Assault on waste

You can tell who's serious about lean. Without determined leadership - or a seriously scary customer - most organisations get to 5S and stop. The fighting few, however, moves on to value stream mapping (VSM), a technique which gets to the heart of the lean project. For professor Marek Szwejczewski of Cranfield School of Management, VSM is a great lean starting point: "It helps kick-start the lean process and it helps you and the management team understand the whole flow through the factory. It gives you a much better picture of what's going on." VSM uses boxes and standard symbols to show process steps and flows. It begins by identifying current value streams. This current-state map identifies in minute detail the material and information flows that tell you whether every process step adds value for your customer. If it does, they'll pay for it. If not, why do it? After analysing the current state you go on to create a second, 'future-state' map. Newcomers to a typical VSM exercise discover that 5% to 10% of what they do adds customer value. A third of the remainder is non-value-added they can't eliminate: meetings, accounting, talking to head office. The rest - queueing, set-ups, measurements, inspections, movements, over-processing - is waste. The task is to take those steps out and create 'flow' among the rest, so that each workstation pulls parts one at a time from the previous workstation with no waiting time inbetween, right from raw materials to finished goods. The key with essential but non-value-adding functions like finance, says Bill Ulyett of Bristol based consultancy Suiko, is to say, yes, they're needed, but nobody says it needs an army of 10 to do work that could be done by two or three. Often, says Ulyett, the senior functions don't understand that flow applies throughout the business, not just the shopfloor. He identifies its importance at the top level (why are we here?); at site level (what does the customer want, and how are we creating value?); and at the process level (what should we do, and not do, to add value?). The site level is a pretty good place to start, says Ulyett, because people have already organised themselves by value streams as product families. The maps are mounted on boards in meeting areas to allow all to track current progress and add ideas on Post-it notes. Don't, says Szwejczewski, put the map on a computer. "Put it around your team room just to get it as visual as possible." Says Ulyett: "The whole point of having the value stream map is to be able to see the thing and convince other people by using this visual tool. You can take pictures of the map and send it to customers, suppliers and other departments." For Szwejczewski, the mapping process begins with putting together "a cross-functional team of people who are involved, who touch the product as it goes through the factory. And that team must walk the whole process, not just bits of it." Kerry Cochran, a practitioner for the Yorkshire and Humber Manufacturing Advisory Service, says that, ideally, "you'd be going to the supplier and building the information up all the way through to the actual customer". Cochran has been working with Rotherham-based electro-mechanical manufacturer Kostal UK for almost five years on lean, and about three years on the supply chain. Szwejczewski concurs. Eventually, he says, "you do need to do a map of your suppliers. Obviously you can't do them all but, for the key elements that are going into your product, you need to do a map of those suppliers' processes. "This is actually quite a major exercise if you're doing it yourself and with maybe one or two suppliers," he warns. "With stops to analyse the data, it's a two-month project." Cochran confirms this: "Kostal had to make quite a significant investment of time and money to help out their supply chain." "You don't have to have an end-to-end value stream map with half the world in there," agrees Ulyett. But even an internal VSM exercise probably leads you to problems at your organisation's boundaries anyway: "You'd invite the suppliers in, show them where you've got to, show them where the issue is, and say, 'we need your help to fix it'." Even with internal VSM, says Ulyett, "you need a bit of help from someone who's done it before". He would include someone from head office and the head of site on the team to begin with: "But you don't want them to stay for the whole week." If they did, no-one would pipe up about the time wasted waiting for decisions. Since customer value is the touchstone, "I would also try to get some customers on board," says Ulyett. And even for an internal VSM exercise, he says, it's a good idea to have some suppliers in there, too. Again, just as within your own operations, says Szwejczewski, "it's important that [suppliers] put the right sort of people into their teams". Not all suppliers have the knowledge, training and understanding of these techniques, he says, and your training, teaching, and guidance would be a big help to their team. He adds: "Generally, the benefit to the supplier is the passing on of knowledge and experience to them. But you'll also help them reduce inventory levels, reduce cycle times, possibly reduce the number of people required." One benefit to Kostal's supply chain is free consultancy - Cochran says he has spent 18 months travelling the UK identifying improvement opportunities. They started with a supplier day to brief the supply chain on the benefits that Kostal had gained from using VSM and other lean tools internally: better stock turns and more accurate information, particularly the number of inaccurate sales orders through the process. From there, says Cochran, they set out how changeovers had been shortened, speeding up throughput and freeing up capacity. It won't work unless the customer shares the benefits with the supplier, says Szwejczewski. Cochran agrees. "Kostal didn't snatch at the benefits straight away. That [would be] a big mistake. Some organisations do the measurement, do the value stream map, and they expect the return immediately from the supplier without correcting the processes that are causing the problem. That's very short sighted and will just alienate the supply chain. That's where most people get switched off." VSM success may depend on the measurements the parties use. One type of metric is the business KPIs used in the two organisations. If the supplier's main KPI is on volume per employee, says Szwejczewski, they will focus on getting as many units made as possible. "That may conflict with your need to get more flow and less inventory between you and them." The other metric is the process detail - what is the actual cycle time, what are the true levels of WIP that are held in each of the suppliers? Some include quality, cost and delivery as well as the time it takes to load orders on to the system, and the time implementing orders. But there are some important top-level issues, too. At Goodrich of Wolverhampton, for example, helping suppliers to reduce inventory and cycle times is not just part of its own inventory-reduction strategy but of its top-to-bottom policy-deployment approach. Goodrich makes actuators for civil and military aircraft. The former Lucas Aerospace factory is recruiting fast to keep up with a steadily expanding order book. Dominant among the mix of civil and military contracts is its supply of weapons-bay door actuators for US F-35 Lightning IIs, formerly the Joint Strike Fighter. Machining vice president Paul Lennon says VSM is but one component of a detailed and carefully developed cascade which starts with a policy deployment matrix (PDM) formulated right at the top of the $6.4bn company in Charlotte, North Carolina and filters down to each business unit. The unit then uses lean tools and techniques, including VSM, to derive improvement targets, devise measures for current and future performance, and develop tasks and activities to help them move towards the targets. Each unit has, typically, eight annual improvement targets and VSM is critical to reaching them. The site does a VSM exercise at the start of every year, says Lennon. The 'as now' VSM identifies the existing processes. The 'future state' map identifies critical items it can work on in the following year to help it move towards its targets. Knowing the critical items, Goodrich's teams set themselves policy-deployment projects to, say, reduce inventory by a certain amount. The projects set out who owns the project and a staged timetable for achieving the goal. Progress is checked every day, says Lennon: "We hard wire it into the appraisal process," he says, "and link it to bonus. That way, everyone benefits, from the top of the company to the bottom." Goodrich now applies these principles in the supply chain. Wolverhampton has identified 102 among its hundreds of suppliers who generate 80 % of its procurement workload. The key supply chain measures are on time and in full (OTIF) and parts per million quality. Goodrich uses VSM to identify weak suppliers and what work they must do together to raise quality and reduce inventory and lead times. Sometimes, says Lennon, if OTIF needs attention, "it may be our fault". If goods inwards don't book a delivery in straight away, that might show up as poor performance by the supplier. Suiko's Ulyett says VSM is often wrongly perceived as being about mapping the processes along the shopfloor. But much of the waste may be elsewhere. You can track a process down at the micro level (where does that piece of paper go?) or at structural level (what does that department do?). Senior people running departments have often got there by always doing what their boss always did, so VSM is a way of rooting out the structural waste right at the top level, says Ulyett. "You have to ask what the scope of the exercise is and what you need to get out of it." Ulyett says this is why he always begins with a one-to-one conversation with the head of site to explain that there is no telling where a VSM exercise might lead. Usually, he says, there's a burning platform - a new person in place "or a customer giving the client a good kicking about quality". He will outline what behaviours he expects from the top of the company: "I'd expect some support," he says. He will insist that blockages and red tape are cleared out of the way, and that management makes it clear to those involved that the work is worth doing. Otherwise, why bother?