It had unfortunately become a familiar scene at the monthly board meeting, Directors squabbling over who was to blame for the company’s poor delivery performance.
“Guys, guys, please, let’s have a time out”, said Mark the MD. “Let’s just reflect for a moment, for the past six months or so we have under-performed. In some cases it has taken us 17 weeks to ship a generator when have quoted the customer 8 weeks. This can’t go on or we simply won’t be in business, its time for a change”.
Unfortunately the other 2 directors in the room were not in agreement as to what should be done, “Mark, my Sales guys are pulling their hair out, they are almost too frightened to answer their phones to customers at present because all customers seem to be chasing delivery dates. We are going to have to hire some more staff to cope”, said Phil, the Sales Director.
John, the Ops director piped up, “Phil I have told you many times before hiring more guys is not the answer, it will take months to train the guys to the standard we require. The answer has to be with your sales guys quoting customers longer lead times until we catch up. Every generator is different and we cannot produce bespoke generators as quickly as you would like us to”.
OK, OK, As I said, I think it’s time for a change”, said the MD. “I have asked one of the guys from our sister division to come in next week and carry out some value stream mapping to see if he can highlight any issues in how we work. I want a fresh pair of eyes to look over the whole process from start to finish to see if we are missing anything. It can’t hurt and we might learn something”.
“What is value stream mapping” said, Phil.
“Value Stream Mapping is a diagnostic tool used to visualise the flow of material and information through a value stream whilst identifying waste. The mapping process can be used to help design the most efficient work flow for our products. We did some of this at our sister company a few months ago and they guys there are raving about it”, said Mark.
“But Mark surely a guy from outside is not the answer, he will have no experience of our industry and will just get in the way, I think this is a bad idea, said the Sales Director.
“It’s not often I agree with Phil but I think this will just take up even more valuable time we haven’t got” echoed John.
“Sorry, I have made up my mind, he will be in next Monday. I want the two of you to brief your guys to be as open and cooperative as possible”, said Mark the MD.
When Monday finally arrived, Simon, a Lean Implementation Manager from the Generator plants sister company arrived. After the formalities and introductions were over Simon asked to see the whole process from receipt of the purchase order to despatch of the finished goods. Simon spent time with each of the people carrying out the individual processes. He took time to speak with every person carrying out each task to see if different people carried out the same task differently. He followed the flow of work and information around the company including when it looped back on itself because of errors or defects. He asked lots of questions to build up a picture of how long each task took to complete. He identified areas in the process where work (or value) did not flow as well and information or materials queued as a result. He identified areas in the process which were person dependent i.e. only one of two people could carry these processes out and if they weren’t available then the process slowed or came to a halt. Finally, after a full weeks work he was ready to present his findings.
The Directors arrived in the board room to see that Simon had pinned up several sheets of paper around the wall which showed the work flow through the company. It showed a lot of numbers and symbols, some figures were highlighted in red and the whole map looked very complicated with lines criss-crossing across the paper.
“OK, thanks for coming” said Simon. As you can see I have mapped the value stream for Generator Production. Simon spent the next 15 minutes explaining to the Directors how to interpret the map. “Value stream maps allow us to visualise the flow of work or value through the process. Symbols or Icons are used to represent items such as processes, customers, inventory, queues etc”.
Simon continued, “This map is called the Current State because it represents what you actually do today and not what you think you do. I call it a ‘warts and all’ snap shot. As you can see this all looks very complicated and contains several steps which in an ideal world you simply would not want. We call any steps which are not really required non-value adding because they simply add no value from the customers perspective. For instance these red triangles you can see on the map show you at which points work stops or queues for the next process. The numbers inside the triangles tell you how much time is wasted at these points. These triangles alone add up to 5 working weeks. Just imagine if you could reduce some of this or eliminate it altogether what a difference it would make to your lead time. Also, take a look at the number of rework loops in the process. These represent the number of times work travels back on itself because it was not completed right first time. Remember rework does not just relate to the manufacturing process. Rework can also happen in the office when incomplete or inaccurate information is passed on”.
“This all sounds quite promising said Mark the MD, but where do we start”.
“Can I suggest you break the map down into loops of activity. For instance, If you look closely at the very front end of the process you can see the sales order qualification and sales order entry process needs improvement.
“What do you mean”, said Phil the Sales Director defensively.
“Well” said Simon, “without wanting to sound too critical it would appear that the Sales Guys don’t have a standard process for detailing exactly what the customers want when they take orders. Evidence I have collected shows that they only gather between 70-80% of the exact product specification from the customer up front. Items such as colour, badging, hose lengths, couplings etc are not always discussed at this stage. Without wishing to appear controversial, it maybe that how you pay the Sales Guys bonus is contributing to this problem. As I understand it they get paid bonus on orders received and not on orders received than can go straight into you system unassisted”.
“What are you saying”, said an indignant Phil.
“I’m just pointing out the possibility that the desire to take an order is maybe currently greater than the desire to capture all of the details up front”, said Simon. “If you don’t collect all of the critical information up front this undoubtedly leads to delays further down the process when questions get asked by your engineers about the fine detail. Look at the map, can you see the number of communications going back and forward at the front end. This is all caused by not collecting as much information up front. Can I suggest you need to find a way of getting the Sales guys to tie down the specification up front and link this to their bonus. Perhaps creating a standard template of information that needs to be completed as a minimum before an order can be loaded. I suggest you put a small team together to look at this area of the process and come up with some practical improvements”.
“I like the sound of that”, said Mark, “it makes good sense, where else do you think we should be looking?”
“If we go back to the current state map for a second you can also see very clearly the amount of waiting time you have for materials. Some of this is caused by the issue we have just talked about but it might it also be sensible to re-look at the supply chain of a number of key components. Some of the commonly used parts could be put on kanban so you should always have enough around you and it might also be worth you going back into your supply chain to negotiate buffer stocking agreements with your suppliers on some of longer lead time components”.
“We have been meaning to do this for a while”, said John, the Ops Director, “I guess this just confirms we can’t hold off any longer”.
Simon continued for the next 30 minutes going over where the current state map indicated further improvements could be made.
After a period of reflection Mark said, “Its incredible really. The improvements required are right in front of our eyes but sometimes you simply can’t see the wood for the trees and it takes an exercise like this to crystalise what should be done. I suggest we get the heads of department together next week and go through this and come up with an action plan”
What happened next?
Six months later the company had not only developed an action plan but they had also improved the value stream and had created a new process (The Future State) with a number of the suggested improvements embedded. Non value adding steps had been reduced and in some cases eliminated altogether and they were now regularly delivering products to their customers in 8 weeks or less.
If your business would benefit from learning how to map your value streams, take a look at our Value Stream Mapping training course.