The value stream is the totality of all specific measures required to develop a certain product. As already mentioned, this can be a product, a service or, increasingly, a combination of the two.
Consequently, it is important to identify and understand the entire value stream. This step in Lean Thinking, is often overlooked by companies and leads to enormous Muda (jap. Waste).
If one examines the process for its components, one will inevitably be able to classify each process step into one of the following three categories:
- Value-added: The activity directly serves to deliver added value to the customer and is necessary for the desired service
- Not value-adding, but necessary: Although this activity does not directly create added value, it is necessary to support a value-adding activity. For example, travel times that cannot be eliminated with current technology
- Wastefulness: These activities do not provide any added value for the customer. An example is unnecessary waiting time or rework due to unclean work
In the above-mentioned activities, the aim is to optimise the value-adding activities, reduce the necessary activities and eliminate waste completely.
Source of error: Lack of overall process understanding
A good example of value stream analysis and optimization is given in the book "Lean Thinking" by James P. Womack and Daniel T. Jones. Pratt & Whitney, the largest manufacturer of jet engines, once studied the processes involved in manufacturing their various engines. They found that there was a lot of waste in the step between the supplier and the processor of the raw materials. The supplier supplied titanium and nickel in a form and with a surface finish that the processor of the materials could not use optimally. During the manufacturing process of the individual parts for the aircraft engine plants, more than 90% of the expensive raw materials were thrown away as scrap.
How could such enormous waste in such a highly complex and high-tech industry as the aviation industry remain undiscovered for years? The answer is simple: the companies involved in the supply chain have never passed on their requirements or wishes to the other suppliers. Neither were the suppliers aware of each other's work processes. Once this lack of communication was discovered, Pratt & Whitney was able to significantly reduce the cost of its engines. Among other things, the supplier of raw materials supplied the materials to be processed in a form that was more suitable for the manufacturer of the aircraft parts.
Direct communication instead of structural change
The history described above shows that Lean Thinking must go beyond the boundaries of your own company. In process optimization and value stream analysis, all suppliers and customers must be considered. Subsequently, the communication between them is required. Only in this way can everyone respond to the needs and requirements of the next link in the process chain. The entire process, from design to production to delivery to the end customer, is the consideration horizon of value stream analysis.
When considering the entire value stream and its optimization, misunderstandings often arise. This refers to the need for a new instance to coordinate the parties involved. The introduction of a control body would destroy the actual added value of the value stream analysis and optimization. This would result in a lack of understanding of the overall process and direct communication of requirements. The learning process of the actual executing companies would also be massively restricted.
In order to make a company and its upstream and downstream operations lean and efficient, a rethink towards better B2B communication is inevitable. The value stream must be transparent for everyone to be able to discuss possible optimization potentials.