Adding "Value" in the Value Stream Map

During the dreary winter gray days, we begin to think about spring, warm weather and the summer days ahead. However, for many companies, there stands between you and spring time a very expensive and non-value added ritual called physical inventory. You may be already planning for physical inventory even as you read this article. You know that this ritual consumes a tremendous number of man hours and can often necessitate a complete stoppage of manufacturing and other operations.

First we must ask, given a choice, will your customer pay for your time to do inventory? We assume the answer is no, they will not. So how do we reduce the time and expenses related to the inventory process?

The ultimate answer is to eliminate inventories so that there is nothing to count; the next best answer is to drastically minimize inventories so that there is as little as possible to count. But there exists the possibility of another, better way. With the application of Lean Six Sigma Tools, the inventory process itself can be drastically reduced and sometimes even eliminated.

From the perspective of Lean Six Sigma, wherever there is inventory there is a problem. Inventory is typically used to deal with the problems caused by unreliable suppliers or manufacturing processes, issues with poor quality or excessive scrap and manufacturing capacity shortfalls. By using the tools of Lean Six Sigma and complexity management, each of these problems can be addressed and often, completely eliminated. The resulting processes are then capable of delivering exactly what is needed, when it is needed and in the time frame required by the customer. This kind of process redesign and development renders inventory unnecessary.

Six Sigma Black Belts are highly qualified project professionals that can analyze business processes and make lasting improvements. Perhaps one of the most powerful tools in the arsenal of a Lean Six Sigma Black Belt is the Value Stream Map (VSM). Huge gains in process improvement, complexity reduction, waste elimination, and work simplification are possible as a result of value stream mapping.

1. The first step for a Black Belt in creating a value stream map is to walk the process and observe every step and action that is required to complete the product or service in question.
2. Listening to what is described, the next step is to develop as complete and accurate a picture (diagram) of the existing value stream as possible, including all of the work-arounds, exceptions, and rework steps that have been devised to deal with problems.
3. Then, by taking the time to carefully assess each step in the process, the Black Belt will work with your team to determine how that individual step performs and whether or not it adds value to the product or the service.

• If the step adds value to the customer, the Black Belt will use the tools of Lean Six Sigma to improve it so it contains no waste and so that it functions as close to perfection as possible.
• If a step or activity does not add value, that step will be eliminated entirely.
• If the step or activity is required due to company policy or government regulation, the application of Lean Six Sigma tools will be used to make that step perform as efficiently as possible.

At that point the Black Belt will have developed a picture of the improved value stream (Future State Map) with as many of the wasteful steps and actions eliminated and implement the new process. Dramatically improved processes and performance are the result of this type of analysis and implantation. Throughput time reductions in excess of 80% and total process step reductions of 50% are both very common.

How does all of this work affect your inventories and physical inventory process? With such significant process improvements, large inventories are no longer needed as a buffer between your customers and inefficient processes. Inventories can be reduced significantly (90%+) and sometimes eliminated altogether as companies develop the capability to “make to order” versus “make to inventory”. With so much less inventory to count, the physical inventory takes only a fraction of the time and man power it once took. Now, you can enjoy the evening at home with your family instead of in the shop counting parts or investigating the variances between the physical count and the “book” inventory!

What steps can you take now? Six Sigma experienced professionals are available help your company improve and complete your next physical inventory. For more information contact Gina Kopera with 10 til 2, partner to ISSSC, at CincyStaffing@tentiltwo.com or (513) 403-3197.