Hi
I'm looking for a good presentation how to do a VSM on a administrative process. I'm doing an excercise on our Interna Audit process but I dont know where to start and where I'm going.

Please help me out here.

Hi
I'm looking for a good presentation how to do a VSM on a administrative process. I'm doing an excercise on our Interna Audit process but I dont know where to start and where I'm going.

Please help me out here.

I am not sure that VSM is appropriate for a process that relies primarily on information . Take a look at this article from the Institute of Industrial Engineers on VSM and PVM analysis:

The actial article with the links to the graphics can be found at http://www.iienet.org/public/articles/index.cfm?Cat=1462



Process Value Mapping

Wring more waste out of business processes

By Merwan Mehta and Robert Sickler
Posted Sept. 1, 2005



Lean practitioners use value stream mapping as a tool to analyze the entire value stream of a product moving through a manufacturing facility from raw material to the finished product. VSM allows us to see the entire product flow in a graphical form to facilitate the application of lean manufacturing principles in a systematic manner. There are several instances where VSM has been able to improve the flow of a physical product, such as a widget that moves from operation to operation.



But although VSM analyzes the material flow of a product it is of little aid in addressing information flow, which is needed to move the product through the value stream. In fact, improving information flow is mostly left out of the VSM analysis and it is no wonder that one ex-Toyota consultant feels that companies are achieving only 10 percent of what they are capable of. He succinctly stated, “Most manufacturing seems to be focused on achieving a 35 percent to 40 percent productivity gain over three to five years, when they should actually be focusing on a 400 percent improvement.” A significant number of manufacturing companies have exhausted the gains that can be derived from the production floor, and the gap in untapped productivity gain that has been referred here can further be captured only by shifting attention to non-production areas. These are processes where the product that is being moved through it is information and where classical VSM struggles to be applicable.



A major reason for this is that in VSM we concentrate on the physical movement of material and the times associated with moving, storing, and processing this material. A very large portion of our classical VSM activity is devoted to analysis of lead-time for the process on the basis of inventory between operations. In reality, this lead-time in terms of the inventory has nothing to do with the true lead-time that it takes to complete the process.



True lead-time is defined as the moment from when a process is begun to the moment the process ends and a product is dispatched to the customer. This true lead-time is made up of both physical and non-physical entities (or time relative to the product processing and time relative to information processing). For non-physical processes, the true lead-time in terms of the time taken to complete the process is far more important than the lead-time calculated in terms of the inventory between the operations. Unfortunately, classical VSM is not the best tool for analysis of information and control processes.



One of the chief reasons that classical VSM works for physical production but not for controls is the fact that product flow generally follows a linear path through a facility, which is not the case for information flow. Information flow backtracks, jumps around the various operations, and at times is intermingled with the physical movement of material. At times, information flow moves parallel to the product flow, and at times the information flow can be along a serial path along with material flow. In such cases, information flow is in the critical path for the completion of the entire process, and might be a major bottleneck that is extending the entire lead-time for the manufacturing of a product.



Considering the above we believe that for processes that have material and information flow intermingled or where the process only deals in information flow, which is the case for most non-production processes in companies, VSM as a tool for optimizing the holistic process has limited success. We propose using a modified version of process mapping – process value mapping, or PVM – for faster understanding and analysis of business and non-manufacturing processes, subsequently leading to better optimization and elimination of waste.



To understand the similarities and differences between a VSM and a PVM, consider an example of a software company. IT Software Inc., receives customer orders, checks customer credit, schedules the product to be shipped, checks whether the boxed product is available in inventory, produces copies of the software if the product is not available in inventory, boxes the compact disks and manuals, and ships the boxed product to the customer.



We can see in this example that product and information flow are co-mingled into one continuous process. If we were to create a current state VSM to analyze this process, we will end up with a VSM similar to one shown in Figure 1. Obtaining the times for the physical operations of copying the disks, order picking, assembly, and shipping, the total processing time is 25 minutes as against an inventory lead-time of six days. There is some inventory buildup between the operations, but most of the six days come from the fact that the blank CDs are delivered on a weekly basis to IT Software.

Using lean principles, we can propose to optimize this process. This would include letting only one operation – the pacemaker process – get the schedule so that the product is pulled through the process. This can be followed by combining the four operations into a cell so that there is no inventory built up between the operations. Incorporating these major lean principles helps material flow but it does not give us a clear picture as to what we can do to expedite the information part of the process, which in this case is on the critical path that affects the total true lead-time for the entire process.



In the current state VSM we might also deduce the percentage of value-added to non-value-added time as 0.87 percent (25 minutes / 6 days). Reducing the initial five days of inventory in the CDs stocked to one day in the future state VSM and combining the four processes into a cell to eliminate inventory in between the operations, we can propose to have a new proportion of VAT to NVAT of 5.2 percent (25 minutes / 1 day). This can show an improvement of more than six times for the future state VSM over the current state VSM, but we miss out on improving the process greatly since we did not consider how we can squeeze out waste from the information flow that directly reflects on the true total lead-time for the process.



We propose to address this issue through the use of a PVM. A PVM is developed after developing a process map or a flow chart for a process. A process map is a flow chart that captures how a product in a process flows. The product can be simply information, or a combination of information and a physical product. Typical symbols utilized in process mapping are the same ones used in developing process value maps and are shown in Figure 2. Most software drawing programs have these standard symbols build into their libraries.

The PVM for IT Software is shown in Figure 3. What converts a process map into a PVM is the inclusion of time for the operations and the time delays that happen in between the operations in the process. This is followed by calculations to come up with the percentage of value-added time for the entire process. This is shown in Figure 4.



In creating a process map for IT Software, the process begins when a customer sends an order. Usually, the sales department looks up orders received in their e-mail box or the fax machine every 10 minutes. We note the 10 minutes on the arrow going from the customer to the sales department, as this is a delay in between the operations. For ease of understanding, we maintain the departments or entities separate by drawing horizontal lines as shown in the PVM for IT Software. Next, the sales department works with the accounting department to check the completeness of the order and evaluate the customer’s credit rating. If the credit rating is not satisfactory and if the customer is not able to satisfy the accounting department with alternate payment plans, the order is rejected and filed away.



Processing times for each operation are shown in the operation boxes in parenthesis, with the total processing time (P/T) shown in a dotted box on the right of each department. Hence, the total P/T for the sales department is 17 minutes, the total P/T for the accounting department is 14 minutes, and so on. In deciding how small to break down the operations, a general guide is to take all that happens in a contiguous fashion for the process as one operation. Breaking down the operation into finer parts to analyze how to decrease the work content of the specific operation to make the operation more efficient can be undertaken after the total process has been optimized, and if there still is a need for gaining a further increase in efficiency in the process.



Moving further into the process, once the order has been accepted by the accounting department, a packing slip is created by the accounting department and stored, while the order is passed on to the production control department for checking for availability of the stocked product and for scheduling. Scheduled orders for processing are then produced by the copying department and moved on to the assembly department for assembling the boxes which are then moved on to the shipping department to be shipped to customers. Times for the various operations are determined and the total P/T for the entire department is calculated. The total P/T for the entire process is now deduced, which in our case adds up to 91 minutes.



A PVM analysis table for calculating of the percent of VAT is next created and is shown in Figure 4. In calculating the percent of VAT, we divide the total VAT for the process by the total time for the process, which includes the VAT and the NVAT, and convert to percentage. This is different than the percentage ratio of VAT to NVAT that we use in VSM analysis. Calculating the percent of VAT as a percentage of the total time taken for the process, rather than the percent of VAT to NVAT allows us to concentrate on improving the process such that the ideal number for the percent of VAT is 100 percent. This is tantamount to saying that the ideal goal for the process is to only have VAT. Using the percent of VAT/NVAT, the ideal figure to shoot for would be infinity, which would be the VAT divided by the ideal NVAT of zero, which is hard to comprehend and achieve.



Using the same department headings as the row headings and the column headings, we capture the total time delay that is incurred in between two respective departments. Example, the total time delay between the sales department (SAL) and the accounting department (ACT) is 80 minutes. To be able to calculate the percent of VAT for each department, we include the 80 minutes in two cells, one under the SAL column and ACT row, and again under ACT column and SAL row. We then add the delay times for the respective departments. Example, the total delay time for SAL is 90 minutes, and for ACT it is 170 minutes.



The total time values for the processing times which constitute the P/T row are now entered directly from the current state PVM shown as the department totals in the dotted boxes. To calculate the percent of VAT for the departments, the P/T for that department is divided by the total delay time in the delay time row. Hence, for SAL the percent of VAT is 17/90 or 0.1589 or 15.89 percent. These values point us as to which departments have the NVAT that can be addressed in the creation of the future state PVM. In our case we can see that the accounting department (ACT) with a percent of VAT of 7.61 percent might have the maximum benefit for improvement, followed by the assembly department (ASB) with a percent of VAT of 9.09 percent, and so on.



In calculating the total percent of VAT for the entire process, we know that the total delay in the process is half the total delay times, since we used the operation delay numbers twice to get the individual percent of VAT for the operations. Therefore, the total NVAT in the process is 600 divided by 2, or 300 minutes. For our case the total percent of VAT for the process comes to 23.30 percent, as shown in Figure 4.

After creating the current state PVM, we now begin to apply lean principles to the process to eliminate or reduce the NVAT in the process. The most important principle (and the one that is most difficult to implement) is tearing down the organizational silos dominating almost all information flow processes. The only way to accomplish this is with the creation of cross functional teams designed to analyze the process from start to finish, and implement the new envisioned state for the process. Once a new process has been designed and implemented, the next step then would be to cross-train all team members in all functions, with a systems mindset rather than an operations orientation.



We begin this by applying the lean principle of reduction of the batch size and, if possible, use of one-piece flow to the current state PVM. In most business processes, the product that is being moved through the process is information, and the inventory that gets built up in between the operations is time delay.



A concept that has been found to be most useful in encouraging the various operators in a business process to act as a team or work in a manufacturing cell-like manner is the idea of virtual cells. In most business processes it is not possible or even logical to physically locate the operations close to each other. But not tying them together in some virtual manner will do nothing to tear down existing functional silos. This means that the process will remain fragmented and continue to build up inventory (time delay) in between the operations. Virtual cells are processes in which the completion of one operation automatically notifies the next station that immediate action is needed so as not to introduce time delay into the process. Virtual cells can be envisioned similar to a relay team which passes batons between one another. In virtual cells, the baton can be an audio, visual or other signal, used to tie the operations together to not allow the buildup of any time delay in between the serial operations.



Another lean principle that is most applicable to business and other support processes is the principle of waste elimination. Looking at each of the operation boxes, we now begin to analyze if it is possible to merge the operation with the previous operation, or merge it with the next operation, in other words eliminating it. This is especially true of operations which are done by different departments or entities. The concept here is to see if any departmental silos that have resulted during the evolution of the process can be taken down and waste eliminated. When operations are merged or consolidated, there is always a time saving as the new operator now does not need time to get oriented to the task, check previous work and begin the operation, laying aside what he or she was already doing.



Incorporating these principles into the future state PVM as shown in Figure 5, we see that there is a potential for reducing the total departments that the process has to pass through from six in the current state to three in the future state. Reducing the number of departments means reducing the bosses and approval points that need to be encountered in the process, eventually making the process leaner. As mentioned earlier, further improvements in the total lead-time can be achieved by next looking at the actual operation times for the specific operations. However, most business processes have extended lead-times because of the delay built in between the operations and not so much because of the time taken to actually perform various functions.

The PVM analysis table for the future state PVM can now be created, and is shown in Figure 6. Here we see that reducing the total number of departments from six to three and merging some of the operations (the copying, assembly and shipping departments are made into one department), we are able to substantially reduce the delay times in between the operations. This was mostly achieved by concentrating on the departments with the lowest percent of VAT calculated in the current state PVM analysis Figure 4. As mentioned above, we see that the most benefit would come from improving operations or interactions in which the accounting department is involved since it has the lowest percent of VAT amongst the process departments at 7.61 percent, and so on.



Looking at the numbers in the PVM analysis table for the future state (Figure 6), we see that we have managed to increase substantially the percent of VAT for the departments, with the minimum percent of VAT for the sales department at 25.93 percent. Comparing the P/T, total NVAT, and the percent of VAT for the current state and the future state PVMs, we see that the VAT has increased by 11 percent, the NVAT has improved by 73 percent and the percent of VAT has improved by 116 percent. These improvements are shown in Figure 7.



Summary

VSM is a great tool for manufacturing processes, which can be complemented immensely by PVM where material flow and information flow are intermingled, or where the product in the process is simply information. This is mostly the case when implementing lean principles in administrative and business functions. A case can also be made for using PVMs along with value VSMs for manufacturing processes where information flow affects the total lead-time for the material flow. Also, using PVMs and VSMs together will force value stream analyzers to look more critically at information flow in their value stream than what they have been doing in the past.



Merwan Mehta, Ph.D., is an associate professor in the department of technology systems at East Carolina University in Greenville, N.C. Mehta has worked as a machine tool designer, manufacturing engineer, manager, trainer, and consultant in the manufacturing industry for more than 25 years. He specializes in training and implementation of lean and Six Sigma. For the past four years, he has lead post-conference seminars in lean value stream mapping at the IIE Lean Management Solutions Conference. In the Dec. 2005 post-conference session in Orlando, he will be introducing the concept of using process value maps for business and administrative processes.



Robert Sickler, Ph.D., of the Missouri Enterprise Business Assistance Center in Rolla has more than 25 years’ industry experience covering production engineering, engineering management, research and development management, plant management, and the exploitation of new technology. Sickler has been a plant safety engineer, a production manager, an ISO 9000 internal audit team leader, and has conducted numerous on-site lean manufacturing, value stream mapping, and plant layout training and implementation programs. He is currently engaged in developing methods for the application of lean manufacturing principle to the forest industry and mining.


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