Enterprise Value Stream Mapping at MIT

Enterprise Value Stream Mapping (EVSM) Workshop Enterprise Value Stream Mapping at MIT! January 16, 2002! Presented By:! Dr. Deborah Nightingale! Massachusetts Institute of Technology! Lean! Aerospace! Initiative! ENTERPRISE VALUE STREAM MAPPING (As currently Taught at MIT) ➢ Course Title: “Integrating the Lean Enterprise! ➢ Course Focus: Planning, developing, implementing and sustaining Lean Enterprises! ➢ Term Project: Students work in teams to develop an Enterprise Value Stream for an actual organization, followed by the creation of a plan for transitioning to a Lean Enterprise.! !On-campus MIT students are assigned to teams that include students in MIT’s Systems Design and Management (SDM) Program, many of whom are taking the course via distance learning. ! !! 2 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Term Project Guidelines ➢ Define the boundaries of the Enterprise being mapped! ➢ Context Specific! ➢ Understand the Intended Audience! ➢ Enterprise Executive Committee! ➢ Senior Leadership! ➢ Intended Usage! ➢ Enterprise analysis provides basis and direction for achieving future lean state! 3 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! ENTERPRISE VALUE STREAM MAPPING (As currently Taught at MIT) Steps:! 1) Value Identification/Definition! 2) Map “Current State” Value Stream! 3) Identify Enterprise Metrics! 4) Determine Strategic Issues! LESAT used to identify! areas for improvement in ! the enterprise! 5) Develop Lean Vision! 6) Develop “Future State” Value Stream Map! 7) Develop Roadmap for Transitioning to Future State! 4 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Example: Kodak Inks ➢ Inks! ➢Large Format Color Ink-Jet Printer! 5 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Step 1 – Value Identification/Definition Value measures the worth of a product or service to customer! ➢Usefulness, functionality! ➢Meets customers need! ➢Available when needed! ➢Acceptable price! ➢ Life-cycle value: “A product introduced at the right time for the right price which delivers best value in mission effectiveness, performance, affordability, and sustainability, and comparatively retains these advantages over the useful life of the product” - Murman et al, 2000! 6 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Stakeholder Value ➢ Customers! ➢ Higher quality! ➢ Lower cost! ➢ Customer satisfaction! ➢ Suppliers! ➢ Trust and commitment! ➢ Lower costs! ➢ Employees! ➢ Connected organization! ➢ Career development! ➢ Stockholders! ➢ Faster response to the mkt! ➢ Higher ROI and ROS! ➢ Lower inventory levels! 7 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Step 2 – Map the “Current State” Value Stream ! !2a) Identify sequence of steps/processes now followed in delivering value to the customer! !2b) Determine the time required in each process! !2c) Specify all resources consumed/utilized in each process! !2d) Determine the information that flows through the sequence of processes! !2e) Identify the tools and technologies used within the value stream! 8 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! 9 - D. Nightingale © 2002 Massachusetts Institute of Technology! Kodak: Inks Current Value Stream web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Opportunities ➢ Takt Time! ➢ R&D, Commercialization, Order-to-delivery! ➢ Digital Imaging Industry! ➢ Excessive Wait Time (Muda)! ➢ Technology Transfer – R&D to IPT ! ➢ Knowledge Management System! ➢ Fractured Manufacturing / Supplier Base! ➢ Many Small, Disperse Suppliers! ➢ Distribution! ➢ Push versus Pull Systems – Inventory Management! ➢ Incongruent Metrics! ➢ Metrics Don’t Always Flow Coherently into Value Delivery! 10 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Step 3 – Identify Enterprise Metrics ! ! ➢ Traditional accounting and balance sheet results are inadequate, even counterproductive! ➢ Disaggregate traditional corporate overhead costs into direct charges associated with processes along the value stream! ➢ Tie metrics to Enterprise Strategy! 11 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Lean Metrics Existing Metrics! ! Added Metrics! ! ! ➢ Number of patents! ➢ Enterprise takt time ! ! ! ➢ Risk/benefit analysis! ! ! Concept! Development! ! ! ! ➢ Unit manufacturing cost ! ➢ Product development takt time ! ➢ Quality supplier matrix! ! ➢ Stakeholder needs % fulfillment! ➢ Quality measure! ➢ Takt time and service level! ! Manufacture and ➢ Customer orders over Distribute! time! 12 - D. Nightingale © 2002 Massachusetts Institute of Technology! ➢ Customer orders over time! web.mit.edu/lean Lean! Aerospace! Initiative! Step 4 – Determine Strategic Issues ! ! ➢ !Identify issues associated with the current value stream that may impact enterprise strategic directions and goals.! 13 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Key Strategic Issues ➢ Executive level lean leadership and support! ➢ Resource allocation consistent with corporate strategy! ➢ Extend the Integrated Product Team! ➢ Create new digital business office! ➢ Enterprise-wide knowledge management system! ➢ Executive support of lean training and kaizen events! ➢ Measure & incentivize lean behaviors! ➢ Continuous improvement – reward waste elimination! ➢ Metrics consistent with corporate strategy – six sigma! ➢ Extend the vision of the enterprise to include customers and suppliers! ➢ Facilitate communications and build trust with suppliers! ➢ Establish a continuous dialog with lead users! 14 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Step 5 – Develop Lean Vision ! ➢ Determine the value proposition for each enterprise stakeholder! ➢ Craft a vision of the enterprise functioning according to Lean principles and practices, with particular focus on eliminating waste and creating value! 15 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Lean Leadership Vision! Mission! Goals !Strategy! ➢ Lean enterprise education! ➢ Lean manufacturing success stories! ➢ Buy-in at all levels of leadership! ➢ Executive leaders / lean champions ! ➢ Internal network leaders / community builders! ➢ Local line leaders / local change agents! ➢ Lean enterprise commitment! ➢ Supply and distribution channels! 16 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Step 6 – Develop “Future State” Value Stream Map ! ➢ Portray the new sequence/organization of processes and flows that will deliver best lifecycle value! ➢ Estimate time and other resources required in each process! ➢ Determine information flows! ➢ Specify metrics which will enable Enterprise Leaders to know the status of achieving the Lean vision! 17 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Cycle/Lead Times and Resources ➢ Excessive wait time between functions! ➢ Push manufacturing results in large inventories! ➢ Production based on demand forecasts! ➢ Quality inspected-in! ➢ External package supplier offsite! 18 - D. Nightingale © 2002 Massachusetts Institute of Technology! Eliminate non-value added tasks Pull manufacturing using aggregated raw material forecasts Build-in quality Co-locate final packaging web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Future Value Stream! Future Map Key! ! Pull material flow! Pull combo material ! and information flow! ! Conception Phase! Conception Integrated Product Team Activities! Project Initialization Integrated Product Team! Push material flow! ! Push electronic ! information flow! ! Push combo material ! and information flow! Design Phase! Upstream Supplier Enterprise! Design Integrated! Product Team! Technology Developmen t! Manufacturing Phase! ! Aggregate d! Forecasts ! ! BU! ! ! Production ! Control ! System ! ! ! ! Manufacturin! g & Assembly!! Supply Chain! Distribution Phase!! Service ! ! 19 - D. Nightingale © 2002 Massachusetts Institute of Technology! Sales & Service! Process Control Audit! Manufacturing! ! Customers! Co-located Organization! Manufacturin g! Packaging / Finishing! Retailers! Receiving & Shipping Orders! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Future Value Stream Key tion Phase Conception Integrated Product Team Activities • Includes finance, testing engineers, technologists, R&D, and information technology employees • Immediate review and decision to move into design phase ct Initialization Integrated Product Team Includes corporate strategy team, marketing, business unit managers, finance, HR Identify corporate strategy, customer needs, product roadmap Pull material flow Pull combined material and information flow Push material flow Push electronic information flow Push combined material and information flow Phase Design Integrated Product Team • Expand Conception IPT to include purchasers, suppliers, marketing, business unit managers • Perform real-time customer voice checks, perform lean tests on incoming suppliers and incentivize current suppliers, move through certification for mfg. quickly Upstream Supplier Enterprise Technology Development facturing Phase Product Forecasts Manufacturing Production Control System Supply Chain Manufacturing & Assembly Process Control Audit Manufacturing Co-located organization Receiving and Shipping orders Packaging / finishing bution Phase Service Sales & Service 20 - D. Nightingale © 2002 Massachusetts Institute of Technology! Customers Retailers web.mit.edu/lean Lean! Aerospace! Initiative! Step 7 – Develop a Roadmap for Transforming the Enterprise ! ➢ Stress necessity of Enterprise-wide transformation! ➢ Stress criticality of strong Executive Leadership! ➢ Focus on behavioral and structural modifications necessary for achieving a Lean Transformation! ➢ Emphasis a coordinated, Enterprise-wide program of education and training! ➢ Emphasize need for communication! 21 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean Lean! Aerospace! Initiative! Kodak: Future Value Stream Transformation Roadmap Integrate into Project Initialization Integrated Product Team! Integrate into Conception Integrated Product Team! ! Integrate into Design Integrated Product Team! Aggregate Forecasts! Establish Pull Manufacturin g Systems! Co-locate Packaging! Establish Pull! Distribution Systems! 22 - D. Nightingale © 2002 Massachusetts Institute of Technology! web.mit.edu/lean