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I have done Value Stream Map for both Materials and Distribution/Logistics. What I can tell you is that they are one of the most valuable tools within both of these areas. So with the little insight that I have I will point out some key factors.
People do a good job of starting at the end of the process (Customer) but tend to cut it short when getting to the front end. Make sure that you show how both Material and Information move into the system. If you are at the Plant level and the initial Information is generated at a Supplier or Corporate area dont let this fool you into not including it. Problems (treasures) are not always buried just within the Value Stream you have control over.
Start high and then move to the more finite level. Dont get bogged down in the details until you can visualize (on the map) the big picture.
Track Information and Material like a Blood Hound. You will find that there are places where Information diverges in two direction (ex. Accounting and Inventory) – make sure that you track both of them. In Materials and Distribution the majority of the problems occur when the two do not follow the same path. When you map it and see this occur you will find out shortly that a Starburst will appear.
The number of touches and the potential for damage or loss have a direct correlation. Rember that transportation is a waste and multiple handlings just makes it worse. Understand when Staging/Inventory are more necessary and when they are not.
As canned as it may sound Go to Gemba – do not rely on computer printouts to tell you accurate information about things like inventory or flow. Go see it for yourself. Matter of fact if possible do the initial outlines on the floor when you get that deep into the process.
What I have found is that VSMs work better for Material/Information Flow and then going back and doing simple Process Maps to understand the physical side of the process work best. The Process Maps are nice but the Living, Breathing Value Stream Map is absolutely necessary.
Thanks I will do the VSM first and then do a process map for specific processes like order entry etc
The challenge is that I need to focus on improving the Logistics department internally as well as improve how they function will Production.
at what point would I introduce internal kanbans as it relates to improving the communication ?
On the other hand, do you think my scope is too wide to focus on the internal operations of the logistics department while trying to see how it supports Production?
Signals – Start simple. Dont go out looking so the latest technological widget to create communication. When looking at you Map it will be easy to see where the communication is lacking – anytime you see a divergence of Material and Information. Look at the methods of communication that are pre-existent in the Stream and see if they can be modified to suit your purposes. Once these options have been exhausted then it might be time to look for Software to help – even at this time make sure that the programs fit the needs.
Kanbans – it can be difficult to introduce Kanban into a system that has never dealt with it before. Another idea might be to start with a simple Visual Min/Max system. Tag will say something like ABC123 Minimum Qty 20 Reorder Qty 20 Max 50. Once this system has been in place for a while and has been successful then it can be evolved to a Kanban System.
Scope – Keep it simple. Remember that each project will affect the Value Stream. If you are turning multiple knobs then things can get confusing. If time permits complete a project, understand its affects and then turn the knob. This is not always easy as we are all trying to outrun the Bear.
Involvement – Got to Gemba and Talk to the Operator. Theses are old adages because they are still true. Remember that with Logistics the Operator may be a Scheduler and Gemba may be a Load Planning office. Dont be afraid to get multiple Departments together to discuss the problems (treasures). It is not your problem – it is our problem. This also creates Sustainability – when people have input they like to see it succeed.
I manage an outbound logistics department, but I think your question is about improving the connection between inbound logistcs and production.
What information are you trying to pass between logistics and production? Pickup location and time? Need by date?
What would you classify as inventory in the case of the Materials Office considering Logistics/Materials can be seen as non-manufacturing, operations?
Yes Mario, I am trying to improve inbound logistics and production. Currently we have problems with lack of proper prestaging of parts for Production, parts shortage in Production , lack of communication interms of next order, lack of signals…as you see many issues.
So I am trying to do a VSM or Process map to highlight the problems and was wondering the following:
3. How would you calculate lead time and process time for an Office (Materials dept ) process?
Anything that you need in an office environment to do a job (process) should be counted as inventory. This includes servers, files, staplers, etc.
Lead time is the time from customer order of a part or service to the delivery of that part or service. Process time is just that. How long does it take to do a process?
Example: A customer orders a maintanence manual from me. My lead time is from when I received the order to when the customer received it. The process time is the time it took to create the manual.
Finished Products – for some people the Finished Product is someone elses Raw Material. For example – tires built at Firestone are considered a Finished Product whereas tires for GM are a Raw Material. Generally these are considered Units. For me when an item comes off of the end of a Production Line it is a Finished Product. Be mindful that multiple Finished Products can be stored in a single Container.
Raw Materials – these are the components that make up your Finished Product. These can be counted per piece, per pallet, per pound, per gallon and so forth. Generally Materials (Inbound) deal with Raw Material whereas Distribution deals with Finished Products. Logistics may have to deal with both.
Paperwork – invoices, customer orders, bills of material, and Production Supply Orders are all forms of Information Inventory.
Electronic Information – say you have a Load Planning group, for me these are the people that take multiple orders and consolidate them into a single Truck Load, for this group the Inventory may mean the number of Truck Loads that should be planned in a give day. Generally in this case Inventory refers to the Backlog of unprocessed Loads.
So with all this being said tell me which of these you have to deal with so I can better answer your question. This will also help me to understand the Lead Time and Process Time portions of the situation.
Inventory between stations – this is Work in Process (WIP). There is an amount that should be there Standard Work in Process (SWIP) and anything over that amount is MUDA (waste). Again for the Physical stuff this is easy to see. For Information it could be a Backlog of papers, orders or loads.
Electronic information(receiving order from the customer) and processing it in terms of scheduling,checking to ensure that the raw materials are available for Production to produce and finally shipping the order. Also the trucks may be customer specific
(on a side note, Materials is responsible for prestaging the raw materials for Production and removing (using Material Handlers) the finished product to have them shipped
I am basically trying to see the communication(visual, stated, unstated) trail from order receipt to order ship. In this case I will treat Production as a black box,( since Materials dept doesnt phyicaclly transform the part)
2. Also amI on the right track to do a VSM first of the overall department and then process map specific processes within the value stream?
1. Metrics – Lead Time/Process times are important but once you stabilize the system they should stay the same 80% of the time; the other 20% is usually variation from suppliers, excessive and abnormal quantities or manpower issues. The definitions given by Ken are spot on so I wont waste time reiterating them.
I am not sure if you have heard of Complete and On Time Delivery, and thats not sarcasm you would be surprised by the number of Logistics folks that have not, COT is the ability to hit full orders at the right time. Keep in mind that on the Receiving and Manufacturing side of your business the Customer is the Production Lines. I like to refer to them as the Internal Customer to shy away from confusion. Start tracking how often you are hitting/missing COT by order. The orders have to be complete – if the order 100 and you miss 1 then you have still missed COT. For the misses record the basic reason why, pareto the data (most often at the top). Attack these problem systematically and one at a time.
2. Staging Lanes – so I hope that Mr. Sugiyama does not read this blog but I have come to understand that there are times when Staging Lanes are a necessary evil. Yes this creates waste through Transportation and additional touches but sometimes it has to be used as a Stop Gap Method or for Consolidation purposes. Switching over to the Distribution Side of things I generally like to create Staging Lanes the approximate size of the trailer we have to load into. What this provides is a Visual of how the product should be organized to go into the truck and can prevent hiccups later when your Operator has five boxes that just will not fit.
3. Do the Value Stream (High Level) first. Include information and materials being fed into your Supply Chain from the outside as well. So maybe the information (Customer Orders) comes from a main Dbase at Corporate and the Scheduling and Load Planning are done locally. Still include it – I have found on several occasions that something as simple as when the batch runs at Corporate can affect my local system. Separate you major Suppliers on the High Level VSM. I am sure there are a few that do not need to be on there but in most cases there are three or four major ones like wood, steel, cardboard that are absolutely necessary. The reason we want to list these is that things like their Lead Time, the number/frequency of deliveries can come into play and may shed some light on why things work the way they do. Once you have a good grasp on the Value Stream then you can zoom down some, maybe to the Materials Group, and start doing Process Mapping. When you decide to move to Process Mapping take the extra time to turn this information into Standard Work (sometimes referred to as Standard Operating Procedures). You will have the basic elements already listed and you want to communicate the Procedure to your Operators.
Remember this stuff is not easy because in Logistics we are breaking new ground. It took me seven years of pure focus on Flow to really get a good grasp on this stuff and I still learn things everyday. Ask questions, get people involved, and remember that the VSM is a Living Document – as you change things it will change and the Flow will change. Another idea is develop a Future State Map – how would it work if you could design the Perfect System. Keep this one simple, build a bridge plan on how you would move to the next step (keep it to six months at a time). This really helps to focus your efforts.
Is the logistics department a value stream? Usually not. As a department it is a function that operates across many or all value streams. As such a process map, or swim lane chart would be more valuable to understand what steps, actions, or decsions are taken, responsibility, and timeline.
If your department is really a shipping/receiving and/or warehousing operation than perhaps a VSM may have some value. A VSM will visually communicate product flow, time, and communication path.
I read your other post and believe you are trying to map the flow of information (order lines) from
If you agree that the number of order lines is inventory (from other post), then a value stream map of the above process is appropriate. At each station, you need to know:
After you create your map, the bottlenecks and problem areas that disrupt flow will become evident. You will see where the introduction of kanban and level loading will streamline communication about requirements and reduce material shortages. You will also see where FIFO (first in first out) will be necessary to preserve order priority.
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