What Is Value Stream in Six Sigma?

Any business that produces something or provides a service has one ultimate aim: to sell the product or service to its customers and pass it on to them for a price. As a customer, you would like to pay only for those products or services that are useful to you irrespective of how it has been created. However, as a business owner, you want to minimize the cost of building services or manufacturing products. For this purpose, you want to make your processes as perfect as possible so there is minimum waste or rework and you can create the best products in the first go itself. To do this, you may employ process improvement techniques like Six Sigma. You want to know what adds value to your product or service and what doesn't. Value Stream Mapping (VSM) is the technique by which you can identify those activities in your process that add value to your output.

What is a Value Stream in Six Sigma?

To understand what is value stream is, let us first know what value addition is. You take raw material for a product or an idea for a service. Then it goes through a series of activities called process, which transforms it into an output that you can offer to your customers and your customers are willing to pay for it. The raw material or the idea has no value for the customer. But when it is transformed into a final product or service after going through a process, it holds value for your customer. Thus, you have added value to the original raw material or idea after making it go through a process. This is a value addition. 

However, since a process is a series of activities, there may be some activities that have not been planned in the process like a defect occurring in the product during processing or the final product coming out with some defect that needs reworking. These are additional activities that don't add any value to the product. So, a value stream is a series or set of activities in the process that add value to your product or service. These activities need to be identified and those that do not add value must be mitigated or eliminated if possible.

Let us take the example of manufacturing a rearview mirror frame for a car. Plastic granules are taken as the raw material. This is followed by heating and melting these granules in the molding machine and then they pass through a mold to take the shape of a rear view mirror frame. So, each of these steps has added value to plastic granules to turn them into a frame that your customers would be willing to buy and pay for. However, if during this process, due to some temperature difference or any other reason, the frame gets deformed or there are other defects like an air bubble forming on its surface, the customer will not buy it. This is so because although the raw material has gone through a process no value has been added to it. Therefore, we can define a Value Stream as a series of activities in a process that add value to a product or service from the start to the end of the process that would hold value for the customer. The process can start right from the conceptualization stage and end when the product finally reaches your customer's hands. 

What is Value Stream Map (VSM) in Six Sigma

Now that we know what a value stream is, how do we visually represent it? How can we bring all those activities that add value to one place to enable us to understand the activities in the process that are doing value addition? The answer is to create a Value Stream Map (VSM). So, what is VSM in Six Sigma? A VSM is a flowchart representing the series of activities forming a value stream. And the process by which this value stream is visually created is called Value Stream Mapping (VSM). A VSM not only contains all the operations in the process of a particular product, but it also includes controls and other information about each step of the process. This helps zero in on and identify the activities that cause delays or defects, thus helping reduce the processing time. A VSM considers all the elements required for finally delivering a product or service to the end customer. The value stream mapping aims to analyze the complete process and make improvements to it, from when raw material or idea is received until the final product is handed over to the customer. 

Process Of Creating a Value Stream Map

After understanding what is a value stream map, it is quite logical that we understand how a VSM is created. In Six Sigma tools, a value stream map is a strong tool. It contains easy-to-understand symbols and some pictures and is easy to make. It can be created on any kind of medium like software, paper, or a whiteboard.

The most important aspect of creating a value stream map is that you should fully understand the process. You can't create a VSM sitting in a room and looking at the process charts. This will form an important part of VSM creation as you will learn below. Let's go through the steps of creating a value stream map.

The first step in creating a VSM is to make the points of state and finish. This will set the scope of your VSM. You may choose the entire process or a part of it for mapping. You may cover the complete supply chain or only your internal process.

Next, identify the area of focus. Unless you develop focal points, you will not be clear about the area you have to cover or which part of the process to keep your focus on. So it is important to be clear about the focus areas.

Once you have clarity on focus areas, go to Gemba. It means actually going and seeing the process happening in front of your eyes. You can't identify the bottlenecks or problem areas by just visualizing a process. You need to have first-hand knowledge of it. You should go and see the process, understand its intricacies and make notes for reference later. In short, walk yourself through the process.

After walking yourself through the process, you need to create a basic value stream. This includes the basic steps in the process, from material received from the supplier to the final product stored in the company.

Once the basic VSM has been created, identify and separate the value-adding activities from the non-value-adding activities. Going back to our rear view mirror frame example, pouring the plastic raw material into the hub of the machine is a non-value-adding activity, but it is necessary, and time has to be spent on it. Once the material goes into the machine, melts, and enters the mold, it is a value-adding activity.

As a next step, enter all the relevant data into the VSM like total process cycle time, time taken for changing from one activity to another, time is taken for each activity, etc.

Once data has been entered, it is critical to know if any bottleneck is being created due to an imbalance in the time taken for each activity or each stage of the process? It could be that the operation time of one activity is too little while for another, more time is being taken or more people have been deployed for one activity while the following activity has a lesser number of people, resulting in unbalanced output and hence, the bottleneck. Identify these points and mark them on your VSM.

Next step in creating a VSM is calculating the percentage of value each activity in the process adds to the final product. This is done by dividing the time taken by a specific activity by the total process time.

Now lastly, you have a graphic VSM in front of you and you need to decipher it. You have a clear view of how the product or service has been processed and the contribution of each activity in the process towards making a final product. You have the bottleneck points, you have the variations in time taken by various activities in the process and other data. This is your Value Stream Map and will act as a road map for improving your process.

The Benefits of A Value Stream Map

As a business owner, you would like to optimize your process to minimize the wastages and achieve the best output. A VSM helps you in identifying the areas where and how the wastage is occurring. Secondly, since you have a visual representation of what adds value to the product or service and what doesn't, you can focus on those activities that will be of value to your customer, thus allowing you to have a customer-centric approach. This, in turn, will aid your business in performing better. It also is a great tool to improve the quality of both operations and the product. And most importantly, a VSM will help you identify the areas where more value can be added.

Conclusion:

In conclusion, a Value Stream Map (VSM) is an invaluable tool for enhancing your processes and minimizing losses by pinpointing areas where improvements can be most effective. It not only identifies but also highlights the areas where enhancements are needed, such as unbalanced process times and bottlenecks. By focusing on value-adding activities and eliminating non-value-adding ones, a VSM helps create a more efficient, customer-centric approach, ultimately leading to better business performance and product quality.
Simpliaxis offers Lean Six Sigma Green Belt Certification to help you further enhance your skills in process improvement and value stream mapping