A Case Study in Value Stream Mapping

1.0 Background

Etcetera, Inc. is a manufacturer of specialty key tags. They have a product line of metal and plastic key tags, some of which have standard symbols and messages; some items may be customized. Their primary market is college book stores and similar off-campus stores, and they produce their standard products with symbols for this market. Custom products have standard symbols with additional messages; these are typically purchased by campus organisations to promote or commemorate special events.

The company has been in business for 15 years, and has been moderately successful. There are 175 employees, 120 of whom are in production or production-related jobs. The company has grown steadily over the years. It has developed a reputation among its major customers for timely delivery and good products at a reasonable cost. The company had 8,000,000 in gross sales last year, an all-time high. The company is a family-owned business. There are rumours that the president and major owner is considering retiring within the next few years.

This company is at a crossroads, and the management seem to recognise it. They are considering both expansion and major reorganisation. They are also becoming concerned with competition. Since the product line involves relatively simple technology, it is certainly possible that competitors could become a factor. Existing competitors tend to operate within the regions that they serve, so competition within a region is virtually non-existent. In fact, most of the competitors in this market act as if they belong to an exclusive club, and so far, there has been a congenial and amiable relationship among the companies that share this market.

Recently, however, a key tag producer in another part of the country was purchased by a group of Canadian entrepreneurs, ostensibly to procure a production facility to support a similar market. This has the owners worried. Not only has a stranger joined the club, but the plans of the new company are not clear. There is a possibility that an infusion of capital into the newly purchased company would lead to an attempt to take market share.

This potential attack on market share, possibly coming during a reorganisation of the company, has the Etcetera owners concerned. They would like to sell their holdings and move, but they feel an almost paternal responsibility to the company. While they believe the company is secure in the short term, they would like to leave it in a state conducive to success in the long term. A few of the owners have attended seminars on quality at trade group meetings and professional society meetings, and the others have read of changes taking place in many industries. They have decided that the use of LEAN management is the key to retaining market share.

The TASK

You have been hired as a LEAN specialist. In communications with the company so far you have learned a few general things about the company, mostly the history described above. Your job is to conduct a comprehensive study of operations, apply lean tools & techniques and recommend improvement actions. The output of your task should be considered to be part of an overall quality improvement strategy.

Etcetera

Internal Memorandum

DATE: yesterday TO: Walter Honcho FROM: John Loomer SUBJECT: Quality Summary

Below are summaries of customer complaints and internal defects for the past six months. Complaints are per 10,000 orders, and defect rates are per 1,000 units. You will note the improvement we have made in shipping and delivery.

Complaints per 10,000 orders	Defects per 1,000 units
Missing Ring 2	Assembly 2
Misplace Print 4	Print Quality 13
Print Quality 23	Print Detail 4
Type Error 6	Edge Flaw 22
Rough Edge 3	Cosmetic 5
Excess Flash 13
Late Shipment 6
Bad Count 4

3. Value Stream Analysis

In this section, you will go through a sequence of analyses designed to identify problems and then home in on solutions. This analysis is based primarily on processes, although human considerations can also come into play. Each sub-section below presents a technique related to the overall case. Each technique is used to move a step closer to the ideal future state.

3.1 Finding the Problem

Regardless of what you have been told about what the problems are, independent problem identification is the first step. A fresh look at the system by an outsider can reveal problems that people close to it cannot see. If this analysis only confirms that assumed problems are real problems, then the analysis is still valuable, because it strengthens our beliefs based on facts.

Go through the interviews and make a list of as many potential problems as you can find. Include potential non-process problems, such as human resources and disagreements. For each problem that you list, give a brief description of it and a potential solution (if you can find one). Then apply a rating technique to provide priority order.

3.2 Learning the Processes

Knowledge of processes is one of the most difficult problems for an outsider. Workers will make assumptions about your knowledge, and unconsciously overlook details that they might consider trivial. A good way to learn a process is to develop a process map of it and give it to a knowledgeable worker to critique.

Based on the interview with Doit (and any other information you can find), develop a process map of the flow through the process. Identify on the map any processes that the interviews have indicated might have problems.

3.3 Analyse the Value Stream

Expand the process map into a value stream map (VSM), from incoming material to shipped product Current State VSM.

Using the current state VSM coupled with the characteristics that one would expect from a lean value stream, identify non-value-added (NVA) parts of the value stream (waste) and create a matrix that associates the lean characteristic, the specific type of waste with a description of the waste.

Then, use an appropriate rating technique to prioritise the impact of the identified waste.

4. Value Stream Design

Starting with the high priority impactors consider how potential changes could be implemented into the value stream to increase the efficiency of the value stream.

Develop a Future State VSM by including suggested improvements to the value stream. (Identify the projects as Kaizen events on the current state map).

5. Improvement Plan - Final Report

You should have documented potential improvements at this point and should also have identified projects that once completed will increase the value-added portion of activity on the value stream. These technical and process items form the basis for a continuous improvement plan.

Create a final report including results of the exercises, and conclusions drawn from each exercise. These results need to be consolidated into a coherent set of recommendations. This task is to formulate overall recommendations and integrate them into a final report. The report should be clear to a person who is not expert in Value Stream Mapping, but it should contain enough technical detail to support your recommendations. The report will tell the reader (in this case, Irving Magnate) what you have done, what you have learned, and what you recommend. You should have specific areas within the value stream for which you can recommend improvements. Your recommendations in the report should deal with technical issues. (Managerial issues at this stage are better handled in person with Mr. Magnate.)

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Question: Draw current value stream map and state future improvement opportunities

Small bit of detail into answer will be appreciated else I won't get enough marks :(

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