Value Mapping for
Lean Manufacturing

Page Contents

• Introduction

• Situation

• Task

• Action

• Results

Introduction

The following real situation provides a small, simple example of the application of Value Stream Mapping applied to a Lean Manufacturing implementation.

While this is just a simple demonstration, the work of the people involved was significant, difficult, and had an important effect on the people (both within the Implementation Team, as well as employees in many areas of the company).

We have attempted to tell the story in terms of the background situation, the task assigned the Lean Manufacturing Team, the actions they took, and the results achieved.

Typically, Lean Manufacturing implementations are able to eliminate 70% of the inventory, cut more than half of the waiting time, and reduce costs between 10% to 50%.
 

Situation

A successful electronics manufacturer had made numerous significant improvements in their business processes.  Lately, they embarked on Lean Manufacturing and Six Sigma techniques to continue their improvement program.  They needed a highly accurate, fast, and effective means of receiving hundreds and thousands of different raw materials and parts from numerous suppliers.

The raw materials and purchased parts are generally of low value, making the transaction cost of handling them on receipt and storage a significant portion of the total cost for the raw materials.

The parts are extremely sensitive to electro-static discharge and humidity.  Failure to abide the strict handling procedures, FIFO (First In, First Out), and other precautions would cause pre-mature failure of the valuable end products.  The end customers must have high reliability and exact standards maintained on all raw materials and finished products.

Quality Management System requirements (ISO 9001:2000) and customer requirements required the raw materials to be certified, inspected, and properly stored.  Inventory management systems required an accurate count, labeling, and location for thousands of parts.  A missing resistor worth $0.005 could stop the shipment of a $400.00 printed circuit board.   Cost reduction efforts and customer lead time requirements required faster and cheaper processing of all raw materials.

Task

Review the current receiving system for all raw materials, and design a new, improved method based on Lean Manufacturing principles that was suitable to ISO 9001:2000, customer requirements, and management's need for a faster & cheaper system. An electronics manufacturer needed a highly accurate, fast, and effective means of receiving hundreds and thousands of different raw materials and parts from numerous suppliers.

Action

1. Do a floor plan, and flow diagram of the current system
    
2. Analyze the existing receiving process using Lean Manufacturing principles.
    
3. Determine the Takt time for the process, % utilization, bottleneck, and wasted effort in the existing process.
    
4. Do a Value Mapping for the existing process.
    
5. Define a new, improved process
    
6. Present the analysis, conclusions, and recommendations to Sr. management for their training, understanding, input, & approval.

	Click on image at left to see full size. This is a schematic diagram of the initial layout and product flow for the Shipping & Receiving area of an electronics manufacturer. Note the 10 different movements that each component must make to be received, inspected, kitted, and inventoried. Under the definitions of Lean Manufacturing, none of this work was "value added" for the customer.  They weren't will to pay for any of this.  The manufacturer was responsible for 100% of these non-value added costs. All of this could be considered waste under the philosophies of Lean Manufacturing.
	Click on image at left to see full size. Using standard terminology for Lean Manufacturing, a value stream mapping of the product flow was developed. Takt times, % utilization, and waste were all identified. Excessive handling, numerous queues, extra steps (unpacking & repacking), excessive transportation (move the material to the workers and the work station), and delays were identified as the main waste under the definitions of Lean Manufacturing. The opportunities for improvement became clear to everybody, and were quantified in absolute and objective terms per Value Stream Mapping, Lean Manufacturing, management measurements and goals, and common sense.
	Click on image at left to see full size. The Lean Manufacturing Implementation Team developed the proposed layout that was intuitively suggested by the Value Stream Mapping. The product flow is straight forward with minimal waste of time, space, and real estate. The product should flow 50% to 900% faster.  Costs should drop similarly. After a few more improvements on paper, the idea was simulated quickly and cheaply with area workers.  A few more adjustments, and a solid plan had the buy-in from all stakeholders. Value Stream Mapping and Lean Manufacturing find another successful implementation.

Results

Value Stream Mapping helps Lean Manufacturing achieve significant improvements in the Shipping Receiving area.  This single improvement removed a significant bottleneck on the entire manufacturing process, with significant savings in lead time, operating costs, and potential for operator error.