Thursday, August 16, 2007

Value Stream Management - Lean Management

If you always wonder why all your Lean, Six Sigma initiatives are not really having the impact they should, you should ask yourself if your company is managing the Value Stream.
how many times do you sit in meetings where one party is focus on defending the processes and targets that they have for themselves without consideration of the overall impact to the organization?
how many times do you hear that the Purchasing department is getting amazing cost savings by renegotiating part prices with the suppliers, while your operations are overload with supplier delivery problems, quality problems, etc.?
how many times do you hear that the engineering department of your organization does not have any more resources to work on support activities, because they are working on several project for the years to come.....and how many times those projects are not in alignment with the overall strategy of your company?
Well, if you answer "many times" or " a lot" or "all the time" to any of this questions, then your company is suffering of what I call a culture of Silos. This culture of silos is where everybody is working very hard, 10 hours a day trying to resolve all the "fires" that pop up in your operations. In this culture every department is trying to make the numbers for the month in order to accomplished their own targets.
If you want to initiate a lean project or a six sigma project in an organization of this type, you might need to consider to have what Jim Womack calls "The Value Stream Manager". This manager will be the person that is responsible for making sure that during the lean projects, the different people from the organization work on the things that really are important for the entire company, not only for their own departments.
Below you will find an extract from an article written by Jim Womack where he explains in more detail the role of this Value Stream Manager.

"What do I mean by “lean management”? Let me start with some general observations about organization and management:

  • All value created in any organization is the end result of a lengthy sequence of steps – a value stream. These steps must be conducted properly in the proper sequence at the proper time.
  • Getting the right value to the customer at the right time with the right cost to the organization is the key to survival and prosperity.
  • The flow of value toward the customer is horizontal, across the organization.
  • All organizations – including Toyota – are organized vertically by department (engineering, purchasing, production, sales, etc.). They always will be because this is the best way to create and store knowledge and the most practical way to channel careers.
  • Someone needs to see, manage and improve the entire process of horizontal value creation on behalf of the customer, from concept to launch, from order through production to delivery, and from delivery through the product life cycle.
  • In most organizations, no one is actually responsible for the horizontal flow of value by product family, whatever senior managers may think. The product is an organizational orphan.
  • In most organizations, managers at every level are being graded on whether they make their department-specific numbers. These are the metrics – usually financial – set by high-level managers as they attempt to fully utilize assets and “control” the organization.
  • Improvements to value streams are managed by staff experts (or consultants) who usually don’t see the whole flow of value, the most pressing needs of the customer and the most urgent business needs of the organization. They use the tools they feel most comfortable with to solve the problems that seem easiest.

How can “lean management” help? Here are three simple elements of lean management worthy of experimentation:

    • Make sure every value stream has someone responsible for overseeing the whole flow of value and continually improving every aspect of the process in light of the needs of the customer and the business.

The question for this value-stream manager to ask is, “How can I make customers happy while making money by engaging the full energies of our people to improve this value stream?”

Note that the value-stream manager doesn’t need a large staff or authority over employees touching the value stream. Instead, the value-stream manager needs to negotiate with the department heads about the needs of the product and resolve any differences by appeal to the most senior managers.

Similarly, no employee should have more than one boss. A good system of value-stream management gives every lower-level employee a boss in his or her department who has determined in conversation with the value-stream manager what that department needs to do to support the value stream. This avoids complex matrices in which employees have two (or more) bosses.

    • Instead of developing complex metrics, ask value-stream managers how they will improve the value-creating process they are overseeing.

If managers focus on their process, the performance metrics will come right; but if managers focus on their numbers, the process is likely never to improve. And, note that most metrics are nothing more than end-of-the-line quality inspection: At the end of the quarter or the end of the year everyone looks to see what happened, at a point long after the mistakes have been made.

    • Teach all managers to ask questions about their value streams (rather than giving answers and orders from higher levels). Turn these questions into experiments using Plan-Do-Check-Act.

Only management by science through constant experimentation to answer questions can produce sustainable improvements in value streams. ( Toyota’s A3 is a wonderful management tool for putting science to work.)

Please understand: Lean tools are great. We all need to master and deploy them, and our efforts of the last 15 years to do so are not wasted. But just as a carpenter needs a vision of what to build in order to get the full benefit of a hammer, we need a clear vision of our organizational objectives and better management methods before we pick up our lean tools.

Lean management is the key to doing this. We don’t yet know all the elements but discovering and deploying them is the challenge we all need to tackle in the next stage of the lean movement"


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