In the simplest sense of the word, value is what your customers are willing to pay for. Learning how to identify a value stream is critical to make your organization more responsive to customer needs and preferences by identifying what has been done (or is being done) to create value. This can also serve as guidance for developing future solutions in the form of products, services, or systems.
Examples of value streams
When talking about value streams, there are two general examples: operational value streams and development value streams. Each of these examples serves a specific purpose, so make sure you learn which one will benefit your organization the most.
An operational value stream refers to the series of steps used in order to create products or deliver services to customers. These processes can be internal or external. Some examples of operational value streams include the marketing of products and services, the selling and processing of orders, and providing support for products/services. Simply put, this is how the business makes money.
On the other hand, a development value stream is a series of steps used as a means of devising new products or offerings. The development value stream is essential as it builds the systems that enable the operational value stream to function. Some examples of these systems include software programs, IT solutions, and the manufacturing processes for the products.
While these two types of value streams are different, they are interlinked and must support each other to bring value to customers. Specifically, they should be evaluated separately and as a linked unit in order to maximize resource utilization, reduce wasted resources, and to maintain the value provided to the end users.
Questions to ask when identifying a value stream
One of the best ways to identify a value stream is to ask a series of questions. These questions are designed to help you attain an introspective look into your processes and to see where improvements are necessary.
These are the questions you can start with when identifying a value stream:
- What is wrong or lacking?
- What is being done?
- Who is doing it?
- Where is it being done?
- How do you ensure value is added?
- How long does it take to complete the process?
- What are the changes being done to ensure improvement?
Answering these questions will help you develop a reflective and actionable approach to the value stream mapping, leading to more success.
How to start
Getting started identifying a value stream can seem daunting. This is especially true when things aren’t going as planned and you do not know where and how to fix things. In every value stream, there are several actions and activities that must come together in order to add value to a product or service.
You can start by grouping your products or services together. These groups are based on the similar processes involved in creating them along with the resources in use (such as machines and steps).
Choose one product family and drill down to the elements that are in most need of improvement. For example, identify which products or services get the most customer complaints or those with the highest defect rates.
From there, you can do an extensive walk-through, starting with the customers and then working your way back to the processes involved before the products or services get to the customers. This will enable you to pinpoint where in the process value is compromised.
Why identify a value stream?
Why do you need to spend time identifying your value streams in an organization? There are manifold benefits to the value mapping process. The following are the benefits of this process, regardless of your business or industry.
Increase Process Efficiency
Value stream mapping enables you to isolate and identify materials and information flow throughout your business processes. In addition, you can also pinpoint the take time, lead time, and cycle time between each process. By breaking down the process, the organization can see where value is added and where it is not.
You may use this information to improve the overall efficiency of your business processes to ensure only those that add value are kept. This is a crucial component of building a quality-focused system.
Align Cross-Functional Teams
An organization consists of multiple teams that are designated to various aspects of product development or service delivery. There are some points in each team’s responsibility that intersect with other teams. Value stream mapping enables you to identify where these intersecting points are so you can develop cross-functional teams and make sure that everyone is in alignment with your common goal.
Identify and Eliminate Waste
Mapping the value stream in an organization is a powerful tool that enables you to see the current and future work state – from start to finish. In doing so, you can see where potential waste is being generated and what modifications can be done to reduce that.
Waste in this sense refers to any activity that does not add value and is something that you can do without.
Identifying value streams in your organization can help your team achieve higher focus and eliminate distractions. This will also enable you to channel your resources to activities that bring the most value to your customers through products or services.
Identify Points for Future Growth
This tool and process can also be utilized in identifying the areas that would facilitate future growth. The benefits that can be gained, such as reducing waste, improving overall efficiency, and building cross-functional teams can contribute to achieving your organization’s ideal future state.
Remember, learning how to identify a value stream is vital to achieve a common understanding of the business processes and to eliminate any activity that does not add value to the end product (or service). This is how your organization can maintain quality and reduce operating cost in the long run. You can benefit from this and more if you start by analyzing your value stream.