enterprise value stream

TWI Neetwork, Inc. all rights reserved Jax Taxes p. 1

Enterprise Value Stream Mapping Case Study:

Jax TaxesJohn Shook

TWI Network, Inc.([email protected])


Using the Value Stream Mapping Tool

Value Stream Scope

Determine the Value Stream to be improved

Understand how things currently operate. This is the foundation for the future state

Current State Drawing

Implementation Plan

Implementation of Improved Plan

Design a lean flow through the application of Lean principles

Future State Drawing

PDC

A L

oop

Develop a detailed plan of implementation to support objectives (what, who, when)

The aim of mapping!


Jax Taxes

Jack is a Certified Public Accountant in the United States. His business consists of providing US federal income tax (IRS) preparation services for individuals who work for companies (salaried) and for self-employed people or small business. U.S. tax forms must be filed with the federal government on or before April 15 every year. During the busy tax season, self-employed returns require long hours because of the frequent waits, delays and errors. Jack and his employees work long hours during this period, and, as his business has grown in recent years, more clients are losing satisfaction with the timeliness and accuracy of his services.


Jax TaxesGenerally, the sequence of work begins for each client sometime late January with Jack’s assistant sending documents to clients for them to fill out. Then, sometime before the first of April, the client must bring in all necessary forms and receipts. Regular clients drop off or send their box of receipts and tax forms from various income sources. Then, Ajck’s office must sort the receipts and documents, and, unfortunately, most of the time, there is something missing. The next step is to prepare worksheets for the client in the Tax Software (TS) system. Once Jack starts filling out the worksheets, he frequently needs to confirm deductions, such as what expenses qualify as business-related and details regarding retirement or insurance deductions.

Once Jack has completed the worksheet, his assistant actually prints and collates the IRS forms. For self-employed clients, the assistant waits until Thursday to print all returns that have accumulated during the week from the TS system. Jack must review and sign each return. Finally, the process is completed by packaging and mailing the IRS forms with the necessary attachments to each client.


Data SetSend packet: P/T = FTQ =

Send Reminder:P/T =FTQ =

Sort receipts & documents: P/T = W/T =FTQ =

Prepare Worksheet: Technology used:P/T = W/T = FTQ =

Confirm deductions: P/T = W/T =FTQ =

Print and Collate IRS tax forms: Technology used: P/T = W/T =FTQ =

Review and sign forms: P/T = W/T =FTQ =

Mail forms to client: P/T = W/T =FTQ =


Important Definitions• Process time:

– Time to actually conduct the work of the process step (may incl.value and non-value added work)

• ex – actually completing a form

• Wait time:– During the process step - Time when the step is not yet complete,

but is not being worked on by the operator• ex – waiting for a call back from the customer

– Between process steps – Time between processes steps when the product or service is not being worked on

• ex – queue time in an “inbox”

• Lead time = Process time + wait time

• First Time Quality (FTQ):– The percentage of the time that the task is able to be completed,

accurately, the first time it is worked on


Metric Current Estimate

From Current State Map

Target from Future State

Map

Actual(post

implementation)

Process Time

Lead Time

First Time Quality

Other(s)

Measurable Metrics & Performance


Typical Steps for Current State Mapping• Document customer information & need

• Who is it? What do they need? When do they need it?

• Identify main processes (in order)• Select data attributes

• P/T, W/T and FTQ

• Perform “value stream walk” and fill in data boxes (how the process really works)

• Pretend that you are the work / document / item being produced

• Establish how each process knows what to process next (how work is prioritized) and document information flow

• Calculate process time, wait time, lead time, first time quality, and any other metrics necessary to evaluate your Value Stream


Icons

Electronic Information Flow

WeeklySchedule

Worker

In Box (Queue)

INMRP

Wait-Time

Conversation Information Flow

Data Box

P/TW/TFTQ

Movement by Push

Supermarket

Movement of “physical” property

Reminder post-card

Customer

Process Box

Technology Used

MRP

IterationsWithdrawal (Pull)

ChangeoverKaizen

Lightning Burst

XOXO Leveling, Mix and/or Volume

F I F OFirst-In

First-Out Flow


Tips for Identifying WasteFollowing are things to look for to help identify waste in a

value stream:• Low FTQ• Long wait times as compared to process times• Process steps requiring multiple iterations/reviews &

rework• Excessive handoffs between people/organizations• Multiple systems/computer tools used – may point to

redundant data entry & “translations”• Starting too early – Does the process start earlier than it

needs to, with preliminary data, driving multiple updates/reworks as “real” data becomes available?

• Look at the “system” level for opportunities to make bold moves– Look for potential to eliminate entire process steps before focusing

on eliminating waste from unnecessary processes





Map

Actual(post

implementation)

Process Time

Lead Time

First Time Quality

Other(s)



Now, with our completed Current State Map, we have a new lens to the Value Stream.

The next challenge is to analyze the current state to create a vision for a better future state.


The Core Value Streams

•Fulfillment from order to delivery•Product development from concept to launch•Maintenance and service from delivery through the life cycle of a product

(These processes create value directly for an external customer)


Support Process Examples:•Hiring employees•Checking customer credit•Collecting receivables•Closing the accounting books•Building prototypes•Identifying new suppliers(These processes only create value for internal customers, but are currently necessary to run the business.)


TOYOTA PRODUCTION SYSTEMEliminate Waste cost and profit

What is Value?

What is Waste ?

Anything that adds cost without adding value

Defined by the customer

The Three M’s

• Muri – Waste of unreasonableness or overburden to a person or a machine

• Mura – Waste of inconsistency; Waste of unevenness

• Muda – The seven types of waste

Employee on temporary leave or special

assignment causing someone else to do two

jobs

- End of month deadline causing overtime - All projects scheduled in 1Q with none in 2Q- Process Variation

COMMWIP



CATEGORIESCATEGORIES OF OF ACTIONACTION

Waste

“Non-Value Creating Work”

ValueCreatingWork

“Secondary” processes•Credit check•Hiring employees•Developing budgets

Action

“Primary” processes•Design products •Enter orders•Service products

Examples:•Reviews•Waiting•Rework


Waste

Points to Remember About Waste:

• It is important to consider waste in the context of the value that the process provides to the customer

• Waste is really a symptom rather than a root cause of the problem

• Waste points to problems within the system• We need to find and address causes of waste to improve

flow• In non-manufacturing processes, waste is often most

prevalent in the information flow• A rule of thumb is to expect that 40% of what we do adds no

value

Any element of production, processing, or distribution that adds no value to the final product:

waste only adds cost & time


TYPES TYPES OFOF

WASTEWASTE

IICC

OO

MMWW

PP

MM

ConventionalThinking

•WASTE NOT DEFINED, NOT EASY TO SEE•REACTIVE IMPROVEMENT•CAN’T DISCERN SOURCES OF WASTE•PROBLEMS REPEAT

More usefulThinking

CorrectionCorrection

OverProduction

OverProduction

MotionMotion

MaterialMovementMaterial

Movement

WaitingWaiting

InventoryInventory

ProcessingProcessing

•WASTE IS "TANGIBLE"•IDENTIFY MANY SMALL OPPORTUNITIES•LEADS TO LARGE OVERALL CHANGE•CONTINUOUS IMPROVEMENT

Learning to See Waste

WASTEWASTE

Unreasonable-ness

Unreasonable-ness

UnevennessUnevenness


DO IT AGAIN!!

Correction: Rework – work done because of errors in the previous process


Overproduction: Making more than is necessary or making things faster than necessary, working ahead


Motion: Unnecessary people motions, travel, walking, searching


M&I Movement:Unnecessary or ineffective handoffs, transfers of material or information (communication)


Waiting: People waiting for machines or M&I; Machines waiting for people or M&I


Inventory: Information or material waiting unnecessarily in queue


Processing: Redundant or unnecessary processing, work that provides the customer more than he/she requires or is willing to pay for

Long Report # 100


Tips for Identifying WasteFollowing are things to look for to help identify waste in a

value stream:• Low FTQ• Long wait times as compared to process times• Process steps requiring multiple iterations/reviews &

rework• Excessive handoffs between people/organizations• Multiple systems/computer tools used – may point to

redundant data entry & “translations”• Starting too early – Does the process start earlier than it

needs to, with preliminary data, driving multiple updates/reworks as “real” data becomes available?

• Look at the “system” level for opportunities to make bold moves– Look for potential to eliminate entire process steps before focusing

on eliminating waste from unnecessary processes


Root Cause Identification for Effective Problem Solving

Waste is a symptom

• We need to identify the root causes of waste

• We must get to actionable, measurable, processes in the future state that:– Eliminate root causes of waste/problems– Prevent similar problems from reoccurring– Make future reoccurrences visible


Waste & Root Cause Exercise

• Document WASTE on Jax Taxes current state map – COMMWIP

• Determine the root cause for one identified Waste Area– Use the Problem Definition Tree and “5 Whys” to

determine the root cause of the waste


The Power Behind Value Stream Mapping


PhilosophyProcess Thinking at Toyota

“Brilliant process management is our strategy…”

“We get brilliant results from average people managing brilliant processes while our competitors often get average (or worse) results from brilliant people managing broken processes.”


LEAN IMPLEMENTATIONLEAN IMPLEMENTATIONSome Lessons LearnedSome Lessons Learned

cartoon copyright © U of M

•Cherry-picking the toolsis not enough

•The tools comprise a systemFocus on the flow of value to create a system

•A way of thinking underlies the tools and system

Learn the thinking through doing

TechniquesTechniques SystemSystem ThinkingThinking


Individual Efficiency vs.System Efficiency

Philosophy Individual Efficiency vs. System Efficiency



Value Stream Scope




Implementation Plan



PDC

A L

oop Design a lean flow through the

application of Lean principles


The goal of mapping!


Future State Questions for the Office

• What are the customer requirements?• How will you make work flow smoothly?• Where and how will you trigger or sequence work? • How will you establish rhythm or milestones to pace

the work and surface problems? • How will you make work progress and delays visible? • What process improvements are necessary to achieve

your Value Stream vision?


– How can we ensure that the customer gets what they need, when they need it?

– Can the timing of the customer requirements be used to establish a pace of work (takt time) for the value stream?

What are the customer requirements?

Right Product

Right Time!

Understanding Customer Requirements

Right Price!!

• Customer requirements?• Work flow smoothly?• Trigger & sequence work?• Rhythm (leveling)? • Progress & delays visible? • Process improvements?


TAKT TIME•Defines the process step duration within which standardized work must be completed to meet customer demand


Available TimeTakt Time =

Customer Requirement or Demand

Synchronizes Pace of Productionto Match Pace of Demand

Rate for producing a product,and its components, based on rate of delivery.



Rule of Thumb for Takt Time

• In order to meet deadlines and help balance workloads, calculate takt time to establish the pace of work

• Determining takt time allows you to see the waste of overproduction, as well as delays

• Note: Determining takt time will also highlight that many current state processes are incapable of meeting the takt time (customer demand)



How will you make work flow smoothly?

– How can we get information to the customer with few/no handoffs?

– How can we get information to the customer with no correction or rework required?

– How will multiple or parallel flows be synchronized?– Is there backflow (repeat or rework) loops that can be

eliminated?– Can a person complete the activity in one sitting?– Can you touch each piece of paper only once, or go to each

screen only once, for each activity?– What steps could be combined or eliminated to simplify

flow?



Rule of Thumb for Flow

• Look at the possibility of combining processes where there are long wait times between short process times

• Look for the presence of numerous information arrows/loops. These could indicate correction, rework and interrupted flow.


Simple Process Flow

All process steps occur in tight sequence (continuous flow), with little or no waiting



gas station


Then1. Park at Pump2. Walk in to Store3. Wait in Line4. Leave Credit Card5. Walk Back to Pump6. Fill Your Tank 7. Walk Back in to Store8. Get Receipt and Credit Card 9. Walk Back to Car10. Drive Off

Now1. Park at Pump2. Insert Credit Card in Pump3. Fill Your Tank 4. Take Receipt 5. Drive Off


Where and how will you trigger or sequence work?

– Can you have one trigger point with uninterrupted process flow?


Rule of Thumb for Triggering Work

• Where you have interrupted process flow, use supermarkets/buffers or otherwise organize handoffs to create “internal pull”

• Where you have smooth continuous flow, establish one trigger point at the point where continuous flow begins



• Customer requirements?• Work flow smoothly?• Trigger & sequence work?• Rhythm (leveling)? • Progress & delays visible? • Process improvements? ONCE YOU TRIGGER,

FLOW WHERE YOU CAN, PULL WHERE YOU CAN’T

Supermarket

Interrupted Process Flow

Continuous Flow

PullPullPull

Trigger

FLOW

Trigger

FLOW


How will you establish rhythm or milestones to pace the overall flow of

work and surface problems?

– How will you use milestones to create an internal pull to establish cadence/rhythm?

– What can be done to level the workload and eliminate the frustrating “peaks” and “valleys”?


Rule of Thumb for Rhythm & Milestones

• Use milestones to create internal pull and establish cadence

• Level demand at each process so that variation is removed from flow

• Establish “Heijunka” – using a Heijunka Box or Leveling In-Box – to levelize imbalance between parallel processes

• Customer requirements?• Work flow smoothly?• Trigger & sequence work?• Rhythm (leveling)?• Progress & delays visible? • Process improvements?


• Customer requirements?• Work flow smoothly?• Trigger & sequence work?• Rhythm (leveling)?• Progress & delays visible? • Process improvements?

Leveling

Jax Taxes ExampleSchedule

Monday…….3 Self Employed, 3 PersonalTuesday……2 Self Employed, 4 PersonalWednesday.. 8 PersonalThursday…. .5 Small BusinessFriday……….5 Small Business

Weekly Batch

Daily:1 Self Employed, 3 Personal, 2 Small Business

Daily: Every Type Every Day

Level: Every Type Every “Ship Window” (AM & PM)1 Self Employed, 1 Personal, 0 Self Employed, 2 Personal, 1 Small Business 1 Small Business


How will you make work progress and delays visible?

• How will you be sure that you know the progress of the work?

• What visual management tools will you use to make progress & delays visible?


Rule of Thumb for Making Progress & Delays Visible

• Establish checks for quality, timing, and output to make progress and problems visible

• Customer requirements?• Work flow smoothly?• Trigger & sequence work?• Rhythm (leveling)? • Progress & delays visible?• Process improvements?


Management Time Frame:With what frequency do you know your

performance to customer requirements?

• 1 WEEK

• 1 DAY

• 1 SHIFT

• 1 HOUR

• 1 PITCH

• 1 TAKT


• Customer requirements?• Work flow smoothly?• Trigger & sequence work?• Rhythm (leveling)? • Progress & delays visible?• Process improvements?

Heijunka Box Example

Current Day

This Heijunka box:•Allows management to check work in progress & ensure that teams are not overburdened•Guides management in assigning future projects to teams not fully utilized•Serves to level the customer demand based on available resources

-The customer’s requirements/due dates drive the entire work process

Work In process

Days of the Month

Work Teams


What process improvements are necessary to achieve your Value Stream Vision?

• Are resources adequate?• Standardized Work• Human Resources - # People, Skills, Knowledge Level• Other – Computers, Software, Outsourced Resources

• Is quality produced at each step? (FTQ)• Is quality defined and measured?• Is there a process to identify and respond to quality

problems?

• Are resources available?• Are resources working on other (the wrong?) jobs?• Are resources waiting at times and too busy at other

times?


Rule of Thumb for Process Improvements

• To Improve the Performance of a Value Stream, plan at the “System Level” and implement at the “Process Step Level”

• Ensure adequate and available resources to implement improvements in the future state Value Stream

• Process improvements must be standardized and documented to “take hold” in the organization



Future State Questions – Supplemental Questions• What are the customer requirements?

– How can we ensure that the customer gets what they need, when they need it?

– Can the timing of the customer requirements be used to establish a pace of work (takt time) for the value stream?

• How will you make work flow smoothly?– How can we get information to the customer with few/no handoffs?– How can we get information to the customer with no correction or rework required?– How will multiple or parallel flows be synchronized?– Is there backflow (repeat or rework) loops that can be eliminated?– Can a person complete the activity in one sitting?– Can you touch each piece of paper only once, or go to each screen only once, for each activity?– What steps could be combined or eliminated to simplify flow?

• Where and how will you trigger or sequence work?– Can you have one trigger point with uninterrupted process flow?

• How will you establish rhythm or milestones to pace the work and surface problems? – How will you use milestones to create an internal pull to establish cadence / rhythm?

– What can be done to level the workload and eliminate the frustrating “peaks” and “valleys”?

• How will you make work progress and delays visible? – What visual management tools will you use to make progress & delays visible?

– How will you be sure you know the progress of the work?

• What process improvements are necessary to achieve your Value Stream vision? – How will you ensure adequate and available resources to improve First Time Quality at each process step in the

value stream?


Icons

Electronic Information Flow

WeeklySchedule

Worker

In Box (Queue)

INMRP

Wait-Time

Conversation Information Flow

Data Box

P/TW/TFTQ

Movement by Push

Supermarket

Movement of “physical” property

Reminder post-card

Customer

Process Box

Technology Used

MRP

IterationsWithdrawal (Pull)

ChangeoverKaizen

Lightning Burst

XOXO Leveling, Mix and/or Volume

F I F OFirst-In

First-Out Flow





Map

Actual(post

implementation)

Process Time

Lead Time

First Time Quality

Other(s)




Value Stream Scope




Implementation Plan


Design a lean flow through the application of Lean principles


PDC

A L

oop


The aim of mapping!


Value of Value-Stream Mapping

• Helps you visualize more than the single process level

• Links work flow with “control information”flow

• Enables “System Kaizen”, a focus on lead time and total system optimization

• Provides a new, common, language• Provides a blueprint for change• Ties together Lean concepts and tools


Leadership is the Key!

enterprise value stream

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