Product development is like a labyrinth. You know there is one exit – that is the end product. But you only know roughly how to get there. Because you have no idea which way is the fastest. This is the moment where asking "what is a value stream mapping" is the right question.
Value Stream Mapping helps you to know right at the start which way leads to the destination and which way leads to a dead end. Value Stream Mapping reveals which processes and paths have a particularly high value for you and the product development – so that you can take the direct path to the goal.
I will show you how exactly Value Stream Mapping works, how to apply it and how your organization can benefit from it. I will also explain why Value Stream Mapping is especially at the beginning of the agile transformation an important tool for you and your organization.
What is a value stream mapping?
Before we take a look at the value streams definition, let's first ask the question:
What is value streams?
Value streams refer to all relevant process steps that an organization needs in order to produce a product or service. Value Stream Mapping is a business method for improving these processes in production and service to generate more value more quickly. Originally, value stream analysis comes from lean thinking.
So now we can answer what is a value stream mapping (I will also give an example below). Value stream mapping analyzes the current state of processes. It uncovers the operational value streams – in other words, the processes that really add value. At the same time, it also reveals the less value-adding processes. This enables you to prioritize the value streams in your company. In doing so, you put the operational value streams at the top. You optimize these first. Because by improving them, you generate particularly high value.
What exactly does value stream mapping do?
A value stream analysis optimizes processes – that sounds abstract and theoretical. In practice, this can mean, for example, that a value stream analysis helps you to reduce unnecessary work and improve interfaces between the organizational units involved. You can use value stream mapping to optimize unnecessary waiting times, for example, and save money as a result.
Value Stream Mapping example: An Ice Cream Parlor
To better understand the value streams definition, let's look at a (simplified) value stream mapping example: you have an ice cream parlor. Let's say you produce a total of 10 flavors of ice cream. For some of these flavors, you need rather a lot of effort: to produce the organic walnut ice cream and organic apple ice cream, you employ an additional part-time worker and use a machine to crush the nuts for the walnut ice cream. So, the "-stream" for the walnut ice cream and the apple ice cream is a little "longer" or more complicated – but do they "value-" accordingly?
Through the value stream analysis, you notice that the apple and walnut flavours (20 percent of your total assortment) are rarely eaten.
The conclusion based on the value stream mapping: you should remove these flavours from your assortment. They take up space in production and in the displays of your ice cream parlors without generating sales. You should therefore either test new ice cream flavors or produce more popular ice cream flavors and offer them. This is more economical and makes customers more satisfied.
The value stream mapping example could go even further: Let's say you realize that in your ice cream shop, coffee sales account for 45% of your revenue. After doing a value stream analysis you know: you are investing hardly any time for this big revenue "stream" in relation to ice cream production, however, the "length" of the stream is very short. Wow!
So maybe you should expand your offerings around coffee. This is where the next step comes in: communication with the customer. Sooner or later, any value stream mapping should lead to getting in touch with customers to understand the background of their behavior. Why does coffee make up such a large part of sales? When we look at our numbers, we realize: We hardly sell ice cream in the morning, but almost only coffee. So, we need to better understand the customers at that time of day. Aha, they are commuters. They value that you're so fast at making coffee. These are added values, unique selling propositions that can be expanded – all based on our value stream analysis.
This value stream mapping example shows how far a value stream analysis can go. Who knows – maybe at some point the ice cream parlor will focus completely on the "commuter" target group?
It should be added that we have kept it very simple in our value stream mapping example. Because: The product and the added value it generates are relatively simple. For many B2B products and use cases, value stream mapping is much more complex. You draw a real "map" (map) of the entire value creation process to identify crucial points in a clear way.
How do I proceed with value stream mapping?
The value stream analysis basically consists of the following steps:
- Narrow down product and process
- Assemble team
- Determine and document process steps
- Collect data and key figures for the individual process steps
- Visualize process
- Evaluate process data
- Optimize process
The goal of value stream mapping is to ensure that everyone involved in a process is pulling in the same direction – so that resources are not wasted, and potential remains unused.
What are the benefits of value stream mapping?
The benefits of a value stream mapping are obvious. You can use it to
- reveal the causes of wasted resources,
- reduce the waste of resources,
- identify potential for improvement,
- uncover priorities for action,
- link interfaces in the organization more efficiently,
- improve product quality and
- provide executives with a deeper understanding of relevant processes in the company.
The latter is the reason why value stream mapping is always worthwhile, especially for complex products: managers have a clearer common picture in front of their eyes and therefore pull together better.
Disadvantages and challenges of value stream mapping
As you can see, you can support your organization on numerous levels with a consistent optimization of operational value streams. What challenges do you face in doing this?
Choosing the right processes
With complex processes in large organizations, identifying operational value streams can be a challenge. However, this is critical to effective value stream mapping. So make sure you identify the processes with the greatest potential for savings up front.
Estimating the effort
Before you identify and optimize a value stream in Lean, you should estimate the effort required. This is because the different efforts involved in a value stream analysis can vary considerably depending on the process and product. You should therefore weigh up the effort and benefits of value stream mapping in advance.
Keep an eye on the return on investment (POI). If you have the basic feeling that the company is operating inefficiently, time is being wasted, customers are not being properly understood or are dissatisfied – then these are signs that value stream mapping makes sense.
Selecting the right people
To optimize a value stream in Lean, you need experienced people. Usually, managers undertake a value stream analysis.
Using agile values
To improve a value stream in lean agile, rely on the proven values of agile, such as commitment, courage, respect, focus, and transparency.
Analysis & visualization software in comparison (VSM Software)
Value stream mapping is not done with pen and paper. To be able to identify and optimize processes, you need a sophisticated analysis and visualization software. Among others, these products can help you:
How do Agile and value stream mapping fit together?
The Scaled Agile Framework (SAFe®) organizes teams around the value of processes. But to do that, you first need to know what has value and how it is created. Value stream mapping identifies operational value streams – the processes that create the most value. In other words, it uncovers where "value" comes from and how it is defined.
That means: value stream mapping is an important building block, especially at the beginning of an agile transformation or when introducing the Scaled Agile Framework, to introduce lean-agile working at all levels of your organization.
In practice, companies often underestimate this. But only with a consistent focus on operational value streams your organization can achieve customer-centric business agility – which is precisely the goal of SAFe®.
What is a value stream mapping - Conclusion
Agile working challenges an organization at all levels. To efficiently create value-added products, companies need to identify the operational value streams within the organization. Value Stream Mapping is your tool for this. It exposes processes in such a way that you can position agile teams around the value.
Our Project Scagile, which is free of charge, shows you what other challenges await you in an agile transformation. It explains in different workshops which 7 mistakes you should avoid on your way to agility. Check it out!