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blog | November 04, 2015

Using Value Stream Mapping (VSM) to Optimize your ERP System

Ever feel like you’re just not getting the most out of your ERP system? Maybe your orders aren’t shipping on time, or perhaps your data never seems to be...

By WorkWiseSoftware

Ever feel like you’re just not getting the most out of your ERP system? Maybe your orders aren’t shipping on time, or perhaps your data never seems to be accurate. Before you ditch your current system for a shiny new replacement, or request an expensive modification for your packaged ERP system, make sure your problems aren’t actually caused by business processes impacting the quality of data you are feeding into your system.

If you aren’t seeing the return you expected from your ERP, you may want to consider evaluating your processes using a technique called “Value Steam Mapping”. You can use this technique to make sure that you’re putting clean and timely data into your ERP system.

Huh? What’s Value Stream Mapping?

Value Stream Mapping (VSM) is a tool that helps businesses understand how their flows currently operate and helps them figure out ways to improve them in the future. This is achieved by creating a process map that is used to streamline processes across the entire supply chain. A Value Stream Map (VSM) is a process map that identifies all the steps and data streams required to produce a particular product or service while adding value to each step that results in improved customer satisfaction.

The goal of value stream mapping is to identify processes, evaluate whether or not they add customer value, eliminate processes that generate waste, and identify performance metrics between the process and your ERP business system to insure your data fully leverages the calculated data outputs required to run your business.

The process of Value Stream Mapping involves using Lean principles to document data streams, analyze the production processes, and plan ways to improve and optimize data input to produce more efficient outputs to drive value towards your deliverables.

This article will help you lean the basics of how value stream mapping works, and how you can create your own value stream map to help you evaluate your flows and optimize them. WorkWise also offers VSM consulting services to help guide and train your team through your first VSM project.

First, a quick review of Lean Principles…

Value: In Lean, value is defined as value for the customer. This is defined in terms of specific products and services.

Value Stream: All the steps and processes needed to design, produce and deliver a particular good or service and eliminate waste.

• Focus on making flow continuous, from one end to the other.
• Let the customer ‘pull’ the value, rather than creating things before they’re needed.
• The process will never be perfect, but the goal is to keep improving the process.

Why Value Stream Mapping Is So Useful

A VSM helps to reduce workflow costs and steps. A VSM is particularly useful visual tool for optimizing your ERP system because it shows a complete view of your entire process at every level. VSM provides an efficient and standardized way to identify waste in the production process and eliminate it.

Creating a VSM

Some companies choose to hire VSM consultants to guide and train their team through their first VSM project. You can also map the value stream yourself. You can download a free Value Stream Map (VSM) template here.

The only truly effective way to implement Value Stream Mapping is to assemble a team of process stakeholders, study the process, record each step on large paper/poster board to plaster on a large wall, identify data streams and systems, and identify KPI (key performance indicators) for each step, while recording process & queue times.

It may be tempting to think you can record the steps of your process from the comfort of your desk, but the only way you’ll get a truly accurate view of what goes on in your production process is to observe it firsthand, document it on poster board, tape to an office wall, and verify/brainstorm each step as being accurate. Your current state is now the new baseline for improvement!

Step 1 – Value and Process Map

Decide on what the customer value is, and the process steps. Access what the value and waste is at each step in the process.

Step 2 – Create a Current State VSM

Create a “Current State” VSM. This is a VSM consisting of all the data for your current process. In order to improve your process in the future, first you need to understand what your process looks like right now. This information should include resources, time, and quality for each step of the process. You can view an example of a Current State value stream map here.

Step 3 – Analyze

Analyze your Current State VSM and find opportunities to improve things, such as bottlenecks or workload balancing. What can you make better? Brainstorm ways to improve your process.

Step 4 – Create a Future State VSM

Use that information to create a “Future State” map to visualize what you want your process to look like in the future, and show how you’re going to get there. You can view an example of a Future State value stream map here.

Step 5 – Create an Ideal State VSM

As we mentioned earlier, your process will never be perfect, but the goal is to keep improving the process. By outlining what your ideal process would look like, you can create a goal to work towards and compare your current state to.

After that, simply rinse and repeat. Continue to follow the same process of planning, evaluating, analyzing and improving to keep making your process more efficient.

Many operations discover that the system mods are not needed at all. Instead, they only masked poor processes that did not add value.

When your business process is achieving maximum possible productivity while minimizing wasted labor and expense, you’ll be able to better manage the data that you pull from your process. This ensures that your data will be cleaner and the information that you put into your ERP system will be cleaner. This enables your ERP system to calculate meaningful planning and decision making output.

This article was written with the help of Dave Krueger, a Sr. Manufacturing Software Consultant at WorkWise. David specializes in Operation Optimization Consulting and Value Stream Mapping.

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