What is Lean Methodology? Value Streams in Enterprise Software Delivery
Lean Thinking methodologies and tools are often captured in different terminologies such as Lean Management, Lean Manufacturing and Lean Enterprise. As the leading company, we believe the term Lean Management best describes the wide array of Lean methods and tools.
Lean methodology is a way of optimizing the people, resources, effort, and energy of your organization toward creating value for the customer. It is based on two guiding tenets, continuous improvement and respect for people.
Many people define Lean methodology in this way: “Lean is both a philosophy and a discipline which, at its core, increases access to information to ensure responsible decision making in the service of creating customer value.” Lean methodology is not a new concept, but its modern application to business is constantly evolving. Before Lean was known as a business methodology, it was an approach to the manufacturing process. Keep reading to learn more about the history and application of Lean, as well as key Lean methodology principles.
Lean methodology’s first applications outside of manufacturing appeared in software development, in a discipline known as Agile methodology. But now conceptually, Agile software development is a Lean development methodology for optimizing the software development cycle. Software development is a natural application of Lean methodology because, much like manufacturing, it generally follows a defined process, it has some defined conditions of acceptance, and also results in the delivery of tangible value.
Over time, the success of applying Agile and Lean principles to software development piqued the interest of other departments and other industries. Today, Lean development methodology is being applied to knowledge work that follows a process – which is essentially all knowledge work.
The Lean Management methodology contains a 5-step model to eliminate waste and optimise business processes.
Step 1: Identify value
Step 2: Create a Value Stream Map
Step 3: Create Flow
Step 4: Create Pull
Step 5: Scrutinize perfection
Each step consists of a set of practical techniques to achieve the next objective. In short: The Lean Management methodology can have significant value to companies in the service industry. It is a way of optimizing the people, resources, effort, and energy of your organization toward creating value for the customer. It is based on two guiding tenets, continuous improvement and respect for people. Teams all over the world, from sales to software development, are using Lean methodology principles to sustainably deliver more value to their customers, while building healthier, more resilient organizations.
The balance between supply and demand is in a constant state of flux. However, it won’t be far from the truth to say that supply has been steadily growing in many industries faster than the demand. As the market is getting more saturated by the day, customers are becoming increasingly pretentious and difficult to convince that you will provide the value they are looking for.
Thankfully, Lean has a way to get you ahead of the competition by visualizing and enhancing the value stream you are delivering to your customers.
What is Value Stream Mapping (VSM)?
The Value stream mapping process allows you to create a detailed visualization of all steps in your work process. It is a representation of the flow of goods from supplier to the customer through your organization.
For example, the value a software company delivers to its customers are software solutions and all features inside like PlusInfoys.
A value stream map puts on display all the important steps of your work process necessary to deliver value from start to finish. It allows you to visualize every task that your team works on and provides single glance status reports about the progress of each assignment.
It is important to clarify that according to Lean, value is everything that the customer would pay for. However, when it comes to mapping a value stream, there are steps that may not bring direct value to your customer but help to ensure that you will be able to deliver the final product/service.
7 Steps to Value Stream Mapping
Now that you know the basics of value stream mapping, here are the exact steps you’d need to take to carry out the initiative.
Step 1: Decide How Far You Want to Go
Typically, you would start your mapping by indicating a start and end point. This would show where your internal process begins and ends. Some companies, however, prefer to map out the entire value chain. This, of course, has it’s pros and cons – while it does give you a better idea of the whole process, there’s usually not much you can do about any external processes.
Step 2: Define the Steps
Now determine what processes are involved in order to get from point A to point B.
As a simple example, a nursery producing ornamental plants begins with seed from a supplier and delivers plants to a customer. Intervening steps that add value along the way might include:
Step 3: Indicate the Information Flows
One of the advantages of value stream mapping is that it includes information flows. To continue with the example above, our plant nursery needs to place orders for its suppliers and its customers will place orders for delivery. How often is this done and how? Record it on your map, Add this department in the middle of the sheet between the input and output blocks, draw another block below it to indicate the weekly plan, and draw arrows from the plan to each of the departments it informs.
Step 4: Gather the Critical Data
You now have the basics, and it’s time for an in-depth look at each process. To do so, you need real data and some of your mapping team might have to spend a little time collecting the information you need. Typical points to look at would include:
- The inventory items held for each process
- The cycle time (typically per unit)
- The transfer time
- The number of people needed to perform each step
- A number of products that must be scrapped
- The pack or pallet size that will be used
Step 5: Add Data and Time Lines to the Map
Once you have all the information, you can start adding it to your map. Draw a table or data box under each process block to do so. If you’ve used historical data, be sure to verify it using the current inputs and outputs for each process.
Indicate the timeline involved in each process beneath your data blocks. This shows the lead time needed to produce products and the actual time spent on producing each unit, pack size, or batch. Don’t be surprised if a product with a lead time of weeks takes just a few hours to produce
Step 6: Identify the Seven Wastes of Lean
- Transport doesn’t add value to your final product – unless you’re in the transport business! See if you can reduce steps involving transport of materials or information that don’t add value.
- Inventory of inputs and finished products costs you money which could have been earning income elsewhere. The lower your inventory levels can be without stonewalling production, the better it will be.
- Motion costs time and time is money. As an example, our nursery worker has to move her transplanted seedling 10 feet from the potting table to the tractor wagon. That’s wasted time.
- Waiting because there’s a bottleneck in a previous process or subprocess is another clear waste of valuable resources.
- Over-processing can be hard to gauge, but if an item can move from one process to another in an acceptable condition with less input, it should do so.
- Overproduction is an additional pitfall to avoid. Even if your product isn’t perishable, storing it and monitoring it until such time as a customer buys it is clearly a waste.
- Defects mean reworking or scrapping and are clear money-eaters. How can you reduce defects in each step of the process you’ve mapped?
Step 7: Create the Ideal Value Stream Map
Use our team to help you map out an ideal value stream map that eliminates, or at least reduces, all the wastes you spotted when analyzing the results of your value stream mapping exercise.
It’s unlikely you’ll be able to get there in one step, so you can create a series of intermediate future state maps with us. Your business would aim to reach these milestones at specific dates, and ultimately, we’d reach the goal you identified when you drew up your ideal state map.
The best way to have that fix and speeds things up is adopting the right technology. PlusInfosys is a company that can help you with process mapping and data gathering.