Value Stream Transformation: 10 Keys
to Success Webinar February 3, 2015

Welcome to all from across
the globe!

VSM Awarded Shingo Research &
Publication Award! © 2015 The Karen Martin Group, Inc. 3 Join our week-long celebration February 1-7! Subscribe: www.ksmartin.com www.ksmartin.com/VSM

© 2015 The Karen Martin
Group, Inc. 4 Strategy Deployment Value Stream Transformation Individual Improvements

Transformation What problems (gaps) do
we need to solve? What opportunities do we want to seize?

VSM Transformation: 10 Key Success
Factors 1. Tie value stream transformation to a larger organizational strategy. © 2015 The Karen Martin Group, Inc. 6

© 2015 The Karen Martin
Group, Inc. 7 1. Create a Strategy 2. Define True North Metrics 3. Prioritize Problems & Opportunities 4. Transform Value Streams As Needed Gain Alignment and Focus

VSM Transformation: 10 Key Success
Factors 2. Must be leadership driven. © 2015 The Karen Martin Group, Inc. 8

VSM Transformation: Leadership Driven ©
2015 The Karen Martin Group, Inc. 9

VSM Transformation: 10 Key Success
Factors 3. Must be at the right level: Macro. © 2015 The Karen Martin Group, Inc. 10

Work: Degrees of Granularity Value
Stream Process Process Process Step StepStep 11 Macro Perspective • Define strategic direction (“what”) • Heavy leadership involvement • Value Stream Mapping Micro Perspective • Identify the tactical “how” • Heavy frontline involvement • Metrics-Based Process Mapping

Value Stream Transformation: Begin at
Macro Level 12

13 Visualize the entire cycle
of value delivery on a single sheet of paper 13

VSM Transformation: 10 Key Success
Factors 4. Scope narrowly. © 2015 The Karen Martin Group, Inc. 14

Value Stream Scoping Diagram Defining
Specific Conditions Golden State Equipment, Inc. Capital Equipment Catalog Configure to order Engineer to order Custom hardware Custom software Both New Product Development Spares & subassemblies Catalog Engineer to order 15

VSM Transformation: 10 Key Success
Factors 5. Team composition & size: • Leaders with strategic authority • No more than 10 • Highly cross-functional. © 2015 The Karen Martin Group, Inc. 16

Sample Mapping Teams © 2015
The Karen Martin Group, Inc. 17 1 2 3 4 5 6 7 8 9 10 Function Name Hospitalist Physician ED Physician Physician Medical Group Corporate Director Nursing Director Pharmacy & Ancillary Assistant Vice President Case Management & Quality Assistant Vice President Rehab Assistant Vice President Admitting, Bed Control, UR Manager EVS Assistant Vice President Nursing Chief Nursing Officer 1 2 3 4 5 6 7 8 9 10 Order management Director Logistics Vice President IS Vice President Tech support Chief Operating Officer Sales Director Implementation Director Legal Vice President Strategic operations Vice President Client services Vice President Function Name Accounting, order mgmt Director

VSM Transformation: 10 Key Success
Factors 6. Sequester the team for three consecutive days. © 2015 The Karen Martin Group, Inc. 18

Prepare Understand Current State Design
Future State Develop Transformation Plan Execute Transformation Plan Three Consecutive Days4 Weeks Prior to Mapping Following Mapping Repeat Value Stream Mapping Activity Phases and Timing 19

© 2015 The Karen Martin
Group, Inc. 20

VSM Transformation: 10 Key Success
Factors 7. Hold daily briefings with leaders in all affected areas. © 2015 The Karen Martin Group, Inc. 21

Daily Briefings #1 – Reduce
resistance #2 – Build consensus #3 – Gain commitment 22

VSM Transformation: 10 Key Success
Factors 8. Use a highly skilled facilitator. © 2015 The Karen Martin Group, Inc. 23

© 2015 The Karen Martin
Group, Inc. 24

VSM Facilitator: Key Skills &
Traits • Objective; No skin in the game. • Able to sense posturing and draw out objections from senior leaders. • Able to challenge senior leader mindsets and paradigms. • Highly skilled in measurement, data collection, analysis. • Highly skilled in time and people management. • Significant experience with performance measurement and a wide variety of countermeasures. © 2015 The Karen Martin Group, Inc. 25

VSM Transformation: 10 Key Success
Factors 9. Future State: Think BIG! © 2015 The Karen Martin Group, Inc. 26

Sample Future State Decisions •
Replace sales commissions with annual profit sharing. • Insource an outsourced activity. • Merge two departments. • Shift work from one department to another. • Eliminate a department (with staff redeployment to other areas). • Build the means for customers to order online. • Develop, test, and roll out multi-disciplinary bedside rounding. • Double financial levels of authority. © 2015 The Karen Martin Group, Inc. 27

VSM Transformation: 10 Key Success
Factors 10. Transformation Plan needs to be tightly managed. © 2015 The Karen Martin Group, Inc. 28

J F M A M
J J A S O N D 1 PROJ Steve 0% 2 PROJ Steve 100% 3 KE Bruce 50% 4 KE Bruce 50% 5 PROJ Jessie 100% 6 PROJ Sally 100% 7 KE Jessie 0% 8 PROJ Mike 100% 9 JDI Jessie 50% 10 PROJ Steve 80% 11 PROJ Steve 10% 12 PROJ Bob 0% 13 JDI Jessie 100% 14 PROJ Marcia 25% 15 PROJ Tom 30% 16 KE Marcia 50% 17 PROJ Sally 50% Value Stream Champion Sally Brooks Value Stream Mapping Facilitator Karen Martin Value Stream Transformation Plan Value Stream Product Y Scheduled Review Dates Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am Socialize new criteria for engineering, quality, & purchasing involvement. Date Created 1/5/2014 Kaizen Burst # Improvement Objective / Hypothesis Proposed Countermeasure Exec. Method * Owner Planned Timeline for Execution Status Create procedure/train GS service engineers to properly feedback suggestions to engineering. Create bulletin re: standardized headplate design to eliminate flange orientation. Create visual "milestone" timeline to educate customers. Define technical info needed from customer and when. Signature: Signature: Signature: Revise standard Ts & Cs to incorporate time limit for customer approval for final payment. Error proof P.O. info (correct specs, ship to, etc.); notify customer re missing info and drop dead date. Create criteria for LOI acceptance. Add initial project release in SF. Resocialize existing customer-requested CO procedure. One piece engineering flow Agreement Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator * Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project) Move to one release (pump & systems) Date: Date: Date: Create commodity management team & supplier SLAs. Standardize WPS/PQR from suppliers. Revise proposal template to limit time to 4 revisions. Create pull signal for invoicing. Create trigger to release (BOMs) for purchase. ConfidentialContentRemoved

VSM Transformation: 10 Key Success
Factors 1. Tie to a larger organizational strategy. 2. Leadership driven. 3. Macro level (via value stream mapping). 4. Scope narrowly (one product family or set of conditions). 5. Team composition & size: leaders, no more than 10, highly cross-functional. 6. Sequester the team for 3 consecutive days. 7. Hold daily briefings with full leadership team. 8. Use a highly skilled facilitator. 9. Future state: think big! 10. Transformation plan needs to be tightly managed. © 2015 The Karen Martin Group, Inc. 30

Your Questions • I’d like
to see VSM applied to construction, oil and gas, architecture, education…. © 2015 The Karen Martin Group, Inc. 31

© 2015 The Karen Martin
Group, Inc. 32 Karen Martin, President @karenmartinopex www.ksmartin.com/subscribe