Value (Stream) Delivery - What about the family?

family picRecently, someone shared that a multi-national company with a  good Lean pedigree was looking to rationalize their facilities so that each facility served only market "A" or market "B," but not both, like many do now.  This makes very little sense, especially in light of the fact that the same value stream serves both markets and there is no substantial difference in  "A" or "B's" design tolerances, required process capabilities, delivery channel, service levels, etc. In other words, value, as defined by "A" and "B," relative to the order to delivery phase, is the same! Here value delivery should be considered market agnostic.

Value stream management and improvement should be focused by product or service family. The families are traditionally identified by the use of a matrix that shows the intersection of products (or services) with processes. These matrices go by different names, but they're the same thing - product family analysis matrix, product family matrix, process routing matrix or product quantity proces (PQPr) matrix.

While the production folks who work within the company referenced above should understand and care about the different markets that they serve, the value stream must be their primary lens and lever for making value flow. The sales and marketing guys,  R&D people, field support, etc. must be concerned about the markets and their specific needs but there has to be some very compelling reasons to split up the family in other portions of the value stream... and there must be critical mass.

What are your thoughts? When does it make sense to split the family?

There are 5 Comments

Jerry Foster's picture

Value Streams are not "one size fits ALL" solutions. You may have the most efficient Value Stream with all the functions in Europe, but a very inefficient delivery system in India, Thailand, etc. Or, the demands and preferences by region may be very different, so some local variation thereof may be the customer requirement. Take micro loans for example, traditional banks would likely lose in the game of supplying micro loans, but do quiet well with much larger loans and all the required structure, regulations, etc.

Unless I missed the point, there still must be a mechanism of providing the basic transactions, but no demand for the frills that come with it. I believe while the fundamentals of the market still exist, the value stream must structure its offerings to fit the market.

Jerry

markrhamel's picture

Jerry,

Thanks so much for the comment and your perspective. Yes, your point is exactly right, the value stream must effectively respond/fulfill the customer's notion of value (let's assume here that customer or market segment is desirable in the first place). Womack and Jones' first step in value stream analysis is to specify that value. Then we must identify, or perhaps the better term sometimes is "discover," the value stream (so that we can understand and improve it).

This definition or discovery of the value stream is aided by the product family analysis matrix (or derivative) described in the post. The value stream is, to quote LEI's Lean Lexicon, "All of the actions, both value-creating and non value-creating, required to bring the product from concept to launch and from order to delivery. These include actions to process information from the customer and actions to transform the product on its way to the customer." And so (the point of my post), if value is essentially the same between one market and another ("A" vs. "B") relative to the order to delivery phase of the value stream and they share the same product family and geography, why split them up? Unless they're going to now have "A" and "B" in separate locations and then co-locate them with a similarly dedicated business front and back-end (which they are not) to have essentially all phases of the value stream together (new product development, inquiry to order and order to delivery, for example) and to facilitate business focus, why split the order to delivery portion of the family? Sounds like muda to me. Sounds like some sales and marketing folks trying to move the chairs because they understand markets but do not really have insight into value streams. Maybe I'm wrong...

JC Gatlin's picture

We had something similar in which our Tampa & Orlando builders have been using a set a value stream maps for a couple of years now. But when we moved into St. Augustine and Jacksonville, the construction professionals there had to continuously tweak the VSMs for the first few months. You would think that Tampa/Orlando would be identical to St. Augustine/Jacksonville. But we now have separate "A" versus "B" VSMs. As we move into Texas and the Carolinas, I'm curious to see if they will be able to use on or the other, or if we'll be adding "C" and "D".

BTW... great photo of the Aadam's Family. The point would have been every stronger had you also included the Munster's family photo along side it. That would give you the similar A & B families!

markrhamel's picture

JC,

Thanks for the comment! So, if I read you correctly, the different geographical areas have somewhat different market requirements which then are satisfied by a somewhat different material flow and/or information flow. While the product families between the regions are presumably pretty close, they're different enough to warrant different value stream maps and ultimately different value stream improvement plans.

You're right about the Addams versus Munster family comparison. By the way, I think Grandpa was funnier than Uncle Fester.

Thanks,
Mark

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