As a business owner, you are always looking for ways to reduce waste and improve efficiency. Too often, businesses get bogged down in their processes and lose sight of what’s important – the customer.
You may have heard of Value Stream Mapping, but you’re not quite sure how it can help your business. By taking the time to map a business process using value stream mapping, you can identify areas where there are bottlenecks or inefficiencies. Value Stream Mapping can help:
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Businesses to reduce waste.
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Value Stream Mapping can help businesses to identify customer needs.
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Value Stream Mapping can help businesses to improve communication and coordination across the organization.
In this way, you can make changes that will improve the customer experience and build loyalty.
So, if you’re ready to take your business to the next level, read on to learn more about value stream mapping and how it can benefit your bottom line.
What is Value-Stream Mapping?
Value stream mapping is the process of using a workflow management tool that can help businesses to reduce waste, identify customer needs, and improve communication and coordination across the organization.
The application of value stream mapping – also referred to as “visualizing” or “mapping” a process – isn’t limited to the assembly line.
When done properly, it will show where improvements need to be made in an activity or process and identify actionable solutions.
Value stream mapping can be used to increase efficiency and quality, reduce costs and lead time, and improve customer satisfaction. 💡 Toyota Motor Company created the original VSM template.
What is Takt, Lead & Cycle Time?
When trying to improve your business production, where to start or what will make the biggest impact. There are many different aspects of business production, and it can be overwhelming trying to figure out which one will have the most significant improvement. Value stream mapping is a tool that can help you identify areas of inefficiency in your business process. In the next section, we’ll take a closer look at takt time, lead time, and cycle time – three key metrics that can help you improve your business production.
Takt Time, Cycle Time, and Lead Time are important time measurements used by managers in companies and factories to help them:
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better understand where to make improvements in the process of product/service production
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better understand where to make improvements in resource use
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better understand where to make improvements in team workflow
Takt Time
The Takt time is the rate at which you must produce a product or service to meet customer demand. It is calculated by taking the available production time and dividing it by the number of products or services that need to be produced. Knowing your Takt time will help you optimize your production process so that you can meet customer demand.
How to calculate Takt Time?
There are two components crucial for your Takt Time calculation:
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Your Net Production Time (NPT)
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Your Customer Demand
The Net Production Time (NPT) is the clean time your team has at their disposal to finish a product. To calculate your NPT, you can subtract the time your team spends on downtime (lunch breaks, other breaks, meetings, machine maintenance…) from the total time your team spends at work. That’s how the formula usually goes.
However, it would be quicker if you were to track only the clean time you spend on the production process. You can use our time tracker Clockify to track your Net Production Time for a product and separate it from your downtime. Now, tracking the time you spend on downtime may not be crucial for your Takt Time calculations, but it can be useful on its own — you may find that you waste a lot of time, and time that could be put to better use.
Your Customer Demand is the number of products your customers buy on a regular basis — usually, your customer demand is counted on a daily basis.
And here is the formula:
Takt Time = Net Production Time/Customer Demand
Now, this formula is simple enough. However, your calculation will be more complicated if your company produces several different products, each with its own customer demand. In such a case, you’ll need to divide your day across
Calculation:
Net Production Time = 550 minutes
Daily Customer Demand = 55 dolls
Takt Time = Net Production Time/ Daily Customer Demand
Takt Time = 550 minutes/ 55 dolls = 10 min/doll
The lead time is the amount of time it takes for your order to be processed after you place it. When it comes to the exact definition of Lead Time, there are several varying answers that depend on the industry. Most prominently, Lead Time is used in manufacturing, supply chain management, and project management.
Lead Time
Most prominently, Lead Time is used in manufacturing, supply chain management, and project management:
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In manufacturing, Lead Time involves pre-processing time (the time needed to make plans and handle paperwork), processing time (the time needed to manufacture the product), and post-processing time (the time needed to deliver the product to the customer).
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In supply chain management, Lead Time involves the time that passes between the moment you place an order for supplies, to the moment the supply delivery arrives from the supplier.
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In project management, Lead Time involves the time it takes to complete a set of tasks in a project. It involves the dependency between activities and points to overlaps between the two.
Differences between the three Lead Times
Now, although the Lead Time in manufacturing is usually the one directly associated with Takt Time and Cycle Time, common sense implies that you’ll need to reorder supplies (perhaps the fabric for your raggedy dolls) to keep the production process moving. Moreover, certain production tasks will likely overlap. This means that Lead Time in manufacturing, supply chain management, and project management are all intertwined, at least to an extent.
How to measure Lead Time?
In order to measure your Lead Time in manufacturing, you’ll need to consider the time you spend on pre-processing, processing, and post-processing activities.
Bear in mind that you can parse your pre-processing, processing, and post-processing activities into even smaller units of time, for better clarity:
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Order Lead Time — the time that elapses between the time you receive the customer order to the time the customer order is delivered.
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Order Handling Lead Time — the time that elapses between the time you receive the order and the time when you create an official sales order request.
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Manufacturing Lead Time — the time that elapses from the sales order request to completed production.
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Production Lead Time — the time that elapses from the start of physical production to completed production.
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Delivery Lead Time — the time that elapses from finished production to product delivery to the customer.
As you’ve probably noticed, some of these Lead Times overlap — And, Order Lead Time encompasses all the process stages.
Calculation:
Pre-processing time = 10 minutes
Processing time = 10 minutes
Post-processing time = 1 day (1440 minutes)
Lead Time (manufacturing) = Pre-processing time + Processing time + Post-processing time
Lead Time (manufacturing) = 10 minutes + 10 minutes + 1440 minutes = 1460 minutes
So, the Lead Time for the Jessica doll says that the customer can count on receiving the doll 1460 minutes from the time of order.
Now, depending on the complexity of your production process, and whether you ship your products to distant cities or abroad, you can also count your Lead Time in hours or days.
Lead Time in manufacturing is the Lead Time linked to Takt Time and Cycle Time, this is the example we have focused on here. If you wish to gain a further understanding of lead time in relation to supply chain and project management, scroll down closer to the end of the page here. explain the differences between these. This will then conclude the three main types of Lead Time.
Lastly, as Lead Time encompasses the time from product order to product delivery, it also includes Cycle Time as a vital sub-component (Cycle Time = processing time).
Cycle Time
The cycle time is the amount of time it takes for one complete production run from start to finish.
So, according to this calculation, Team #1 is expected to assemble one Doll #1 (Jessica) per 10 minutes (600 seconds), in order to meet the Customer Demand.
Cycle Time vs Throughput Time
To better understand Cycle Time, it’s best that we relate it to Throughput Time.
Throughput Time is the number of units you produce in the production process during a specific period of time.
In line with that, Cycle Time is the average amount of time you need in order to produce one unit.
For example, during a specified period of time (once again, this is your Net Production time, and let’s say it equals 60 minutes) you produce 6 units — 6 units per 60 minutes, this is your Throughput Time. We can further conclude that it takes you 10 minutes to produce one unit during that 60 minutes (6 X 10 = 60) — 10 minutes per product, this is your Cycle Time.
How to measure Cycle Time?
The Total Cycle Time formula takes into account your Net Production Time and the number of units you produce during this time — all for the purpose of singling out the amount of time you really spend producing one unit.
Cycle Time = Net Production Time/Number of Units made
Let’s take the doll factory example once again, and look at the Cycle Time for Doll# 1 (Jessica). We’ll take the same Net Production Time, and assume that 45 dolls are really made during this time:
Calculation:
Net Production Time = 550 minutes
Number of units made = 45 dolls
(Daily Customer Demand = 55 dolls)
Cycle Time = Net Production Time/Number of units made
Cycle Time = 550 minutes/ 45 dolls = 12,22 minutes/doll
Further observations about this Cycle Time Example
Currently, with a Cycle Time of 12,22 minutes, you’re running 2,22 minutes behind for each doll — considering that your Cycle Time is longer than your Takt Time.
At the end, that builds up to 672,1 minutes you’d need to meet customer demand, making you about 2 hours and 2 minutes short in total each day ((672,1 – 550) / 60). In other words, you’re currently falling short of your customer demand by 10 Jessica dolls.
However, having a shorter Cycle Time than your Takt Time is also a problem. If this is the case, you may be producing more dolls than you need to meet customer demand.
For example, say that your Cycle Time is 7,34 minutes for each doll, and you maintain this cycle for the expected 550 minutes.
By the time only 403,7 minutes have elapsed (7,34 X 55) you will have met your daily customer demand. If you continue at this pace, you’ll eventually assemble about 75 dolls (550 / 7,34), surpassing your daily customer demand by 20. So, if you continue working at this pace, you’ll get stuck with 20 more Jessica dolls in your storage space every day.
In conclusion, it would be ideal if your Takt Time and Cycle Time were equal.
Takt Time vs Cycle Time: How to sync the two
In order to meet your customer demand, you will need regular evaluations to determine if some tweaks in your workflow and adjustments to your Cycle Time to your ideal Takt Time are needed.
Use time management and productivity techniques to make sure you speed up your work process and consider hiring more workers, to better meet the customer demand.
Bonus: Click here to Download Takt Time + Cycle Time + Lead Time calculator
Source: Takt time, cycle time, and lead time explained (+ calculators)
What are the steps of Value Stream Mapping?
The purpose of Value Stream Mapping is to determine the steps involved in creating a product or service and the resources required to complete each step.
To create a value stream map, you need to decide what you want to map and who is involved. A facilitator is needed to help you complete the mapping. Once the mapping is complete, it can be improved without consulting the original creators.
To create a value stream map, you will need pen and paper, post-it notes, information on your value stream map, or value stream mapping software. *Lucidchart is a great workflow management tool for mapping. I personally use it and love it! 💜
Value Stream Mapping helps to identify and optimize the flow of resources between steps in the process.
What are the benefits of Value Stream Mapping?
The benefits outweigh the challenges. Value stream mapping is a powerful tool, there are several benefits of value stream mapping, including:
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Increased customer loyalty & satisfaction: By understanding the various steps involved in delivering a product or service, businesses can identify areas where they can improve the customer experience. This can lead to increased customer satisfaction and loyalty.
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Improved quality: By identifying areas of improvement, businesses can also work to improve the quality of their products or services.
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Improved communication between departments: Value stream mapping can help to improve communication between different departments within a company. This improved communication can lead to better coordination and increased efficiencies.
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Reduced waste: One of the goals of value stream mapping is to identify and eliminate waste throughout the process. This can lead to cost savings for the company and a better overall product or service.
Value stream mapping is important in relation to building client loyalty because it helps organizations shift their thinking from projects to product delivery. This helps individuals and teams understand how their work fits into the bigger picture and encourages or even requires cross-team collaboration.
Additionally, value stream mapping can help identify where and how waste is created, and how to reduce or eliminate it – which ultimately leads to improved company bottom lines. All of these benefits work together to foster trust and loyalty between a business and its clients.
What are the challenges of Value Stream Mapping?
While Value Stream Mapping is core to lean methods if not applied wisely, process mapping can be wasteful in itself.
Some caveats, an improvement in one process step or in one part of production won’t always translate to a bottom-line improvement due to:
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Inaccurate data
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Lack of standardization
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Complex processes
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Difficult to implement
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Time-consuming
You might choose to start small, with a limited focus and a limited budget, get the win and then move on to something more complex and potentially rewarding.
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Learn more about the Founder of Above All Admin Tovey Blake.
