Value Stream Mapping: Boost Your Business Efficiency

What is value stream mapping?

Value stream mapping is a process that allows you to analyze the current state and future projections of your product delivery journey. It starts from the very beginning of sourcing or production and culminates with delivery.

With this comprehensive visualization of your business process, you can easily see how everything currently works in your organization.

You can make plans for where you want things to be in the future, and you can temper those plans with realistic projections at given time intervals.

In short, this is a way to visualize how your business operates and how you can try to change that operation for the better. It looks at things like information flow, supply chains, delivery mechanisms, and even customer satisfaction.

Types and purposes of value stream maps

One way to better understand value stream maps is to take a look at some of the common types of maps and what they do.

You can make these value stream maps in a number of ways and for countless reasons, but the bulk of them can be broken into three categories: the current state, the ideal state, and the future state.

It’s worth noting that the future state and the ideal state will not and should not perfectly overlap. We’ll get into that more as we break down the concepts.

So, let’s look at each of these categories in more detail to see what emerges.

Current state map

The current state map is probably the easiest to understand. This map analyzes your business as it is right now.

In this map, you will break down information and material flows, noting how material/information flows from one stage of your process to the next.

With the map, you can quickly see the information flow and goods taken through your organization. You can quantify resources that are attached to the processes, and you can make quick determinations as to how well things are functioning.

A thorough state map should help you identify bottlenecks and weaknesses in the entire process.

Ideal state map

The ideal state map is a useful planning tool. You take the current state map — noting all existing issues and weaknesses — and then project what an idealized map would be.

What would your process look like if everything was optimized to the fullest extent that is physically possible?

You take those optimizations, bake them into your current state map, and that is the ideal state.

You can do this in two ways. You can optimize the current process and see what it looks like at its best.

Or, you can think about how to optimize the material flow and information flow by changing the process itself.

Both maps are idealized, but the path to the ideal state changes considerably depending on how you use this tool. In either case, you’re looking for product growth strategies that push your business to the maximum.

Future state map

A future state map is not the same thing as an ideal state map. The ideal state map is aiming to show the limit of how well a process can work. A future state map is a projection of what the real state of the business will look like after planned changes are implemented.

A future state map should look better than the current state map, but it won’t hit all of the ideals — at least not if you’re being realistic about everything.

The point of the future state map is to project how a change in the process can really impact your business and what your expectations for any given change should be.

Why is value stream mapping important for business processes?

Let’s take a moment to emphasize what distinguishes a value stream map from other analytical techniques. The primary goal is to identify how each point in a process adds value to the final outcome. You’re mapping the flow of value itself.

As a result, the value stream map also highlights nodes in your process that don’t add value (or don’t add enough value).

This highlights problematic steps in your process and shows you exactly where you can make the most obvious and dramatic improvements to the business as a whole.

Doing this comes with some major benefits. Let’s start with efficiency.

Increased efficiency

The current state map should be able to help you find inefficiencies in your current process.

Once you identify those inefficiencies, you can take measures to improve on them, and you can even project how those changes will perform with your future state map.

State maps, like any effective analytical tool, are there to highlight problem areas (also known as areas of opportunity). That’s the gist of it, and it’s how they will help you improve efficiency.

Cost savings

Typically, a more efficient process is more cost-effective as well. So, by improving process efficiency, your state map is helping your cost efficiency as well.

But, there’s more to state maps than just efficiency.

Your map can help you find areas of loss. If points of the process introduce time delays, you could be losing money on labor, utilities, or other time-sensitive costs.

If you’re suffering material loss from part of your process, that should also show up on the state map.

If nothing else, the state map is highlighting your basic input and output for the business process. By doing that, you can see what your return on cost is in very clear terms of the process, and that can help you find places to cut costs or productivity losses.

In all of these ways, the state map can save you money and improve your return on investment for the entire business process.

Improved quality

The value stream map highlights all of the major steps along the production and/or delivery process. It shows you the starting input, the final output, and every step along the way.

If you want higher quality in your outputs, then the map shows you exactly where you can implement changes to achieve that goal.

While the map is helping you improve efficiency and your returns on investments, it can also show you spots that might be hindering quality. You can target those specific parts of the process, and your quality will improve as a result.

Increased customer satisfaction

As for customer satisfaction, it’s not terribly difficult to understand. If there are bottlenecks or hiccups in your process, then those issues can delay delivery times, lower quality, or otherwise hurt customer satisfaction.

It’s pretty easy to identify pain points for customers. Your value map can help you attack those pain points by preventing them in the first place. You’re empowered to solve problems at the source.

It’s the most efficient and effective way to mitigate customer pain points, and as a result, you can expect a consistent increase in overall customer satisfaction.

After all, who doesn’t want better products at a more affordable price that are consistently delivered on time?

Competitive advantage

If you are improving efficiency, value, quality, and customer satisfaction with your value stream map, doesn’t that sound like a whole list of competitive advantages?

There are two ways to look at this.

First, if you are utilizing all of the benefits of a value stream map and your competitors are not, you should be able to pull ahead. You’re getting a ton of improvement out of a relatively modest investment of time, money, and effort.

The other way to look at this is that your competitors might also be using value stream maps. If they’re making good maps, planning accordingly, and improving every facet of their general workflow, then that’s going to make them very competitive.

Can you afford not to keep up with competitor analysis?

Better overall business performance

That brings us to the inevitable conclusion. Value stream maps are adding tons of benefits to your business. How can that do anything other than improve overall business performance?

After all, this is a holistic visualization. You’re looking at the entire business process at a glance, and with that tool, you’re targeting specific parts of the process that merit improvement.

Any time you improve your business in such a way, the results are going to impact the organization’s overall outlook. That’s really the point of value stream mapping in the first place.

How to conduct value stream mapping

Now that you know what you stand to gain from the value stream mapping process, let’s talk about how the process actually works.

Below, you’ll find an outline of the steps you can take to create value stream maps (present and future) along with how to use those maps for the sake of your business.

Prepare for value stream mapping process

If you’re going to map the value addition at each stage in your business process, then you need the right information and understanding to achieve that. The first part of preparation is assembling knowledge.

Make a team of managers and/or leaders who are aware of all of the steps in the process and who can deeply analyze those steps. They need to understand the tools at play, team dynamics, how different pieces fit together — everything.

When that team is assembled, then you can lay out the general business process and think about visualization templates that you can use for the map itself. You can borrow from countless online examples and adjust them to the point that you are satisfied with the layout.

Of course, while doing this, you should also budget for the process. Value stream mapping does not need to be a massive project, but you will be devoting some resources to it, so try to figure out how much the process is worth to you and set your budget accordingly.

Map the current state

When preparation is complete, you can map the current state of your business. This is where your team will collect raw data on the various steps in the process and perform analytics to ascertain value addition in each phase.

All of that data and resulting analytics can then be imported to the map itself. The layout was already determined, so creating the map is a simple matter of filling in the blanks and ensuring that all necessary information is present and clear.

In some respects, creating the current state map is easy because you’re simply expressing the current business in this new format. The data should already be available.

Design the future state

Once you have a state, your team can work on goals.

Typically, your business plan will include high-level goals like total revenue numbers, profit margins, and the like. Using those goals as a guide, your value stream map team can figure out specific goals at future dates.

They can then reverse engineer the future state map accordingly. The current state shows the relationships between inputs, outputs, and the various nodes in the process.

If you want to change the outputs, then you simply need to identify how nodes in the process have to change to get to that point.

That’s how you map the future.

Implement and continuously improve the value stream

The most important part comes once you have your completed future state map. You have to implement the changes.

You will want to create new current state maps at intervals to track your progress and continuously find the best places for improvement.

But for the most part, this is all about doing the specific things prescribed by the future state map and then seeing if those changes produced the desired results.

This is an iterative process, so you can redo it as many times as needed, and each loop through your value stream mapping should incrementally improve the overall business outlook.

Tips to improve your value stream mapping

While the above steps outline the process for creating a value stream map, there’s still more to consider.

If you’ve never done this before, then you might want some advice on how to create a good map that adds more value to your analytics.

If you’re just making this up as you go, then your value stream map might not be as illuminating as you hoped, and it might not generate as much value as intended.

So, consider these ideas to improve your value stream mapping.

Align value stream mapping with business strategy

This comes first. You should already have a business strategy. You should know what your business is trying to accomplish and have a general idea of how to go about it. You should also have plans for the immediate and long-term future.

Your value stream maps need to align with the business strategy — especially when working on future state maps.

The way you already conduct business should inform the maps. When that is the case, the maps will do a better job of highlighting opportunities for improvement.

Involve all relevant stakeholders

It’s easy to make your map too narrow. You might only focus on the cost of inputs and the total revenue or profit of your outputs, but there are a lot of stakeholders involved, and they will have different priorities.

When you involve those stakeholders (including partner businesses, vendors, shareholders, and more), you will get a broader view of the value stream.

As a result, your value stream will reveal more to you, and that helps it to achieve its goals of improving the business in general.

Prioritize improvements

Value stream maps really shine when you use them to prioritize changes. The idea is that you can see which nodes are adding the least value (or even subtracting the most value).

These are your priorities. Nodes in the process that are wasteful without adding real value to the final outcome are top priorities. They’re hurting the bottom line, and you can target them for rapid improvements.

You can prioritize all of your planned improvements in this way. Rate your changes on a potential ROI, and go from there. That will extract the most value as quickly as possible from this whole concept.

Implement changes gradually

Even though you want rapid improvements and results, it’s important that you don’t change too much too soon. A complete overhaul of your business practices could lead to more harm than gain.

The smarter approach is to make one change at a time. Once you implement a change, sit on it long enough to measure the true results of that change. Then you can move on to the next fix.

If you aren’t tracking your progress with real data, then you won't really know which changes are having the most meaningful impact on your business. At best, you’ll miss opportunities. At worst, you’ll damage your process and hurt the business.

Strive for continuous improvement

The philosophy driving value stream maps is the earnest desire for continuous improvement. Value stream maps are one among many tools that can help you on this path.

Whether you’re focused solely on value stream maps or looking at other ways to improve, Mailchimp is your ally.

You will find countless resources, all of which can help you with specific aspects of your business, driving you carefully and consistently along the route to improvement. If you would like to learn more about marketing analytics and Mailchimp’s reports and analysis, contact us today.