What Is the Definition of Value Stream?

by Heidi Wiesenfelder; Updated September 26, 2017
Planning as concept

Value stream mapping is one of the key elements of lean and lean Six Sigma methodologies. Without adequate information about the value stream for a specific business operation, implementing improvements and increasing efficiency would be less than optimal at best.

Basic Definition

The value stream for a business process is the series of steps that occur to provide the product, service and/or experience the customer desires. Thus steps that do not add value, that represent waste or that a customer does not want and would not pay for are not part of the value stream.

Customer Value

Business leaders often have trouble distinguishing between steps that for technical or business reasons must be included and steps that are actually value-added according to the customer expectations. As Michael George states in "The Lean Six Sigma Pocket Toolbook," a good question to ask is, “If this step was deleted would the customer complain?” If the answer is yes, the step is truly value-added; if not, it cannot be considered value-added, no matter how necessary it is for the business to provide the final product or service. Other questions to ask are whether the customer would pay more for the product or service or have a preference for it over the competition with that task included.

Identifying the Value Stream

In identifying the value stream for a business process, it is helpful to evaluate each step based on the criteria above to assess whether it is value-added or non-value added. To do this, solid information about customer expectations for quality and value must be obtained; assumptions about what customers want and expect are not sufficient. Some groups find it useful to add a third category to represent steps that are not value-added, but that really must be conducted to create the final product or service. These steps are referred to as business-value added steps and may include tasks required by regulatory bodies or for company financial reporting.

Objectives

Once the value stream is identified, the ultimate goal is to eliminate all other steps from the process. Steps that are non-value added should definitely be removed; business-value added steps should be reevaluated and eliminated if possible. By making these improvements, an organization can improve efficiency, reduce waste and improve the customer experience.

Continuous Improvement

It may be tempting to think about identifying the value stream and eliminating non-value added steps as a one-time project. However, customer needs and expectations can change over time, so existing products and services should be assessed periodically to ensure the originally identified value stream still applies and is being followed. The value stream should also be clarified prior to establishing new products and services.

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