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The new paradigm in corporate efficiency

Value Stream Management is a new approach to corporate operational management which ensures alignment between corporate strategy and corporate operations. Far too often, the annual report calls for the company to achieve a set of strategic objectives, but how does management really know if the corporation's daily operations are working toward and achieving these goals? Equally as important, how does management know if new initiatives align with strategy, address greatest need, and synergize with each other?

Some firms have attempted to manage IT portfolios to address this problem from the CIOs perspective, but reality is - IT is not the center of a corporation. It is an enabler. As proven by countless world class firms such as GE, Motorola, and Toyota, when it comes to business, "it is all about the process" (Jack Welch). Hence, Value Stream Management is the final evolution of corporate resource management.

Consistent with Six Sigma, Value Stream Management treats People, Information Systems, Customers, and Suppliers as inputs into corporate processes which must ultimately use these inputs to achieve corporate goals.

By maintaining a database of all corporate processes and then mapping these processes to the goals and the inputs (people, IT, etc.), the manager gains visibility and manageability of the corporation like never before. When evaluating new IT initiatives, the manager can compare requested initiatives against the processes they automate or touch and make data based decisions with regard to which processes need investment and how the new system will enable, or not, corporate objectives. If according to Value Stream Management a corporate goal will be achieved without the investment, yet others are in jeopardy, investment in other areas may be more prudent. Six Sigma teaches us to focus on the root causes of the areas that need improvement, and not try to improve everything at once. With Value Stream Management, seemingly smart investments may be shown to be an exercise in futility. Have you ever seen an IT investment that seemed like a good idea in the beginning but somehow did not have the anticipated impact on the organization? We have seen plenty.

Additionally, by monitoring the portfolio of processes with Six Sigma tools the manager is able to identify out-of-control processes and predict their impact on corporate goals. Traditionally, companies only measured the outputs of processes (profit, customer satisfaction, units made, units sold, etc.) This form of measurement is similar to that of manufacturing processes before Six Sigma. With Value Stream Management, by measuring the processes that create these outputs and maintaining a database of the related processes and inputs, the manager can easily perform predictive analysis and root cause analysis to correct and improve the processes. This approach allows managers to maintain low level process alignment with corporate goals such that potential problems are discovered before it is too late.

Of course, there is much more to Value Stream Management. It requires a new methodology and a new way of doing business at every level of an organization in order to facilitate the measurement and management techniques of Six Sigma. With a planned, incremental approach, the efficiencies proposed by Value Stream Management are possible. To learn more about Value Stream Management, contact 6 Sigma Technology Group.