This is the fourth blog about why a value stream organization makes sense for most lean companies.
Organizing by Value Stream Gives Better Business Control.
A value stream organization has value stream managers with full responsibility for the sales, delivery, and profits for the product or services provided by their value streams. This creates clear accountability within the organization. Departmentally organized companies have no such unambiguous accountability.
Value Stream Accounting
Value Stream accounting gives clear and straight-forward financial reporting for the value streams. This reporting is usually done weekly – rather than monthly – so as to provide better financial control. And the financial reports are designed so that everybody in the value stream can immediately understand them. This leads to better financial control and reduced expenditure.
Lean Performance Measurements
Value stream performance measurements also provide better control than traditional organizations. The weekly, visual measurements report the end-to-end performance of the value stream. This enables the value stream team to control their performance and create continuous improvement. The daily or even hourly cell measurements are designed to control the individual processes. These measurements – together with standardized work and Andon – create prompt and focused control of the value stream’s flow. Similar measurements are used in the sales processes, order entry, purchasing, and other more administrative tasks.
Understanding of Capacity
When the team is organized by the value stream there are straight-forward ways to understand the capacity usage. We can easily calculate how much time (people & machines) is spent on productive tasks, non-productive tasks, and how much capacity is available within the value stream. We can also see where the flow bottleneck is located and clearly manage the flow.
When we have a good understanding of the value stream financial performance, operational performance, and capacity usage, we can then make good decisions by seeing their impact on these three aspects. We can also accurately estimate and track the benefits of our various lean improvement projects.
Organizing your lean production, lean product design, lean sales & marketing, lean clinics, lean surgery, lean banking, etc by value streams leads to better control and better decisions.