Creating a Value Stream Organization

A recent customer of ours decided to move forward with lean accounting. During an implementation planning session the assignment of value stream costs was discussed. Because this company was structured in a traditional departmental organization, many costs could not be directly assigned to value streams.

In order to improve value stream costing, management decided to create a value stream organization by breaking up all of the traditional manufacturing support departments (quality, engineering, cost accounting, maintenance, etc) and assign people into a value stream. Management also had other reasons for doing this:

  • They wanted to send a message to the company that becoming a lean company means everything will change
  • They felt that creating a new organizational structure was inevitable, so why not do it at the beginning and get it out of the way

There are a few lessons to learn here:

  • Senior management must take the leadership role in a company’s lean transformation and make sure the company is “all in” with lean
  • Senior management must pay close attention to the cultural & political issues with a lean implementation and be prepared to make tough decisions