ABSTRACT
Understand the transfer function of production cost and analyze • how companies produce and offer goods for sales Recognize the difference between short-term and long-term cost func-• tions, marginal cost function, and the shapes of various cost curves Analyze your industrial sectors to prevent production failures and • win in the market
Before an understanding of value stream mapping can be achieved, there must be an understanding of value streams, what they represent, and their boundaries. “Value” is an activity that transforms the product in a way the customer is willing to pay for. A value stream is all the actions (both value added and nonvalue added) currently required to bring a product through the main flows essential to every product, which includes:
Production: The production flow from raw material to customer• New product development: The design flow from concept to launch•
A value stream is an end-to-end collection of activities that create or achieve a result for a customer of the manufacturer. The value stream is made up of everything that supports the value stream tasks and activities, including the:
People who perform the tasks and their knowledge and skills• Tools and technology that are used to perform and support the value • stream tasks Physical facilities and environment in which the value stream resides• Organization and culture of the manufacturer that owns the • value stream
Values and beliefs that dictate the corporate culture and behaviors, • and affect the way in which work is accomplished Communications channels and the way in which information is dis-• seminated through the manufacturer Policies, procedures, and processes that govern the activities of the • value stream Social systems that support the value stream•
As described in the next section, value stream mapping focuses on the activities of the manufacturer’s value streams. It takes a rapid, high-level look at the business within the context of the value streams. It focuses on rapidly identifying business problems and opportunities for improvement, and defining solutions to resolve those problems and to take advantage of identified opportunities to effect improvement. Through value stream mapping, an unbiased understanding of the business, the vision, and the strategies upon which the business is founded, the way it operates, and its strengths and weaknesses are developed. The results of value stream mapping focus on the need for business improvement through change, defining the changes necessary to resolve business problems, and the ways to make that change happen.
