VSM Explained

The daily course of a Value Stream operation can be a bit messier than what we expect. While producing new value for customers and stakeholders, Value Streams need to stop here and there to fix unplanned defects and incidents, refactor existing areas of products to improve maintainability, evolve infrastructure capabilities, improve performance, execute security and compliance requirements, and provide support to functional areas.

Value Streams are defined by the constant flow of requests and deliveries of customer and stakeholder requests. As a rule of thumb, the customer is the one who requests and receives the value produced. Stakeholders, on the other hand, are parties with interest in either the production process or the value produced. Anyone that can either affect or be affected by a Value Stream.

The concept of Value Streams is over a century old. Probably, most notoriously dating back to Ford’s Model T assembly line in 1913, when the time required to assemble one vehicle was reduced from over 12 hours down to just 93 minutes. The cost ended up going down from the original $825 to $260 despite high inflation at the time. Ford’s mass production system came with a catch, however. He had a famous saying: "Any customer can have a car painted any colour that he wants, so long as it is black." Unfortunately, such a mass production system wouldn’t work later for Toyota. 

Value Stream Management (VSM) is the process of understanding the criteria that makes your product or service relevant to your customers and stakeholders, and ensuring your service level continues to fall within acceptable customer thresholds where you are considered to be fit for purpose.Put simply, VSM is all about maintaining fitness in the presence of a rapidly changing external environment. After reading this article, we hope that you can start seeing Value Streams where you could only see companies, divisions, teams, and individual contributors before.