Value Stream Forms

Lean Performance Measurement
Value Stream Starter Set - Primary

Measurements
Units per Person
What It Measures
Measures productivity of the value stream and

shows value added by the value stream.
How Its Calculated

Units per Employee =
Units Shipped by the Value Stream

Avg. Number of Full-Time Equivalent
Dedicated Employees of
Value Stream
-
Include all full-time equivalent direct

production employees in the value stream
during the period, including first line
management.
Example
Goal: Increase units per Employee by 20% over
the previous year.
Value Stream Units Per Person
Average value for the previous year: 850 per

week
Current year goal: 1,000 per week
Your Calculations:
The Objective
Eliminate obstacles to flow.

Use standard work.
Value Stream Goal(s)
Increase throughput with the same resources

to a specific number of units per employee.
Improve productivity.
The Ideal
Increased capacity available through lean

initiatives will allow increased sales without
increasing the number of persons assigned to
the team.
When Things Go Wrong
The first step is to understand why:

Is the value stream responding to customer
demand at TAKT, or is there a constraint to
meeting customer demand?
If sales cannot be increased, how can excess
capacity be redeployed to yield greater
productivity?
A review of On-Time Shipment to Schedule,
Dock-to-Dock Time and First Pass Yield will
help to isolate possible sources of the
problem.
How to Present Units per Employee:
2,000
1,500
1,000
500
15
/2
00
1
1/
22
/2
00
1
1/
29
/2
00
1
2/
5/
20
01
2/
12
/2
00
1
2/
19
/2
00
1
2/
26
/2
00
1
3/
5/
20
01
3/
12
/2
00
1
3/
19
/2
00
1
3/
26
/2
00
1
00
1
1/
1/
8/
2
1/
1/
2
00
1
Units Shipped per Employee
Value Stream Units Per Person
Target

Measurements
On-Time Delivery
What It Measures
Measures the shipment of the right products in the

right numbers to the customer order and shows
the percentage of the scheduled customer order
volumes actually shipped on schedule.
How Its Calculated
On-Time Delivery =
Orders Shipped on Time
Total Orders Shipped
Example
Goal: ship on-time to schedule 100% of the time
The Objective
Make products on time.

Use standard work.
Increase throughput with same resources.

Reduce order fulfillment lead time.
Ship on time in the right volumes 100% of the
time.
Your Calculations:
Value Stream On-Time Delivery
The Ideal
Shipment of the right products in the right

quantities to the right customer location exactly on
time 100% of the time.
If products are not available to ship, examine

cell-level Day-by-the Hour reports to
determine whether products are being built to
schedule or built out of the correct sequence
If there are insufficient or excess quantities to
ship, examine the source and causes of
overproduction or underproduction
Using the value stream continuous
improvement process, identify the root
causes of the problem end correct its
cause/causes.
How to Present On-Time Delivery:
100.00%
95.00%
90.00%
85.00%
80.00%
1Ja
n
8Ja
15 n
-J
a
22 n
-J
an
29
-J
an
5Fe
12 b
-F
e
19 b
-F
e
26 b
-F
eb
5M
a
12 r
-M
a
19 r
-M
a
26 r
-M
ar
2A
pr
75.00%
On Time Delivery
Value Stream On-Time Delivery
Target

Measurements
Gross Profit %
What It Measures
Measures profitability of the value stream.
How Its Calculated

Gross profit %= [Value Stream Revenues-(Material Costs +
Conversion Costs)] / Value Stream Revenues
Value Stream Revenues = Sales value of shipments from the value
stream during the period and invoiced to the customer. This will be
equal to the amount booked as Sales to the general ledger for the
period from items shipped from the value stream.
Material Costs= The purchase price of materials placed into
production for the period. This ignores balances in work in process and
finished goods inventories at the end of the period
Conversion Costs=Payroll costs for direct and indirect labor worked
on the value stream during the period.
The invoiced costs for any outside processing incurred during the
period.
Depreciation expense and maintenance during the period for
machinery and equipment in the value stream.
Facilities Costs for building depreciation, utilities, overhead and the like
charged on a square-foot basis to the value stream
Conversion costs include the total amounts expensed for the period
and ignore balances in work-in-process and finished goods inventories.
Value Stream Gross Profit %
Example
Weekly units shipped
Avg selling price per
unit
Avg material cost per
unit
Revenues
1-Jan
8-Jan
15-Jan
22-Jan
4,500
4,550
5,250
5,500
$50
$50
$50
$50
$20
$20
$20
$20
$225,000 $227,500 $262,500 $275,000
Materials cost
$90,000
Conversion cost
90,000
Value Stream Costs
$91,000 $105,000 $110,000

$90,000
$90,000
$90,000
$180,000 $181,000 $195,000 $200,000
Value Stream Gross

Profit
Value Stream Gross
Profit %
$45,000
20%
$46,500
20%
$67,500
26%
$75,000
27%
Your Calculations:
The Objective
Increase value stream profitability.

.
initiatives will allow increased sales without
increasing the conversion costs.
The goal is to manage value stream
profitability, not the profitability of individual
products in the value stream. The test of new
business is whether it contributes to the
profitability of the overall value stream.
The Ideal
Value Stream Gross Profit %
Value stream profitability can decline

because of problems in the value stream or in
the market for the products. If the problems
are in the value stream, the team should work
to understand the reason for the constraint to
achieving planned volumes produced and
conduct kaisen events to increase the
throughput to achieve the planned volumes. If
the problems are due to a permanent decline
in the market, then the company should
develop new markets for its products or
reduce its conversion costs.

Measurements
Order-to-Dock Time
What It Measures
Measures the flow of products from receipt of raw

materials to the shipment of finished goods and shows
the speed of conversion of raw materials to finished
product.
How Its Calculated
Dock-to-Dock Time =
Units of Control
Part in the Plant
Manufactured End
Products per week
Days
X per
week
-Count the total units of a control part in the plant (Raw

Material, Work in Process, and Finished Goods) and
divide by the average rate at which its end products
are manufactured in that value stream (the end-of-line
rate in products per hour).
-Can be expressed in hours or days
-Order-to-Dock Time = Dock-to-Dock Time + Order
Process Time
The Objective
Eliminate obstacles to flow.

Visual pull/Kanban system.
Quick changeover.
Quality at source.
Reduce order fulfillment lead time to a specific time

limit.
Reduce inventory.
The Ideal
-Continuous flow of products through the plant

-Continuous improvement in DTD Time towards zero
waste and zero defects
Your Calculations:
Value Stream Order-to-Dock Time
-Whenever parts stop and wait in the process, nonvalue-added costs increase.
- Identify the constraints to material flow and focus
improvement efforts to remove them.
- Possible causes are over-production, defects,
excess waiting for changeovers, equipment
breakdown repair, and materials, excess inventory
including buffer stock, movement of inventory, etc.
Example
Company: Acme Stamping Company

- Control Part: There are 5 days supply of brackets at
an average usage rate of 920 per day, or 4,600.
- Calculation mechanics: count the number of units of
the control part in the plant and divide this number by
the average number of parts completed per hour.
Total brackets in plant:
Raw material = 4600
WIP
= 12990
Finished goods = 4140
Total
= 21730
End products per week=

4600 brackets
Days per week = 5
21730 divided by 4600 x 5 =
23.6 days per bracket
How to Present Dock-to-Dock Time:

25
20
15
10
5
Dock-To-Dock Time
Value Stream Order-to-Dock Time
pr
2A
26
-M
ar
19
-M
ar
ar
12
-M
ar
5M
26
-F
eb
19
-F
eb
12
-F
eb
5Fe
29
-J
an
22
-J
an
15
-J
an
8Ja
n
Ja
nu
a
Target

Measurements
Accounts Receivable Days Outstanding (AR Days)
What It Measures
Measures the average time to collect cash after

shipment.
How Its Calculated
Calculate the average sales per day and divide it

into the period-end accounts receivable balance:
AR Days Outstanding =
Accounts Receivable Balance
Average Sales Per Day
Average Sales per Day = Average Months Sales
Working Days in Month
The Objective
Make products on time.

Increase cash flow and reduce debt.
Collect cash within a specific time limit.
The Ideal
- Rapid receipt of cash from sales--resulting in low

accounts receivable balances
- Negotiated pay-on-receipt with key customers
- Credit card sales for small and infrequent
customers
-Poor quality and/or delivery service can contribute

to late payment by customers
-Poor payment from customers triggers
examination of terms of contracts with customers
and renegotiating payment terms
Your Calculations:
Value Stream - AR Days
Example:
January
Accounts
Receivable
Balance of Value
Stream Sales (000)
Three Months
Average Sales per
month from Value
Stream (000)
Average working
days per month
Accounts
Receivable
Days
Outstanding
February
$11000 $10,500
March
April
$10,200 $9,500
$3,000
$4,500
$4350
$4,750
31
30
30
30
114
70
68
60
How to Present AR Days:
120
100
80
60
40
Ju
ly
A
ug
us
Se
t
pt
em
be
r
O
ct
ob
er
N
ov
em
be
D
r
ec
em
be
r
Ju
ne
M
ay
A
pr
il
Ja
nu
ar
y
Fe
br
ua
ry
M
ar
ch
20
Average Days Outstanding
Target

Measurements
Average Cost per Unit
What It Measures
Measures the productivity of the value stream.
How Its Calculated

Average Cost per Unit=(Material Cost +Conversion
Cost)/Number of Units Shipped
Material Costs= The purchase price of materials placed into
production for the period. This ignores balances in work in process and
finished goods inventories at the end of the period
Conversion Costs=Payroll costs for direct and indirect labor worked
on the value stream during the period.
The invoiced costs for any outside processing incurred during the
period.
Depreciation expense and maintenance during the period for
machinery and equipment in the value stream.
Facilities Costs for building depreciation, utilities, overhead and the like
charged on a square-foot basis to the value stream
Conversion costs include the total amounts expensed for the period
and ignore balances in work-in-process and finished goods inventories.
Example
Weekly units shipped
Materials cost
Conversion cost
Value Stream Costs
1-Jan
8-Jan
15-Jan
22-Jan
4,500
4,550
5,250
5,500
$90,000
90,000
$91,000 $105,000 $110,000

$90,000
$90,000
$90,000
$180,000 $181,000 $195,000 $200,000
$40.00
$39.78
$37.14
$36.36
Your Calculations:
The Objective
Increase value stream profitability.

so as to reduce average cost per unit .
The Ideal

initiatives will allow increased sales volume
without increasing the conversion costs.
As capacity is freed up through lean, the goal
is to increase the volume shipped from the
value stream without increasing the
resources of the value stream. This will cause
the average cost of units shipped from the
value stream to decrease.
The average cost per unit can increase

because of problems in the value stream or in
the market for the products. If the problems
are in the value stream, the team should work
to understand the reason for the constraint to
achieving planned volumes produced and
conduct kaisen activities to increase the units
of throughput to equal the planned volumes.
If the problems are due to a permanent
decline in the market, then the company
should develop new markets for its products
or reduce its conversion costs.

Measurements
First Pass Yield
What It Measures
Measures percent of total units successfully

manufactured through the value stream on the first
pass without being repaired, reworked, re-tested
or scrapped.
How Its Calculated
The first pass yield of the value stream is the

product of the first pass yield at each evaluation
point in the entire value stream:
The Objective
Standard work.
Quality at the source.
Zero defects/ zero waste.
The Ideal
Zero defects throughout the value stream

FPY of 100%
- Identify the source of defects that prevents

improvement in dock-to-dock time
- Fix the cause of the quality problem(s) identified
and monitor improvement in FPY and DTY
Your Calculations:
Value Stream First Pass Yield
Example
Company: Perfect Stamping, Inc.

Product: Frames for weight training equipment
Evaluation Points:
- EP(1) After the Stamping cell
- EP(2) After the Welding and Assembly cell
- Collected at the cell by shift and summarized at
the value stream by week.
How to Present First Pass Yield:
80.0%
70.0%
60.0%
First Pass Yield
Value Stream First Pass Yield
A
ug
us
t
Se
pt
em
be
r
Q
ct
ob
er
N
ov
em
be
r
D
ec
em
be
r
Ju
ly
Ju
ne
ay
M
A
pr
il
Ja
nu
ar
y
Fe
b-W
k
1
Fe
b-W
k
2
Fe
b
W
k
3
Fe
b
W
k
4
M
ar
ch
50.0%
Target

Value Stream Starter Set - Support
Measurements
OEE at the Constraint Cell
What It Measures
The limit to improved value stream throughput and

where it lies
The potential improvement to value stream
capacity by eliminating the constraint
Where improvements to value stream
performance should be directed first
How Its Calculated
Value Stream OEE
See Cell Measurements - Overall Equipment

Effectiveness

Measurements
Average Number of Improvement Projects Completed
What It Measures
Measures the average number of improvement

projects undertaken, completed, and in process by
cells in the value stream over time.
Shows the level of activity in implementing a
regular program of incremental lean improvement
initiatives.
Illustrates the extent to which cell management
views its role as changed from overseeing a series
of activities to creating continuing improvement in
the performance of the activities.
How Its Calculated
Average # of Projects Completed =

Total Projects Cell 1 + Total Projects
Cell 2 + Total Projects Cell n
Total Number of Cells in Value Stream
The Objective
Eliminate variability.
Increase value stream employee improvement

project participation to support goals.
Value Stream - Improvement Projects Completed

Measurements
Average Cross Training per Person
What It Measures
Measures the average number and level of

training programs completed by value stream
employees.
Indicates the extent to which cell-level personnel
are able to perform multiple tasks required to
produce a product or service
Represents the ability of the value stream
manager to shift personnel from areas of overcapacity to under-capacity
How Its Calculated
Average Cross Training per Person =

Total Training Cell 1 + Total Training
Cell 2 + Total Training Cell n
Total Number of FTE Direct Employees
in Value Stream
The Objective
Increase training and cross training.
Increase improvement project participation.
Your Calculations:
Value Stream - Average Cross Training per Person

Measurements
Number of Safety Incidents
What It Measures
Measures the total number of accidents, and near

accidents.
The Objective
Eliminate injuries and accidents.
Institute standard safety measures.
How to Present Number of Safety Incidents:
GOING FOR ANOTHER SAFE DAY
1
OCTOBER 99
3
5
7 8 9
13 14 15
19 20 21
25
27
29
2
4
6
10 11 12
16 17 18
22 23 24
26
28
30
Value Stream Number of Safety Incidents
No accidents/injuries
Near accident
Accident; No lost time
Lost time accident
Were thinking and working SAFELY
today and every day

Value Stream Forms

Diunggah oleh

Informasi Dokumen

Deskripsi Asli:

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Value Stream Forms

Diunggah oleh

Hak Cipta:

Format Tersedia

Lean Performance Measurement

Value Stream Starter Set - Primary

Measures productivity of the value stream and

How Its Calculated

Units Shipped by the Value Stream

Include all full-time equivalent direct

Value Stream Units Per Person

Average value for the previous year: 850 per

Current year goal: 1,000 per week

Eliminate obstacles to flow.

Value Stream Goal(s)

Increase throughput with the same resources

Increased capacity available through lean

When Things Go Wrong

The first step is to understand why:

How to Present Units per Employee:

Units Shipped per Employee

Value Stream Units Per Person

Lean Performance Measurement

Measures the shipment of the right products in the

How Its Calculated

Goal: ship on-time to schedule 100% of the time

Make products on time.

Value Stream Goal(s)

Increase throughput with same resources.

Value Stream On-Time Delivery

Shipment of the right products in the right

When Things Go Wrong

If products are not available to ship, examine

How to Present On-Time Delivery:

Value Stream On-Time Delivery

Lean Performance Measurement

Measures profitability of the value stream.

How Its Calculated

Value Stream Gross Profit %

$225,000 $227,500 $262,500 $275,000

Value Stream Costs

$91,000 $105,000 $110,000

$180,000 $181,000 $195,000 $200,000

Value Stream Gross

Increase value stream profitability.

Value Stream Goal(s)

Increase throughput with the same resources

When Things Go Wrong

Value Stream Gross Profit %

Value stream profitability can decline

Lean Performance Measurement

Measures the flow of products from receipt of raw

How Its Calculated

-Count the total units of a control part in the plant (Raw

Eliminate obstacles to flow.

Value Stream Goal(s)

Reduce order fulfillment lead time to a specific time

-Continuous flow of products through the plant

Value Stream Order-to-Dock Time

When Things Go Wrong

Company: Acme Stamping Company

End products per week=

21730 divided by 4600 x 5 =

23.6 days per bracket

How to Present Dock-to-Dock Time:

Value Stream Order-to-Dock Time

Lean Performance Measurement