Simple Excellence: Organizing and Aligning the Management Team in a Lean Transformation by Adam Zak

Author:Adam Zak [Zak, Adam]
Language: eng
Format: mobi, epub
Publisher: Taylor & Francis
Published: 2011-11-28T05:00:00+00:00

22 From author Bill Waddell’s experience with Quality Screw & Nut while working as VP of Supply Chain at McCulloch Corporation from 1996 to 1999.

10

Value-Stream Structures

Having talked about flow, the need to link the inbound supply chain with the outbound distribution channels, and the critical nature of identifying how the customer defines value—and then going about meeting that ­definition—it is time to organize the company around making all of these lofty ideas reality. That means restructuring the whole place into value streams: knocking down all of the functional silo walls, with no more departments based on what kind of work people do. Everyone has to do the same kind of work—create value for customers. Functional departments never were a particularly good idea, and they most certainly are not an effective way of getting much of anything done that a customer sees as helpful.

A value stream is the series of activities that link each distribution channel you serve with its inbound supply chain. A value-stream organizational structure is one in which all of the folks who are needed to support the flow along the value stream work for one boss: the value-stream manager. There is no engineering department or supply chain department, no purchasing department or quality department. All of the people who used to work in those groups of like-skilled people are redeployed to the value streams, and no matter what their technical skills they are assigned responsibility for creating the maximum value for the customers of their particular value stream. They are to work cooperatively to make sure that the value stream has all necessary skills at hand to continually make things better.

To illustrate the point we cite the following anonymous but true story:

The engineering leader of a value stream in a consumer products manufacturer left a meeting in which the key metrics for the value stream were reviewed with senior management. He was pleased but still a little surprised at the changes in his job, his outlook, and the level of involvement he had, less than a year after the transition from functional departments to value streams. His boss was no longer the director of engineering but now was a value-stream manager who had come out of the supply chain management group, apparently with only limited technical know-how. Where his previous peers had been three or four engineers with qualifications similar to his own, he now worked alongside a manufacturing leader, a marketing leader, a supply chain leader, and a value-stream analyst—people whose job content was as mysterious to him as were the nuances of his engineering expertise to them.

He couldn’t help but be pleased. Senior management had just showered him with praise. The value-stream management team was a big step closer to reaching its performance bonuses because the value stream had made enormous strides in reducing inventory, one of five key performance indicators (KPIs) upon which value-stream success was measured. And the one KPI that had shown the least improvement was inventory reduction until the team had asked him in to take the lead.

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