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What Is A 'Value Stream'?

A Value Stream is the set of all steps from the start of your value creation until the delivery of the end result to your customer.

The Value Stream is basically the combination of your Value Creation and Value Delivery processes.

It's best to try to make your Value Stream as small and efficient as possible.

Josh Kaufman Explains The 'Value Stream'

When I worked at Procter & Gamble, one of the most fascinating things about my job was understanding how products were created and delivered. Here’s a quick look at how a bottle of Dawn dishwashing detergent is made:

1. Raw materials are delivered to the factory.
2. The materials are combined to create dishwashing liquid, which is stored in large vats.
3. Plastic bottles are blown into shape using molds, then filled with the liquid and capped.
4. Adhesive labels are applied to each bottle.
5. Each bottle is inspected, boxed, then loaded onto a pallet.

It’s a textbook example of a Value-Creation process, which begins with raw materials and ends with finished product, ready to be shipped. Here’s what happens next:

1. Pallets are wrapped, stacked, and stored for shipment in a warehouse.
2. When orders from customers are placed, pallets are moved into position for loading on a truck.
3. A truck picks up the pallets and delivers it to the customer’s closest distribution center.
4. The customer puts the pallets on a delivery truck.
5. The truck delivers the pallet to a store that needs additional inventory.
6. The store unwraps the pallet, unboxes the product, and transfers it to the shelf, where it will remain until purchased by the consumer.

That’s a lot of steps for a little bottle of dish soap. Those steps are worth studying.

A Value Stream is the set of all steps and all processes from the start of your value creation process all the way through the delivery of the end result to your customer. Understanding what your offer’s value stream looks like is critically important if you want to be able to deliver value to your customers quickly, reliably, and consistently.

You can think of the Value Stream as a combination of your Value-Creation and Value-Delivery processes. Very often, your offer moves directly from the first into the second. Even though the purposes of these core processes are very different, treating them as one big process can help you improve your ability to deliver the value you create.

The Toyota Production System (TPS) was the first large-scale manufacturing system to examine its entire value stream on a regular basis. Analyzing the production system in great detail paved the way for an ongoing series of small, incremental improvements: Toyota engineers make over 1 million improvements to the TPS each year.

As a result, the company consistently reaps huge rewards in speed, consistency, and reliability, which greatly improved Toyota’s Reputation as a company with very high-quality products – that is, until the Paradox of Automation destroyed that reputation.

The best way to understand your Value Stream is to diagram it. Tracing the steps or transformations your offer goes through from the beginning to the end is an extremely enlightening process that can show you just how efficient your value-delivery process is. It’s very common for processes to contain unnecessary steps or awkward transitions. Creating a complete diagram of your entire Value Stream takes effort, but it can help you streamline your process, making the entire system perform better.

In general, try to make your Value Stream as small and efficient as possible. The longer your process, the greater the risk of things going wrong. The shorter and more streamlined your Value Stream, the easier it is to manage, and the more effectively you’ll be able to deliver value.

Questions About The 'Value Stream'

• What does the process you use to create and deliver value to real paying customers look like? Can you diagram it?
• Do the value-creation and value-delivery processes fit together seamlessly?

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"Great design is eliminating all unnecessary details."

Minh D. Tran

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