Value stream management in action: Banking on transformation
Ravi Sawant
Global Head of Modern Business Management & Digital Transformations @ HCLTech | VSMC Ambassador | SAFe? Practice Consultant
Authors: Ravi Sawant , Sharat Kunduru
Article 2
Value Stream Management (VSM) is a powerful approach that organizations can employ to revolutionize their business processes and elevate customer satisfaction. By identifying the value stream and eliminating wasteful activities, VSM enables streamlined processes, cost reduction, and enhanced customer experiences. In this article, we delve into the practical application of value stream management through the lens of a bank, using its loan process as a compelling example. By exploring the journey of this bank, we uncover how VSM principles can drive remarkable benefits for any organization and its customers.
Concepts we will refer to in this article include?Value, or the benefits received, and the importance of it being measurable and requiring continuous validation. Next, the?Value Stream, that encompasses the activities that comprise the process of delivering a product or service and generate value. This includes all the people, systems, and flow of information needed to deliver the product or service, and there can be one or many value streams. Finally,?Value Stream Management, which is the framework and process of analyzing and improving value streams to maximize efficiencies and minimize waste in the value streams.
Picture yourself in your everyday interactions with a bank—the services you rely on, the moments you appreciate, and the occasional hiccups you face. Behind each of these encounters lies an intricate value stream, working tirelessly to ensure the seamless provision of banking services that shape your banking experience.
In this context, let's redefine the meaning of value, value stream, and value stream management, shedding light on their profound significance in today's organizations. To make it more relatable, let's take a closer look at the loan process in our hypothetical bank and witness Value Stream Management in action firsthand—a familiar example of a value stream consisting of distinct stages and activities.
Uncovering the Value Stream: Identification, Mapping, and Visualization
Acknowledging lower customer satisfaction scores in loan processing, the bank's management commits to improvement, realizing the potential of streamlining and improving the flow of value to the customers. The journey begins with value stream identification, followed by comprehensive value stream mapping that visualizes the systems, processes, and people involved.
To embark on this transformative journey, the bank undertakes the following steps:
Driving Improvements: Optimizing the Value Stream
By undergoing this comprehensive value stream transformation exercise, the bank is able to clearly visualize their end-to-end value stream containing stages or activities in sequence, with people involved in all those stages and with systems supporting each stage.
It also helped them better empathize with their customers and understand their needs, and pinpoint areas in need of improvement, such as:
Throughout the transformation journey, the bank emphasizes the importance of continuous monitoring and measurement of their value streams. They understand that optimization is an ongoing process, and they need to ensure that the implemented improvements are yielding the desired results.
By periodically measuring the effectiveness of their changes on the flow of value and customer satisfaction, the bank can identify areas that require further enhancement or any existing changes that may need adjustment. This commitment to continuous improvement ensures that the value stream remains optimized and aligned with evolving customer needs and enables the bank to embrace any uncertainties and changes that may come their way in the future.
By embracing the principles and practices of Value Stream Management and relentlessly addressing their value stream challenges, the bank experiences remarkable improvements in efficiency, cost reduction, and customer satisfaction. The loan process becomes streamlined, faster, and more customer-centric, enhancing the bank's competitive edge in the market.
In Conclusion
Value streams exist in many forms across organizations in all industries. They can be one or two seamless streams covering everything, top-to-bottom. Or it can be many different streams at many different levels. Most organizations will typically have a hierarchy of value streams where each child value stream could be enabling or adding value to the parent value stream. There may be many different sub streams of value in an organization that may or may not be tied to each other in a systemic way. By mastering the principles of VSM, organizations become adept at identifying and optimizing these value streams, unlocking their full potential for growth.
In our next article on VSM, we will delve deeper into the intricate dynamics of value streams within a typical organization. We will break down the concept further and explore value streams in the context of value, work, and organization levels. Whether it is a banking organization like our example or any other sector, the underlying principles remain consistent.?Stay tuned as we unravel the secrets of value streams and uncover valuable insights applicable across diverse industries.
Retired - Executive Advisor, Strategic Planning and Portfolio Management, Solution Engineering at Broadcom
1 年Great article, Ravi and Sharat. I enjoyed reading your practical application of Value Stream Management using a very relatable example.
Solution Director - Services at HCL Technologies
1 年I like that this article walks us through what is likely a real customer VSM scenario.?I believe the VS identification is a critical step, leveraging “ multidisciplinary teams” is very important as customer work to identify steams, which help remove the silo barriers as the teams learn a common new language that transcends through all organizational business units.
Global Head Professional Services & CTO @EnterpriseStudio
1 年Well put Ravi and Sharat. Ease of doing business is key. Customer alike including each of us are not interested in excused on long winded reasons why some process that is not our context is broken. VSM can help cut out the noise, reduce the waste and drive optimised execution and flow.