Why Value Streams aren't only for projects!

While value streams are frequently used in project management to track and optimize work flow within a given project or product development, they have far-reaching applications as used in ITIL v4. A value stream provides a comprehensive picture of the company's major processes. By mapping these processes, a organization can discover bottlenecks, inefficiencies, and waste that reduce the overall value offered to consumers or stakeholders.

Value streams in corporate processes are more than just one-time projects or incremental enhancements. They value continual value delivery. Every business activity or process can be considered a component of a wider value stream that benefits consumers, investors, or even internal stakeholders. This ongoing focus on value enables firms to gain long-term competitive advantages by enhancing the efficiency, quality, and responsiveness of operations across all functions, not just inside a project.

Value streams encourage enterprises to consider the flow of value from beginning to end, across the whole life cycle of a product, service, or customer encounter. In project management, this emphasis is typically limited to certain projects or results. However, in a broader organizational context, every department and activity contributes to an overarching value stream, which influences how fast and effectively a company can meet customer requests, supply products, and respond to market demands.

By mapping value streams, departments may break down silos. Production and finance for example all have an impact on the delivery of a product or service to a consumer, but they typically work in isolation. By viewing corporate activities as an integrated value stream, various functions are encouraged to collaborate more closely. The ultimate goal is to ensure that every department, function, or team works together to create value.

How to Turn Business Processes Into Value Streams?

The first step in transforming a business process into a value stream is to map the flow of work—from the time a customer or internal stakeholder expresses a need until that need is met. This is frequently accomplished by value stream mapping (VSM).

Identify the inputs and outputs. Define the starting input for any business process (e.g., a client request, a request from an internal department, etc.) and the final outcome (e.g., delivered product, financial report, customer feedback).

Detail every step of the process, including those that may not directly contribute to customer value but may nonetheless be required.

Evaluate how easily work flows through each process and look for bottlenecks, delays, or areas where value is being lost due to inefficiency.

Differentiate between value-adding and non-value-adding activities. After mapping the process, divide the processes into those that provide value to the end product or service and those that do not (waste). If you are familiar with Lean, think TIMWOOD.

Businesses can enhance the overall value delivered by identifying and eliminating unproductive steps.

After identifying the value-adding and non-value-adding phases, work to minimize waste and improve the flow of work. Just-in-time (JIT) manufacturing, continuous improvement (Kaizen), and Lean Six Sigma techniques can all be used to reduce delays and inefficiencies, ensuring that resources are used as efficiently as possible.

Measure and Track Value!

Regularly measuring performance is critical for converting corporate activities into value streams.

The main metrics could include:

Lead Time: The whole time it takes from receiving a customer request to delivering the value.

Cycle Time: The time required to accomplish a single task within the value stream.

Throughput: The rate at which value is delivered, often expressed as the number of units produced or services completed in a certain time period.

Customer Satisfaction: This is an important indicator of how well the value stream provides the expected value to the end user.

Businesses can use these indicators to determine whether their value streams are optimised for efficiency and customer satisfaction. If there are bottlenecks or locations where time is lost, these must be addressed in order to improve total productivity.

To properly integrate value streams into the fabric of the business, they must be closely aligned with the company's strategic objectives. This alignment guarantees that resources and efforts are directed towards procedures that contribute the most to attaining company objectives. For example, if the company's purpose is to improve the customer experience, it should prioritize the value stream that focuses on customer assistance, order fulfillment, or product quality.

Companies can better identify opportunities for investment, improvement, and innovation by mapping value streams to strategic goals.

EVA (Economic Value Added): EVA is a financial performance statistic that determines the value added above and beyond the cost of capital. Businesses can track the financial impact of their operations by assessing EVA for each value stream and determining where efficiency or effectiveness enhancements will give the greatest returns.

Calculating ROI at the value stream level enables firms to determine which processes, activities, or initiatives produce the highest return for the least amount of investment. This can help with resource allocation and ensuring that resources are directed toward the most profitable value streams.

Net Promoter Score (NPS) is a key indicator for determining customer satisfaction with the value provided by a value stream. Organizations may enhance customer happiness, loyalty, and repeat business by tracking how they perceive the value of a business process.

For value streams that involve client-facing procedures (e.g., sales, customer support, or order fulfillment), calculating the cost-to-serve helps firms understand the underlying cost of delivering value and how to optimize for cost-efficiency without losing quality.

Value streams are an effective instrument that extends beyond the scope of specific projects. They give a framework for firms to map, measure, and optimize all business processes to guarantee that they are providing the most value for their consumers and stakeholders. Companies that convert business operations into value streams can increase efficiency, reduce waste, connect activities with corporate goals, and ultimately improve both customer happiness and financial performance.