1

MEM

Process Engineering and

Continuous Improvement

FUNDAMENTALS OF CONTINUOUS
IMPROVEMENT – 3

Value Stream Mapping and Project Charter

José António de Sousa Barros Basto

Professor Auxiliar F.E.U.P.

DEGI
10 September 2021

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Value Stream Mapping

• Value stream mapping: a special type of

flowcharting tool for development of lean
processes
– Used to visualize product flows through various processing
steps
• Need a full understanding of the business
including production processes

(From: F.
Robert Jacobs, Richard B. Chase ; Operations
and supply chain management.)

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Value Stream Mapping Symbols

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VSM: A Two Part Process

¨ “Value stream mapping is a two-part process:
¤ Depict the “current state” of the process (see Exhibit 13.3: next
slide)
¤ Map of the same process with suggested improvements (Exhibit
13.5: see two slides over)
¨ The “future state” map has been annotated using Kaizen bursts that
suggest the areas for improvement. Kaizen bursts identify specific
short-term projects that teams work on to implement changes to the
process.”

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Manufacturing Process Map: Current State

of a Process (Exhibit 13.3)

CT= Cycle
Time

C/O =
Change
Over;
Setup Time

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VSM: A Two Part Process

¨ “Exhibit 13.5 is a totally redesigned process:
¤ The individual production operations have been combined into a
workcell operated by three employees.
¤ In addition, rather than “pushing” material through the system
based on weekly schedules generated by production control, the
entire process is converted to a pull system that is operated
directly in response to customer demand.
¤ Lead time in the new system is only 5 days, compared to the 34
days in the old system.”

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Manufacturing Process Map: : Possible

Future State of a Process (Exhibit 13.5)

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Value Stream Mapping

• For further study:

– Rother, M., & Shook, J. (2003). Learning to see: value stream
mapping to add value and eliminate muda. Lean Enterprise
Institute.
– Jones, D., Womack, J., Brunt, D., Lovejoy, M., & Shook, J.
(2011). Seeing the whole value stream. Lean enterprise institute.

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documentation of goals and for decision-making.
the end of the “define” phase.
AsA acentral
preliminary,
theme in this consider that
chapter is that a first
the most step
relevant in important
strategies projects involves search-
associated with
inganswering
the available literature.
these questions Searchso-called
relate to identifying engines such ”as
“subsystems andgoogle and yahoo are relevant.
their associ-
9
ated key input variables (KIVs) and key output variables (KOVs). Therefore, the chapter
Also, technical
begins indexesof such
with an explanation as the
the concept science
of systems citation index
and subsystems. Then, theand
formatcompendex are relevant.
Finally, considertheusing
for documenting governmental
conclusions resources
of the define phase such
is discussed, andasstrategies
the National
are Institute of Stand-
briefly defined to help in the identification of subsystems and associated goals for KOVs.
ards (NIST) and the United States Patent Office web sites.
Systems and Subsystems
Next, specific methods are described to facilitate the development of a project
charter, including benchmarking, meeting rules, and Pareto charting. Finally, one rea-
sonably simple method for documenting significant figures is presented. Significant

“ASystems andis Subsystems

3.2figures and the implied uncertainty associated with numbers can be important in the
system an entity with inputs and outputs. A
documentation of goals and for decision-making.

“subsystem” is itself a system that is wholly contained

As a preliminary, consider that a first step in important projects involves search-
A system is an entity
ing the available literature.with
Searchinputs
engines and
such outputs. A yahoo
as google and “subsystem ” is itself a system that is
are relevant.
Also, technical
wholly containedindexesinsuch as the science
a more major citation index and
system. Thecompendex are relevant.
subsystem may share some inputs and
in a more major system. The subsystem may share
Finally, consider using governmental resources such as the National Institute of Stand-
outputs withandits
ards (NIST) theparent system.
United States . Figure
Patent Office 3.1 shows three subsystems inside a system.
web sites.
some
The inputsfor and
main motivation outputs
the “define phase” is towithidentify itsspecific
parent system.
subsystems and to Figure
Systems and
focus attention
3.2 on Subsystems
them. The main deliverable from the define phase of a project is
3.1 shows three subsystems
A system is an entity with inputs and outputs. A “
inside a system.”
” is itself a system that is
subsystem
wholly contained in a more major system. The subsystem may share some inputs and
outputs with its parent system. . Figure 3.1 shows three subsystems inside a system. FROM: Allen, T. T.
The main motivation for the “define phase” is to identify specific subsystems and to
focus attention on them. The main deliverable from the define phase of a project is (2018). Introduction
to engineering
statistics and Lean
Six Sigma:
Statistical quality
control and design
of experiments and
. Fig. 3.1
. Fig. Example
3.1 Example of subsystems
of subsystems inside a system
inside a system systems. Springer.

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Project Charter

“project charter - A document that formally recognizes

the existence of a project and provides direction on the
project’s objectives and management

The charter documents what is to be accomplished by whom and

when.”
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Project Charter
• “Clarifying what can be accomplished within the project
time frame with the available resources is probably the
main concern in developing a charter.
• The term “scope” is commonly used in this context to
formally describe what is to be done.
• The term “deliverables” refers to the outcomes
associated with a project scope.
• The creation of a charter is often a complicated, political
process. Allocating the selected team for the allotted
time is essentially an expensive, risky investment by
management. Management is betting that the project
deliverables will be generated and will still be worthwhile
when they are delivered. “
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Project Charter
• “Developing a charter involves establishing a semi-
formal contract between management and the team
about what is “in scope” and what is “out of scope” or
unnecessary for the project to be successful.
• As a result of this contract, team members have some
protection against new, unanticipated demands, called
“scope creep,” that might be added during the
remaining project phases…
• The project goals in the charter are often expressed in
terms of targets for key output variables (KOVs).
Commonly, the scope of the project requires that
measurable KOVs must be intermediate variables
associated with subsystems.”

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Project Charter
• “At least one KOV for these subsystems must have a
likely relationship to bottom-line profits for the major
system.
• In defining who is on the project team, common sense
dictates that the personnel included should be
representative of people who might be affected by the
project results.
• This follows in part because affected people are likely to
have the most relevant knowledge, giving the project the
best chance to succeed.
• The phrase “not-invented-here syndrome” (NIHS) refers
to the powerful human tendency to resist
recommendations by outside groups.”
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Project Charter
• “In defining when a project should be completed, an
important concern is to complete the project soon
enough so that the deliverables are still relevant to the
larger system needs.
• Many six sigma experts have suggested project
timeframes between 2 and 6 months.”

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Project Charter
• “Example 3.3.2 Snap Tab Project Charter
? Question
• Your team (a design engineer, a process engineer, and
a quality engineer, each working 25% time) recently
completed a successful 6-month project. The main
deliverable was a fastener design in 3D computer aided
design (CAD) format. The result achieved a 50%
increase in pull-apart strength by manipulating five KIVs
in the design. The new design is saving $300K/year by
reducing assembly costs for two product lines (not
including project expense). A similar product line uses a
different material. Develop a charter to tune the five KIVs
for the new material, if possible.”

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Project Charter
• “Example 3.3.2 Snap Tab Project Charter
Answer
• Scope - Develop tuned design for new material
• Deliverables - One-page report clarifying whether
strength increase is achievable; A 3D CAD model that
includes specifications for the five KIVs
• Personnel - One design engineer, one process engineer,
one quality engineer
• Timing - One-page report after 2 months;3D CAD model
after 3 months and completion
• Expected profit - $281K (see below)”

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Project Charter
“Predicting Expected Profits
• The term “rework” refers to efforts to fix units not
conforming to specifications.
• The term “scrap” refers to the act of throwing away
nonconforming items that cannot be effectively
reworked.
• Often, the rework and scrap costs constitute the most
tangible monetary figure associated with an
improvement project."

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Project Charter
“Predicting Expected Profits
• Let “RC” denote the current rework and scrap costs on an annual
basis. Let “f” denote the fraction of these costs that the project is
targeting for reduction. Note that f equalling 1.0 (or 100%) reduction
is usually considered unrealistic. Assuming that RC is known, a
simple model for the expected savings is (Eq. 3.1):
Expected Savings = G × f × (2.0 × RC) (3.1)
• where the 2.0 derives from considering savings over a 2-year
horizon and G is a “fudge factor” designed to account for indirect
savings from increasing the fraction of conforming units. Often, G =
1.0 which conservatively accounts only for directly measurable
savings. Yet, in some companies, G = 4.0 is routinely used out of
concern for indirect losses including production disruption and lost
sales.”

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Project Charter
“Predicting Expected Profits
• Often, salary expenses dominate expenses both for rework and
running a project.
• The term “person-years” refers to the time in years it would take one
person, working full time, to complete a task.
• A rule of thumb is to associate every person-year with $100K in
costs including benefits and the cost of management support. This
simple rule can be used to estimate the rework costs (RC) and other
project expenses. With these assumptions, a crude model for the
expected profit is:
Expected Profit = Expected Savings − (Project Person − Years) ×
$100K (3.2)
where “Project Person-Years” is the total number of person-years
planned to be expended by all people working on a project.”

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Project Charter
“Predicting Expected Profits
• Example 3.3.3 Snap Tab Expected Profits
? Question
• Your team (a design engineer, a process engineer, and a quality
engineer, each working 25% time) recently completed a successful
6-month project. The main deliverable was a fastener design in 3D
computer aided design (CAD) format. The result achieved a 50%
increase in pull-apart strength by manipulating five KIVs in the
design. The new design is saving $300K/year by reducing assembly
costs for two product lines (not including project expense). A similar
product line uses a different material. Estimate the expected profit
from this project, assuming a 2-year horizon.”

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Project Charter
“Predicting Expected Profits
• Example 3.3.3 Snap Tab Expected Profits
Answer
• As savings do not derive from rework and scrap reductions, we
cannot use Eq. (3.1).
• However, since $300K/year was saved on two product lines in
similar circumstances, it is likely that $150K/year in costs could be
reduced through application to a single new product line. Therefore,
expected savings over a 2-year horizon would be
2.0 years × $150K/year = $300K.
• With three engineers working 25% time for 0.25 year, the person-
years of project expense should be 3 × 0.25 × 0.25 = 0.1875.
• A rule of thumb is to associate every person-year with $100K in
costs including benefits and the cost of management support.
Therefore, the expected profits from the model in Eq. (3.2) would be
$300K – $18.73K = $281K.”
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