Value Stream Mapping and Analysis for Yahoo Widgets, Inc.

QUESTION

Instructions

For this assignment, you will be required to read the following prompt and chart and answer the questions that follow.

Yahoo Widgets, Inc. (YWI) is a widget manufacturer in Williamsburg, Virginia. YWI receives raw material sheets of plastic from Tribe Plastics, once per week, on Monday, for the family of widget models it produces. These widgets are then shipped to another manufacturer, Acme Gadgets, Inc. (AGI), for inclusion in its family of gadgets, which are sold to end users. For its new product line, the gadget manufacturer requires two types of widgets, large and small, that are packaged in returnable trays holding 55 widgets for shipment. The trays are returned, empty, to YWI after the widgets are used by AGI. The manufacturing process consists of a thermoforming activity that transforms the sheets of plastic into a “rough” widget, which requires a drilling process step and a grinding and sanding process step before the packing and shipping process step. These steps and related information are as follows:

• Process characteristics:
  • Average demand: 5,000 per day, 3,500 larger, 1,500 small
  • Batch size: 1,100
  • Number of shifts per day: 2
  • Shift: 8 hours with 30 minute lunch
• Shipments:
  • One shipment of 5,000 per day
• Information flow:
  • Electronic communication of forecasts to supplier
  • Electronic communication of daily orders from customer
  • Electronic communication of forecasts from customer
  • Electronic communication of daily shipping schedule to process step 4
  • Electronic communication of weekly schedule to process steps 1-3
  • All material is pushed

The idea that lies behind the calculations associated with a VSM is Little’s Law -Little’s Law is a ratio that states:  Inventory = Rate X Time

Rate may also be called Throughput Rate. Time may also be called Flow Time.

Units matter! Make sure that your units are consistent.  Inventory is whatever is being mapped as flowing through the process—our unit of analysis. It could be widgets, cars, burritos, customers, or patients.  Time units can be represented as days, hours, minutes, or seconds, just make sure to be consistent when you are calculating values.  Units of days are frequently used for inventory buffers when they are particularly large (long).  When times are short, minutes or seconds may be used—this is often the case for activities (processing/value-adding work).

Little’s Law relies on a few simplifying assumptions…we use long term averages, and we assume the process is operating in a stable manner (not speeding up/slowing down), and that the process is full (not starting up/stopping).  Under these assumptions, long-term averages do a good job of representing the average process performance, and the VSM is like a “snapshot” of this long-term view.

Process mapping doesn’t have to be VSM. While VSM is the underlying tool for improving processes according to Lean principles, simpler process maps with much less data can be used in many different contexts as a useful starting point to solve problems.

Key takeaway: if you have an issue (defects, rework, something takes too much time, the process can’t meet demand), and it involves a process that is repeated (a series of activities used to transform inputs into outputs), it is worth sketching out a simple process diagram to make sure everyone involved with the process has a common understanding of how things work and where the issues occur.

I have been working on process improvements for longer than I’m willing to admit to you! What is consistent in my experience is that organizations—small and large, young and old—find value in mapping and agreeing upon how things actually work in their processes.

Once a map is agreed upon, it becomes much easier to identify, quantify, and prioritize problems, and to understand how different improvement ideas might or might not work. One framework for doing this type of process improvement that is grounded in operations management is Lean/Six Sigma. Full coverage of these ideas is beyond the scope of this course but touched on throughout the materials.

Questions

1. Using the data shown in the table, construct a value stream map for Yahoo Widgets, Inc.
   • See list of steps above. Important: For the purposes of this assignment, show the setup (changeover time) for each activity and note the batch sizes on your map, but they do not impact your calculations.
2. What is the takt time of the manufacturing cell?
   • Manufacturing cell refers to this entire “process” from end to end. Takt time is the available production time divided by customer demand. For example, if a widget factory operates 480 minutes per day and customers demand 240 widgets per day, takt time is two minutes.  Make sure to clearly state any assumptions. Takt time is relevant because, in theory, this is the perfect rate at which to produce to exactly meet customer demand.
3. What is the production lead time for each process step?
   • Calculate the lead time for each of the steps.  From Chapter 6, recall that lead time is the time needed to respond to a customer order.  In terms of lean, this means that lead time includes buffer time and processing time.  You can add up the time associated with each buffer and the step that follows it to get a lead time for each step.  If you add up all of the times – all buffers and all activities – across the entire process – you get the lead time for the entire process.
   • Important: Based on how this question is worded, please provide a time for each of the 3 steps, and an overall time for the entire process.
   • Note that filling out your timeline at the bottom of the map is important for answering this question.  To see an example of how to calculate buffer time for each inventory point noted in the process data, see Exhibit 12.2 in Chapter 12. Notice that 504 pieces/day are shipped…this is the rate at which the process operates currently.  The first inventory buffer on Exhibit 12.2 is 5,040 pieces, which equates to 10 days of supply (see the 10 days on the timeline) for this process.
4. What is the total processing time for the manufacturing cell?
   • Processing time is the same as value-adding time.  You have three processes for which times are provided; since these are all averages you can add them up to produce a total.
5. What is the total capacity of the manufacturing cell?
   • For the purposes of this assignment, you can calculate capacity for a single operating day – how many widgets can Yahoo make in a day. Keep in mind that what constitutes an operating day depends on the process. You have been given information about the length of an operating day for this process.
   • The capacity is constrained by the available operating time.  Make sure to take into account how many shifts run, and for how long, as well as equipment downtime.
   • Capacity is also constrained by the pace of the slowest processing activity. This activity is also known as the bottleneck.  The process as a whole cannot produce any faster than the bottleneck.

ANSWER