VSM- A Value Stream Structure for Middle Management

VSM- A Value Stream Structure for Middle Management.

It is our belief at the greendot that a value stream is the best place to start building your organizational structure. This is because it creates a direct alignment between the needs of your customers (what you need to make), your processes (how you make it), and the roles of all employees in your organization.

In most businesses, the natural tendency will be to structure the team along process lines. That translates into employing a machine shop manager, a welding shop manager, and an assembly manager. In the paint industry, you might have managers responsible for dispersion, mixing, quality control, color matching, and filling; and in a packaging factory, a materials supervisor, a print supervisor, a die-cutting supervisor, and a finishing supervisor.

There is some logic in this approach, and it is perhaps unavoidable for front-line roles because the skills required for coaching a team in a machine shop are quite different from those required in an assembly cell, due to the different technologies involved. However, as you move up the organization, you need to challenge this process-centric organization and try to organize your factory as your customer sees it—in value streams.

The problem with the process-centric structure is that once you put someone in charge of a process department, you tend to align their performance measures and their focus to that one specific department. The manager of that department has the responsibility of optimizing operations in that one specific area only. This often puts the manager in conflict with the needs of the overall value stream. For example, the supervisor of a packaging printing department is likely to be measured on the number of sheets or meters of output from printing. The overall output from the value stream and the fact that he might be flooding the finishing area with work-in-progress (WIP) is not his concern. He will also be reluctant to run shorter runs or slow production to match demand because it may reduce the output of the printers and make his personal performance metrics look bad, even if the additional printer output is not needed. Introducing one-piece flow becomes difficult or almost impossible as it involves bringing assets from multiple departments together into one cell, which is in the interest of none of the individual functional departments. It is much better to start with a value stream and appoint a leader for each value stream, cutting across the process boundaries.