What Is the Definition of Value Stream?

Value stream mapping is one of the key elements of Lean and Lean Six Sigma methodologies. Without adequate information about the value stream for a specific business operation, implementing improvements and increasing efficiency would be less than optimal at best. But what exactly is the value stream and why is it such an important concept within the Lean philosophy?

Tip

The value stream definition refers to the steps a company uses to provide a service, product or experience that actually add value to the process.

The value stream for a business process is the series of steps that occur to provide the product, service and/or experience the customer desires. Thus steps that do not add value, that represent waste or that a customer does not want and would not pay for are not part of the value stream, meaning they'd be removed.

Business leaders often have trouble distinguishing between steps that for technical or business reasons must be included and steps that are actually value-added (VA) according to the customers' expectations. It helps to think about whether a customer would complain if you deleted a step. If the answer is yes, the step is truly VA; if not, it cannot be considered VA, no matter how necessary it is for the business to provide the final product or service.

Other questions to ask are whether the customer would pay more for the product or service or have a preference for it over the competition with that task included.

In identifying the value stream for a business process, it is helpful to evaluate each step based on the criteria above to assess whether it is value-added (VA) or non-value added (NVA). To do this, solid information about customer expectations for quality and value must be obtained; assumptions about what customers want and expect are not sufficient.

Some groups find it useful to add a third category to represent steps that are not VA, but that really must be conducted to create the final product or service. These steps are referred to as business-value added (BVA) steps and may include tasks required by regulatory bodies or for company financial reporting.

Once the value stream is identified, the ultimate goal is to eliminate all other steps from the process. Steps that are NVA should definitely be removed; BVA steps should be reevaluated and eliminated if possible. By making these improvements, an organization can improve efficiency, reduce waste and improve the customer experience.

It may be tempting to think about identifying the value stream and eliminating NVA steps as a one-time project. However, customer needs and expectations can change over time, so value stream management involves assessing existing products and services periodically to ensure the originally identified value stream still applies and is being followed. The value stream should also be clarified prior to establishing new products and services.