To begin, let's look at a value chain analysis case that Peter did when he was working in the aircraft leasing industry.
1: Value chain mapping of key business processes
Value stream mapping is the process of analyzing the flow of materials or information within an organization to identify areas of waste and improve overall efficiency. It is similar to process analysis testing, which breaks down and explains various procedures or tasks into manageable steps. Value stream mapping can help organizations streamline their business processes and reduce costs.
Example of value stream mapping
Example of a simplified value stream diagram
Peter's Example: Value Stream Mapping to phone number in the philippines Diagnose the Financial Close Process
Peter shares a case in the 1990s at GE Capital Aviation Services (GECAS) where he was challenged to reduce the time it took to close the books.
"To begin with, in GECAS, we had planned 13 or 14 days of work to close our accounts. The challenge was to try to close in three days. The only real approach is either to start from scratch, which is very difficult to do, or to map the process. From start to finish and understand, within that process, where the big chunks of time and the big chunks of effort are.
In our case, we literally dissected the process. Working with a team in finance, we looked at all these big chunks and created charts to show where the problems were. Our analysis revealed a classic Pareto chart, where 80% of the problems came from 20% of the work. When we looked at the entire close process, we found that processing time was being impacted by things like manual journal entries and other waste that you have to deal with to balance your books.
Once we had the complete process map, we assessed where the real value was coming from and what we could do to reduce non-value-added work. Then we systematically attacked the inefficiencies and eliminated thousands and thousands of manual journal entries, accruals, and all the other things you have to do yourself until you can close your books. The net effect of this project was that we were the first group within GECAS to reduce our close time to three days.”
Peter's advice : "Value stream analysis helps you rethink why people work the way they do. Accounting is a good example of a function where there are all sorts of tasks where people check things, and auditors check the check again. It's about mapping all of these tasks into a value stream and analysing where the value is added from all of these control cycles. Often you find ways around manual work or identify ways to do things more efficiently."
