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Value Stream Mapping A-Z: Your Complete Guide to Principles and Best Practices

This guide teaches you the benefits of value stream maps, the step-by-step work streams to create an effective VSM strategy to reduce all forms of waste; and various best practices to learn how to build a value stream map.

What Is Value Stream Mapping?

Value stream mapping is a powerful visual tool to improve any business by reducing potential waste in handoffs, relearning, and delivery; bottlenecks; delays; defects, and other areas where the company could be more efficient.

The basic premise of value stream mapping is this: you take a look at the steps that go into making something happen and then figure out whether those steps are truly necessary or if there are any that are superfluous.

You can further use VSM to identify any opportunities for improvement that might exist within your organization’s workflow; find parts of your business that need attention first, and create action plans for improvement.

Research suggests that VSM can be used by teams of all sizes and within all industries, however it is especially useful for large organizations with multiple departments working toward the same goal. These kinds of organizations often follow many different steps from the time an idea is conceived until it reaches customers. Value stream mapping helps optimize those steps, as well as resolve potential problems faster and redundancy-free.

In this guide, we will discuss:

1. The benefits of VSM

2. How to create a powerful value stream map in just a few steps

3. The application of value stream mapping and the best industries where its use cases are most useful

4. A comparison between the three types of VSM

5. The powerful metrics to measure value stream mapping success

6. The pros and cons of value stream mapping

7. Indispensable tips and best practices to optimize your value stream strategy

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The benefits of VSM

Why use value stream mapping in the first place? At its core, the benefits of value-stream mapping for company owners, managers, and employees revolve around creating the most powerful products at the least cost and at the least waste of resources.

Here are the more specific benefits for various groups:

For Employees

  • To improve career performance and chances for promotion. When employees identify areas where they can provide better service or increase productivity, they can see how their work fits into the bigger picture of what the company does as a whole. This helps the management see how their contribution matters, resulting in a better chance of promotion and a subsequent paycheck increase.

For Managers

  • To identify areas where employees are wasting time or doing unnecessary tasks. With VSM, managers are able to eliminate those tasks and make sure that employees are working on tasks that add value to the company. This will increase productivity by allowing employees to focus on what matters most: adding value and reducing waste.

For Employers/Entrepreneurs

  • To help business owners reduce waste that cost them their capital. With VSM, business owners can identify where waste is occurring and then eliminate it so that employees aren’t overworked or spending time on unnecessary tasks. This means less wasted labor costs for your business.

How to create a powerful value stream map in just a few steps

Value stream mapping is already an established strategy to stay relevant in a disruptive global market. But how does one actually go about creating a value stream map?

Here are the four core steps you need to incorporate into your value stream mapping template, regardless of how you customize your workflow according to your unique business structure:

Step 1: Identify all the value streams and processes in your company to improve

In a first step, you should focus on identifying all of the processes involved in creating or delivering your product or service. This also includes defining your goals and objectives for this project. What do you want out of them? Are they going to help you improve your company’s efficiency, or are the steps just going to be a way for you to get the product released in the market?

For example, if you’re a manufacturer and produce shirts, then each step leading up to the point where the shirt leaves your factory would be included in this list (ie: design, materials sourcing, manufacturing). Don’t forget about shipping because it plays an important role in delivery times as well as customer satisfaction levels if there are delays or errors along the way.

In this initial step, always make sure to ask questions like “What does it take for our product or service to get from point A (idea) to point B (customer) at the lowest cost and best price?” or “What does it take for us to make x amount of money in 2 months?”

This step should include:

  • how to map out each step in the process
  • how inspectors can measure the time taken for each step of the process and identify where there are delays (usually due to bottlenecks)

Step 2: Identify the leaks, bottlenecks, and other sources of waste

To continue, you need to look at your current workflow and determine where exactly time is being wasted. This is where the actual value stream mapping comes in: it helps you identify where there are bottlenecks in your processes and find ways to eliminate them so that your team can focus on other things (like making customers happy). This could be anything from improving communication between departments or rearranging equipment/materials so they can more efficiently be used by employees during their shifts, following the 5s system, for example.

This step should include:

  • how to properly use the standard symbols to explain value streams
  • how to spot problematic handoffs of processes during delivery through stations

Step 3: Create the map

How do you draw a VSM? Decide how extensive and detailed your map should be; just remember that bigger isn’t always better. Make sure that all of the information on the map is relevant and necessary for its purpose, yet concise and clear at the same time.

Don’t forget to rank all the activities by importance, starting with those that have the greatest impact on your customers and ending with those that have the least impact. Draw arrows between each step, showing how they connect with each other and what information flows between them.

If there are any steps that should be removed because they aren’t adding much value or taking up too much time, draw an arrow pointing away from it on either side of the box representing those steps.

Remember to:

  • optimize team communication and collaboration using value flow mapping
  • use the map to create value stream visualizers that teams can use to consciously improve work culture and attitude

Step 4: Track each activity and progress through the steps, beginning with the most important.

As you go through this next step, ask yourself this question: “If we stopped doing this activity right now, would our customers notice?” If they would (e.g., if it’s a necessary part of delivering their product), then it needs to stay on the list. If they wouldn’t (e.g., if it’s a necessary part of delivering their product but is done behind the scenes) it is fine and likely even beneficial to remove it from the list and move on to the next one. When you’re done mapping out all of your activities, carefully review them to ensure you’re continuously improving and nothing gets left behind.

Don’t forget to

  • draw a VSM complete with feedback loops and suggestions for continuous improvement
  • create audits and processes with the lowest LOE (level of effort) that balances between potential value of executing the VSM versus its costs to make sure the return on investment (ROI) makes sense
  • get all the experts across departments to work together since creating a VSM is vastly cross-functional and layered

The application of value stream mapping and the best industries where its use cases are most useful

These are the major industries where the use of value stream mapping steps can yield dramatic results when implemented correctly:

  • Technology
  • Finance
  • Software as a Service (SaaS)
  • Agriculture
  • Cleaning Services
  • Construction
  • Emergency Services
  • Facility Management
  • Food & Hospitality
  • Health Services
  • Horticultural
  • Manufacturing
  • Pharmacy & Chemistry
  • Professional Services
  • Project Management
  • Real Estate
  • Manufacturing
  • Transport & Logistic

VSM can further be employed in conjunction with various other lean methods and strategies, and benefit their effects significantly.

Value Stream Mapping in Six Sigma

Value flow mapping is a tool used in Six Six Sigma to help businesses improve their processes by optimizing all the steps that it takes to get a product released, so you can see where you can cut out waste and make improvements.

The idea behind VSM in Sigma is simple: if you know where your business starts, and where it ends up, then you can identify process steps that aren’t adding any value. Those steps are called “non-value added” steps, and they’re easy to spot when you’re looking at a value stream map.

Value Stream Mapping in Scrum

Scrum is a management framework that was developed to help teams deliver high-quality products quickly, most often used in software development and product management. It can also be used in other areas such as marketing and training.

When you use Scrum, you break down all of your work into small chunks called sprints. Each sprint lasts between 1–4 weeks and focuses on one part of a larger project or task. During each sprint, you do your work with two things in mind: speed and quality. You move quickly through all of your tasks so that you can get them done as quickly as possible without sacrificing quality.

Lean value stream mapping is one of the key concepts in Scrum. It’s a way of achieving Scrum with success at the lowest cost and the highest quality. A value stream in Scrum is all the activities that are necessary to deliver value to your customers, which may include everything from designing and building a high-grade product, all the way to selling it to customers and handling customer service issues.

Coworker taking notes during a VSM design walkthrough

A comparison between the three types of VSM

What are the key objectives of value stream mapping? The answer to that depends on which type of VSM feedback you use. Value stream maps are a powerful tool for visualizing, analyzing, and improving the flow of work in your organization, but only if you use the right type.

There are three different types of value stream maps that help you streamline your current processes and set your team up for success in the future:

  • Current Value Stream Map: This map shows how your current process works, including your starting point if you’re trying to improve a process that already exists within your organization.
  • Ideal Value Stream Map: This map shows how you’d like the process to work, based on the goals outlined by your team or management. It helps you set ambitious targets that can be used as benchmarks as you move forward with improvements.
  • Future Value Stream Map: This map shows what an ideal future state might look like after several rounds of improvement have been made along with other changes within the organization (e.g., new technology). It’s where companies want their processes to end up after implementing changes over time, which is also something you may see in Value Stream Mapping vs Process Mapping comparison.

The powerful metrics to measure value stream mapping success

To measure success, there are a number of metrics that can help you understand how well your product is doing and choose the right value mapping type, and whether or not VMS is actually helping your company grow.

Here are the top value stream metrics for measuring success:

  1. Lead time This metric measures how long it takes to move an item through a process in your workplace, from start to finish. This can be measured in hours, days, or weeks. Lead time is typically measured from when work begins to when it’s complete (or nearly complete) and ready for inspection or shipment. Other variables you need to understand for these metrics include: Process Time (PT), Work-in Process (WIP) and Percent Complete and Accurate (%C&A), Activity Ratio (AR), and many more.
  2. Inventory levels This metric calculates inventory levels at various stages of production by taking into account what’s in stock and what’s needed to complete the next step in the process. Consider how much inventory is required for each stage and how much excess inventory exists at each stage. You can also calculate average inventory levels per day or week by dividing total inventory by a number of days or weeks in that period.

    For example, if you have $100 worth of product on hand on Monday morning but only $50 worth on Friday afternoon (that’s half as much), then your average inventory level over those four days would be $100/4 = $25/day.

The pros and cons of value stream mapping

Value Stream Mapping has been around for quite some time now, and it’s gaining in popularity. However, while value stream mapping’s benefits outweigh the costs, the method also has its own share of drawbacks.

Here are the PROs and CONs that managers, employees, and business owners must not dismiss about initiating value stream mapping strategies in their workplace:

Advantages of Value Stream Mapping

  • Implementing VSM helps you to understand how your business works on a larger scale. This helps you understand customer value and design customer-centric processes, and makes everyone involved in making decisions about your company’s operations.
  • VSM helps you identify bottlenecks and improve efficiency by reducing expensive customer service costs that cause delays and redundant task switching. This is because VSM helps you understand what is happening on the shop floor and creates a common language that your employees can use to communicate more effectively and efficiently, so informed decisions about how to improve it can be made.
  • It helps you make continuous improvements by identifying the root cause of problems and opportunities to solve them. This can be done by creating a visual representation of your workflow, which helps everyone involved in the process to better understand their roles and where they fit into the process.

Disadvantages of Value Stream Mapping

  • You might miss important factors that don’t show up on a value stream map. To avoid this problem, try using another analysis method alongside your value stream map, such as Root Cause Analysis or a Fishbone Diagram.
  • You’ll need qualified employees who are able to make sense of data from multiple sources. This may require some training on Total Quality Management and VSM together before getting quality results. If there aren’t enough people in these roles (or if those people don’t have enough training), then your organization may not be able to get much value out of this technique right away—or ever. If you’re just starting out with value stream mapping and have never implemented anything like it before, then you may want to try something simpler first (such as 5S or Lean) before moving on to more complex lean tools like this one.
  • While VSM can be useful, it’s not always a good idea to use it as a stand-alone tool. Sometimes your company process is too complex for value stream mapping alone, which is why VSM is best used in conjunction with other tools— such as Lean Six Sigma or Lean Startup— to help you understand your business processes and identify opportunities for improvement.

Indispensable tips and best practices to optimize your value stream strategy

You’re probably thinking: “How hard can value stream mapping be?” After all, it’s likely that you’re very familiar already with the ins and outs of your company’s workflows and processes.

That might be true, but the problem is that it’s easy to get complacent. To avoid costly mistakes in the complacency of building a value stream map, here are some dos and don’ts, industry-vetted tips, and best practices for your company to follow:

  1. Start with something simple first. In trying to generate higher profit margins per customer using value stream mapping, make sure your VSM is clear, vivid, easy to implement and measure, and can convey a large bulk of vital information at a glance. This will allow you to see real results and build momentum toward larger changes later on.
  2. Use simple but powerful checklists alongside your value stream mapps. For best execution, find a comprehensive checklist software that can itemize everything you need to assess in your VSM strategy. Make sure the software or app is trusted and can be accessed anywhere, anytime, by anyone on the team for quick and high-quality results.
  3. Make sure you have the right people on board for value stream mapping. It’s important to put together a team of people who know how the company works, so that they can identify problem areas and fix any issues in raw materials and the final product faster. You should include employees from different departments and sometimes even customers and suppliers for a holistic approach.

    Your team can be as small as two people or as large as 20 people depending on the size of your organization and the length of staff training. Make sure you include people from different departments who have different perspectives on different issues. This will help to ensure that you’re getting all of the information needed to identify problems with your process.

  4. Sketch the map by hand first for a better-detailed plan. When you’re developing your value stream map, it’s tempting to jump right into the software and start creating a visual representation of your current system. But sketching it by hand first is a more effective way to get started with this process. Experts explain that sketching by hand is an effective way to think through the steps in your value stream before you start drawing it out on the computer.

    By drawing out your ideas on paper, you’ll be able to see if they make sense before you commit them to digital space—and you’ll also be able to see if there are any gaps or holes in your thinking.

  5. Use examples in your Value Stream Map. For example: “Inventory Type” examples might be high-value goods or low-value goods. “Complexity Level” samples might be complex or simple products that go through the process because they have related processes that must occur before they can leave the process flow.
  6. Ensure that everyone on your team has access to all assessment data. This way, they can create better value-added and non-value-added steps, as well as make informed decisions on defect waste management and waiting costs based on real numbers rather than just assumptions.
  7. Be as detailed as possible in your illustration elements. Identify all bottlenecks or delays in the process by drawing red circles around them and labeling them with their specific cause so that they can be addressed later when doing analysis.
  8. Understand the boundaries of your process. This will help you identify the activities that need improvement, and the limits of what your map can solve. Don’t forget to include variables, such as: waiting expenses like heating, lighting, cooling, and the risk of contracts and materials expiring because of delays.
  9. Try improving the product at its end and work your way back to its origins. If you’re trying to figure out how to improve your supply chain and reduce waste in handoffs and delivery, you may try to start by looking at where things are ending up—the finished product or service—and work your way back toward its beginning.

    The same goes for a value stream map. The further away from the end result (or “end customer”) you are, the more likely you are to find ways to improve efficiency and reduce waste throughout the process. The closer you get to the “end user”, the more complex things get and the less likely there will be substantial room for improvement.

  10. Strengthen the initial phases of your mapping, like raw materials and product development inputs. This perspective can be very revealing when it comes to identifying opportunities for improvement. For example, if you know where each part of your process starts and ends—and where each piece of inventory sits at any given point in time—you can get a sense of just how many steps are being repeated unnecessarily.

    This will also give you a sense of how long things take to move through your system, which gives you insight into whether there’s any waste happening during transit or waiting time (or both).

  11. Make your products customer-obsessed throughout the value mapping process. If you’re trying to grow your business, it’s important to realize that your product is more than just a product. It’s an opportunity to change the lives of your customers. Thinking this way shifts your product from profit generation to changing the lives of people in ways that they will want your product or service perpetually.

In a nutshell…

Value stream mapping is an important tool for identifying waste and improving your facility or company’s processes to generate higher returns. In this guide, we covered how to use value stream mapping to hit these goals, including detection of the causes of process inefficiencies and how to take actionable steps towards improvement.

VSM is a process of identifying all of the steps involved in your product or service delivery. You can then look at each step and determine if any of them are unnecessary or inefficient. If so, you can remove these steps from your process and improve efficiency. By taking time to map out your current processes and identify areas for improvement, you will be able to optimize your business operations and grow as an organization.

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