Whenever there is a product for the customer, there is a value stream. The challenge lies in seeing it.

—Mike Rother & John Shook, Learning to See [1]

Operational Value Streams

Definition: An Operational Value Stream (OVS) is the sequence of activities needed to deliver a product or service to a customer.

Examples include manufacturing a product, fulfilling an order, admitting and treating a medical patient, providing a loan, or delivering a professional service. Most employees in the enterprise work in operational value streams that serve the ultimate customer directly, where they may:

  • Market the enterprise’s products and services
  • Sell and process orders
  • Manufacture products
  • Provide customer support and deliver related services

The people that develop the products and services work in Development Value Streams, the subject of the companion article, Development Value Streams. Understanding the enterprise’s OVS is integral to effective solution design and implementation. These people use the solutions;  knowing them means knowing your customer, a critical aspect of Customer Centricity and Design Thinking. OVS offers products or services to Customers, which helps keep the business profitable and healthy.

Details

Value streams are the most fundamental construct of Lean thinking and are foundational to SAFe. Lean thinking can be summarized as follows [2]:

  • Precisely specify value by product
  • Identify the value stream for each product
  • Make value flow without interruptions
  • Let the customer pull value from the producer
  • Pursue perfection

There are two types of value streams in SAFe, Operational and Development.

Each value stream represents the sequence of steps an enterprise uses to deliver value to its customer. Each highlights the flow of value, delays, rework, and bottlenecks. They illustrate how the current flow affects the people who do all the work. Identifying, visualizing, and optimizing value streams is the primary method a Lean enterprise employs to shorten time to market while improving the timeliness, quality, and value of its products and services.

Defining Operational Value Streams

Whether obvious or not, every product or service already has an OVS, the series of steps used to deliver a specific product or service to the customer. For example, fulfilling an order, admitting and treating a medical patient, or providing a loan or professional service.

Figure 1 illustrates the structure and flow of a value stream. A ‘trigger,’ usually a request for a product or service, initiates the flow. Each chevron identifies a ‘step’— an activity needed to process the order. Each step takes time to complete. The sum of all the processing-step times, plus the delay periods between them, is the ‘total lead time’ (or Flow Time). Shortening the lead time is the fastest way to reduce the time to market.

Figure 1. Example structure and flow of an OVS
Figure 1. Example structure and flow of an OVS

Value streams are persistent and enduring for as long as customers continue to place orders for their products or services. They cut across departments and functions, and each contains:

  1. All the steps necessary to convert the trigger to the delivery of value
  2. The people who perform these steps
  3. The systems they use to do their work
  4. The flow of information and materials that are necessary to satisfy that request

Comprehending the four steps above is critical to understand how value flows to customers. Figure 2 illustrates this expanded view of an OVS.

Figure 2: An expanded view of an operational value stream
Figure 2: An expanded view of an operational value stream

Types of Operational Value Streams

There are four common OVS patterns:

  1. Fulfillment represents the process of processing a customer order for a digitally-enabled product or service by delivering it and receiving payment. Examples include providing a consumer with an insurance product or fulfilling an eCommerce sales order.
  2. Manufacturing converts raw materials into the products customers purchase. Examples include consumer products, medical devices, and complex cyber-physical systems.
  3. Software products offer and support software applications and solutions for sale to the end user or enterprise. Examples include ERP systems, SaaS, and desktop and mobile applications.
  4. Supporting value streams are end-to-end workflows for various repetitive and internal support activities. Examples include employee hiring, establishing and executing supplier contracts, performing the annual audit, and completing an enterprise sales cycle.

Figure 3 illustrates an example of each type of OVS.

Figure 3. Examples of the four types of OVS
Figure 3. Examples of the four types of OVS

And although companies need functional departments to build and share knowledge, they are not value streams since they don’t deliver value from trigger (request) to delivery of the product or service to the ultimate customer. However, many of the people in these departments participate in one or more OVS.

It stands to reason that large enterprises typically offer their customers various products and services. That’s one of the ways they grow. As such, it follows that there are a substantial number of value streams within those enterprises. Figure 4 illustrates how a ‘consumer loan’ value stream is just one of a large bank’s offerings and OVS.

Figure 4. Highlighted operational value stream for consumer loans in a commercial bank
Figure 4. Highlighted operational value stream for consumer loans in a commercial bank

Identifying Operational Value Streams

Value streams provide the most essential and fundamental knowledge of how an enterprise serves its customer. There is no substitute, and the Lean enterprise continually improves its business performance by identifying, analyzing, and optimizing its value streams. The purpose of DVS is to create and advance the systems and products for the OVS. So, understanding those value streams is also indispensable to business performance.

However, unlike the footpath lighting in a dark theater, value streams do not illuminate themselves. They are complex, and perhaps no one in the enterprise understands any single OVS flows exactly. This means that SAFe Practice Consultants (SPCs) and their Lean-Agile leaders often are asked to understand and help optimize the organization’s OVS that they serve. The following questions can help with that analysis:

  • Who are your users and customers? Are they internal, external, or both?
  • What products and services do you market, sell and support?
  • What solutions do you provide for internal users?
  • What triggers the flow of value?
  • What value do your customers perceive you deliver?

Once identified, the template in Figure 5 can be used to capture a particular value stream’s purpose and attributes.

Figure 5. Value stream definition template with consumer loan example
Figure 5. Value stream definition template with consumer loan example

Operational Value Streams and Customer Journey Maps

As shown in Figure 6, customer journey maps are powerful design thinking tools. They illustrate the user experience as customers engage with a company’s OVS and its products and services. They allow teams to identify ways one or more DVS can improve the customer journey, creating a better end-to-end experience.

Figure 6. Customer journey map for the consumer loan value stream
Figure 6. Customer journey map for the consumer loan value stream

Many developers build and support internal systems that OVS uses to create the customer’s journey. Improving these underlying systems improves the external customer’s journey. As such, the people in the OVS who use these internal systems are DVS’s customers. Customer centricity and Design Thinking applies there equally well.

Improving Operational Value Streams

Finally, value streams enable value stream mapping, a collaborative process in which a group of stakeholders defines a value stream’s steps, handoffs, and delays. This mapping highlights the total time needed to fulfill a request while spotlighting areas for improvement.

Figure 7 illustrates a value stream map for a marketing campaign that supports a product launch.

Figure 7. Value stream map for a marketing campaign
Figure 7. Value stream map for a marketing campaign

With most unoptimized value streams, the wait between steps consumes most of the flow time. In this example, the total active time represents only 11% of the flow time. The other 89% is time spent waiting for steps to begin.

The natural tendency is to reduce active time. After all, that’s where the actual work is done. However, focusing solely on active time can negatively impact people, culture, and quality. That, in turn, can increase flow time and reduce economic outcomes.

Reducing the wait time between steps is typically more effective. Much of the guidance in SAFe focuses directly on this problem. Principle #6 – Make value flow without interruptions describes several practical ways to do this.

Learn More

[1] Rother, Mike, and John Shook. Learning to See: Value Stream Mapping to Create Value and Eliminate Muda. Lean Enterprise Institute, 1999.

[2] Womack, James P., and Daniel T. Jones. Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Free Press, 2003.

Last update: 26 September 2023