Agility Launches Value Stream Mapping to the Next Level

Thought Leadership |

Hybrid models are being seen as a useful tool to combine conventional methods with Agile approaches. One of them is Value Stream Mapping. This is a quite known lean methodology. Enhanced with some agility it provides a state-of-the art tool for process optimisation as well as supporting underlying changes within the organisation. Through the iterative nature, quick-wins can be achieved at an early stage and therefore will provide the desired value with less attached risk.

The business environment is changing and there are both challenges and opportunities on the horizon. Driven by multiple business objectives including increasing industry requirements, decreasing financial returns and rising operational risks, the need to optimise the bank’s processes, functions and infrastructure has come into focus. A number of Tier 1 European banks have already started to implement and execute this optimisation process by focusing on building capital strength, reducing costs and operational risks.  In the hope to accelerate results such as transforming the business portfolio, reducing balance sheet and implementation of long term efficiency & productivity measures.

Value Stream mapping

The results of these efforts will provide attractive returns on capital, profitable growth and simplification in terms of operational efficiency. In order to realise these stages of change, banks should start to review and assess various angles within operations and business lines. This means optimise their processes (by using Value Stream Mapping), introduce new enhanced tooling such as RPA or workflow components and reviewing options to change their current operating model, with underlying changes to their IT. Some banks have recognised the need for change and have already initiated large change programs, therefore time is ticking.

This paper focusses on some activities & trends that already have initiated options to cope with the described situation and will pick one of these approaches to manage the change in an appropriate and tailored manner. Having the right tool and the experience from various projects is key for the successful outcome of an Operational Excellence project. But there is also the essence of latest thinking that leads to new opportunities.

Agile Value Stream Mapping

One of the key opportunities is to explore and adapt new methodologies. Agile seems to be the saviour for all issues out there. But there is also the trend to enhance common or known methods with Agile components. One of them is Agile Value Stream Mapping. This method focuses on analysing the current state and designing a future state for the series of events and/or processes.

A combination of the successful usage of Value Stream Mapping (VSM) and Agile components accelerates the future state outcome and leads to a more integrated and holistic view.

But how does this hybrid model provide the desired outcome?

Agility focusses on an iterative VSM process – to stay in Agile terms: “Sprints”. Each sprint (2-3 weeks) will focus on the 5 steps summoned below. These are followed by an implementation phase that could last up to 8 weeks. After each sprint, the subsequent sprint is in scope. The implementation will also be done in parallel.

All these iterative sprints mainly focus on a defined outcome and is also restricted to that focus:

  1. Definition & Planning: Prioritisation of the key processes and/or events in scope with the relevant owners. Observe the underlying cycle time, process time and defect rate
  2. Problem Definition: Identification of major pain points (waste) and their impact. Definition and ranking of challenges.
  3. Package of Measures: Creation of the design principles. Focus on the challenges and define key actions.
  4. Target Design & Test: Development and test of the target event and/or process and get sign-off on change in scope. Introducing potential Robotics solutions to enhance the target design and value creation.
  5. Roll-out / transition-to-live1: Implementation and tracking of changes in scope. Train relevant process stakeholders.

During the cycle or iteration, relevant processes will be marked on the Kanban board and shifted between the stages. This tool will help to keep track of the changes and the complete scope.

Hybrid model

As a result of this hybrid model, the changes are rolled out in a frequent manner. This creates value in an early stage and incorporates further changes that are identified during the implementation. Additionally, it is as a low risk method.

The benefits that can be achieved should be mapped back in the functional model and underlying IT with various potential changes. As a consequence the organisation will follow a lean process model, a far higher integration of processes and systems, reduction of IT infrastructure complexity (e.g. decommission core systems) and from an organisational point of view, termination of duplicate functions inside the organisation.

Implementation

We have successfully managed this approach at various financial services clients in Europe. The approach can be tailored to the requirements in scope and has been proven to bring the desired improvements in a shortened and less risky way. Projective can leverage experience from Operational Excellence experts that have the insights from these engagements.

Furthermore, the Projective Ecosystem will provide digital solutions (e.g. Chatbot, machine-learning optimization, open source based API) that will enhance the target outcome and might lead to an even leaner organisation. 

Published by: Kersten Meyer & Mudasar Waheed