The point of embarking on a lean or Operational Excellence initiative is to grow the business and sell more products at a lower cost. To accomplish this, we focus our efforts on flowing value to the customer with as little waste as possible. Here, think of waste as anything that disrupts flow. In other words, if we have waste present in our value stream (or things that disrupt flow), then by definition we will not be able to create a flow of value to the customer.
If creating a flow of value to the customer is the goal, then what is the first step in creating flow? Conceptually, the first thing to understand is that flow through a value stream must be designed using principles, guidelines, and math.
This is very similar to how engineers design a bridge to cross a certain distance while bearing a certain load: they use principles, guidelines, and math (i.e., the laws of physics, statics, dynamics, and so on). In other words, what they don’t do is sit around a conference room table and offer opinions on how much load the bridge will bear, and we don’t want to do this either when it comes to designing value stream flow in our operations.
Knowing that flow must be designed using principles and guidelines has a few ramifications for how we think about our lean activities. While going around the shop or facility and eliminating waste is a good thing to do, as customers don’t want to pay for our waste, eliminating waste will not, by itself, create a flow of value to the customer. In other words, flow is not something that will just “happen” on its own unless we design our value streams to flow.
So, what is the first step in designing a flow of value to the customer? Determining product families. We do not attempt to create flow for the whole shop or plant all at once but rather we group together the products we make (or services we offer) into more manageable buckets and then tackle those one at a time.
Creating product families is one of the most important steps in designing value stream flow because all the steps that follow are applied on a per-product family basis. If we get this initial step wrong in determining product families, it’s very hard to recover from because our design efforts will have started pointing in the wrong direction from the beginning.
Remember that the reason we are looking to design flow for each value stream is so we can tell when the flow in any value stream has stopped, and this tells us something has gone wrong in the flow of product to the customer. Note that the typical benefits associated with creating flow are all good (decreased lead time, increased throughput, increased efficiency, and much more) but the reason we create flow is to be able to see when it stops.
If the design of value stream flow does not follow the proper methodology, with the first step being to define product families, then the following is likely to result:
- Flow will be difficult to achieve in each value stream
- It will be very challenging to understand if the value stream is operating normally (because we do not have flow)
- Management will need to continuously be involved in the day-to-day running of each value stream, leaving less time to focus on growth activities
Product Family Do’s and Don’ts
In Operational Excellence, when we talk about product families, we are referring to how products are made on the shop floor and are thinking of our products in this way in order to understand how best to flow them to the customer. Again, though, we are considering our products purely in terms of how we make them in our facility.
Product families in Operational Excellence have nothing to do with the customers to which the products are sold or how the products are grouped together on the website because these considerations have nothing to do with how the products are made in the facility.
In the examples that follows, we’ll look at how to determine product families in production manufacturing, where discrete parts or products are being made. The following scenarios will be examined later on:
- Service operations (meaning nothing is manufactured on-site)
- Office work
- Operations that make many products (think >1,000 or >10,000)
- Operations that make many products (think >1,000 or >10,000) but where the timing data on the products is largely unknown
- Job shop environments (e.g., we can custom make anything you want, but we might never make the same product twice)
To begin determining products families, start with your active part numbers. Do you have some part numbers that haven’t been made in 5 years? Don’t include them for now, but don’t forget about them either. We still need to account for where they fit at the end of this process, but we do not want them to drive this process either.
Next, take the active part numbers and arrange them in a grid (note that the grid below is a simple example for teaching the basic concepts about how to create product families).
In the column headings across the top, list the processes or equipment in the plant (these are the peach-colored boxes in the image). Note that if you have similar processes with different capabilities, then list them out in separate columns. For example, if you have two CNC lathes, but one of them is dual-spindle lathe and the other is not, then list out both lathes separately.
Down the left side, list the active part numbers (these are the blue-colored boxes in the image). Wherever a part goes through a process, put an “X” in the grid square where the two intersect.
Next, looking at the column headings, and moving from left to right across them, typically there is natural break at some point between upstream or shared processes and the processes that come after the shared processes. In the image, this is represented by the vertical red line (note that this line is seldom perfectly vertical, and this is okay).
Going forward for the rest of our processes used to determine product families, we are only going to look at the processes to the right of the red line, the downstream processes. For now, ignore any processes to the left of the line.
Looking only at the downstream processes, the first criterion we use is to group products together based on a minimum 80% commonality in the processes through which they go. So, for example, if two parts have 80% process commonality, they are potentially in a family. We do this with all the part numbers in our grid, but keep in mind that this is only the first step in determining product families.
Once this step is completed, we get the image below.
Here, we can see that we have three potential families: one group of parts circled in green, one group of parts circled in purple, and also the radon detector in its own family.
Remember why we are creating product families – as the first step to being able to flow value to the customer. To do this, we need to understand where commonality exists in how we produce our part numbers.
With this in mind, we can see that there is not enough commonality between (for example) the radon detector and the parts circled in green to warrant including all five of them together. Trying to flow these parts together would be challenging since they don’t go through enough of the same processes. The design we would create for such a hypothetical product family would only cover some of the products or some of the processes, and we want the design to cover as much of both as possible.
We mentioned before that the products circled are potentially in a family. This is because we are not yet done with our product family analysis.
The next step is to understand how long it takes to produce each part. To do this, we replace each “X” with the time it takes to produce the part at that process, then add up the rows (see image below).
What do we do with this information? Up to this point, we have ensured that our potential families have commonality in the processes through which they pass. In order to still be considered a product family, within the potential family, the time variation between the longest product and shortest product should not exceed 30%.
Calculate this by subtracting the lowest time in the potential family from the highest time in the family potential family, the dividing the difference by the highest time in the family. For example, within the “green” family, we get (68 – 33) / 68 = 51% variation between the longest and shortest product in the potential family. This is too much variation for all these products to remain in the same family.
Remember that we are doing this product family analysis to determine how best to flow our products to the customer. If there is too much time variation in how we make the products in the same product family, the flow will be choppy at best or otherwise impossible to create.
So, even though it looked like we had one family circled in green, in fact we have two.
At this point, there might be a question as to why we can’t combine the products in the purple family and orange family into one family. After all, their times are very close together: (68 – 65) / 68 = 4% variation between the longest and shortest product, well within our target of 30%.
The reason we cannot do this is because we only look within a potential family when considering how long it takes to make the products. In other words, this step comes after the first step where we look to process commonality, and this is why we can’t combine the purple family with the orange family. If we don’t have at least 80% process commonality, then it doesn’t matter if the total times are close to each other because there is not enough overlap in terms of how the products are made on the shop floor.
After this, the final step is to bring in product experts to determine if we have unintentionally created any untenable manufacturing scenarios. For example, what if the “Motion Activated Arm” needs to be made in a clean room, and the “Manual Activated Arm” needs to be made on a line with grease and other lubricants present? We would not be able to tolerate the risk of contamination, so these two products would need to be in different families even though “the math” says they could go together. Bear in mind that this final step comes at the very end (don’t begin with this step, in other words, as we run the risk of inadvertently excluding products from families where they otherwise belong).
The Next Step
So, we’ve created product families…now what?
Recall that to create a flow of value to the customer, the first step is to determine product families. Why? Because each product family becomes one value stream.
Value streams are defined as the flow of products in one product family. In other words, value streams do not have some ambiguous definition (or worse, are defined dependent on where you work or who you ask). The flow of value through a value stream is all about flowing the products in a product family through that value stream.
Once product families are determined, we then create a current state map and apply a series of guidelines to that current state to design the future state. For example, in production manufacturing, the eight lean guidelines1 used to design a future state are as follows (you might have seen them before):
- Finished goods strategy
- Continuous flow
- Pull (Supermarkets)
- Try to schedule only one point
What do we apply these guidelines to? The guidelines are applied independently to each value stream in the facility. And how do we define a value stream? As the flow of products in a product family.
This is why creating product families using the correct methodology is so important. Product families become value streams, and then the way we design a future state flow for the value stream is by applying the guidelines to each value stream independently. If our products families (and, therefore, our value streams) are not founded on this rigorous analysis that considers how the products are made in the facility and how long they take to make, then applying the design guidelines becomes very challenging to do, as there will be very little commonality in the products we’re trying to work with.
As you review your current product families, consider whether they have been constructed using the following methodology below:
- Only active part numbers have been considered as part of the product family analysis.
- There is a minimum 80% commonality in the process steps or activities each product in a family goes through.
- Within each family, there is no more than a 30% difference between the time it takes to complete the longest product and the time it takes to complete the shortest product .
- Product experts have been brought in to ensure there are no untenable manufacturing scenarios.
Follow these steps, and you will be well on your way to creating flow in your operation.
1. Rother, Mike and John Shook. Learning to See: Value Stream Mapping to Create Value and Eliminate Muda. Lean Enterprise Institute. Cambridge, MA. 1998.