Value Chain and Value-Stream Mapping
Two “value” tools that look similar and work at different scales. The first shows where an organisation creates value; the second shows where one flow wastes it.
Porter’s value chain
Michael Porter’s value chain (from Competitive Advantage, 1985) splits a business into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (firm infrastructure, human resources, technology, procurement). In BPM it is the usual starting point for the top level of the process-architecture-and-governance: each primary activity becomes one or more end-to-end processes.
Value-stream mapping (VSM)
VSM comes from lean and the Toyota tradition (taiichi-ohno). It maps the steps, information flows and waiting between a customer request and its delivery, and records for each step the process time, wait time and often the quality rate. The key output is the ratio of value-adding time to total lead time, which is usually small and shows where flow stops. A current-state map is drawn first, then a future-state map.
| Value chain | Value-stream map | |
|---|---|---|
| Scale | Whole organisation | One product or service flow |
| Shows | Where value is created | Where time and effort are lost |
| Typical user | Strategist, process architect | Improvement team |
| Lifecycle phase | Identification | Discovery and analysis |
VSM vs BPMN
A VSM measures flow and waiting at a coarse level on one page. BPMN captures decision logic and exceptions in detail. Teams often draw a VSM first to find which part of a process hurts, then model that part in BPMN. For quick diagrams see process-diagram-types.
Related
BPM hub, kaizen, theory-of-constraints, six-sigma-and-dmaic, bpm-lifecycle
Open items
- Porter’s activity lists are from memory of the standard textbook account; verify against the 1985 book before reuse.
Sources
- Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985
- Lean Enterprise Institute, value-stream mapping: https://www.lean.org/lexicon-terms/value-stream-mapping/
- Rother and Shook, Learning to See, Lean Enterprise Institute