Lean

Difference between a Value Chain and Value Stream?

Difference between a value chain and value stream

Have you ever wondered what is the difference between a Value Chain and Value Stream? Well wonder no more.

Value Chain

In a value chain, workers in one part of the chain (the current step) of the workflow enables the worker in the next part of the value chain to create value for the customer. Each worker adds value for the next worker in the next step. This implies that value increases after each step in the workflow and ultimately delivers the anticipated value to the customer.

Value Stream

A value stream is described as the sequence of steps from start to finish, from concept to return on investment. To analyze the flow of information within these steps we use value stream mapping (VSM) to understand the flow of value through the value stream to the customer.

Understanding the landscape of the values streams within an organization allows individuals to see the bigger picture in which they are involved in. It allows an organization to optimize that value stream and focus it around its ultimate purpose: the flow of value to the customer.

Doing value stream analysis allows Agile teams to see where problems exist in the stream by using Lean to identify the root cause of the problem and common sense to fix it. Enabler spikes can be utilized to describe and address the inefficiencies within the stream to reduce risk and increase value. Visibility into the entire value stream allows us to simplify auditing and reporting processes while using metrics to demonstrate compliance.

Optimize for Fast-Flexible-Flow

Value streams in Lean organizations are created through a coordinated effort among business, management and delivery teams. The application of Lean improves communication as a whole as everyone is focused on end-to-end delivery of value creation. According to systems thinking a team is only as capable as the processes in which they operate. To focus on delivering continuous flow of business value teams utilize the Emergent Design method. They perform activities just-in-time (JIT) which reduces risk, eliminates waste and shortens the lead time (time to market).

Optimize the Value Stream

Value Stream Mapping (VSM) enables the business team to record things like supplier, input, process, and output as customer diagrams. Failure modes are made visible and starting point to begin effects analysis, perform technical feasibility studies (in the form of Enabler Spikes), and to solicit feedback from customers.