What is VSM? Maybe a lot of people don’t know the term date. But VSM is quite a familiar phrase in Marketing. At the same time, VSM also plays an equally important role in this major. So let’s go into what is VSM? What functionality does VSM bring? And how to create a perfect VSM? We invite you to read our article below.

What is VSM? How important is VSM in Marketing

What is a VSM value chain map?

Surely many people are wondering what VSM is? In fact, VSM stands for the English phrase “Value Stream Mapping”. In Marketing “Value Stream Mapping” is understood as “value chain map”. VSM is a useful tool in Lean Manufacturing.

What is VSM? How important is VSM?
VSM? How important is VSM?

VSM is considered the most effective way to improve major processes. Currently, VSM is very popular with businesses and is widely used around the world. VSM’s system of methods will help reduce waste, reduce production time and time not adding value. Thereby increasing productivity and improving quality for the production process.

What is the core idea of VSM? Here are 2 main ideas of VSM.

  • If the process is right, the product or service will be of high quality
  • To follow the right process, you first need to understand the chain of activities that provide customer value.

To explain what VSM is seems simple but also very complicated. Hopefully, through our sharing above, you also understand a part of what VSM is. To have a more solid knowledge of this term, increase your chances of growth in the Marketing industry, follow our next sections.

The history of value chain diagrams – VSM

Many people still wonder what is VSM? Where did it originate? In fact, this type of diagram has been around for a long time. In 1918, the book “Installing Efficiency Methods” by Charles E. Knoeppel. Later referred to the “Value Chain Map” with the name “Materials showing the flow of materials and information”. Later this type of scheme became known and associated with the Japanese Toyota system. It was not yet called a value chain diagram, but it worked and was praised in the lean manufacturing movement.

VSM - Lean Manufacturing Tool
VSM – A useful tool of lean production

Up until the 1990s, the lean production system was widely used, spreading to the whole world. At that time, the concept of “Value Chain Map – VSM” was born. At the same time, VSM also affirmed its value when it became the central and core element of the lean methodology. The concept of what VSM is is getting more and more attention.

What is the purpose of VSM?

VSM will show the whole process happening from start to finish. You can create a visual map to review all the information and documents from the time the order is received until the products are delivered. From there you can:

Value Chain Mapping - VSM
Value chain diagram – VSM
  • Identify the specific cause of waste.
  • Identified which steps bring value and which do not bring value to customers
  • Identifies which steps are problematic, which details do not make sense, and eliminates errors and improves efficiency.
  • Intuitive process.
  • Connect to the flow of information and materials.
  • Platform for improvement.
  • See the correlation and contrast of the steps in the process.
  • Identified the key issues to be streamlined
  • Anticipate abnormalities and provide timely solutions.
  • Understanding customer needs.
  • Create a new value chain map.
  • Basis for prioritizing lean methods.

The above factors have explained specifically what the purpose of VSM is. VSM – Value chain maps often tend to show what has happened and is happening rather than what is desired. As a result, you can promptly grasp and solve problems immediately. This will be the basis, the foundation for you to come up with good initiatives to help reduce waste and increase value.

What are the benefits of VSM?

Through the above explanation, perhaps you also have a brief understanding of the concept of VSM, right? So now let’s go to find out what are the benefits of VSM? This is also an important part to help you understand the value of VSM. From there, capture and make the best use of the value chain map, bringing benefits to your business. The following are the outstanding advantages of value chain maps that you need to grasp.

Important benefits of VSM
Important benefit of VSM

A comprehensive overview of the process

In business/manufacturing, a value chain map is essential. Thanks to it, businesses will have a tighter grasp of all elements in the process. It can be said that this is a picture that is both comprehensive and detailed, helping users not to miss any problems. VSM helps businesses understand the needs of customers and how to produce and deliver the products they want. Thereby, businesses realize which elements are needed and which are redundant, so that they can adjust accordingly.

Define waste types

This is one of the biggest benefits of value chain mapping. Early identification of costs has a very important impact on the business. Expenses are losses to an activity that does not add value to the customer, making them less willing to spend on it. There are 7 most common types of waste:

  • Inventory
  • Shipping
  • Excess movement
  • Waiting
  • Overproduction
  • Production is not necessary
  • Defective product

Through the above findings, businesses can quickly come up with appropriate solutions.

The role of VSM in business
Role of VSM for business

Simpler workflow improvements

The value chain diagram shows the location that needs to be changed or supplemented. At the same time, it indicates a new direction, optimizing results. You can also experiment with calculating certain stages in the process without affecting other stages.

VSM allows you to plan for improvement, or make continuous improvement, more easily. VSM provides the most effective way to reduce waste, prevent waste, and promote labor productivity.

It is because of the above benefits that the concept of what VSM is is no longer strange to everyone. Many people seek and exploit value chain maps more appropriately. VSM is becoming more and more popular and is a top priority for businesses. Because of the above benefits, mapping the value chain is a necessity. So what is VSM  value chain mapping? What steps should be followed? Please continue to read the article to know how to set up a VSM!

Simple steps to create a VSM Value Chain Map

Value chain mapping – VSM will help businesses more closely manage activities in production and business. Thereby supporting the development of the business. Following are 5 simple steps in the VSM establishment process.

Product group identification

This is the first and very important step – defining the product, the product line. You will choose a production process of something that you want to improve. Then define a start and end point for it. This is the most important rule, as it makes it possible to draw a diagram from start to finish, within the appropriate range. From there you can see the unnecessary elements that change or eliminate. Businesses often spend a lot of time creating value chain diagrams for only one product line.

Determine current flow

After defining the product range, we next look at what the current workflow looks like and map the current flow. First of all, you need to understand the needs of your customers. To create an effective VSM you need to show what happens? By gathering stakeholders and conducting information gathering. Exploit all tasks and activities necessary to meet customer needs.

Watch and confirm the process

The mapping will begin with a fact-finding at the warehouse. Usually the documentation teams will start with the delivery or shipping process. Next go back to value chain testing, evaluating each step in the process. And finally stop at the first step where the warehouse receives the goods.

VSM establishment process
VSM establishment process

Set flow

This is a very important step  in the process. After gathering enough information, the team began to draw the product flow. This work usually includes the following activities:

  • Fill in data under each process: Number of operators, cycle time, quality, error,…
  • Record the amount of work in each process, inventory items.
  • Profile information flow.

Plan implementation

Implement a value chain map
Implement the value chain diagram

This is the last and most important step in the process. In this step we will plan the implementation to achieve the desired future. Here the implementation team will be divided into two parts: present and future. Currently are the issues that can be improved, priority to be completed first. Then future problems become present and continue to make continuous improvement.

VSM Tool Application

What is VSM? That keyword is not only familiar in a fixed industry. VSM value chain diagram is quite popularly applied in many fields. Such as:

  • Removal of production waste
  • Dealing with waste and delays in the supply chain
  • For the healthcare sector, VSM helps improve the treatment process, reduce costs, and is highly effective.
  • In the administrative field, it helps to limit the procedures and shorten the time to complete.

So you already know what VSM is, right? This is definitely an ideal tool for businesses, an indispensable marketing support tool. If readers want to know more information about what VSM is, they can contact us via website: https://www.vsm.vn/. We are happy to answer your questions.