As enterprises considered how to transform their entities into lean embracing organizations, in 1998, Mike Rother and John Shook’s pioneering work Learning to See provided critical guidance. They wrote that “wherever there is a product for a customer, there is a value stream. The challenge lies in seeing it.”
The Lean Enterprise Institute defines a value stream as
All of the actions, both value-creating and nonvalue-creating, required to bring a product from the concept to launch (also known as the development value stream) and from order to delivery (also known as operational value stream). These include actions to process information from customer and actions to transform the product on its way to the customer.
Value stream mapping (VSM) involves identifying an organization’s value streams, mapping and examining the process flows that create value, improving by differentiating value from waste, and then transforming the organization into a lean operation. Although VSM is frequently used to examine production processes, it can also be applied to the service sector or transactional operation areas such as sales, information technology, accounting, and finance.
The terms value chains and value streams are sometimes interchangeably used but they are not quite synonymous. “Value Chain,” introduced in 1985 by Michael E. Porter in his book the Competitive Advantage analyzes how the total organization of an enterprise creates value for its customers. Value stream identification and its mapping, on the other hand, focus on improving the process of design and delivery a specific product or service to satisfy customers.