International Journal of Production Research, 2014

Vol. 52, No. 20, 61466160, http://dx.doi.org/10.1080/00207543.2014.917770

A simulation-enhanced value stream mapping approach for optimisation of complex

production environments
D. Schmidtkea*, U. Heisera and O. Hinrichsenb
a
Clariant Produkte (Deutschland) GmbH, Heufeld, Germany; bCatalysis Research Center and Department of Chemistry, Technische
Universitt Mnchen, Garching b. Mnchen, Germany
(Received 3 October 2013; accepted 11 April 2014)

Value stream mapping (VSM) is a widely adopted method for transformation of production environments into a lean
operational state. The straightforwardness as well as the completeness, with which processes are analysed and optimised,
are key to the success of the method originating from the automotive industry. However, these attributes of the paper
and pencil approach result in limitations when applying VSM in complex production environments. This research paper
targets to overcome these limitations, specically in production environments involving signicant demand variability,
complex routing and cost factors which potentially increase with lean implementation. For this purpose, an enhanced
VSM method is developed, which utilises discrete event simulation (DES). The method features a feasibility and trade-
off analysis which is incorporated into the VSM procedure. A case study covering a process of exhaust gas purication
catalyst production is then conducted to test the newly developed method. The VSM project yields a shop oor lead
time reduction from 11.4 to 1.4 d. The additional DES feasibility and trade-off analysis determines customer demand
fullment and quanties the monetary benet of the future state. In that way, potential iterative implementation which is
inherently oppositional to the lean philosophy is avoided.
Keywords: value stream mapping; discrete event simulation; process optimisation; lean production

1. Introduction
In an ever globalising economy, competitiveness is the key for the success of any manufacturing company. Over the
past decades, western manufacturers and researchers have turned towards the Japanese-originated lean production move-
ment for achieving higher productivity and thus competitiveness.
The lean concept has been derived from the Toyota production system (TPS) (Ohno 1988). Its core intent is the
development of production environments, which allow cost-optimised operation through the elimination of non-
value-added activities. TPS aims to reduce inventories as well as scrap production to the lowest possible level and
targets production cycle times (CTs) equal to the so-called takt time (TT) predened by the customer demand.
Over the twentieth century, Toyotas methods were gradually rened with a wide variety of tools and concepts,
which include Kanban Supermarkets (Monden 1981), changeover time (COT) reduction through single-minute exchange
of die (Shingo 1983) or error prevention through poka yoke (Shingo 1986).
The term lean production in the context in which it is nowadays understood by western producers was introduced
by Krafcik (1988). He concluded that what was formerly termed fragile production (no big buffers of intermediates in
between process steps) worked out as an advantage for TPS. Therefore, the negative term fragile was substituted by
the more positive sounding term lean. The nal breakthrough of the lean production paradigm came with the book
The Machine that Changed the World (Womack, Jones, and Roos 1990), in which the gap between former western mass
production and lean production is highlighted.
Today, lean production is a well-established subject of academic literature. A concise review of the development of
lean production from its roots in TPS to a globally deployed process improvement concept is presented by Holweg
(2007). A literature-based taxonomy of the wide eld of lean is provided by Taylor, Taylor, and McSweeney (2013). Upon
further interest on the evolution of lean thinking alongside its increasing popularity, see Hines, Holweg, and Rich (2004).
Effected by the growing interest of western manufacturers in lean production, researchers, consultants and the com-
panies themselves have developed integral methods for transforming production environments into a lean operational
state. One widely applied method is value stream mapping (VSM), as introduced by Rother and Shook (1999). VSM is

*Corresponding author. Email: david.schmidtke@clariant.com

2014 Taylor & Francis

 International Journal of Production Research 6147

a systematic approach for rearranging production shop oors, sites or even whole supply chain systems and eliminating
non-value-added activities. It can be described as a graphical tool used to map the as-is situation of the organisation, to
identify opportunities for waste elimination, and to decide the improvements to be implemented to eliminate the waste
(Pavnaskar, Gershenson, and Jambekar 2003).
As an integral component of the production strategy of virtually all major companies around the world, VSM is also
included in many process optimisation initiatives companies are running following six sigma or lean sigma methodologies.
Despite its high diffusion, VSM and lean production in general are not universally applicable to its full extent in all
sectors of industry and production environments. Limitations of lean have been reported in sectors that are different
from its original eld of application (Marodin and Saurin 2013). Cooney (2002) argues that lean-opposing batch produc-
tion is more benecial for certain niche producers in the automotive sector. Bertolini et al. (2013) proved that the pure
material pull approach of VSM may not be optimal in high variety low volume manufacturing facilities. Drawbacks of
the method have also been reported for complex production environments, especially with multiple merging material
ows (Braglia, Carmignani, and Zammori 2006). A sector, which is particularly struggling with the adaption of the prin-
ciples tailored to automotive production, is the process industry. Chemical plants for example commonly exhibit com-
plex, non-linear routing of material ow. Furthermore, process equipment is often designed to run optimally at specied
production rates or batch sizes (BSs). Frequent changeovers inevitably lead to loss of material or excess energy con-
sumption and often bear a considerable risk of cross-contamination. Thus, many companies tend to run long production
campaigns decoupled from the customer takt at the expense of unstably oscillating inventory levels (Russel 2012).
Most of the drawbacks of VSM which have been reported, originate in the static and low-detailed nature of the
method. The straightforwardness of VSM is a major factor for its success, but also constrains its applicability. Major
gaps that VSM cannot or can only insufciently address are:
 Involving high levels of process detail
 Involving process dynamics
 Proving the feasibility of potential future states
 Analysing potential future states for trade-offs with conicting cost factors
 Quantifying the benets of potential future states
This paper targets the development of an enhanced VSM procedure, which is able to overcome the above stated
decits. For this purpose, VSM is coupled with discrete event simulation (DES), a tool which is capable of modelling
complex processes with great detail including dynamic effects.
First, the method of VSM as developed by Rother and Shook (1999) is summarised, before its limitations are clari-
ed in detail. Then, an enhanced VSM method is developed, which applies DES for feasibility and trade-off analysis
after the future state mapping phase. Finally, the applicability of the new method is explicated in a case study of a com-
plex industrial process of exhaust gas purication catalysts production.

2. Value stream mapping

2.1 Introduction to VSM
One secret of success of VSM is the straightforwardness of the method. VSM is not only a package of lean improve-
ment tools, but comprises complete guidance for reaching a lean future state of a production process. A typical VSM
project is executed in four phases:
(I) Selection of a product family in order to avoid over-complication of the project and maintain its impact at the
same time, a group of products having common or similar processing routes is selected for the mapping procedure;
(II) current state mapping the current production process is visualised and analysed; (III) future state mapping one
or more potential lean reformulations of the production process are developed and visualised; and (IV) dening a work
plan for achieving the future state for implementation, the selected future state is divided into work packages which
are executed successively.
VSM is a paper and pencil method, both the current and the future state map are models of the process drawn on
a 11 17 or A3 size paper. The current state map, which depicts the so-called value stream comprising all process
steps from raw material to nal product, is recorded while walking through the process. Practitioners are advised not to
rely on any documentation or business process software data while composing the current state map. Consecutively, the
future state map is developed by following several guidelines aiming towards a lean value stream, which are described
in detail by Rother and Shook (1999). A schematic overview of the future state guidelines is presented in Figure 1.
6148 D. Schmidtke et al.

Figure 1. Application of VSM future state guidelines.

Since the development of VSM, its industrial application success has been well documented in the academic litera-
ture, primarily focusing on mechanical production processes. For example, Lasa, Laburu, and Vila (2008) report gainful
use of VSM for optimisation of a mobile phone parts production process. Seth and Gupta (2005) as well as Singh and
Sharma (2009) successfully applied VSM in the Indian automotive industry. Serrano, Ochoa, and de Castro (2008) con-
ducted a broad case study involving six different companies across the manufacturing sector, where VSM was success-
fully applied and also gaps between theory and practice were identied.
Furthermore, applicability of VSM has also been reported in areas, which deviate from its original eld of
application, e.g. the wine production industries (Jimnez et al. 2012), or the health care sector (Lummus, Vokurka, and
Rodeghiero 2006)
Besides the method by Rother and Shook (1999), further benecial VSM approaches have been developed, e.g. by
Hines and Rich (1997), who composed several valuable VSM tools. The applicability of this approach has been proven
in a paper on optimisation of a supplier network (Hines, Rich, and Esain 1999).

2.2 Limitations of VSM

The simplicity, the high degree visualisation as well as the completeness, with which processes can be analysed and
improved, are often regarded as the strength of VSM. Jones and Womack (2000) describe the method as the simple
process of directly observing the ows of information and materials as they now occur, summarising them visually, and
then envisioning a future state with much better performance. At the same time, this strength of the method entails sev-
eral limitations, which potentially lead to dissatisfactory project results:
 International Journal of Production Research 6149

2.2.1 Process variability

Many production plants are subject to heavy variability of the process itself as well as the customer demand. When
gathering data for the current state map of a VSM project while walking the process, a rather static picture is developed.
Consequently, the variability of the operating conditions may not be fully accounted for and a poorly performing future
state may be developed.

2.2.2 Complex process ow

In many industry sectors, e.g. the process industries, material ow can be highly complex and non-linear. Features such
as recycling, merging and diverging of material ow make the mapping approach much more difcult. Furthermore, the
non-linearity of processes leads to difculties when designing the future state in a VSM project. Consequently, there is
the risk that implementation results in a time- and cost-consuming iterative procedure.

2.2.3 Conicting cost factors

VSM future state guidelines production mix levelling, production volume levelling and every part every interval
promote BS reduction in order to facilitate the highest possible ow degree (Rother and Shook 1999). Reduction of BSs
is always accompanied by an increase of changeovers. While in assembly line processes, this merely causes higher time
efforts, more frequent changeovers can also entail higher material or energy consumption, in chemical production for
instance caused by dead volume or process start-up. Thus, classical VSM does not necessarily yield a cost-optimised
operational state.
With a classical VSM project, the following two questions may remain unanswered:
 Does the proposed future state result in a feasible solution which is able to meet the customer demand?
 Is the proposed future state benecial, when all cost factors are considered?
Without addressing these issues after creation of a future state map, implementation can become a costly iterative
procedure. Furthermore, it is crucial to assure and quantify benets of any improvement project for gaining management
support and approval for implementation.

3. VSM and DES

The limitations of VSM are rooted in process complexity, which hand-drawn value stream maps are unable to capture.
A very promising add-on to VSM is DES. The method is able to model complex process sequences including variability
in great detail. For an introduction to DES, cf. the paper by White and Ingalls (2009), numerous examples for its appli-
cation can be found in the book by Bangsow (2012).
The prot of incorporation of DES into value stream improvement projects has already been pointed out by various
authors. For instance, Grimard, Marvel, and Standridge (2005) state that simulation is able to reduce the time required
between redesign and full production capability. Lian and Van Landeghem see benets of DES for both, cost-saving
and worker training prior to future state implementation (2002). Later on, they developed a model generator, which
automatically transforms static current and future state maps into dynamic simulation models (2007). Solding and
Gillander (2009) present a similar approach, in which they generate a simulation model from spread sheet-based VSM.
Several authors apply DES to quantify the effect of VSM implementation on lean performance measures, such as work
in process and lead time (Abdulmalek and Rajgopal 2006; Detty and Yingling 2000; McDonald, van Aken, and Rentes
2002).
Marvel and Standridge (2009) even postulate, that iterative lean implementation as propagated by many authors, is
inherently oppositional to lean concepts because it is a wasteful process. Consequently they suggest future state valida-
tion through simulation in order to eliminate this wasteful process.
One issue which has not yet been addressed is the fact that VSM implementation affects conicting cost factors.
Above all, value stream optimisation yields reduced inventory and, thus, shortened lead times. It therefore directly
effects monetary benets, such as less costs for tied capital, reduced scheduling efforts or lower costs of poor quality
and overproduction. However, a proposed VSM future state may for instance cause production unit-related energy con-
sumption, raw material usage or waste water production to increase. Including all cost factors in an objective function
6150 D. Schmidtke et al.

implemented in a DES model may facilitate to nd the true monetary effect. It may be helpful for further optimisation
of the future state as well as gaining management acceptance.

4. Concept for a DES enhanced VSM method

In order to maintain the undoubtable strengths of the method, surrounding its visual and straightforward character,
it is highly favourable not to overcomplicate the mapping procedure itself. Application of sophisticated simulation
tools while capturing the current state and developing potential future states may jeopardise the involvement of
important process experts. Thus, we propose an enhanced method, which applies DES after nishing the future
state map. The changed procedure seeks to compensate the two major decits of classical VSM through simulation
analysis:
(1) Feasibility analysis is the proposed future state able to meet the customer demand?
(2) Trade-off analysis does the proposed future state result in the optimal process when all cost factors are con-
sidered?
The advanced VSM procedure (see Figure 2) may help to avoid iterative implementation likely to result in customer
dissatisfaction and to nd the global cost optimum. While most previous research focused on checking feasibility and
showing the effect of potential future state maps on typical lean measures, we emphasise the importance of including all
important cost factors in a trade-off analysis. This is particularly important, because it facilitates determination of the
actual quantitative benet, which is often essential for gaining management acceptance.

Figure 2. Advanced VSM procedure.

 International Journal of Production Research 6151

For carrying out DES feasibility and trade-off analysis, we propose the following procedure after the future state
mapping phase:
 Identify variability of process data summarised in VSM and t statistical distributions wherever possible.
 Identify cost factors which are affected by future state implementation, such as tied capital, cost of poor quality,
raw material and energy costs, labour costs, etc.
 Establish relationship between cost factors and process measures, e.g. tied capital and inventory or energy costs
and machine runtime.
 Implement the future state map including process data variation in a DES model. We propose the use of any
contemporary DES packages, such as ExtendSim or ARENA.
 Verify and validate the simulation model (see Law 2007). For this purpose, we strongly advise to model the
current state as well.
 Conduct simulation experiments with the future state model and record customer order fullment and service
level (feasibility analysis) and production costs from cost factors and process measures (trade-off analysis).
In case the simulation results are dissatisfactory, they can serve as a basis for redevelopment of the future state map.
Otherwise, the proven feasibility and quantied benets can be used to gain management acceptance before the future
state of the real process is implemented.

5. Case study
In order to assess the proposed concept, a case study is conducted with a process that includes the three key issues
presented above: variability, complex non-linear ow and cost factors which are potentially aggravated by VSM
optimisation. The study covers a production process of exhaust gas purication catalysts.1

5.1 Product/process description

The product family discussed in this study consists of three major as well as various exceptional products. They mainly
differ in geometry of the honeycomb substrates on which the catalyst material is coated. Over the timeframe of one
year, 804,000 catalysts are demanded by the customers.
The production process is displayed in Figure 3. It starts with the production of wash coat (wct), aqueous slurry of
metal oxides which is mixed, homogenised and milled. Subsequently, honeycomb substrates are coated with wct on two
parallel machines. The coated substrates are then transferred to a continuously operated belt oven, where they are heat-
treated. In order to reach the desired wct loading on the substrates, the coating and heat-treatment process steps are
repeated for two more cycles. For the third cycle, the temperature prole is changed, however the process step is carried
out on the same belt oven. The substrates, coated with the nal metal oxide loading are then manually placed in beak-
ers, which are lled with a solution of the actual catalyst agent. For chemisorption of the catalyst agent on the metal
oxide coating, the lled beakers are stored for several hours until the chemical surface reaction is completed. After-
wards, the substrates are fed to the belt oven for the fourth heat-treatment step, again at a different temperature prole.
The nished catalysts are then marked with a customer-specic label on a labelling machine. Afterwards, the products
are packaged in cardboard boxes. In the nal shop oor step, the substrates are inspected for defects, before they are
passed to the shipping department.

Figure 3. Process ow of case study process.

6152 D. Schmidtke et al.

Between the process steps, the work in process is transferred batch-wise. For the major products, the BS is 5000
pieces (product A) or 2500 pieces (product B and C). In the process, central production planning is applied. The pro-
duction department receives a monthly forecast of customer demand, which is reviewed weekly. Due to long production
lead times and uncertainty of customer orders, the production is scheduled daily. On the shop oor, each batch at each
process step is prioritised on a daily basis for fullling the closest due dates.

5.2 Current state mapping

Current state mapping data collection was conducted following the approach proposed by Rother and Shook (1999). In
industrial application as well as academic literature, various contradictory denitions of VSM metrics can be found. In
order to avoid misunderstandings, the parameters process time (PT), CT and batch time (BT) as well as their denitions
employed in this paper are summarised in Table 1.
As the rst step of current state mapping, the customer takt was determined. The plant is operated on an estimated
360 factory working days and on three shifts per day with a total labour time of 21 h per day. With the given annual
customer demand of 804,000 catalytic converters per year, this results in a daily demand (DD) of 2233 pieces,
corresponding to a TT of 33.9 s per piece.
Wherever possible, measurement of process data was carried out while walking through the shop oor. For each
process step, all relevant gures, such as PT, BT, CT, BS or COT were collected. Between the process steps, inventory
levels were counted and converted to days of inventory (DOI) to provide a snapshot of current material ow.
The current state map of the product family is presented in Figure 4. The double frame of the belt oven, labelling
and inspection steps indicate that this equipment is co-used by other product families, which means that its availability
is limited. Note that a go see symbol is added to most shop oor information ow lines. Due to long lead times and
uncertainty of customer orders, production management reschedules daily and shop oor supervisors adjust priorities of
work in process continuously. Between all individual process steps, intermediate inventory was found, adding up to
25,540 pieces for the core process from substrate coating to nal quality inspection. Dividing the inventory levels by
the daily customer demand (DD) results in a process lead time of 11.4 days. The value added time can be calculated by
summing up all processing times. For the case study process, value added time of 12.9 h was found, yielding a value
added ratio of 4.7%.

5.3 Future state mapping

The current state map of the process reveals several shortcomings of the process, mostly related to a vicious circle
around the presence of high inventory on the shop oor (see Figure 5). High inventory is directly coupled with long
lead times through the shop oor process through Littles law (Little 1961). Due to long lead times and customer
demand uncertainty, continuous re-scheduling is inevitable for maintaining a high customer service level. This, in turn,
results in high shop oor turbulence where ow is not governed by the rst in rst out (FIFO) rule, but by due date

Table 1. VSM measures adjusted for chemical processes.

Quantity Batch process Continuous process Unit

Process time (PT) s

Cycle time (CT) Batch time/Batch size s kg1 or s piece1

Batch time (BT) Process time Process time + Cycle time * Batch size s
International Journal of Production Research 6153

Figure 4. Current state map.

6154 D. Schmidtke et al.

Figure 5. Relationship between shop oor issues.

priority, causing high inventory. The three major downturns of this status, which can also be expressed as monetary def-
icits, are tied capital, high scheduling efforts and slow detection of process deterioration-related defective parts.
With emphasis on these concerns, the future state map was developed following the future state guidelines according
to Rother and Shook (1999). First of all, the possibility of process integration was found for several process steps.
Catalyst agent beaker preparation and catalyst agent impregnation could be directly coupled. The rather wasteful pro-
cedure of packaging prior to inspection, which involves unpacking and re-packaging could be rearranged. This
yielded the chance to integrate labelling and inspection prior to packaging of the nal product. Between the process
steps, material is piled, even though coupling of the process steps is readily possible. Process integration directly leads
to elimination of the three wastes transportation, inventory and motion as dened by Ohno (1988).
The inventory/scheduling issue described above was tackled by BS reduction, strict FIFO rule, pacemaker schedul-
ing and introduction of initial pull. One of the core ideas of VSM is that a production process should be actively con-
trolled at only one process step, which is then referred to as the pacemaker. The other steps should be controlled by the
process itself, upstream of the pacemaker by material pull and downstream of the pacemaker by continuous ow. For
the case study process, the rst wct dip was proposed to function as the pacemaker. Upstream of the pacemaker, a
Kanban pull system was suggested for wct production. Between the nal process step and the pacemaker, an initial pull
feedback control system was recommended to maintain a constant WIP level. When designing an initial pull system,
care must be taken to keep the process effectively working. If the constant WIP level is set too low, the process
throughput decreases below the customer takt. Finding a feasible WIP level is particularly challenging when the process
is non-linear. In the case study, the maximum WIP level was set to four batches based on the process data found during
current state mapping as well as spreadsheet calculations. With a BS reduction from 5000 pieces and 2500 respectively
to 800 pieces, this results in a constant WIP level of 3200 pieces. The rearrangements facilitate reduction of the time-
frame in which a particular process step is able to process each product, which is demanded by the every part every
interval future state guideline.
A simplied future state map is presented in Figure 6. All things considered, the proposed future state offers laminar
production ow throughout the whole process. The WIP is drastically reduced, leading to a reduced shop oor lead
time, which can be calculated as 24 h with static spreadsheet simulation. This makes production more exible and gives
the opportunity of quick detection of errors. Furthermore, with only one process step being actively controlled, the
workload of shop oor scheduling is also markedly decreased.

5.4 Feasibility and trade-off analysis

After designing the future state, feasibility and trade-off analysis as proposed in Section 4 of this paper was conducted,
utilising the DES package ExtendSim.

5.4.1 Feasibility analysis

In the classical VSM future state mapping phase of the case study, BS reduction as well as initial pull with decreased
WIP level were proposed. The two process modications potentially affect the throughput, due to an increased number
of changeovers and equipment idle time. The given framework of a non-linear multi-cycle process with co-use of
equipment as well as customer demand variability makes the issue whether the future state is actually able to full the
customer demand not straightforward. Specically, the following two questions have to be answered:
 International Journal of Production Research 6155

Figure 6. Simplied future state map.

 Can the proposed future state process produce the amount of pieces demanded by the customer?
 Does the proposed future state full due dates in order to maintain a sufcient customer service level?
First, all the data determined during current state mapping were used to model the process. Additionally, variability
of the process and customer demand derived from statistical analysis were modelled with appropriate distributions. After
building the model, simulation of the current state had to be validated. Validation involved careful tracing of process
ow, animation of the model, as well as comparison of output data with the real system. Simulation of the current state
shows the highly transient character of the process with output data varying strongly over time. Observation of WIP
over time for example results in a curve meandering around the level of 25,540 pieces as measured during current state
mapping (see Figure 7).
After validation of the current state, the model was modied in order to simulate the future state as proposed in the tra-
ditional VSM approach. Besides the proposed future state, feasibility was tested at different operating states of maximum

50,000

40,000
Work in process [pcs]

30,000

20,000

10,000

0
0 20 40 60 80 100 120 140
Time [d]

Figure 7. Simulation of the current state shop oor WIP.

6156 D. Schmidtke et al.

WIP level and BS. For comparability of the simulation results with different parameter settings, a sample size calculation
was conducted. It was found that a sufciently small 99% condence interval for average lead time, WIP, pieces ordered,
pieces processed and belt oven utilisation could be achieved when the non-deterministic model was run 30 times.
The simulation results were analysed with regard to the two customer demand questions. The results show that the
range of parameter settings is limited for the achievement of feasible solutions (see Figures 8 and 9). The overall cus-
tomer demand is not fullled when combinations of low BS and low maximum WIP are applied (see Figure 8). Large
numbers of changeovers and signicant idle time of processing equipment make the process ineffective. The service
level graph exhibits a maximum at medium WIP pull levels (see Figure 9). For low WIP levels, the infeasibility can
again be explained by an ineffective process causing build-up of backlog of unfullled orders. High WIP pull levels on
the other hand result in long shop oor lead times which potentially exceed the response times given by the due date.
When the process is operated at high WIP pull levels, the comparably low service level inevitably causes instability of
the FIFO rule. In order to satisfy customers, rescheduling of the shop oor process is required, leading back to the prob-
lems of the current state.
The modelling also shows that the proposed future state of 3200 pieces maximum WIP and 800 pieces BS is able to
full overall customer demand and yields a customer service level well above 90%. The analysis also reveals that under
the given framework, the settings result in the lean optimum for the process, since lowering of either BS or initial pull
level gives a non-feasible process.
The lead time of the simulated future state was found to be 1.4 days average with 0.1 days standard deviation and
2.0 days maximum. Continuous rescheduling of shop oor process steps is made obsolete due to strongly reduced lead
time from the original 11.4 days. New orders with close due dates can be channelled into the process without violating
the FIFO rule with a maximum response time of two days.
The slightly higher lead time of the DES model compared to the static spread sheet simulation results from more
realistic modelling, including lunch breaks and simultaneous utilisation of the belt oven for other product families.
The feasibility analysis model can also be used to predict the response of the future state process to changes of cus-
tomer demand. Figures 10 and 11 show the customer demand fullment in case of a 15% demand increase. Both feasi-
bility criteria show that the proposed future state is not able to full the customer demand anymore. If changes in
customer demand are expected, either technical process optimisation projects have to be deployed or a different, more
robust operational point has to be chosen. For potential 15% demand increase in the case study, a capable process can
be found at 1500 pieces BS and 6000 pieces maximum WIP. This operating point leads to a lean, yet robust process
and should be implemented if customer demand is likely to increase and investment in technical improvement is to be
circumvented.

5.4.2 Trade-off analysis

For exemplication, a trade-off analysis is presented for the case study process. In the analysis, the parameters BS and
initial pull WIP level were varied. At the same time, the cost factors tied capital, scheduling effort, cost of poor quality
and belt oven energy costs were observed. For tied capital, the capitalisation cost rate was calculated as 10% p.a., which
is a rather conservative number (Russel 2012). The shop oor scheduling costs were assumed to be linearly dependent

1.0

0.9
pcs processed/pcs ordered[-]

0.8

0.7

0.6

0.5

0.4 Batch size 400 pcs

0.3 Batch size 800 pcs
Batch size 1,500 pcs
0.2
Batch size 2,500 pcs
0.1 Batch size 5,000 pcs
0.0
0 5,000 10,000 15,000 20,000
Maximum work in process [pcs]

Figure 8. DES feasibility analysis overall customer demand.

 International Journal of Production Research 6157

1.0

0.9

0.8

0.7

Service level [-]

0.6

0.5

0.4
400 pcs batch size
0.3 800 pcs batch size
1,500 pcs batch size
0.2 2,500 pcs batch size
5,000 pcs batch size
0.1
90% Service Level
0.0
0 5,000 10,000 15,000 20,000
Maximum work in process [pcs]

Figure 9. DES feasibility analysis service level.

1.0

0.9

0.8
pcs processed/pcs ordered[-]

0.7

0.6

0.5

0.4 Batch size 400 pcs

0.3 Batch size 800 pcs
Batch size 1,500 pcs
0.2
Batch size 2,500 pcs
0.1 Batch size 5,000 pcs
0.0
0 5,000 10,000 15,000 20,000
Maximum work in process [pcs]

Figure 10. DES feasibility analysis overall customer demand (15% demand increase).

1.0

0.9

0.8

0.7
Service level [-]

0.6

0.5

0.4
400 pcs batch size
0.3 800 pcs batch size
1,500 pcs batch size
0.2 2,500 pcs batch size
5,000 pcs batch size
0.1
90% service level
0.0
0 5,000 10,000 15,000 20,000
Maximum work in process [pcs]

Figure 11. DES feasibility analysis service level (15% demand increase).
6158 D. Schmidtke et al.

600

500

Costs [ 1,000pcs-1]
400

300

200
800 pcs batch size
1,500 pcs batch size
100 2,500 pcs batch size
5,000 pcs batch size
current state
0
0 5,000 10,000 15,000 20,000
Maximum work in process [pcs]

Figure 12. DES trade-off analysis. Separating lines indicate settings which are not feasible due to lack of fullment of overall
customer demand (a) and service level (b).

on the average lead time. Cost of poor quality was modelled as proposed by Rosenblatt and Lee (1986) as a function of
BS based on the defect rate of the plant. The belt oven energy costs were based on consumption measurements and cur-
rent natural gas prices. As expected, both tied capital as well as scheduling costs increase with increasing BS and initial
pull level, while energy costs decrease. Cost of poor quality increases with BS while it is independent of initial pull
level. The results of the overall objective function over the range of parameter settings is displayed in Figure 12. The
proposed future state settings actually yield the overall cost optimum within the feasible options. However, as concluded
from the feasibility analysis, the process is not robust towards customer demand changes. The trade-off analysis shows
that there are various other operating points, which are feasible and at the same time cost efcient, especially compared
to the current state. The operating point at 1500 pieces BS and 6000 pieces maximum WIP suggested in the feasibility
analysis, which is more robust towards customer demand increase for instance results in a benecial process as well.

6. Summary and conclusion

Advancing manufacturing practices more and more depart from high volume mass production towards subtle customer
oriented processes. VSM is a vital tool for this development. However, with increasing process complexity, VSM
reveals several weaknesses. This paper aimed for development of an enhanced VSM method, which is able to overcome
these weaknesses by assessing feasibility and analysing trade-offs of the proposed future state prior to implementation.
For this purpose, we suggested to utilise DES. In order to maintain the strengths of VSM originating in the simplicity
of the method which allows straightforward involvement of all process experts, we proposed to add DES only after the
future state mapping phase (see Figure 2). The VSM method enhanced with a DES feasibility and trade-off analysis
was then successfully applied to a process of exhaust gas purication catalysts production. The additional analysis facili-
tated determination of a robust, lean and cost-efcient future state.
Applying the enhanced VSM method entails the following benets for practitioners:
 Customer demand fullment is analysed prior to implementation, avoiding a potential iterative procedure, which
is costly and, at the worst, leads to customer dissatisfaction.
 The actual monetary benet of the proposed future state is determined before implementation. Consequently,
the future state map can be rened, in order to obtain the most favourable process.
 DES results can be a precious tool for gaining management acceptance, as they provide hard gures instead of
vague indication of the applicability and benet.
 The original paper and pencil procedure of VSM, allowing straightforward involvement of process experts is
preserved.
 The effect of potential future changes in customer demand on the value stream optimised process can be pre-
dicted in advance.
Application of the feasibility and trade-off analysis requires additional effort. Original VSM projects can be carried
out rather rapidly. Project durations between 4 and 10 weeks have been reported (Serrano, Ochoa, and de Castro 2008).
 International Journal of Production Research 6159

For adding feasibility and trade-off analysis, relatively time-consuming process variability analysis and DES model
building are required. In our case study, the additional procedure amounted to approximately four weeks. Furthermore, a
simulation expert has to be involved in the project. Due to the user-friendliness of contemporary DES packages how-
ever, attaining simulation experts has become a less challenging issue.
Opposed to the low-detailed modelling of classical VSM, the enhanced method adds a considerable amount of
complexity, inevitably creating pitfalls. Creating valid DES models demands detailed analysis of process parameters
including their behaviour over time. Misinterpretation or lacking availability of process data can lead to false process
input distributions for the DES model and ultimately to incorrect conclusions.
Developing a valid objective function involving all affected cost factors for the trade-off analysis is particularly chal-
lenging. Detailed cost factor modelling provides room for further research. More case studies are required for proving
the applicability of the enhanced VSM method and especially for rening the cost factor modelling.
All the peculiarities, which make the application of VSM enhanced with feasibility and trade-off analysis protable
can be found in the chemical industry. The enhanced method can be particularly valuable when lean optimisation results
in excess energy and material consumption, as is the case in chemical processes. The case study of this paper covers a
process which lies between an assembly line, to which classical VSM is tailored, and chemical production. Thus, in
order to conrm the usefulness of the enhanced VSM method, further research should involve its application in a chem-
ical bulk production process. In that direction, we advocate additional research involving dynamic modelling of transient
bulk processes, e.g. with discrete rate simulation.

Acknowledgement
The research of this article was supported by Imagine That Inc by providing ExtendSim AT as a research grant.

Note
1. For condentiality reasons, various data is made anonymous.

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