As organizations scale Agile practices, identifying and optimizing value streams becomes critical for delivering value efficiently. Operational value streams are the end-to-end processes used to fulfill customer requests and deliver products or services.
Understanding your operational flows allows you to map out the steps from initiating a customer request through production and delivery. This enables you to visualize bottlenecks and reduce waste.
In this article, you’ll learn what operational value streams are, how to identify them in your organization, and how they differ from development streams.
We’ll also explore techniques like value stream mapping to analyze and improve operational processes to highlight how optimizing these flows is key to achieving business agility and delighted customers.
What are Value Streams?
Value streams are the series of steps and processes that a company uses to deliver value to customers. They represent the end-to-end flow from the initial customer request to the final delivery of the product or service.
Value streams include all the actions, resources, and workflows required to fully meet a customer’s need. For a physical product, it may consist of production, order processing, inventory management, distribution, and customer service. For a service, it may involve steps like sales, scheduling, service delivery, follow-up, and billing.
Value streams differ from traditional organizational structures in that they cut across departmental silos to focus on optimizing the complete flow of value. Cross-functional Agile teams often work together in value streams to deliver solutions in a flexible, iterative way.
Mapping and improving value streams allows you to reduce waste, speed up product cycles, and get feedback quickly which accelerates value delivery to customers.
Well-defined value streams also provide visibility into how work gets done across your company, understanding these end-to-end flows is key to achieving business agility.
What is an Operational Value Stream?
An operational value stream is the sequence of steps that fulfill a customer request by delivering a product or service.
While a high-level value stream may involve various departments, the operational flow focuses on the nitty-gritty processes that directly serve the customer. For a hamburger restaurant, the operational value stream would encompass taking orders, cooking patties, assembling burgers, and serving customers.
Operational streams deal with recurring day-to-day activities that provide value to external customers. This contrasts with internal support processes like financial planning or HR management. Optimizing your operational flows allows you to rapidly fulfill customer needs while eliminating waste.
Understanding your operational value streams provides insight into how work gets done and where improvements can be made. This knowledge helps you enhance quality, reduce costs, and exceed customer expectations.
Types of Operational Value Streams
There are four main types of operational value streams:
1. Fulfillment Value Streams
Fulfillment streams focus on processing customer orders and delivering requested products or services. Steps may include taking orders, procuring materials, manufacturing, packing, shipping, and final delivery to the customer.
For example, an online retailer has a fulfillment stream that starts with a customer order, proceeds through warehousing operations like batch picking, sorting, and checking; shipping activities like load planning, labeling, and dispatch; and ends with the customer receiving the product.
Optimizing fulfillment processes allows companies to rapidly meet customer demands.
2. Manufacturing Value Streams
Manufacturing value streams convert raw materials into finished products using machinery and labor. Key steps are procuring materials, creating sub-assemblies, final assembly, quality control, and distribution.
An automaker has a manufacturing value stream comprising welding steel frames, adding interiors, paint application, final automobile assembly, testing, and vehicle shipment to dealerships.
Smoothly flowing manufacturing processes ensure efficient production.
3. Software Value Streams
Software value streams involve developing and delivering software products and services. The main stages include planning, design, coding, testing, release, licensing, support, and maintenance.
A SaaS company has a software value stream starting with ideation and requirements gathering, moving through agile development sprints, quality assurance, deployment, sales and downloads, and finishing with customers actively using the platform.
Well-defined software streams allow for rapid iteration and incremental delivery.
4. Supporting Value Streams
Supporting streams enable a company’s core operations through assistance processes like auditing, budgeting, hiring, and acquiring raw materials.
A retailer’s supporting value stream for inventory management involves demand forecasting, procurement, receiving, putaway, replenishment, and analysis of stock levels. This enables efficient warehouse and shelf stocking to meet customer needs.
Having streamlined, waste-free operational value streams is key for any company looking to improve productivity, reduce costs, and provide superior customer service.
What is the Primary Focus of an Operational Value Stream?
The primary focus of an operational value stream is directly creating value for external customers with operational flows by meeting their needs and fulfilling customer requests through the timely delivery of products or services.
Improving these processes enhances quality, reduces costs, and increases customer satisfaction.
How To Identify Operational Value Streams
Identifying your organization’s key operational value streams is crucial for improving flow and reducing waste. Follow these steps to do so:
1. Define Your Purpose
First, clarify your company’s core purpose and target customers. This guides you in pinpointing the endpoints of your operational flows.
2. Map High-Level Steps
Next, outline the key stages from initiation to delivery for your main products or services. For example, a retailer may map steps from order through fulfillment and customer receipt.
3. Analyze Specific Details
Now dive into the nitty-gritty details. Walk through each process and document the exact activities, inputs, and outputs. For instance, order fulfillment may involve steps like picking, packing, shipping prep, and delivery.
4. Identify Waste
Look for any non-value-adding steps in the process. This waste could include excess motion, waiting, overproduction, or defects. Eliminating waste accelerates flow and cuts costs.
5. Talk to Team Members
Interview team members working directly on each process as they can provide insider knowledge on pain points and improvement ideas.
6. Map the Stream
With all the information gathered, map out the complete flow from start to finish. Visualizing the linkages helps uncover inefficiencies and delays in the operational value stream.
7. Improve and Optimize
Use techniques like Lean Six Sigma to eliminate waste from the stream. Simplify processes, smooth flows, and implement automation where possible. Continually refine the stream to better meet customer needs.
Taking these steps will provide tremendous visibility into your real-world operational processes so you can enhance productivity.
Operational Value Stream vs Development Value Stream
Operational and development value streams are complementary flows focused on different business functions:
Customer Interaction
The operational stream directly serves external customers through activities like sales, production, and service delivery. In contrast, the development stream creates internal systems, products, and capabilities.
Day-to-Day Work
Operational flows involve recurring daily processes that fulfill customer orders and requests. Development streams on the other hand focus on periodic initiative-based work like releasing new features.
Feedback Loop
Operational streams provide rapid customer feedback based on real-time interactions and metrics while development streams rely more on market research and user testing for insights.
Team Composition
Operational teams require staff familiar with daily processes like manufacturing and fulfillment. Development teams need more specialized skills like engineering and programming.
Waste Identification
Operational streams aim to eliminate tangible waste like defects and idle time. Development streams target intangible waste like technical debt and over-engineering.
Iteration Pace
Operational flows tend to follow consistent routines while development Sprints iterate frequently to incorporate learnings.
Related: How to Measure Business Value in Agile
Operational Value Stream vs Customer Journey
Similarly, despite being related, the operational value stream and customer journey happen to be distinct concepts. Let’s do a comparison to highlight these distinctions:
Internal vs External
The operational stream maps internal company processes while the customer journey follows the external steps that customers go through.
Functional vs Emotional
While the operational stream focuses on functional activities like production and delivery, the journey considers the customer’s emotions and questions at each stage.
Optimization vs Understanding
Value stream mapping aims to eliminate waste and inefficiency. In contrast, journey mapping provides an understanding of the customer experience.
Means vs End
The operational stream represents the means to provide value via processes. Conversely, the customer journey is the end goal those processes aim to serve.
Behind the Scenes
The operational value stream shows backstage workflows hidden from customers. In contrast, the customer journey reveals the customer’s visible frontstage experience.
Big Picture vs Details
Value stream mapping portrays the big-picture flow of steps while journey mapping adds detailed insights into specific touchpoints.
Essentially, the operational stream focuses on HOW value is delivered, while the customer journey illuminates WHAT value customers seek. Aligning these perspectives helps companies optimize internal operations to excel at meeting customer needs.
SAFe Operational Value Stream Examples
Let’s look at some real-world examples of operational value streams within the Scaled Agile Framework (SAFe):
Customer Service
A customer service value stream starts with a customer inquiry through channels like phone, email, or social media. The stream proceeds with steps to log the request, assign it to an agent, research solutions, correspond with the customer, document details, and finally close out the ticket after issue resolution.
Optimizing customer service flows reduces response times and improves satisfaction. Teams may use SAFe rituals like backlog refinement and retrospectives to continually improve.
Order Fulfillment
An e-commerce company has an order fulfillment stream beginning with a website purchase. Upstream steps cover payment processing, order information transmission to the warehouse, picking and packing, shipping preparation, and delivery.
This operational flow impacts customer experiences. SAFe principles like visibility, waste reduction, and continuous improvement can help fulfill orders accurately and rapidly.
Software Delivery
A software firm develops products using SAFe to manage development value streams. However once engineering completes new features, the operational flow for software delivery takes over.
This downstream stream involves steps like release planning, build/configuration, quality assurance, deployment, licensing, entitlement management, and maintenance. Optimizing these steps gets capabilities to users faster.
Manufacturing
A manufacturer utilizes Lean and Agile principles to manage operations. Its production value stream flows from the procurement of raw materials through multiple assembly steps, quality checks, and distribution to retail outlets for sale.
SAFe provides structures to coordinate activities across the value stream, from suppliers to production lines to distributors. This harmonization helps smooth flow and improve productivity.
Conclusion
As iterated in this post, operational value streams are end-to-end processes that directly deliver value to customers.
Optimizing your order fulfillment, manufacturing, software delivery, and other operational flows enables faster time-to-market, lower costs, and superior quality.
By identifying and mapping your critical value streams, you can eliminate bottlenecks and waste. Linking internal operational activities to the external customer journey provides insights for process improvements.
With streamlined and lean operational value streams, your company can achieve business agility and satisfy customer needs.
FAQs
Is DevOps an Operational Value Stream?
DevOps can be considered an operational value stream because it focuses on the processes of collaboratively developing, testing, releasing, and maintaining software applications.
The DevOps stream aims to improve the flow from code to production to deliver value faster to users. Its practices help optimize the operational activities required for continuous software delivery.
Is Operational Value Stream the Same as Customer Journey?
No, the operational value stream and customer journey are not the same as previously explained in this article.
The operational value stream maps internal company processes to deliver a product or service while the customer journey refers to the steps customers go through in engaging with the company and receiving value.
