One of the most powerful benefits of value network modeling is the ability to monitor, predict and influence performance. Metrics are made simple with the Comprehensive Reports function in the ValueNetwork.com application. In addition to Animations and Detailed Visuals, indicator reports are generated for the Standard Value Network (Role view) and the Collaborative Value Network (Participant view). The text and charts below are drawn from a Standard Value Network (Role-based) Report, using the example of scheduling procedures in a health care organization. For other blogs in this series see the links at the end or simply search "Indicators and Metrics."
Optimizing Value Flows
Value flow optimization is a way of expanding a process perspective from a linear way of thinking to a complex adaptive systems approach. Value flow optimization is different from a classic process engineering approach. Process engineering strives to drive out variation and to standardize business processes. However, in complex environments variation is a given. It is not only a given – it is desirable in order to adapt to changing conditions and support the continuous innovation required for competitive advantage.
The goal in optimizing a value network is to support effective value flows or workflows where there are many different possible pathways. For example a large heavy shipping port was increasing safety and security inspections from two to five per day. Inspecting ships is very complicated. There are many regulatory and safety compliance requirements where there must be tightly controlled documentation processes. At the same time, different ship models and situations have different types of vulnerabilities and require different kinds of responses from maintenance crews.
Inspecting two ships at once could be managed with process engineering approaches, although it would be very challenging. However, with five per day – each with unique starting conditions and challenges – the process approach was simply too slow and cumbersome. VNA was used to define the roles and interactions that would provide for the greatest consistency while allowing the necessary variation and flexibility. Value flow optimization provided a new way for the shipyard to think about how ships moved through the inspection activity.
How to do it
From a completed value network map run different scenarios to help define the different possible pathways a workpackage such as a ship, a product, or a service delivery might travel. Then use the scenarios to address different issues that affect the function of each of these pathways. Issues can relate to Role execution, Transaction speed or channels, quality or value of Deliverables, and how different flows intersect or work together.
Note that all of these different flows could be addressed separately using process engineering approaches and structured technology support systems. However, the difficulty is that those methods are almost always conducted from the perspective of a single Role or small group of Roles – or a single isolated process – and almost never from a “whole system” or “whole network” perspective. Further, looking at flows as separate activities misses the interdependencies between them and the conflicting resource demands that might result. It is too easy to overlook critical hand-offs between Roles or needless redundancies.
Transaction Speed
Transaction speed is an obvious indicator to consider when thinking about optimizing value flows. The first step in determining speed is to identify the Sequence of transactions. The simply means identifying what happens first in a typical scenario, then what happens sequentially until the entire story of the value network unfolds. Then use the drop down list in the Excel-based template for uploading datato assign a speed for each transaction. If both sequence step and speed are filled out in the data upload then the PowerPoint Report generated by the ValueNetworks.com application will include Animations of the value network.
Transaction speed can refer to the actual transit time of the Deliverable. Used this way it is useful compare speed with the transport Channel profile.“wait time” for a Role to complete and send the Deliverable. This approach is useful to identify where there may be Roles that could be better supported with resources or improved processes for faster execution.
Transaction speed can also refer to how slow or fast the Deliverable is executed and released by the Role. Used this way it would more represent "wait time for a Role to complete and send the Deliverable. This approach is useful to identify where there may be Roles that could be better supported with resources or improved processes for faster execution.
Calculate the overall speed of the flows by averaging the speed of all Transactions in the flow. Identify the “slow-downs” and do a root cause analysis to identify what is impeding the flow.The Transaction speed indicator is helpful in spotting network bottlenecks. In the ValueNetworks.com application speed is calculated by giving the default ratings of: Fast = 1, Medium = 2 and Slow = 3. A sample report is below:
Average Speed of All Transactions:
Total Number of Transactions: 45 Average Speed: 1.84
Average Speed of Intangible Transactions:
Total Number of Transactions: 14 Average Speed: 1.79
Average Speed of Tangible Transactions:
Total Number of Transactions: 31 Average Speed 1.87
Other VNA indicators to improve value flow performance
Several other value network indicators discussed in this blog series are useful in prompting questions about value flow optimization.
Resilience indicators are very useful for asking about whether flows need to be more or less formally structured. Use the ratio of Tangible/Intangible Transactions to ask about the appropriate ratio of formal exchanges vs. informal informational or support exchanges.
Value Creation indicators help understand which Roles are playing key informational Roles that are often overlooked in process improvement.
Brand Management – Perceived Value is a gold mine for optimizing value flows, although people rarely take the analysis to this level. If Deliverables are not valued highly by the Receiver then it is reasonable to ask, “Why are we doing this?” We find it very easy to ask people to do “more” but how often do people ask what they can stop doing? Optimize value flows by eliminating as many negative or low-value Transactions as possible.
Asset Management indicators also help identify low-value Transactions and Deliverables or those that provide little benefit for the cost involved. Use these indicators to assess which value flows accelerate value creation and which ones are creating a greater drain on assets than necessary.
Risk indicators show where there is too much dependency on a single Role that might put a value flow at risk.
Channel usage patterns are also helpful for assuring that appropriate technologies and infrastructure are in place to support the different value flows.
Other topics in this series: | 
