Flow Design: VSM, SMED, and WIP

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SEF Reference Guide G12  |  Manufacturing OpEx Maturity Assessment

What it is

Flow design is the work of seeing how material and information actually move through the plant, then changing the layout, batch sizes, and changeovers so parts move from one value-adding step to the next without sitting and waiting. When you map a typical batch-and-queue plant, the processing time is usually a small fraction of the total lead time. The rest is waiting. Flow design attacks that waiting time.

Three tools do most of the work. Value Stream Mapping (VSM) shows the whole door-to-door flow on one page, with the waiting made visible. SMED cuts changeover time so smaller batches become economical. WIP control caps the amount of work between steps, which shortens lead time directly.

VSM was set out by Mike Rother and John Shook in Learning to See (Lean Enterprise Institute, 1998). SMED was developed by Shigeo Shingo from his work with Toyota and others and published in English as A Revolution in Manufacturing: The SMED System (1985).

Why it matters

• Lead time and delivery: by Little’s Law, average lead time equals average WIP divided by average throughput. Halve the WIP at the same output and you halve the lead time.
• Cash: WIP is money on the floor. Reducing it releases working capital.
• Quality: with small batches and short queues, a defect is found within minutes, not after a whole batch has been made wrong.
• Space and cost: less WIP means fewer racks, less handling, fewer lost or damaged parts, and less expediting.
• Flexibility: short changeovers let you build what the customer ordered this week, not what was cheapest to batch.

Key terms

Term	Meaning
Flow	Work moving continuously from one value-adding step to the next without waiting. Flow cannot happen where large buffers of work in process sit between steps.
WIP	Work in Process. Material that has entered the process but is not yet finished.
Buffer	A planned quantity of raw material or work in process placed before a workstation so it can keep working when upstream supply varies.
VSM	Value Stream Mapping. Drawing the current flow of materials and information from supplier to customer, identifying waste and non-value-added time, and designing a better future state.
SMED	Single-Minute Exchange of Dies. A method for cutting changeover time (ideally to under 10 minutes, “single-digit minutes”) by separating internal from external setup work, which makes smaller batches economical and reduces WIP.
Internal setup	Changeover work that can only be done with the machine stopped (for example, removing and fitting the die).
External setup	Changeover work that can be done while the machine is still running the previous job (fetching tools, preheating, staging material).
Changeover time (C/O)	Time from the last good part of one job to the first good part of the next, at full speed.
Cycle time (C/T)	How often a part is completed at a step, as observed.
Little’s Law	Average lead time = average WIP / average throughput (John Little proved the general form in 1961).
Cellular layout	Equipment for a product family arranged in process sequence, usually in a U or line, so parts move one or a few at a time.
Spaghetti diagram	A floor plan with the actual path of a part or person drawn on it, used to show wasted travel.

How to do it

1. Pick one value stream. Choose a product family that shares most process steps and matters to the business (volume, margin, or late deliveries).
2. Chart the process flow. Walk the route with a clipboard, from shipping back to receiving. Record every step, every queue, and the distance traveled. Draw a spaghetti diagram.
3. Draw the current-state VSM. For each step capture C/T, C/O, uptime, number of operators, shifts, and first-pass yield. Count the WIP in each queue and convert it to days: WIP quantity / average daily customer demand. Add the information flow (how orders and schedules reach each step). Draw the timeline: total lead time (sum of queue days) against total processing time.
4. Group work into cells where it makes sense. Move equipment for a product family into process sequence. Aim for basic cells first: short distances, parts passed in small quantities, operators able to see each other.
5. Run SMED on the key changeovers. Start with the constraint and any step that forces large batches.
   • Video a full changeover and list every element with its time.
   • Mark each element internal or external.
   • Move external work out of the stop time (checklists, carts, pre-staged tools).
   • Convert internal to external where possible (preset tooling, standard heights, duplicate fixtures).
   • Streamline what is left (quick clamps instead of bolts, no adjustments, parallel work by two people).
   • Write the new method as standard work and train it.
6. Set planned buffers and cap WIP. Decide where buffers are needed (in front of the constraint, at points of real variation) and size them. Mark the floor for the maximum. Everywhere else, cut WIP by reducing batch size as changeover time comes down.
7. Design the future state. Using the current-state map, design a future-state VSM: where flow is continuous, where supermarkets and pull are needed, where the schedule enters (pacemaker), and how WIP will be capped. Turn the gaps into a 6 to 12 month plan.
8. Re-lay out the flow physically. Move equipment to match the future state. Measure lead time, WIP days, and travel distance before and after.
9. Extend the map. Once the internal flow is stable, map with key suppliers and customers: order transmission, delivery frequency, packaging, and inventory held on both sides.

What each maturity level looks like

FL-2 Flow Analysis and Design

Level	Assessment wording	What it looks like on the floor	How to move up
1	No evidence of flow analysis.	Layout grouped by machine type (all lathes together, all presses together). Parts travel long distances in large batches. WIP everywhere, nobody knows how many days of it.	Walk and chart the flow for one product family. Draw a spaghetti diagram and count the WIP.
2	Process flows are charted and basic cellular layouts are in place.	Process flow charts exist for main products. At least one cell groups equipment in sequence. Changeovers are still long, so batches stay large.	Video and analyze the main changeovers using SMED. Define planned buffer locations and maximum quantities.
3	As Level 2, plus changeover times are analyzed (SMED) and Work in Process (WIP) is reduced to planned buffers.	Changeover times are measured and falling. Setup carts and checklists are in use. Floor markings show buffer locations with max quantities, and WIP outside them is rare.	Draw a current-state and future-state VSM for the main value stream and build the re-layout plan.
4	As Level 3, plus Value Stream Mapping (VSM) is completed and the results are used to physically re-lay out the flow.	Current and future-state maps are posted with dates. Equipment has been moved to match the future state. Lead time and WIP days are tracked and have dropped since the map.	Invite key suppliers and customers into the next mapping round. Map order, delivery, and inventory links across company boundaries.
5	As Level 4, plus VSM extends to customer and supplier processes to optimize the whole value stream.	Joint maps with suppliers and customers. Delivery frequency, pack sizes, and order signals have been changed on both sides. Inventory across the chain is falling, not just being pushed onto the supplier.	Sustain: refresh maps every 12 to 18 months or after major product changes, and share results with other sites.

Evidence to look for

Document

• Process flow charts and spaghetti diagrams with dates.
• SMED analysis sheets (element list, internal/external split, before and after times).
• Current-state and future-state VSMs with a dated action plan.
• Layout drawings showing before and after the re-layout.
• Buffer definitions: location, max and min quantity, reason for the buffer.

Observation

• Are there floor markings for WIP with maximum quantities, and is WIP inside them?
• How far does a part travel? Count the handling steps for one part.
• Watch a changeover. Is the next job’s tooling and material staged before the machine stops?
• Is equipment arranged in process sequence, or grouped by type?

Statement (questions to ask and who to ask)

• Operators: “How long does your changeover take? What do you wait for during it?”
• Supervisor: “Where do parts wait the longest? Why?”
• Planner: “How did you choose the batch sizes?”
• Engineering or CI lead: “When was the last VSM done, and what changed on the floor because of it?”
• Purchasing or logistics: “Have we mapped the flow with any supplier or customer?”

Management report

• Lead time trend (order to ship, or dock to dock) for the main value stream.
• WIP value or WIP days trend.
• Changeover time trend for key machines.
• VSM action plan completion.

Common pitfalls

• Maps on the wall, nothing moved. A VSM that does not lead to a physical change is a poster. The Level 4 test is re-layout, not drawing.
• Mapping from the office. Data from the ERP system usually understates queues and overstates uptime. Walk the flow and count.
• SMED without standard work. A fast changeover done once for the stopwatch drifts back within weeks unless the method is written, trained, and audited.
• Saving changeover time and banking it. If shorter changeovers do not lead to smaller batches (more changeovers), WIP and lead time do not fall. Decide in advance how the time will be used.
• Buffers with no limit. A buffer without a marked maximum is just a pile. Size it, mark it, and review it.
• Pushing inventory onto suppliers. Extending the map should lower inventory in the whole chain, not move it from your floor to theirs.

Template

VSM process box data sheet (one row per step)

Step	C/T (s)	C/O (min)	Uptime %	First-pass yield %	Operators	Shifts	WIP before step (units)	WIP days (WIP / daily demand)
Totals	Processing time = sum of C/T							Lead time = sum of WIP days

SMED analysis sheet

#	Changeover element	Time (min)	Internal or external now	Can it be external? (Y/N)	Improvement idea	New time (min)
1
2
	Total internal time

Buffer definition card

Field	Entry
Location
Part(s)
Reason for buffer (constraint protection, variation, supplier lead time)
Max quantity
Min quantity (trigger)
Owner
Review date

First 30 days

• Week 1: Choose the value stream. Walk it from shipping back to receiving. Count WIP at every queue and draw the spaghetti diagram.
• Week 2: Complete the current-state VSM with the team. Calculate total lead time versus processing time. Pick the one changeover that most drives batch size.
• Week 3: Run a SMED workshop on that changeover. Move external work outside the stop. Write the new method as standard work.
• Week 4: Mark buffer locations with max quantities for two or three key queues. Sketch the future-state map and list the top five actions with owners and dates.

Further reading

• Mike Rother and John Shook, Learning to See: Value Stream Mapping to Add Value and Eliminate Muda (Lean Enterprise Institute, 1998). https://www.lean.org/store/book/learning-to-see/
• Shigeo Shingo, A Revolution in Manufacturing: The SMED System (Productivity Press, 1985).
• Lean Enterprise Institute, Lexicon entries for value-stream mapping and SMED: https://www.lean.org/lexicon-terms/value-stream-mapping/ and https://www.lean.org/lexicon-terms/single-minute-exchange-of-die/
• Wallace J. Hopp and Mark L. Spearman, Factory Physics (3rd ed.). Covers Little’s Law and the relationship between WIP, throughput, and lead time.
• James P. Womack and Daniel T. Jones, Lean Thinking (1996).