What is Value Stream Mapping? – Concepts and How to Use It

Explore this value stream mapping (VSM) guide to explore the key points including definition, benefits, usages, and step-by-step instructions for undertaking your own value stream analysis.

Value Stream Mapping Basic Definition

Value stream mapping (VSM) is a technique used by firms to, define, analyze and optimize the information/materials flow required to the whole production process. The model, which contains both values adding steps and non-value-adding steps from the customers’ standpoint, is a bit similar to the flowchart structure. The main purpose of value stream mapping is to help managers and team leaders build an efficient and integrated resources and information flow system for their organizations. Below is an example of chair production value stream mapping. You can click on it to see more insights.

What is Value Chain Analysis? – The in-depth Guide

See this article for all the essential information you need to understand and undertake your value chain analysis. Feel free to create your own value chain diagrams with more free templates and the handy diagram software.

Value Chain Analysis Basic Definition

The theory is popular in the business field and was first pointed out by Harvard Business School professor Michael Porter in 1985. To better understand value chain analysis, Let’s breakdown the concept into the following parts:

• Value is the profit margin that created and captured by an organization. The margin, in this case, equals Value (total revenue) minus Cost.
• Value chain shows the full process of internal activities for a firm to transforming inputs (money, labor, materials etc.) into final goods or services.
• Value chain analysis, therefore, is the analysis of a series of value chains for organizations to find out activities that add value to its final product or service in order to gain more competitive advantages including cost leadership and a high degree of product differentiation.

Here you can see a value chain analysis example in the public products sector with a series of activities including channel management and distribution management. You can click on it to see more details.

Main Value Chain Analysis Activities

In reality, firms may undertake thousands of activities in producing goods or services. According to Porter, all of these activities can be put into two general common groups: the primary activities and the support activities. Companies can gain more profit if combing these two activities efficiently. Porter’s theory can be drawn as a diagram below:

Primary Activities

These activities have a direct relationship with creating and delivering a product, and they are usually considered as the main source of cost advantage where costs can be quickly found. Primary activities have five sub-categories:

• Inbound logistics refers to the receive, storage, and distribution of raw resources during the production process. Here supplier relationships play an important role.
• Operations are the process (assembling, packaging etc.) at which the raw resources are turned into the final service or product. At this stage, the value is added to the product through the production line.
• Outbound logistics is the distribution of the final product to consumers, wholesalers or retailers etc. At this stage your operational systems create value.
• Marketing and sales including activities such as advertising, promoting, selling, analyzing the market and pricing the final product to ensure it is targeted to the appropriate consumer groups. The key aim is to make your customer groups aware of the product in order to create demand for it. At this stage, you should focus on consumer relationship management.
• Service refers to the activities (warranty and after-sale services etc.) needed to improve or maintain your service’s or product’s performance after ordering.

Support Activities

Organizations usually use support activities with primary activities to gain profit. Support activities also used as the most key source of differentiation advantage. Furthermore, each support activity can be used in each primary activity. There are four main sub-groups of support activities as shown below:

• Infrastructure refers to organizational management, risk management, accounting, legal, and quality-control mechanisms for productive daily operations. Inefficient infrastructures would lead to a waste of organizational resources and a lower level of productivity.
• Human resource management mainly refers to hire, train, compensate, and retain proper professional employees. In service sectors where face-to-face interactions commonly exist, employees can be the competitive advantages of their firms.
• Procurement is how the raw resources (machinery items etc.) for the product or service are obtained. Procurement normally involves finding vendors, managing suppliers’ relationships, and negotiations based on agreements. The biggest challenge for purchasing is to get suitable quality at the best price according to the budget.
• Technology is used by firms in many ways to research, design, improve and develop new products and reduce cost. In modern times, technical development may require a high level of expenditure and a long time, but organizations can, therefore, enjoy long-term benefits and gain more values.

Any Value Chain Analysis Usages?

Value chain analysis can be used in nearly all fields and industries including manufacturing (automobiles etc.), trade, retail (supermarkets etc.), logistic, finance (online banking etc.). So far, many world top 500 companies, such as FedEx, Toyota, Walmart and Nestle etc., integrate the basic value chain analysis models for the changing market demand. Here is an example of a value chain analysis in the finance sector (click on the image to see more).

Some other noticeable usages of value chain analysis are:

• Food Sector – coffee beans; the use of agri-food value chains in developing countries and areas such as India, Kenya, and Latin America; help farmers to operate profitable products in the long term.
• IT – software development etc. Developers can use the value chain analysis model to identify the problems of online order tracking, system programme testing and so on.
• Public Sector – international enterprise use value chain analysis models to improve rural development and worldwide sustainable development by working with local governments and some other non-profit organizations.

How to Use the Value Chain Analysis Model?

Cost advantage and differentiation advantage are two key approaches for undertaking a value chain analysis for a whole producing line or process.

Cost Advantage

This method is used when firms want to analyze the sources of their cost advantages, and the factors that drive these costs. A typical cost advantage approach has the following five steps:

1. Find out the organization’s primary and support activities by deeply looking into capabilities of the organization (e.g. direct-selling activities and indirect-selling activities).

2. Break down the total costs of producing a product or service and assign to each activity.

3. Explore cost drivers for each activity (economics of scale, organizational policies, location, and labor-intensive activities etc.).

4. Analyze the relationships between different activities (e.g. the reason for cost reduction).

5. Find out any breakpoints to reduce costs (e.g. outsourcing).

Differentiation Advantage

This method is used when organizations want to create superior products or services compared to their competitors in the market. A general differentiation advantage has the following three steps:

1. Find out the customers’ value-generating activities, for example, the outstanding product functions by a leading company.

2. Integrate strategies (e.g. competitor analysis, human resource management, technology innovation, customer relationship management) to improve user experience, customer service and more.

3. Look for the best sustainable choice of product/service differentiation and achieve them in a step-by-step way.

Further Value Chain Analysis Tips

Here are some tips to overcome challenges:

• Communication – Listen to and gain feedback from a wide range of roles, for example, team members, staff from other departments, loyalty customers, stakeholders and so on.
• Use Supportive Tools – Try to use Gantt charts, timelines, brainstorming skills, flowcharts or mind maps to improve your work productivity, make flexible time tables and visualize all of your ideas.
• Data Collection – Leave more time for gathering data for your value chains. The process could be labor or time-intensive.

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What is Value Chain Analysis?

What is Fault Tree Analysis (FTA)? – The Beginner’s Guide

This detailed subject guide offers an explanation of the basic concepts in fault tree analysis (FTA) and some other key topics of the field.

What is a Fault Tree Analysis (FTA) – Definition

The fault tree analysis is a deductive process. Developers or engineers use it to find out the root cause or human errors for different types of software, engineering facilities or hardware. It usually starts at a single point (the undesired top-level event) and then goes downwards in the form of a tree (the top-down structure) with a number of blocks and symbols to show the relationship between events (mechanical components). More specifically, the definition of “Fault” in fault tree analysis indicates the occurrence of an undesired state for a component or system. For example, the light is failed off due to the switch failure as shown below (click on it to see more details).

History of Fault Tree Analysis

The development of fault tree analysis has the following main stages:

• The Early Years – In 1961, Bell Labs developed the model for the use of Air Force Minuteman Launch Control System. Later, Boeing company use the fault tree analysis model for the design and evaluation of both civil aircraft and commercial aircraft. Around the 1970s, engineers in the aerospace and nuclear power industries further adopted the fault tree analysis model for complex projects.
• The Middle Years – Fault tree theory became popular among different countries with the adoption of technical algorithms and codes. Around the 1990s, the software industry and the chemical sector also introduced fault tree analysis.
• The Recent Years – Worldwide professionalists developed more commercial codes for the use of reliability engineering and robotics projects. Now, fault tree analysis is regarded as one of the most significant system reliability and safety analysis tools.

Here is a fault tree analysis example for finding out the cause of the aircraft crash. Feel free to click on it to see more information.

Why Use Fault Tree Analysis?

Overall, it offers a well-structured, highly visual and comprehensive picture of your system. It helps users or developers quickly understand the results based on the logical relationships in order to pinpoint drawbacks and errors in the design process. Some other important benefits are:

• Easy to Adopt – Administrators can easily make changes for their system, evaluate for possible effects, design quality test and maintain procedures according to their fault tree analysis diagrams.
• Wide Applicability – Many subjects and fields use fault tree analysis, such as organizations in hardware, software, algebra, probability, reliability, physics, chemistry and engineering sectors etc.
• Risk Estimation – Engineers or developers can identify risks prior to a program launch by using the fault tree analysis model.
• For Complex System – It can be used to monitor and manage the safety performance of large-scale complex systems, for example, the fuel and aircraft project.

Fault Tree Analysis and other Analytical Models

Developers often compare the fault tree analysis, the Failure Mode Effects Analysis (FMEA) and the Reliability Block Diagram (RBD):

Relationship with FMEA

• Fault tree analysis is in the form of a top-down tree, while FMEA usually has a matrix structure with all the key measurements (severity rating, occurrence rating, process controls, detection rating and risk priority number etc.) right on the top column.
• Fault tree analysis can be used to show single or multiple initiating faults, but it could be hard to find all possible faults by using fault tree analysis. In contrast, FMEA does well in exhaustively cataloging initiating faults and identify effects, but not good at exploring multiple or single faults.
• In some cases, FTA and FMEA can be used at the same time for better system development (e.g. the analysis of civil aerospace).

Relationship with RBD

• RBD depicts a system by using paths rather than gates in fault tree analysis diagrams.
• RBD focuses on the success part while fault tree analysis works on the failure part.
• Fault tree analysis is normally used for analyzing fixed probabilities of the occurrence of each event. RBDs may cover time-varying factors during the analysis process.

Fault Tree Analysis Diagram Symbols

Fault tree analysis has three basic symbol types: events and gates symbols.

Events

This sub-category includes the following shapes:

• Primary/basic event is normally shown as a circle. It is a failure or error in a system component or element.
• An external event is normally shown as a house-shape. It is an event that normally expected to occur.
• The undeveloped event usually means some component in a system that needs no more investigation due to limited information.
• Conditioning event is a restriction on a logic gate.
• The intermediate event is usually placed above a primary event in order to show more event description details.

Gates

These symbols mainly show the relationship between output and input events, and the two most popular ones in this sub-category are OR gate and AND gate.

• OR gate – It occurs as long as at least one of the input events occurs.
• AND gate – It occurs only if all input (at least two) requirements are met.
• Exclusive OR gate – It occurs only if one of the input conditions is met, not if all conditions are met.
• Priority AND gate – It occur only after a specific order of conditions.
• Inhibit gate – It only occurs if all input events take place and whatever is defined in a conditional event.

How to Undertake a Fault Tree Analysis?

Although the nature of the undesired event may be quite different, fault tree analysis has the same procedure for any types of undesired event. To do a comprehensive fault tree analysis, simply follow the process below:

1. Define and identify the fault condition (hazard) as precisely as possible based on the aspects such as the amount, duration, and related impacts etc.

2. Using technical skills and existing facility details to list and decide all the possible reasons for the failure occurrence.

3. Break down the tree from the top level according to the relationship between different components until you work down to the potential root cause. The structure of your fault tree analysis diagram should be based on the top, middle (subsystems), and the bottom (basic events, component failures) levels.

4. If your analysis involves the quantitative part, evaluate the probability of occurrence for each of the components and calculate the statistical probabilities for the whole tree.

5. Double-check your overall fault tree analysis diagram and implement modifications to the process if necessary.

6. Collect data, evaluate your results in full details by using risk management, qualitative and quantitative analysis to improve your system.

How to Create a Fault Tree Analysis Diagram?

Creating a fault tree analysis diagram is easier than you think. Just do the following steps:

Step 1: Open a Blank Page

Run the fault tree analysis diagram software, go to Business Diagram, then double-click the Fault Tree Analysis icon to open a blank drawing page. Alternatively, you can directly click a built-in template to start your work.

Step 2: Add Shapes

Drag and drop the fault tree analysis standard symbols on the drawing page, and edit them in suitable sizes to fit your tree structure. You can also explore the built-in library to switch to other kinds of fault tree analysis diagram shapes.

Step 3: Connect Shapes

Select proper connectors to connect shapes. Also, feel free to add more connection points on your shapes.

Step 4: Add Text

Open a text block to add details or just double click shapes to add directly. You can also insert supportive materials such us hyperlinks or notes for your shapes.

Step 5: Further Customize Your Shapes

Now you can do a series of formatting for your fault tree analysis diagram, for example, choose a new theme from the built-in themes, change the diagram background, customize the text color and align shapes by clicking the relevant menus.

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What is Fault Tree Analysis (FTA)?

Easily Learn What is a Piping and Instrumentation Diagram (P&ID)

Piping and instrumentation diagram (P&ID) is not difficult to understand by reading this simple P&ID article with basic concepts and key aspects.

What is a Piping and Instrumentation Diagram (P&ID)?

A piping and instrumentation diagram displays the piping components (for example equipment, valves, reducers and so on) of an actual physical process flow and is often used in the engineering projects, such as setting up steam boilers, heat exchangers, electric boilers and more. To read a piping and instrumentation diagram, simply break down the overall diagram into smaller parts and then trace from a piece of single equipment and follow the pipeline. Piping and instrumentation diagram also has a close relationship with the Process Flow Diagram (PFD). The latter type shows a picture of the separate steps of a process in sequential order.

Main Purpose of using piping and instrumentation diagrams are:

• To better understand the design conditions of an engineering project;
• To operate, maintain and modify the processing system efficiently;
• To conveniently layout out and demonstrate the physical sequence of systems with the focus on the control and shutdown schemes, safety and regulatory requirements, and the basic start-up and operational details.

Piping and Instrumentation Diagram Elements

There is no standard form for a piping and instrumentation diagram, but you may see some of the following elements:

• Different kinds of equipment including drain, reducers, drains and so on;
• Equipment details such as sizes, tag numbers, rating, capacity and more;
• Details about the overall diagram including element identification, insulation requirement, flow directions, interconnections reference, quality level, various interfaces, permanent start-up, and flush lines;
• Symbols including valves;

Any Piping and Instrumentation Diagram Usages?

Piping and instrumentation diagrams have been used in many fields such as metallurgical sector, air conditioning industry, power generator sectors and so on. The key usages of such diagrams are:

• For designing a manufacturing process for a physical plant with complex chemical or mechanical steps. This is especially important for a safety check.
• For training new workers and contractors before they start work in the plant.
• To derive project capital cost estimate and develop project contract specification, for example, the guidelines and standards for facility operations.

P&ID Symbol Legend

The piping and instrumentation diagram symbols, which show the functional relationship between piping, instrumentation, and system equipment units, are very important for users to understand the subject. Unlike floor plan symbols that are dimensionally accurate, piping and instrumentation diagram symbols are mainly used to illustrate the process of a system. All piping and instrumentation diagram symbols can be divided into seven main categories: equipment, piping, vessels, heat exchangers, pumps, instruments and finally valves.

Equipment

Equipment has unique miscellaneous units that are different from the other piping and instrumentation diagram categories. The equipment category contains facilities and devices such as compressors, conveyors, motors, turbines, vacuums, and more.

Piping

Pipes are used to transporting fluid substances in industrial diagramming. Piping has a number of different materials, such as metal and plastic, to be used to create various types including multi-line pipes, separators, and so on.

Vessels

Normally, a vessel is a kind of container that is used to store fluid or change the features of the fluid during storage. The vessels category covers from tanks to columns as you can see below:

Heat Exchangers

A heat exchanger is used to efficiently transfer heat from various kinds of areas or mediums. This category includes many different forms of devices such as boilers, condensers, hose reel and more.

Pumps

Generally, a pump is a kind of device that uses pressure to raise or compress fluids in and out of other industrial facilities. This category covers pumps, fans, ejector, spray and many more.

Instruments

An instrument is used to measure and control quantities including flow, temperature, or pressure. The instruments category includes houses indicators, transmitters, weir meter, controllers and so on.

Valves

A valve is used by engineers to control the flow of a fluid by opening or closing passageways in a piping system. This section includes rotameters, gauge, ball and more.

P&ID Examples

Using examples with colored labels helps a lot to understand the piping and instrumentation diagram. Simply check out the following examples from different industrial fields. Feel free to click on any of these examples to see more.

Water Boiling Process

This example here shows a general process for changing from the liquid phase to a gaseous phase. In this case, the vapor pressure of the liquid has the same level of the atmospheric pressure exerted on the liquid.

Power Generation System

A power generation system, which is also called as a power plant or power generation station, is a set of industrial equipment for generating electric power. You can see different types of facilities such as power supply tanks and LP turbines in the following diagram.

Evaporate Piping and Instrumentation Diagram Example

This diagram here shows an evaporator system with a number of elements and three key evaporators. By following the pipelines in this diagram you can clearly see how water is evaporated.

Air Conditioning System

This piping and instrumentation diagram example here shows the general process of removing heat and moisture from a certain space in order to improve the living environment. The key air conditioner is set at the middle and equipped by a series of pipelines in different directions.

Low Dust SCR System

SCR refers to the Selective Catalytic Reduction, which is an advanced emissions control system. Hit on the diagram below to check out more details, or you can free download it in PDF format.

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Easily Learn What is a Piping and Instrumentation Diagram (P&ID)

What is a UML Diagram? – An Easy and Comprehensive Guide

Simply read this comprehensive guide for all the key aspects (basic concepts, usages, benefits, types, how-to-create etc.) of knowing about the UML diagram with free download UML diagram templates.

What is a UML Diagram?

A UML diagram shows the unified visual presentation of the UML (Unified Modeling Language) system with the aim to let developers or business owners better understand, analyze and undertake the structure and behaviors of their system. To be more simple, such a diagram is very similar to blueprints used in construction building projects. So far, the UML diagram has become one of the most common business process modeling tools and is doing well for large and complex projects. UML is also highly significant to the development of object-oriented software with more clear and easy notations.

Why Use UML Diagrams?

UML diagramming has many benefits for both software developers and businessman, and the most key advantages are:

• Problem-Solving – Enterprises can improve their product quality and reduce cost especially for complex systems on a large scale. Some other real-life problems including physical distribution or security can be solved;
• Improve Productivity – By using the UML diagram, everyone in the team is on the same page and lots of time are saved down the line;
• Easy to Understand – Since different roles are interested in different aspects of the system, the UML diagram offers non-professional developers, for example, stakeholders, designers, or business researchers, a clear and expressive presentation of requirements, functions, and processes of their system.

What are the Types of UML Diagrams?

The two most main categories of UML diagrams are the Structure UML diagram and the Behavior UML diagram. Furthermore, 13 sub-types of UML diagrams are divided into these two groups and each one of them has a different purpose. Now let’s check out all of them in more details as shown below. You can also click on them to see more and download these examples for free.

Structure Diagrams

These diagrams show different objects and the static structure of the system. The elements in a structure diagram may include an abstract and some other related implementation concepts. This category has six sub-types:

• Class diagram
• Composite Structure diagram
• Object diagram
• Component diagram
• Deployment diagram
• Package diagram

Class Diagram

It is the most widely used UML diagram sub-category. The Class diagram is the building block of all object-oriented software systems. Users can depict the static structure and identify classes relationship of a system by checking the system’s classes and attributes. Each class has three basic elements: the class name at the top, the class attributes in the middle, and the class behaviors at the bottom. In reality, you can create classes such as “Sales Account” or “Online User” in business systems, or “Teacher” and “Student” in academic systems.

Composite Structure Diagram

Composite structure diagrams are used to show the internal structure, the behaviors of classifiers, and the relationships between classes in a system. The composite structure type is similar to Class diagrams but the former ones represent more detailed individual parts rather than the whole system structure. Object Diagram

Object diagrams can be considered as the screenshot of the instances and their internal relationships in a specific system. By using such diagrams, developers can be able to analyze the operations of the system at a particular instant, and check their abstract structure. Furthermore, the relationship between a Class and an Object in software development can be described as the relationship between, for example, the class “Food” and the brand “KFC” or the general class “User” and a specific username called “David” or what else.

Component Diagram

Component diagrams are used to show in what way the physical components in a system is organized. Normally, developers use the Component Diagram to check out implementation details, break down the system into smaller parts, depict the structural relationship between system elements especially in the case of large-scale complex projects with more advanced technologies.

Deployment Diagram

Deployment diagrams are generally used to show users the visual relationship between software and hardware. A sample Deployment diagram in the software development field has two main parts: Nodes (basically different kinds of servers) and Artifacts (normally client or database schema). Nodes host the Artifacts, while different types of Artifacts operate on Nodes.

Package Diagram

In general, Package diagrams are used to depict how packages and their elements are organized into meaningful groups in a system. More specifically, Package diagrams can be considered as a structure that includes many deployment diagrams with nodes and artifacts. So far, package diagrams are used to organize the Class and Use Case diagrams.

Behavior Diagrams

These diagrams display the dynamic behaviors or in other words, what should happen in a system. For example, the way that objects interact with each other, or a set of changes to the system over a certain period. This category has seven sub-types:

• State Machine diagram
• Activity diagram
• Use Case diagram
• Sequence diagram
• Communication diagram
• Timing diagram
• Interaction Overview diagram

State Machine Diagrams (State Machines or State-chart Diagrams)

Such UML diagrams are used to represent the condition of the system, the dynamic action (different states) of a class in response to a particular time based on internal or external factors. A real-life example of the State Machine diagram could be playing Poker cards. The final result (different states) of the game can be different based on players’ specific strategies.

Activity Diagrams

Activity diagrams are used to illustrate the interconnected flow of different activities and actions (both in sequential form or in parallel type) in a system, and to display the steps involved in the execution of a use case. This type of UML diagram is widely used both in business modeling process and software development.

Use Case Diagrams

A Use Case diagram can be regarded as a good starting point for discussing project key actors and processes without going into too many implementation details. This UML diagrams is also the most popular type of the Behavioral UML diagram category and is used to analyze the functionality (the use cases) and the interactions with different types of agents (actors) of a system. For business cases, enterprises may use such diagrams to check out the customer order system by monitoring the stock, product quality and so on. For daily life cases, Use Case diagrams are similar to the Hot Sale product list of your local supermarket. You know the product name and its prices according to the list when making your purchasing decision.

Sequence Diagram

A sequence diagram generally shows the interaction between objects in sequential order. It is for users to document and understand requirements in a new system. In software development, this type of diagram is used to represent the architecture of a system.

Communication Diagram (Collaboration Diagram)

A Communication diagram is used to display sequenced communications between objects with the focus on primary objects and their relationships. Communication diagrams usually use number schemes and pointing arrows to show message flow. Moreover, compared with sequence diagrams, communication diagrams are much easier to be designed but contains fewer details when drafting documentation for systems.

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What is a UML Diagram?