AAOM Handbook

A Value Driver Tree is constructed on the following principles; • Start at the Outcome Node – the result. • Each Branch is independent • All Nodes in a branch must relate to the end Node of the branch • A Driver that can be isolated to affecting a specific Node is placed under that Node. • A driver that relates to several Nodes is placed at the same level as the highest related Node. • A driver is not placed below the level at which it is controlled. A Value Stream Map is constructed on the following principles; • Start by identifying each significant storage point in the flow, • Identify each significant branch of the flow, • Insert each Transform or Transfer Process / Productive Unit between the Storage Points and Branches, • Think carefully if you have a combination of Transform/Transfer processes without either a Storage point or a Branch between them. If either of the two does not exhibit independent variation combine them (e.g. a loader feeding onto a conveyor). If both exhibit independent variation it may be meaningful to separate them (e.g. a loader and a truck fleet). In the Operating Model the typical elements of a Business Structure are; • Value Driver Tree; o Company, o Business Unit, o Operation. • Value Stream Map; o Process, o Productive Unit. The definitions are provided in the Quality section of this Task Assignment and examples are included in Appendix 1. The relationships between elements of the Business Structure, and the flow of material or information through them, can be incorporated into a statistical model. Such a model allows the results of variation and interaction in the process to be visualised. With this information, the Performance Targets that each element of the flow sheet must deliver for the overall Business Expectations to be met can be determined. Similarly, reporting of performance can be rolled up as defined by the flow sheet relationships. It is typical for us, when defining a Business Structure, to think first of the major streams of material or information evident within a business. While this is probably a logical starting point the same approach can be adopted when breaking down or rolling up the performance of any function - for example potable water treatment systems and site surface water catchment/containment systems, supply chain functions, etc.

© McAlear Management Consultants 2006

Operational Planning: Set Performance Targets

Updated: August 2018

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