The kingfisher was about this far away!

Each mapping layer, value chains, value streams, and process maps serve related but different purposes. As an organization drills down from a value chain to a process map different measures and metrics are exposed. One could summarize value chain metrics as high-level cost, revenue and speed while process mapping as variations on effort, delay, and work-in-process. Each metric set is highly related but targeted at different levels of the organization.

Value Chain Metrics Pallet

Cycle Time (Active and Delay) Measures, such as Concept to Cash and other variants capture the whole life cycle of a piece of work from inception to delivery to market.  Cycle time is measured in based on calendar time.

EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization, provides a robust evaluation of an organization or products financial performance. EBITDA reflects not only the contribution of the direct transformation steps in the value chain but also all of the support components (such as People or HR department).

ROI, return on investment, is one of the classic measures that evaluates the ratio of revenue to costs (one time and recurring) discounted for the time value of money ($1 earned today is more valuable than $1 earned next year) over a time horizon.  

Margin is the difference between revenue and cost for a specific period (note – margin is sometimes given as gross margin total sales less total cost of goods sold or as net margin which includes taxes and interest).

Value Stream Metrics Pallet

Process Metrics:  Reflect the efficiency of transforming ideas and raw materials info product.  

Work-in-process is a count or valuation of work items that have entered the value stream but have not been completed.

TAKT Time is the completion rate at which the finished product meets customer demand.  Throughput, the rate of story or work item completion, is used as a proxy for TAKT time.   TAKT is a reflection of the efficiency and capacity of the process.

Delay is the amount of time a work item sits before it can be worked on. Total delay is the sum of all delays in a process.  

Burden Rate is the ratio of effort required for non-engineering / non-transformation steps needed to deliver a product to the total effort required to deliver. Burden rate goes up as overhead, review and other non-transformation steps are added to a process.

Processing Time is a measure of how long and step takes to perform.

Output Metric Reflect (what)

Inventory (rare in software) is a count or valuation of work items that have been completed and not shipped. Inventory is only an issue if an organization builds up work before the software is released.

Throughput is the count of the number of work items that correctly complete and leaves the value stream. Examples might be the number of stories completed per sprint.

Cycle Time is the calendar time required to complete the value stream.

Defect Rate is the number of defects discovered for a specific period of time. Note – delivered defects, the number of defects discovered after a work item is completed and leaves the value stream.

Process Mapping – is the lowest level of granularity and many of the metrics are just deeper dives.

Delay is the amount of time a piece of work sits before it is worked on or after it worked on until it can be handed off to the next step.

Processing Time is the amount of effort time work is actively performed to transform an idea or raw materials. Examples might include the time required to code a story or to regression test a module.

Work-in-Process is a count of work items that have entered a step but have not been completed.

Defects Rate is the number of defects discovered in a specific step for a specific period of time.

Duration is the calendar time required for work to enter, complete and leave a step.

Value Added is a determination whether the step transforms (adds value to) the input into a work product with a higher value (example coding transforms a user story into functional code) step or exists to validate or review a work product (example, regression testing validates a work product but does not transform it).

Each layer of the mapping breaks work down into smaller chunks. As the maps focus on smaller chunks, different metrics can be generated that provide actionable information to different layers of the organization.