Oftentimes, we tend to create additional steps to a process in order to fix a problem or improve a situation. Over time, these additional activities become an accepted part of the process although they do not add any value to the product or service. To improve our processes, we need to identify these non-value-added activities, determine the problems they were made for, then find new ways to avoid those problems in the first place. Problem solving efforts should focus on those aspects of processes that are wasteful and add no value to the customer. Show Value is one of the most important concepts within Lean thinking and one of the most valuable outcomes Lean provides. It is simply how much your product or service costs from the perspective of your customers. Value analysis focuses on what adds value to business processes as perceived by the customer. Any activity that does not add value to the product or service should be feed into your future problem-solving efforts. Each step within a process can be classified into one of three categories: Value-added activities – Refers to the activities that increase the worth of a product or services from the customer’s perspective. Common examples include machining a part and serving a customer.  Essential non-value-added activities – Refers to the activities that add no value to the product or service but are required to conduct the business due to the current settings of the process, policy or technology. Common examples include inspecting a part and preventive maintenance. Essential non-value-added activities – Refers to the activities that add no value to the product or service, not required for business operational reasons, and must be considered in future problem-solving efforts. Common examples include searching for a tool and reworking an application. Research has shown that value-added activities in a typical process are less than 10 percent of the total work performed. This means that the work that the customer cares about is only 10%. In fact, companies are spending more time and resources on areas that do not add value. Painting for example is usually a value-added activity. However, repainting as a result of using the wrong paint is a non-value-added activity as it is considered a rework. Customers are not willing to pay for the mistakes of their suppliers. The first step when analyzing the value of any process is to determine who the ultimate customer is. An ultimate customer is normally the end user of the product or service. It is important that you clearly understand the expectations of your ultimate customers and know exactly what they are willing to pay for. You need to actively listen to them and encourage them to send feedback on how well your product or service meets their needs for future process improvements. The following are some of the concepts and tools that can be used to identify and analyze wasteful and non-value-added activities:
1. The Eight Types of WasteOne of the core principles of Lean thinking. Categorizing waste into these eight forms makes them easier to identify and helps identify priorities for action. Click here for more information about the eight types of waste. 2. Waste WalkWaste walk is a practical approach that helps identifying value-added and non-value-added activities within an area or in a process. It allows walkers to understanding how the process really works and helps them quickly identify continuous improvement opportunities. It is highly encouraged to regularly walk the process to look for opportunities to reduce waste and make improvements. 3. Waste Recording FormA waste recording form helps identifying and recording wasteful activities during waste walks. It usually contains a place to classify the waste according to the eight types of waste or any other waste classification. 4. Opportunity Process MapAn opportunity process map is a type of process map that provides a visual picture of how the process works and whether activities are value-added or non-value-added. 5. Value MatrixThis four-fields matrix can be used to help making the correct decision about wasteful and non-value-added activities. If the activity is unnecessary and adds no value to the product or service, then it should be eliminated or reduced as much as possible. 6. Value Analysis MatrixA value analysis matrix clarifies the types of non-value-added activities present in the process and can be used track non-value-added time spent in each activity. can also be used for the same purpose. 7. Value Stream TimelineA value stream timeline reflects the value-added and the non-value-added activities of the core process and often found at the bottom value stream maps. It helps finding out the VA and NVA percentages. 8. VA/NVA MetricsMany companies are using various metrics in order to measure the performance of their end-to-end process. One of the most common metrics is the Value-Added Ratio (Value Stream Ratio), which is the proportion of time spent in a process in a way that is adding value. VAR = Total Value-Added Time / Total Lead Time Other Formats If you want to use the following three documents in your training courses, the PPTX versions are available to buy from our Shop page. How can a valueValue-Added Activities are those that transform raw materials (plastic, lithium, copper) into the finished product (a smartphone) for which the customer is willing to pay. Some examples include molding, cutting, drilling or assembling parts.
How would valueValue-added activities, as the name suggests, create value for the customer. Business-value-added (BVA) activities do not create value for the customer, but are necessary. These activities sometimes are referred to as Type 1 waste. Some examples of BVA activities are marketing, design, and delivery.
How is value defined in Lean thinking?Value – the definition of value in lean is everything the customer is willing to pay for.
What are the value adding activities?Value Added activities are those that convert a product from raw material to a finished product quickly and at minimal cost. It helps businesses to complete a business activity properly the first time and to deliver the product/service in accordance with customer specifications.
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