Thoughts on Value Added

I spent some time recently reviewing the Value Stream Maps of a couple of processes and identifying the steps that the customer (the production floor) really cares about and those that don’t add value.

Here are my thoughts after identifying a number of steps that don’t add value to the customer, but are still essential part of the process.

Non-Value Added (NVA) – any activity that is not required by the business or the customer willing to pay for. The NVA list is extensive and includes storing, moving, reworking, obtaining multiple approvals or signatures for the product. As I said the list is extensive.

Value added activities can be divided up into two categories –

Customer Value Added (CVA) – this is the stuff the customer cares about, turning aluminium into airplanes, writing code and adding functions that provide additional features that the end user cares about. If the activity changes the form, fit, function, interchangeability or adds a feature then it probably adds value to the customer. Additionally any work we do that provides a competitive advantage, for example eliminating defects, reducing price or reduction in flow time, falls under this category.

Process Value Added (PVA) – activity or expense that is required to operate the business and the customer does not care about. There are a considerable number of tasks that are required (or even essential to the process not breaking down) but don’t add anything to the product.

It’s obviously important to eliminate NVA activities. There is inevitably some low hanging fruit that’s easy to remove, however it’s important to delve deeply into the process and really understand what each step in the process adds and eliminate all NVA tasks and steps.

Recognising PVA and separating them from the NVA can be difficult. You are required (by law or by some form of regulatory body) to perform there steps, but they don’t add anything to the product. First step is to confirm the step is required, then look a little close of see if it’s performed as efficiently as possible, this may require contacting a subject matter expert to really understand. Ideally you’d like to eliminate PVA, but that’s typically impossible for a true PVA step. Then you are required to ensure the cost of these steps is reduced as far as possible.