Value Added vs. Non Value Added are key concepts in process improvement methodologies, particularly in Lean Manufacturing and Six Sigma. Value Added (VA) activities are those that, in the eyes of the customer, enhance the product or service, making it worth more or more desirable. On the other hand, Non Value Added (NVA) activities are processes or steps that take time, resources, or space but do not increase the product’s value. Identifying and minimizing Non Value Added activities while enhancing Value Added ones is crucial for increasing efficiency, reducing waste (muda), and improving overall customer satisfaction. One of the easiest ways to achieve improvement is to eliminate Non Value Added activities from your process/job. You don’t need special skills and statistical tools for this, in many cases is enough just to be rational & logical. Non Value Added activities are always around us, but we are too blind to see them.
Three groups of activities
In this chapter, I delve into the categorization of activities within any operational process, dividing them into three distinct groups: Value Added (VA), Necessary Non Value Added (NNVA), and Non Value Added (NVA) activities. This classification is crucial for understanding and improving the efficiency of processes, especially in manufacturing and service industries.
Value Added (VA) activities
Any activity that increases the value of a product or service to the customer. In manufacturing those activities transform raw materials into the finished product for which the customer is willing to pay (cutting, joining, assembly).
Necessary Non Value Added (NNVA) activities
These activities don’t increase the value of the product/services and the customer is not willing to pay for them, but they are necessary to run processes. These activities are also part of waste, but many times they are required by technology, regulation or we think they are needed. In manufacturing NNVA could be inspection, measuring, movement of material, etc.
Non Value Added (NVA) activities
Any activity that doesn’t increase the value of a product/service and the customer is not willing to pay for them. They only add to the cost and time. Non Value Added activities are also called „Pure Wastes “. In manufacturing those activities are rework, repair, downtime, searching tools, etc.
4 Steps to manage Value Added vs Non Value Added activities
Step#1 – Mapping and Analyzing the AS-IS Process State
The initial phase in process optimization involves creating a simple process map or conducting a time study. This step is essential for capturing the current state of the process, known as the AS-IS state. Through this mapping, it becomes possible to visually identify and record all the activities involved in the process. This comprehensive identification is crucial for understanding the workflow and pinpointing areas for improvement. The process map or time study serves as a foundational tool for subsequent analysis and optimization efforts.
Value Added vs Non Value Added Mapping and Analyzing the AS-IS Process State
Step#2 – Value Added vs Non Value Added vs Necessary Non Value Added
The second step in the process improvement journey is the classification of all identified activities into three distinct categories:
- VA – Value Added: These are activities that directly add value to the product or service from the customer’s perspective. They are essential in transforming raw materials or basic inputs into the final product or service that the customer is willing to pay for.
- NNVA – Necessary Non Value Added: These activities do not directly add value to the product or service and are not something customers are willing to pay for. However, they are necessary for various reasons, such as compliance with regulations, maintaining process efficiency, or due to current technological limitations.
- NVA – Non Value Added: These activities do not add value to the product or service and are not necessary for the process. They are often considered pure waste and include tasks that only increase costs and time without contributing to the final value of the product or service.
This classification is pivotal for identifying areas where efficiency can be improved by either eliminating or optimizing specific activities.
Value Added vs Non Value Added vs Necessary Non Value Added
Step#3 – Implement improvement actions
Third step is to propose and implement improvement actions based on following matrix.
Implement improvement actions
One of the most common missteps in process improvement is the exclusive focus on eliminating Non Value Added (NVA) activities. However, it’s equally important to initiate actions aimed at minimizing Necessary Non Value Added (NNVA) activities and optimizing Value Added (VA) activities. Adopting a holistic approach that addresses all three categories of activities is crucial for the comprehensive optimization of the entire process.
Step#4 – Present Before and After
The fourth step in the process improvement journey involves the calculation and visualization of the impact of the implemented action plan, essentially comparing the ‘Before’ and ‘After’ states. This stage is crucial for quantifying the effectiveness of the changes made.
Before and After – NVA vs VA
By applying common sense and critical thinking, a significant amount of waste can be identified and eliminated, leading to substantial improvements in the process. This visualization not only provides tangible evidence of progress but also helps in identifying further areas for improvement, ensuring continuous process optimization. It’s a vital step for reinforcing the value of the changes made and for guiding future improvement initiatives.
Standardized Work in Eliminating NVA
Standardized work is an essential tool in distinguishing Non Value Added (NVA) activities from Value Added (VA) activities and plays a pivotal role in process analysis and improvement. Here’s how standardized work supports this critical analysis:
- Establishing a Baseline for Comparison: Standardized work creates a uniform baseline. This consistency makes it easier to identify deviations that may represent NVA activities, as they do not conform to the established standard (Standard Operating Procedure) of what adds value.
- Highlighting Inefficiencies and Waste: By defining the most efficient method to perform a task, standardized work helps in pinpointing areas where time or resources are being wasted. It allows for a clear visualization of the process flow, making it simpler to spot NVA activities such as unnecessary movements, delays, or redundancies.
- Facilitating Continuous Improvement: Once the process is standardized, it becomes easier to apply continuous improvement methodologies like Lean or Six Sigma. These methodologies thrive on clear, well-defined processes, and standardized work provides the necessary framework for systematically eliminating NVA and optimizing VA activities.
- Improving Process Understanding and Training: Standardized work helps in better training of employees (for example with the Training Within Industry program) by clearly defining what constitutes VA activities. This understanding is crucial for employees to identify and suggest improvements that can eliminate NVA activities, fostering a culture of continuous improvement.
- Enabling Better Measurement and Control: With standardized processes, it becomes feasible to measure performance against a known standard described in the SOP (Standard Operating Procedure). This measurement is critical in quantifying the amount of NVA activities and understanding their impact on the overall process efficiency.
Conclusions: Value Added vs Non Value Added
The distinction between Value Added (VA) and Non Value Added (NVA) activities is a fundamental aspect of process improvement. Understanding and categorizing activities into VA, Necessary Non Value Added (NNVA), and NVA is crucial for identifying areas of waste and potential enhancement in any operational process. The journey from mapping the AS-IS process, through classifying activities, to implementing and evaluating improvement plans, highlights the importance of a holistic approach.
Focusing solely on eliminating NVA activities is not sufficient; optimizing VA activities and minimizing NNVA activities are equally important. This comprehensive strategy ensures not just the elimination of inefficiencies but also the enhancement of the overall value delivered to the customer. The practice of continuously analyzing and improving these elements can lead to significant enhancements in efficiency, cost-effectiveness, and customer satisfaction. In essence, the balance and interplay between Value Added and Non Value Added activities form the cornerstone of effective process optimization and organizational excellence.
Nenad Marcetic is CIO at Lean Community. He has over 15 years of experience in Lean Management. He is a graduate of Quality Management. He has conducted more than 250 management system audits in various companies and industries (manufacturing, food and beverage, agriculture, IT services, finance, retail, mining). Since 2015 in a global automotive company, where he is responsible for process standardization and the implementation of the IATF standard.
