Let us have a discussion on a topic of common interest. 

There are several management processes like operations planning, budgeting, resource planning etc. which customers are not really williing to pay for.

If we strictly categorize activities as either Value Adding or Non Value Adding (and try to avoid terms such as business value adds or business enabling), would it be correct to say that management processes should be considered as non value adding activities? 

One argument goes that they are NVA - there were quite a few management activities in the past which have been eliminated today. (consider an example of report making at each level by summarising data from lower level persons which was part of planning and control earlier) 

A counter argument goes that planning should be consider the biggest value adding task for management above all.

Would you like to break up management processes into types that can be called VA or NVA? 

What do you think?  

Planning is very vital for the success of the Process/ activity. Drawing PERT chart analysing the shortes part, early completion etc are the vital elecments for a sucessful completion of the task/project.

The argument of, some activities being obsolete and completely out of the system. is true for some processes (as advised in the topic: example of report making at each level by summarising data from lower level persons which was part of planning and control earlier). However these activities were earlier being done manually and would consume a lot of time and energy. Resultant would be a lot of time being invested in analysing and thinking about future growth rather than putting things into action. This activity was actually replaced by the technology, but the basic need for analysis was still there. There were ready tools available to compile the data and inferences was now possible in a very short time.

However the need for Analysis and and process is always a great value add. It not only cleares the path we need to tread, but also helps us calculate the risks, prepare for the worst outcomes, also fore-warns us to take corrective actions for all things going wrong.

In upcoming projects, as rightly addressed by Mr. Pallassena, Shortest path is always important for financial managemet of the project. Planning is not only for successful completion, but also for timely completion of a project and helps you to meet the benchmarks / deadlines. Any extension in a project delivery is an added cost on the project which if saved, is a great value add.

Resource planning gives you a great insight of your strenghts, abilities, capabilities and also a great control over your financial outflow.

All processes if planned always give a great financial edge and relates to controlled utilization of availabale resources.

I feel it is always a value add to have planning in place.

Planning also helps us to find and eliminate the exact way of completing project in the quickest way or shortest way. CPM and PERT.   

I can say planning and other managment processes budgeting, resource planningis are the acitivities helps to identify, filter and eliminate the NVA.

Management activities may not be a value adding item for product and customer may not pay for it. But it helps to save the money and it is a value adding acitivity for any management. 

If a product is delivered to customer/user without having a management processes it may cost them more than the price with management processes.   

I do Agree that managmenet is an Non Value Add to the project, having said that  Client always  expect quality at source or inbuilt quality and client do no pay for the Q . Its becomes vital for  the company to add in between Value ad and non Value add something name Operational Value add. To matter of fact even client expects to  follow various process and redundancy of reporting as well as work. We can streamline and minimize the said non project activites but cannot elimnate as its a risk to proejct itself.

 

There has to be further categorization of necessary evils (NVA) and unnecessary evils (NVA). NVAs continue to be automated, basically the first category- a good example is reporting. However, not everything can be automated. If there is a process, there will be a way of improving its efficiency. While we should cap all management practices as NVAs (going by the definition of it- unless we want to redefine it), we need to further look at what is a necessary evil and what is not and try to remove unnecessary evils & increase efficiency of processes for necessary Non Value Adds

Hi All,

      We have moved from the days of only pen & paper to complete automation, which is the major reason for some of the activities (like report making at each level, per the question) to have become redundant, but without nulifying the need for basic planning & analysis in any process, as aptly opined by Rohit.  

     Keeping aside all management & six sigma jargons we can say that, planning is the only differentiating factor between doing the right thing in a particular situation rather than doing anything (whether relevant or not) for the same situation. The results are there for all to see & any sensible person would go for the former. So, Planning & other related management activities was, is still & will continue to be an integral & VA part of the management process in doing any business the right way.  

Thanks & rgds.

Hi Chris, 

I see value on somments by both Chris and Manian. I look forward to views from others on the subject. 

Management Processes are the biggest opportunity for business developement and benefits. They are necessary NV Adds w.r.t bussiness benefits. With developement of technology the management processes should be improved upon to have instant decision making tools and platforms that can be almost virtual and shall add value not only from customers point of view but business point of view also. We may say that these are VA for business.

Well, for once, logic may go like this! The end result envisaged, defines the purpose! The purpose is a combination of efforts and direction. In order to set the direction, tone and pace of efforts, one needs the data and its analytical results. The effectiveness of this depends on effective and timely communication of data (processes and results). Thus one may see that it is elementary to have data to achieve end results. Thus management process can be summarised as management of this communication channels effectively to achieve end result. Having said that, in a larger span of time, no operational data is irrelevant or NVA.  They have their significance under varying business circumstances. The question is which data to be considered at what time? This, if the organisation has sufficiently organised its data collection, assimilation and analysis process (say by employing some automation tools) much of the chores (considered VA and NVA by some) is taken care. Thus one can conveniently say that AN ORGANISATION DOESN'T EXIST WITHOUT THE WELL DEFINED MANAGEMENT PROCESSES BINDING ITS VARIOUS FUNCTIONS. WITHOUT PROCESSES IT MAY FAIL TO ACHIEVE ITS ULTIMATE OBJECTIVE OF CUSTOMER DELIVERY AND SATISFACTION, AND HENCE MAY SOON BECOME  A REDUNDENT ENTITY.

Dear All,

I like the Lean approach to identifying and classifying things as NVA or wastes. If an activity belongs to one of the following 7+1 categories, then it would be a waste.

Waiting - Overproduction - Rework - Motion - Overprocessing - Inventory - Transportion - Human Underutilization.

According to the above classification, planning if done correctly the first time does not fall into any of the above categories - so I would classify planning as VA.

However, if planning results are not being used, causes rework, is not done at the right time, causes too much nva work, or not planned right the first time, then planning could be NVA.

Would like to hear other thoughts on this...

Hi Sj sir,

        From a NVA standpoint, you have further classified planning activity into proper planning & improper planning & attributed the latter to be an NVA.

       Going by your contention, even a purely VA activity can be classified as VA or NVA based on whether it is done properly or improperly, respectively. For eg, in a manufacturing process, the activity of properly introducing basic raw material(s) into the machine by a worker (assuming that automation is not possible for the job) for producing a good quality finished product will be undoubtedly & imperatively a VA activity. However, if the same job is done improperly, then it will affect the quality of the finished good & will be termed as NVA activity.

      Here, the main VA activity is introduction of the Raw material (need for producing the finished product) into the machine by the worker which cannot be skipped. Further classifying that (activity of introduction of raw material) as VA or NVA based on whether done properly or improperly ( per the skill & capability of the person doing the job) may not be right. This is a problem at the fundamental personnell level & needs to tackled by proper training & / or selection for the job.   

     Drawing a parallel with the above example, Planning (more importantly right planning) is an essential VA activity in the mgt process for doing business the right & correct way & cannot be avoided. Further gauging it's (Planning) correctness & calling it NVA if found to be done in an improper way, is an error of judgement (in choosing the wrong people for the planning ) before the commencement of the planning activity or choosing the wrong plan.  

   Other thoughts.

Thanks & rgds.

I guess it is important here to discuss what should be considered value adding.

"Anything that can not be skipped" or "Anything that cannot be avoided" should not be the definition for "value adding".

The important question for VA/NVA segregation is - what is it that generates value from customer's stand point? What is it that the customer is willing to pay for?

Let us consider an example I commonly use during training - 10 years ago when you went to withdraw cash from a bank and were made to sit on a sofa with a metallic token in your hand, would you have liked to call the activity (taking a token) value adding? Well, that was not what you went to the bank for. Was it required? Yes, it was required. Was it unavoidable? It was unavoidable and could not be skipped at that time. I would not have to liked to call it value adding even at that time. It was definitely a waste. (WAITING)

There are large number of activities that are non value adding but essential. Another example is the time spent in sorting of customer care requests so that they can be forwarded to the right person. Is this sorting activity value adding?

Does the sorting activity qualifies in one of the following WASTES - Waiting - Overproduction - Rework - Motion - Overprocessing - Inventory - Transportation - Human Underutilization. (List provided by Dr. Suresh above)? I bet it does. So sorting although unavoidable in customer care of banking processes is an NVA

Now, coming back to some more management processes - If a management process is such that ----

• it is done first time right (and is not a type of WASTE as defined above)
  
• customer is willing to pay for it, and
  
• results in transformation of a product or service
  
• it should be called value adding.
  

In the same vain, if it is an activity that happens because of something that got done wrong earlier, it qualifies as an NVA (REWORK). Similarly if it relates to movement of information (TRANSPORTATION) or unnecessary movement (MOTION), it is an NVA.

Do you have examples of management processes that should be called value adding? I know about a few which should be purely NVA (although essential).

I fully agree with Chris Simon who summed it up beautifully in this discussion above.

Dear Shri Khatri,

Greetings.

My thoughts are below:

Let us first see the widely used "operational definition" of what management is:

"Management is the art and science of getting things done from others by way of planning, organizing, staffing, controlling, and directing".

It is obvious that the Management processes are also same as above.

It is the Customer who decides if a process or a process step is Value-Adding or Non-Value adding.

Now, let us ask the question to a customer:

Will you accept a product or service without these processes?

Strictly speaking, the customer should say "Yes" as long as you deliver the intended product or service without doing any of these processes.

However, as management is an art and the process performers are human beings, there needs to be an Integrator who integrates the individual processes to get the final product or service or result.

To understand it better, now, let us make an analogy to a movie song.

Movie song: The Product

Music composer: The Integrator (The Manager)

Man-on-street : The Customer.

The Management Processes: lyrics writing, composing, singing, and integrating.

Without the integrator (the music composer- the manager - the management process of integrating), we won't get the pleasing song (the product) and the user / customer won't buy the song or pay for it.

Hence, the process of integration, which is a management process, is essential in transforming the product to a saleable product for which the customer is willing to pay and hence is a Value-Adding process and will continue to be so until machines start managing themselves.

Regards,

Ari

One process i would definitely consider as NVA is testing or validation process. Do we call it management process- well i leave it to you guys to decide. Will the customer pay for it? -  he may and i consider it as a mere transfer of cost and not a value addition. While it is definitely the responsibilty of any vendor to deliver a high quality output that is acceptable to the customer, how he does it is not what the customer should be worrying about. So the real value addition to what the customer gets is when the product can satify requirements without being tested

Fancy thinking, but i would love a process where its just right all the time and the customer has the confidence is such process- till the time we can acheive that, i guess testing will be a necessary evil

Hi again VK sir & All,

                     The moot point of my earlier perspective was not to convey that anything that cannot be skipped or avoided is VA. If that was the case, then quite a few NVA activities that cannot be avoided would also become VA, which is wrong.

              All I was trying to emphasize is, the role of any activity on the whole (that is necessary & which cannot be skipped in the business process) cannot be termed as NVA if performed improperly / incorrectly ( which leads to redoing the activity). The proper or imroper performance of a necessary / required activity should not be the deciding factor for categorising that essential & basic activity itself as VA or NVA. This (VA or NVA), as we all know is decided by the question ' Is the customer willing to pay for the activity ? '

         If we take Planning as an activity in the mgt process, as originally mentioned, then we first see Planning itself as a necessary & vital activity (per the explanation in my first response on this topic) for the business. Furthermore, there are two ways of performing this activity.

Viz,

1) Properly, or

2) Improperly.

     So, if the activity of planning is performed improperly (leading to redoing it again), we cannot term the role of Planning itself as NVA, which is vital for the business. Here improper planning is an unnecessary evil (point brought up by Chris), which needs elimination by doing correction/changes at the fundamental business level (eg, choosing right people in the Planning team), which precedes the process of business mgt (of which planning is an essential & VA part, as seen above).     

     I believe to have made sense with due respect to other thoughts supported by their own valid examples. Also, Ari sir & Chris (on validation/testing) conveyed their points very articulately.

Thanks & rgds.

Hi all,

But from the books of Toyota, any activity which is not involved in Direct production is called as an NVA.

1. Toyota has not only made automation in its production line, but also in the corporate. (Eg.1), a person enters the company, swipe his card. Automatically the same is accounted into his salary. There is a very less human intervention, supposed to be for maintanance (Eg.2), More material movements within the factory which consumes more resources & money.

2. But for companies like IT, ITES/BPO the employee becomes the capital compared to other hardwares & softwares.(eg.1) Here, a peson serving a cup of coffee for the entire team is an NVA. Rather it can be a coffee maker. The person after filling the coffee maker can do some extra activity. Also here, this may lead to direct manpower distraction. (eg.2) More document movements

Point (1) & (2) are relatively different.

NVA may be described as a "Lengthier / fatter activity" to achieve a goal. This is "an opposite of Lean Process".

Ramabadran

Usually, when we quantify an activity as VA. We tend to be happy with ourselves that yes - we are adding value. Once an activity is classified as VA - no further effort will be taken to improve that activity.

On the other hand, if we classify an activity as NVA - then we are constantly looking at ways to improve or eliminate that activity.

Hence, when in doubt, it may be better to classify an activity as NVA so that we can constantly look for ways to get rid of it.

Hi SJ sir,

        Indeed a very valid point brought up to ponder, ' when in doubt, it may be better to classify an activity as NVA so that we can constantly look for ways to get rid of it '.

      The bone of contention in this (SJ sir's) perspective is the element of doubt /   uncertainty in classifying an activity as VA or NVA. This element of doubt is put to rest by the person/team performing the essential/vital (VA) activity based on the person's/team's confidence in his/her/it's prowess/capability (or of the other person / team chosen) in performing the activity, such that the efforts put in translate into customer satisfaction (through the final product). And so, the activity to be performed gets classified as VA activity. In case of doubt in or if the doubt cannot be put to rest in the successfull performance of the essential/vital (VA) activity, it gets classified as NVA.

       As mentioned by Chris earlier, NVAs (customer not willing to pay) once identified, we need to further classify them from a necessary & unnecessary evil view point, & try to eliminate/remove the latter (eg, poor / improper planning) & improve the efficiency of the former in the process (eg, quality check).  Instead, classifying an activity as NVA & attributing the same to it's practical definition in toto, despite it's significance in the process/business & VA aspect to the customer, because of an element of doubt / uncertainty (for whatever reasons) in it's chances of success & consequent value add, may not find unanimous agreement & would continue to be an issue of debate, unless the guranteed success of all VA activities (as one may choose to define them along with customer's willingness to pay) can be proved, ruling out the possibility of any doubt/uncertainty or contingency that can make it (VA activity) an NVA activity. 

     Without saying, looking at ways to eliminate/improve NVA activities & further improve the efficiency of VA activities should be a constant endeavour in any business process.  Further, complacency/non-complacency (strife) in this endeavour should not be related to the practical definition of any activity in classifiying it as VA or NVA, as that's (endeavour) an inherent aspect of human nature & not of the activity itself. 

     I hope to have made a valid point with due respect to other thoughts.

Thanks & rgds.

Hi all,

The following are the 7 major wastes (MUDA), in other words the NVA's in a process,

"TIMWOOD"

T - Transportation

I  - Inventory

M - Motion (Man movement)

W - Waiting / Queing / High WIP

O - Over Production

O - Over Processing

D - Defects / Re-work

Any process need to be studied thoroughly for these wastes & need to be minimised.

Regards,

Ramabadran

Sir, I would say it is value adding. Because if proper planning, budgeting, etc is not done, and due to that the process will not be properly done. Due to that wastages, non time delivery, non coustmer satisfaction, etc. may all occur due to that loss of money. Which is called you have not paid.  If ever thing is done properly, and due to that customer satisfaction and the customer pays the full amount, even some case a premium can be charged, which is called value adding.  So this issue is would call it a value adding.

Dear Mr. VK,

Most of the members has shared their views as Management process is a value adding activity, including me.

But the example given above "the report making" was a value adding item but now it is not since the technologies available to do such works. So NVA and VA shall be periodically reviewed corresponding to the latest vogues 

I would like to copy the extract of Mr. Suresh Jayaram 05 may 2009, that, if we rate it as NVA there is room for improvement since NVA is a actionable workfront. if we rate it as VA there are chances of no improvement on it. So it is always advisable to consider a doubtful activity as a non value adding to open the room for improvement.

Zahir Hussain

Two points I would like to highlight in Mr Hussain's thought

1) Classification of doubtful activities as NVA- Classification of any activity is subjective. However, its good not to have any doubtful activities (pun intended) as it only shows an undecided state. Classification of NVA and VA only narrows down our search for optimization. That brings me to the 2nd point which is

2) Classification as VA does not have room for improvement- on this I have a different opinion. Process Improvements should be considered on other aspects of stability, consistency and capacity of the process- when big Y does not meet customer specs- establishment of Cp & Ck may help. Process improvements will be driven by changing & controlling identified small (x)s. Therefore, rejecting VA as no room for improvement may not be a good idea.

I apolozise if this deviates from the discussion on classification of Mgmt process as NVA or VA, but i chose to write in because it might impact our thought process on process improvements based on NVA/VA classifications

 

Khatri,

Yes it is very interesting topic to discuss, but in my opinion it is required NVA.It is good to consider this as NVA so that we can work towards it to improve or eliminate to some extent. VA services are the one for which customer is willing to pay.

Let's try to understand with the example of serving food in Hotel.

Food is a product.

Waiter is staff to serve.

Cook is the one who cooks the food.

Now if you ask the customer whether he is  ready to pay for cook, in normal case the answer will be no. But without cook food can not be made. Hence this is a required NVA. Now if we work towards it, it can be eliminated by using more and more machine for  e.g machine for cooking idli etc .Here what we are trying to do is reducing the manual work by involving machine. Hence we are reducing the cost of cooking.

In the same way it can be applied in the service industry by using software like SAP for salary where one person is required to enter the data and whole calculation will be taken care of software.

Conclusion is if we don't have solution to eliminate such NVA today,but still  we have to consider it as NVA, so that we can work towards it to eliminate in future.

Thx

Anil Mehta