The general definition of Value is  "Value is a value only if the Value provided is Valuable to those who value it". Considering definition,below three checks can be evaluated.

1. A value adding activity is one that customer is willing to pay for. 
2. A value adding activity is transformational by nature. 
3. A value adding activity is done first time right

CHECK 1, 2 is important as both have the power to remove non value add activities in a Process, Solution, developing the Product or rendering a service.

CHECK 3 is a self check to create value when one is taking ownership to drive it. So it is more of personal value addition in the WORK that is done , rather than overall big picture. 

 

Since Value is real ground perception of the consumer/ customer ,there has to be a feedback seeked from the consumer/customer to check how much of value was realized . That would be the real measure of value.

This could be consumption made easier, reduction of effort, heightened delight, reduced cost, efficiency, quality and many more.

To measure this , one more question should be asked.

4. Is this activity adding up , to the promised value to the customer .

 

The lesser the difference  between promised value and actual value , the more the value is Valuable to Customer

 

 

 

Most of the VA or NVA activities can be verified against following 3 criteria

1. A value adding activity is one that customer is willing to pay for. 
2. A value adding activity is transformational by nature. 
3. A value adding activity is done first time right. 

But, apart from these verification criteria, still there are many activities which are VA activities but doesn't fit into above criteria. One example of such activities is Business Value Added (BVA) activities. BVA are those activities which add value to the business but from customer point of view they are not VA activities. One of such example is Inspection activity, it may be required for business but customer would prefer your process so perfect that the requirement of Inspection can be done away with, which will save some cost. Some other examples of BVA are preparing financial reports, maintaining human resources records etc., all these activities are such that the customer is not willing to pay for them and these activities are not transformational also. However i do feel that the third question i.e. a VA activity has to be first time right is always true.

A value added activity is an activity that meets a specific need of a customer, at a specific time, at specific cost and with specific capabilities.

Any value added activity aims to eliminate three enemies of Lean, namely Muda, Mura and Muri.

Muda = Wastes. There are 8 different forms of wastes, namely Defect, Over Production, Waiting, Non-Utilized Talent, Transport, Inventory, Motion and Excess Processing. These wastes can be put in short form as "DOWNTIME".

Mura = Unevenness, for example an uneven work pace in an operation causing operators to hurry and then wait.

Muri = Overburdening equipment or operators by requiring them to run at a higher or harder pace with more force and effort for a longer period of time than equipment designs and appropriate workforce management allow

There are three checks for value addition activity, namely

1. A value adding activity is one that customer is willing to pay for.

This is a top pre-requisite for labelling any activity as value add or otherwise. Any activity

If a customer is not willing to pay for it, then there is no value. For example, let's say a company A manufactures widgets and offers free 24-7 customer support for widgets. To provide the best customer service it always has at least one knowledgeable technician available to answer customer questions 24 hours a day, seven days a week. On the other hand, its competitor, company B, only offers email support, with a guarantee of getting an answer within 48 hours, and they sell their widgets for 5% less than the price of widgets of Company A. Because of their lower price the company A is losing several major customers to its competitor every month

Let us elaborate this further by taking an example of a patient. A patient who comes in with

suspected hip fracture would value the steps directly required for diagnosis and treatment. Time spent directly with caregivers, such as nurses, and surgeons, would be valued. However, it would be a waste if the customer has to give the same information to different caregivers. Having x-rays reviewed would be valued, but the time spent waiting because the radiologist is too busy would be considered waste.

2. A value adding activity is transformational by nature.  This definition describes changing the “form, fit, or function of the product/service” that brings it closer to its final state. For example, installing a car door changes the product in a value added way as customers are willing to pay for doors and the product changes from a door-less chassis to one with doors. Time spent moving doors in the factory or waiting to assemble them would be non-value added because nothing is changing with the product.   A transformational activity will be considered value add only if it fulfils a specific need of a customer and for which the customer is will to pay for. Mere transformation of a product or service may not be considered a value add if the customer is not willing to pay for it even if it is deemed as important by the company   As an example, in call center, merely transforming the call handling process by adding verbiage, new application and short codes , will not create any value if it does not fulfil specific customer requirement specified through a specific query/complaint by the customer as and when the customer connects with the call center agent.

3. A value adding activity is done first time right.

An activity might meet the requirements of the first two rules, but if something was done incorrectly at the first time, requiring rework and additional motion, then that activity will not be considered a as it will double up the time for doing the same activity.value add

For

example , if a call center agent handling balance deduction query of a customer only provides the reason for deduction and the amount deducted, then the resolution may not be considered as a value add. The agent did provide information on the reason of deduction and the amount deducted but did not provide the way to avoid such any unwanted deduction further on. The customer may again loose his/her balance due to the similar reason and may end up calling call center again. Thus the initial call handling activity by the call enter agent was not a value add as it did not provide first time fix which led to repeat interaction.

1. A value adding activity is one that customer is willing to pay for. 
2. A value adding activity is transformational by nature. 
3. A value adding activity is done first time right. 

All the above statements are acceptable but there will be times where they have to be modified depending on the process/ situation/ industry.

 

Any work that takes place on the manufacturing or service floor constitutes a series of processes.These processes are either value add or non-value add. An operator could be performing a simple assembly of an engine or car part. The walk time which he takes to fetch the part to assemble is non-value add. Similarly, in service process the waiting time to download information from the system is non-value add. On the airport, the time we spend in the queue before a query gets answered is non-value add time.

The purpose of an organization is to:

• Satisfy the existing customers
• Grow  by adding new customers
• Improve profitability

 

A gap exists between customer expectations and organization delivery against those expectations. Operational Excellence aims to translate the Voice of the customer (VOC) into measurable metrics across the value chain with a view to addressing these gaps. An introspection into these gaps reveals their existence because of non-value add (NVA) steps or activities across value chain. Organizations should aim to Eliminate and Reduce the NVA’s across value chain.

 

Non-value add(NVA) is classified into two types.

Type I waste (ENVA)

ENVA is an abbreviation of Essential Non-Value Add. It signifies the activities carried out in the process that do not add any value to the customer but required for process completion

Typical examples of ENVA

• Backing up of computers for data storage purposes does not add value to the service, but mitigates risk of data loss.
• Downloading information before processing data, observed in service environment is an ENVA.
• Processing tool of a CNC machine searches for axis position between processing steps. Searching is absolutely non-value add, but is required in the context of starting next processing step.

 

Type II Waste (NVA)

It signifies the activities carried out in the process that do not add value to the customer and not required by the process

Example:

Any defect that occurs during the manufacturing or transactional process causes rework leading to delay in product or service reaching the customer. 

 

 

1. A value adding activity is one that customer is willing to pay for.  - Yes this should be modified in pharmaceutical industry because all the activities during manufacturing of a product are value adding but we have to perform necessary non value adding activity to complete the manufacturing of end product

 

 2. A value adding activity is transformational by nature. - Natural value adding activity are not common in every industry. 

 

 

In the Lean Management philosophy, all activities in an organization are grouped into two categories:

·         value-added (VA) activities, and

·         non-value-added (NVA) activities.

 

In the context of Lean Management, VA and NVA activities are viewed from the customer’s perspective. VA activities are those that bring additional value to products or services. Examples include entering orders, ordering materials, laying foundations, creating codes, assembling parts and shipping of goods to customers. Customers are willing to pay for these improvements that can change the form, fit or function of a product or service.

 

On the other hand, NVA activities are tasks that do not increase market form or function. Examples are filing, copying, recording, waiting, counting, checking, inspecting, testing, reviewing and obtaining approvals. These activities should be eliminated, simplified or reduced.

 

By tackling wastes from an end-to-end business process, not only can your company improve the value of its products and services, you can also achieve significant cost reduction, strengthen cash flow and emerge from the downturn with a stronger and more competitive profile

 

The ability to identify waste in your organization is the first step towards its elimination. A common problem-solving technique is the PDCA (Plan-Do-Check-Act) approach.

 

Generally, we go with these questions as prescriptions for value addition in most of the circumstances. However, we modify depending on the process / situation, for example we treat NVA as business value added in many of the circumstances.

If the task is essential for internal customers; we may like to name it as Business Value Add (BVA) instead of NVA. 

Business Value Added (BVA) sometimes called Type I NVA. These activities provide no value to customers (as defined above), but are necessary given current process limitations. Common examples are inspections, management approvals, most quality assurance activities; technical support activities.

 

When it comes to VA.. definations mention the above questions & answer to these if yes then it is value adding. 

However needs to define who the customer is ... External/ internal/ Cross-functional department/stake holders ,accordingly the value that they are looking for will also change.this means that the accept the work/ find value in it/they support the idea.

  Let us see a example of a R& D lab .. team works  resurch & develop a new product...  In this effort if the resurch  is successful then only the value is added? But is the work & efforts that concluded with the knowledge & other findings are they be called wast? No so you need to some times modify the question as per the process.