Value-Add Analysis

A value-add analysis is generally performed after the process map is drawn to help streamline the process. In this analysis, process steps and activities are classified into three categories, value-adding (VA), non value-adding (NVA) and value-enabling (VE). A task is considered value-adding if it is essential to the production and delivery of the product or service to meet the customer’s needs and requirements. The remaining tasks that are non essential are considered either as non value-adding or value-enabling. A task is considered value-enabling if it is required by law or regulations to allow the value-adding tasks to be carried out. In general, when the answers to the following three questions for an activity are yeses, it is likely to be value-adding.

1. Does the activity physically transform the product?
2. If the activity is eliminated, will customer know the difference?
3. Will the activity add value to the customer or will the customer pay for it?

Common types of non value-adding work includes, rework, waiting, inspections, reviews, setup, transport, internal reporting, etc. A typical process will generally only have 5-20% of value-add and it is the objective of process improvements to increase that to 20-40% value-add. The effective use of this method requires users to challenge the value of each and every activity of the process with the objective to streamline it. The following are guidelines teams can use to streamline their process for each type of work.

Value-Add

• Challenge current paradigm to determine if it is really value adding
• Find alternative ways to deliver the same outcome more efficiently
• Explore possibilities of parallel processing or merging work activities or front loading

Value-Enabling

• Challenge if activities is really required or performed under false assumptions
• Find alternative ways to deliver the same outcome more efficiently
• Explore the use of technology to enable this step

Non Value-Add

• Remove it and review the impact on the process