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Jasmeet Kohli Jasmeet KohliSenior Consultant at RvaluE Group - Quintes Global Pvt LtdPublished Apr 19, 2016 Lean is one of the most dynamic methodologies that aim at always looking at improvements in all business processes. In Lean, all business processes are critically examined to identify waste and non-value added activities and taking steps to eliminate them. Waste in lean is considered to be like poison which has to be eliminated at all costs. Business activities in Lean are divided into two broad categories – Value Added and Non-Value Added. Value Added activities: These activities are those which adds value to a business process or product and for which customer is willing to pay. Value Added activities help in converting a product from a state of raw material to a finished product in the least possible time, at minimum costs. It aims at completing a business activity correctly the very first time, and helping the business to deliver the product or service while fully conforming to customer requirements or specifications. Non-Value Added activities: These are those which do not add any value to the product or service but are an inherent part of the process. Customers are not willing to pay for such services. These activities prove to be a burden on the organization and affect its efficiency. Valuable resources in the organization are engaged in completing these activities despite the fact that such activity is slowing the progress of the organization. There are several examples of Non-Value Added activities found commonly among different organizations. Some of the most commonly found are:
Non-Value Added activities cause customer dissatisfaction by late delivery of goods and services which affect the credibility of the company as it is not able to deliver as per the committed/planned schedule. Also, the cost of such products and services is much more which ultimately customer is paying for. In such a scenario, customers will only stay with the company till the time they are able to find a suitable alternative. Companies having Non-Value Added activities may survive in monopolistic conditions but such companies are rare to find in today’s world where efficiency and profitability are the benchmarks. Similarly, companies where efficiency and excellence is given foremost importance survive through all highs and lows of business cycles and continue to prosper long after their competitors have bitten dust.
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IntroductionWhen it comes to running a successful venture, one of the most important things to do is ensuring that you add value to all your activities. Whether you are organizing a charity sale or starting a service business, you want to ensure that whatever you offer is actually worth your customer’s investment. What is Value?The value is defined as what the customer is willing to pay for. If the customer is not willing to pay extra for an activity, then that activity is not adding value to the product or service. Customers recognize value by paying a premium, being loyal customers or preferring a particular product over similar products from competitors. Lean Management
What exactly are value-added activities?For an activity to be considered genuinely value-added, it needs to have these three key features. 1. Modification/ Transformation This means that the final product, whether tangible or not, is different from what you started with. The value-added activities are the activities that will take the product or service towards its completion. In a manufacturing organization, the value-added activities are those that transform the product from raw material to its finished form for which the customer is willing to pay. It is, of course, essential to strike a balance between modification and budget monitoring. That way, you do not end up spending too much money or even time changing something that needed only slight adjustments. 2. Value for money You want the clients to feel like what they are paying matches the quality they are receiving. So it is not enough to modify your product; you need to make it good enough to spend money on. The value-added activities are those activities for which the client is willing to pay. 3. First time’s the charm Finally, value addition means getting things done right on the first try. This means that neither you nor your customer has to incur any further costs to make it perfect. That way, any rework done to make a product or service acceptable to the client is not a value-added activity.
What are non-value-added activities?Any activity that does not meet the above three conditions for value-added activities is non-value-added. Lean manufacturing classifies non-value-added activities as waste. There are eight types of wastes that organizations should avoid. These eight types of wastes are commonly referred to as TIMWOODS. Examples:Examples to help put things in perspective; value-added or not? 1. Repair activities 2. Assembly 3.
Overproduction 4. Service provision 5. Over-processing 6. Inspection Non-value-added but essentialIn addition to these two categories (value-added and non-value-added), there is a third category of activities, and that is "non-value-added but essential". These are also called:
These activities are non-value adding activities from the customer's perspective but are required to perform a business. Examples of such activities include:
Bottom lineIn a nutshell, value-added services aim to save time, save money, minimize effort and produce high quality. Apply the LEAN tool, and you should notice a difference in your business in no time. Kano Analysis
 Quality Management Course FREE! Subscribe to get 52 weekly lessons. Every week you get an email that explains a quality concept, provides you with the study resources, test quizzes, tips and special discounts on our other e-learning courses. Similar Posts: What is value added refers to?Value-added is the difference between the price of a product or service and the cost of producing it. The price is determined by what customers are willing to pay based on their perceived value.
What are the types of value added?Categories of Value-Added Benefits. Support services: services provided by your company, not by you personally. ... . Consulting services: services that you offer, such as providing your expertise on use or implementation. ... . Personal services: enhancements that you bring to an account.. What is an example of a value added product?Value added products are raw agricultural products that have been modified or enhanced to have a higher market value and/or a longer shelf life. Some examples include fruits made into pies or jams, meats made into jerky, and tomatoes and peppers made into salsa.
Which of the following is a value added activity?processing. As processing transforms raw materials into finished products that directly increase their value, it is a value-added activity.
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