In your work, there should be a lot of value that is apparent to your customer. Some of the work done to make sure that a quality product ends up in their hands is going to be invisible to them and adds no value. That does not mean, though, that they are not necessary.
Overview: What is Necessary Non-Value Adding (NNVA)?
These are activities that are absolutely necessary to complete work with the present operations and/or equipment. They do not add value to the customer but must be present in order to get business done.
3 drawbacks of NNVA
There are a few drawbacks of NNVA:
1. Some are tricky to identify
While some activities that do not add value can be easily spotted and eliminated, it is likely complicated to identify all of the activities in your operations that do not add value to your customers but are necessary for the health of your business.
2. Time
Making sure that your business is adequately on top of its necessary non-value-adding activities may take more time than a customer would like. Explore if there is any waste involved in the processes related to these necessary activities that can be eliminated.
3. Difficult to quantify for a customer
When a customer wants something right now, necessary non-value-adding activities can be difficult to quantify for a customer. For example, some customers might want you to subvert government regulations in order to have a service provided faster. Having to adhere to government regulations is a non-value-added activity since if you do not abide by the regulations, you could lose your business license.
Why is NNVA important to understand?
Necessary non-value-adding is an important concept to understand for a number of reasons:
1. They are part of your processes
NNVA activities are simply a part of doing business. Some of them will simply be unavoidable parts of the processes inherent in getting your product or service to your customers. That said, all of the steps in your processes should be analyzed. Having a clear understanding of all the steps involved will make you a better businessperson as well as show you ways to save money and increase customer satisfaction.
2. You need to understand what cannot be eliminated
None of us like to spend money where we don’t have to. When looking at your company’s books, it is important to know what costs can be eliminated and which are necessities.
3. Some necessary non-value-adding activities may be temporary
One example of an NNVA could be equipment that is outdated or a work method that is behind the times. While these may be necessary under current conditions, these could change and improve over time.
An industry example of Necessary Non-Value Adding
One customer has it as part of their contract that a minimum number of lots should be ready to go and kept on the floor a week before they are to be shipped. This causes frustration amongst staff because it means extra inventory that is taking up space. This can be seen as NNVA because, while it does not add any value, it is a necessary activity since it is part of a customer’s contract.
3 best practices when thinking about NNVA
Here are some things to keep in mind when thinking about NNVA
1. Is it really necessary?
Some examples of necessary non-value-adding activities in your business would be meeting customer specifications, adhering to government regulations, ensuring that industry standards are kept, and having to currently use outdated machinery. It may be found that some of these things are not concrete in the long-term, namely customer specifications or the use of outdated machinery.
2. Just because they are necessary, does not mean they cannot be improved
While necessary non-value-adding activities are unavoidable, that does not mean that the processes involved cannot be improved. One example would be the filing and copying of documents. While this is necessary, it may be found that the worker doing this activity is creating waste by spending too much time doing the filing. It may be found that another worker could do this necessary activity more efficiently.
3. Room for improvement may be finite
There is always room to improve the processes that make up your business. It is true that there will be room to improve your necessary non-value-adding activities, but this is one area where eventually you may find that there is no further advancement likely for things like cost-saving after a certain number of improvements.
Frequently Asked Questions (FAQ) about NNVA
1. Are necessary non-value-adding activities impossible to eliminate?
They can be extremely difficult to eliminate in the short term. Some of them can be eliminated over time, such as the use of outdated equipment.
2. Can trying to modify some NNVA impact my business?
Careful analysis and consideration should be conducted when modifying any of the necessary non-value-adding activities that are part of your business. You need to be sure that any modification will not negatively impact the success of your company.
3. Can I have too much NNVA?
Absolutely. There are some industries where the NNVA necessary to do proper business may be beyond their grasp.
NNVA and your business
Understanding what activities are necessary but non-value-adding is an important aspect to the health of your business. Knowing where cuts can be made and where they absolutely cannot can help ensure that moves are not made that could make your business suffer. Some things, like adhering to government regulations, are just a part of being able to keep your business running. Knowing how to improve your processes around these necessary activities can only help.
