Definition of Non-Value-Added (NVA):
When you look at a process, how do you know whether it’s the right process? Simply put, the right process provides a product or service at an acceptable price point, timely on-time delivery, and an agreed upon level of quality — all of which are determined by your customer.
So, do all the actions that take place in your process work towards that goal? Odds are the answer is no, and the actions that do not move you toward that goal are known as non-value-added.
An overview: What is non-value-added?
Non-value added is any action that does not add value to a product or service, value being defined by the customer. It is the waste within a process. An action is either value-added or non-value-added.
Companies should be concerned about eliminating or minimizing waste within their processes, because to not do so is to invite a competitor to encroach upon market share. Competition has never been fiercer, and other companies are always looking for opportunities to take your business by finding ways to produce your product or service in cheaper, faster, or with higher levels of quality.
3 benefits of attending to non-value-added
Understanding non-value-added activities is crucial to making any sort of successful process improvement. It helps you understand where your process is wasting money, taking too long to perform, and having quality issues.
Reduce total cost
Any money spent on non-value-added tasks is money thrown away. This can be found in both the form of direct costs and indirect costs that are associated with the production of a product or service.
There are many examples of savings to consider. We can examine wasted costs connected to raw materials, labor times, machine setup, maintenance times, labor benefits, costs lost due to safety incidents, rework costs, scrap costs, machine breakdown costs, machine availability, waiting time costs, facility upkeep costs, technology support costs, and more. If your competition can provide a similar product at a superior cost, you may find your customers flocking to those competitors.
Reduce lead time
Taking more time than necessary to meet lead time is a waste. Minimizing lead time, which is the total time it takes to complete a series of tasks within a process, can be done by identifying and removing as many non-value-added activities as possible.
This also allows a company to respond faster to changes in customer demand. Remember that if you cannot deliver your product to a customer when they want it, and another company can, you may not have that customer for long.
Quality is the ability of your products or services to conform to your customer’s requirements. Non-added-value steps that lead to rework, or worse, a customer receiving an inferior or broken product, must be addressed swiftly. If a company does not provide the desired level of quality to the customer, eventually the customer will turn to the competition to meet their needs.
3 non-value-added best practices
- Understand what value-added entails. Value added is any activity that adds value to the product or service. The customer defines value, so the customer must recognize that a step is valuable. The step needs to change the product’s form, fit, or function, as it must be done right the first time. If a step does not meet these requirements, it is not value added, meaning that it is waste and non-value-added in nature.
- Analyzing a step or process for non-value-added times is best done by witnessing the work in person. Do not trust that process documentation is always followed verbatim. Many processes, in practice, differ from documentation.
- Non-value-added, or waste, is a key concept that is linked to the concept of lean. Lean, sometimes called lean manufacturing, is the philosophy of taking the action of identifying non-value-added activities, then making changes to the process to either eliminate actions, combine actions, or minimize actions in an effort to decrease the amount of non-value-added activities within a process.
Frequently Asked Questions (FAQ) about non-value-added
What are some examples of non-value-added actions?
There are eight recognized types of waste, known as the eight wastes. They are transportation, inventory, motion, waiting, overproduction, over-processing, defects, and non-utilization of the skills or of personnel.
Why are there any non-value-added actions in the process?
Some wastes are unavoidable, such as transportation, but it is still possible to minimize the amount of non-value-added activities, such as placing sequential workstations closer to each other.
Some wastes may not have initially existed when a process was first created, but as time progressed, the customer requirements or technologies may have changed. These changes can make an existing step obsolete — or no longer the ideal action — and if the process is not regularly examined for efficiency, these unnecessary or ineffective steps can stay in place long after their necessity ends.
I have a non-value-added process step, but the action is required for legal reasons. Does that make the action value-added?
This case is still non-value-added by definition, but there is another term for this situation, known as business-value-added. These are actions that are non-value-added in the eyes of the customer, but required for other reasons in order to remain in business. Safety features can fall under this category, as while customers may not desire or value safe working conditions for their supplier’s personnel, all companies must provide safe working conditions or risk fines and possible shutdown.
Non-value-added activities are not what the customer are paying us to perform, so eliminate the waste
Good businesses are always looking for the non-value-added activities embedded within their processes, always keeping an eye out for how to reduce total cost, reduce lead times, and improve quality. They recognize that a value-added step today might be a non-value-added step tomorrow.
A company not interested in the identification and elimination of waste will find their processes overflowing with wasteful actions over time, and will likely find themselves without customers in short order. This is because the competition is always working on taking away market share by finding ways to do the same job cheaper, faster, and with higher quality.« Back to Dictionary Index