In Lean manufacturing and quality management, every activity performed in a process is classified as either value added or non-value added based on whether it contributes to what the customer is willing to pay for. Identifying and eliminating non-value added activities helps organizations reduce waste, improve productivity, lower costs, and shorten delivery time.
This concept is fundamental to Lean Manufacturing, Six Sigma, ISO 9001, and IATF 16949, where continuous improvement focuses on maximizing value while minimizing waste.
What are Value Added Activities?
A value added activity is any process step that transforms the product or service in a way that the customer is willing to pay for.
For an activity to be considered value added, it must meet all three conditions:
• It changes the form, fit, or function of the product or service
• The customer recognizes the change as valuable
• The activity is done right first time
If any of these conditions are not met, the activity is not truly value adding.
Examples of Value Added Activities in Manufacturing
• Machining a component to required dimensions
• Welding parts together
• Assembly operations
• Painting or coating that meets customer requirements
• Heat treatment to achieve specified properties
• Testing required by customer specification
These activities directly contribute to the final product’s functionality or quality.
What are Non-Value Added Activities?
A non-value added activity consumes resources such as time, labor, or cost but does not increase the value of the product from the customer’s perspective.
Customers are not willing to pay for these activities because they do not improve the product’s usefulness or performance.
Examples of Non-Value Added Activities
• Waiting time between processes
• Rework and repair
• Excess transportation of materials
• Searching for tools or documents
• Overproduction
• Unnecessary motion
• Multiple inspections
• Inventory storage
These activities are considered waste and should be reduced or eliminated wherever possible.
Necessary Non-Value Added Activities (NNVA)
Some activities do not add value but are currently required due to business, regulatory, or technical constraints. These are called Necessary Non-Value Added Activities.
Although customers do not pay for them, they cannot be completely eliminated under present conditions.
Examples of Necessary Non-Value Added Activities
• Mandatory inspections for safety or compliance
• Documentation required by standards or regulations
• Equipment setup and changeover
• Material handling between processes
• Quality audits
• Regulatory testing
Lean initiatives aim to minimize the time and cost of these activities even if elimination is not immediately possible.
Difference Between Value Added and Non-Value Added Activities
Value added activities directly contribute to the product’s function, performance, or customer requirements. Non-value added activities consume resources without improving the product.
Value added activities transform the product, while non-value added activities typically involve delays, movement, corrections, or administrative work.
Organizations should focus on maximizing value added time and minimizing non-value added time to improve overall efficiency.
Relationship with Lean Manufacturing Waste
Non-value added activities are closely related to the concept of waste (Muda) in Lean Manufacturing. The eight common types of waste include:
• Transportation
• Inventory
• Motion
• Waiting
• Overproduction
• Overprocessing
• Defects
• Unused talent
Reducing these wastes leads to improved productivity, lower costs, and faster delivery.
How to Identify Non-Value Added Activities
Organizations can identify non-value added activities through process analysis techniques such as value stream mapping, time studies, process flow diagrams, and workplace observation.
Key questions to ask include:
• Does this step change the product in a way the customer values?
• Would the customer be willing to pay for this activity?
• Can the product function without this step?
• Is this activity caused by inefficiency or errors?
If the answer indicates no customer value, the activity should be targeted for reduction or elimination.
Manufacturing Example
Consider a machining process for an automotive component.
Value added activities include cutting operations that shape the part to required dimensions.
Non-value added activities include waiting for machine availability, transporting parts between departments, and reworking defective pieces.
Necessary non-value added activities may include inspection required by customer specifications and machine setup during product changeover.
By reducing waiting time, improving process flow, and preventing defects, the organization increases the proportion of value added time in the process.
For example in the manufacturing industry Stamping, welding, machining, painting & assembly of parts etc. So as we do these activities within a process, the product changes shape into a complete product as required by the customer. Customer values these activities & pays for them.
Benefits of Eliminating Non-Value Added Activities
Reducing non-value added activities provides significant business advantages:
• Lower manufacturing cost
• Reduced cycle time
• Improved productivity
• Better resource utilization
• Higher product quality
• Faster delivery to customers
• Increased competitiveness
Continuous improvement initiatives focus on systematically removing waste to achieve operational excellence.
Applications in ISO 9001 and IATF 16949
Quality management standards emphasize process effectiveness and efficiency. Identifying value added activities supports:
• Process improvement
• Risk-based thinking
• Customer satisfaction
• Cost reduction
• Performance monitoring
• Continuous improvement initiatives
Organizations implementing these standards often use Lean principles to enhance process efficiency.
Frequently Asked Questions
What is a value added activity in Lean Manufacturing?
A value added activity is one that transforms the product or service in a way that the customer is willing to pay for.
Why is inspection considered non-value added?
Inspection does not change the product; it only verifies quality. Therefore, it does not add value from the customer’s perspective, although it may be necessary.
What are necessary non-value added activities?
These are activities that do not add value but cannot be eliminated due to regulatory, safety, or technical requirements.
How can companies reduce non-value added activities?
By applying Lean tools such as value stream mapping, process improvement, standardization, and error prevention techniques (Poka Yoke).
Value added and Non value added example by Dr. Shingo:
Dr. Shigeo Shingo was once walking in a factory with some engineers. Suddenly he stopped in front of a press machine & was watching operators loading & unloading sheets. Then he asked the engineers “what percentage of the time are they adding value & what percentage of time they are adding waste”
One engineer said they continue working so it is 100%. Another engineer said it is 50%. Dr. Shingo laughed & said only 14% after looking in his stopwatch. It is adding value only when it is bending the metal sheet otherwise rest is the waste.
Then Dr. Shingo asked, ” what can you do to improve the ratio?” Then one engineer told them that they can put the blank sheet onto the leveler to maintain the height. So that the bending time to pick up the sheet can be reduced. Another engineer said that they can put a spring at the back of the press to automatically eject the formed sheet after an operation.
The genius in Dr. Shingo was to understand what was waste & to stay focused on its removal. He knew that there was real power in asking the right question and not in just telling the people what to do.
Conclusion
Understanding the difference between value added and non-value added activities is essential for improving efficiency in manufacturing and service processes. By focusing on activities that create customer value and reducing wasteful steps, organizations can achieve lower costs, higher productivity, and improved competitiveness.
Lean Manufacturing and quality management systems emphasize continuous improvement through systematic identification and elimination of non-value added activities. Companies that adopt this approach are better positioned to deliver high-quality products quickly and efficiently.
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