Lean Concept of Value

Value Analysis
  • Also known as VA NVA Analysis and Value-Added Analysis.

    Variants include Waste Analysis.

    Oftentimes, we tend to create additional steps to a process in order to fix a problem or improve a situation. Over time, these additional activities become an accepted part of the process although they do not add any value to the product or service. To improve our processes, we need to identify these non-value-added activities, determine the problems they were made for, then find new ways to avoid those problems in the first place. Problem solving efforts should focus on those aspects of processes that are wasteful and add no value to the customer.

    Value is one of the most important concepts within Lean thinking and one of the most valuable outcomes Lean provides. It is simply how much your product or service costs from the perspective of your customers. Value analysis focuses on what adds value to business processes as perceived by the customer. Any activity that does not add value to the product or service should be feed into your future problem-solving efforts.

    Each step within a process can be classified into one of three categories:

    Research has shown that value-added activities in a typical process are less than 10 percent of the total work performed. This means that the work that the customer cares about is only 10%. In fact, companies are spending more time and resources on areas that do not add value.

    Value analysis research result

    Painting for example is usually a value-added activity. However, repainting as a result of using the wrong paint is a non-value-added activity as it is considered a rework. Customers are not willing to pay for the mistakes of their suppliers.

    The first step when analyzing the value of any process is to determine who the ultimate customer is. An ultimate customer is normally the end user of the product or service. It is important that you clearly understand the expectations of your ultimate customers and know exactly what they are willing to pay for. You need to actively listen to them and encourage them to send feedback on how well your product or service meets their needs for future process improvements.

    The following are some of the concepts and tools that can be used to identify and analyze wasteful and non-value-added activities:

    1. The eight types of waste.
    2. Waste walk.
    3. Waste recording form.
    4. Opportunity process map.
    5. Value matrix.
    6. Value analysis matrix.
    7. Value stream timeline.
    8. VA/NVA metrics.

    1. The Eight Types of Waste

    One of the core principles of Lean thinking. Categorizing waste into these eight forms makes them easier to identify and helps identify priorities for action. Click here for more information about the eight types of waste.

    The eight wastes

    2. Waste Walk

    Waste walk is a practical approach that helps identifying value-added and non-value-added activities within an area or in a process. It allows walkers to understanding how the process really works and helps them quickly identify continuous improvement opportunities. It is highly encouraged to regularly walk the process to look for opportunities to reduce waste and make improvements.

    3. Waste Recording Form

    A waste recording form helps identifying and recording wasteful activities during waste walks. It usually contains a place to classify the waste according to the eight types of waste or any other waste classification.

    Waste Recording Form

    4. Opportunity Process Map

    An opportunity process map is a type of process map that provides a visual picture of how the process works and whether activities are value-added or non-value-added. Click here for more information about the opportunity process maps.

    Opportunity Process Map

    5. Value Matrix

    This four-fields matrix can be used to help making the correct decision about wasteful and non-value-added activities. If the activity is unnecessary and adds no value to the product or service, then it should be eliminated or reduced as much as possible.

    Value Matrix

    6. Value Analysis Matrix

    A value analysis matrix clarifies the types of non-value-added activities present in the process and can be used track non-value-added time spent in each activity. Process chart can also be used for the same purpose.

    Value Analysis Matrix

    7. Value Stream Timeline

    A value stream timeline reflects the value-added and the non-value-added activities of the core process and often found at the bottom value stream maps. It helps finding out the VA and NVA percentages.

    Value Analysis Matrix

    8. VA/NVA Metrics

    Many companies are using various metrics in order to measure the performance of their end-to-end process. One of the most common metrics is the Value-Added Ratio (Value Stream Ratio), which is the proportion of time spent in a process in a way that is adding value.

    VAR = Total Value-Added Time / Total Lead Time

    Other Formats

    If you want to use the following three documents in your training courses, the PPTX versions are available to buy from our Shop page.

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