No value added

No Value Added (NVA) is a management term loosely related to the Lean Manufacturing movement as codified in the 1980s by a landmark MIT study of the automobile industry, which explained lean production for the first time.

No Value Added programs can be formal or whimsical. Generally, they involved seeking input and opinion from every level of the organization about rules, processes or process elements which are said to be “no value added.”

In one form, the proponent of an activity accused of being NVA must defend it, or suspend it.

In a milder form, the proponent (or process owner) of an activity accused of being NVA is simply informed that it is seen in that light. Oddly, this milder form is often effective because in a large organization, the original reason for an activity can be long forgotten, similar to cabooses which came into use in the 1830s, but eventually had no useful purpose and became NVA.

Some claim that this NVA is a jibe at Net Value Added accounting methods, which were held in low esteem by some Lean advocates, and high esteem by others.

Value added

In business, the difference between the sale price and the production cost of a product is the unit profit. In economics, the sum of the unit profit, the unit depreciation cost, and the unit labor cost is the unit value added. Summing value added per unit over all units sold is total value added. Total value added is equivalent to revenue less outside purchases (of materials and services). Value added is a higher portion of revenue for integrated companies, e.g., manufacturing companies, and a lower portion of revenue for less integrated companies, e.g., retail companies. Total value added is very closely approximated by total labor expense (including wages, salaries, and benefits) plus "cash" operating profit (defined as operating profit plus depreciation expense, i.e., operating profit before depreciation). The first component (total labor expense) is a return to labor and the second component (operating profit before depreciation) is a return to capital (including capital goods, land, and other property). In national accounts used in macroeconomics, it refers to the contribution of the factors of production, i.e., capital (e.g., land and capital goods) and labor, to raising the value of a product and corresponds to the incomes received by the owners of these factors. The national value added is shared between capital and labor (as the factors of production), and this sharing gives rise to issues of distribution.

Value-added (disambiguation)

Value added is offering additional features with goods or services.

Value added may also refer to: