Non Value Added
Uploaded by
Adrian ChrissanjayaNon Value Added
Uploaded by
Adrian ChrissanjayaNon Value Added
STORAGE ACTIVITIES
What are Storage Activities
Storage activities are any step within the process where the product or
work in progress is delayed or is put into storage, either temporarily or
long term. Storage activities are identified as triangles on a process
flowchart. Delays are identified as round-ended rectangles on a
process flowchart.
Value of Storage Activities
Storage activities add no value to the product in the customer's eyes.
Storage activities are not required to support the business process. The
storage of the product (either finished or work-in-progress) indicates
problems in the design of the process, and the organization's ability to
anticipate supply and demand for the product.
Exceptions
Exceptions are cases where storage improves the product. For
example, the storage of wine improves the taste of the product and
therefore, this storage activity adds value to the product.
How to Eliminate Storage
To eliminate or reduce the storage activities in the process, the process
must be designed such that:
production output can be varied, based on demand,
bottlenecks in the process are eliminated,
rework of defective components is eliminated,
various departments involved in the process can
synchronize their activities within the related departments,
unscheduled down-time of equipment is avoided,
suppliers deliver on time.
TRANSPORTATION ACTIVITIES
What are Transportation Activities
Transportation activities are any step within the process where the
product or work in progress must be moved from one area or location
to another. Transport activities are identified as fat arrows on a process
flowchart. Transmission activities are identified as zigzagged arrows
on a process flowchart.
Value of Transportation Activities
The transport of the product, within a business process, adds nothing to
the product in the customer's view and is not necessary to support the
business process. The movement of work-in-progress is probably due
to inefficient process design. The goal in designing the process is to
minimize the amount of movement required in the process.
Exceptions
The delivery of the product to the customer, when expected and/or
required by the customer, is a value-added activity. The customer may
be an internal customer (e.g., the showroom or store) or an external
customer (e.g., end consumer of the goods).
How to Eliminate Transportation
The transportation activities in the process can be minimized or
eliminated by:
combining activities in the process,
locating people closer together physically,
automating some manual activities in the process.
A geographic flowchart of the business process may help uncover
inefficiencies in the physical design of the business process.
INSPECTION ACTIVITIES
What are Inspection Activities
Inspection activities are any step within the process where the product
or work in progress is stopped for review, inspection or approval.
Inspection activities are identified as large circles on a process
flowchart.
Value of Inspection Activities
Organizations may view inspection type activities as valuable
activities. However, from the customer's viewpoint it is wasteful. The
activity only verifies that the product meets the specification. The
need to inspect the product indicates the organization's inability to
produce a good product. Inspection activities may indicate a flaw in
the design of the business process.
Most approval processes are also considered wasteful from the
customer's point of view. This is especially true of activities that
review and then approve another person's work (e.g., supervisor
approval required for a cashier to accept a customer cheque over a
specified threshold).
Exceptions
Exceptions are cases where a contract specifies inspection. Vendors
may specify that the supplier must verify the critical components of
their product.
How to Eliminate Inspection
Inspection activities within the process can be eliminated through
better quality inputs. If the supplier can supply defect-free material,
the need for inspection is reduced.
Proper training of employees can eliminate the need for inspection.
Employees who understand how to do the job and are properly trained
to do the job, make a better quality product, thereby decreasing the
need to inspect their work.
Processes can be designed to reduce or eliminate errors. If it is
impossible to make errors, there is no need to inspect the product.
Often when errors occur in a process, inspection steps are added to the
process to review the output. When the process is corrected to prevent
the error from occurring, often the review step remains.
Empowering the Employee
Employee empowerment can reduce the number of review and
approval activities in the business process and increase the
effectiveness of the business process. By pushing the decision-making
power down to lower levels within the company, employees dealing
directly with the customers have the authority to make important
decisions concerning customer service. The benefits of moving
decision-making activities from managers to workers include fewer
delays, lower overhead costs, better customer response, and satisfied
and motivated employees.
When approval is a value-add activity within the business process, it
should only be necessary to obtain one approval. Each review activity
and each approval signature must add value to the product or service.
If a second approval signature is required, there must be a financial
justification for the approval. For example, the approval policy may be
designed to require one or more approvals for expenditures over
certain threshold amounts. This ensures that:
Proper attention is given to the approval by all parties
required to sign. If an approval or multiple approvals are
required for all expenditures, the approving person(s) may not
pay close attention to the approval decisions, due to the volume
of paperwork that must be completed on a regular basis.
Small expenditures are processed in a timely manner,
without introducing delays in the business process (e.g., it
should not be necessary to get approval to order a pen or
stationery).
There is limited risk, to the organization, of
unauthorized spending of large sums of money.
PRODUCTION ACTIVITIES
What are Production Activities
Production activities are the make and do steps within the process.
Production activities are identified primarily as rectangles on a process
flowchart. They also include decisions in the process, represented as
diamonds on the process flowchart.
Value of Production Activities
Many production activities contribute to the value of the product or
support the business process. Any real-value-add (RVA) or businessvalue-add (BVA) activity is a value-add activity. In value-add
activities, there may be possibilities for improving the efficiency and
effectiveness of the activity.
Exceptions
There are some production activities that are non-value-add (NVA)
activities, such as rework. These activities exist because an error is
introduced into the process at some earlier point and must now be
corrected.
How to Eliminate Production Waste
Some indicators of problems in the process that may contribute to NVA
activities or inefficiencies in value-add activities, are:
the amount of setup time required,
the amount of storage space required,
the distance work-in-progress must be moved by
employees,
the amount of rework done,
the amount of unscheduled down-time,
the extreme high or low values in efficiency measures
of the activity or process (cycle time or cost).
Rework activities can be eliminated if the root cause of the rework can
be found and corrected. If the error was never introduced into the
process, there would be no need to correct it.
Often there is a great deal of time spent on BVA activities. Can these
activities be done more efficiently, perhaps by a cheaper resource or
through automation? Are these activities really necessary for the
process? Do they indicate a flaw in the design process? For example,
activities in the process for coordinating departments, expediting work,
and maintaining records, point to a need to redesign the process.
The functional flowchart may also provide some insight into the
process. NVA activities are common in business processes that cross
departments within the organization. The business process may incur
delays due to poor communication between departments or unbalanced
production lines.
