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CITOOLKIT
Value Analysis
Lean Concept of Value
ENVA
VA NVA
citoolkit.com
Introduction
Oftentimes, we tend to create additional steps to a process in order to fix a
problem or improve a situation.
Value Analysis 2
Over time, these additional activities
become an accepted part of the
process although they do not add any
value to the product or service.
citoolkit.com
Introduction
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.
.
Value Analysis 3
Problem solving and continuous improvement efforts should focus on those
aspects of processes that are wasteful and add no value to the customer.
Inspect
samples
Take
samples
Print report
Enter results
into spreadsheet
Fill up the
sample form
citoolkit.com
Value
Value is one of the most important concepts within Lean thinking and one
of the most valuable outcomes Lean provides.
Value Analysis 4
It is simply how much your product or
service costs from the perspective of
your customers.
So, you should establish what does value mean for every product or service your
business offers.
citoolkit.com
Value Analysis
Value analysis focuses on what adds value to business processes as
perceived by the customer.
Value Analysis 5
Any activity that does not add value to
the product or service should be feed
into your future problem-solving
efforts.
citoolkit.com
Value Analysis
Each activity within a process can be classified into one of
three categories . . .
Value Analysis 6
VA
Value-added
activities
ENVA
Essential non-
value-added
activities
NVA
Non-value-
added activities
(or unavoidable
wastes)
VALUE
citoolkit.com
Value-Added Activities
Refers to the activities that increase the worth of a product or services from
the customer’s perspective.
They are required even if the process seems to be going on perfectly well.
Value Analysis 7
VA
Value-added
activities
ENVA
Essential non-
value-added
activities
NVA
Non-value-
added activities
citoolkit.com
Value-Added Activities
Common examples include . . .
Value Analysis 8
Assembling a product
Machining a part
Serving a customer at a call center
Writing a proposal
citoolkit.com
Essential Non-Value-Added Activities
Add no value to the product or service and the customer is not willing to
pay for them.
Value Analysis 9
VA
Value-added
activities
ENVA
Essential non-
value-added
activities
NVA
Non-value-
added activities
They add cost to the product or service but are required to conduct the business.
citoolkit.com
Essential Non-Value-Added Activities
Common examples include . . .
Value Analysis 10
Preventive maintenance
Inspecting parts for quality defects
Regulatory work
Purchasing, accounting, HR, R&D and legal
citoolkit.com
Essential Non-Value-Added Activities
Also referred to as . . .
Value Analysis 11
Necessary non-
value-added
activities
(NNVA)
Required non-
value-added
activities
(RNVA)
Pure waste
Unavoidable
waste
ENVA
Business non-
value-added
activities
(BNVA)
citoolkit.com
Non-Value-Added Activities
Add no value to the product or service, not required for business
operational reasons, and must be considered in future problem-solving
efforts.
Value Analysis 12
VA
Value-added
activities
ENVA
Essential non-
value-added
activities
NVA
Non-value-
added activities
The non-value-added work that is not necessary for producing the product or service.
citoolkit.com
Non-Value-Added Activities
Common examples include . . .
Value Analysis 13
Waiting for a delayed starts
Searching for a tool
Reworking an application
Sending missing information
citoolkit.com
Value Analysis
Value Analysis 14
NVA
ENVA
VA
They contribute to the
customer in a
meaningful way.
They physically
changes the product
or transfer the item
more toward
completion.
They are done right
the first time.
Do not add value and
not necessary to
produce the output.
Include the eight types
of waste activities.
Must be eliminated.
Required to conduct
the business due to the
current settings of the
process, policy or
technology.
They have been added
to the process to
prevent defects and
errors in order to
sustain the business.
Value-added Non-value-added
Essential non-value-added
citoolkit.com
Value Analysis
Research has shown that value-added activities in a typical process are less
than 10 percent of the total work performed.
Value Analysis 15
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.
ENVA
VA
NVA
citoolkit.com
Value Analysis
The first step when analyzing the value of any process is to determine who
the ultimate customer is.
Value Analysis 16
An ultimate customer is normally
the end user of the product or
service
citoolkit.com
Ultimate Customers
It is important that you clearly understand the expectations of your
ultimate customers and know exactly what they are willing to pay for.
Value Analysis 17
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.
citoolkit.com
Ultimate Customers
For example, because patients are the ultimate customers in medical
services, it is important to meet their expectations by providing them with
personalized and comprehensive health care.
Value Analysis 18
Occasionally . . .
Patients wait too long to be diagnosed by their
primary doctors.
They sometimes move from one area to another
to receive care.
They are often asked to fill out multiple medical
forms.
citoolkit.com
Traditional Versus Lean Approach
Value Analysis 19
LEAN APPROACH
Focuses on eliminating the root
causes of the 90 percent of the
non-value-added activities,
which is much cheaper and
more effective
TRADITIONAL
APPROACH
Focuses on reducing the time to
perform the process normally
through capital investment
citoolkit.com
Useful Tools
The following are some of the concepts and tools that can be used to
identify and analyze wasteful and non-value-added activities . . .
Value Analysis 20
Value Matrix
Value Analysis
Matrix
Waste
Recording
Forms
Opportunity
Process Maps
Waste Walks
The Eight
Wastes
Value Stream
Timelines
VA/NVA
Metrics
citoolkit.com
The Eight Wastes - One of the Core Principles of Lean Thinking
Value Analysis 21
Unused Skills – Wasting human talent,
creativity, enthusiasm.
Over-processing – Processing more
than necessary to produce the desired
output.
Unnecessary movement – Movement
performed by people that is not
required.
Excess of inventory – Having more
materials or information than what is
actually needed.
Defects, errors and mistakes – Causing
the effort to be redone to correct the
problem.
Over-production – Creating too much
material or information.
Unnecessary transportation – The
unnecessary movement of items or
information from one place to another.
Waiting – Occurs any time a person or a
product is waiting.
citoolkit.com
Waste Walks
A waste walk is a practical approach that helps
identifying value-added and non-value-added
activities.
Waste walks are used to quickly identify waste and
non-value-added activities within an area or in a
process.
Value Analysis 22
citoolkit.com
Waste Walks
It allows walkers to understanding how the process really works and helps
them quickly identify continuous improvement opportunities.
Value Analysis 23
It is highly encouraged to regularly
walk the process to look for
opportunities to reduce waste and
make improvements
citoolkit.com
Waste Recording Forms
A waste recording form is a tool used to document
instances of waste within a process or system.
Value Analysis 24
Usually contains a place to
classify the waste according
to the eight types of waste
or any other waste
classification
Helps identifying and
recording wasteful
activities during waste
walks
May also contain a place
that encourages the team to
propose priority areas for
action
Process step Waste category Description Possible cause Proposed action
citoolkit.com
Opportunity Process Maps
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.
Value Analysis 25
NVA
STEP 3
ENVA
STEP 2
VA
STEP 1
QT PT
15 minutes 3 minutes 24 minutes
3.4
hours
2.2
hours
Opportunities for improvement can then be identified by focusing on those steps
that add no value to the customer.
citoolkit.com
Opportunity Process Maps – Example - Photocopying
Value Analysis 26
Value-added Non-value-added
Prepare original
Start
Copier
in use?
Wait?
End
Glass
clean?
Leave
Place papers
YES
NO
YES
NO
Clean glass
YES
NO
Select size/number
Out of
papers?
Load papers
YES
Press Copy button
NO
Collect photocopies
Get papers
citoolkit.com
Value Matrix (Value Four-Quadrants Matrix)
Used to help making the correct
decision about wasteful and non-
value-added activities.
Value Analysis 27
If the activity is unnecessary and
adds no value to the product or
service, then it should be
eliminated or reduced
If the activity adds no value but is
necessary for business operational
reasons, then it can be simplified or
integrated wherever possible to
optimize the process
VA
NVA
Necessary Unnecessary
$$
? Waste
citoolkit.com
Value Analysis Matrix
Clarifies the types of non-value-added activities present in the process.
Value Analysis 28
Process step 1 2 3 4 5 6 7 8 9 10 Total Total %
Time (hours) 12 10 1 10 20 6 10 1 10 20 100 100%
Value-added X X 2 2%
Preparation 0 0%
Fixing errors X 10 10%
Inspection X 6 6%
Waiting X X X 52 52%
Transportation X X X 30 30%
Total 12 10 1 10 20 6 10 1 10 20 100 100%
citoolkit.com
Value Stream Timelines
Visual representation of the flow of value through a process, typically from
the beginning (e.g., customer order) to the end (e.g., delivery of the product
or service).
Value Analysis 29
Total VA
Total NVA
VAR
30 sec
0.1
days
45 sec
17 sec 376 sec 179 sec
0.1
days
0.1
days
75
days
0.4
days
0.2
days
397 sec
12
days
They are used to analyze the process and identify value-added and non-value-
added activities and help to determine the percentages of VA and NVA activities.
citoolkit.com
VA/NVA Metrics
Many companies are using various metrics to measure the performance of
their end-to-end process.
Value Analysis 30
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
citoolkit.com
Is rework Value Adding or Not?
Rework is generally considered a non-value-added activity in Lean and
process improvement methodologies as it involves redoing work that was
not completed correctly the first time, often due to defects, errors, or
inefficiencies in the process.
Value Analysis 31
However, repainting as a
result of using the wrong
paint is a non-value-
added activity as it is
considered a rework
Painting for
example is
usually a value-
added activity
Customers are
not willing to
pay for the
mistakes of
their suppliers
© Copyright Citoolkit.com. All Rights Reserved.
CITOOLKIT
Made with by
The Continuous Improvement Toolkit
www.citoolkit.com

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Value Analysis: How Lean Thinking Defines Value

  • 2. citoolkit.com Introduction Oftentimes, we tend to create additional steps to a process in order to fix a problem or improve a situation. Value Analysis 2 Over time, these additional activities become an accepted part of the process although they do not add any value to the product or service.
  • 3. citoolkit.com Introduction 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. . Value Analysis 3 Problem solving and continuous improvement efforts should focus on those aspects of processes that are wasteful and add no value to the customer. Inspect samples Take samples Print report Enter results into spreadsheet Fill up the sample form
  • 4. citoolkit.com Value Value is one of the most important concepts within Lean thinking and one of the most valuable outcomes Lean provides. Value Analysis 4 It is simply how much your product or service costs from the perspective of your customers. So, you should establish what does value mean for every product or service your business offers.
  • 5. citoolkit.com Value Analysis Value analysis focuses on what adds value to business processes as perceived by the customer. Value Analysis 5 Any activity that does not add value to the product or service should be feed into your future problem-solving efforts.
  • 6. citoolkit.com Value Analysis Each activity within a process can be classified into one of three categories . . . Value Analysis 6 VA Value-added activities ENVA Essential non- value-added activities NVA Non-value- added activities (or unavoidable wastes) VALUE
  • 7. citoolkit.com Value-Added Activities Refers to the activities that increase the worth of a product or services from the customer’s perspective. They are required even if the process seems to be going on perfectly well. Value Analysis 7 VA Value-added activities ENVA Essential non- value-added activities NVA Non-value- added activities
  • 8. citoolkit.com Value-Added Activities Common examples include . . . Value Analysis 8 Assembling a product Machining a part Serving a customer at a call center Writing a proposal
  • 9. citoolkit.com Essential Non-Value-Added Activities Add no value to the product or service and the customer is not willing to pay for them. Value Analysis 9 VA Value-added activities ENVA Essential non- value-added activities NVA Non-value- added activities They add cost to the product or service but are required to conduct the business.
  • 10. citoolkit.com Essential Non-Value-Added Activities Common examples include . . . Value Analysis 10 Preventive maintenance Inspecting parts for quality defects Regulatory work Purchasing, accounting, HR, R&D and legal
  • 11. citoolkit.com Essential Non-Value-Added Activities Also referred to as . . . Value Analysis 11 Necessary non- value-added activities (NNVA) Required non- value-added activities (RNVA) Pure waste Unavoidable waste ENVA Business non- value-added activities (BNVA)
  • 12. citoolkit.com Non-Value-Added Activities Add no value to the product or service, not required for business operational reasons, and must be considered in future problem-solving efforts. Value Analysis 12 VA Value-added activities ENVA Essential non- value-added activities NVA Non-value- added activities The non-value-added work that is not necessary for producing the product or service.
  • 13. citoolkit.com Non-Value-Added Activities Common examples include . . . Value Analysis 13 Waiting for a delayed starts Searching for a tool Reworking an application Sending missing information
  • 14. citoolkit.com Value Analysis Value Analysis 14 NVA ENVA VA They contribute to the customer in a meaningful way. They physically changes the product or transfer the item more toward completion. They are done right the first time. Do not add value and not necessary to produce the output. Include the eight types of waste activities. Must be eliminated. Required to conduct the business due to the current settings of the process, policy or technology. They have been added to the process to prevent defects and errors in order to sustain the business. Value-added Non-value-added Essential non-value-added
  • 15. citoolkit.com Value Analysis Research has shown that value-added activities in a typical process are less than 10 percent of the total work performed. Value Analysis 15 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. ENVA VA NVA
  • 16. citoolkit.com Value Analysis The first step when analyzing the value of any process is to determine who the ultimate customer is. Value Analysis 16 An ultimate customer is normally the end user of the product or service
  • 17. citoolkit.com Ultimate Customers It is important that you clearly understand the expectations of your ultimate customers and know exactly what they are willing to pay for. Value Analysis 17 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.
  • 18. citoolkit.com Ultimate Customers For example, because patients are the ultimate customers in medical services, it is important to meet their expectations by providing them with personalized and comprehensive health care. Value Analysis 18 Occasionally . . . Patients wait too long to be diagnosed by their primary doctors. They sometimes move from one area to another to receive care. They are often asked to fill out multiple medical forms.
  • 19. citoolkit.com Traditional Versus Lean Approach Value Analysis 19 LEAN APPROACH Focuses on eliminating the root causes of the 90 percent of the non-value-added activities, which is much cheaper and more effective TRADITIONAL APPROACH Focuses on reducing the time to perform the process normally through capital investment
  • 20. citoolkit.com Useful Tools The following are some of the concepts and tools that can be used to identify and analyze wasteful and non-value-added activities . . . Value Analysis 20 Value Matrix Value Analysis Matrix Waste Recording Forms Opportunity Process Maps Waste Walks The Eight Wastes Value Stream Timelines VA/NVA Metrics
  • 21. citoolkit.com The Eight Wastes - One of the Core Principles of Lean Thinking Value Analysis 21 Unused Skills – Wasting human talent, creativity, enthusiasm. Over-processing – Processing more than necessary to produce the desired output. Unnecessary movement – Movement performed by people that is not required. Excess of inventory – Having more materials or information than what is actually needed. Defects, errors and mistakes – Causing the effort to be redone to correct the problem. Over-production – Creating too much material or information. Unnecessary transportation – The unnecessary movement of items or information from one place to another. Waiting – Occurs any time a person or a product is waiting.
  • 22. citoolkit.com Waste Walks A waste walk is a practical approach that helps identifying value-added and non-value-added activities. Waste walks are used to quickly identify waste and non-value-added activities within an area or in a process. Value Analysis 22
  • 23. citoolkit.com Waste Walks It allows walkers to understanding how the process really works and helps them quickly identify continuous improvement opportunities. Value Analysis 23 It is highly encouraged to regularly walk the process to look for opportunities to reduce waste and make improvements
  • 24. citoolkit.com Waste Recording Forms A waste recording form is a tool used to document instances of waste within a process or system. Value Analysis 24 Usually contains a place to classify the waste according to the eight types of waste or any other waste classification Helps identifying and recording wasteful activities during waste walks May also contain a place that encourages the team to propose priority areas for action Process step Waste category Description Possible cause Proposed action
  • 25. citoolkit.com Opportunity Process Maps 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. Value Analysis 25 NVA STEP 3 ENVA STEP 2 VA STEP 1 QT PT 15 minutes 3 minutes 24 minutes 3.4 hours 2.2 hours Opportunities for improvement can then be identified by focusing on those steps that add no value to the customer.
  • 26. citoolkit.com Opportunity Process Maps – Example - Photocopying Value Analysis 26 Value-added Non-value-added Prepare original Start Copier in use? Wait? End Glass clean? Leave Place papers YES NO YES NO Clean glass YES NO Select size/number Out of papers? Load papers YES Press Copy button NO Collect photocopies Get papers
  • 27. citoolkit.com Value Matrix (Value Four-Quadrants Matrix) Used to help making the correct decision about wasteful and non- value-added activities. Value Analysis 27 If the activity is unnecessary and adds no value to the product or service, then it should be eliminated or reduced If the activity adds no value but is necessary for business operational reasons, then it can be simplified or integrated wherever possible to optimize the process VA NVA Necessary Unnecessary $$ ? Waste
  • 28. citoolkit.com Value Analysis Matrix Clarifies the types of non-value-added activities present in the process. Value Analysis 28 Process step 1 2 3 4 5 6 7 8 9 10 Total Total % Time (hours) 12 10 1 10 20 6 10 1 10 20 100 100% Value-added X X 2 2% Preparation 0 0% Fixing errors X 10 10% Inspection X 6 6% Waiting X X X 52 52% Transportation X X X 30 30% Total 12 10 1 10 20 6 10 1 10 20 100 100%
  • 29. citoolkit.com Value Stream Timelines Visual representation of the flow of value through a process, typically from the beginning (e.g., customer order) to the end (e.g., delivery of the product or service). Value Analysis 29 Total VA Total NVA VAR 30 sec 0.1 days 45 sec 17 sec 376 sec 179 sec 0.1 days 0.1 days 75 days 0.4 days 0.2 days 397 sec 12 days They are used to analyze the process and identify value-added and non-value- added activities and help to determine the percentages of VA and NVA activities.
  • 30. citoolkit.com VA/NVA Metrics Many companies are using various metrics to measure the performance of their end-to-end process. Value Analysis 30 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
  • 31. citoolkit.com Is rework Value Adding or Not? Rework is generally considered a non-value-added activity in Lean and process improvement methodologies as it involves redoing work that was not completed correctly the first time, often due to defects, errors, or inefficiencies in the process. Value Analysis 31 However, repainting as a result of using the wrong paint is a non-value- added activity as it is considered a rework Painting for example is usually a value- added activity Customers are not willing to pay for the mistakes of their suppliers
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