Value added activity
A value-added activity is a process or task that contributes to the enhancement of a product or service, making it more valuable to customers. These activities can include design, production, marketing, and customer service, among others. The goal of value-added activities is to differentiate a product or service from those offered by competitors and increase customer satisfaction.
Value-added activities in Lean and Six Sigma
In Lean Management and Six Sigma, value-added activities are those that directly contribute to the creation of a product or service that meets customer requirements. These activities are considered essential to the process and are the focus of improvement efforts.
In Lean, value-added activities are identified and streamlined through the use of tools such as value stream mapping, which helps to visualize and analyze the flow of materials and information through a process. This allows for the identification of waste, such as unnecessary steps or delays, and the implementation of improvements to increase efficiency and reduce lead time.
In Six Sigma, value-added activities are identified through the use of process mapping and statistical analysis. The focus is on measuring and improving the quality of the process, using tools such as statistical process control and design of experiments. This helps to identify and eliminate defects and improve overall process performance.
Both Lean and Six Sigma approaches aim to eliminate non-value-added activities and increase the focus on those activities that add value to the customer, resulting in increased efficiency and customer satisfaction.
Examples of value-added activities
Some examples of value-added activities include:
- Customization of products or services to meet specific customer needs
- Providing after-sales support or warranty services
- Offering training or education on how to use a product or service
- Adding unique features or design elements to a product
- Utilizing advanced technology or automation to increase efficiency and quality
- Offering a loyalty program or membership benefits
- Providing a convenient and user-friendly buying experience
- Offering free or fast delivery or installation services
- Providing a mobile app or online portal for customers to manage their account or track their orders.
Examples of non-value-added activities
Some examples of non-value-added activities include:
- Unnecessary bureaucracy or paperwork
- Waiting for approvals or inputs from others
- Excess inventory or overproduction
- Unnecessary transportation or handling of materials
- Unnecessary or duplicate inspections or testing
- Unnecessary administrative tasks
- Defects or rework caused by poor quality control
- Inefficient or poorly designed processes
- Unused or underutilized equipment or facilities
- Unnecessary or outdated regulations or procedures.
References
- Cuervo-Cazurra, Á. (2007). Sequence of value-added activities in the multinationalization of developing country firms. Journal of international Management, 13(3), 258-277.
- Cumming, D., Fleming, G., & Suchard, J. A. (2005). Venture capitalist value-added activities, fundraising and drawdowns. Journal of Banking & Finance, 29(2), 295-331.
- Alwi, S., Hampson, K., & Mohamed, S. (2002). Non value-adding activities: a comparative study of Indonesian and Australian construction projects. In Proceedings of the 10th Conference of the International Group for Lean Construction (pp. 627-638). Federal University of Rio Grande do Sul.
