Lean tools

Value added

In French: Valeur ajoutée

A value-added activity is one the customer would agree to pay for if it were described to them. Everything else splits between what is necessary without being wanted, and what can disappear.

Sorting into three categories

Value added. The activity transforms the request in the direction of what the customer expects, right first time. Machining a part, writing the expected opinion, making a diagnosis. The criterion is the customer’s, not the company’s: a task indispensable to internal operation does not enter this category merely because it is indispensable.

Necessary non-value-added. The activity brings nothing to the customer but cannot be removed as things stand — a regulatory check, an entry imposed by a system, a traceability required by a client. It is not removed, it is reduced and lightened.

Non-value-added. Everything else: waits, trips, re-keying, corrections, searches for information. That is the potential, and it is almost always the largest of the three.

The difficulty is not understanding these three boxes, it is deciding honestly. Almost every activity finds a defender to explain that it is indispensable, and the classification hinges on the quality of the argument rather than on the rank of the person making it.

The three questions of the test

Would the customer pay for this? Asked as is, the question settles most cases. Nobody pays for a file to wait, for a piece of information to be entered twice, or for an error to be corrected.

Does the activity transform the request? Moving, checking, storing, passing on transform nothing. It is the criterion that surprises most, because it eliminates tasks whose execution is visible and often valued.

Is it done right first time? Rework creates no value, even when it produces exactly the right result: the customer paid for the original, not for its second execution.

The three questions are asked in that order and three yeses are needed. A single no is enough to take the activity out of the category — and it is that requirement that makes the result uncomfortable the first time it is applied to one’s own work.

What the sorting serves to decide

The sorting is of interest only in relation to time. A non-value-added activity that takes a few seconds does not deserve a meeting; the same one that takes three days of waiting designates the subject of the project. Classifying without timing produces a virtuous table with no follow-up.

The ratio between value-added time and the total duration of the journey gives a proportion, often very low, and it is precisely the gap that indicates the potential. An organisation that discovers that ratio generally stops trying to make its teams work faster.

The sorting finally serves to direct the improvement effort: remove in the third category, lighten in the second, and protect the first. Investing to speed up a value-added activity when the lead time is decided elsewhere is the most frequent misreading — and the most expensive, because it is visible and reassuring.

The common mistakes

Judging value from the inside. "This approval is indispensable" answers a different question from "would the customer pay for it". Both answers can be true at the same time, and it is the second that classifies the activity.

Treating the second category as untouchable. An obligation imposes a result, almost never a way of obtaining it: the same regulatory requirement is often satisfied with far fewer gestures.

Classifying without measuring durations. A three-column table with no time alongside ranks nothing and puts people to work on the first line that comes along.

On the shop floor — Engineering office

On the preparation of a technical quotation, the record gave a little under two hours of real study for a lead time of nine working days. The classification showed that searching for information scattered across three systems weighed more than the study itself. The team had assumed an additional engineer had to be recruited.

The other tools illustrated by this trade: services, it and engineering.

Frequently asked questions

Is a quality inspection a value-added activity?

Not in the strict sense: the customer expects a conforming product, not the verification that it is. Inspection belongs to the second category, the necessary non-value-added, and stays there as long as the process does not guarantee conformity by itself. That is in fact the logic of devices that make the error impossible: they make it possible to remove the inspection without taking a risk.

How do you apply the notion to an internal department?

By identifying who receives the output of the process and reasoning from their point of view. For a payroll department, the customer is the employee and the employer; an operation that improves neither the accuracy nor the timing of the payslip creates no value for them, even if it makes the department’s work easier. The question remains valid, only the customer changes.

Should the aim be to remove every non-value-added activity?

The objective is to reduce them, not to eliminate them all, because some protect the process against real disruptions. Removing a stock that absorbs delivery variability without treating that variability simply moves the problem to stock-outs. The cause is removed first, then the protection that has become useless.

What proportion of value added can be hoped for?

No general figure makes sense here: the proportion depends entirely on the type of process, and a journey that includes incompressible physical delays cannot be compared with file processing. What compares usefully is the same measurement made twice on the same process, before and after. The progression is a result; the absolute level is only a starting point.