In a Lean Six Sigma projects, analysis of Customer Value Add time leads to identification of efficiency issues within the process. After all, if we are doing work that isn’t important to our customer, we are adding expense that we can’t recover. In this article we will examine what constitutes Non Value Added activity, and suggest methods to remove this waste from the system.
To understand a Value Add Analysis we need to establish operational definitions for Value Add, Business Value Add, and Non-Valued Add. For a process step to be considered of value to the customer, 3 conditions need to be in place.
If these 3 conditions (value, change, done right the first time) are not met, then our first conclusion is the activity is Non-Value Add, however is it business value Added enabling the process, or simply offers no value to anyone. Business Value Add is defined as the activity is necessary for the process to operate even though the customer doesn’t directly receive benefit (BVA). Finally, Non-Value Add is activity that offers no benefit. The analysis should be performed by the project team working from a detailed flow map of the system. Each step is analyzed separately beginning with the question; does the step meet the criteria above of a Value Adding step?
If the step is not value added, does it then enable the process to function? Care should be taken at this point because we typically see what we do as important to getting the job done. A clarifying question then would follow the form of, is there any other way to do this step? An example of the trap here would be; in a loan approval process, after underwriting the application it is put into a file and physically delivered to the next processing step. Internal transportation is not of value to the customer however getting the information to the next step is critical for the process to function. The second question “can it be done any other way?” might lead to electronic transfer or vocal transfer though a phone call. In this case, the actual step as performed is not enabling (BVA) and is therefore NVA.
In a non-lean enterprise we typically see CVA time as only a small fraction of the time spent in the process, typically in the 2% range. Removing the NVA time we spend in a process will improve our process efficiency. We will produce more in a shorter time without adding resources.
The results of the analysis are to identify NVA activity and remove it from the process; identify BVA activity and reduce the time spent doing it; and identify the CVA and optimize it. Lean thinking offers numerous tools to accomplish these goals including actions like process flow balancing, set up reduction, and process flow optimization. Using a cross functional team to brainstorm the to be state of the process will greatly enhance the efficiency and stability of the process and then the statistical side of the Lean Six Sigma will be able to continue the optimization.