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A portion of each step in a Value Stream Map is allocated to the value-added effort, which is work done that creates customer value. All other time and effort in the step is non-value added. In many cases, the entire step is non-value added.

Quick reference

Value Added/Non-Value Added

All effort and time in a Value Stream Map is allocated to either be treated as value-added or non-value-added.  Understanding the difference can prioritize the analysis and improvement activities.

When to use

Whenever a Value Stream Map is created and timing data collected, each step should be analyzed to determine what portion is value-added.

Instructions

Value-added time and effort only occur when the process operator (man or machine) is actively working on the item or transaction and doing work that contributes to an element of customer value. Also, it is value-added if it is the first time the operator has worked on that feature. However, if there was a defect that required rework or additional work, that is not value-added, even if it is work done on a feature of customer value. If that step had been done correctly the first time, there would be no need to rework it.

The Cost of Poor Quality provides an excellent set of categories for what constitutes non-value-added effort. All the work to fix problems is often referred to as the “hidden factory.”  These activities can grow and become a dominant portion of the operation and the flow. Essentially the assumption becomes that everything is wrong and must be reworked so the extra inspections and steps are added to the process.

Non-value-added time is calculated using a 24-hour clock and a 7-day workweek. That is because the customer is waiting until the process finally completes and that includes nights and weekends. Also, when considering batch operations, the value-added time is the time associated with the first item in the batch, as soon as it is done, it is wasting time waiting for the rest of the batch to finish. Batch operations that are value-added can still have a great deal of non-value-added time in the value stream map waiting for all the batch to be ready to move to the next step. It is very common in processes that have not been leaned for the ratio of value-added time compared to non-value-added time to be less than 10% value-added. 

A time ladder is a quick way to highlight the amount of value-added time in a process. For each step in the process have two rungs on the ladder, a lower and an upper rung. I normally place the value-added time on the lower rung and subtract that from the step total time. The difference is the value-added time that goes on the upper rung. Another method of displaying value-added effort is with the cycle time map. In this map, there is a horizontal bar for a workstation or work cell that shows the total time spent at that workstation. Then a portion of the bar is shaded with a different color to highlight the amount of that time that was value-added.

Hints & tips

  • Manual processes typically have less than 10% values added. Even automated processes are often less than 50% value added. Time spent on a conveyor system in an automated plant is not value-added time. No customer feature is being created.
  • In most cases, inspection and testing are non-value-added. If the design was poka-yoke or statistical process control was being used, there would be no need to “inspect in quality.” The exception is if the customer needs a test certification to meet their quality standards. Then the test adds value since it creates the data for the certification.
  • Managers and operators are often reluctant to labor something as non-value-added, especially if it is a major portion of their job. Be clear that you are not saying the individual is not value-added. The activity is the problem. In fact, the individual is often a “hero” making things right. But our goal is to have processes that do not need heroics to work.  
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  • 00:04 Hi, this is Ray Sheen.
  • 00:06 A lean principle that we rely on when searching for
  • 00:09 waste in our process is the difference between value-added and non-value added.
  • 00:14 Let's talk about value-added first.
  • 00:17 In the lean value stream map, we have a straight-line flow of activities that
  • 00:22 deliver the process output to the process customer.
  • 00:25 We know that lean emphasizes the elimination of waste,
  • 00:29 both wasted effort and wasted time.
  • 00:31 And we have mentioned that Lean divides everything into value-added activities and
  • 00:36 non-value-added activities.
  • 00:38 So, what is the definition of a value-added activity?
  • 00:42 These are actions that create an element of customer value.
  • 00:46 This usually means that the product or service that is going
  • 00:49 through the process is being changed in some manner in order to add the value.
  • 00:54 Let's contrast this with non-value-added effort.
  • 00:58 You may recall that when we discussed the cost of quality,
  • 01:01 we had a number of categories that were classified as costs of poor quality.
  • 01:05 Those are things like rework, repair, or recalls.
  • 01:09 Well, the non-value-added effort is all of those and then some.
  • 01:13 The costs of poor quality are due to, wait for it, poor quality.
  • 01:19 If the process delivered good quality, those activities would not occur.
  • 01:24 So although they may be fixing something that is valuable to the customer,
  • 01:28 if it hadn't needed to be fixed, the work wouldn't need to be done.
  • 01:32 All this extra work is sometimes referred to as the hidden factory.
  • 01:37 It is the portion of the factory dedicated to fixing all the problems that the other
  • 01:42 part of the factory created to begin with.
  • 01:44 In some cases, this hidden factory represents the lion's share of
  • 01:49 the costs and cycle time in the process.
  • 01:52 The non-value added work can often creep in over time.
  • 01:55 Extra steps are added to the process It is because
  • 01:57 of poor quality early in the process.
  • 01:59 If we fix the problem, the extra steps are no longer needed, but they're still there.
  • 02:04 In some cases, extra work was added as a temporary fix for a temporary problem,
  • 02:10 but the extra work was never taken out once the temporary problem was resolved.
  • 02:15 The bottom line is, if a process has not been leaned out lately, it is likely that
  • 02:20 there are tremendous opportunities for eliminating non-value added work.
  • 02:25 I've had projects where we reduced cycle time by over 75% and
  • 02:29 cost by over 50%, while at the same time improving the outgoing
  • 02:34 quality just by getting rid of non-value added effort in the process.
  • 02:39 Let's take a minute to compare the two.
  • 02:42 All the time and effort in a process is divided into value added and
  • 02:46 non-value added effort.
  • 02:48 There is no third category.
  • 02:50 My assumption is that everything is non-value added until it
  • 02:54 demonstrates how it adds value.
  • 02:57 And just to be clear, if a step is working a batch of items sequentially,
  • 03:02 then the value added time and effort for that step is based on processing one item.
  • 03:07 All the time and effort spent working on the other items
  • 03:10 in the batch doesn't do a thing to add value to the first item.
  • 03:14 Now, something to watch out for
  • 03:16 when measuring data is the item that we're measuring going through the process
  • 03:20 being treated specially just because everyone knows we're measuring it.
  • 03:25 So it's best if you can to collect the results of a process over
  • 03:29 a period of time and take an average of the time and
  • 03:33 effort spent on all the items that go through the step.
  • 03:37 Fortunately, in the manufacturing world,
  • 03:40 ERP systems now track production at almost every step with a timestamp.
  • 03:46 So it's easy to take all the production output for
  • 03:49 week and find out the average amount of time items spend at each step.
  • 03:54 In particular, when time is concerned,
  • 03:56 we often create a time ladder to accompany the value stream map.
  • 04:01 This ladder has two rungs for each step.
  • 04:03 The lower rung is the value added time for that step, and
  • 04:06 the upper rung is all the rest of the time associated with that step.
  • 04:11 And that is the non-value added time.
  • 04:14 By the way, when counting value added time,
  • 04:17 it is the elapsed time when someone is actually working on the item.
  • 04:22 However, the non-value added time includes the non-value added work and
  • 04:28 also any idle time.
  • 04:29 And that idle time is based on a 24-hour clock, 7 days a week.
  • 04:34 An item that sits at a workbench over the weekend just picked up two
  • 04:39 days of non-value added time.
  • 04:41 You can see in this time ladder that one step has no value added time.
  • 04:46 That's actually quite common.
  • 04:48 Also, watch out for units.
  • 04:50 The first step has value added time in minutes, but
  • 04:53 the non-value added time is listed in hours.
  • 04:57 If we converted that non-value added time to minutes,
  • 05:02 it would be 2,910 minutes.
  • 05:05 This last slide is one of my favorite for illustrating
  • 05:08 the insights that you can get from value added and non-value added effort.
  • 05:12 The cycle time map.
  • 05:13 This shows the breakout of a value-added time and
  • 05:17 non-value-added time within a process.
  • 05:20 The total process takes 70 hours, but the value-added time is only 8 hours.
  • 05:25 Let's say that we are asked to cut the cycle time by 50%.
  • 05:30 Many process managers would look to go into the 8 hours and
  • 05:34 try to cut in half each of those steps.
  • 05:37 Because as they think about the process, that's what they think of,
  • 05:41 is all those process steps that are adding value.
  • 05:45 But if instead the process manager eliminated
  • 05:48 the non-value-added time at the end of setup, and
  • 05:51 the first and last blocks of non-value-added time in assembly.
  • 05:56 And that large chunk of non-value-added time in inspection and test, well,
  • 06:01 they would've eliminated 40 hours and not changed a single value-added effort.
  • 06:07 In fact, they even would have time to improve or
  • 06:11 increase the work they do in several of those steps to improve the quality,
  • 06:16 and still reduce cycle time by 50%.
  • 06:19 Eliminating non-value-added time and effort is some of the low
  • 06:24 hanging fruit when looking to do improvements in processes.

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