This type of work activity does not meet the criteria of value added work, mainly because a customer is not willing to pay for the product, service, activity or information. However, the product, service, activity or information although not considered value added is necessary to either protect the company or comply with regulatory requirements. Because of this it must be performed by the organization. This type of work is still considered wasteful.
Although business necessary work can not always be eliminated right away these activities should still be reduced or minimized as much as possible until they can be removed.
Value added work is the actual work that a customer is willing to pay for. It can be described as the the activities that transform a product or service from one condition to another only if the customer is willing to pay for it and the activity is done correctly the first time through. With that said value added work has three defining characteristics:
Here is an example of a value added activity. Keep in mind that no process is 100% free of waste. John receives an order for a part he must machine. John begins machining his part and completes it correctly the first time through. This is seen as value added because the customer is willing to pay for it, the transformation occurred on the machine and he machined the part correctly the first time through. Let’s look at one more example. Martha requests some information from Dianne. Dianne gathers the necessary information and emails Martha. When Martha receives the information she is grateful. She reads through the email and is able to get all the information she needs to complete her task. This would be considered a value added email because Martha requested it, the email contained all the necessary information and it was performed correctly the first time.
Some activities can be difficult to determine whether they are value or not. If you are unsure as to what type of work the activity should be classified as, ask yourself the three questions shown below:
If any of your answers were a no, the activity can not be value added.
John receives a second order for parts he needs to machine. He begins machining the parts however one hole is undersized. Because it is undersized he can rework the hole. Is this activity still value added?
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