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.
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.
If you are unsure whether something is value added ask yourself these three questions:
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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The ABC's of