A value-added activity is any activity that increases the worth of a product or service. It directly contributes to meeting customer requirements, and customers are willing to pay for it. Value-added activities also generate a positive ROI for an organization. Without these activities, the process will be affected. A lean team should analyze if activities in a process actually add value to a product or service. They should also determine if activities in a process can be performed in parallel or be merged. This will help organizations deliver outputs more efficiently.
Example: In a manufacturing process, value-added activities can include: receiving a part request, preparing an internal request for a part from production, finding a relevant plant for issuing a request, finding production availability, updating part request information, and the manager processing the part request information and updating the request.
Non-value-added activities are activities that consume resources and time without adding any value to a service or product. Non-value-added activities do not contribute to customer satisfaction and, therefore, customers are not willing to pay for these activities. They are not important to the production and delivery of a product or service, and eliminating them will not affect a process. Because non-value-added activities do not generate any positive ROI but incur only expenditures, organizations should focus on eliminating them.
Example: In the manufacturing process, non-value-added activities can include: sorting and organizing requests, searching for relevant part production locations, checking locations for availability and delivery, generating production requests, and reviewing the status of requests.
