Focussing the lean enterprise on value adding is at the heart of any excellence program – so what is value adding and how can you tell if what you are doing adds value?

Well many people have many different definitions but we like to keep things simple.

1) Value adding steps do things that customers care about.  The acid test is ‘will they pay for this’?

2) It’s a conversion activity or process.  It takes ‘inputs’ and changes them in some way to produce an ‘output’.  This output is either already in the form that the customer wants it or it becomes the input to a downstream process that converts it some more

3) This conversion process must be optimised to produce the output right first time, every time

By default everything that does not meet all three of these criteria is non-value adding.  In any excellence program the easiest place to start is trying to eliminate or at least minimise the non-value adding activities.

Some non-value adding steps are considered essential, at least in the short / medium term.  In that case they must be organised in such a way as to enable the value adding steps to operate as effectively as they can.  For example moving material from one place to another is a classic non-value adding step but cannot be avoided unless the factory is completely redesigned, which is not easy in the short term.  So the deliver of materials to a value adding step must be organised to ensure the process never stops because it’s waiting for materials and there should never be too much material, awaiting processing or converted, so as to reduce the effectiveness of the process.

There is always lots to go at in reducing non-value add, before you need to worry about squeezing the last ounce of performance from the value adding processes