Value-Added Work: Basic Lean Concepts

As consultants, one of our first assessment tasks involves discovering the amount of value added work in a client’s organization vs. non-value-added work.  In assessing a process, it is important to understand what activities in the process actually add value to the end result. All other activities are wasteful.  First, some definitions:

Value-Added Work (CVA or VA)

Customer Value Added work (CVA or just VA for Value Added): adding form fit or function to a product or service, an activity that the customer would be willing to pay for in isolation if they knew it was being done – e.g. Creating code, implementing functionality. In the Scrum Framework, the Product Backlog Items are meant to be Customer Value Added. In the Kanban Method, the same idea is referred to as “Customer Recognizable Value”. Both Scrum and Kanban are strongly influenced by, and based upon Lean thinking.

Business Value-Added Work (BVA)

Business Value-Added or non-negotiable waste: an activity that is required to operate the business but the customer is unwilling to pay for – e.g. Budget tracking, code documentation.  In a Scrum environment, some of these things might show up on the Product Backlog or in the Definition of “Done”. In Kanban, these activities might show up as parts of a Kanban board or as work items.  In both, BVA activities are subject to efficiency efforts.

Non-Value-Added Work (NVA)

Non-Value-Added: an activity that is not required by the business nor is the customer willing to pay for – e.g. Waiting for resource allocation, requirements documents.  Neither Scrum nor Kanban specifically call out this type of work.  However, both approaches to agility put significant emphasis on using continuous improvement techniques such as retrospectives and kaizen to reduce and eliminate NVA activities.

Identifying Value-Added vs. Non-Value-Added Activities

In the book Lean Six Sigma : Combining Six Sigma Quality with Lean Production Speed by Michael George, he describes a series of questions that can help you distinguish between these three categories:

1. Customer Value-Added (CVA) Questions:
   • Does the task add a form or feature to the product or service?
   • Does the task enable a competitive advantage (reduce price, faster delivery, fewer defects)?
   • Would the customer be willing to pay extra or prefer us over the competition if he or she knew we were doing this task?
2. Business Value-Added (BVA) Questions: In addition to customer value-added activities, the business may require you to perform some functions that add no value from the customer’s perspective.
   • Is this task required by law or regulation?
   • Does this task reduce the financial risk of the owner(s)?
   • Does this task support financial reporting requirements?
   • Would the process break down if this task were removed?

   Recognize that these activities are really non-value-added but you are currently forced to perform them. You need to try to eliminate or at least reduce their cost.

3. Non-Value-Added (NVA) Questions:
   • Does the task include any of the following activities: counting, handling, inspecting, transporting, moving, delaying, storing, all rework loops, expediting, multiple signatures?
   • …

(p 52-53)

Categories of Non-Value-Added Work (Waste)

Lean thinking gives us means for identifying and eliminating waste from our organizations.  However, the way we identify waste (or the categories of waste) are dependent on the industry in which we work.  This table, adapted from the book “Lean Software Development” by the Poppendiecks, provides a summary of the categories for two industries:

In Product Development, the customer pays for the benefits of using the product and its features.   In healthcare, we want healthy people. Anything else is waste, and any activities that do not lead to customer benefits or healthy people are non-value-added activities.

Links:

Its About Time – an article about the importance of time in lean and value.

Reducing NVA Office Work – applying lean in an office environment.

Inventory is Ignorance – reasons that lean is so hard to do.

Eight Types of Waste in Healthcare – simple mapping of traditional lean waste categories with examples.

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