A process analysis of value-added versus non-value-added activities is a method of dissecting process steps for value content from the customer's perspective. Value-added analysis allows for the identification of hidden costs and resource waste.
The first step is to construct a map of your "as-is" or current process, then look at each step and apply the following three questions;
- Would the customer be willing to pay to have this step performed?
- Was the step completed correctly the first time? Any step that starts with the review, re-check, or re-work is a dead giveaway to wasted resources.
- Was there a physical change? If no tangible, physical change was manifested by performing a step, it is likely redundant or unneeded and adds no real value to the overall process.
Your next step is to place each step into three basic categories:
- Value-added activities: These are essential steps necessary to deliver the product or service to the customer.
- Required, but not value-added: These may be business processes that are not especially meaningful to the customer but essential to conducting business. An example could be documentation activities required for accreditation or compliance.
- Non-value added: These activities are also known as waste. Performing these steps adds no value from the customer's perspective and does not serve some vital business function or requirement.
Doing this sort of analysis can be very eye-opening. It is not uncommon for the following types of waste to be revealed:
- Steps that have been "done this way" for long periods but which are there for no specific reason.
- Steps linked to standards, procedures, or regulations that no longer exist or ones that no one can locate.
- Extra or redundant steps that add no value and can be eliminated immediately without any effects.
