Value Analysis in Lean Six Sigma: Identifying Value Add, Necessary Non-Value Add and Waste
Value analysis in Lean Six Sigma is a systematic approach to identify and differentiate between activities that add value and those that contribute to waste. In any business process, activities can be classified into three categories:
Value-Added Activities: These are actions that directly contribute to meeting customer needs. They change the form, fit, or function of a product or service and are something the customer is willing to pay for. In a typical process only about 5% process steps/activities are Value Added.
Necessary Non-Value-Added Activities: These are activities that don't directly add value from the customer’s perspective but are necessary for compliance, safety, or regulatory reasons. They don't contribute to the final product or service, but eliminating them isn't feasible. A typical process can have up to 35% of process steps/activities as Necessary Non-Value Added.
Non-Value-Added Activities (Waste): These actions consume resources without adding any value. They don't change the form, fit, or function of the product and are something the customer doesn't care about or is unwilling to pay for. Examples include unnecessary inspections, excess movement, and waiting times etc., In a typical process only about 60% process steps/activities are Waste.
Value Analysis Filter
People often understand the concepts of value-added, waste, and necessary non-value-added activities, but distinguishing them in real-world processes can be challenging. This difficulty can lead to disagreements when defining what constitutes value-added versus waste. The Value-Add Filter becomes essential in these situations, offering a structured approach to classify each process step accurately. By evaluating activities against specific criteria—whether they contribute to customer value, compliance, or are simply waste—the filter helps streamline decision-making and improve operational efficiency.
How to utilize Value Analysis Filter?
Map the Entire Process: Include every step, regardless of perceived value.
Apply the Value - Add Filter: Evaluate each activity using the value-add filter.
Question 1: Does the end customer care? (Is the customer willing to pay for this activity?)
Response - Yes: It's a Value-Added activity.
Response - No: Move to the next filter.
Question 2: Does it convert input directly into a process outcome (change in fit/form/function)?
Response - Yes: It's a Value-Added activity.
Response - No: Move to the next filter.
Question 3: Are we doing this due to compliance, safety, or regulatory reasons?
Response - Yes: It's a Necessary Non-Value-Added activity.
Response - No: It's classified as Waste.
Categorize Activities:
Value-Added: Directly transforms the product/service.
NNVA: Necessary for compliance but doesn’t add customer-perceived value.
Waste: Consumes resources without contributing to customer value.
