The Value Added Process in Lean Manufacturing

You have heard that typical phrase that some things are priced and others have value, right? Many people use this phrase to discern activities that are important from others that can be done later. The value added process comes right into that.

Applied in Lean philosophy, this concept is extremely important because it is the pillar of everything that will be done within this methodology. After all, if the customer does not see value in the product, he/she will not buy.

So read on to learn all about this concept, see how to apply and see an example to help you with the application in your company!

What is value added?

Value added is defined in terms of specific products or services that have specific capabilities / features, offered at specific prices to specific customers at time intervals. It is doing what the customer is willing to pay.

This value is the starting point for Lean Production, since in Lean Manufacturing everything comes from the customer perspective. But how? I will explain ...

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Traditional System x Lean System

In the traditional system, the price is a consequence of the cost added to the profit you want.

In this way, the focus is on profit, not taking into account the needs of the customers and how much they are willing to pay.

In the Lean Manufacturing production system, the first issue analyzed is the market price. After all, it is no use putting a price exacerbated above the market.

Otherwise it is not interesting to charge a price below competitors as this harms the profits you can get.

Considering this point, profit becomes the consequence of a well-done process. This vision also enables you to increase profit by reducing costs, that is, waste reduction, which is exactly the purpose of the Lean.

But how to differentiate activities that are value added from those that are non value add? It’s simple and I'll show you.

What are Value Added Processes?

Within this concept we can classify the operators cycle time into 3: activities that add value, necessary activities and waste. Let's talk a little bit about each one:

• Add value: Activities that transform the materials or information into products that the customer wants, that is, they pay for them because they see value.
  
  
• Necessary activities: Activities that consume resources, do not directly contribute to the product or service, but are highly needed.
  
  
• Waste: Activities that consume resources, time and space but do not directly contribute to producing what the customer wants. They can be eliminated and do not compromise the result.

As you can see, we should always have activities that add value, try to reduce those that are necessary, since they can not be eliminated, and eliminate wastes, since these activities do not add anything to the product, instead consuming resources that could be dedicated to other stages.

To make an easier visualization, let's take a look at the following graph:

In the typical company in our example, only 1% of the processes add value to the product, while 99% of the processes are divided into necessary activities and waste, which can be inventory, people in unnecessary activities , etc.

At this point, many companies make a serious mistake which is trying to attack processes that add value and make them faster, and the most important thing is not to be fast but to do it right the first time.

The correct thing is to attack the wastes first, because they are more harmful to the process, because they do not add value to the product, and then attack the necessary activities, trying to reduce them as much as possible.

In this way you will have a process as demonstrated in the second step, with more activities that add value, much less waste and activities that are absolutely necessary.

Why is it important to reduce activities that do not add value?

In a simple and practical way, it is possible to observe that reducing activities that are non value added as the waste, profit will increase, making processes better in terms of value for the client and also in relation to the gains obtained.

Value Added Process Analysis

Now that you know the value-added concept and have seen the types of activities that make up a process, I'll show you examples to make it easier to see.

As you can see, this image sums up everything I said related to the value added and influence that this concept has on Lean Manufacturing.

As we said earlier, the first point of improvement is to attack the obvious wastes, as they are easier to identify and can be completely eliminated from the process.

Then comes the necessary activities, which are impossible to eliminate but we can reduce, for example, to allocate the part closer to the operator, avoiding his movement to get it.

Only after focusing on these two points should we look to improve activities that add value. But you may be wondering, is it possible to improve processes that already add value? The answer is yes! Do you want an example?

A tool that removes trimmings from a part is a process that adds value. However, there are already machines that can produce parts without chips, which can make the process and value adding even better.

Muri, Mura, Muda

This is a classic example that allows you to easily visualize the errors of a process. Shall we go to them?

In all the processes there is a poor use of the capacity of the truck. In Muri there is an exaggeration, in the Mura the process is badly regularized, and in Muda occurs the wastage of the capacity of the truck.

As in the example, these concepts can be applied to process operators. Some may be overloaded, others poorly assigned to their duties and others with downtime or not having their potential enjoyed in the best possible way.

And what would be the ideal process?

The ideal is to have the maximum capacity explored! In the case of our example, is to use the truck in order to carry the maximum weight that it supports without overload, without using trucks beyond what is necessary and without wasting their full capacity.

We can again make the analogy to the operators of a process, where the ideal is that the operators are not overloaded, are not allocated incorrectly in unnecessary processes and do not have their potential wasted.

Value Added Process: The Secret of Lean Manufacturing

If you understood this concept, you understood the premise of Lean. Taking the best product to the customer, with the best price, so he feels as satisfied as possible, is the basis for the success of any company.

Learning to visualize activities that add value, identify waste and understand that some activities are necessary is a differential in the curriculum of any professional.

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