In yesterday’s post, I introduced lean manufacturing. A crucial detail to lean manufacturing is to maintain all value-adding activities, while eliminating all non-value adding activities. Although this can be found in yesterday’s reading, I wanted to re-iterate the importance identifying value-adding processes vs. non-value adding processes. Here’s Stace England’s explanation from SBJ contribution:
A simple explanation of value-added activity is something your customer is willing to pay for. A good health care example most of us can relate to is going to a hospital or lab for blood tests. All the customer wants, or is willing to pay for, is the test results. However, many steps occur in a typical lab experience to get those results. The customer signs in, goes through registration and insurance verification, etc. before the actual blood draw. Waste, or “non-value-added” activities, is often baked into those steps – such as movement to different stations to complete registration, waiting for a registration person, waiting for a room to open for the blood draw, moving to the room and then waiting for a phlebotomist to draw the blood.
A typical blood draw takes two or three minutes. If the customer has a 30-minute total experience at the lab, 27 of those minutes are non-value-added, as are all the additional steps by the patient and staff. Once you identify these non-value-added steps, you can begin to eliminate, reduce or simplify them.
By focusing on the customers and what they are willing to pay for, you perform an important first step. This mindset is often a breakthrough in thinking for many businesses. Currently, the accepted wisdom is that everything is “value-added” because it is “how we do it.” However, 95 percent of typical activity in any process is non-value-added. Businesses can experience significant productivity gains and happier
Another valuable resource is Craig Borysowich’s blog post: http://it.toolbox.com/blogs/enterprise-solutions/determining-the-valueadded-activities-of-a-process-20700