# Value Add Time Calculation in Value Stream Mapping (VSM)

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#### sem_trivedi

Hello,
I am familiar with displaying Processing Time with Lead time on VSM.

However wanted to clarify if the individual process steps are performed by multiple operators, then obiviously the value add time is sum of each operators value add time for that process.

How do you depict the total VA time of each process steps on VSM? What do you compare it against as the Lead time will not serve as a good reference given that it doesn't care about number of operators in its calculation?

#### Stijloor

Super Moderator
Hello,
I am familiar with displaying Processing Time with Lead time on VSM.

However wanted to clarify if the individual process steps are performed by multiple operators, then obiviously the value add time is sum of each operators value add time for that process.

How do you depict the total VA time of each process steps on VSM? What do you compare it against as the Lead time will not serve as a good reference given that it doesn't care about number of operators in its calculation?

Any VSM experts that can lend a hand?

Thank you!

Stijloor.

D

#### Duke Okes

Hello,I am familiar with displaying Processing Time with Lead time on VSM. However wanted to clarify if the individual process steps are performed by multiple operators, then obiviously the value add time is sum of each operators value add time for that process. How do you depict the total VA time of each process steps on VSM? What do you compare it against as the Lead time will not serve as a good reference given that it doesn't care about number of operators in its calculation?

Value-added time is different from operator time. VA time is clock time it takes to actually carry out a particular activity, regardless of number of people involved.

Productivity looks at VA time versus person-hours.

S

#### sem_trivedi

Thanks for your response Dukes and understand the productivity calculation.

However my question is, if for a particular operation there are 3 operatiors who contribute to it, say 3 operators work at the same time for the same duration, on the different area of the same workpiece and complete the task in exactly 15minutes. The processing time in this instance is 15min however there was 15x3=45min of value addition.

There has been a practice to show Value add time vs Leadtime on the Time line to highlighte % of value addition.

Question1: In the above example if the value add time is calculated as the sum of 3-operators' time, then it will be improper to compare it to Leadtime since the leadtime doesn't account for number of operators. What is the comparative time?

Question2: If in the above example, we ignore to sum the value addtions by the individual operators, then which operators value add time we must consider and report (the highest value adding operator or the lowest?). With this approach I am concerned that we won't be able to highlight improvement opportunities that may exist with other operators and even if someone improves other operators time spend on the operation it will still be not reflected on VSM timeline.

I am looking for a standard approach rather than inventing one myself for this problem just because I don't know that there is a standard approach.

A

#### ab001

Lead time = from time in to the factory to time out of the factory
VA time = time spent value adding (clock time - 15 mins in your example)
NVA time = time spent doing nothing (waiting, storage, ...)

Time in to the factory typically means cash out for materials.
VA time typically means cash out for labour.
NVA time typically means cash out for overheads.
Time out typically means cash in for sales.

You probably want to shorten cash in to cash out and/or minimize cash out. (it depends entirely on you and your organisation to decide what to do)

S

#### sem_trivedi

Lead time = from time in to the factory to time out of the factory
VA time = time spent value adding (clock time - 15 mins in your example)
NVA time = time spent doing nothing (waiting, storage, ...)

Time in to the factory typically means cash out for materials.
VA time typically means cash out for labour.
NVA time typically means cash out for overheads.
Time out typically means cash in for sales.

You probably want to shorten cash in to cash out and/or minimize cash out. (it depends entirely on you and your organisation to decide what to do)
Both responses that I have received so far confirms that VSM only captures Cycletimes (i.e Lead time and value add time) but it doesn't show Effort time nor does it detail the consequences of improving value add % in the lead time.

With VSM I find that this is a significant limitation and not only that but it can provide entirely incorrect picture of the process.

E.g Let's assume that for a given process chain the,
Value Add time is : 12 hrs
and the Value add time is delivered by 2 resources

Hence, there is only 50% value add time compared to Lead time. If the process is such that it can be performed by one operator then by removing the other operator, the Value add time will increase to 24 hrs. And let's say that if all other wastes remain unchanged, then the Leadtime will increase to 36 hrs. Now the ratio of Value addtime to Leadtime has improved from 50% to 66.6%. Opps....

However the process can't affort to increase its Leadtime, but would rather we like to reduce the leadtime. So let's assume an extra resource was thrown in which then shrunk the value add time to 8 hrs. The end result is the new lead time now is 20 hrs and the % of value add time is 40%. Is this an improvement? Not really. It is true that the lead time has improved, but it shows the VA % has declined. This is just twisted arithmaticss

The real improvement opportunity in my opinion is to reduce the effort requirement for a given process, and that is not captured in VSM. Am I right?

A

E.g Let's assume that for a given process chain the,
Value Add time is : 12 hrs
and the Value add time is delivered by 2 resources

Hence, there is only 50% value add time compared to Lead time. If the process is such that it can be performed by one operator then by removing the other operator, the Value add time will increase to 24 hrs. And let's say that if all other wastes remain unchanged, then the Leadtime will increase to 36 hrs. Now the ratio of Value addtime to Leadtime has improved from 50% to 66.6%. Opps....

If I'm understanding your thought process correctly, you are saying that VA or Value Add time is resource dependent, or that is what you are wanting to show. However, Value Add, as seen by and defined from the customer's point of view, is resource agnostic. It does not matter if you have 1 or 10,000 people working on the 12 hours of VA time within the overall 24 hour lead time. If you reduced the resources to 1, that still leaves 12 hours of VA and 12 hours of NVA time. Your areas of opportunity are to reduce the amount of NVA time in your process, and if it meets the customer's wishes, reduce the overall lead time. How you optimize resources within the process is part of that improvement, but in no way alters the designation of VA or NVA time.

Cheers.

S

#### sem_trivedi

Thank you all for your informative responses. - Cheers

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#### pga_gold

It does not matter if you have 1 or 10,000 people working on the 12 hours of VA time within the overall 24 hour lead time. If you reduced the resources to 1, that still leaves 12 hours of VA and 12 hours of NVA time. Your areas of opportunity are to reduce the amount of NVA time in your process, and if it meets the customer's wishes, reduce the overall lead time. How you optimize resources within the process is part of that improvement, but in no way alters the designation of VA or NVA time.

AdamP is spot on with these comments. For clarification purposes, I would add that in order for a process step to be considered "Value Added" it must meet three criteria:
1) The step must physically transform the product or service,
2) The customer must be willing to pay for it, and
3) It must be done right the first time.

If a process step does not meet ALL 3 of the above statements, then it must be deemed as "Non-value Added." Equipment idle time, QC testing, transportation, repair/rework time are all big contributors to non-value added time. I am very accustomed to seeing VA time around or below 1% of the total lead time.

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