Definition Value Added - Definition of 'Value Added' and the Three Levels of Value Added


David Mullins

"Value-added" is one of those terms that Q people use to death and then it gets them in trouble.

I glossed through an article somewhere (unfortunately I think it was in an airline magazine) which talked about 3 levels of "value-added".

First was your straight out, no questions asked, we make the product that goes to the customer group, labelled people who add value.

Second was those in administrative, purchasing, accounting and (gulp) quality type areas, who don't necessarily add value directly to the actual product going to the customer, but whose function is necessary if the customer is to receive the product IFOTA1 (in full, on time, to A1 spec - that wasn't the term used in the article). I can't remember the label applied to this group.

Finally you've got those that don't add value and aren't necessary. These bludgers are called snr management, sorry, anal retentive, sorry, civil servant, sorry, I can't remember their label either.

Unfortunately I was sitting in the aisle seat of the last row in the plane, and a very nice :lick: air hostess / customer service rep / trolley dolly ended up squating in the aisle and talking ;) to me for the next 2 hours. Subsequently I forgot to retain the mag with the article:smokin:. Scored some free alcohol though. (I don't know that she should've continued talking to me whilst the old guy several rows up suffered with a nose bleed, but she did).:ko:

Anyway, has anybody seen anything like this article, where they can fill in the blanks for me?

Hey, let's call it a birthday present alright?
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No takers on this one, eh? I'm not sure what to say because to me what is or isn't 'Value added' is as much a personal opinion as it is defined within each company. some companies do not see inspection as value added, for example, but I don't always see it that way. To me it depends upon what the risk is if you don't do the inspection.

I can't recite the standard classes of what is and what isn't. I think that's a Cost of Quality thing.


Trusted Information Resource

1st - Happy Birthday! You hit the big 40 !

Hope your day was great.

2nd - Call the airline-see if they will mail you a copy of the mag.




Nobody else is jumping in so I guess it is safe to stir up a discussion.

Value added, as applied to processes, is anything which translates into something useable/useful to the customer. The customer can be either internal or external.

The same thinking should be applied to value added in any other part of the business. Does it have/add anything useable/useful to whatever it is you are trying to do?. If it just makes a lot of noise or sits there looking pretty, it may not add anything but noise and beauty which might not be useful to the customer.

Inspection as value added? Sure it is, if it actually adds something. I have seen 100% inspection imposed as a corrective action (yes, I know - another topic) on every CAR received. Because of the procedure, even a packaging CAR requires 100% inspection of the parts (would probably be OK if 100% of the packaging). Sure, the wrong corrective action was applied, but the point is, the action wasn't value added.

An after hours receptionist (hope I don't offend anyone) who sits at the front desk to greet visitors and answer the phone doesn't add much value if the door is locked and the phones are on automatic.

I hope that's enough to get some others going on the subject.


M Greenaway

The air hostess squatting in the aisle sounds like a much more interesting topic - how did you get on Dave ? ;)



During our Lean Manufacturing training, Value Added was used to define those processes that the Customer really cares about. I never thought about it as it affects internal customers. Most everything we do affects somebody else in the organization. The Customer doesn't care about how many times you inspect his product. They care about receiving the right part, on-time delivery and price. The more I see this term used, the more I see it as one of those things that someone came up with to replace "wasted effort" in your business as well as anything that doesn't add to the bottom line. You can make a case for anything being Value Added, especially when it comes to eliminating a position. Like Mine!:vfunny: Purely subjective and given more attention when coming from Top Management. JMHO :ko: :smokin:
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These are from the Lean Manufacturing Glossary page of The URL is

Value Added: Activities or actions taken that add real value to the product or service.
Real Value: Attributes and features of a product or service that, in the eyes of customers, are worth paying for.

There are also things that are mission critical that are not “value added”, such as payroll and maintenance. You can’t operate without them, but the customers usually won’t pay for as a line item on the invoice.

Value Added vs critical

When I'm teaching the QS-9000 Internal Auditing course, this topic comes up ( I mention the definition listed in my earlier post, and add that some functions might not be “value added”, but are still critical to mission success. The two I list are:

Payroll – a non-value added function, but the operation will cease without it.
Restrooms -- a non-value added use of floor space, but required by law. Once again, without them, the operation will cease.

Geoff Cotton

Quite Involved in Discussions
To me value added is simply anything that changes the fit form or function of a product or service.

Does the Quality Assurance Department add value ?????

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