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

J
#21
Just Reading Thru

Figured I'd throw in my 2c worth.

I like the idea of splitting the terms into value added and mission critical.
Value added would apply anything directly to the products produced.
Mission critical to the other areas.

I would liken it to the old idea of machine productivity. Theoretically speaking, the only time a machine is making money is when it is making chips (from the old days when I ran lathes).
Therefore tool changes etc. were not making money therefore were not value added. However tool changes were necessary, therefore critical to the mission. Thus "Mission Critical".

James
 
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D

David Mullins

#22
my thoughts - thus far

Basically we can't agree on a definition for "value-added" (just like 'quality'), so we need to split it up.
I don't agree with James' "mission critical" theory, as the tool change isn't mission critical.
Having spent time with the USAF I'm pretty confident I understand their interpretation of mission critical, and it doesn't fit the fragmentation of "value-added".

Does QA add value?

Not to the product (directly). If the machine operator takes the day off, the parts don't get made, and no value is added. If the QA person takes the day off, there is no impact to the machining of product (efficiency is probably improved, if anything).

BUT, QA does add value to the business! Insert your own examples here.

If we sacked the QA dept, profits should increase in the short term, then decrease in the long term. Reduced overheads in the short term become lost business, increased warranty claims, higher rework rates and costs, etc.

So can we agree that there are several types of value adding, as stated in the opening post?
 
M

M Greenaway

#23
I think we can say that everything is value-adding, just as everything affects quality in its broadest terms.

Try asking your customers if they would mind if you did away with the quality function at your plant as it did not add value - I think you would get your answer !
 
A

Atul Khandekar

#24
Does QA add value?
Not to the product (directly). If the machine operator takes the day off, the parts don't get made, and no value is added. If the QA person takes the day off, there is no impact to the machining of product (efficiency is probably improved, if anything).

BUT, QA does add value to the business! Insert your own examples here.

If we sacked the QA dept, profits should increase in the short term, then decrease in the long term. Reduced overheads in the short term become lost business, increased warranty claims, higher rework rates and costs, etc.
Interesting argument! Not so long ago we read on the forums that QA folks should 'work themselves out of jobs'!

Question is WHERE and HOW does QA add value? In inspection? creating charts? Documentation? If QA takes actions that make the processes robust or reduce waste, isn't value added to the product directly?

IMHO, the 'Lean' definition of non-value Added items really focusses on reducing and eliminating (where possible) the wastage and delays in certain operations such as handling, storage, inspection, setup and those that Mike S. mentioned. You cannot completely eliminate the operations themselves. It is possible that there are such wastages in activities that are usually considered value-added as well!

JMO, FWIW

-Atul.
 
Last edited by a moderator:
J
#25
Dave Mullins said
......I don't agree with James' "mission critical" theory, as the tool change isn't mission critical......

Dave,
A tool change in a machine is critical to the mission of that machine. If I need to Drill and Tap a hole I must have a tool change even though I am not directly effecting the product during the change. It may not be the best example, but I believe it is still valid.:truce:


M Greenaway said
I think we can say that everything is value-adding, just as everything affects quality in its broadest terms.

Try asking your customers if they would mind if you did away with the quality function at your plant as it did not add value - I think you would get your answer !

Martin,
Makes sense to me. However if the QA dep't isn't percieved as value added, it can still be stripped, ripped and rendered ineffective by management. It is one thing to have a "quality dep't", and quite another to have a Quality Company.

James
 

E Wall

Just Me!
Super Moderator
#26
Value Added

We have discussed this before in at least one other thread, I would encourage anyone pursueing this topic to perform a search and read some of the past posts.

One of the best summaries I've seen recently is from Jim Womack's Lean Institute:
I get many e-mails from the Lean Community asking for definitions of the terms we commonly use. For example, a respondent recently wanted to know how Lean Thinkers tell "value-creating" activities from those that are "non-value-creating".

It’s actually very simple: Map out the value stream for a product, noting every step and action performed on information and materials. Then, for each action and step, ask if the customer would think the product would be worth less if that activity could be left out. If the customer won’t miss it, it isn’t value
creating!


Common sense to me dictates not just the activity itself but the fallout from it's exclusion long-term.
 
L

lee01

#27
The quality function albeit inspection, spc or any other activity can not be associated with adding value to the product in question! I’m deeply surprised to find that people would say otherwise?

Anybody, in my opinion, who is adding value to a product must be doing something to the product to make it as the customer specifies. Any quality activity does not change the product in any way, it confirms that the product is manufactured and/ or is confirming to specification. This activity is aiding the manufacture of the part not manufacturing the part itself.

Its like this, two people have a game of tennis, the umpire aids the two in ensuring the game is played to the rules. He is not playing himself. Same as for Quality. We are assuring the part is correct, but we are not adding value to the part because we are not changing the part to coincide with customer specifications.

 For every second a part is being manufactured, the person who is manufacturing it is theoretically charging the company his/ her salary. He/ she in turn is paid by the company for the part he/ she has just created

 For every second a part is being inspected, the person who is inspecting it is theoretically charging the company his/ her salary. He/ she in turn is paid by the company for the part that someone else created. (He/ she has not added value)

In a theoretical and ideal world the part would always be correct, there would be no need for quality at all, does that mean we would have to sell the part cheaper because the inspector/ quality guy has not had his hands on it?

Lee01 (Interested, very interested)
:rolleyes:
 

Geoff Cotton

Quite Involved in Discussions
#28
Who needs 'inspectors', our operators are responsible for ensuring that what they produce is to the required standard.

IMHO Inspection is not Quality Assurance
 
M

M Greenaway

#29
You can only say your inspection function is not adding value if they never find anything wrong. In which case you could successfully do away with them.

Your customer will not pay for defective products :bonk:
 
L

lee01

#30
In regards to Inspection not being Quality Assurance;

For a start I never said the inspection activity is quality assurance nor would I imagine it is! Inspection is however, held under the Quality banner and depending on the organisations current position and outlook on quality, this could be just a simply inspection or a quality control, quality assurance or TQM orientated organisation.

In my opinion and that’s all it is, any activity that can be deemed as non-productive must be held as a non-value adding operation. Inspectors and quality personnel as a whole are non-productive

As for operators being in control of their own work, great! I personally would disagree though. Operators have a personality that consists of self-preservation. I have come across operators not highlighting failures to try to disguise their own shortcomings. Okay this is highly wrong and should not happen but it does and always will. But if you feel confident in you’re operators being able to demonstrate errors on their part?

Inspectors should always be used in a random/ petrol manner to assist the operators.

Lee01
 
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