A non-value added activity is one which neither adds value to the external customer nor provides any competitive advantage to the organization. Non-value added activities fail to meet the criteria for value-adding which includes rework, inspection and control. One of the main objectives of a Six Sigma project is to eliminate activities which do not add value.
Non-value added activities add no value to the final output. They are activities which the customer does not want to pay for. It is important to note that some non-value added activities are important and unavoidable. Such activities should either be made a part of value added activities or eradicated in order to save costs and get a better ROI.
There are eight kinds of wastes or non-value added activities which are identified in Lean.
1. Overproduction
This is one of the most misleading wastes. Overproduction simply means that a product is made earlier and faster than its requirement. It leads to collection of unwanted stock. Overproduction happens when an organization wants to produce products cheaply in bulk, wants to cover up quality deficiencies, breakdown of machinery, unbalanced workload or a long process set-up. However, overproduction also leads to the unnecessary production of products which are not needed and so there is wastage of time, money, resources and personnel.
A Lean analysis helps to spot and eradicate the production of units which are no longer in use or the ones which are obsolete in technology.
2. Inventory
If the supply of a raw material or a finished good or a work-in-process is in excess of a one-piece flow production process, it is considered a waste. If the inventory is held for a year it costs approximately 25% of the money. Lean Manufacturing helps to prevent wastage in terms of unnecessary performance of work-in-progress or the production and storage of unwanted products.
3. Defects
Defect is a key waste which includes wastage in terms of men, machines, materials, sorting or rework. Any product which requires scrapping, replacement or repair is also included in the category of defective products. The reason why products develop defects can be many. The main ones include unskilled workers, ineffectual control over the process, lack of maintenance and imperfect engineering specifications.
Lean analysis helps to recognize defects in the manufacturing process and helps eradicate the production of faulty units which cannot be sold or used.
4. Processing
Processing is a waste which adds zero value to the product or service from the customer’s perspective. It comprises of spare copies of paperwork and other surplus processing for unforeseen problems which might occur in the future. Waste also occurs in the form of acceleration of process to meet targets.
Lean methodology comes handy to reflect unwanted steps or work elements which add no value to the product.
5. Transportation
Although transportation is an important aspect of the manufacturing process, yet it is a non-value added activity as it adds to costs but not to value. In fact, it involves the use of expensive equipment for the movement of men and material inside and outside the organization. Costs like space, shelving and the manpower and systems needed to track the material.
By incorporating Lean manufacturing in the organization, the transportation system can be reformed. Multiple handling of materials, holdup in material handling and needless handling can be avoided.
6. Waiting
Waiting means idle time. It comprises waiting for parts from up-stream operations, waiting for tools; arrangements and directions form higher authority. The time wasted in measuring and procuring information also makes up for idle time and is considered a waste. Idle time is the one when no value is added. In fact, waiting for manpower/labor is a matter of greater concern than the usage of machinery.
7. Motion
Any movement in terms of people or machinery that adds zero value to the product is wastage in terms of motion. The examples of motion waste include time wasted in hunting for tools, extra product handling, and arrangement of products, walking and loading. The reasons for motion wastage include poor infrastructure, incompetent labor, weak processing and constant changes in agenda setting.
Adopting Lean methodology helps as it exposes fruitless efforts and motions executed by the employees.
8. People
Wastage of manpower is a matter of concern. This kind of wastage depends on the recruitment process, styles of management, attrition rate, low motivation by the higher authority and not using the employees’ ability to the fullest potential contribute to waste in the form of people. People’s abilities should be utilized fully in terms of mental and creative level, their skills and experience.
The main goal of Lean Manufacturing is elimination of waste. Waste can be eliminated by identifying it and eradicating all non-value-added activities. Non-value adding activities eat up time, money and resources. However, it should also be noted that activities like accounting, government laws and regulations are important and cannot be avoided.
