In assessing a process, it is important to understand what activities in the process actually add value to the end result. All other activities are wasteful.
CVA (Customer Value Added – or just VA for Value Added): adding form fit or function to a product or service, an activity that the customer would be willing to pay for in isolation if they knew it was being done – e.g. Creating code, implementing functionality.
BVA (Business Value Added – non-negotiable waste): an activity that is required to operate the business but the customer is unwilling to pay for – e.g. Budget tracking, code documentation.
NVA (Non-Value Added): an activity that is not required by the business nor is the customer willing to pay for – e.g. Waiting for resource allocation, requirements documents.
In the book Lean Six Sigma : Combining Six Sigma Quality with Lean Production Speed by Michael George, he describes a series of questions that can help you distinguish between these three categories:
- Customer Value-Added (CVA) Questions:
- Does the task add a form or feature to the product or service?
- Does the task enable a competitive advantage (reduce price, faster delivery, fewer defects)?
- Would the customer be willing to pay extra or prefer us over the competition if he or she knew we were doing this task?
- Business Value-Added (BVA) Questions: In addition to customer value-added activities, the business may require you to perform some functions that add no value from the customer’s perspective.
- Is this task required by law or regulation?
- Does this task reduce the financial risk of the owner(s)?
- Does this task support financial reporting requirements?
- Would the process break down if this task were removed?
Recognize that these activities are really non-value-added but you are currently forced to perform them. You need to try to eliminate or at least reduce their cost.
- Non-Value-Added (NVA) Questions:
- Does the task include any of the following activities: counting, handling, inspecting, transporting, moving, delaying, storing, all rework loops, expediting, multiple signatures?
Its About Time – an article about the importance of time in lean and value.
Reducing NVA Office Work – applying lean in an office environment.
Lean Six Sigma on the Electronic Business – some lean six sigma success stories.
Inventory is Ignorance – reasons that lean is so hard to do.