What is Value Analysis?

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Value added tasks are defined as tasks that customers, if directly asked, would be willing to pay for. Limited value tasks are those deemed necessary but not directly valuable for the customer. All others tasks are non-value added. When performing value analysis, we study the value added, limited-value added, and non-value added task ratio for every process we map. When we map a business process, we typically find the value-added to limited and non-value added ratio is in the 5 to 20% range of total process tasks.

 

What are Value Added Tasks?

Each of the value added tasks below create something the customer would be willing to pay for.  These activities contribute to the operational transformation that creates a useful service or a product produced by the process.

Building – Building can be done with parts and materials to create a tangible product, or it can be the act of establishing or giving form to a business or organization.

Developing – Organizations and businesses that develop for their customers provide a product with more capabilities and possibilities.

Researching – Researching requires gathering information on a specific topic of interest to the customer. Further analysis of this data helps the customer to interpret, utilize, and apply the information collected. 

Educating – Education can be delivered in a classroom environment, through formal instruction, or in participatory workshops. These methods train and develop the skills of the customer.

Delivering – A task can deliver physical or intellectual products. Delivery must take into consideration when the customer would like to receive the products or services.

Prevention – Problems are opportunities that can be identified, analyzed, and improved upon. About 70% of all improvement opportunities are directly related to business process deficiencies.

Generating – A task can generate new products or services that will provide value to the customer.   

Installing – Installing requires the positioning or connection of the customer to services in order to facilitate their use. 

Conceiving – The creation of ideas produces resources that can be used to improve an organization and its products. 

Servicing – Servicing is work performed by the supplier that benefits the customer. Does the customer need any services not provided? Does the process provide any services not needed?

 

Improve your Organization with Value Analysis

Value analysis requires organizations to evaluate each task in a process to determine its impact on the value delivered to the customer. Organizations must ensure that the final product delivers a values higher value than its total cost of production. With this in consideration, each task must be assessed and classified so the limited value tasks can be minimized and the non-value added tasks can be eliminated. The ratio of value added tasks to limited-value and non-value added tasks should ultimately exceed at least 50%.

When conducting a value analysis in your organization, ask whether each task in the process is necessary to produce the final product. Consider whether it contributes to the customer’s perception of value. If the answer to either of these questions is no, you have raised a red flag and the task needs to be eliminated.

 

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