Waste and Value-Added Management Tools

Abstract

Added value can be defined as products, services, processes and activities, which generate a certain value to the organisation and enterprise. Value-added must be regarded from the customer viewpoint and is everything for which the customer is willing to pay for. It is important that Value-added is recognised and perceived as value by the client. Many studies have shown that we only add value to a product for less than 5–15% of the time, the rest of the time is wasted (Helmold & Terry, 2016a, b). The opposite is non-adding value or waste as shown in Fig. 17.1. Waste (Japanese: Muda, 無駄) is anything which adds cost or time without adding any value or any activity which does not satisfy any of the above conditions of Value-added is a waste or a non-Value-adding activity in a process. The focus in operations management must therefore be in eliminating such activities like waiting time or rework (Liker, 2004). Enterprise must target value-added process and eliminate or reduce waste, whereby waste can be visible (obvious) or invisible (hidden) as shown in Fig. 17.2.

Most Business Processes Are 90 percent Waste and 10 percent Value-Added Work.

Jeffrey Liker