What is the best approach to making the distinction between “value-added” and “non-value added”?
When applied to a company or to an aggregate of companies, the concept of value-added is clear and quantitative. It is the difference between the price at which goods are sold and the cost of materials used to make them. In terms of individual manufacturing operations, processes can also be analyzed in terms of “value-added tasks” and “non-value added tasks”, however at this level it becomes more challenging to try to quantify the difference. It is here that it becomes a question of not whether a task has a higher value-added than another, but whether it has any or none. Within the context of lean, tasks are usually non value-added if they do not contribute to what the customer pays for. The concept of waste may be more operational. It is possible to identify what is waste and what isn’t, and according to lean philosophies, waste needs to be eliminated. • Oftentimes, “becoming lean” is interpreted as terminating employees to reduce costs. Is this true? Answer: When evaluating “non-valu
