9.2 Defining Value Add

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9 hours 3 minutes
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Hi, guys. Welcome to analyze phase divine defining value. I'm Catherine Nick Iver, and today you're gonna have the ability to define if an activity is value, add non value, add or business non value. Add. So there's a little bit of blurriness between our previous module current state process mapping
and this module on defining value added So in their previous module, I did reference that as you are analyzing your current state process map,
you're going to want to identify if each of the activities are value. Add this is the module. Will you learn how to identify that so
defining value? First, we need to stop for a second and remind ourselves that it is our customers that define value.
We as an organization for this value. But it is ultimately our customers that tell us whether or not an activity that we're doing is
value add. So with that, there are three criteria that have to be met for an activity or process step to be value add.
So the 1st 1 is not really work. So this isn't something that I didn't do it right the first time, so I'm redoing it for you. That is automatically a waste. We consider it defects in our down time.
But anything that is re work is not value. Add it should have been done right the first time.
The next four criteria is that it has to change the output in some way. So if you're thinking about our Kita example, I have a pizza with crust and sauce, and this process step adds cheese that has now changed the output. It gets a little bit tricky in transactional and informational processes.
So you have to think about things like, Does this change the data? Did we add something to
are known data set? Do I send this to a different group? Does this trigger something further down? So when you're thinking about informational and transactional, really try to be mindful about what does this specific step do for the process
and that will help you tease out whether or not it changes the output in some way.
Um, or if the step that you're doing is one of the forms of waste
generally extra processing or overproduction when we're talking an informational, um in the last one is the customer must be willing to pay for it. So this is really important
and think about it for a second.
The customer must be willing to pay for it.
This is your organization's contribution. If you have no customers, you have no company. Happy customers equal happy Cos remember this. But also, if you were doing a bunch of stuff that your customer doesn't care about,
then that is extra processing. Because, remember, the definition of extra processing is
doing stuff over and above the customer's requirements. So if for some reason they um your process step does not meet old three of them, it is a non value add so drilling into the definition of the three. The 1st 1 is value. Add.
You want to keep doing this. This is your organization's contribution to the universe. This is what people come to your company
for. Keep doing it. This doesn't need to be define herbal. It's even better in my lean six Sigma world if it is measurable. But if they're if it meets the three criteria for value at on the previous slide, keep doing it.
if it does not meet one of the three or all of the three of the criteria on the previous light. Stop doing it.
Don't kid yourself into thinking that you have to do it for some reason. Or maybe that you're doing it in. The customer doesn't know that they want it. Stop doing it. This is where the opportunities and the gains and the benefits from lean six Sigma really start to come in When you start eliminating your non value at activities,
these things that we do that we don't know why we do them. Or maybe
they had value add 10 years ago. But they don't now just stop.
Um, the last category is yucky. It's ah, awful category, but it is a requirement. It is business non value. Add
So these are things that in order to run a company, you have to do things that your customers don't care about. So you're going to want to keep doing them
grudgingly. Um, the cliche for business non value add is regulatory requirements. Um, and the example that I used to give the the environment has changed a little bit. Is an exam a great example of the business Non value added an organization is payroll. Your customers
do not care
if you as the employees get paid. That has subsequently changed. So you guys know this idea of social responsibility and giving our business to companies that treat our employees. He's better. So payroll is no longer a good example. So we're going to stay with regulatory requirements. There is some sort of agency
that says you as an organization have to do these things.
That is not to say that all regulatory requirements are not our business. Non value. Add There are certainly quite a few regulatory environments that I, as a customer, will be happy to pay for starting off with hand washing of employees. I will pay whatever to get you to wash your hands when you come back to your work bench.
So business non value out is a yucky category because people have a tendency to have that emotional connection to their process steps and then say things like, Well, this is a business non value Add. We have to do this
because this is a business known value. Add, and then you end up instead of having a process map that has about 20%
um, value added about 80% non value. Add the parade Oh, principal, the 80 20 rule. You now end up with a process map that has about 20% value. Add about 75% business non value add and about 5% non value add. So it's
I don't like it is a category, and I try not to lead with it because it's very easy to become the dumping ground. Well, if we don't want to get rid of it for some reason, because we really like doing this extra work, we're just going to say it's business non value it. And now it's not touchable
with that. Here's a little quick flow chart as we're going through. Is it valuable? Remember, there are three categories. So is it rework? Yes, we don't want to do it. Does it change the output? No. Then we don't want to do it. It's probably over or extra processing. Are you required to do this?
business non value at, and there's really a lot of non negotiables in that category and is the customer willing to pay for it? If you have gotten through all of these decision points, your activity is value. Add if you have not, then it is non value. Add with the exception of your business, non value at activities, which is that
unfortunately awkward category.
So let's stop for a second and ask ourselves
what type of classification of value add is a heat lamp at a restaurant.
So this one's tricky because I'm a customer. I want my food to be hot, right? So I'm willing to pay for it. Wait, no, we did this out of order. Let's stop and think back for a second. Is it really work?
Well, let me not really. It's not like it was under a heat lamp before, but now it is.
I would actually probably argue that it is because you had food that was warm,
and now it is not warm, and you needed to be warm again. So this is re work. But
aside from whether or not I'm willing to pay for it, which is
actually realistically, not like, I'm not gonna be a kid about that one. Heat lamps, a gross. Whether or not I'm willing to pay for it and rather not, it's rework. Then the other question is, does it transform it in any way? And
I'm not about heat lamps because I think it makes your food robbery. So I'm gonna go with all of this is a non value add activity. But start thinking about the things that you do in your process. In that context of those three criteria.
So remember our customer defines value. All activities that happened within the organization are either value, add non value at or business non value. Add the criteria for value. Add is that it is not rework that it transforms the output
and that the customer is willing to pay for it. And as you are going through your day to day work,
start asking yourself, Is the tackiest the task that I'm doing truly value at? Because now we're getting back to identifying the waste in your everyday work as the yellow belt that you are. And remember, this tool is used in conjunction with your current state process map, which is our previous module. Um,
it's been a pleasure, Guys. Our next module is going to be a really quickly
refresher on the eight waste which is also used in conjunction with our current state process map. So thanks, guys. I'll see you next time in eight wastes
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