In every business, processes are defined as activities meant to fulfil objectives. These steps may contribute towards the overall goal of the business process. To maximize value and minimize waste, you need to know the following three types of activities.
Value-Added Activities:
Value-added activities are tasks or processes that directly contribute to creating value for the customer. These activities enhance the product or service and are essential for meeting customer needs or expectations. They involve transforming inputs into outputs, which customers are willing to pay for. Value-added activities increase the utility or desirability of a product or service, making it more valuable in the eyes of the customer.
Example with a Startup:
Let’s consider a startup that manufactures custom-made bicycles. The following activities would be considered value-added:
- Designing unique bicycle frames based on customer specifications.
- Assembling the bicycle components to create a customized product.
- Testing the bicycles for quality assurance and safety.
- Providing after-sales support and warranty services.
Non-Value-Added Activities:
Non-value-added activities are tasks or processes that do not directly contribute to creating value for the customer. These activities consume resources, time, or effort but do not enhance the product or service in the eyes of the customer. Non-value-added activities are often considered wasteful and should ideally be minimized or eliminated.
Example with a Startup:
Continuing with the custom bicycle manufacturing startup, the following activities would be considered non-value-added:
- Excessive waiting time between production steps due to inefficient scheduling.
- Overproduction of bicycles beyond customer demand.
- Unnecessary transportation of materials or components within the manufacturing facility.
- Inventory management processes that lead to excess or obsolete stock.
Business Non-Added Activities:
Business non-added activities refer to tasks or processes that do not directly contribute to the creation of value for the customer, nor do they contribute to the internal operations or efficiency of the business. These activities are not essential for delivering the product or service, and they do not improve customer satisfaction or operational effectiveness.
Example with a Startup:
In the case of the custom bicycle manufacturing startup, the following activities would be considered business non-added:
- Excessive administrative paperwork unrelated to customer orders or production processes.
- Unproductive meetings or discussions that do not lead to actionable outcomes.
- Redundant or unnecessary documentation procedures.
- Excessive bureaucracy or hierarchical decision-making processes that slow down innovation or responsiveness.
Identifying and minimizing non-value-added and business non-added activities is crucial for startups and businesses to improve efficiency, reduce waste, and focus resources on activities that directly contribute to customer value and business success.
