Non-value added (NVA) activities are those that do not add value to the product or service the customer is purchasing. These products or services add to the over all cost but do not enhance the value
To learn more about NVA, check out the blog: What is Added Value and Non-Added Value
NVA comes in either direct labor (labor that is directly related to the product or service) or direct materials(materials that is directly related to the product or service). NVA is added cost to the process or product that the customer does not perceive value for.
The benefits of removing any NVA activity, you will be able to:
Become more efficient in the process
- Creating products and service quicker.
- Improving employee satisfaction and performance.
- Decrease safety risk.
- Minimize rework.
Increase Customer Satisfaction
- Improved quality products and services.
- Quicker output of product and services.
Increase in Revenue
- Increase in productivity means being able to provide more products and services with the same amount of resources.
- Increase in customer satisfaction means more referrals.
It can be difficult to know if a activity or product has value to the customer. To determine if an activity is has no added value to the customer, ask the following questions:
- Does the steps transforms the item to completion? Meaning each step in the process gets the product or service closer to being finished.
- Is product or service done right the first time? That means that there is no error in the process that would cause “rework”.
- Is the customer willing to pay for that additional process or product? Removing this process or product will not decrease the perceived value. Instead, your customer will not notice that that the product or process is already removed. Another evaluation is if your competitor has already removed the product or process and their sales are the same or even more.
Removing non-value added activities from your product or service is not just suitable for your customer but it has benefits for you and your business that go beyond increasing revenue.
Want to learn more about how to increase your revenue by removing NVA activities then follow the link below to set up your 15 minute business evaluation call.
It’s free and it’s full of impactful insights to make your business more profitable.
Just click the box below, schedule a time that best fits you.