Lessons for Life
5. Determine value and non-value added.
“Value” is defined by the customer; it is the aspects that the customer pays for. Everything else is “non-value added.” For example, a can of Coke™—the only value in a can of Coke™ is the brown, sugary water. Everything else is not of value to the customer. How the can is made, where it’s made, how it’s shipped, stored, and sold is irrelevant to the customer. They just want the same, tasty, brown, sugary water. Every business has to define value and non-value for itself. Once you determine this, work hard at minimizing or eliminating all non-value-added activities.
Task: Go through the supply chain of your business looking at each critical step in making a product or delivering a service. Involve all team members. At each step ask, “Why do we do this?” Ask it five times. Try to get to the base of understanding precisely what is valued by the customer. Whatever is not valued should be eliminated or minimized immediately.