Using Value-Added Measurement for Continuous Improvement

Eric Bigelow, Polaris Industries

Many organizations use old-school measurement to gauge their success. However, these old-school measurements can create an illusion of efficiency. This illusion only requires a bare minimum of continuous improvement activity to maintain itself. This eventually causes the company to stagnate. Sooner or later the status quo is accepted as good practice.

These illusions are extremely hard to renounce because they are deeply rooted. They look good on paper or displayed on a wall and seem like good discussions at the daily meetings. Unfortunately, illusions are not real, and relying on them is an enormous mistake that could prove quite costly.

With that said, how can you recognize the true current state? What can you do to understand what is really happening? How can you be sure your projects and assignments are really adding value? 

These are very significant questions that require answers. I believe they can all be answered by measuring the value-added percentage of the processes in your organization. How is this done? First, form a team to break down every process on the manufacturing line into elements. Do not break it down into large chunks. It must be in finite detail. In fact, the more detail the better. This includes turns, picks, walks, alignments, searching, traveling, lifting, reaching, tightening, checking, inspecting, raising/lowering carriers, transferring material, opening boxes, opening totes and all periodical work. Basically, separate the value-added work from the non-value added work.

Unfortunately, space does not permit me to provide a list of extremely detailed examples. However, if someone walks to pick a component, the walk cannot be included in the pick. This separation into detail takes practice, but it will get easier in time.

Next, take your elements from each station and separate them into value-added and non-value added work. Then determine the percentage of value-added work for each process on the manufacturing line.

For example:

  • Cycle Time: 220 seconds
  • Value-Added Time: 50 seconds
  • Value-Added Percentage: 22-percent value-added work

Continue this through all of your processes on the manufacturing line and then average your findings.

To further illustrate this method, consider a five-station assembly line (a sprocket assembly) with the following value-added measurements:

  • Station 1: 22 percent
  • Station 2: 15 percent
  • Station 3: 21 percent
  • Station 4: 14 percent
  • Station 5: 19 percent
  • Total Value-Added Percentage: 18.2 percent

This 18.2-percent number sets the measurement for everyone. It should be posted on the shop floor for all to see. As a plant manager, you could use this data to set the annual goal to 22 percent. Everyone supporting the sprocket assembly line would then be responsible for raising the value-added percentage by 3.8 percent.

Be sure to make the goal achievable. You want employees to succeed and celebrate their success in order to encourage, motivate and create a good attitude for the next annual goal. By doing this, you establish a new standard that speaks to everyone and force individuals to think outside the box, challenge the status quo and truly go after waste. You also set the stage to change the culture positively.

Keep in mind that every solution must be thought about in the value-added sense. For instance, an engineer cannot just come out to the line and add a jig to eliminate an alignment problem. A jig must only be implemented as a temporary countermeasure because it would increase the non-valuable work. Nothing should be done unless it is a justifiable temporary countermeasure or increases the value-added percentage.

For example, say the current value-added percentage of the sprocket assembly line was 18.2 percent in 2013. After a switch is made to MY2014 Sprocket Assembly, the value-added percentage decreases 2 percentage points to 16.2 percent. Obviously, design did not think about assembly when developing the next model year.

Another example would be when a few new components are added to the assembly because the company wants more options available to the customer. While the options are not included on every model, when they are installed, the operators have to struggle and fight with the component to get it to fit. The value-added percentage goes down 1 percentage point to 17.2 percent. Once again, design did not consider how the option would negatively affect assembly.

The value-added measurement also has extreme value in shop-floor kaizen. Individuals can use value-added percentage increases to communicate the benefits of their kaizen to management. If the value-added percentage does not increase, then either it was not the right project or perhaps the kaizen wasn’t directed properly.

Measuring the value-added percentage of processes can organically improve design, flow, delivery, quality and downtime. Admittedly, it takes a little time to perfect, but it can make a positive impact throughout an organization. 

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About the Author

Eric Bigelow is an industrial engineer and continuous improvement professional. He is currently a lean coordinator located in Spirit Lake, Iowa. He has trained numerous individuals in lean manuf...