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Process value analysis
5/11/2005
Process value analysis is a qualitative analysis procedure that can quickly and significantly improve your processes. It allows an improvement team to identify specific process steps that may not be adding value, with the goal of saving time and resources.
After a process is documented using the S-I-P-O-C and process mapping tools, you can quickly analyze the value of each step of the process from the perspective of people who are served. Three categories are used to describe types of value that a process step may have:
- Value added to people served: steps that directly impact the satisfaction of the people served
- Value added to operations: steps that support the ability to deliver services to the people served
- Non-value-added: steps that could be eliminated or changed without harming service levels or the organization
1. In order to assess whether the steps in your process have value to the people that you serve, ask:
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Is this step required by the people served by the process?
- Are those served willing to pay for this activity?
An activity can be described as adding value for the people served only if:
- the people served recognize the value
- the activity specifically impacts the service requirements of those served
- the step is necessary to meet the timelines and expectations of those served
2. In order to assess whether the steps in your process add operational value, ask:
- Could this activity be eliminated if some preceding activity were done differently?
- Is there a risk if this activity is eliminated?
- Could any existing technology eliminate this activity?
- Could this activity be eliminated without impacting the quality of our product or service?
- Does this activity fulfill an external regulatory requirement?
- Could this step be made more efficient? Is it done right the first time or does it need to be repeated?
An activity adds operational value if it is not a customer value-added activity and is required to:
- sustain the ability to perform value-added activities for the people served
- meet contractual, legal, or other regulatory criteria
- meet health, safety, environmental, or personnel development criteria
3. In order to assess whether the steps in your process are non-value-added, ask:
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Does this activity add value for the people served or operations?
An activity is ‘non-value-add’ if it does NOT add value for either the people served or for operations. Designating a step as ‘non-value-added’ means that it warrants further analysis to determine whether it should stay the same.
Doing the analysis
Use a table format like the one below along with your process map to review each step of your process. List each process step in the far left column of the table in the order that they occur. Next, review each step against the definitions of customer value added, operational value added, and non-value added, and classify each step as appropriate. For each step, place one check mark in the appropriate column.
| PROCESS: OPENING AN ACCOUNT |
| Activity |
Customer value added |
Operational value added |
Non-value added |
| Request account to be opened |
X |
|
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| Gather information |
|
|
X |
| Qualify request against legal compliance |
|
X |
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| Authorize request |
|
|
X |
| Request review |
|
|
X |
| Send incomplete requests to account rep |
|
|
X |
| Obtain account information |
|
|
X |
| Complete memo |
|
|
X |
| Request set up |
X |
|
|
| Account manager review |
|
|
X |
| Account manager approval |
|
|
X |
| Risk manager review |
|
|
X |
| Risk manager approval |
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|
X |
| Notify account manager |
X |
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| Request authorization key |
|
|
X |
| Data entry to system |
X |
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| Data formatted to open account |
|
X |
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| Distribute to various departments |
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|
X |
| Account open |
X |
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| Student receives notification |
X |
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For each item that is checked as ‘non-value added,’ critically assess whether that step could be completely eliminated or at least modified. Eliminating steps that don't add value allows processes to get faster and more efficient without impacting quality or service levels.
Tips
- When assessing each step, be sure to include participants who are directly familiar with the process as well as one or two outside voices to help challenge assumptions.
- Give each step a hard look. Often, many steps in a process have been performed for so long that they are simply accepted as important even if they are not.
- Teams should continually challenge assumptions about what is important and what is not.
- The ‘big learning’ occurs when a step is deemed non-value added. Do not get caught up in whether a step adds value for the people served or for the operation. Further, a process does not need both types of value-added steps in order to be legitimate: it's okay if one column is blank.
- Expect sensitivity to classifying the work people do as ‘non-value added.’ In order to foster a robust dialogue that challenges the status quo, it is useful to provide examples of the type of steps that may be non-value added, such as:
- counting the amount of work
- inspection and checking
- sorting work
- logging information
- checking calculations
- reviewing and approving
- moving and setup
- monitoring work
- stamping
- any type of rework
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