Process and Activity Types

All of the activity in a business can be categorised into different types. This helps people to see what needs to be focused on and what eliminated, as it does not add value.

The image above shows a generic process model. It can either be applied at a business level or right down to a local level. The model includes two types of process:

• Core - these processes directly add value to the customer - when they are oprated, the output to the customer is changed. In a traditional supply chain manufacturing business, the materials come into the process from the left side, and are operated on to achieve the product that is received by the customer.
• Enabling - these processes are required by the business for it to operate and maintain the capability to deliver its core activity. They include managing people, finance, assurance, IT etc.

Within any business process, however classified above, activities either add value to the business or waste resources, time and cost as follows:

• Value Add, or "VA" activities - these are the activities in core processes that directly add value to the output
• Non Value Add, or "NVA" activities - these are activities that enable or support the value add activity, such as the enabling activities above
• Waste - this is all other activity, such as defects, waiting and moving around, that do not add value or support the delivery of value creation in the business. Waste activity is everywhere, in the Core and Enabling, and if not checked creeps back in to even the best processes

Identifying which activities are which is generally straight forward. Waste activities are categorised into "The 7 wastes"→.

Generally the strategy for dealing with different activity types is:

• Maximise the amount of VA activity in the business - it is this that satisfies the customer and generates income
• Optimise the NVA activity - this is an essential overhead that needs to be lowest cost to deliver the enablers the business requires
• Eliminate waste - this is just throwing money and resources away, and needs to be systematically removed