Non Value Adding Activity

“That’s Non-Value Adding Activity”

If I’m being honest, I’ve never heard anyone outside of a Continuous Improvement function say that – unless they were trained in Lean Six Sigma (LSS).

And yet it is fundamental to improving your product or service; either the speed in which it’s produced, the cost in which you produce it or the quality in which it was produced.

Value Adding’ is a task that is taken toward a service or product that adds value to the end state of that product. Ultimately you need to ask yourself the question, is my customer willing to pay for the service this area is providing? If the answer to that question is no, then it’s a ‘Non-Value Adding’ step.

Before you fire your entire legal and marketing department, you need to consider if the Non-Value Adding activity can be avoided or not. Sure, you can release the legal department, but it is unlikely your regulators will appreciate that… there’s probably a detrimental impact to your bottom line. We call this ‘Value Enabling’.

It is important to recognise why we remove ‘Non-Value Adding’ activities, and the fundamental reason is to create capacity for people to work on ‘Value Adding’ activity – enhancing customer experience, increasing revenue by driving sales and of course, retaining customers.

Let us look at a small service delivery process for simple complaints:

Step 1:     Customer sends email articulating their complaint
Step 2:     Agent receives an email, takes note of the key points (4 minutes)
Step 3:     Agent loads CRM system and inputs key data points; name, address, key points for complaint and categorisation (9 minutes)
Step 4:     An agent calls the customer to discuss the complaint and seeks resolution (15 minutes)
Step 5:     Agent completes acknowledgement letter (12 minutes)
Step 6:     Agent prints and sends a letter (10 minutes)

The total time here to acknowledge a complaint is 50 minutes and yet the only value-adding part of this process is the actual conversation with the customer. The rest is waste.

Let’s take a closer look:

Step 1:     No impact on business
Step 2:     Agent noting down information adds no value to the required outcome of the process
Step 3:     Agent copying/pasting from one system to another adds no value to the overall process
Step 4:     ‘Value Adding’ activity
Step 5:     The agent sending an acknowledgement letter to the customer adds no value to the process, as the customer is already aware of the complaint being acknowledged from the call. However, this is a regulatory requirement, so it’s waste that cannot be removed.
Step 6:     Agent printing and sending the letter is part of the same regulatory requirement but looking at the process – there will likely be a significant waste here due to a requirement to ‘walk around the office from one machine to another

So… what’s the solution?

You could use some Lean thinking and digital transformation to convert this into a more effective, lean process.

Step 1:     Give the customer a web form to complete with mandated fields; these will be stored in a SQL database
Step 2:     The agent receives the complaint in their queue with all the mandated fields completed in CRM (2 minutes)
Step 3:     The customer is prompted to call the customer and is offered likely resolutions based on previous complaints of this nature (15 minutes)
Step 4:     CRM prompts to ask if the complaint is resolved or still open
Step 5:     If a complaint remains open the CRM system will automatically produce and print the acknowledgement letter. You can either outsource the letter distribution or print automatically in a mailroom.

The new turnaround time for the process is 17 minutes – a 33-minute reduction on the original time. You’ll notice we haven’t removed all the ‘Non-Value Adding’ activity – but we have taken out what we practically can.

But the real difference here is that the agent is now focused on making calls to resolve customer complaints – rather than completing complaint admin.

Of course, this is just an example. In the real world, we’d also look at the root causes for complaints in the first place and look to reduce or eliminate the failures that cause this work to arrive.

Got a similar problem? We’d love to talk to you about it.