Question

what is the difference between a value-added activity and nonvalue-added activity? Describe at least one example of each category and include in your description why your example is value-added or nonvalue-added. Be sure to state the type of business the activity is related to (for example, restaurant, bookstore, auto dealer, etc.)

Answer 1

Value Added activities: These activities are those which adds value to a business process or product and for which customer is willing to pay. Value Added activities help in converting a product from a state of raw material to a finished product in the least possible time, at minimum costs. It aims at completing a business activity correctly the very first time, and helping the business to deliver the product or service while fully conforming to customer requirements or specifications.

Examples might include drilling, piercing or welding a part: These are value Added Activities because they are going to transform the product from raw material into finished goods that the customer is willing to pay for. The industry from this example is SHeet Metal Industry

Non-Value Added activities: These are those which do not add any value to the product or service but are an inherent part of the process. Customers are not willing to pay for such services. These activities prove to be a burden on the organization and affect its efficiency. Valuable resources in the organization are engaged in completing these activities despite the fact that such activity is slowing the progress of the organization.

Examples might include extra motion or transportation involved in walking from one area of production to another, or any rework caused by defective products. The activity is Non-Value Added because it is creating extra inventory.Customers are not willing to pay for such services. The bussiness type of this is any kind of manufacturing industry.