In: Accounting
Value added activities are necessary to remain in business. Nonvalue added activities are defined in your text as “All activities other than those that are absolutely essential to remain in business.” Describe for the class some examples of value added and nonvalue added activities that you observe in your workplace, or even your home or a business you frequent. What suggestions do you have on how to reduce the time or money spent on nonvalue added activities?
Value Added activities are those which add 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. In simple terms, value is something the customer is willing to pay for. Some examples of value added activities at a workplace are designing / assembling products, ordering raw materials, preparing plans, innovating, etc. Some examples of value added activities at home are buying groceries, cooking, painting the walls, etc
Non-Value Added activities 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. Some examples of non-value added activities at a workplace are waiting times, unnecessary movement of goods, rework due to defective manufacturing process or product, unnecessary paperwork/red-tape, idle machinery/equipment, backing up of computer data, etc Some examples of non value added activities at home are idle white goods lying around the house, vegetables turned rotten, uneaten food going waste, etc
The suggestions to reduce the time and money spent on nonvalue added activities are: