Determining NVA Value in a Product

sites@tailorbrands.com — Mon, 24 Feb 2025 15:02:07 GMT

Discover how a client with a vast SKU portfolio streamlined their production. Their linear assembly line boasts perfectly balanced stations, while their cellular setup for semi-finished products faces tougher NVA challenges.

Determining NVA Value in a Product

Measuring NVA on the Assem bly Line

Determining NVA on an assembly line is a relatively straightforward process, though it does require a period of careful observation. When production stations are well-organized with clear assembly instructions, marked indices, and helpful visual aids, it is essential that all necessary materials are prepared in advance according to a frozen plan (typically set for several hours) before any NVA measurement is taken.

Interruptions during the measurement process can lead to significant issues. For example, if “rush orders” or priority tasks are introduced unexpectedly, the process becomes disrupted. Operators may leave their stations to prepare a different product, which introduces additional NVA. While this may seem obvious, it is a challenge not every production line manages to avoid.

Ensuring Operator Efficiency

Operators play a critical role in the production process, and it is the responsibility of management to design workflows that maximize value-added (VA) activities. Clear instructions and timely availability of prepared materials are key to ensuring that operators focus on VA tasks rather than being sidetracked by NVA activities. Without these elements, the production structure can easily tilt towards inefficiency.

Measuring NVA in Cellular Workstations

Measuring NVA in cellular (or semi-automated) workstations—which are often not utilized at 100% capacity—is a more complex task. Once you have mapped out all the operations in the production flow (assuming you’ve mastered process mapping—if not, that could be a topic for another post) and defined clear standards for semi-finished or finished products, the next step is proper scheduling and operator assignment.

Optimizing Cellular Production

There are many types of production systems and machinery, but here the focus is on cellular setups in semi-automated production. In these environments, not all operators are occupied throughout their entire shift, which opens up the possibility for overlapping tasks and cooperative work across machines.

Effective machine placement can allow a single operator to manage several machines concurrently. While this might seem self-evident to some, it’s important to note that not every professional has experience in every industry. Therefore, planning the assignment of one operator to multiple machines must be done carefully. For instance, rather than assigning one operator to manage one machine from each cell, the organizational structure should be clearly delineated. An example structure might be:

Cell 1:

– Machine 1, Machine 2, Machine 3

Cell 2:

– Machine 4, Machine 5, Machine 6

Cell 3:

– Machine 7, Machine 8, Machine 9

In a basic setup, the BOO system should record a single combined time (VA + NVA) for the flow of each cell—Cell 1, Cell 2, and so on. By imposing a structured product plan, you limit the possibility of increased NVA at any given station.

Mixed Production Flows and Staffing Considerations

When dealing with mixed production flows across machines, the key factor is whether the production line is fully staffed. The extent to which NVA is generated in these scenarios depends significantly on staffing levels—a topic that certainly deserves a more in-depth discussion in its own right.

Conclusion

By carefully measuring and managing NVA in both assembly line and cellular production processes, companies can better focus on maximizing value-added activities. Clear operational instructions, well-prepared materials, and structured scheduling are essential in minimizing NVA and ensuring smooth, efficient production operations.

Product cost (VA, NVA) vs. Investment CAPEX

Mon, 24 Feb 2025 14:56:57 GMT

Product cost (VA, NVA)

Determining Components for Cost Reduction Targets

The fundamental element in setting cost reduction targets is identifying the components that make up the entire production process.

While the basics are straightforward, as you delve deeper, things can become murky. We illustrate this with an example drawn from our own experiences, highlighting how to approach the task more effectively.

Consider a company where initial technological times were measured roughly—a very positive first step. Determining the basic times for Value Added (VA) and Non-Value-Added (NVA) activities as a combined metric is useful for an initial analysis of product profitability, as well as for establishing total labor costs and productivity.

Below is a sample chart that demonstrates how the time consumption for executing a product should be segmented. There is a clear separation between VA and NVA, meaning you know exactly what constitutes the labor cost components of a product.

Example Breakdown: Detailed Production Time Analysis

For the above example, the total production time is 2010 seconds , broken down as follows:

Value-Added (VA) Time: 1200 seconds (59.70%)
Non-Value-Added (NVA) Time: 810 seconds (40.30%)

Returning to the main discussion, if only the overall production time is used in product calculations—without a detailed breakdown—it becomes extremely difficult to estimate potential savings in areas such as transportation or quality control.

Therefore, it is crucial at the initial stage to establish the correct measurement method and determine the appropriate size of the reference sample.

CAPEX – Calculating Potential Investment Based on NVA

CAPEX, or Capital Expenditure, refers to the investment outlay for purchasing assets. Often, mid-level and senior managers must forecast investments using only limited data, especially toward the end of the fiscal year.

While this isn’t the only or most precise method, it’s one of the simplest and fastest ways to get a rough estimate. One effective approach to planning ROI is to target the largest component of Non-Value-Added (NVA) activities—in this case, internal transportation. For our example, internal transportation takes 710 seconds, which is 35.23% of the total production time. With this insight, you can quickly gauge the potential budget for future investments.

Example Calculation:

Daily Production Employees: 100
Average Monthly Salary: 6,580 PLN
Monthly Employee Cost: 658,000 PLN
Annual Employee Cost: 7,896,000 PLN

Based on our breakdown:

Value-Added (VA) Costs (59.70%): 4,713,912.00 PLN
Non-Value-Added (NVA) Costs (40.30%): 3,182,088.00 PLN

Considering that some companies view a 2-year ROI as attractive, this example suggests a CAPEX of approximately 6 million PLN for close-range transportation equipment. It’s important to note that internal transportation can’t be entirely eliminated—someone must load and unload products or semi-products on the line. However, if NVA could be reduced to 10%, the potential CAPEX would be around 2,386,560.00 PLN for a one-year payback period, or 4,773,132.00 PLN for a two-year payback period.

Calculating potential CAPEX in this way is invaluable for budgeting investments and assessing production potential. In upcoming posts, we’ll explore in greater detail how changeovers impact NVA and the planning implications they bring.

Thank you for your time, and please feel free to get in touch with any questions or comments.

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Determining NVA Value in a Product

Product cost (VA, NVA) vs. Investment CAPEX