Value Added and Non Value Added Activities

Published: 2019-08-28 08:00:00
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Value added activities are the activities that increase the worth of a product or service. A product or service is of benefit by either changing its form, fit, or function, (Kilpatrick, 2003). Some of the value-added activities include rebranding, advertising, investing in raw materials, giving of rewards, incentives, appraisal, and gratuities. Value adding activities to some extent are expensive means since they entail heavily investing on an idea, an already existing product or service to gain a breakthrough in the market or increase its returns.

On the other hand, non-value added activities are practices conducted on products and services as a routine or a means of reviewing. In return, the activities of non-value added activities do not change the form, function or fit of the product or service. The non-value added activities include inspection, review, quality control and rework of the product or service, (Kilpatrick, 2003).In either way, the non-value added activities is an expensive endeavor considering that the activities incur the cost of both time and resources but at the end of it do not bring back any value.

In similarity, both value and non-value added activities incur costs of both time and money. Besides, in both operations, the customer pays for the product or service regardless as to whether it was through an added or a non-added activity. Ironically, both activities are a requirement towards business management. Firstly, nothing is permanent, and hat may seem to be of value today may not be of value tomorrow. In the same way, an activity that adds value to a product or service may not always be the case in the future. As a result, non-value adding activities are needed to assist towards adding value to a certain product or service. For instance, companies dealing in a processing of drinks will need to regular inspect and review their product.

In such a case, such a company will need to collect information and evaluate how the product of service is performing to the final consumer. Consequently, upon assessing the information then the company develops a strategy towards ensuring and retaining their market space. The company does so by coming up with value added activities and in the process, the non-value adding activities will be intermingled to revive and retain the market share amidst stiff competition.

In a case study, Volkswagen manufacturing company involved in a scandal that entailed the manufacture of cars that had high engine consumption, which was both an issue to the client and also to the Environmental Protection Agency, (EPA) (Russell, 2015). In return, the company had to go back to the field and identify all the customers in the use of such cars to compensate them with the low engine combusting cars. As a value adding activity, the company had to come up and manufacture cars with a low engine combustion hence adding value in the form of rebranding and advertising of their new product. As a non-value adding activity, the company had to conduct a survey and review the usability of the initials cars produced as well as compensating to the customers. Similarly, to maintain their reputation, the company had to pay a compensation value to EPA for causing environmental hazards.

Conclusively, value adding and non-value adding activities are to some extent complementary. In either way, the non-value adding activity can be used to bring value to a product or service employing reviewing and inspecting the product and hence strategizing on advertising, rebranding or tipping. The result entails the increase in revenue and profit towards the management of the business. Hence, both non-value and value added activities are also utilized as tools to gauge a certain product towards the management of the business and hence enable the product or service to break through in the market by means of adding value.

Reference

Kilpatrick J (2003), Lean Principles, Utah Manufacturing Extension Partnership.

Russell Hotten, (2015). Volkswagen: The scandal explained. BBC New retrieved on 04April 2016

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