Naomi owns a plastic molding company and makes signs for companies in standard sizes. From the information in the attached image, what is the value added time for each step in her process?
What does value added time mean with respect to operations efficiency and waste?
A. Attached is the completed process chart that shows all of Naomi's steps to make a sign:
The total time it takes Naomi to produce a sign is 57.65 min.
To fill this chart out you simply list each of Naomi's steps and determine what kind of operation she's doing in each; if she moves her product to a new station, for instance, that activity will fall under T for "Transit."
You will also need to list the distance covered in each step and minutes taken to complete each step. Most of Naomi's steps were straightforward in describing the number of minutes each took, however, some listed 3 seconds or 6 seconds, and for those you must convert seconds into minutes (3 seconds equals 0.05 minutes).
B. To determine the value added time, you must first determine which of Naomi's steps added value to her product. Ask yourself, "which steps contributed to what the customer is willing to pay for in the end product?" Think of value added time as something that is examined solely from the customer's point of view. Value added time, therefore, will not be made up of the time it takes for Naomi to, say, clean her work stations after completing a sign. In Naomi's process chart, we can eliminate all of the 'T', 'D', 'I', and 'S' steps, as none of these contribute to the construction of the final product. All of the Operation steps - the steps taken to actually produce the sign - will be counted only.
Adding the minutes it takes to complete each of these steps we get:
5+10+7+7+2+1+3= 35. Naomi's value added time is 35 minutes.
To calculate the value added ratio (time spent adding value to the product compared to completing the product) divide 35 min by 57.65 min. This gives you the value added ratio of 0.61%.
C. Value added time is important in regards to operations efficiency and waste because manufacturers need to focus on creating a quality product in as little time as possible. Have you ever heard the old adage "time is money"? This is where it applies.
Naomi will want to ensure that every minute she spends making her product earns her more money. Value added time represents the number of minutes in her entire process in which she earns money for her work. Therefore, manufacturers like Naomi will want to decrease time that does not earn them money (waste), such as transportation or delays. In Naomi's case, if she, for instance, could find a resin that set faster than 17 minutes, she would be able to improve on her current value added ratio and be able to use her freed up time to create more inventory.