Distinguish between necessary and unnecessary nonvalueadded

Distinguish between necessary and unnecessary nonvalue-added activitites. Explain how you differentiate them. GIve examples. Can a non-value-added activity in some places be considered necessary, in other places unnecessary? Explain

Solution

Necessary non-value added activities are the activities that do not add any direct value to the product or service but are essential for carrying out the other operations. Or in other words, if they are eliminated in the systems, they will affect the other processes.

Unnecessary non-value added do not add and direct or indirect value to the process or services.

For example: Holding Inventory is a non-value added activity, but it is necessary as it add value to the service delivery by providing fast delivery to customer and handle the variation in demand and supply chain.

Yes, it depends on situation. For example, holding inventory in unnecessary non-value added activity if the demand is very well defined and carries no variability