Business bits - Value Adding, NVA activities MUDA TIMWOOD

To:      All

Subject :  Value Adding Actitivies;  NVA, MUDA TIMWOOD

1  Many have heard about value added tax.  It is now at 12% (in lieu of the sales

    tax)   What is it?

2.  It is an activity that adds value to a raw material. It is a process.  It converts

     ordinary water to mineral or distilled water;   converts palay from palay to rice

     uncooked rice to cooked rice.  Correspondingly at each step of the way, price

     goes up.

               Say 1 kg of palay     -      P5.00 kg

                       l kg of milled rice     P35.000

                       1 cup of rice              P10.00 maybe you have 10 cups/kg.

3.  This is what you call the value stream.  And businessmen can enter into

      any one of them depending on his resources and skills;

4.  There is no such thing as break even or same price of input and output

      at the minimum BIR asks for takex as 2% CGT if you experience losses on

      the first two years.    You pay the wages the rent, the transport, cost of               selling..  Thus you can not buy ball pen for two pesos and sell this for two

     pesos also

5.  Thus any staff, any process must align itself to value adding, all others,

     none value adding are wastes and must be eliminated

6.   NVA can be due to regulatory requirements -  eg filing of reports, operating

      anti pollution equipment hiring a Pollution Control Officer.  (This is supposed

      to VA for the planet -  a long term insurance for earths viability

7.   Say in fixing flat the activities that are VA are:

     1.  Removal of nuts

     2.  Raising the vehicle

     3.  Removal of the interior

     4.  Looking for the hole

     5.  Patching the hole

     6.  Reinstallation of the exterior and interior

     7.  Reattachment of the wheel lug nuts

    NON VA:

   1.   Paper works for the repair

   2.   Getting the tools

   3.   Walking to and fro the  vehicle

   4.  Smoking

   5.  Answering the CP

8.  We must make robust the process to focus work on VA or even mechanize

  1.  Buy a a hydraulic  jack

  2.  Acquire a pneumatic tool for nut removal

  3.  Acquire a pneumatic machine for for removal of tire bead from the

       the rim;

  4  Use dry patch, rapid drying glue for the patch up of the hole/puncture

   These enables:

   1.  Fast turn around of cases;

   2.  More revenues

9.  What are the activities that are neither NVA nor VA?

     They are called MUDA and have acronym of TIMWOOD

     1.  T - ransportation -   repeated handling of materials, single touch only

          Dispersed location   Thus tools must be near work place   The Central

          parts storage is obsolete.;   delivery at work station is OK

    2.  Inventories -   too much using Just In Case rather than kanfban pull syste

          Just In time (works in a clustered industrial park as Toyota or Samsung

   3.  M - otion.  Irrelevant motion after an industrial engineering study must be

        reduced or eliminated

  4.  W - aiting.   For other parts for the PO, for the signatures, for late parts

       arrival, for the late workers, reports,  etc.  Thus we emphasize punctuality 

  5.  O - ver production -   Products that are left unsold consume storage space

      (a huge waste in high rent or high lot price.)  If money is borrowed it                    represents huge financial burden.  if financed by equity, this represents

      huge lost income opportunityes

  6.  Over processing  -  arises from lack of trust and unreliable staff.   If employees cant have trustworthy or reliable output, we have to double

check every thing they do.  Huge labor expenses

  7.  D -  elay  -  start, construction, purchasing of equipment and  materials

       needed.  Delay in docs    Waste represents losses

 For us to be wealthy and or have our wages paid:

1.  Focus more on value added activities especiallyy those that are high value

     addes;

2.  Eliminate TIMWOOD muda.  

Its either you are with us to show your gratitude  (paying forward)

or against us (our enemies)