Measuring and

Value Adding

Regardless of industry, manufacturing is about adding value to a product. However, measuring the value added to a product in process has proven challenging.

Many manufacturers measure non-value adding activity instead, and use that as an indirect measurement of value. Others rely on the information generated by their ERP or accounting systems, but this data is not delivered in real-time and is often not empirical.

Value-Adding Activities (VAA) can be defined as any action that adds value throughout the production process. However, each industry measures value differently, which is why we have listed some industry-specific examples below.

Industry Examples of Value-Adding Activities

To measure value-added activities, identify what actions add value to the product

Welding Industry

For those in the welding industry, it is not uncommon for your value-adding activity to be the actual weld-time or the actual number of spot welds or tack welds made.

CNC Machine Monitoring

Within the CNC industry, spindle time is usually an accurate indication of value adding activity. Axis in motion, “machine in cycle” and “end of cycle” are often good secondary indications.

Other Industries

Through-beam sensors on a conveyor, part present sensors, test complete outputs – all could be indications of value adding activity being performed by machines or manual stations.

Measuring Value

Value-added activity is measured either by:

  • Tracking Time (typically Minutes, but could be hours or seconds)
  • Counting Cycles or Parts (Cycles / Time or Counts / Time)

Each industry will have a primary and secondary measurement for value-added activity which will always be measuring time or counting cycles.

Tracking Time

Measuring Time

Typically, the tool and die industry (CNC machines), custom shops, tooling, and mold shops measure using time as the primary method of measurement for an input such as spindle or axis. Measuring time is typically measured as a percentage value.

To measure time as a percentage value, you typically use the following equation:

Running Time (Min) / Total Time 

Running Time is made up of a sum of multiple run time segments, followed by one or more periods of inactivity, followed by more running time and inactive segments.

If you were to calculate “uptime” or “utilization” using the time option, the equation would look like:

Uptime (Shift)= Total Spindle Running Time (shift) / Scheduled Time (shift)

Uptime (last 60 minutes) = Total Spindle Time (last 60 minutes)/60


A secondary measurement for time can be:

  • Spindle Running reported in minutes (for defined period)
  • Axis in motion (as an alternative to spindle)
  • M60 (Code-end of program) to count completed cycles
  • “In cycle” output (when available) to determine total VAA

Counting Cycles

The auto industry, production shops, injection molding, filling stations, bottling stations and presses performing repetitive operations typically use the cycle option as the primary method for measurement.

Measuring cycles is typically measured by Rate using the following equations:

Rate = Cycles / Period of Time

Uptime = (number of minutes where cycle counter > set point)/time period

If secondary signals are available, yield can be determined:

Yield = Output (downstream) / Output (upstream)


A secondary measurement may represent value-added uptime using the input defined as count to determine what percentage of the day the machine was producing cycles in a value-added state.

Visualize Non-Value-Added Activity

ShiftWorx uses the Narrative Module to measure and visualize non-value-added activity using reason codes and reporting tools. Reason codes can be put in categories to help interpret the data and gain insights quickly.

Reasons for a machine not running generally fall into one of the following categories:

  • Set up
  • Scheduled and Unscheduled Occurrences
  • Administration or Quality Reasons

Manufacturers can typically expect to see additional productivity improvements of 15% or more.

Visualize Value-Added Activity

The key to ShiftWorx software’s approach is to first make value-added work measurable and visible to everyone. This provides empirical data and makes everyone accountable for their “Value-Added Activity” today, this shift, this hour, or this period. Measuring and displaying value-added activity typically leads to productivity improvements by virtue of the ‘Hawthorne Effect’.

Everyone is accountable to themselves and their peers first, and then to management.

Accountability from measuring value-added activity typically results in improvements of 10% or more.

Establishing Baselines

Every manufacturing process has its own rhythm and cadence and it is important to know what “normal” or “healthy” looks like.

As far as Running Time, Uptime, or Utilization Time is concerned, a higher number is not always better. For instance, an old machine, running at a slower rate, will likely have a higher uptime and utilization time than a new machine. It is important to know why a machine is not running, and why its numbers may be low, whether it’s maintenance, no work scheduled, completed jobs early, or being set up for a new job.

Knowing the VAA (value added activity) of the machine is important. Knowing the reasons for the non-value adding activity is equally important.