Work out value added ratio instantly with clear inputs, formula shown and shareable results.
The value-added ratio is value-adding time as a percentage of total lead time and is typically under 5% in unimproved processes. Separating necessary non-value-adding work from pure waste shows how much of the gap is realistically attackable, and the target ratio converts an aspiration into a lead time number.
Value-added ratio
VA ratio % = value-adding time x 100 / total lead time
Target
Target lead time = value-adding time x 100 / target ratio %
Only steps that physically transform the product in a way the customer would pay for. Moving, counting, storing, inspecting and reworking do not qualify, however necessary they may be.
It signals opportunity rather than incompetence. Even excellent operations rarely exceed 20-25%, because some waiting is inherent in batching and shared resources.