About 30% of the revenue the state receives precisely thanks to the introduced value added tax (VAT). This concept is inextricably linked to taxation. Added value is the basis for budgeting, universal and absolutely objective. It practically does not affect the competitive sectors of the economy.
By the definition of "value added" is meant all kinds of technological operations that add value to the product in the eyes of the consumer. In other words, the buyer should want to buy the product.
Often next to the concept of "value added" is another - "squandering." Here, all manipulations and results that cannot benefit the buyer are considered wasteful, as a result of which the latter does not want to buy the goods. On this occasion, once commented by Fujiom Cho (former head of the famous Toyota Corporation): "Wasting is everything except the minimum cost of components, material, technical equipment, workplace, working time."
A reasonable increase in value added is possible only if the causes of waste of resources are eliminated.
With waste, it is obviously appropriate to refuse technological operations, the result of which the client does not need: defective products, unnecessary (or expensive) packaging, double cleaning, etc. This should be completely ruled out.
It is more difficult to understand hidden squandering. Here, according to the client, technological processes do not have (or should not have) added value, which, despite its inappropriateness, is nevertheless created. A classic example: logistics of material flows, warehouse logistics, administrative processes. Such hidden costs need to be localized and optimized. Waste can be considered:
- overproduction (products are produced much more than necessary, part of it must be sent for processing or disposed of);
- unnecessary service (deficiency or defective parts, lack of equipment, lack (lack) of information.
- excess or unnecessary transportation (loading, unloading, shifting, repacking, extra length of the route);
- defective products (non-standard stage production, failures in established processes, outdated equipment);
- excess stocks (unskilled planning, unsustainable joining of flows from the warehouse to the warehouse);
- excessive movement (irrational organization, search for materials, disorganization of workers);
- insufficient processes (low production capacity, lack (or high cost) of equipment).
- lack of demand for the abilities of employees.
When analyzing wastefulness, gross value added should be taken into account.
But the result will not appear if the leadership will not support the processes of combating the revealed waste. In addition, time and resources are needed both for planning and for implementing the measures defined by management. It will require the creation of a project team consisting of employees of the problem department and specialized specialists. Further, bottlenecks of production are identified. And only then the formed group develops a work plan to combat identified shortcomings. Decisions are divided into stages (task packages), an action plan is drawn up, costs are estimated.
The next stage is monitoring the progress of the project and calculating the savings. If the project is successful, control of optimized processes will be required.
The emphasis is on the common efforts of all participants in the process. Only then we can talk about success, only then the added value will be not only justified, but also profitable.
Pragmatism is appropriate here: debating is worse than experimenting.
Prevention of squandering is not possible without building the capacity of frugality. This moment is especially important at small investments and at crises.