2014 the plandocheckact-cycle-of-value-addition-2169-0316.1000124

ISSN: 2169-0316
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Research Article Open Access
Gidey et al., Ind Eng Manage 2014, 3:1
http://dx.doi.org/10.4172/2169-0316.1000124
Volume 3 • Issue 1 • 1000124Ind Eng Manage
ISSN: 2169-0316, IEM an open access journal
Keywords: Value; Value addition; Function; Innovation; PDCA
Cycle; Process; Manufacturing
Introduction
Customers of recent times demand products and services to have
the maximum added value. They are not willing to pay for products
that pass through wasteful processes. In this regard, the norm ‘value
addition’ has become a reference for expressing the performance of
organizations. However, it was loosely treated and expressed as the
difference between output and input prices. But, many intangible
inputs might be ignored. In value addition calculations, those inputs
that are consumed only in the production process were considered. But,
value chain related studies revealed that there are additional functions
beyond manufacturing [1].
More than 90% of manufacturing activities are non-value
adding of which, 65% are not necessary at all. Only less than 10% of
manufacturing activities are thought to add value that customers need
[2-4]. Continuous improvement efforts have only been targeted towards
enhancing value by eliminating wastes. Such continuous processes have
mainly been described by and enclosed within the Plan-Do-Check-Act
(PDCA) domain [5,6]. This cycle has also been known as Deming cycle
or Shewhart’s cycle. The PDCA cycle has been a foundation for process
improvement its central theme being enhancing value in a way that
customers’ specifications are
Regularly captured and improved. PDCA has been practiced as a
main competitive advantage and continuous problem solving approach
by many successful companies all over the world.
Problems are identified and prioritized to be addressed. Solution
approaches are generated and the best is selected and implemented;
products and processes are checked for whether they incorporated the
proposed improvement; and lastly, decisions are made regarding the
effectiveness of the improvements introduced. Then, new improvement
ideas are generated and forwarded to be further considered in next
iteration. This process never ends; and lasts in the lifetime of companies.
However, it usually is limited within the shop floor and design
function; this process hardly gives indications for what functions exist
in the process of value addition and enhancement. It also ignores the
immediate consideration of customer requirements and feedback. For
example, in continuous improvement initiatives, the intangible benefits
that marketing function contributed in enhancing value addition into
products was hardly considered.
If companies fail to consider the corrections requested by their
customersontime,therewouldbeahighprobabilityforsuchcompanies
to incur high cost and extinct shortly. Companies are recently
obliged to dominate their competitors by exceeding both customers’
requirements and competitors’ capabilities. Thus, companies are urged
to have strong research and innovation function as part of their system
than ever. Every new innovation and improvement made on a product
need to be standardized so that consumers will be confident on it.
Thus, standardization inherently adds value to a product which was
previously unnoticed; the cost and benefits of standardization has little
been considered in the continuous quality improvement of products.
Value was traditionally considered to be added only in the
manufacturing; functions before and after it, have been overlooked.
This paper is therefore an attempt to extend the concept of continuous
process improvement beyond the manufacturing environment in a
way that the value added into a product would be reviewed. Moreover,
the PDCA cycle would come across for improvement, not only based
on problem identification process but also based on the rationale flow
*Corresponding author: Gidey E, School of Mechanical and Industrial
Engineering, Industrial Engineering Chair, Addis Ababa Institute of Technology,
Addis Ababa University, Addis Ababa, Ethiopia, Tel: +251-111232414, +251-
911002935; E-mail: ephyalem2007@yahoo.com
Received December 30, 2013; Accepted February 19, 2014; Published February
25, 2014
Citation: Gidey E, Jilcha K, Beshah B, Kitaw D (2014) The Plan-Do-Check-Act
Cycle of Value Addition. Ind Eng Manage 3: 124. doi: 10.4172/2169-0316.1000124
Copyright: © 2014 Gidey E, et al. This is an open-access article distributed under
the terms of the Creative Commons Attribution License, which permits unrestricted
use, distribution, and reproduction in any medium, provided the original author and
source are credited.
The Plan-Do-Check-Act Cycle of Value Addition
Gidey E*, Jilcha K, Beshah B and Kitaw D
School of Mechanical and Industrial Engineering, Industrial Engineering Chair, Addis Ababa Institute of Technology, Addis Ababa University, Addis Ababa, Ethiopia
Abstract
Value addition has only been measured as the difference between output and input prices and the critical roles of
all functions in the process of value addition were not clearly known. Moreover, some core functions that inherently
exist in the process of value addition were ignored until recently. The process of value addition and enhancement is
continuous in its approach. Despite the fact that the value addition process is a continuous process, only its absolute
measures were used for evaluating the intensity of value addition. Usually, value addition to a product was considered to
happen only in the shop floor. In reality however, value addition is not only the responsibility of manufacturing function;
rather, other functions before and after manufacturing also add significant tangible or intangible value to a product.
The continuous characteristics of the value addition process can be visualized and evaluated in terms of the PDCA
continuous process cycle so that value addition can be enhanced in a continuous basis. The PDCA cycle is a renowned
continuous quality improvement approach and has been widely used by many successful companies as a strategic
weapon for enhancing organizational performance. Hence, this paper roots its core idea towards the conceptual design
of continuous value addition process using the PDCA cycle. The study also intends to identify the potential functions
that were ignored and their respective roles. Thus, six core functions in the value addition process are identified and
categorized into the four distinct phases of the PDCA cycle. The findings of this paper will, at large, help academicians
and practitioners care for the respective roles of functions in the process of value addition and easily know how these
functions interact in a continuous basis.

Citation: Gidey E, Jilcha K, Beshah B, Kitaw D (2014) The Plan-Do-Check-Act Cycle of Value Addition. Ind Eng Manage 3: 124. doi: 10.4172/2169-
0316.1000124
Page 2 of 5
of value from its conception till its delivery to the customer. Thus,
the continuity of value addition and improvement can preferably be
analyzed using the PDCA cycle when a product passes through all value
adding functions.
Literature Review
Recently, the leading competitive advantage of companies
is exceeding customers’ requirements. In their way of exceeding
customers, companies are also urged to establish research and
innovation functions [7]. The phrase ‘value addition’ has been used to
express the extent of capturing and exceeding customers’ requirements.
Usually, customers will to buy products which give them the ultimate
function at the minimum cost possible. All activities in the long way
towards serving the customer should by any means be accepted by the
customer. Customers are not willing to pay for products and services
that pass through wasteful processes; the existence of waste benefits
neither the customer nor the provider. A product passes through many
functions before it reaches the customer. Plenty of methods have been
devised which help to streamline processes and eliminate unnecessary
activities and to enhance value addition. According to Dong-Young
et al. [5], Quality Management is a holistic philosophy that fosters
all functions of an organization through continual organizational
change. It involves an ongoing refinements and structural problem-
solving in response to continuous feedback from customers so as to
link organizational efforts to innovation [8]. Innovation refers to new
applications of knowledge, ideas, methods, and skills that can generate
unique capabilities and leverage an organization’s competitiveness [9].
In all of these cases, improvements gains have been interpreted into
value addition. Until recently, the shop floor was the main concern to
evaluate the extent of value addition into products. However, compared
to the needs of recent customers, the value addition into a product is
no more the only issue of shop floors; rather, customers’ can mainly
be exceeded through research and innovation both by continuously
studying what the customer really wants and by minimizing wasteful
manufacturing activities [3,4,10-12]. According to European
Commission report on Key Enabling Technologies [13], state-of-the-
art philosophies for eliminating wastes are results of tedious research
and innovation from both the academics and industry. Reducing
or eliminating organizational wastes and other problems have been
approached through the Deming’s or Shewhart’s PDCA cycle [14].
It is known as an iterative four-step management approach used for
controlling and continuously improving processes and products [6,12].
Richard et al. [15] have tried to show the detailed activities of each
stage of the PDCA cycle the central theme being increasing customer
satisfaction (Table 1).
Though the basic theme indicated in Table1 is customer satisfaction,
what’s embodied within the stages is the value addition process. Each
stage contributes to the overall value added into the product/service.
Of course, PDCA has got enormous applications: as a model for
continuous improvement; when starting a new improvement project;
when developing a new or improved design of a process; when defining
a repetitive work process; and when implementing any change [1].
Robert et al. [12] in his paper entitled ‘From continuous
improvementtocontinuousinnovation’,generatedanacceleratedPDCA
which was thought to be suitable for dynamic environments. His model
outweighs the conventional PDCA in that he under weights Plan and
overweighs Do. Recently however, as a result of the tough competition
among competitors and the dynamically changing customer needs,
companies have no option than continuously improving their processes
and overall performances which lastly should result in delighting
customers [6,9,16].
This paper targets to study the benefits out of PDCA by using it
as a model for accelerated continuous improvement when defining
a repetitive work process. It is therefore an attempt to model a
comprehensive continuous value addition process model which
encompasses external functions and expressed in terms of the
functions involved in it using the PDCA cycle as a framework. The
seemingly repetitive continuous process improvement is extended by
incorporating external functions which were previously ignored in the
value addition process. The new model will devise a new outlook of
value addition as well as functional interaction in the value addition
process.
Identification of Functions in the Value Addition
Process
Here, logical justifications are presented and dealt in detail so that
the value addition process can be continuously improved by making
use of the PDCA cycle. It theoretically examines the content of product
value addition at its different stages. In this regard, the value addition
process is divided into three consecutive phases as shown in Figure 1.
Each phase will have value adding functions for value addition; and
the content of value addition by respective functions would then be
Plan
• Create appropriate teams
• Gather all available data
• Understand customers' needs
• Describe the process that surrounds the
problem
• Determine root cause(s)
• Design action plan
• Develop plan
Do
• Implement improvement
• Collect appropriate data
• Measure progress
• Document results
Check
• Summarize and analyze data
• Evaluate results relative to targets & see
differences
• Review any problems/errors
• Record what was learned
• Specify any remaining issues or unintended
costs
Act
• Standardize desired
improvements
• Formalize "current best
approach
• Communicate results broadly
• Identify next improvement
Table 1: Important characteristics and contents of the four stages of PDCA cycle.
Figure 1: Three distinct phases of product value addition evolution.
Feedback for improvement
Overall Value
Added
Pre
Production
Value Addition
In
Production
Value Addition
Post
Production
Value Addition

0316.1000124
Page 3 of 5
identified through the PDCA cycle. Hence, the research approach
followed in this paper is an exploratory content analysis using the
PDCA method of continuous improvement (Figure 1).
Three distinct phases of product value addition evolution though
most products have common features that all customers want,
today’s tough competition obliged producers to continuously search
for improvements and additional new features. Mostly, customer
requirements, company capabilities, competition scenarios, and new
features are captured and considered mainly in the early stages of a
product’s value addition process. Consistent with the dynamically
changing customer requirements and with the ‘quality at source’ notion
of Lean Manufacturing, products’ quality should be considered and
designed at the very beginning of the value addition process. But, Lean
Manufacturing limited the ‘quality at source’ concept within a company
– in the design function. Recent customers, however, want updated
and innovation built-in products. And, when firms get into the global
market they might encounter tough competition to win.
Inherentlyandpractically,thefirstfunctionthatcapturescustomers’
requirements is the research and innovation function. Especially those
high-tech companies are expected to have a sophisticated and well-
established research and innovation center. Likewise, other companies
are also urged to have such facilities which can help them continuously
consider the dynamically changing customers’ requirements. The
innovative power found within a company is also a deciding factor for
success in gaining market acceptance [16] the Design function. This
starts with defining the detailed technical requirement of the new
product or improvements identified to be incorporated in an existing
one. Such activities still add value to the product in way that the
innovations and standards begin to be interpreted and converted into
suitable manufacturing details. Of course, there are occasions whereby
both innovation and design functions are merged into Research and
Design function. Therefore, Innovation and Design functions are
categorized as the ‘Pre-production’ portion of the value addition
process. All product details are planned and documented through these
two functions. Clearly, input information is required from the other
parts of the value addition process and the output of this function is
sent to subsequent functions found in the ‘In-production’ part of the
process.
Physical transformation of value is predominantly accomplished
through Manufacturing, Assembly & Packaging functions. This
constitutes enormous useful interactions among different entities
such as men, machines, materials, and methods. Product values
proposed in previous functions are physically realized into tangible
objects. Conventionally, these functions have been considered as the
only functions to add value into products. Moreover, the packaging of
products is also becoming another focus area to attract more customers.
Recent customers also give attention not only on the functional value
of products but also on the way the product is packed. Packaging is
then thought to add a different perspective of value to the customer in
a way that attractive packaging approaches that impress customers are
introduced. Thus, Manufacturing, Assembly & Packaging belong to the
‘In-production’ portion of the value addition process. What has been
previously planned is practically realized through these functions.
Completed products need to be checked for their quality compared
to what the customer previously stated. This functional requirement is
basicallypracticedthroughqualitycontrolandinspection.Thisfunction
adds a different perspective of value to the customer in a way that
whether customers’ requirements are met is checked. Those products
which conform to customers’ requirements should be standardized.
The notion of standardization came to lead in contributing value to
products. Standards become norms and values that producers all over
the world can smoothly communicate with customers. Standardization
is therefore becoming a competitive advantage for today’s companies.
Had there been no standardization, one can imagine the confusion,
instability, and crisis that might have been created in the world. Waste
and variation, which majorly are affecting quality of products and
customers satisfaction, are measured by taking these standards as
nominal values. To this end, standardization can be considered as the
gravitational force of value addition that kept markets in their stable
position. But, in value addition determinations, the costs associated
with and the benefits attained from standardization were yet unnoticed.
Lastly, finished and quality products have to be marketed. Most
organizations actively strive to promote their products so as to increase
their market shares. As a result, the functions in the ‘Post-production’
portion of the value addition process include: Quality control &
inspection, Standardization, and Marketing.
Outlining the PDCA Cycle of Value Addition
As specified in previous deliberations, this paper is an attempt to
devise a continuous value addition framework which incorporates
previously unnoticed functions using the PDCA cycle. The functions
in the three phases of value addition are already identified; these are:
• Pre-production: innovation and design
• In-production: manufacturing, assembly, and packaging
• Post-production: quality control & inspection, standardization,
and marketing
Then, this session investigates the position of the functions in the
PDCA cycle through logical rationales. Even in the ‘quality at source’
view point, value addition process starts at the design phase; it neglects
the outbound functions in the value addition process. Customers
usually want products with high value but less cost. In order to
continuously improve products’ value, recent literatures advised that
companies need to give higher attention to innovation since recent
customers are observed to demand products with innovated values. It
is also thought that companies in the developed economies compete
on innovation and companies in developing economies compete in
poor labor market and add little value to final products. The Design
function is thought to be the innovative power of companies since all
the innovations already generated should be made into suitable media
such as engineering drawings for product and process design and
product portfolio development. In these two functions, the required
value is conceptualized and prerequisites to realize that intended value
are set. These two functions involve innovative ideas and cumulatively
help to plan values that customers want to get; otherwise, the successive
functions are largely unable to realize the true value.
Conceptual value addition requirements are then sent to the
Manufacturing and/or Assembly functions to be physically realized.
Significant portion of the value that was anticipated in the Innovation
and Design functions is practically realized at this portion of the value
addition process. It’s not doubtful that these two functions perform
physical transformation of value. Packaging finished products can also
be considered as part of the value addition process. Though packaging
practically adds no value into the product, recent customers’ first
impression is being laying not only on product’s quality but also on
its package. The impression that the packaging material and approach
creates should be valued as far as it satisfies customers. Packaging system
is recently one of the areas that have got priority to exceed customers’

0316.1000124
Page 4 of 5
expectations even when little improvements are made on the basic
product itself. Hence, the Manufacturing & Assembly and Packaging
functions make the ‘Do’ stage of the continuous value addition cycle.
Next, the function, quality control & inspection, helps not to send
a defective product to the customer; this may, in a long-term, affect
customers’ satisfaction and producer competition. In this function,
adequate sample products are taken and checked for their quality. Now-
a-days, manufacturers are not the core decision makers in the process
of value addition into products; rather, customers get the key role in
deciding the content and extent of value addition. Completed products
should then be sent to the customer. Organizations actively strive to
promote their products so as to increase their market shares. In doing so,
companies promote the value of the functions they offer and the unique
features that their products constitute. Products have to be marketed and
shipped properly and safely. It would not be nonsense to say marketing is
the key function that sustains a firm. Promoting ones product or service
using appropriate media helps customers know more and more about
the product/service they intend to buy. Moreover, existing customers feel
proud when they heard about a product they most liked.
Likewise, when new or improved products are introduced,
standardization becomes a main focus and competitive advantage
in the process of value addition whereby producers and consumers
all over the world can communicate. This is a value adding function
which is practiced mostly but overlooked to add value into a product.
Not only products require standardization, but also processes and
systems through which products pass through. Also, whenever a new
product enters the market or improvements are made on it, it should
be standardized so that variability will be reduced and uniformity of
outputs can be kept for long. Therefore, standardization might either
be required at the initial stage of a newly introduced product or at the
last stage of improved products. Consequently, the three functions in
the ‘Post-production’ portion of the value addition process are: Quality
control & inspection, Standardization, and Marketing in which the
first belongs to the ‘Check’ stage of the PDCA cycle and the other two
belong to the ‘Act’ stage of the cycle. From these founding deliberations,
a PDCA-based framework of value addition process is proposed in
terms of the associated functions (Figure 2).
Discussion
Here, it should be noted that the proposed functions and the
framework for their interconnectedness and cyclic appearance do
inherently exist. But, some of the functions were overemphasized for
the value they add to a product and benefits that can be attained out of
their cyclic appearance have not been valued yet. The paper extends the
value adding functions beyond the boundaries of manufacturing with
intent. Though the activities of the design function has been considered
in the value addition process, the extent of the value it adds was not as
such comparable to manufacturing and assembly functions. This paper
noticed that appreciable part of a product’s value is enacted through
design and innovation. Continuous improvement movements require
intensive research and innovation in every aspect; let alone being in
an era of exceeding customers’ expectation, companies in the mass
production era had been greatly supported by innovative ideas and
products. Every customer requirement should be properly captured in
a cost effective manner; this needs innovative mind set. Consequently,
innovation and design together build up the ‘Plan’ stage of the PDCA-
based value addition cycle (Figure 2).
Until recently, quality-related philosophies emphasized on the
minimization of wastes and variations; customer-focus; leadership;
process-based; employees involvement, and continuous improvement.
Especially, the involvement of all employees is basically targeted towards
utilizing their innovative mind set in problem solving requirements.
Employees may also have the chance to hear the voice in their social
interactions and can actively participate in decision making processes.
Lean Manufacturing theories indicated that more than 90% of the
manufacturing activities are non-value adding activities. It’s also known
that customers do not need to pay for these non-value adding activities.
Besides, the two functions, manufacturing and assembly, make up
the ‘Do’ stage of the value addition cycle since the conceptual value
proposed by the previous functions is practically realized through these
functions. These two internal functions were known to add almost all
of products’ value. This paper noticed that majority of the value that has
been thought to be added through these two functions is really added
in the previous functions-design and innovation.
Products produced in the shop floor should be checked for their
quality; products that constitute less value than what has been proposed
or less than what the customer really wants. This is basically performed
through the quality control and inspection function. This function
belongs to the ‘Check’ stage of the PDCA-based value addition cycle.
Protecting the customer from receiving substandard products seemed
to add no value to the product; but, this activity is not, by any means,
a non-value adding activity. It adds an indirect value by keeping the
balance of customers’ satisfaction and by keeping the reputability of the
product’s future market. This would then be assumed as a function in
the post-production phase of the value addition process. The quality
control and inspection activities in the intermediate manufacturing
processes are assumed to be part of the manufacturing function. Lastly,
improved and satisfactorily produced products should be standardized
and marketed on time.
Summary and Conclusion
The aim of the study was to visualize and evaluate the value addition
process as a continuous process using the four stages of PDCA cycle
and identify the core functions that the literature dropped out from
consideration in the value addition process. The paper has revealed
that manufacturing is not the only function that adds value in the
value addition process. It exceptionally considers additional functions
that were previously forgotten in value addition premises. Especially,
innovation and standardization were not recognized for their
Figure 2: The PDCA cycle for value addition.
Value
Addition
Planning
Value
Doing
Value
Checking
Value
Acting
Value
Pre-Production
• Innovation
• Design
Post-Production
• Quality control
In-Production
• Manufacturing
&Assembly
• Packaging
Post-Production
• Marketing
• Standardization

0316.1000124
Page 5 of 5
contribution in value addition. This paper however realizes that these
two functions contribute important but intangible values to products.
Overall, six core functions are identified and constituted in the
value addition process; these are: innovation, design, manufacturing,
quality control & packaging, logistics, marketing, and standardization.
As a result, in a pre-production phase, Innovation and Design functions
help organizations to plan what a value to add and how to realize it.
The two core functions found in the production phase, Manufacturing
& Assembly and Packaging, have infrastructures to realize the value
addition proposed by the previous functions – Innovation and Design.
After production, whether products are according to customers’
requirements are checked by the Quality control & inspection function.
Lastly, two core functions are identified for taking two basic actions
– scrutinizing improvements and delivering quality. Standardization
is identified as an action to concretize the improvements made into
products and Marketing is considered as an action to deliver completed
and quality products to customers. In this manner, the paper offers
pertinent rationales for the notion that all functions that exist in the
process of value addition, more or less, tangibly or intangibly, add value
to the final product.
In order to devise a framework for continuous analysis and
improvement of the value addition process, the PDCA cycle has been
introduced and all identified functions are categorized into the four
distinct phases of the cycle – Plan-Do-Check-Act. Thus, innovation
and design functions are planning activities that conceptually depict
what customers require and what a value to add into the final product.
The conceptually innovated and designed value is physically realized
by the manufacturing and assembly functions. Aesthetical values are
also added through the packing function. Since these functions have
physical contact with the product, they are grouped in the ‘Do’ phase of
the continuous value addition cycle. All processes could not completely
give products that the customers need. In this regard, higher care is
made to protect opportunities of sending defectives to customers.
This would then be the ‘Check’ phase of PDCA cycle for value
addition. Eventually, conforming products need to be commercialized
improvements introduced into products and processes need to be
standardized. These two functions collectively construct the ‘Act’ phase
of PDCA value addition cycle since these two functions are actions that
companies communicate with their customers.
In this regard, this paper extends the value addition process one
level before and after the manufacturing function. It also extends the
‘Quality at Source’ notion beyond the traditional limit at the design
function. This finding will, at large, help academics and practitioners
to attentively look for the respective roles of the functions in the
process of value addition and easily know how they should interact in a
continuous basis. Further study is required to estimate the real measure
of value added by respective functions in producing practical items.
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Citation: Gidey E, Jilcha K, Beshah B, Kitaw D (2014) The Plan-Do-Check-
Act Cycle of Value Addition. Ind Eng Manage 3: 124. doi: 10.4172/2169-
0316.1000124

2014 the plandocheckact-cycle-of-value-addition-2169-0316.1000124

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