What's the word for this manufacturing principle?

August 12, 2017 10:46 AM

There is a concept or principle in manufacturing whereby each operation done to manufacture a part makes the part increasingly valuable. In other words, a block of stock is not worth much, but as it is transformed step-by-step into a part, the value adds up. Is there a name or word for this?
posted by fake to Grab Bag (9 answers total)

You pretty much said it at the end of your question, but the term I know is “value added.”
posted by musicinmybrain at 11:06 AM on August 12, 2017 [11 favorites]

Manufacturing, refining, even baking or cooking depending on the materials involved
posted by Jacen at 11:18 AM on August 12, 2017 [1 favorite]

It's added value when you are analyzing what the incremental improved value is at each step. But you may be thinking about "lean manufacturing" in which the object is to eliminate all practices and costs in the manufacturing process that do not add value for the end consumer. So for example if you have been polishing a surface for five minutes somewhere along the assembly line, but the customer will not pay any more for a five-minute polish than a one-minute polish, you cut out the expense of the useless four minutes of polishing.
posted by beagle at 11:29 AM on August 12, 2017

You could be talking about a number of things.

Since you bring up stocks, there is the concept of arbitrage where you can buy, say, a block of Spider ETF for the S&P 500 and immediately break up the stocks and sell them individually for a net gain. This is a no risk transaction and therefore considered arbitrage.

Small fish can't really deal like this. You need massive buying power and super fast expensive computing power with slightly privileged access to markets. But if this is what you're looking for, "arbitrage" is the word.
posted by Lord Fancy Pants at 11:35 AM on August 12, 2017

I'm pretty sure OP was talking about a literal block of stock material, not stock market-type stocks.

Added value or "value-add" as an adjective is the term I've heard for this as well.
posted by btfreek at 11:44 AM on August 12, 2017 [1 favorite]

Oh, THAT kind of stock. Never mind.

Value added.
posted by Lord Fancy Pants at 11:50 AM on August 12, 2017

A place i worked tracked the raw material cost & finished part "value". along with scrap. Labor & overhead not included as that was "4 walls/labor". This was a high tech manufacturing company, gov. contracts, etc. I agree that the "term" you are looking for is value added.
posted by patnok at 2:27 PM on August 12, 2017

Response by poster: Value added seems to line up. Thanks all.
posted by fake at 2:51 PM on August 12, 2017

As another data point, a VAT, or Value Added Tax, is supposed to be based more-or-less on the change in value of a good from the time it enters a company to the time it leaves, and its definition pretty much fits what you're looking for.
posted by clawsoon at 5:59 PM on August 12, 2017 [1 favorite]