Definition
Value-added time as a share of the lead time; the numerator is the processing time that actually transforms the product and the denominator is the end-to-end delivery time, so the result is usually a few percent, or even a few parts in a thousand down to a few parts in ten thousand.
In detail
The value-added ratio points a direction rather than scoring anything: as soon as it is computed it shows that the leverage sits in the 95 percentage points of waiting, not in the processing motions. The denominator comes in two bases that differ by more than a factor of three — available working hours versus calendar hours — so the same value stream yields two numbers and the basis must be stated; showing both side by side is safest. It is only meaningful for before-and-after comparison on the same value stream; comparing it across products or plants means nothing.
Example in practice
A value stream has 275 seconds of processing time against a 19.7 day lead time: on a calendar-hours basis the value-added ratio is about 0.0016%, and on an available-working-hours basis it is about 0.052%. Rather than shaving the 275 seconds, the team converts two batch waits into continuous flow, cuts the lead time to 10 days and doubles the ratio.