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Unit 2 Lecture 5

The document discusses Value Added Analysis in business process reengineering, categorizing activities into value-added, strategic, support, and waste. It emphasizes the importance of measuring operational performance through defined criteria such as timeliness, accuracy, and efficiency. Additionally, it highlights the need for precise measurement definitions to ensure consistency and reliability in data collection.

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Soumitra Chakraborty
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4 views12 pages

Unit 2 Lecture 5

The document discusses Value Added Analysis in business process reengineering, categorizing activities into value-added, strategic, support, and waste. It emphasizes the importance of measuring operational performance through defined criteria such as timeliness, accuracy, and efficiency. Additionally, it highlights the need for precise measurement definitions to ensure consistency and reliability in data collection.

Uploaded by

Soumitra Chakraborty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Business Process

Reengineering

Lecture 5

Value Added Analysis &


Measure of Improvement
Value added Analysis
Value Added Activity Categories
● Value-added – transforms or shapes a product or
service towards that which satisfies the customer’s
real or perceived needs or wants (e.g., material, labor,
process costs, field sales, advertising)
● Strategic Activity – indirectly transforms a product or
service and is strategically important to the long-term
health of the business (e.g., training, marketing,
capital investment, new product development)
Non-Value-Added Activity Categories
● Support Activity – does not add value as perceived by
customer, but provides a service which maintains the
operations process or is driven by actions outside the
organization (QA, purchasing, logistics, human
resources)
● Waste – within control of the organization,
consumes time, resources and space, but does not
contribute to the transformation of the product
(inspection, material handling, rework, supervision,
expediting)
Interpreting the Results of Value-
Added Analysis
● Activities identified as non-value-added are
candidates for a more detailed analysis.
● A more detailed process map of the nonvalue-added
activity may be required.
● Root cause analysis techniques can help to identify
the reasons for bottlenecks, delays, etc. (Why, why,
why, why, why..).
Ask...
Ask..
Defining Measurement
● Operational Definition
○ A precise description of the specific criteria used for the measures (the what),
○ the methodology to collect the data (the how),
○ the amount of data to collect (how much), and
○ who has responsibility to collect the date (the who)
● Provides everyone with the same meaning
● Ensures consistency & reliability
● Describes the scope of a measure (what is included and what is not
included)
Types of Measurement
● Timeliness – Do we meet the defined criteria (e.g., 48 hours
for billing)
● Accuracy – Number of issues resolved on first enquiry
● Cycle Time – Time it takes from point A to point B
● Efficiency – Output vs. input (e.g., # of invoices processed
per hour)
● CTC (Critical to Customer) – Impacts the customer
(incorrect invoices, wrong product shipped, etc.)
● CTB (Critical to Business) – Customer may not be directly
affected, but it is critical to the business (cycle time,
cost/margin)
Examples of Measurement Definition
•Poor: “Cycle time for applications.”

•Good: “Collect data from all applications received by fax


on a weekly basis. The response time will be determined
by the date and time of the fax received as shown on the
faxed application to the time the approval/rejection letter
is faxed to the applicant as shown by the fax log. The
data will be reported weekly as an average response
time per application.”

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