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Refer to Exercise 12.8. Suppose that clerical error is the common root cause of the non-value-added activities. Paying bills is a subprocess that belongs to the procurement process. The procurement process is made up of three subprocesses: purchasing, receiving, and paying bills. Required: 1. What is the definition of a process? Identify the common objective for the procurement process. Repeat for each subprocess. 2. Now, suppose that Thayne decides to attack the root cause of the non-value-added activities of the bill-paying process by improving the skills of its purchasing and receiving clerks. As a result, the number of discrepancies found drops by 30 percent. Discuss the potential effect this initiative might have on the bill-paying process. Does this initiative represent process improvement or process innovation? Explain.

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 12, Problem 10E
Textbook Problem
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Refer to Exercise 12.8. Suppose that clerical error is the common root cause of the non-value-added activities. Paying bills is a subprocess that belongs to the procurement process. The procurement process is made up of three subprocesses: purchasing, receiving, and paying bills.

Required:

  1. 1. What is the definition of a process? Identify the common objective for the procurement process. Repeat for each subprocess.
  2. 2. Now, suppose that Thayne decides to attack the root cause of the non-value-added activities of the bill-paying process by improving the skills of its purchasing and receiving clerks. As a result, the number of discrepancies found drops by 30 percent. Discuss the potential effect this initiative might have on the bill-paying process. Does this initiative represent process improvement or process innovation? Explain.

1.

To determine

State the definition of a process and identify the common objective for the process of procurement and repeat the same for each sub-process.

Explanation of Solution

Process: A process is a broad collection of activities that have a common objective.

  • The common objective of a procurement process is to supply bought and paid for materials towards operations. One common example is the manufacturing process.
  • The common objective of purchasing process is to produce a request for the materials from suppliers of the company...

2.

To determine

Explain the actual effect on the bill-paying process assuming that the root cause of non-value added activities of bill-paying activities by actually improving the skills of their purchasing and receiving clerks resulting in a 30 percent drop in the number of discrepancies. Provide information whether the current initiative reflect a process improvement or a process innovation.

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Chapter 12 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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