P1.D.5 Business Process Improvement

Question 1

What is Value Chain Analysis?

P1.D.5 Business Process Improvement

Answer 1

Strategic tool for assessing and improving competitive advantage by analyzing internal processes or activities

Question 2

What are the steps in Value Chain Analysis?

P1.D.5 Business Process Improvement

Answer 2

1. Internal cost analysis: identify sources of profitability
2. Internal differentiation analysis: finds ways of superior differentiation to increase customers perceived value
3. Vertical linkage analysis: wider application of internal cost analysis & internal differentiation analysis

Question 3

What is Process Analysis?

P1.D.5 Business Process Improvement

Answer 3

1. Reviewing business processes to sustain competitive advantage in long term.
2. It should be effective, efficient and adaptable

Question 4

What is Process Reengineering?

P1.D.5 Business Process Improvement

Answer 4

Resigning a process to reduce or eliminate non-value adding activities, reduce costs and improve quality and productivity.

Question 5

What is Benchmarking?

P1.D.5 Business Process Improvement

Answer 5

A process or measuring entity’s performance, products, etc. among their peers.

Question 6

What is the Benchmarking Process?

P1.D.5 Business Process Improvement

Answer 6

1. Identify activities/processes to be benchmarked
2. Determine internal/external benchmarks
3. Compare performance & identify cause for gaps
4. Take corrective action
5. Review progress towards goals

Question 7

What are Prevention Costs?

P1.D.5 Business Process Improvement

Answer 7

Costs incurred prior to production to avoid defects and errors.

Example: product design, product research, employee training, etc.

Question 8

What are Appraisal Costs?

P1.D.5 Business Process Improvement

Answer 8

Costs incurred to determine whether product conforms to quality standards.

Example: inspection and testing, quality audits, etc.

Question 9

What are Internal Failure Costs?

P1.D.5 Business Process Improvement

Answer 9

Costs incurred for failure to comply with quality standards before its delivered to customer.

Example: scrap, rework, retesting, etc.

Question 10

What are External Failure Costs?

P1.D.5 Business Process Improvement

Answer 10

Costs incurred for failure to comply with quality standards after its delivered to customer.

Example: warranties, recalls, etc.

Question 11

Conformance and non-conformance costs

P1.D.5 Business Process Improvement

Answer 11

Conformance

1. Prevention
2. Appraisal

Non-conformance

1. Internal failure costs
2. External failure costs

Question 12

Types of Benchmarking

P1.D.5 Business Process Improvement

Answer 12

1. Functional: comparison to similar or identical practices within the same or similar functions outside the immediate industry
2. Internal: comparison of business process to similar process inside organization
3. Competitive: direct competitor-to-competitor comparison of product, service, process or method
4. Generic: broadly conceptualizes unrelated business processes or functions that can be practiced in the same or similar ways regardless of the industry

Question 13

Value Chain Order

P1.D.5 Business Process Improvement

Answer 13

1. R&D
2. Marketing
3. Customer Service