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Process Modeling, Process Improvement, and ERP Implementation
PROCESS IMPROVEMENT
Process-mapping tools provide the ability to describe business processes in a universally
understood format. Generally, the task of mapping a process requires a team consisting of
key personnel who are involved in the process. Frequently, the act of accurately
describing the process, and understanding how the functional areas interact, make it
obvious to the team what steps are necessary to improve the process. This is especially
true for organizations that have previously focused on functional responsibilities rather
than business processes.
Using the simple technique of value analysis can also generate process-improvement
ideas. In value analysis, each activity in the process is analyzed for the value it adds to 197
the product or service. The value added is an increase in a product’s or service’s value,
from the perspective of the customer. Activities can add:
• Real value—Value for which the customer is willing to pay
• Business value—Value that helps the company run its business
• No value—An activity that should be eliminated

The Fitter expense-reporting process does not provide real value, because Fitter’s
customers do not care whether sales employees receive prompt and accurate
reimbursement of their business expenses. However, the expense-reporting process does
add business value, and it should provide this value at a minimum cost. Determining the
value of a good or service is easy—it is what someone is willing to pay for it. Evaluating
the value of part of a business activity, however, is not an exact science because parts of a
process cannot be sold on the open market. Although it is a challenging task, evaluating
each activity on the basis of value provided can highlight opportunities for improvement.
Activities that cost more than their value added should be improved.
The value analysis concept can be expanded to an evaluation of both the time and
cost of each process step. For each step in the current process, you estimate the actual
time and cost. Then you estimate the value-added time and cost—determining how much
of the actual time is adding value and how much of the cost is worth paying for.
We will use the “Mail expense report” function of Fitter’s expense-reporting process to
illustrate value analysis. This function could cost upwards of $50, including not just the
cost of the envelope and postage, but also the time spent by the salesperson to mail the
expense report. The value analysis includes the elapsed time for mailing the expense
report, including the time it takes the salesperson to find a mailbox, the time the
postal service takes to deliver the expense report to the company headquarters, and the
time it takes the company’s internal mail system to deliver the expense report to the
sales manager.
Suppose that for Fitter the elapsed time is typically three days. To perform value
analysis, you would determine how much of this time and cost is value added. To
determine this value, you must view the activity “Mail expense report” in terms of what is
actually being accomplished. In this case, it is not the physical transmission of paper that
matters. Mailing the expense report is a means to transmit expense data and
documentation. Email could minimize the time and cost required to transmit that data;
therefore, mailing an expense report at a cost of $50, to arrive in three days, is only
providing value worth pennies (which is the cost to send an email) in a function that
could be executed within seconds. Looking at the current time and cost of each process

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