A
Activity-based costing, 65
APQC International Benchmarking Clearinghouse, 104
APQC model, 161
B
Business value-add activities
administration see Business value-add—administration activities
administrative activities, 5, 7
future, 5–6 see Business value-add—future activities
indirect, 5–6 see Business value-add—indirect activities
market transactions, 25
profit improvement, 26
vertical integration, 25
virtual integration, 25–26
waste, 26
Business value-add—administration (BVAA) activities, 158–159
activity-to-value creation category mapping, 34–36
administrative functions, 38
cost cutting, 37
internal communication and coordination, 33–34
management activities, 37–38
process management, 106
supply chain partners, 34
types of activities, 37
value destroyers, 34
Business value-add—future (BVAF) activities, 127, 158
activity-to-value creation category mapping, 31–32
discretionary, 33
long-term survival, 30–31
process management, 106
purchase decision, 31
shareholder perspective, 33
types of activities, 31, 33
Business value-add—indirect (BVAI) activities, 157–158
activity-to-value creation category mapping, 27–29
customer satisfaction, 30
internal and external communications, 27
invoice, 26
service logic approach, 30
types of activities, 27, 30
BVAA activities. See Business value-add—administration activities
BVAF activities. See Business value-add—future activities
BVAI activities. See Business value-add—indirect activities
C
Communication attribute, 120
Cost–value gap, 14–15
Customer profitability, 66
Customer segment, 21–23
data, informative cost summary, 92–93
value data, Windows, Inc., 131
Customer value, 66
Customer value-add activities
customer segments, 21–23
features and benefits, 13
value attributes see Value attributes
value proposition see Value proposition
D
Data collection, 163–164
instrument
activities identification, 73
activity analysis, 73–75
activity cost estimates, 77, 79–80
activity data, 89
activity to value attribute weighting, 77–78
activity-value assignment, 75–77, 90
avoiding weeds, 71–72
field-based data collection, 77
full-time equivalent employees, 88–89
part-time workers, 88
people assignment, 89
resource assignment, 73
shared workers, 88
team members, 90
total budget, 90
value-add assignment, 89
value-added vs. business value-add and waste, 81
performance evaluation
Impact Communications, 149
management control, 149–150
performance management systems, 149
waste identification and elimination, 149
Windows, Inc. analysis, 148–149
“Dial and smile” activities, 119
E
Engagement planning process, 118–119
F
Feeding the beast. See Business value-add—administration activities
I
Incremental analysis, VCMS
activity-based analysis, 145
Easy Air incremental analysis template, 145–146
Frangor profit squeeze situation, 145
service company data, 147–148
short-term operational analysis, 144
Windows, Inc. capacity cost analysis, 145, 147–148
Informative cost summary
customer segment data, 92–93
management report, 92
process-oriented result, Windows, Inc., 94–95
value-add, business value-add, and waste dollars, 92
J
Job-specific value profile, 118
L
Lean management model, 72, 162–163
identification and elimination, 43
value stream mapping, 43–44
wasted activities flow, 45
M
Management control system, 165
Master file, 90–91
Meetings, 85–87
P
Process management, 161
activities and products horizontal flow, 101
data summarization
academic records, 111
classification detail, 111–112
cost summary, 107, 109–110
financial and physical resources, 111
gaps and redundancies, 111
relational database, 107, 111
delays and decision points, 102–103
executional disconnects, 102
framework development
APQC Process Framework, 104–105
benchmarking, 106
industry, 106
“outcome” stopping points., 105–106
second- and third-tier numbering systems, 105
standard framework, 104
13 processes, 104
USCGA, 105–106
improvement, 111, 113
process workflow, 102–103
structure, 65
tying activities
BVAA activities, 106
BVAF activities, 106
cross-functional team, 107
data collection time, 107
process classification, 107–108
waste and inefficiency identification, 102
website ordering system, 103–104
Process waste, 46–48
Product/service development
customer input, Windows, Inc.
brand-based marketing, 130–131
customer segment value data, 131
customer value attributes, 130
less expensive line windows, 129
revenue equivalents, 131–132
target costing structure, 131, 133–134
trading partner costs, 134–135
variety offer, 134
hidden waste, 136–138
service profile extension, 136
support costs, 135–136
value engineering, 128–129
Project team, 68–69
R
Revenue multiplier, 9. See also Value multipliers
Revenue equivalents, 53, 131–132, 157
S
Service customization, 115
Service logic, 6
Strategic analysis, VCMS
company’s effort mapping, 141
customer segments, 142
differentiation strategy, 143
Frangor’s value profiles, 142
growth-oriented model, 144
profile change, 143–144
value-add and BVA-future expenditures, 143
value profile identification, 144
waste and BVA-administrative costs, 143
Strategic cost analysis, 163
Structural waste, 46–48
Support costs, 135–136
T
Target costing, 162
“Target” diagram, 86
U
USCGA. See U.S. Coast Guard Academy
U.S. Coast Guard Academy (USCGA), 105–106, 161–162
V
Value
creation see Value creation
customer’s perspective
responsiveness, 2
value attributes, 2–5
value proposition, 3–4
definition, 2
Value-added core activities, 5–6
Value attributes, 155. See also Value proposition
cost structure, 14
cost–value gap, 14–15
dollars per, 54, 56–57
listing, 118
product’s economic value, 14
revenues vs. value-add, 52–53
service responsiveness, 15
value-added activity, 16
weightings, 54–55
Value-based cost management system (VCMS)
activity-based analysis tools, 8
BVAF activities, 33
competitive marketplace, 156
creation steps, 9–10
customer-driven organization, 10
customer value, 155
data collection, performance evaluation
Impact Communications, 149
management control, 149–150
performance management systems, 149
waste identification and elimination, 149
Windows, Inc. analysis, 148–149
essential criteria, 23–24
goal, 8
implementation, 163–165
automation, 81–82
avoiding weeds, 71–73
back out report, 97–98
building, 98–99
customer information, 70–71
data collection instrument see Data collection; Data collection instrument
finding champion, 67–68
informative cost summary see Informative cost summary
interview team, 86–87
managers education, 85–87
master file, 90–91
money flow direction, 85
need identification, 65–67
project team, 68–69
right level activity, 71
top-line-driven growth model, 85
value multipliers, 94, 96–97
incremental analysis
activity-based analysis, 145
Easy Air incremental analysis template, 145–146
Frangor profit squeeze situation, 145
service company data, 147–148
short-term operational analysis, 144
Windows, Inc. capacity cost analysis, 145, 147–148
initiatives, 161–163
job shop
customer support, 123–124
directing resources, 118–119
explanation to customers, 116–117
job-specific value profile, 118
reporting to customers, 121–122
service customization, 115
tracking system, 119–121
and lean model, 43–45
identification and elimination, 43
value stream mapping, 43–44
wasted activities flow, 45
market perspective, 155–156
price, 156
process coding, 10–11
process management see Process management
and product/service development see Product/service development
revenue multiplier, 9
revenues vs. value-add
customer data, 51
Frangor manufacturing, 52
price, 52
revenue equivalent, 53
value attributes, 52–53
value multipliers see Value multipliers
strategic analysis
company’s effort mapping, 141
customer segments, 142
differentiation strategy, 143
Frangor’s value profiles, 142
growth-oriented model, 144
profile change, 143–144
value-add and BVA-future expenditures, 143
value profile identification, 144
waste and BVA-administrative costs, 143
strategic, tactical, and operational uses, 159–161
temperature/ongoing monitoring, 150–151
vs. traditional accounting models, 51
value-add activities, 152, 157–159
value-added core, 156–157
value attributes, 155, 157
value creation and revenue, 19–20
value multipliers, 11, 157
value proposition, 17
Value capture, 2–5, 13
Value creation
accounting
firm’s economics, 7
revenue, 8
VCMS see Value-based cost management system
customers and shareholders, 13
customer’s perspective, 3–4
market perspective, 5–7
and process management see Process management
revenue, 19–20
Value engineering, 128–129, 162
Value multipliers, 164
activity-based approaches, 53–54
cost data, 53
creation, 54, 58
development and interpretation
calculation, 94
customer segment data, 97
level of competition, 97
market segmentation strategy, 94, 96
dollars per value attribute, 54, 56–57
high, low, and in-between metrics
cost-based strategy, 58
customer satisfaction data, 58
Impact Communications, 59–60
segment calculation, 61
strategic implications, 61–62
value attribute weightings, 54–55
Value proposition
accounting system, 17
conjoint analysis, 17
customer value assessment tools, 18
definition, 16
Impact Communications, 116
marketing gains, 18
and price, 18–19
services, 16
spider chart, 16–17
VCMS, 17
VCMS. See Value-based cost management system
W
Waste activities, 5, 7
behavioral impact, 48–49
Easy Air’s charts, 45
faces of, 41–43
lean model and VCMS, 43–45
structural vs. process-based waste, 46–48
Windows, Inc. waste reporting, 45–46