Framework For Managing Process Improvement example essay topic

Purpose: In 1994, the Office of the Assistant Secretary of Defense, Director of Defense Information, issued the Framework for Managing Process Improvement, A Guide to Enterprise Integration, providing Department of Defense functional managers with the processes and procedures that should be applied when conducting process improvement projects throughout the DoD. Since that time there have been various publications, policies and instructional material developed. This handbook is a further development of the methodology, procedures, and principles. Scope: Activity accounting is a fully inclusive management information concept which includes the total spectrum of accounting controls, reports and analysis. It is oriented on the activity structure of an organization rather than on the formal departmental or organizational format.

The process provides quantitative activity-based cost information to: "i assess continuing operations and project future impacts for a mature activity- based organization. "i evaluate selected process flows, relative cost of various activities, and potential effects of modifications. "i analyze alternative process flows with comparative economic evaluation. Experience has shown that an evaluation using purely qualitative judgement of possible alternatives and change opportunities is woefully inadequate to demonstrate the full potential of meaningful improvements, particularly in an environment where dollars and work hours are a major determinant of performance and efficiency. It is the quantitative characteristics of activity-based costing that make it a key component of the analysis and evaluation process and improve the quality of the final decisions. This means that it cannot be ignored even if it is performed in a perfunctory manner. The major difficulty in using activity-based costing has been the variance of the practices, methods, definitions, procedures, and standards applied under it. This guidebook is specifically designed to resolve this void and to provide guidance to those embarking on a redesign effort.

Chapter 1: Introduction to Activity-Based Costing What is ABC? ABC is an essential part of the functional process improvement and reengineering effort. It captures quantified cost and time data and translates this into decision information. ABC measures process and activity performance, determines the cost of business process outputs, and identifies opportunities to improve process efficiency and effectiveness.

Qualitative evaluation and determination alone is totally inadequate as a single measure of improvement. Though quality might determine 'i better^i, it does not contribute to other meaningful decisions such as what is 'i cheaper^i and 'i faster^i. It is the integration of these two dimensions that is the critical decision support element of the total process. ABC is the mechanism to integrate these two views. with particular emphasis on the practical use of Activity-Based Costing (ABC) within DoD, and is intended to be used by DoD personnel in conjunction with the current published guidance and policy of the DoD. It is important to note that this guidebook, while intended for DoD use, is based on solid, industry-wide principles of Activity-Based Costing and therefore can be used by other (non-DoD) governmental agencies and private sector enterprises.

This is a practical handbook for use during a functional process reengineering or improvement project. It will provide empirical guidance and suggestions on the basics of how to plan for, implement, and apply activity-based costing in evaluating and analyzing process flows and in performing a functional economic analysis of alternative courses of action.