Answer to Question #208708 in Accounting for Nikk

Question

Accounting

C. Discuss the difference between non-value adding activities and business process reengineering with examples relating to the above scenario in the question. (5 Marks)

Answer 1

Solution:

Non-value adding activities are those activities that do not add any value to the product or service but are a fundamental part of the business process. These activities do not increase the worth of what is delivered to the customer and customers are not willing to pay for such services. These activities prove to be a burden on the business and impact its efficiency. Examples of non-value-adding activities include billing a customer, inspecting some parts, unnecessary paperwork, reviewing and obtaining approvals, recording, filing, copying, checking, and testing products.

On the other hand, business process engineering refers to the radical redesign of business processes to attain dramatic improvements in critical aspects such as service, quality, costs, and speed. It involves the analysis and design of business workflows, cutting down on costs and inefficient or redundant processes, and finding out ways to change them.

Examples of successful BPR include Heflo, Ford Motor Company, Airbnb, T-Mobile, Taco Bell, and Hallmark.