TheTopTwentyLowValue-AddedActivitiesInDiagnosticsRepresent$34.4MMOfCostACTACTIVITYTITLEACTCOST48TechnicalComplaints/ProductProblems6,84775SiteServices/Building&GroundsMaintenance6,277141GeneralMeetings/Administrative5,188140ServiceTravelTime3,37354UnscheduledService2,45883Material:Pick/Pack/ReturntoStock1,45238SpecialPrices/Discounts94565Rework/Remixing84425OngoingRegularComplianceMonitoring805170CollectingAccountsReceivable793101Pre-ShipmentTroubleShooting70442Non-TechnicalComplaints/Inquiries65728FinancialReporting62566DirectLaborUnallocabletoProduct602133InvoiceDiscrepancies/Disputes504158Inter-SiteMaterialShipping49341OrderDocumentation/Verification48668Inspecting/Testing:Receiving48171Inspecting/Testing:Rework4556ProjectandDesignReviews448Total$34,437ToFocusOnLowValue-AddedActivitiesInDiagnostics,ItIsAlsoImportantToUnderstandWhereTheActivitiesArePerformedACTActivityTitleACTCOSTBus/ProMgmtFinanceSalesCustServiceMfgInsuMfgGIConeMfgGISheMfgManatiServiceTechnolEuropeAllOther48TechnicalComplaints/ProductProblems6,8472%0%5%0%0%0%0%0%83%1%9%1%75SiteServices/Bldg.&GroundsMaintenance6,2770%0%4%0%3%1%59%14%12%3%4%1%141Gnrl.Meetings/Admin.5,1883%0%15%3%3%9%4%3%28%12%9%9%140ServiceTravelTime3,3730%1%0%1%0%0%0%0%74%0%21%3%54UnscheduledService2,4580%0%0%0%0%0%0%0%48%0%45%6%83Material:Pick/Pack/ReturntoStock1,4520%0%0%0%4%38%0%20%6%0%0%0%38SpecialPrices/Discounts9452%0%80%1%0%0%0%0%8%0%7%0%65Rework/Remixing8440%0%0%0%32%7%1%53%6%1%0%0%25OngoingReg.ComplianceMonitoring80512%0%0%0%8%7%24%24%1%11%8%3%170CollectingAcctountsReceivable7930%43%28%21%0%0%0%0%0%0%7%0%101Pre-ShipmentTroubleShooting7040%0%0%0%37%40%0%16%0%6%0%0%42Non-TechnicalComplaints/Inquiries6571%0%40%9%1%0%0%0%19%0%26%5%28FinancialReporting62514%47%0%0%1%0%0%4%1%0%2%31%66DirectLaborUnallocabletoProduct6020%0%0%0%64%29%3%0%0%3%0%0%133InvoiceDiscrepancies/Disputes5040%9%28%5%2%0%0%0%9%1%45%2%158Inter-SiteMaterialShipping4930%0%0%4%5%17%0%19%0%1%1%53%41OrderDocumentation/Verification4860%0%13%21%1%0%0%0%14%4%27%20%68Inspecting/Testing:Receiving4810%0%0%0%15%53%0%14%7%2%0%8%71Inspecting/Testing:Rework4550%0%0%0%14%31%0%37%10%4%5%0%6Project&DesignReviews4480%0%0%0%6%6%2%0%18%62%0%4%TOTAL$34,4372%2%8%2%5%6%12%7%35%4%11%6%InABroadSense,AllActivitiesCanBeClassifiedIntoThreePrimaryTypesHIGH-VALUEACTIVITIESNECESSARYBUSINESSACTIVITIESLOW/NO-VALUEACTIVITIES•ActivitiesCriticaltotheAchievementofExistingStrategies•ActivitiesWithHighImpactonProductQualityandCustomerPerception•ActivitiesNecessarytoConductGeneralBusinessOperationsand/orSupportHigh-ValueActivities•ActivitiesWhichProvideLoworNegligibleOverallValuefromProduct,Customer,andBusinessStrategyPerspectivesAKeyConceptRegardingOrganizationalEffectivenessInvolvesStrategicallyReallocatingResourcesSTRATEGICVALUEACTIVITIESHIGH-VALUEACTIVITIESNECESSARYBUSINESSACTIVITIESLOW-VALUEACTIVITIESLOW/NO-VALUEACTIVITIESHIGH-VALUEACTIVITIESNECESSARYBUSINESSACTIVITIESLOW/NO-VALUEACTIVITIESADDFocusonEffectivenessFocusonEffectivenessPrimaryFocusonEffectivenessSecondaryFocusonEfficiencyMINIMIZEFocusonEfficiencyINTEGRATEInAddition,ThereMayBeNewActivitiesWhichShouldBePerformedInTheFutureSTRATEGICVALUEACTIVITIESHIGH-VALUEACTIVITIESNECESSARYBUSINESSACTIVITIESLOW/NO-VALUEACTIVITIES•ActivitiesNotCurrentlyPerformed,ButCriticaltotheAchievementofFutureStrategies•ActivitiesNecessarytoProvideFutureCustomerSatisfactionValue-AddedAssessmentActivityNecessarytoProduceOutput?ContributestoCustomerRequirements?ContributestoBusinessFunctions?RealValue-AddedNoValue-AddedBusinessValue-AddedRecordOrderTypePolicyResearchDataRecordClaimRecordDataRcvd.OrderFormsUpdatePersonnelRecordsPrepareFinancialReportsReview/ApprovalReworkMovementStorageActivitiesThatDoNotContributetoMeetingCustomerRequirements.TheseActivitiesCouldBeEliminatedWithoutDeteriorationinProduct/ServiceFunctionality.ActivitiesThatMustBePerformedtoMeetCustomerRequirementsHighMediumNoneValueAddedYESYESYESNONONO27%OfOrderManagementActivitiesDoNotAddValueForTheCustomer54321034%23%11%32%ActivityCost($MM)Value-Added:ActivitytheCustomerValuesandWouldPayForNonValue-Added:InternallyFocusedActivitytheCustomerWouldNotPayForNegotiateSaleEnterOrderExecuteOrderInvoice&CollectNon-ValueActivities•SetUpContracts•DetermineListPrice•MaintainPriceData•ResolveCreditHolds•CustomerSpecificPriceApproval•AllocateDuringShortage•SchedulePackaging•ReportShiptoFinance•ReviewInvoice•CorrectInvoice•CollectInvoice•ResolveShortPay18%OfTheActivityCostsInDiagnosticsAreLowValue-AddedToTheCustomerAllActivitiesLowValue-AddedActivities$221.5MM$39.3MMAllCosts1991MayYTDAnnualized$MMTop20$34.488%Bottom23$4.912%High$7735%Low$39.318%Medium$105.247%
