How can IDEF0 models be used to reveal non-value-added activities, problem areas, and opportunities for improvement?
In the process of building the baseline IDEF0 model, problem areas and opportunities for improvement may be identified simply as a result of defining and describing the activities, inputs, controls, outputs, and mechanisms. For example, building a model is an effective way of identifying redundancies and disconnects in the activities performed within a system. After the model is built, applying cost and performance measures to the baseline activities will also identify the high and low cost activities, nonvalueadded activities, and activities in which cost and performance measures are substantially higher or lower than in related activities. Later in this course, we will talk briefly about specific ways to exploit improvement opportunities. But for now, let’s take a look at another important technique that aids a functional manager in defining the AS-IS environment — Activity Based Costing. OVERVIEW OF ACTIVITY BASED COSTING ActivityBased Costing (ABC) is a form of cost accounting th
