The Postal Service can create a value chain map by interviewing key individuals within each product category to construct a detailed representation of all steps involved in the process or flow of a product or service, from raw material⁄creation to end-user consumption⁄use. Current costs are then baselined, using ABC to identify the cost pools, or activity centers, in an organization. Costs are assigned to products and services based on the number of events or transactions involved in the process of providing a product or service. ABC helps managers determine which steps of a particular process are creating or eliminating value. This is similar to process flowcharts; the only difference is that each step is then categorized into three types of work.
Figure 2.4 shows ten steps in a typical purchase process. Of these ten steps, two are value-adding, four are essential, and four are non-value-adding.
Figure 2.4
Example of a Value Chain Map
