ROOT CAUSE (DRIVER) ANALYSIS
Honley Company has 20 clerks that work in its accounts payable department. A study revealed the following activities and the relative time demanded by each activity:
|
Activities
|
Percentage of Clerical Time |
|
Comparing purchase orders and receiving orders and invoices |
15% |
|
Resolving discrepancies among the three documents |
70 |
|
Preparing checks for suppliers |
10 |
|
Making journal entries and mailing checks |
5 |
Required:
Suppose that clerical error—either Honley’s or the supplier’s—is the common root cause of the non value added activities. For each non value added activity, ask a series of “why” questions that identify clerical error as the activity’s root cause.