Whitley Company has 20 clerks that work in its Accounts Payable Department. A study 5-6 revealed the following activities and the relative time demanded by each activity: Non-Value-Added Percentage of Activities: Non- Activities Clerical Time Value-Added Cost Comparing purchase orders and receiving orders and invoices 15% LO2 Resolving discrepancies among the three documents 70 Preparing checks for suppliers 10 Making journal entries and mailing checks 5 The average salary of a clerk is $30,000. Required Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, state why they are non-value-added. Refer to Exercise 5-6. 5-7 Required Root Cause (Driver) Analysis Suppose that clerical error-either Whitley's or the supplier's-is the common root LO2 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. Refer to Exercise 5-7. Suppose that clerical error is the common root cause of the 5-8 non-value-added activities. Paying bills is a subprocess that belongs to the procure- ment process. The procurement process is made up of three subprocesses: purchas- Process ing receiving and paying bills. Improvement/ Innovation Required LO1, LO2 1. What is the definition of a process? Identify the common objective for the pro- curement process. Repeat for each subprocess. 2. Now, suppose that Whitley decides to attack the root cause of the non-value- added activities of the bill-paying process by improving the skills of its purchas- ing and receiving clerks. As a result, the number of discrepancies found drops by 30 percent. Discuss the potential effect this initiative might have on the bill- paying process. Does this initiative represent process improvement or process innovation? Explain