What is 'Process Value Analysis - PVA'

Process Value Analysis (PVA) is the examination of an internal process that businesses undertake to determine if it can be streamlined. PVA looks at what the customer wants and then asks if a step in a process is necessary to achieve that result. The goal of PVA is to eliminate unnecessary steps and expenses incurred in the value chain required to create a good or service without sacrificing customer satisfaction. The result is that a good or service may be delivered to the customer more rapidly and at a lower cost.

BREAKING DOWN 'Process Value Analysis - PVA'

In conducting PVA, managers will consider whether any new technologies could be profitably implemented, whether errors are being made that could be avoided, whether there are extra steps in the process that are unnecessary and so on. Any steps in the process that are identified as not adding economic value may be changed or thrown out. A process may repeatedly be examined as new technologies emerge that could make the process more efficient.

Companies will sometimes conduct PVAs when they have made an acquisition. A PVA may reveal whether the acquired company has processes that are less efficient than those of the acquiring company.

One risk of PVA is that some critical steps in a process may be eliminated. Processes sometimes include control points to ensure that rules are followed. These rules may be designed to establish cost controls, safeguard proper accounting procedures, and other internal controls.

Some companies have undertaken PVA to streamline their purchasing processes. For small purchases, they have opted for issuing managers procurement cards from major credit card companies. This has proved less expensive than requiring that small purchases go through the multi-step process normally required for large purchases.

  1. Business Process Redesign (BPR)

    A business process redesign is an overhaul of a company's central ...
  2. Gross Processing Margin - GPM

    Gross processing margin is the difference between the cost of ...
  3. Purchasing System

    A purchasing system is a process for buying products and services ...
  4. Batch Credit Card Processing

    The transmission of all credit card transactions on a given day ...
  5. Internalization

    Internalization can refer to any process that is handled within ...
  6. Quality Control

    Quality control is a process through which a business seeks to ...
Related Articles
  1. Tech

    Is the Payment Processing Industry Evolving? (PYPL, TGT)

    Learn about the many changes in commerce and payment systems that are happening in the rapidly evolving payment processing industry.
  2. Financial Advisor

    Asset Manager Ethics: Investment Process and Actions

    Managers, in developing their investment process, need to determine some “general rules” that make it meaningful. We offer six.
  3. Small Business

    Value chain analysis: The basics

    Value chain analysis establishes an action plan to understand and implement activities that create values to a firm's clients, resulting in firm profits.
  4. Personal Finance

    What Is the Financial Planning Process?

    There are six steps individual investors can take to develop a financial plan.
  5. Investing

    Choose a Fund With a Winning Manager

    We break down key components of analyzing a fund manager's performance so you can find a winner.
  6. Investing

    Do Your Research When Using an Active Manager

    When it comes to using active managers for your portfolio, it pays to do your research.
  7. Investing

    Due Diligence in 10 Easy Steps

    Learn how due diligence offers key information for potential investments. Find out how these 10 important steps can give you a balanced views of pros and cons of your investments and allow you ...
  8. Investing

    A Top-Down Approach to Investing

    Use a global view to determine which stocks belong in your portfolio with the top-down approach.
  9. Financial Advisor

    Asset Manager Ethics: Risk Management and Compliance

    Managers should create a compliance and risk function that is integral to the investment function in order to plan for the increasingly more common market dislocations that occur in the global ...
  1. What is the difference between a value chain and a supply chain?

    Learn the difference between a value chain and a supply chain, and why a company would want to maximize the value of both. Read Answer >>
  2. Why is reconciliation important in accounting?

    Learn about accounting reconciliation and its importance for individuals and businesses to help prevent fraudulent activity ... Read Answer >>
  3. How are business decisions made in a partnership?

    Understand how partners in a business can tackle decision making, and learn the options available for partnerships to develop ... Read Answer >>
  4. How does a strong value chain management team help a company?

    Understand what makes up a company's value chain and the point of a value chain. Learn how a strong value chain management ... Read Answer >>
Trading Center