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.

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