LOG430 Process Map analysis for one process category in your department or division at your company or select a Fortune 500 company department or division (i.e. Amazon, Google, or Coca Cola).

Complete a simple process map in PowerPoint that can be copied as an image into an APA formatted Word document. Conduct a simple analysis for one process category in your department or division at your company or select a Fortune 500 company department or division (i.e. Amazon, Google, or Coca Cola). Be sure to identify stakeholders and discuss the key value-added activities recognized associated with a basic process map, using analysis results to identify gaps or opportunities for consolidating steps. Lastly, discuss the product, costing, or price values based on recommended changes that would create cost-efficiencies or value-added benefit to the company stakeholders and end customer.

The requirements below must be met for your paper to be accepted and graded:

• Write between 750 – 1,250 words (approximately 3 – 5 pages) using Microsoft Word in APA style, see example below.
• Use font size 12 and 1” margins.
• Include cover page and reference page.
• At least 80% of your paper must be original content/writing.
• No more than 20% of your content/information may come from references.
• Use at least three references from outside the course material, one reference must be from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the three reference requirement.
• Cite all reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) in the paper and list on a reference page in APA style.

References must come from sources such as, scholarly journals found in EBSCOhost, CNN, online newspapers such as, The Wall Street Journal, government websites, etc. Sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. are not acceptable for academic writing.

LECTURE:

The Life Cycle Cost Composition

Executing value proposition hosts similar goals at every organization in order to be the first to market a product, a service or solution provider, or operating as a technology leader to fulfill a customer need. The Department of Defense (DoD) is no different in establishing a value-based approach as it has on many occasions brought to fruition inventions, such as the internet and more:

• GPS
• Freeze Drying
• Epipen (auto injecting syringes)
• Cargo pants
• Duct tape
• Jeeps
• Computers
• Microwaves (Lex, 2012)

The DoD Defense Acquisition Management System (DAMS) requires a systematic approach to develop weapon systems and as with any organization, finance is the bottom line.

Cost Drivers

Can you describe the value proposition (key attribute that sets you apart from competitors) in your organization, product or service, variations among business units, products, or services, transparent activities and benefits to the customer?

Process Mapping and Cost Tools

By first identifying corporate terminology to include the cost analysis, price analysis, total cost of ownership, and target costing, we can determine the nature of the buy and the type of relationship sought with suppliers. Decision classification is the result of either low impact, leveraged capability, strategic itemization, or critical project needs, which by comparison to the DoD hosts similar terms and processes.

DoD Life Cycle Costing

In accordance with the DoD Financial Management Regulation and Chief Financial Officer (CFO) Act of 1990, as prescribed by the Office of Management and Budget; the Secretary of the Treasury; Comptroller General; and General Accounting Office (GAO), all federal agencies and services are to abide by the federal generally accepted accounting principles (GAAP). Fawcett, Ellram, and Ogden (2007) discuss Chief Executive Officer (CEO) and Chief Financial Officer (CFO) fiduciary responsibility under the Sarbanes-Oxley Act (SOX) of 2002. Under the DoD military services fiscal accountability is scrutinized even further under the Federal Acquisition Regulation (FAR), Financial Management Regulation (FMR), and Uniform Code of Military Justice (UCMJ), with the latter regulation applying to uniformed services.

So how does the DAMS and financial system work together? In December of 1992, the DoD 5000.4-M, Cost Analysis Guidance and Procedures was released, which has standardized seven cost terms to include:

• Development Cost
• Flyaway Cost
• Weapon System Cost
• Procurement Cost
• Program Acquisition Cost
• Operating and Support (O&S) Cost
• Life Cycle Cost

The standardized framework terminologies relate and permit acquisition workforce members to correlate cost terms to work breakdown structure elements, budget appropriations, and logistics/supply cost categories. Figure one below illustrates an example of a system broken out between the subsystem and component levels. Configuration Items (CIs) are predicated upon the allocated baseline configuration, which lead to supply chain designs, task elements, and cost categories.

The different cost terms are critical to the Program Planning Budget and Execution (PPBE) process to obtain congressionally approved appropriations to fund or continue funding programs. PPBE documents include the Program Objectives Memoranda (POM), Budget Estimate Submission (BES), the Defense Acquisition Executive Summary (DAES), and Selected Acquisition Report (SAR), also containing a Cost Analysis Requirements Document (CARD). The CARD on average ranges from 400 to 600 pages depending on the program size and quarterly reviews by the Office of Cost Assessment and Program Evaluation (CAPE) to ensure fiscal responsibility is aligned with program cost allocations.

Total Ownership Cost

The DoD also sponsors programs in the aggregate relevant to Total Ownership Cost (TOC), when including the life-cycle cost elements as well as other infrastructure or business process costs normally not attributed to a single program. This concept supports the determination of the true cost of design, development, ownership, and support of DoD weapon systems. Infrastructure in the broad sense consists of military department and defense agency activities that sustain the military forces. Major categories include equipment support (acquisition and central logistics activities), support to military personnel, such as school facilities, training, personnel administration and benefits, medical, communications, and information structures.

The Research and Development (R&D) cost initiatives are crucial to determine system complexities versus maintenance concepts as less availability or product reliability increases incremental changes to effectively operate and support a system throughout the lifecycle; most notably, against competitor rivals and substitutes. As demonstrated by Figure 2, costs during the incremental as well as operating and support phases range from minimal to staggering. In correlating this concept to corporate strategy and objectives discussed in Chapters 1 and 8, a clear delineation of declining profit margins is the result of poor planning and execution.

Narrowing the life cycle cost categories to a single acquisition program I will further describe each cost category as applicable to figure three as follows:

• Development Cost references the cost of all research and development-related activities, contract and in-house, necessary to design and test the system. This cost category includes a number of WBS elements (Prime Mission Equipment, Support Equipment, Training, etc.) prototypes, and test articles.
• Flyaway Cost (Rollaway, Sailaway, etc.) refers to the cost of procuring prime mission equipment (e.g., an aircraft, ship, tank, etc.) with procurement appropriations and is part of the investment cost category. Figure 3 shows that this term includes the WBS elements of Prime Mission Equipment, System Engineering/Program Management, System Test and Evaluation, Warranties, and Engineering Changes.
• Weapon System Cost extends from the procurement appropriations. It is the procurement counterpart of Development Cost in that it contains the same WBS elements as Development Cost. Weapon System Cost consists of the Flyaway Cost plus the additional WBS elements Training, Peculiar Support Equipment, Data, Operational/Site Activation, and Industrial Facilities.
• Procurement Cost is completely different from the procurement appropriations. It includes Weapon System Cost plus the WBS element of initial spares. For Navy shipbuilding programs, outfitting and post-delivery costs are also included when these costs are procurement-funded.
• Program Acquisition Cost is a multi-appropriation cost category. It consists of all costs associated with developing, procuring and housing a weapon system. This is the complete cost of acquiring a weapon system – ready to operate.
• Operating and Support Costs are funded primarily with the Operations and Maintenance (O&M) and Military Personnel appropriations. This category includes all costs for personnel, equipment, and supplies associated with operating, modifying, maintaining and supporting a weapon system in the DoD inventory. This includes all direct and indirect costs. These costs do not include any of the development costs, procurement costs or any other part of the program acquisition costs for the weapon system, nor do they include any disposal costs for the weapon system.
• Life-Cycle Cost includes all WBS elements, all appropriations, and all cost categories. As shown in Figure 3, it is the sum of Program Acquisition Cost, Operating and Support Cost, and Disposal Cost for a system (ACQuipedia, 2015).

Data Analysis and Retention

Lastly, cost activities are organized either in an Enterprise Resource Planning (ERP) or in compliance with the Cost Accounting Standards. The federal government uses the ERP database aligned with Financial Improvement and Audit Readiness (FIAR) measures. Business contractors supporting DoD requirements use the CAS system, which sustains compliance with GAAP standards as well as other financial regulations as previously discussed.

References

• ACquipedia. (2015). Cost terms. Retrieved from https://dap.dau.mil/acquipedia/Pages/ArticleDetail…
• DAU. (2015). Work breakdown structure (wbs). Retrieved from https://dap.dau.mil/acquipedia/Pages/ArticleDetail…
• Fawcett, S., Ellram, M. L., & Ogden, J. A. (2007). Supply chain management: from vision to implementation. Upper saddle River, New Jersey: Pearson Education, Inc.
• Lex, A. (2012). 9 things invented for military use that you now encounter in everyday life. Retrieved from http://mentalfloss.com/article/31510/9-things-inve…