Refer to Exercise 12.10. Suppose that Thayne attacks the root cause of the non-value-added activities by establishing a totally different approach to procurement called electronic data interchange (EDI). EDI gives suppliers access to Thayne’s online database that reveals Thayne’s production schedule. By knowing Thayne’s production schedule, suppliers can deliver the parts and supplies needed just in time for their use. When the parts are shipped, an electronic message is sent from the supplier to Thayne that the shipment is en route. When the order arrives, a bar code is scanned with an electronic wand initiating payment for the goods. EDI involves no paper, no purchase orders, no receiving orders—and no invoices.

Required:

Discuss the potential effects of this solution on Thayne’s bill-paying process. Is this process innovation or process improvement? Explain.