Winfried comments:
> For me the concept of adding value is not customer oriented.
> No customer
> buys added value. Customer buy value!
>
> So whenever I want to stress the customer focus, I insist on
> talking of
> creating value, not adding value.
>
> Once you know how you are going to create value, this is often done
> practically in a "value chain", where at each step "value is
> added". This
> is then a completely internal view - and not even too helpful: If one
> scraps a product at step 3, what was the added value at step 1 and 2?
> Nothing but a waste of time and effort. Whether value has
> been added in a
> certain step can only be determined AFTER the customer bought
> the final
> product.
The concept of 'added value' is an economic one, Winfried. It deals with
the transformation of raw materials or components, labor, thought, or some
other form of material or energy from a potentially valuable to a
deliverable state. Value add is work performed which creates profit. It
IS an internal metric. Scrap is non-value add, as is a
transport-store-transport cycle. If a heap of nuts, bolts, and sheet
metal is transformed into an automobile in the least possible amount of
steps, value has been added, the customer has been served and wealth, in
the form of profit, has been created. Basic, but true, and useful, most
particulary, in manufacturing, to analyze the cost:price ratio.
John Zavacki
jzavacki@greenapple.com <mailto:jzavacki@greenapple.com>
--"John Zavacki" <jzavacki@greenapple.com>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>