Page 320 - The Handbook for Quality Management a Complete Guide to Operational Excellence

Analyze stage objectives include (Keller, 2011a):

• Value stream analysis to determine value-producing activities
• Analyze sources of process variation
• Determine process drivers

Value Stream Analysis
Value stream analysis starts by defining the value of the product or ser-
vice in the eyes of the customer. Value is alternatively defined as:

• Something the customer is willing to pay for
• An activity that changes form, fit, or function
• An activity that converts an input to an output
Value is only relevant at a specific price and point in time. One com-
mon problem in specifying value is that organizations tend to concentrate
on what they are able to deliver, rather than what it the customers really
want, the fallacy of “we know their needs better than they do.” Of course,
when they then try to improve the design or delivery process, the result
can be more efficient muda, but muda none the same. The airline indus-
try’s use of hubs is a great example of this, cited frequently by Womack
and Jones. The hubs serve the airlines’ need to use their existing resources
well, but do not provide what the customer really wants: a hassle-free
journey directly from point A to point B.
Once the customer’s true needs are defined, a target cost is deter-
mined, which is the cost of delivery once all the waste has been removed.
If compet ing products or services exist in the market, the target cost can
be determined by studying the customer’s needs, determining the waste
that exists in the cur rent product/service, and calculating the cost of
delivery once the waste has been removed. The reduced cost of delivery
can lead to lower prices to the cus tomer, or to greater margins for the
business.

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