Value is not a simple factor

19 Jul 2019 7:38 AM | John Heap (Administrator)

Lean Thinking emphasises the concept of value - which in business is the creation of product/service features and attributes that the customer wants or needs AND is willing to pay for. 


The second criterion of that statement is very important. If the customer is not willing to pay for something you are creating or adding to your product/service, then you are wasting your time (and money). Take a few moments and think about, say, your car.  If all the items were separately priced, are there some of the ‘included extras’ that you would choose to exclude? In my case, one item is electric windows. In my youth, all car windows were raised and lowered by mechanically turning a handle. The system worked. It was simple. It has been replaced by a system that is more expensive and is more likely to go wrong, resulting in an expensive repair. So, I would  be quite happy to eschew this feature and save a little money. So, why can’t I?


Well, the car companies work on standardised procedures and economies if scale. If I, and others like me, were able to choose between electric and manual window opening, the manufacturer would have to create a separate production line or workstation for the manual option. This would increase costs, add to their parts costs and make manufacturing a little more complex.


These ‘value decisions’ are thus not simple. Manufacturers are continually balancing customer choice and value with manufacturing cost. You, as a customer, may lose a little choice but you do get a cheaper car.


And, of course, price is factored into your value decision. 



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