1. Value Tools Applied to Everyday Problems
A Tutorial for the
Baltimore Section of the American Society for Quality
12 December 2005
LCEA
Life
Cycle
Engineering Associates
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Value Mgmt/asq value meeting_12Dec05.ppt

2. Topics Concepts of Value Concepts of Cost Value Engineering Tools
Pitfalls in Analysis
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Value Mgmt/asq value meeting_12Dec05.ppt

3. Wisdom Through the Ages
“give me a lever and a place to stand and I can move the world” …Archimedes, 3d century BC
“ to measure is to know.” ….James Maxwell, 1871
“If you can’t measure it…you can’t manage it.”
…. ???, ???
“ I can measure anything... or derive a reasonable value for it” ???, 17 September 2001
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Value Mgmt/asq value meeting_12Dec05.ppt

4. Goals of this Session
Give examples of how to begin the value analysis process using everyday examples
Show that imagination must compliment data in arriving at product/service valuations
Perceptions must also be quantified and normalized to tangible values
Identify some of the pitfalls in valuations
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Value Mgmt/asq value meeting_12Dec05.ppt

5. A measure of appropriate cost and performance
What is Value?
A measure of appropriate cost and performance
value always increases by decreasing cost
value increases by increasing performance
[if Customer needs, wants & is willing to pay for]
Maximum Value is never achieved
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Value Mgmt/asq value meeting_12Dec05.ppt

6. Value in ‘Qualitative’ Terms
Simply:
What is received [benefit]
What is paid [cost]
More detailed:
Actual Benefit + Perceived Benefit Price+ Inconvenience + Perceived Cost
Value =
Value =
Notes:
Perceived Benefits or cost include emotions, expectations exceeding reality, additional service, treatment, fairness, “KANO characteristics [can be positive or negative]
Inconvenience is the ‘burden’ associated with the product/service purchased [cost of poor quality, training, inspection, “opportunity costs’
mathematical relationships can be defined for each sub-level of the model; not necessarily linear relationships
use of KANO model characteristics can also be quantified or mathematically modeled
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Value Mgmt/asq value meeting_12Dec05.ppt

7. Finding Data on Value Sources More on surveys survey data focus groups
Comparison shopping
market research companies
includes market share, income/expenses, product cost
More on surveys
structured to get results
ask how much you would pay for the feature of service
ask about compensation expected if needs aren’t met
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Value Mgmt/asq value meeting_12Dec05.ppt

8. Sample Survey Questions
Question is designed to get more information about what customers would pay for reliable appliances:
given the inconvenience of getting warranty work done, would you prefer not to have warranty work in the first place?
How much would you pay for this level of convenience?
< $10
$11-$50
$51-$100
$101-$150
$151-$200
>$200
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Value Mgmt/asq value meeting_12Dec05.ppt

9. Concepts of Cost
How can we verify that the brand name is actually worth $8000?
Surveys,
focus groups
comparison shopping
Is the Name Brand worth $8000?
* PV = perceived value
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Value Mgmt/asq value meeting_12Dec05.ppt

10. Value Engineering Tools
Kano
Value Analysis Matrix [VAM]
Spider web chart
Value stream map
F.A.S.T. diagram
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Value Mgmt/asq value meeting_12Dec05.ppt

11. KANO Modeling: Finding “Breakthrough” Opportunities
Overview of the Model
Human response to product attributes falls along these three main curves. Suppliers of products/services need to know how to react to these attributes
This axis shows how positively Customers respond to the attributes +
EXCITEMENT
PERFORMANCE
EXCITEMENT curve -
“delights Customers”[even when not well executed]
commands a price “premium”; advertise
accumulate “profit” on these features as long as possible - +
BASIC
This axis shows how well the Customers perceives the attributes are being supplied.
PERFORMANCE curve -
roughly a 1-to-1 relationship on how well a supplier delivers an attribute and future Customer loyalty
strategy: advertise those that are done well; downplay others
accumulate “profit” on these features as long as possible
BASIC curve -
must provide these attributes just to stay in the market.
If poorly executed/delivered, will definitely lose the “offended” Customer, plus may lose others through poor ‘word-of-mouth’
strategy: don’t waste money on advertising or sales force training, because cost would outweigh benefits; look at cost-effective quality improvement programs -
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Value Mgmt/asq value meeting_12Dec05.ppt

12. Value Analysis Matrix [VAM]
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Value Mgmt/asq value meeting_12Dec05.ppt

13. Spider Web Chart
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Value Mgmt/asq value meeting_12Dec05.ppt

14. Value Stream Map [changing a tire]
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Value Mgmt/asq value meeting_12Dec05.ppt

15. F.A.S.T. Diagram [Mouse Trap]
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Value Mgmt/asq value meeting_12Dec05.ppt

16. Pitfalls [part 1]
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Value Mgmt/asq value meeting_12Dec05.ppt

17. Pitfalls [part 2]
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Value Mgmt/asq value meeting_12Dec05.ppt

18. Summary Much of Value is perceived
One can always measure/calculate value
Imagination is required in determining value
Branding can add much to the bottom line
Many ways of determining value; most are easy
Be careful of the pitfalls
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Value Mgmt/asq value meeting_12Dec05.ppt

19. [not covered in the session]
Other Examples
[not covered in the session]
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Value Mgmt/asq value meeting_12Dec05.ppt

20. Customer Feedback: Survey Questions to Support KANO
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Value Mgmt/asq value meeting_12Dec05.ppt

21. Value Stream Map [housekeeping]
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Value Mgmt/asq value meeting_12Dec05.ppt

22. Cost of Losing Customers
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Value Mgmt/asq value meeting_12Dec05.ppt

23. For more information, contact...
John Weisz CQE CRE
Life Cycle Engineering Associates [LCEA]
(cell)
LCEA
Life
Cycle
Engineering Associates
11/11/2018
Value Mgmt/asq value meeting_12Dec05.ppt