The Added-Value Metric - A Complementary Performance Measure for Six Sigma and Lean Production

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1 The Added-Value Metic - A Complementay Pefomance Measue fo Six Sigma and Lean Poduction Djoko Setijono & Jens J. Dahlgaad Depatment of Foest and Wood Technology, School of Technology & Design, Växjö Univesity, Sweden Division of Quality Technology and Management, Linköping Univesity, Sweden djoko.setijono@vxu.se; jenda@ikp.liu.se Abstact The Six Sigma and Lean Poduction methodologies suggest that ceating value fo customes is the objective of a poduction pocess o an oganisation. In the poduction context, "added value" dominates the discussion about the ceation of value to customes. Howeve, "added value" is often only defined conceptually o discussed at a stategic level, and the link between added value and custome value has not yet been well conceptualised. Theefoe, the pupose of the pape is to develop a methodology to measue added value in ode to complement the existing pefomance measues in Six Sigma and Lean Poduction by conceptualising the link between custome value and added value. The conceptual link "confims" that quality, time, and costs ae the elements of added value, which ae tansfomed into a metic to expess custome value. The implementation of the metic ecommends the adoption of Lean (Six) Sigma and Lean Accounting (Activity Based Costing), which thus implies that "leanness" is an impotant "featue" of added value. Keywods: Added value, Pefomance measue, Custome Value, Six Sigma, Lean Poduction Categoy: Conceptual pape Intoduction Accoding to Conti (2005), an oganization is a system that geneates [custome] value. This statement implies that a fim is a value-adding opeation (Gönoos, 1996) o system (Fawcett and Fawcett, 1995), whee the value added by a fim is the value ceated by all the playes in the vetical chain minus the value ceated by all the playes except the one in question (Bandebuge and Stuat, 1996; in de Chenatony et al, 2000). Moeove, the Six Sigma and Lean Poduction methodologies suggest that the objective of a poduction pocess is to ceate, delive, and impove custome value (Womack & Jones, 1996; Beyfogle, 2001; Like, 2004). Thus, added value becomes a company's attempt to povide value fo its customes. Hence, in the poduction context, custome value is "acknowledged" as added value unde a cicumstance that in diffeent contexts, custome value may "appea" in diffeent "modes" (Setijono, 2005). The hypothetical elationship o association between added value and custome value has been descibed by, e.g. de Chenatony et al (2000) and Gönoos (1997), besides that the elationship seems to be well gounded within the pinciples of Lean Poduction. Accoding to de Chenatony et al (2000), added value enables 1

2 oganizations to delive supeio custome value as well as enables customes to ecognize supeio value and be moe confident in thei choice. The tem "custome value" stated by de Chenatony (2000) efes to the value ecognised by customes pio to the puchase o acquisition of a poduct, i.e. peceived custome value. The hypothetical elationship between added value and custome value suggested by de Chenatony (2000) seems to be consistent with the way Gönoos (1997) defines the elation between [peceived] custome value and added value, that Peceived Custome Value = Coe Value ± Added Value. This elation implies that added value may have a positive o negative impact on peceived custome value. Gale (1994) suggests that peceived custome value is the atio between maket peceived quality and maket peceived pice. Meanwhile, Hay & Cawfod (2005) defines added value as a function of utility, access, and costs. Although Gönoos (1997) and Gale (1994) discuss the same concept, thei desciptions and/o fomulations indicate a divegence. Theefoe, compaing these two definitions might be confusing. A possible explanation is that Gale (1994) explains peceived custome value fom the puchase's (custome's) point of view, while Gönoos (1997) explains a simila concept fom the view of a sevice povide (poduce). The five pinciples of Lean Poduction [i.e. defining custome value, identifying the value steam, making the value ceation steps flow, let the customes pull the value fom the value steam, and pusue pefection in ceating value] (see e.g. Womack and Jones, 1996; Like, 2004; Dahlgaad and Dahlgaad Pak, 2006) contain the philosophy that the way a company ceates value to its customes will influence the customes' peception about value. The main "message" behind the five pinciples of Lean Poduction is that the poduce fist intepets (define) custome value into seveal specific citeia. These citeia detemine the value steam, whee the "value" flows along the defined steam, so that the customes can pull the value fom the poduce at the time they wish. The way of expessing value also needs to be continuously impoved towads pefection. Hence, we notice that: 1) the hypothetical elationship o association between added value and custome value is somewhat fuzzy, in the sense that thee is no adequate conceptualisation povided, although the elationship between added value and custome value exists theoetically and is acknowledged by eseaches, and 2) this fuzziness might be the eason behind the "absence" of pefomance measues which adequately eflect the notion of custome value. This is pobably why the pefomance measues in Six Sigma and Lean Poduction inadequately indicate the success (eventually failue) of a company in poviding and/o impoving custome value. Theefoe, the pupose of this pape is to explain the conceptual link between added value and custome value in ode to undestand in what way added value enhances custome value, so that the suggested methodology to measue added value may be used to indicate the custome value ceation. The pape will be oganized in the following way: fist, the authos will povide a theoetical eview about custome value and pefomance measues in Six Sigma and Lean Poduction. Then, a conceptual link between added value and custome value will be descibed. Next, the authos suggest a methodology to use the added value as a metic to measue pefomance. The pape finalizes with conclusions. 2

3 Liteatue eview Pefomance measues in Six Sigma and Lean Poduction Accoding to Beyfogle et al (2001), the metics used to measue pefomance must be elated to custome value. Howeve the existing Six Sigma metic, i.e. numbe of defect pe million oppotunities (dpmo) does not seem to eflect the custome-value oientation because: 1) quality, as an impotant component of custome value is not meely about defects and it is not adequate to measue quality based on just defects, 2) custome value as a metic, is a function of caefully selected cost elements, and the dpmo in itself "fails" to show o expess this elation in its metic. The weaknesses of the dpmo metics become moe obvious if we conside the statement of Geoge (2002) that the dpmo is not always applicable at a copoate level o in sevice-oiented companies due to the fact that it is not always easy to define and count defects. Geoge (2002) futhe states that many Six Sigma pactitiones have not yet addessed the issue of the impotance of non-manufactuing defects elated to dpmo o thei value. A simila phenomenon can also be found in Lean Poduction, whee the pefomance measue does not well eflect the intended goal to be achieved. The main goal of Lean Poduction is to povide custome value (Womack and Jones, 1996; Hines et al, 2004), but the application of lean thinking at the opeational level, i.e. in tems of shop-floo tools, does not apply this pinciple (Hines et al, 2004). The "success" in poviding custome value is measued though cycle time, unde the assumption that the eduction o elimination of waste will ceate a smoothe flow and a shote cycle time. Time is cetainly an impotant element of custome value, but measuing custome value meely in tems of cycle time is consideed to be inadequate. Custome value in the context of poduction Thee is a "univesal ageement" that value is a means to gain competitive advantage (Gönoos, 1997; de Chenatony, 2000; Hube et al, 2001; Khalifa, 2004) besides its extensive application in vaious disciplines (Wikstom and Nomann, 1994; in Hube et al, 2001). Although it is "ageed" that custome value is geneally defined as a atio between benefits and sacifices (see e.g. Gale, 1994; Ravald and Gönoos, 1996; Dumond, 2002; Khalifa, 2004), value is a complex and difficult-to-define tem (de Chenatony et al, 2000; Khalifa, 2004) because "... the value concept is multifaceted and complicated by numeous intepetations, biases, and emphases" (Hube et al, 2001; pp. 42). Setijono (2005) suggests that, in the context of poduction, custome value manifests into added value. Added value becomes the cues to ecognize supeio custome value that may lead to confidence in choice (de Chenatony et al, 2000). Hence, it may imply that added value is a "tade mak", which "cetifies" that the poduct is valuable fo customes in the sense that customes "get" moe than what they "give" (i.e. the benefits is highe than the sacifices). Hay & Cawfod (2005) povide a conceptual fomulation of added value (AV), that: U * A AV = (1) C 3

4 Whee U is the utility, A epesents access, and the cost is defined as C. Equation (1) implies that the added value to customes is educed if the poduct is not easily accessed when needed (A < 100%) and/o if the poduct is too costly, although the poduct has "pefect" utility (U = 100%). Linking added value and peceived custome value Fist-ode and second-ode models of peceived custome value Defining peceived custome value, as a atio between "oveall benefits" (such as maket peceived quality) and "oveall sacifices" (such as maket peceived pice) epesents a second-ode model of peceived custome value. Thus the elation between "benefits" and "sacifices" with the constuct of peceived custome value is fomative, which means that the "benefits" and "sacifices" ae the components of peceived custome value o have a causal effect on it (Lin et al, 2005). It is likely that we could select seveal to descibe what "benefits" and "sacifices" consist of when we "beak down" o "disaggegate" the "benefits" and "sacifices". The esult leads to a fist-ode model of peceived custome value, whee the "benefits" consist of "get 1", "get 2",... "get n" ( that ae elated/associated to the benefits gained by the customes) and the "sacifices" consist of "give 1", "give 2",... "give n" ( that ae elated/associated to the sacifices that the customes need to make when obtaining the poduct). Unlike the second-ode model, the fist-ode model is eflective, which means that those selected ae the manifestation o the effect of peceived custome value (Lin et al, 2005). Figue 1 descibes the fist-ode and the second ode models of custome peceived value. The figue is adapted fom Lin et al (2005) with modifications <Take in figue 1> Figue 1. The conceptualisation of peceived custome value Lapiee (2000) uses fist-ode dimensions (whee each dimension consists of seveal ) such as poduct quality, esponsiveness, eliability, pice, time/effot/enegy, etc and classifies these dimensions into the following categoies: poduct-elated, sevice-elated, and elationship elated. Lin et al (2005) use "constucts" (whee each constuct also consist of seveal ) such as monetay sacifice, fulfilment/eliability, custome sevice, (the efficiency of) website design, etc. With this backgound, we classified the fist-ode dimensions as descibed in Lapiee (2000) and the constucts as descibed by Lin et al (2005) into the following categoies: quality (of poduct, sevices, and elationship), time, and pice. The "new" way of categoizing the fist-ode dimensions (constucts) becomes the key to undestand the link between added value and custome value. Convegence meanings/intepetations of added value Viewing the fist-ode of peceived custome value fom a diffeent angle leads to an undestanding that quality, costs, and pice ae impotant manifestations (o indicatos) of custome [peceived] value. This finding is consistent with the statement of Womack and Jones (1996, pp. 141) egading custome value that it should be "...defined in tems of a specific poduct with specific capabilities offeed at a specific time and pice". Kippenbege (1997) discussed that a poduct with specific capabilities offeed at a specific time and pice is a meaningful expession of 4

5 custome value. Thus, the poduct's capabilities, time, and pice ae poduce's view egading what custome value compises. Accoding to Hay and Cawfod (2005), added value can be defined as a function of utility, access and costs. Hay and Cawfod descibe utility as "the fom, fit, and function of the poduct", and access as "factos such as the volume poduced, the timing of availability to the maket, and the location of distibution" (ibid, pp. 130). It is then clea that utility efes to quality, while access is elated to time. Consideing that 1) poduct capabilities ae the basis fo customes to judge poduct quality, and 2) pice is a sum of costs and magin, then the definitions of value suggested by Hay and Cawfod (2005) and Womack and Jones (1996) eached a consistency (convegence) in meaning o intepetation. Thus we conclude that added value is the manifestation of custome value in a poduction context, which compises quality, time, and costs. Hence, it is suggested that added value (AV) is defined as: AV Q * T = (2) C Fom (2), it follows that the condition fo impoved added value is that at least one of the following equiements is fulfilled: impoved quality (Q), impoved time (T), and educed cost (C). This fomula is useful as the basis to develop a metic to measue added value in elation to customes. Conceptualization of the link between added value and custome value The desciption fom the pevious section has "evealed" the "invisible" link between added value and custome value, and it has been descibed that the basic "ingedients" of added value ae quality, time, and costs. Howeve, the complexity of conceptualising the link between added value and peceived custome value may stem fom the fact that: 1) it involves two entities and two diffeent contexts, whee supplie (poduce) and customes may have diffeent intepetations of quality, time, and costs, and 2) it may be isky if the intepetation and the expession of value doesn't "match". Incoect intepetation and expession may lead to a failue in ecognizing supeio custome value, and thus the "absence" of a puchase tansaction. Theefoe, conceptualising the link between added value and custome value is a "delicate" matte and equies caeful eflections. The following desciption conceptualises the link between added value and custome value. The customes pefe to buy a poduct o sevice, which is capable to fulfil thei needs and/o goals. Thus, customes judge poduct o sevice quality based on the capability to fulfil thei goals o needs. Howeve, the poduce (supplie) intepets quality as: 1) the attactiveness of the poduct to the customes and 2) the poduct should be fee fom defects. Though these intepetations, the poduce may expect that the poduct will likely satisfy customes' needs and intended goals. Customes' view egading time is that the poduct o sevice should be available when needed o just-in-time (Womack and Jones, 2005). Howeve, the poduce intepets just in time (JIT) as a shote and shote cycle time. Even though shote 5

6 cycle time is a "misconception" of the actual JIT meaning, it enables the poduce to ensue that poduct o sevice is available when it is needed. The customes pefe that the pice should be fai (Padula and Bussaca, 2005). When the pice is fai, it might also be peceived as cheap. The peception of fainess o cheapness is a esult of compaison between the custome willingness to pay and the actual pice offeed by the poduce, and thus it may not always be associated with a lowe pice. Howeve, the poduce intepets fai o cheap as a continuous eduction of poduct cost. Even though a continuous eduction of poduct cost may not be a "coect" intepetation of fai o cheap, it enables the poduce to ensue that the pice offeed would not exceed the pice level that the customes ae willing to pay. Figue 2 povides a [visual] conceptualisation of the link between added value and peceived custome value, as well as explains how added value becomes the enable of custome value. The figue may enable companies to develop a methodology to measue added value. <Take in figue 2> Figue 2. Added value as the enable of custome value Measuing added value Accoding to Andeson & Naus (2004), custome value consists of the following elements: poduct leadeship, custome intimacy, and opeational excellence. De Chenatony et al (2000) stated that "focus on pocess" is an impotant chaacte of added value, and it is the popety that makes added value an enable of custome value. This implies that added value should be measued in the coe pocesses (o value steams). Six Sigma and Lean Poduction ae pocess-oiented methodologies that may help companies to achieve poduct leadeship, custome intimacy, and opeational excellence. Six Sigma is output-oiented, which explains why dpmo is the most impotant measue in Six Sigma. Meanwhile, Lean Poduction is activity-oiented, which explains why faste flow (shote cycle time) is the most impotant measue in Lean poduction. Theefoe, the synegy (fusion) between Lean Poduction and Six Sigma may incease and optimise added value (Anheite and Maleyeff, 2005). These two methodologies have also diffeent views egading cost and costing. In Six Sigma, the costs ae likely detemined in a taditional way (poduct-based). Lean Poduction, on the othe hand, views that costs occu due to a consumption of esouces in cetain pocess activities, and thus, it is activity-based (Bhasin and Buche, 2006). This might explain why Six Sigma emphasizes defect eduction in ode to educe costs, while Lean Poduction emphasizes smoothing the pocess flow by educing o eliminating non-value added activities in ode to educe costs. Theefoe, the implementation of Lean Sigma needs to conside a costing method that eflects custome oientation. Activity Based Costing (ABC) may fulfil this equiement because it is based on the assumption that costs ae diven by esouce consumption in the pocesses o activities to give what customes want and value (Lebas, 1995). The application of ABC may suppot the identification of activities that add and do not add value to customes, which allows a company to identify 6

7 impovement oppotunities to educe o avoid "waste". This might be the eason that ABC is also known as Lean Accounting (Schonbege, 2005; Bhasin and Buche, 2006). Consequently, the application of ABC is a way to identify non-value added costs (o the quality costs) that takes into account the view of Lean Poduction egading costs and costing. Tsai (1998) descibes that cost of quality can be identified and measued by using Activity Based Costing (ABC), whee the cost of quality is defined as the sum of value-added quality costs and non-value added quality costs. Hee, value added quality costs include the costs fo peventing failues, while non value-added quality costs ae costs of appaisal and costs due to failues (intenal and extenal failues). The Lean Poduction (Toyota Poduction System) methodology defines added value as the actual tansfomation pocess o the coe pocess that the custome is paying fo, and eveything that is not a pat of the coe pocess actually does not add value to the customes and will theefoe be egaded as "waste" (Like, 2004). The waste o non-value added could futhe be classified into necessay waste (e.g. inspections, contol systems to check that pocedues ae being followed, documentation) and pue waste (e.g. failues, ewoks). An example fom a Danish company (see Dahlgaad and Dahlgaad Pak, 2006) showed that a lage potion of salay costs fo unning a sevice pocess wee spent on waste of diffeent kind. Between 40-50% of the paid woking time was used to identify and coect failues, and the same pecentage was used to poduce non-value added output. The two concepts of added value ovelap each othe and they actually fit pefectly if we see them fom the ight angle. These two concepts ae actually explaining simila things fom diffeent pespectives. The non-value added output o activities (i.e. the wastes) add exta costs ( C) to the "ideal poduct cost", defined as the costs when "quality is pefect" o thee is no waste. This means that C is the diffeence between actual poduct costs (C) and the poduct costs when quality is pefect (C*). Campanella (1990; in Dahlgaad et al, 1998) defines this as the cost of quality (COQ). Hence we may expess that: COQ * = C = C C (3) It may then be obvious that the costs of quality ae actually non-value added costs. It should also be ecognised that a cetain cost categoy in quality costs (i.e. pevention costs) is valuable fo the poduce to geneate (ceate) what is valuable fo the customes. To sum up, the costs of quality should epesent (eflect) both necessay and pue waste, whee the costs ae measued accoding to a pocess-based o activity-based model. The seven types/citeia of waste (Like, 2004) povide guidelines to detemine whethe an activity adds value o not. Custome value as a metic fo impovement measuement Thee ae two complementay stategies to impove custome value. The fist stategy is to focus on poduct development, whee "custome voices" and new undestandings 7

8 of customes' latent needs become the input. The second stategy is by focusing on pocess impovements, whee elimination of waste along the value steam is the key. In the second stategy, waste is defined as anything that does not add value to customes, such as failues and othe non-value adding activities o output. The impovement effots to incease the added value should then be focused in eithe impoving the benefits (1st stategy) o educing unnecessay costs (2nd stategy). In ode to be able to use value added as an opeational metic to measue the pogess of impovement, we need to ensue that the components of added value have the same unit of measuements. Theefoe, the added value to custome (AV) as a metic to measue pefomance is defined as: AV Q * T C = (4) Thus, added value is a function of the elative pefomance of quality ( Q ), the elative pefomance of time ( T ), and the elative pefomance of cost ( C ). Relative pefomance of quality ( Q ) can be defined as the atio between the yield (Y) at peiod (i+1) and yield at peiod (i). Yield is defined as the pecentage of output that confoms to the specifications, i.e. the atio between the amount of acceptable poducts and the total amount poduced. Then: Q Y Y i+1 = (5) i The waste does not only influence costs, but also cause a longe cycle time than necessay, due to the time consumed by non-value added activities. Theefoe, the cycle time (T C ) can be geneally expessed as a sum between value-added time (T VA ) and non-value added time ( T VA ). A moe effective and efficient opeation is expected to educe the non-value added time, and theefoe educe the cycle time. Hence: T = T + T (6) C VA VA Fom (6), we define the faction of value added time (ν), which is defined as a atio between value-added time (T VA ) and the cycle time (T C ). Hence: T T VA ν = (7) C Relative pefomance of time ( T ) is defined as a atio between the faction of valueadded time (ν) at peiod (i+1) and the faction of value added time at peiod (i). Then: T ν i + 1 = (8) ν i 8

9 Theefoe: TVA( i+ 1) / TC ( i+ 1) TVA( i+ 1) TC ( i) T = = * (9) T / T T T VA( i) C ( i) VA( i) C( i+ 1) The elative pefomance of cost ( C ) is defined as the atio between non-value added costs ( C ) at peiod (i+1) and non-value added costs at peiod (i). Then: VA C CVA( i+1 ) COQi+1 = = (10) C COQ VA ( i) i The analytical model of added value is consistent with the fundamental definition of custome value (i.e. a atio between "benefits" and "sacifice"). In fact, added value becomes the poduce's way to expess custome value, whee educed numbe of defects and faste cycle time incease the customes' peception egading the benefits and eduction of non-value added costs is poduce's attempt to educe customes' sacifice in getting the benefits. The poduce's way of expessing and impoving custome value towads sustainable custome value though the entie poduct's life cycle equies the adaption of Lean Sigma and Lean Accounting, which then implies that "leanness" is a cucial "featue" of added value. Example: Let's conside the data as shown by table I in ode to calculate the added value. Table I. Illustative data Peiod (i) Peiod (i+1) Yield (%) Value added time (min) Cycle time (min) Cost of quality (SEK) 20,000 18,500 Thus, added value is: AV = * * ,500 20,000 = Based on the esult, we may intepet that duing peiod (i+1) the company has impoved its pefomance and added 16.6% moe value to the customes. Conclusions Custome value is the "ultimate" goal of Six Sigma, Lean Poduction, and Lean Sigma methodologies. Howeve, the existing ways of measuing pefomance hadly indicate (epesent) the concept of custome value itself, which might be caused by a "fuzzy" conceptualisation of the link between the value to customes fom customes' 9

10 pespective (i.e. custome value) and the value to customes fom poduce's pespective (i.e. added value). Theefoe, in ode to ovecome this inconsistency, it is necessay to claify the conceptual link between custome value and added value, which allows us to expess added value as a pefomance measue. The utilization of custome value as a metic is expected to povide a "bette" pefomance measue fo both Six Sigma and Lean Poduction methodologies. REFERENCES Andeson, J.C., Naus, J.A. (2004), Business Maket Management undestanding, ceating, and deliveing value, Second edition, Peason Pentice Hall, New Jesey. Anheite, E.D., Maleyeff, J. (2005), The Integation of Lean Management and Six Sigma, The TQM Magazine, Vol. 17, No. 1, pp Bhasin, S., Buche, P. (2006), Lean viewed as a Philosophy, Jounal of Manufactuing Technology Management, Vol. 17, No. 1, pp Beyfogle, F.W., Cupello, J.M., Meadows, B. (2001), Managing Six Sigma: a pactical guide to undestanding, assessing, and implementing the stategy that yields bottom-line success, John Wiley & Sons, Inc. Conti, T. (2005), Quality and Value: convegence of system thinking, Poceeding of Wold Confeence on Quality and Impovement, Seattle. Dahlgaad, J.J., Kistensen, K., Kanji, G.K. (1998, 2002), Fundamentals of Total Quality Management, Nelson Thones, UK. Dahlgaad, J.J., Dahlgaad-Pak, S.M. (2006), "Lean Poduction, Six Sigma Quality, TQM, and Company Cultue", TQM Magazine, Vol. 18, No. 3, pp De Chenatony, L., Hais, F., Riley, F.D. (2000), Added value: its natue, oles, and sustainability, Euopean Jounal of Maketing, Vol. 34, No. 1/2, pp Dumond, E.J. (2000), Value Management: an undelying famewok, Intenational Jounal of Opeations & Poduction Management, Vol. 20, No. 9, pp Fawcett, S.A., Fawcett, S. A. (1995), The fim as a value-added system, The Intenational Jounal of Physical Distibution and Logistics Management, Vol. 25, No. 5, pp Gale, B.T. (1994), Managing Custome Value, The Fee Pess, New Yok. Geoge, M.L. (2002), Lean Six Sigma - combining Six Sigma quality with Lean speed, McGaw-Hill. Gönoos, C. (1996), Relationship Maketing: Stategic and Tactical Implication, Jounal of Management Decision, Vol. 34, No. 3, pp Gönoos, C. (1997), Value-Diven Relational Maketing: fom Poducts to Resouces and Competencies, Jounal of Maketing Management, Vol. 13, No. 5, pp Hay, M., Cawfod, D. (2005), "Six Sigma - the next geneation", Machine Design, Vol. 77, No. 4, pp Hines, P., Holweg, M., Rich, N. (2004), "Leaning to evolve - a eview of contempoay lean thinking", Intenational Jounal of Opeations & Poduction Management, Vol. 24, No. 10, pp Hube, F., Hemann, A., Mogan, R.E. (2001), Gaining Competitive Advantage though Custome Value Oiented Management, Jounal of Consume Maketing, Vol. 18, No. 1, pp Khalifa, A. S. (2004), Custome value: a eview of ecent liteatue and an integative configuation, Jounal of Management Decision, Vol. 42, No. 5, pp Kippenbege, T. (1997), Apply Lean Thinking to a Value Steam to Ceate Lean Entepise, The Antidote, Vol. 2, No. 5, pp

11 Lapiee, J. (2000), Custome Peceived Value in Industial Context, Jounal of Business and Industial Maketing, Vol. 15, No 2/3, pp Lebas, M.J. (1995), Pefomance Measuement and Pefomance Management, Intenational Jounal of Poduction Economics, Vol. 41, No. 1-3, pp Like, J. K. (2004), The Toyota Way, McGaw-Hill. Lin, C.H., She, P.J., Shih, H.Y. (2005), Past Pogess and Futue Diections in Conceptualizing Custome Peceived Value, Intenational Jounal of Sevice Industy Management, Vol. 16, No. 4, pp Padula, G., Busacca, B. (2005), "The asymmetic impact of pice-attibute pefomance on oveall pice evaluation", Intenational Jounal of Sevice Industy Management, Vol. 16, No. 1, pp Ravald, A., Gönoos, C. (1996), The Value Concept and Relationship Maketing, Euopean Jounal of Maketing, Vol. 30, No. 2, pp Schonbege, R.J. (2005), Lean Extended, Industial Enginee, Vol. 37, No. 12, pp Setijono, D. (2005), "Custome value measues: indicatos and diving factos of quality impovement oppotunities and competitiveness", Poceeding of the 8th QMOD Confeence, Palemo, Italy. Tsai, W-H. (1998), "Quality cost measuement unde activity-based costing", Intenational Jounal of Quality & Reliability Management, Vol. 15, No. 7, pp Womack, J.P., Jones, D.T. (1996), "Beyond Toyota: how to oot out waste and pusue pefection", Havad Business Review, Vol. 74, No. 5, pp Womack, J.P., Jones, D.T. (2005), Lean Solutions: how companies and customes can ceate value and wealth togethe, Simon and Schuste, London. 11

12 LIST OF FIGURES Figue 1 Lapiee (2000) 2nd ode 1st ode Poduct-elated Benefit-elated Get 1 Get 2 Get n Sevice-elated Relationshipelated Sacifice-elated Give 1 Give 2 Give n Peceived Custome Value 12

13 Figue 2 Poduce's Intepetation High quality (attactive; zeo defect Shote cycle time and/o delivey time Lowe cost Customes' Pefeence Capable to fulfill needs o goals Available when needed (JIT) Fai, cheap Qualityelated Time-elated Piceelated Peceived Custome Value 13