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Being Valuable' or How Do We Show That What We Are Delivering Is of Value.'

There are many ways to measure the value of a product or service, but it is difficult to do so quantitatively. Value can be measured through profitability, market position, customer utility and perception, and collaborative estimation. An organization must determine which metrics are most useful for measuring value delivery. Customer retention, engagement, acquisition, and feedback are also good indicators of whether a product provides value. Applying lean principles in a workplace could include processing invoices correctly the first time, having efficient budgeting and cost allocation processes, and timely reporting to support decision making.

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30 views

Being Valuable' or How Do We Show That What We Are Delivering Is of Value.'

There are many ways to measure the value of a product or service, but it is difficult to do so quantitatively. Value can be measured through profitability, market position, customer utility and perception, and collaborative estimation. An organization must determine which metrics are most useful for measuring value delivery. Customer retention, engagement, acquisition, and feedback are also good indicators of whether a product provides value. Applying lean principles in a workplace could include processing invoices correctly the first time, having efficient budgeting and cost allocation processes, and timely reporting to support decision making.

Uploaded by

ninnyragay
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NIÑA THERESA L.

RAGAY MBA 09-SUMMER CLASS 2020


WEEK 4 DISCUSSION 2
Discussion topic (Reference: Video on Elements of a JIT Manufacturing System Part 2)
 What is your understanding of the term “value”? How easy (or difficult) is it to measure value
and deliver it to the customers? What has been your experience in using the defining paradigms
of JIT and Lean in your business?

My understanding of the term “value” is that it is a measure of something’s worth and importance. It
also implies the rating of a thing highly for its intrinsic worth. Value is the thing that your customers pull
from your organization, so it is really easy to find but it is hard to measure. One can either measure it
through quantitative basis or a simpler way through the following questions:

In most circumstances, it has been found that what is really being asked is either ‘how do we show we are
being valuable’ or ‘how do we show that what we are delivering is of value.’
So there are three value measures implicit in this:
 Measuring improvement (Are we good?)
 Measuring if we met our commitment (Did we deliver the benefit?) and
 The true measure of value; was it of value to customers?

Each is a different question and measure, none of which are standard.  This creates an enterprise rub as
many corporate structures demand broad sweeping quantitative measures that can be benchmarked and
compared.

However, one could also measure value through the following:

 Measuring Value by Profit

Many organizations look at the sheer profitability of a product to measure its value. One approach is to
use the simple equation Value = Benefits / Cost.

 Measuring Value by Market Position

Another common metric to demonstrate a product’s value is market position. Looking at the sheer volume
of the market your product holds over competitors can give a real picture of the way consumers view the
product.

 Measuring Value by Utility

Consumers stay loyal to products that they can apply in their life in a meaningful way. Utility of a product
can be measured through a number of quantitative research methods and competitor comparative studies.
 Measuring Value through Customer Perception

Your product is a large part of your brand, so the way customers view your product reflects how they
view your organization. Measuring customer perception of your product, as with measuring utility, gives
you a good quantitative metric that can be measured over time and compared to your competitors.

 Defining Value Collaboratively

Another common agile approach is a collaborative estimation of value. A product or product feature is
assigned a qualitative value that it delivers to the user or business. It is then given an estimated value
using inputs such as level of effort, risk, and cost. The products or product features are then prioritized
relative to each other.

 Define Value Based on What Matters to You

DEFINE VALUE BASED ON WHAT MATTERS TO YOU


There is no cookie cutter approach to measuring the value of a product. It very much depends on the
organization, product, and the market the product serves.

 Revenue

While revenue can be deceptive when viewed in isolation, when overlaid with other metrics like market
share and customer satisfaction this can give you a good indication of whether you are delivering value to
the market.

 Cost Savings

Some products, such as internal systems, don’t generate revenue. One way to measure the monetary value
of the product is looking at how much it saved your organization over time.

 Customer Acquisition

Look at the rate at which you are gaining new customers. If you are delivering value consistently, this
number should steadily increase.

 Customer Retention

The number of customers you are able to keep is also a strong indicator of value delivery. If you are
losing a large number of customers, this is a clear indication users do not think highly of your product or
find utility in it.

In addition to measuring churn, also gather qualitative and/or quantitative feedback to understand how
your customers perceive your product.

 User Engagement
If customers are using your product, and using it frequently, that speaks volumes about the value it
delivers. Companies such as Facebook and Evernote look at customer engagement as a metric of success.
This data is also invaluable in informing how to enhance your product over time.

Source: (https://www.phase2technology.com/blog/measuring-value-your)

With the metrics and basis mentioned above, there are truly numerous ways to measure value and that’s
the difficult part there for some of these may work and others may not. An organization must find what
metrics are useful and favorable for them in order to measure value in an efficient way. But one thing’s
for sure, product’s value can be seen or reflected through your customers for the existence of your
products comes from the demand of these customers and it aims to supply and satisfy them.

Application of “lean” in my workplace:

 Processing of invoices correctly the first time


 Budgeting processes seamless, smooth and efficient
 Allocations of costs adding value to the decision making process
 Timely submission of reports needed for decision making process
 Updated monitoring and recording of daily transactions

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