CUSTOMER VALUE ASSESSMENT METHODS IN ARVO

In ARVO research project a method called the Kano model (e.g. Kano et al. 1984, Löfgren and Witell 2008) was used to define customer value. The Kano model explains how customer perceives the value of products or services through five dimensions:

1. Must-be dimension: The must-be dimension describes the basic level for product and service attributes. If the basic level is not achieved, the customer will not be satisfied. The must-be attributes cannot increase customer satisfaction, i.e. they cannot provide richer customer value.
2. Attractive dimension: As an opposite to must-be attributes, attractive attributes can provide richer customer value. However, they cannot cause customer dissatisfaction, because the customer does not expect them.
3. The-more-the-better dimension: These attributes are simple - the more there is such an attribute, the more satisfied the customer will be.Because customers expect these attributes, they can also cause dissatisfaction when the expectations are not fulfilled.
4. Reverse dimension: Reverse attributes are opposite to the-more-the-better attributes.The more there is such an attribute, the more dissatisfied the customer will be.
5. Indifferent dimension: Attributes in this dimension do not impact customer satisfaction, i.e, they do not cause satisfaction or dissatisfaction. Therefore, organisations do not have to invest in attributes in this dimension.

Kano model and its five dimensions (adopted from Jylhä and Junnila 2012)

IMPROVEMENT POTENTIAL IN VALUE CREATION

The second aim of the ARVO project refers to the actual value creation. The current value creation was studied and visualised in order to understand what happens between the input and output. Based on the analysis, six typical sources of waste were identified that were interrupting the value creation. If the below described sources of waste could be eliminated or minimised, REB organisations could gain impressive efficiency gains.

1. Sub-process focus: According to the case studies, the value creation is organised through sub-processes. In each sub-process the person (or team) in charge tries to optimise their operations without knowing how the changes and improvements in their sub-process impact on the other sub-processes. After each sub-process, the value creation is handed from one person to another. Because of all the hand overs, the flow is disturbed.
2. Price minimisation: Cost minimisation has a central role in lean and this is typically achieved through waste elimination. The case studies show that cost minimisation has also a dominant role in the REB sector, but the way to reduce costs is based on bidding, not on waste minimisation. Through bidding, the actual costs are not necessarely decreased but merely the prices, because waste is not minimised.
3. Unmanaged information flows: Without information it would be challenging to create customer value. Currently, information is not well managed and paradoxally, there is a constant lack of information and constant overload of information.
4. True customer value stays uncaptured: Most likely the most difficult part in lean management is to capture customer value.This was also recognised in the case studies and there were many excuses why the customer value stays uncaptured.
5. The unlevelled workload of employees: According to the findings of the case studies, the workload of the employees is not levelled. The employees have a constant overload of work, which creates frustration. The workload of employees could be levelled by minimising the waste activities that the employees are currently doing, i.e., activities that should not be done at the first place.
6. Continuous improvements are challenging to realise: In lean management, improvements are done constantly in the daily working. In the case studies, employees created best practices in order to improve their own daily working. However, these practices were not shared systematically. Because of this, the wheel was invented over and over again and it wasted resources and time. The improvements that are aimed for sharing are usually done in projects. Lean management suggests that improvements are integrated to the daily working, not done in separate projects.

THE LEANREB MODEL

The leanREB model is based on the six sources of waste described above. The model describes three major shifts that assist to enhance the value creation. The shifts are

1. The shift from sub-process optimisation to the entire value creation process
2. The shift from price minimisation to costs minimisation with the help of waste reduction
3. The shift from collecting data to utilising it

To implement the shifts, the three key concepts of lean management should be taken into use: waste thinking, customer value approach and the strive to do improvements continuously.