of characteristics: order qualifiers and order winners. Order qualifiers are characteristics of a product that convince a customer to consider a product. Order winners are characteristics that convince the customer to buy the product. Different market segments define order qualifiers and order winners differently. For example, order qualifiers in the eyes of a commercial airline flyer are entirely different from order qualifiers of a wealthy businessman who wants to buy a private jet. Customers purchase products based on the value that they will derive from a product. That value is the greatest amount that the customer is willing to pay. Several companies might propose their products with different prices. If customers view different values in these different products then they will buy the product with the largest gap between the value they derive compared to the product or process that the manufacturer or service provider offers. We refer to the difference between that value in the eye of the customer and the market price of a product/service as consumer surplus. Process Competencies Cost Customers are defined in four dimensional space: how much they are willing to pay, the quality they expect to get, the time that it takes to get the product and the variety of options they do have. Firms define their Customer Value Proposition to meet and exceed those expectations. In order to deliver the necessary customer value proposition, firms create Process Competencies in four-dimensional space of cost, quality, time and flexibility. Producers need to have process competencies in these four dimensions to reflect a Customer Value Proposition in the product that meets and exceed customer expectations. For example, companies try to produce accurately priced products to satisfy the customer expectation in the price dimension. The cost dimension is the total cost of producing and delivering the products or outputs. Producers look at the process to discover what parts of the production process are value-adding and what parts are non-value adding. Non-value adding processes do not play a role in the transformation process of producing a product or delivering a service. Therefore, non-value adding processes are removed to lower production cost. To keep quality high and costs low, producers also need to allocate appropriate resources to each activity. If resource cost is higher than activity cost, activity cost goes up. If resource cost is lower than activity cost, quality of process or product goes down. Therefore, producers need to find out exactly the appropriate resource cost is. Producers also need to have high standardization and low variations in arrival time and processing time along with high utilization. Producers need to fully utilize
of characteristics: order qualifiers and order winners. Order qualifiers are characteristics of a product that convince a customer to consider a product. Order winners are characteristics that convince the customer to buy the product. Different market segments define order qualifiers and order winners differently. For example, order qualifiers in the eyes of a commercial airline flyer are entirely different from order qualifiers of a wealthy businessman who wants to buy a private jet. Customers purchase products based on the value that they will derive from a product. That value is the greatest amount that the customer is willing to pay. Several companies might propose their products with different prices. If customers view different values in these different products then they will buy the product with the largest gap between the value they derive compared to the product or process that the manufacturer or service provider offers. We refer to the difference between that value in the eye of the customer and the market price of a product/service as consumer surplus. Process Competencies Cost Customers are defined in four dimensional space: how much they are willing to pay, the quality they expect to get, the time that it takes to get the product and the variety of options they do have. Firms define their Customer Value Proposition to meet and exceed those expectations. In order to deliver the necessary customer value proposition, firms create Process Competencies in four-dimensional space of cost, quality, time and flexibility. Producers need to have process competencies in these four dimensions to reflect a Customer Value Proposition in the product that meets and exceed customer expectations. For example, companies try to produce accurately priced products to satisfy the customer expectation in the price dimension. The cost dimension is the total cost of producing and delivering the products or outputs. Producers look at the process to discover what parts of the production process are value-adding and what parts are non-value adding. Non-value adding processes do not play a role in the transformation process of producing a product or delivering a service. Therefore, non-value adding processes are removed to lower production cost. To keep quality high and costs low, producers also need to allocate appropriate resources to each activity. If resource cost is higher than activity cost, activity cost goes up. If resource cost is lower than activity cost, quality of process or product goes down. Therefore, producers need to find out exactly the appropriate resource cost is. Producers also need to have high standardization and low variations in arrival time and processing time along with high utilization. Producers need to fully utilize