Value-Driven Channel Strategy

Reginald W. Goeke, R. Eric Reidenbach

Description

Value at the point of production does not automatically translate into value at the point of consumption. Augmenting lean thinking with a more robust and substantial customer value basis makes it even more powerful when applied to the organization’s value stream. This book unleashes the principles of lean thinking as a strategic tool to do just that. As authors Reidenbach and Goeke argue throughout this book, an organization’s ability to use lean techniques not only to eliminate non-value adding costs but also to use the same lean tools to enhance its competitive value proposition is to realize the full power and potency of lean. The concepts explained are pertinent not only to manufacturing but also service organizations that move products/services through channels of distribution. The book will challenge managers from a number of distinct organizational areas to think about the way they view their business. Those in marketing, quality, logistics, Six Sigma, customer relationship management (CRM), market research, and business intelligence will find the book extremely. The principles outlined apply to commercial banks, healthcare, and insurance as well as they do to the automotive or pharmaceutical industries.

Sujets

• Business
• Qualité, hygiène, sécurité, environnement
• Total Quality Management
• Gestion et management
• Economics

Informations

• Publié par: ASQ Quality Press
• Date de parution: 07 avril 2005
• Nombre de lectures: 1
• EAN13: 9780873894357
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

ValueDriven Channel Strategy

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To request a complimentary catalog of ASQ Quality Press publications, call 800-248-1946, or visit our Web site at http://qualitypress.asq.org.

ValueDriven Channel Strategy

Extending the Lean Approach

R. Eric Reidenbach Reginald W. Goeke

ASQ Quality Press Milwaukee, Wisconsin

American Society for Quality, Quality Press, Milwaukee 53203 © 2006 by American Society for Quality All rights reserved. Published 2005 Printed in the United States of America 12 11 10 09 08 07 06 05 5 4 3 2 1 Library of Congress CataloginginPublication Data Reidenbach, R. Eric. Value-driven channel strategy : extending the lean approach / R. Eric Reidenbach.— 1st ed. p. cm. Includes bibliographical references and index. ISBN 0-87389-659-9 (case-bound : alk. paper) 1. Strategic planning. 2. Value. I. Title.

HD30.28.R4194 2005 658.4012—dc22

ISBN 0-87389-659-9

2005011610

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Printed on acid-free paper

Contents

List of Figures and Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 1 Expanding Lean Thinking . . . . . . . . . . . . . . . . . . . . . Current Thinking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expanded Thinking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 2 The Value Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . What Is Customer Value? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Value Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Importance of Value to Lean Thinking . . . . . . . . . . . . . . . . . . Four Value Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Value Model: The Information Platform . . . . . . . . . . . . . . . . The Competitive Value Matrix: The Strategic Radar Screen . . . . . Chapter 3 Five Propositions of Channel Value That Drive Lean Distribution . . . . . . . . . . . . . . . . . . . . . . . Five Key Value Propositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 4 How Do Markets Define Value? . . . . . . . . . . . . . . . . . Which Customer? Which Product? . . . . . . . . . . . . . . . . . . . . . . . . Prioritizing in Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Precise Value Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 5 Linking Value Drivers to Value Delivery Systems . . A Service Firm Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 6 Value Stream Analysis: A Process Overview . . . . . . . The Strategic Focus of VSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Understanding Value Streams . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Business as a Single Value Stream . . . . . . . . . . . . . . . . . . . . . . . A Business as Multiple Value Streams . . . . . . . . . . . . . . . . . . . . . .

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25 26 33 33 38 43 49 58 63 64 65 66 67

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Contents

Value Streams across the Supply Chain . . . . . . . . . . . . . . . . . . . . . 68 Channel Design Incorporates Many Process Impediments . . . . . . 72 Chapter 7 Becoming Lean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Step 1: Extend the Focus—Identify Analytical Priorities . . . . . . . 78 Step 2: Identify Impediments to Value Delivery . . . . . . . . . . . . . . 83 Step 3: Identify Non-Value-Adding Costs . . . . . . . . . . . . . . . . . . . 84 Step 4: Identify Improvement Priorities . . . . . . . . . . . . . . . . . . . . . 85 Step 5: Identify Opportunities for Value-Based Improvements . . . 87 Step 6: Redesign the System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Step 7: Implement the System Changes . . . . . . . . . . . . . . . . . . . . . 89 Step 8: Monitor Effectiveness of the Improvements . . . . . . . . . . . 91 Chapter 8 VSA in Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Monitoring Plan Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Chapter 9 Managing Channel Loyalty: A Necessary Condition for Lean Initiatives . . . . . . . . . . . . . . . . . . 115 Assessing Dealer Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Chapter 10 Implementing Lean Thinking within the Channel Environment . . . . . . . . . . . . . . . . . . . . . 131 Lose the Attitude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Understand Precise Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Pilot with the Loyal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Map Value Streams across Corporate Boundaries . . . . . . . . . . . . . 136 Apply the Appropriate Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 A Value Stream Allegory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Appendix A Understanding the Value Model . . . . . . . . . . . . . . . . . 143 The Predictive Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 The Managerial Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Appendix B The Competitive Value Matrix . . . . . . . . . . . . . . . . . . 147

Appendix C Acquisition and Retention Tools . . . . . . . . . . . . . . . . 151 The Vulnerability Matrix: A Powerful Acquisition Tool . . . . . . . . 151 The Customer Loyalty Matrix: Managing the Annuity Effect of Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Appendix D How Do You Capture Customer Value Definitions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

Figure 1.1 Figure 2.1 Figure 2.2 Figure 2.3 Table 2.1 Table 2.2

Figure 3.1 Figure 3.2 Figure 4.1 Table 4.1 Table 4.2 Table 4.3 Figure 4.2 Figure 4.3

Figure 4.4

Figure 4.5

Figure 5.1

Figure 5.2

Table 5.1

Table 5.2 Figure 5.3

Table 5.3

Figures and Tables

Customer value drives profitability. . . . . . . . . . . . . . . . . . 5 Customer value: An overview. . . . . . . . . . . . . . . . . . . . . . . 10 Generalized customer value model. . . . . . . . . . . . . . . . . . 18 Competitive value matrix. . . . . . . . . . . . . . . . . . . . . . . . . . 20 Comparison of competitive value drivers. . . . . . . . . . . . . . 22 Comparison of competitive scores: “Understands needs” driver. . . . . . . . . . . . . . . . . . . . . . . . 24 Value loyalty response function. . . . . . . . . . . . . . . . . . . . . 31 Customer value and price sensitivity. . . . . . . . . . . . . . . . . 32 A generalized product/market matrix. . . . . . . . . . . . . . . . . 34 Financial services product/market matrix. . . . . . . . . . . . . 37 WesTrac product/market matrix. . . . . . . . . . . . . . . . . . . . . 40 Advanced WesTrac product/market matrix. . . . . . . . . . . . 42 The value concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Customer value model: Lawn mowers/ commercial users. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Customer value model: Retirement services/ large businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Customer value model: Executive benefits/ large businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Competitive value matrix: Compact tractors/ hobby farmers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Customer value model: Compact tractors/ hobby farmers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Comparison of competitive scores: Dealer service driver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Dealer service/process linkages. . . . . . . . . . . . . . . . . . . . . 56 Customer value model: Wireless services/ businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Customer focus/process linkages. . . . . . . . . . . . . . . . . . . . 60

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Figures and Tables

Figure 6.1 Customer-focused value stream. . . . . . . . . . . . . . . . . . . . . 66 Figure 6.2 Value mapping template. . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Figure 6.3 Value map with critical value path. . . . . . . . . . . . . . . . . . . 73 Table 7.1 Process/driver matrix: Order and delivery value stream—hay balers/farmers. . . . . . . . . . . . . . . . . . . . . . . . 80 Table 7.2 Process/driver matrix: Mortgage origination value stream—mortgages/full nest I families. . . . . . . . . . . . . . . 82 Figure 7.1 Partial value map: Parts delivery to work bay. . . . . . . . . . 85 Table 7.3 VSA improvement opportunities. . . . . . . . . . . . . . . . . . . . 86 Table 7.4 VSA improvement plan form. . . . . . . . . . . . . . . . . . . . . . . 90 Figure 8.1 Competitive value matrix: Trucks/miners. . . . . . . . . . . . . 96 Figure 8.2 Competitive value matrix: OHT/miners. . . . . . . . . . . . . . . 97 Table 8.1 OHT/OM situation analysis. . . . . . . . . . . . . . . . . . . . . . . . 98 Table 8.2 Process driver matrix: Dealer service value stream. . . . . . 100 Figure 8.3 Initial value stream mapping. . . . . . . . . . . . . . . . . . . . . . . 101 Figure 8.4 Time lines/cost for “what-if” analyses. . . . . . . . . . . . . . . . 102 Figure 8.5 Truck engine repair VSA: Drill down 1. . . . . . . . . . . . . . . 104 Figure 8.6 Truck engine repair VSA: Drill down 2. . . . . . . . . . . . . . . 105 Figure 8.7 Truck engine repair VSA: Drill down 3. . . . . . . . . . . . . . . 105 Table 8.3 VSA problem identification. . . . . . . . . . . . . . . . . . . . . . . . 106 Table 8.4 VS improvement plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Figure 8.8 Truck engine repair VSA: VS redesign—one segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Figure 8.9 Warehouse hours: budget/required. . . . . . . . . . . . . . . . . . . 110 Figure 8.10 Engine repair wait times. . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Figure 9.1 Channel value model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Table 9.1 Value drivers and value performance criteria. . . . . . . . . . . 119 Figure 9.2 Manufacturers’ competitive value matrix. . . . . . . . . . . . . . 121 Table 9.2 Comparative manufacturer profile: Product quality and supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Table 9.3 Comparative manufacturer profile: Partnering relationship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Figure 9.3 Customer responses about quality and supply. . . . . . . . . . 124 Figure 9.4 Customer responses about partnering. . . . . . . . . . . . . . . . 125 Figure 9.5 Dealer loyalty matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Figure A.1 A generalized value model. . . . . . . . . . . . . . . . . . . . . . . . . 144 Figure B.1 Competitive value matrix. . . . . . . . . . . . . . . . . . . . . . . . . . 148 Figure C.1 Competitive vulnerability matrix: All competitors. . . . . . . 152 Table C.1 Comparison of competitive value groups’ scores. . . . . . . . 153 Figure C.2 Analysis of a poor value group. . . . . . . . . . . . . . . . . . . . . . 154 Figure C.3 Customer loyalty matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Figure D.1 Customer value measurement process. . . . . . . . . . . . . . . . 158

Preface

he premise of this book is simple. First, extending the concept and principles of lean thinking to the distribution system is necessary for sm T oothly running distribution system will have problems moving shoddy those organizations adopting a customer value orientation. Just as a product, so too does an efficient lean manufacturing organization have trou- ble moving high-quality product through an ineffective and poorly managed distribution system. Value at the point of production does not automatically translate into value at the point of consumption. Both manufacturing and distribution excellence are necessary but, unto themselves, insufficient con- ditions for value creation and delivery. And while it is difficult to separate the production and distribution functions within the context of value cre- ation, this book will concentrate primarily on the latter. Second, augmenting lean thinking with a more robust and substantial customer value basis will make lean thinking even more powerful when it is applied to the organization’s value stream. Both the production and the delivery of value become effective organizational weaponry within ever increasing competitive environments. Third, and of significant importance, is the need to unleash the princi- ples of lean thinking as a strategic tool. To focus lean thinking solely as a cost-reduction approach is to deny its capacity to enhance an organization’s value creation and value delivery capacity. As we will argue throughout this book, value is a strong leading indicator of market share increases. Accord- ingly, an organization’s ability to use lean techniques not only to eliminate non-value-adding costs but also to enhance its competitive value proposi- tion is to realize the full power and potency of lean. Managers from a number of distinct organizational areas such as mar- keting, quality, logistics, Six Sigma, TQM (total quality management), and CRM (customer relationship management) as well as market research and business intelligence will find the book useful and interesting, and it will challenge them to think about the way they view their businesses. Equally

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