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Reducing Process Costs with Lean, Six Sigma, and Value Engineering Techniques by Jon M. Quigley, Kim H. Pries

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Preface xvii
Preface
We might ask, why this book? We describe several reasons.
A. Tight Economic Conditions!
It is easy to understand why a cost improvement book should be written. There
are boom times and there are times when the business world is less secure and prot
margins erode. One typical company response to economic downturn is to eliminate
staff as if that were the only way to become a thriving company again. We wonder if
these companies have some cost improvement methodology behind them that would
give their management other options than removal of people. A company that has
ongoing effective cost improvement activities will be more adaptable to changing
economic climates.
Innovation provides value to an organization. New product or service generation
is important for business growth. However, we want to maximize our return on this
investment in the development of a product or a new service. In order to do that, we
must frequently critique how we are meeting our customers’ needs. What is our value
proposition? How can we improve upon the existing proposition?
Certainly, it is not necessary to wait until we have delivered our product or service
to start thinking about cost. It is sound business practice to understand the market
and whether a particular course of action has an economic benet for the undertaking
organization.
This book contains multiple ways of reviewing your value proposition. Some more
sophisticated than others. We provide examples of cost improvement opportunities
and questions to help you think through how you can help your company improve its
margins.
This book will show you a wide range of tools and techniques for improving the
value proposition. These tools and techniques vary in complexity and capability. We
will provide examples of these tools as well as the benets and drawbacks for their
use.
The book Value Management Practice by Michel Thiry identies the types of value
(page 9). He denes the variety of value propositions as:
Type of Use Denition
Use value The amount of current resources expended to
realize a nished product that performs as it was
intended
Esteem value The amount of current resources a user is willing
to expend for functions attributable to pleasing
rather than performing e.G., Prestige, appearance
and so on
Exchange value The amount of current resources for which a prod-
uct can be traded. It is also called worth, as the
minimal equivalent value considered

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