Explain the concept of value stream. State the factors contributing to customer value (brand perception).

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teamques10 ★ 68k

Definition of Value Stream: “The combination of actions required to deliver value to the customer as products and services.”
The value Stream is a concept closely related to value chain. The difference is that it considers different types of tasks that are involved with adding value and looks at how the efficiency of these tasks can be improved.
Womack and Jones define value stream as the set of all specific actions required to bring a specific product through the three critical management tasks of any business such as:

The Problem-solving task: The process of new product development and production launch
The information management task: The process of order taking, scheduling to delivery.
The physical transformation task: The process of transforming raw materials to finished product delivered to customers.

Consider the equation given below which defines the customer value (brand perception)

  Customer value (brand perception) = Product Quality * Service Quality
                            Price * Fulfilment time

This equation specifies the lean thinking approach proposed by Womack and Jones is aimed at adding value by cutting out waste in each of the three management tasks mentioned above.
By reducing new product development and production times and costs, organizations can then either increase customer value by decreasing fulfilment time, or if they wish do it, by decreasing price, and/or increasing product and service quality. E-commerce plays a key role in decreasing time to market and production times and costs.

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