The Added-Value Metric - A Complementary Performance Measure for Six Sigma and Lean Production

  • Setijono, Djoko (Department of Forest and Wood Technology, School of Technology & Design, Vaxjo University) ;
  • Dahlgaard, Jens J. (Division of Quality Technology and Management, Linkoping University)
  • Published : 2007.04.30

Abstract

The Six Sigma and Lean Production methodologies suggest that creating value for customers is the objective of a production process or an organisation. In the production context, "added value" dominates the discussion about the creation of value to customers. However, "added value" is often only defined conceptually or discussed at a strategic level, and the link between added value and customer value has not yet been well conceptualised. Therefore, the purpose of the paper is to develop a methodology to measure added value in order to complement the existing performance measures in Six Sigma and Lean Production by conceptualising the link between customer value and added value. The conceptual link "confirms" that quality, time, and costs are the elements of added value, which are transformed into a metric to express customer value. The implementation of the metric recommends the adoption of Lean (Six) Sigma and Lean Accounting (Activity Based Costing), which thus implies that "leanness" is an important "feature" of added value.

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