Conference article

Customer Value

Djoko Setijono
Department of Forest & Wood Technology, Växjö University, Sweden

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Published in: 10th QMOD Conference. Quality Management and Organiqatinal Development. Our Dreams of Excellence; 18-20 June; 2007 in Helsingborg; Sweden

Linköping Electronic Conference Proceedings 26:96, p.

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Published: 2008-02-15


ISSN: 1650-3686 (print), 1650-3740 (online)


Although value is an important concept; many companies often do not know how to define and/or measure value (Anderson and Narus; 1998; Lindgren and Wynstra; 2005). According to Bounds et al (1994; pp. 345); the ability to create superior value to customers requires at least three kinds of knowledge: customer knowledge (knowledge of customer needs; desires; and how customers use products or services); subject matter knowledge (scientific; engineering; and social knowledge required to be able to produce the product or service); and self-knowledge (knowledge regarding the mechanisms and capabilities of an organisational system to deliver value as well as the knowledge to improve the system).

Customer knowledge can be gained through identifying customer needs; goals; or desires using a hierarchical value map or the means-ends model (in e.g. Bounds et al; 1993). Value to customers is then related to the degree of compatibility (match) between the consequences of using the product and customer needs. Within TQM (and Six Sigma); the subject matter knowledge seems to be the dominating knowledge for value creation and delivery if we take Quality Function Deployment (QFD) as an example. Thus; customer value is related with the existence or performance of product/service attributes. Meanwhile; the Lean Production methodology seems to rely more on self-knowledge to create and deliver value to customers; meaning that creating customer value is about driving away the wastes from a system.

As a value-creating system; an organisation also needs to focus on customer knowledge (besides subject matter knowledge and self-knowledge) to understand to whom is the system creating value for. Therefore; the purpose of this paper is to propose a method to identify customer value based on customer knowledge; which can be transformed by the producer into value that can flow along the value stream.


Customer value; system thinking; customer knowledge; functional utilities


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