Customers, Stakeholders, and Understanding Value

One of the first steps in process improvement is to define “value” – this means specifying work from the standpoint of the customer. In order to improve processes, it is important to understand what every step is doing to provide value to the next step in a process chain that begins and ends with the customer.

In this light, activities are either value added or non-value added:

Value Added– Any activity that changes the form, fit, or function of a product or service, in pursuit of customer requirements. Value added is important in process improvement because it helps guide our decisions and actions to the ultimate goal of improving the customer experience.

Non-Value Added – Any activity that does not add value to the process or product.

Adding value does not always mean doing work faster or cheaper –
it can mean doing the same work with better consistency or producing the same product with less effort, freeing more time for other work priorities. (Read more about defining value here.)

Customers, Stakeholders, and Understanding Value

Who is the customer? This question can be trickier than it seems at first blush. If one agency processes a transaction for another agency, which in turn is providing a service to a citizen, who is the customer?

The “customer” should be defined as the recipient of the product or service produced. At Jail Health Services, for example, “customer” always refers to the patient.

Value Chain with Stakeholders and Customers

Each arrow represents a process performed by an agency (“stakeholder”) as the product moves toward the customer. Each of these stakeholders has requirements that need to be met before the product or service can move forward to the next process and finally to the customer.

Agencies that don’t work directly with the customer may nonetheless contribute to the overall experience of the customer. These agencies are considered “stakeholders.” Stakeholder requirements help to ensure that customers receive what they need, and in this way can also add value.

Stakeholder requirements need to be met before the product or service can move forward to the next step in the process and ultimately to the customer.   Stakeholder requirements should always align closely to customer requirements.

Keep in mind:

  • Understanding value lets us focus on what our customers want and need. 
  • Knowing which steps are value added vs. non-value added helps us improve processes that add value for the customer.
  • By identifying the customer and stakeholders everyone is able to move in one direction towards improving the process.

Delve Deeper

Read more about what customer requirements are and how they can be measured in order to provide value.

Thanks to Hannah Bachelder, a Lean Specialist with King County Public Health, for the development of this One-Point Lesson.

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