Customer Value Management
Utility: Utility is a concept from economics. It has no connection with the price paid by the customer
Total life time cost of a product or service: This the monetary cost incurred by a consumer in using a product or service.
Total life time supply chain cost: This is the cost incurred by the participants in the supply to chain to produce, distribute, service and maiintain the product or service over the life time of the product or service.
Customer Value is Utility minus the the total life time cost of a product or service.
This customer value needs to be maximized by a supply chain in competition with other supply chains.
Supply chain profit is the total life time cost of a product or service minus total life time supply chain cost.
Supply chain designers have to maximize the supply chain profit. Supply chain value or present value is the discounted value of the supply chain profit pattern (cash flow pattern).
The focus of this knol will be customer value management from a supply chain perspective as well as from an individual firm in the supply chain.
Each supply chain has an associated customer value chain.