November 9, 1990
Mr. Muthiah Kasi
Alfred Benesch & Co.
233 North Michigan Ave
Good morning Muthiah:
I’m pleased to see that the standards and definitions used in SAVE are up for review. Attending the 2nd annual VA conference in Paris, France in October has given me an appreciation for how far behind we are in the Value Management processes, standard and definitions.
If SAVE is moving toward a market serviced society (and it should if SAVE is to survive and grow), then we need new definitions to reflect that directional shift.
Some 10 years ago I read the enclosed article published in the “Conference Board”, and it had a profound affect on me and the direction I took with my Value Management process.
Interestingly, the article fully supports Carlos Fallon’s belief, which I enthusiastically endorse, that VA/VE/VM comes from Marketing, not purchasing, manufacturing or engineering. This belief is supported by the simple fact that the BUYER, NOT the PRPDUCER determines the value of products and services offered to the market place.
From a producers point of view, the relationship of value is still valid: Value = function/cost. But from a customers view point; Perceived Value = Perceived benefits/ Price is more accurate in satisfying the customers concept of value.
I hope this helps.
Sincerely,
Jerry Kaufman
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