Last year we were told that Total Quality Management (TQM) was the gold standard to achieve and now we hear it’s Total Value Management (TVM). I can’t be bothered with these management systems any more. Wait up a minute, we can have our cake and eat it by successful adoption of TVM. Moreover you can boost your business bottom line and keep your customers happy, an all round winner.
Overview: What is Total Value Management?
Total Value Management (TVM) is a management system that was developed back in the 1990s and has been successfully deployed in a wide variety of industries since. At its heart TVM is designed to build value into every step of product, process or service creation ensuring that the customer receives the most competitive combination of value, function and quality that meets their requirements and expectations. Crucially it also ensures that the delivery of the product, process or service is sustainable for the supplier enabling a mutually beneficial supplier: customer relationship.
Many of the guiding principles of TVM will be familiar to those organizations who have adopted Total Quality Management (TQM) and continuous improvement methodologies. Interestingly, TVM is often portrayed as a replacement for TQM or incompatible with TQM guiding principles. However this is not the case as they are synergistic in the pursuit of quality and value for both the customer and the supplier.
The guiding principles of TVM can be broadly grouped into 4 areas:
- Concurrent Function Deployment: deployment of specifications to target values which address the Voice of the Customer (VoC). Utilizing the Kano Model and a requirements prioritization process function and value can be optimized.
- The seven T’s and employee involvement: Talent, Tasks, Teamwork, Techniques, Technology, Time & Tools; energizing and utilizing the workforce to deliver maximum value
- The four M’s and leadership: Methods, Models, Metrics and Measures with clear leadership accountability for delivery of optimized value.
- The three P’s: Policies, Practices and Procedures, how to do things right first time and every time, removing waste and maximizing value.
Many of the guiding principles include classic lean and Six Sigma tools for defining and understanding value with the removal of waste. These tools in combination with organizational and cultural behavioral change lead to successful TVM deployment.
2 benefits and 1 drawback of TVM
Like many management systems and methodologies there are a number of benefits and drawbacks to consider before deployment of TVM. Let’s explore some of these further.
1. It is strategically aligned to business growth and sustainability
We hear a lot of talk about growth but without sustainability it can be a flash in the pan and quickly reversed. With TVM we are locking in sustainability and affordability for you and your customers.
2. It involves all aspects of the business
No area, person or process is immune or excluded from TVM. It truly reaches across your business and makes you consider the value of every contribution. It becomes your culture, striving for value optimization with your customer requirements firmly locked in.
3. It can be misconstrued as cost reduction
When you talk about value often people immediately think of cost and inevitably cost reduction. Communication is key to ensure that everyone understands the meaning of value and the principles of TVM.
Why is TVM important to understand?
By deploying TVM we have a logical and structured approach to delivering value in a business
Poor decisions on value lead to uncompetitive products
How many times have we heard or seen that poor, ill informed decisions lead to products that the customer does not want or cannot afford? Only by drilling down into each area of your operation and assessing the value steps and value creation can you manage and optimize value for you and the customer.
Your competitors are already signed up to TVM
When you completed your competitor benchmarking did you wonder how they deliver their products with such low levels of cost but high function, quality and desirability? Guess what, they probably deploy the principles of TVM across their business and have already got one step ahead of you. It’s time to get on a level playing field.
It’s synergistic with existing business management systems
Don’t sweat, if you have already embraced TQM or any of the ISO 9000 series standards then you will be working in a culture of positive change and improvement. TVM does not have to rip up the rule book and cast these other systems aside.
An industry example of TVM
A Tier 2 supplier in the chemical process industry was under increasing pressure from its customers to improve cost competitiveness. From previous studies and analysis of the Voice of the Customer the functional attributes of the products supplied were meeting requirements, likewise the product quality but the value proposition was under scrutiny. The supplier had successfully implemented a TQM system some years ago and the senior management team now decided to investigate Total Value Management as an evolutionary step.
Having studied how companies in the automotive and aerospace industry had successfully deployed TVM and internally benchmarking their own performance across the 4 areas of TVM guiding principles, they concluded maximum benefit would be achieved by focusing upon the seven T’s. A number of working groups were set up to review each of the 7 elements: Talent, Tasks, Teamwork, Techniques, Technology, Time & Tools with an initial focus on the manufacturing operational areas. Classic lean management tools were used to eliminate waste and challenge necessary but non value add activities.
Following an intensive 8 week deep dive into the opportunities from the manufacturing operational areas, improvements were identified covering task and flow optimization, process time reduction and use of improved technology and techniques for blending of products. The value identified and realized from the adoption of TVM techniques translated into improved cost competitiveness with no change to quality or function of the products.
3 best practices when thinking about TVM
As with most value centric management systems there are some key things to consider when deploying TVM, let’s explore three of these.
1. Use the power and knowledge of your employees
Employees are your precious source of value improvement, nurture and grow their talent and recognize and reward teamwork.
2. Sharpen up your processes
Often known as methods, metrics, policy and procedures TVM forces an organization to cast a critical eye over its processes, looking for opportunities to remove waste in a classic lean deployment.
3. Question everything, be data driven
To understand the true value of a process, an activity, a design iteration then every element needs to be understood and backed up with data. If you don’t measure it, how do you know what the true value is and how can you then optimize to create sustainable value?
Frequently Asked Questions (FAQ) about TVM
1. What does TVM stand for?
TVM stands for Total Value Management, a well known business management approach to delivering value at every step of product and process development
2. What is the purpose of value management?
At its core value management is concerned with the creation of sustainable value, either at project, product, process, organizational or social level. Its aim is improving and sustaining a desirable balance between the needs and wants of customers and the resources needed to satisfy them.
3. Are TVM and TQM the same thing?
No, TQM Total Quality Management and TVM Total Value Management utilize similar concepts but with TVM the focus is on delivering value with implicit quality that meets customer requirements.
A final thought on TVM
Often misconstrued as cost reduction and cheapening products and services, TVM has had a rocky road but like all good management systems diligent application and a long term strategic view means that TVM genuinely can deliver best value, function and quality for your business.