Board of Directors
Basic Strategy Guide
Diagnose
Improve
Tools
Blog

Describing the Customer’s Costs


TYPICAL COSTS FOR FINAL CUSTOMERS: USE STEPS

The Final customer is either an end-user or an installer. Consumers make up the bulk of the end-users, though organizations such as companies, government entities, and other organizations, can also be end-users. The installer type of Final customer includes both contractors, who serve the ultimate end-user, as well as original equipment manufacturers, who buy products to install in their own Final product.

The Final customers take four steps in connection with the product:
Acquire,
Use,
Maintain and
Dispose. Each of these four steps cause the Final customer to incur additional steps costs in connection with the product. Some of these additional Use costs include:

Use Steps: Use steps include all the customer's value added activities or the consumption of the product itself. These steps include all the costs the customer incurs in employing the product in its intended use.

  1. Remove product from storage: The customer must remove the product from inventory or storage.

  2. Deliver product to Final destination: The customer must bring or deliver the product to its location of use.

  3. Prepare product for consumption/use: The customer must set up the product or prepare it for consumption or use.

  4. Consume/use product: The customer must consume or use the product.

  5. Monitor consumption/use process: The customer must monitor the product as it is consumed or used to ensure that the pace of consumption or use is appropriate.

  6. Adjust process to keep output within an acceptable range: The customer must adjust the product or the process in which it is used in order to keep the output of the product or process within an acceptable range.

  7. Eliminate waste or ill effects associated with process: The customer must eliminate waste or other ill effects associated with the product or process in which it is used.

  8. Transfer output to other processes: The customer must transfer the output of the product or its process to other processes.

  9. Return excess product to storage: The customer must return unused product to its storage or inventory location.

Back to Describing Customer Costs