Value Creation

There are three activities associated with value: creation, sharing and claiming. Suppliers’ solutions may help create value for the buying organisation, so when pricing their offering, suppliers will seek to charge a price for their solution which reflects the value created for the buyer. In doing so, they are seeking to claim some or all of the value created for the buyer. In cooperative relationships, the parties may agree that rather than seeking to claim value from the other, they will share the value between them. As an example, if a supplier provided a solution which reduced their client’s electricity consumption by 10% and the client saved $100,000 as a consequence, the supplier has created the value and the relationship between the parties will determine whether the buyer claims the value, whether the supplier claims the value, or whether the parties decide to share the value between them. See also Muda.

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Discover the world’s largest Glossary of Procurement terms

With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.