VALUE ANALYSIS / VALUE ENGINEERING

“Value Analysis is the systematic application of recognized techniques which identify the function of a product or service, establish a monetary value for the function and provide the necessary function reliability atthe lowest cost”

“Value Engineering is the application of exactly the same set of techniques to a new product at the design stage”

DFM: An Example

(c) Final design

Design for push-and-snap assembly

(b) Revised design

One-piece base & elimination of fasteners

(a) The original design

Assembly using common fasteners

AIMS Simplify the product Use (new) cheaper and better materials Modify and improve product design Use efficient process Reduce the product cost Increase the utility of the product by economical means Save money or increase the profits

WHEN TO APPLY VALUE ANALYSIS

• Company’s products show decline in sale• Company’s prices are higher than those of its

competitors• Raw material’s cost has gone up suddenly• New designs are being introduced• The cost of manufacturing is rising disproportionate to

the volume of production• Rate of return on investment has a falling trend• The firm is unable to meet its delivery commitments

PERFORMANCE (Utility)

VALUE = --------------------- COST

VALUE:The designer equates the value with Reliability;Purchase person with price paid for the item;Production person with what it costs to manufacture andSales personnel with what the customer is willing to pay.

Types of Value: Cost Value Exchange Value Use Value Esteem Value

Cost ValueIt is the summation of labour, material, overhead and all

other elements of cost required to produce an item or provide service.

Exchange ValueExchange value refers to the price that a purchaser will offer

for the product, the price being dependent upon satisfaction (value) which he derives from the product.

Use ValueIt is also known as the function value. The use value is equal

to the value of the functions performed. Esteem Value

It involves the qualities and appearance of a product which attract persons and create in them a desire to posses the product.

Value Engineering Procedure

1. Blast (i) Identify the product(ii) Collect relevant information (iii) Define different functions

2. Create (i) Different alternatives(ii) Critically evaluate the alternatives

3. Refine (i) Develop the best alternatives (ii) Implement the alternatives