Value Analysis and Value Engineering

Value Analysis and Value Engineering

Definition Value Analysis (VA) and Value Engineering can be defined as an organized and systematic approach to provide the required function at the lowest cost consistent with specific performance, quality, and reliability.

Features of Value Analysis Value analysis pertains to the existing product and services whereas value engineering is concerned to the design of new products. The main objective of value analysis is to increase profit by critical examination of the areas of high cost in the manufacturing of a product or a service and finding out the ways and means of reducing or elimination of unnecessary costs.

Contd..The value can be increased in three ways:Retain the value but reduce the cost. Retain the cost but increase the value Increase the cost if necessary, but increase the value much more than the cost. The value analysis is a group activity consisting of cross functional team.

Concept of valueTypes of value :Use value primary or basic value Esteem value enhanced value associated with a brand or a product created by smart marketers. This is a notional or snob value for which the customer is ready to pay higher. This is also known as the secondary value associated with the product.

Steps in value Analysis. Collect data about cost function, customer needs, history and likely future developments related to the product and its use. Determine the function of the product. Develop alternative designs to fulfill the functional requirement of the product. Ascertain the cost of the alternatives. Evaluate the alternatives to fulfill primary and secondary values with minimum cost.

ContdRecommend and implement the best solution. Control and periodic measurement of performance with corrective action is advisable.

Factors influencing Product Design or Redesign As per customers perspectives Functions musts and wants needs. Aesthetics marketing requirementUser friendliness ease of use, market leadership. Esteem associated with possession additional distinguishing features, possession of Rolls-Royce car.

ContdOrganizational perspective optimum utilization of internal resources. Intrinsic cost of material elimination of wastages, reduction in material consumption and elimination/substitution of non value adding components in the product or service. Use of cheaper and better substitute parts. Intrinsic cost of labor work measurement, time study, motion study and method study.

ContdReplacement, exchange and disposal- of personnel, machines or material due to product design or redesign.

Methods of value analysis Eliminate parts in operation non value adding parts e. g. replace car audio system by FM. Simplify parts in operation multi-functional switches in a four wheeler or two wheeler. Substitute alternative materials e.g. substitution of heavy rigid steel car bumpers with lightweight collapsible fibre glass reinforced ABS plastic bumpers.

Contd..Use standard parts in materials modular manufacturing to obtain flexibility and reduction in cost. E. g. construction, furniture and automobile industry. Relax manufacturing tolerances e. g. note on drawing that all sharp corners to be rounded off instead of specifying radius of sharp corners.

Contd..Use standard manufactured parts reduce inventory, reduce cost. Eliminate unnecessary design features specify only required dimensions to reduce cost of production. Change design to suit manufacturing process in house for close monitoring and reduce cost. Buy if cheap than make outsource if cost of manufacturing in house is more.

ContdUse pre-finished materials:- pre- finished parts and components reduce inventory, reduce cycle time and speed up the manufacturing and assembly process. Use pre-fabricated parts :- pre- fabricated parts and components reduce inventory, reduce cycle time and speed up the manufacturing and assembly process.

ContdRationalize product range in terms of customer satisfaction, return on investment and future expansionSubstitute labor cost manufacturing process- eliminate human error, lower cost of production and better quality of the end product. Rationalize and standardize low cost purchased parts no shortage, no inventory and low cost. Eliminate material waste optimum utilization of material to avoid use of excess material.

Value Analysis Area of Improvement Functions Details of the basic functions.Details of secondary functions.Are all the functions necessary?Substitute the factors.Combination of the factors.

ContdMaterials What materials are used?Look for alternative materials. Reduction in waste materials.Standardization of materials. Use of cheaper and better substitute materials. Price of materials.Make or buy decision.

ContdManufacturing Define operations. Can it be eliminated?Can it be substituted?Can it be simplified?Can it be standardized? Can standard tools be used? Can pre-fabricated parts be used?Make or buy the parts.

ContdSpecifications Define specifications. Can dimensions be reduced? Are the parts oversized?Are tolerances very close?Are tolerances very critical?Can tolerances be increased?What type of finish is required?Are finish standards essential?

Phases of value engineering Orientation phase training , selection of subject of study and form a team. Information phase information regarding key questions of cost and collect data about spercial waste and work procedures. Sources of information can be government publications, government reports, suppliers, competitors, project data, historical data, experimental data, etc.

Contd..Functional phase answer following questions What does it do?What must it do?How much does it cost?What is its function/work?Speculation/creation phase brainstorm and find feasible alternative substitutes.

ContdEvaluation/Analysis phase evaluation on the basis of value addition or cost reduction. Recommendation phase - make prototype, take trials, get customers feedback, access managements need for profitability and ROI. Make presentation to the customers, organizational people, and the dealers for the acceptance of the idea. If everything goes well and chances of idea becoming successful are high, recommend the same for implementation as a validated idea.

ContdImplementation phase value engineering team to work out action plan with required resources and time bound schedule. Remove bottlenecks, monitor for smooth implementation to obtain desired results. Audit follow up prepare periodic reports of results obtained under normal working condition. After successful implementation value engineering team looks for spin-off projects in other similar areas and initiates new projects.

Darsiri method Darsh in Sanskrit means to reconsider. The darsiri method of value engineering is the systematic approach to improve the value of product and its components by reconsideration of the cost & quality. Focus in the process of reconsideration is on the quality of the product based on its functions, esteem and cost.

Steps of Darsiri method Data collection based on function and cost .Data analysis focused on saving in cost with improvements in the product features without compromising on performance and reliability of product and related service. Recording of ideas through brainstorming exercise. Speculation and selection based on earlier trial and failure, technological viability, availability of material etc.

Contd..Investigation prototype testing for performance. Select the best alternative to satisfy all basic functions and maximum no. of secondary functions. Recommendation value engineering team recommends the best alternative for implementation and arranges for required resources.

ContdImplementation responsibility of implementation is shifted to most affected department. If the exercise is for better market share, the department will be marketing department. On the other hand if the objective of the value engineering is cost reduction, the implementing department will be manufacturing department.

Contd..A periodic review is always required after implementation to find out the scope for further improvement as well as for implementing in the other relevant areas.