Value Analysisby Theodore C. Fowler

Dr. Fowler, a Fellow of the Society of Value Engineers, wrote this paper in response to a request from NASA. He has explicitly granted permission for its use by University Learning Institute.

This material was originally created to respond to a demand created when Value Analysis (VA) joined the CompuServe Information Service in late 1993. The question "What is VA?" was the subject of many LEAP Forum messages. Most of the questioners were engineers with no specific experience in VA. This document was placed in the General Section of the Library. It contains general answers to most of the questions.

Q: What is Value Analysis?

A: A team problem-solving system, developed at the General Electric Company in the late 1940s.

That seems pretty old hat. Nearly every one of the NEW WAVE systems, from Quality Circles to Grid Organization Development, Kepner-Tregoe, Brainstorming, Continuous Systematic Improvement and Total Quality Management call themselves team problem-solving systems.

Q: What is so special about VA?

A: Its special power is a technique called Function Analysis which dramatically shifts the viewpoint of the problem-solvers. When Lawrence D. Miles of General Electric conceived VA in the late 1940s, its only totally unique element and the source of its major breakthroughs was Function Analysis.

Q: Tell us about this Function Analysis.

A: The product or process under study is first converted into a number of word-pairs called Functions. The remainder of the study then concentrates on those word-pairs rather that on the concrete product or process.

The specific form used for these word-pairs is now called a Functive. Each pair comprises one verb and one noun. Each noun is ideally a parameter or measurable quantity. Each verb is ideally demonstrable on a non-verbal level. Those who recall their sentence diagramming from English 101 will realize that one verb and one noun make up one elemental sentence. Therefore, when the VA question, "What does it do?" is asked of a product or process, the answer becomes a series of two-word sentences. The total number of these sentences could run from forty or eighty for even a simple product or process. In sum, these two-word statements are a total description of the functions of the product or process. Value Analysts call this group of statements a Function Analysis. By concentrating all of their problem-solving effort on these two-word Functions, the team accomplishes several objectives:

They greatly minimize what Miles called "functional fixedness." For example, it is possible to be more creative when tackling a problem defined in terms of improving "Remove Polutants" than one defined in terms of "Make a better Calalytic Converter." Miles defined this creative focus of Function Analysis in terms of the technique he called "Create-by-Function."

In the Creative Phase team session, the focus is on Function. This Function-focus maintains the critical perspective of Function; the WHAT IT DOES for the customer, rather than the WHAT IT IS in the mechanical sense. Over the years, few practitioners of Value Analysis have truly understood and fully applied the concept of "Create-by-Function." The secret to great Value Analysis at this stage is to treat a Function in its semantic sense and to rigorously resist reverting to simply creating solutions to the problems of the product under study.

They capture the essence of a complex product or process on one page of unambiguous statements. This is called a Function Diagram or "FAST Diagram."

The costs of a product or a process are commonly presented in a hierarchical structure called the Costed Bill Of Materials. A Costed Bill Of Functions would be far more condusive to effective creative problem solving. To this end, a VA team allocates the costs to the Function Diagram, resulting in a hierarchical structure called a Costed FAST Diagram. The team now has a new viewpoint, that of Function-Cost, to replace its customary viewpoint of Hardware-Cost. Their solutions therefore typically reach far closer to the limits of the envelope of practicality.

It is also possible to add to the FAST Diagram carefully structured but unconstrained data on the attitude, needs and desires of the user/customer. This adds the dimension of Function-Worth to each of the Functions. With Function-Cost and Function-Worth, the team can identify and focus upon only those functions where there is a mismatch between the two parameters.

Q: Are there other key elements to the Value Analysis process?

A: Yes, there are several other essential components in a valid Value Analysis study, however, only Function Analysis is unique to the process. The eight key elements are:

FUNCTION ANALYSIS FUNCTION-COST FUNCTION-WORTH CREATE BY FUNCTION IMPLEMENTATION THE JOB PLAN THE TEAM OWNERSHIP

The Function related items have been discussed above. What follows is a brief discussion of each of the other elements:

IMPLEMENTATION

In modern VA, Implementation is step one. This is in keeping with Leonardo daVinci's famous exhortation, "Think of the end before the beginning." The team prepares a list, before even starting the study, of all of the possible areas in which they might anticipate their results to fall. They then list all of the roadblocks which they might expect to strike in implementing those results, and they they then list all of the actions which they must consider during the study in order to circumvent those roadblocks. These lists are updated throughout the study. This commonly results in few surprises during the later effort to implement the results of the study. Implementation rates of a properly conducted VA study are typically very near 100%.

THE JOB PLAN

Miles' system followed a rigorous six-step procedure which he called the Value Analysis Job Plan. Others have varied the Job Plan to fit their peculiar constraints. A modern version has the following eight steps:

PREPARATION INFORMATION ANALYSIS CREATION SYNTHESIS DEVELOPMENT PRESENTATION FOLLOW-UP

THE TEAM

The ideal VA team comprises five experts on the product under study, each from a different discipline. They must all be Decision-Makers whose assignment presently includes responsibilities on the product under study. The following capabilities must be included in the team: DESIGN

Project Engineer, Chief Draftsman, Designer. Ideally the Engineer responsible for the product.

OPERATIONS Factory Supervisor, Industrial Engineer, Manufacturing Engineer, Methods Engineer

COST Cost Estimator, Industrial Engineer, Accountant

OUTREACH Marketing, Sales, Field Service, Purchasing

CATALYST A Constructive Troublemaker, possibly an Engineer, Product Manager, or Marketeer

OWNERSHIP

During the Synthesis Phase of the Job Plan, as ideas and concepts arise, the team leader asks team members which one of them will Champion the idea or concept.

If no one raises a hand, the idea or concept is dropped. One who volunteers to become a Champion is charged with investigating the feasibility and economics of the idea or concept. This Champion Concept results in a series of solutions which are highly likely to be implemented.

Q: In the fifty years since VA was developed, has it changed?

A: This leading question has an obvious answer. Yes, it has changed mightily. Users have modified the process to fit their requirements. A version of the process is in heavy use in the US Government, where it is called "Value Engineering." The Construction industry has followed their lead. Their version is also called "Value Engineering." Some refer to the process as "Value Management." Your attention is directed to a number of generally available books which have been written on the process.

It is expected that readers of this summary may develop further curiosity about the Value Analysis process. Most of the answers can be found by contacting the Society of American Value Engineers

Heuristic Ideation TechniqueFrom Mycoted

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Heuristic ideation technique (HIT) is an alternative variation to e.g., Attribute Listing, Morphological Analysis, Listing, developed by Edward Tauber and described by Arthur VanGundy in Techniques of Structured Problem Solving, for initial developments (although it could be used in other areas). The procedure is as follows:

Choose two items of interest that already exist, e.g. if I sell novelty goods, I might select a particular china mug with a floral decoration on it, and a particular novelty greetings card.

Make a list of each component, e.g. the components of the mug may include: handle, square shape, coloured china, floral decoration, coffee sized, etc. The cards components might include: glitter decoration, poetic message, can be sent by post, etc.

Construct a matrix, where the rows list the components of the one product the columns list the components of the other, and each cell corresponds to a combination of one element from each product.

&nbsp Card Glitter decoration Poetic message Sent by post

Mug Mug, card Mug, glitter decoration

Mug, poetic message

Mug, sent by post

Floral design

Floral design, card

Floral design, glitter decoration

Floral design, poetic message

Floral design, sent by post

Coloured design

Coloured design, card

Coloured design, glitter decoration

Coloured design, poetic message

Coloured design, sent by post

Coffee sized

Coffee sized, card

Coffee sized, glitter decoration

Coffee sized, poetic message

Coffee sized, sent by post

Square shape

Square shape, card

Square shape, glitter decoration

Square shape, poetic message

Square shape, sent by post

Cross out for elimination any cells that correspond to existing products, e.g. ‘floral design, sent by post’.

Identify any cells that have market potential as they stand e.g. ‘coffee sized mug, can be sent by post’, ideal for gift packaged product.

Looking at the table from another angle, try to identify any cells that look creatively thought provoking, but in need every more work.

Develop the highlighted cells into workable ideas. HIT comes from its use of the 3 ‘rules of thumb’:

o That new ideas are usually combinations of elements of existing ideas; o That the core of many new product ideas can often be captured by a two-element

combination; o That combination of dissimilar items (‘chalk/cheese’) work better than similar

items (‘chalk/limestone’).

Value analysis endeavours to maximize the usefulness of a product via the most cost effective means:

Identify its Basic Function e.g. a glass to hold a fluid, if it cannot hold a fluid is it unusable

Identify its Secondary Function e.g. strength or colour of glass are not essential to hold the fluid, i.e. the fluid could be in a bag

Identify its Supporting Functions i.e. colour, design on glass, non essential, but make the product look more desirable

Cost-Effectiveness calculate how much it costs to implement each function. Ideas to Improve each Function Systematically go through each function and try to

generate more effective and cheaper ways to achieve them.

This ‘bit by bit’ methodology helps to break down the ‘bigger picture’ (overall problem) enabling a better understanding. The technique can be used in situations where an expensive commodity exists but is thought to possibly be of little value

SynecticsFrom Mycoted

Synectics is based on a simple concept for problem solving and creative thinking - you need to generate ideas, and you need to evaluate ideas. Whilst this may be stating the obvious the methods used to perform these two tasks are extremely powerful.

Preliminary planning

In advance, hold a preliminary planning meeting with the problem owner(s). This checks that there are genuine problem owners, wanting new options that they themselves can implement, within their authority; helps you to understand the problem-owners' perceptions of the problem area; gives a feel for the number and quality of solutions needed; helps to ensure realistic expectations about results; and allows you to agree team membership.

Procedure during the session

1. Problem owner provides headline and wish: They describes the issue, how it is experienced, the background, what has been tried, and the possible scope of action. It is then expressed in one or more ‘big wish’ statements of the form: ‘I wish (IW)...’ or ‘How to (H2) ...’. NB that this is not a ‘problem definition’ but a wish reflecting the way the issue is experienced. The group listen imaginatively, rather than analytically.

2. Group generates large numbers of ‘springboards’: The mood here should be expansive and unconstrained. The springboards use the same formats as the ‘big wish’ (IW, H2, etc.). They are not ideas for solutions, but articulate further wishes to open up space for invention: ‘It would be nice if we could do X but we don’t yet know how to.’. A wide range of springboard triggering techniques have been developed, e.g. various uses of Analogies; various types of Excursions; the essential paradox/book title technique, and others ( Free Association, Random Stimuli, Drawing techniques, etc.)

3. Select an interesting springboard: The mood now switches to a more focused approach than in Steps 1-2. Problem owner and group members choose their favourite springboards (more on the basis of interest or appeal than on the basis of logical relevance). They share their choices, but final choice rests with the problem-owner. However, the process can always be repeated, so the choice is not critical. The assumption is that within any springboard will be creative possibilities that can usefully be explored.

4. Ideas to help achieve the selected springboard are generated, using the trigger techniques mentioned in Step 2 (or any other idea-generation methods). The problem-owner selects some that seem interesting.

5. Check understanding of these by paraphrasing them and checking with their authors until the paraphrase is correct. An idea is selected for the Itemised Response.

6. Itemised response. Every conceivable positive features of the selected idea is listed. Then (and only then), a single concern / problem / issue is expressed as a problem for solution (e.g. ‘How to ...’). Solutions for these are expressed by all in terms of ‘What you do is (WYDI)...’.

7. Recycle or end: Back to 4. until sufficient ideas for this spring board have been explored. Then back to 3. for another springboard. Cycle until the problem-solver has a solution s/he is happy to run with, or until time runs out

Attribute listing is a technique from the early 1930's which

takes an existing product or system, breaks it into parts, identifies various ways of achieving each part, and then recombines these to identify new forms of the product or system.

It has many variants, and is an important precursor to techniques such as Morphological Analysis and Value Engineering.

A new kind of pen or project management method probably has much the same major functional elements as any other kind of pen or project management method, but with some important difference in the way the elements are achieved or put together. So to generate a new way of doing something, you could list all the key attributes of current approaches, and try to improve on some of them. So:

1. Identify the product or process you are dissatisfied with or wish to improve. 2. List its attributes. For a simple physical object like a pen, this might include: Material,

Shape, Target market, Colours, Textures, etc. 3. Choose, say, 7-8 of these attributes that seem particularly interesting or important. 4. Identify alternative ways to achieve each attribute (e.g. different shapes: cylindrical

cubic, multi-faceted….), either by conventional enquiry, or via any idea-generating technique.

5. Combine one or more of these alternative ways of achieving the required attributes, and see if you can come up with a new approach to the product or process you were working on.

Unfortunately, classic Attribute Listing offered no advice about the ‘combinatorial explosion’ that occurs as the number of attributes and alternatives increases. If you have N attributes and each could be achieved in M alternative ways, there are MN combinations – so even with only 5 attributes, each with only 4 alternatives, you already have over 1000 logically different combinations! The designer is left to explore different possible combinations using imagination and intuition.

Using randomly chosen combinations to stimulate ideas: If you prefer a more mechanical and less intuitive way of using this array of alternatives, you could generate provocative combinations by working through each attribute in turn and picking one of the ways of achieving that attribute at random (e.g. with dice). You can then use this either as a random stimulus to

trigger more ideas (cf. Random Stimuli) or you can attempt a form of constructive evaluation by identifying what would be good about it, and what problems it would create (e.g. Plusses, potentials and concerns, or Receptivity to ideas). This process of generating random combinations and then using them to stimulate ideas can be repeated ad lib.

The combinatorial problem is explored more fully in later developments such as Morphological Analysis.

BrainWriting 6-3-5

The name Brainwriting 6-3-5 comes from the process of having 6 people write 3 ideas in 5 minutes. Each person has a blank 6-3-5 worksheet (below)

Problem Statement: How to...

Idea 1 Idea 2 Idea 3

1

2

3

4

5

6

Everyone writes the problem statement at the top of their worksheet (word for word from an agreed problem definition). They then write 3 ideas on the top row of the worksheet in 5 minutes in a complete and concise sentence (6-10 words). At the end of 5 minutes (or when everyone has finished writing) pass the worksheet to the person on your right. You then add three more ideas. The process continues until the worksheet is completed.

There will now be a total of 108 ideas on the 6 worksheets. These can now be assessed.

BrainWriting Pool

Each person, using Post-it notes or small cards, writes down ideas, and places them in the centre of the table. Everyone is free to pull out one or more of these ideas for inspiration. Team members can create new ideas, variations or piggyback on existing ideas.

The basis of Brainstorming is a generating ideas in a group situation based on the principle of suspending judgement - a principle which scientific research has proved to be highly productive in individual effort as well as group effort. The generation phase is separate from the judgement phase of thinking.

One of the problems I find, is that there are many variants of Brainstorming, although the basic rules are the same.

F-R-E-E-WritingFrom Mycoted

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F-R-E-E-Writing F-R-E-E stands for Fast, Raw and Exact-but-Easy.

F = FAST

You write as fast as you can while remaining legible. Keep your hand moving: once you begin writing, you don’t stop until you have completed the time or page space you have allocated to the exercise. You don’t pause to reread what you’ve just written, because that leads to stalling and attempting to control or refine your first thoughts.

At first your wrist or hand may be sore but don’t worry about that – just keep going. Your muscles will adjust in a few days. Write as fast as you can until you have completed the allocated time or pages.

Let the words flow f-r-e-e. Lose control.

R = RAW

Writing raw has two meanings. On one hand, because you are writing as fast as you can with the aim of unleashing your unconscious mind, you can forget all about spelling, punctuation etc. This writing is for you; when you read it back you will know what you mean: so forget everything your English teachers ever told you and write as raw as you like. Pay no attention to style or expression, just write the thoughts that arise in your own, everyday language.

Don’t cross out or correct or try to edit anything, either as you write or once it is written. Even if you write something you didn’t mean to write, leave it stand.

The second meaning of writing raw is to resist any urge to self-censor. From time to time, you will find thoughts rise in you that you don’t want to write, thoughts that feel frightening or silly or disgusting or pathetic. Thoughts you don’t want anybody else to know you ever had. Let them come, raw as they are. Get them out of you. The words you least feel like writing are often those that are most significant. Don’t think, just write.

Let the words flow f-r-e-e. Lose control.

E-E = EXACT-BUT-EASY

What we mean by “exact” is that you should be precise about detail as you write. Not “some fruit” but “a bunch of green grapes”. Not “a man” but “a 35-year-old bricklayer”; not “She sat at her desk, looking sad,” but “She leaned over her desk, the book she had stopped reading discarded, her arms crossed, her head low.” Take the time and the extra few words it takes to be specific.

This is also a matter of using the original detail of your own life. Nothing links us to our own lives better than writing down the real and precise details of how things actually are for us: the sights and smells, the tastes and feelings. Everyone’s life is at once both ordinary and extraordinary, trivial and important. The trivial detail is always worthy of record: through it, somehow, we sense our own significance.

The challenge is to keep the writing exact-but-easy, specific and precise without stopping to chew our pen over details or slowing down. This sounds contradictory but in fact is much easier in practice than it sounds. Once you give yourself the instruction in advance of your writing session, you find it happens automatically. Don’t chastise yourself as you write for getting it “wrong”: if you write something vague like “flower” and notice it, just put the name of the flower – “a rose” - beside “flower”. Be gentle with yourself.

And if you do find yourself in a situation where you have to choose between speed or detail, choose speed: writing fast is the first requirement of F-R-E-E Writing. Take a moment, before you begin a session each time, to instruct yourself to write concrete and specific details. We all have the habit of thinking and writing in abstractions, but lived detail is what we’re after in our F-R-E-E Writing.

Let the words flow f-r-e-e. Lose control.

Getting Started

Sit at a table or desk with your WoW pen and F-R-E-E-Writing Notebook. Sit in stillness and quiet, for two full minutes, letting your breathing become progressively slower and deeper. Let your thoughts rest, waiting to begin this new activity.

At the end of the two minutes, take up your pen and begin to write. Whatever form the words take, let them arrive without your direction. Do not reject or censor anything. Neither is there any need to affirm anything you write. Just let it come, without judgement. Do not welcome any thought or image because it is optimistic, or encouraging or “positive” in any way. Similarly, no thought or image should be rejected because it is too “negative” or because it points toward difficulties that may lie ahead. Accept what comes.

That’s it. You’ve done your first F-R-E-E Writing session. How did it feel? Were you surprised by anything that emerged? Did it feel strange?

If you wish, take a few moments to record your responses. Did you manage to burn through to first thoughts, to where the mind feels and sees, rather than thinks? Perhaps not. Often it takes a few sessions before we feel fully comfortable with the method and some of us (especially those who had good English teachers in school) may find it difficult to let go on the page. We learned too well how to censor ourselves, how to tidy things up so they were nice and neat (and unoriginal and boring).

Try not to judge your writing as good or bad. In F-R-E-E Writing terms, writing that is “good” is simply writing that is honest and open but we don’t – can’t – always produce such words. Sometimes we can write what seems like garbage for days and, then, like a flower from compost, something significant emerges.

But we don’t work for that. We work only to do it. We know that process of doing it is what counts. So if you are in any way unhappy with what you produced today, in your first F-R-E-E Writing session, forget about it. It doesn’t matter. All that matters is that you did it.

And that you will F-R-E-E Write again tomorrow.

F-R-E-E-Writing enables you to meet yourself on the page, connecting you to all three levels of your self: Front Self, Deep Self, Beyond Self.

F-R-E-E-Writing rights. It improves your psychic state, elevates your mood, makes you feel centred, sets you up for your day.

F-R-E-E-Writing sets the movements of your life into perspective and often uncovers hidden meanings and significances

F-R-E-E-Writing honours your life, gives it value.

F-R-E-E-Writing teaches you to trust your own intuition and your own experience of the world.

F-R-E-E-Writing processes your past and can help to heal trauma, pain or unhappiness arising from the past

F-R-E-E-Writing separates you from your thoughts and emotions, so you can observe them. By becoming “the watcher” in this way, your feelings and ideas lose some of their power over you.

F-R-E-E-Writing increases your awareness of all your relationships, with people, places and things

F-R-E-E-Writing gives you the courage to make change: truly allowing all the voices inside you diminishes the power of the critics outside.

F-R-E-E-Writing fosters a sense of gratitude and appreciation. It keeps you on the track of what you truly want and keeps you alert to opportunities as they arise in your life, including opportunities for increasing your prosperity, sharing your gifts and making a contribution. It is a creative act that roots you in the moment and shows you when you are going off balance. In short, F-R-E-E Writing grounds you to each of the stepping-stones to wealth

Paired comparison is a practical technique for comparing up to; say 10-15 items (ideas, options or criteria etc.) – i.e. too many to rank easily just by inspection, but not so many that the table size becomes unmanageable. However, if a larger comparison is necessary then you can use the same principle with computer aided methods such Interpretive structural modeling

Value BrainstormingFrom Mycoted

Perceives single or group values observing their effect, if any, on what is actually done.

Public values brainstorm short-list ‘what are my/our primary concerns’ Hidden values brainstorm short-list ‘what hidden values lie behind this primary concern’

or ‘what does this matter’ Rank and Clarify Rank short-list hidden values and define what each means Consider Implications now contemplate what can be done to action the ranked results

Negative Brainstorming From Mycoted Jump to: navigation, search

A to Z of Creativity Techniques

Negative (or Reverse) brainstorming requires a significant level of effort analysing a final short-list (rather the initial mass) of existing ideas. (see BulletProofing and Potential Problem Analysis ). Examining potential failures is relevant when an idea is very new, complex to implement or there is little margin for error. Negative brainstorming consists

of a conventional BrainStorming session (or any other suitable idea-generation method) that is applied to questions such as: ‘What could go wrong with this project?’

Often referred to as the ‘tear-down’ method, because of its negativity can be advantageous and seen in a positive light when training implementers to deal with hostile criticism. However, even this example needs to be followed up with a constructive debrief to ensure the implementer feels encouraged and secure.

1. Brainstorm Displaying a comment such as ‘How not to solve the problem, i.e. how to really mess up implementing project X’ will generate much humour and unexpected ideas (which should be noted)

2. Identify a cluster i.e. comments said in different ways that mean the same thing ‘Staff only’; ‘don’t tell non-staff’, reverse the cluster to give a single positive comment e.g. ‘tell those involved’

Mind mapping, developed by Tony Buzan, also has been called ‘spider diagrams’ represents ideas, notes, information, etc. in far-reaching tree-diagrams.

To draw a mind-map:

Layout a large sheet of paper in landscape and write a concise heading for the overall theme in the centre of the page.

For each major sub-topic or cluster of material, start a new major branch from the central theme, and label it.

Each sub-sub-topic or sub-cluster forms a subordinate branch to the appropriate main branch

Carry on in this way for ever finer sub-branches.

It may be appropriate to put an item in more than one place, cross-link it to several other items or show relationships between items on different branches. Coding the colour, type of writing etc can do this. Alternatively you drawings in place of writing may help bring the diagram to life.

Software packages are available that support with mind-maps, making it easier to amend and reshuffle the map, they often hold notes and documents, etc. associated with the labels (so acting as a filing system). Computer-based maps have the disadvantage of the small screen, and are less flexible than hand drawn versions (e.g you cannot usually make cross-links). Freemind is a cross platform free and open source example which is very popular for is flexibility and compatibility.

Lateral ThinkingEdward de Bono writes in "Serious Creativity", how he became interested in the sort of thinking that computers could not do: creative and perceptual thinking. The entry in the Concise Oxford Dictionary reads: "seeking to solve problems by unorthodox or apparently illogical methods.

Lateral thinking is about moving sideways when working on a problem to try different perceptions, different concepts and different points of entry. The term covers a variety of methods including provocations to get us out of the usual line of thought. Lateral thinking is cutting across patterns in a self-organising system, and has very much to do with perception.

For example: Granny is sitting knitting and three year old Susan is upsetting Granny by playing with the wool. One parent suggests putting Susan into the playpen. The other parent suggests it might be a better idea to put Granny in the playpen to protect her from Susan. A lateral answer!

The term "Lateral Thinking" can be used in two senses:

Specific: A set of systematic techniques used for changing concepts and perceptions, and generating new ones. General: Exploring multiple possibilities and approaches instead of pursuing a single approach.

Value Analysis/Value Engineering 

When to use it

Use Value Analysis to analyze and understand the detail of specific situations.

Use it to find a focus on key areas for innovation.

Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.

It is particularly suited to physical and mechanical problems, but can also be used in other areas.

 

Quick X  Long

 

Logical X  Psychological

 

Individual X  Group

 

How to use it

Identify and prioritize functions

Identify the item to be analysed and the customers for whom it is produced.

List the basic functions (the things for which the customer is paying). Note that there are usually very few basic functions.

Identify the secondary functions by asking ‘How is this achieved?’ or ‘What other functions support the basic functions?’.

Determine the relative importance of each function, preferably by asking a representative sample of customers (who will always surprise you with what they prefer).

Analyze contributing functions

Find the components of the item being analyzed that are used to provide the key functions. Again, the question ‘How’ can come in very useful here.

Measure the cost of each component as accurately as possible, including all material and production costs.

Seek improvements

Eliminate or reduce the cost of components that add little value, especially high-cost components.

Enhance the value added by components that contribute significantly to functions that are particularly important to customers.

Example

In analyzing a pen, the following table is used to connect components with the functions to which they contribute and hence identify areas of focus.

 

How it works

Value Analysis (and its design partner, Value Engineering) is used to increase the value of products or services to all concerned by considering the function of individual items and the benefit of this function and balancing this against the costs incurred in delivering it. The task then becomes to increase the value or decrease the cost.

 

Index of articles > Business > Business publications > International Journal of Purchasing and Materials Management articles > March 1992 articles

Purchasing's role in value analysis: lessons from creative problem solving.International Journal of Purchasing and Materials Management| March 22, 1992 | Lacy, Steve; Smith, William C.; Williams, Alvin J. | Copyright

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As purchasing professionals seek to enhance performance in increasingly competitive worldwide markets, innovative approaches must be sought and implemented. This article focuses on the applications of creative problem solving techniques to improve the value analysis effort, in particular, and overall purchasing and organizational performance in general. Purchasing's contribution to this process can be enhanced through greater commitment to innovative and creative techniques.

INTRODUCTION

Purchasing practitioners are in constant pursuit of ideas, approaches, products, and systems that enhance organizational productivity. The challenge to purchasing from the executive suite is to reduce material costs and to conduct the total acquisition process more efficiently. Unlike increases in sales, reductions in purchasing costs flow directly to the "bottom line," impacting profitability markedly.

The concept of value analysis (VA) can play an integral part in enhancing efficiency and profitability. Purchasing professionals should have an active role in their firm's value analysis process. However, in examining purchasing's participation in value analysis, it is evident that the creative element has not been fully utilized as a mechanism to increase the potential usefulness of the process. Purchasers appear to have continued to rely on traditional analytical approaches to develop new and innovative techniques and processes. While important, these approaches alone lack the utility required for successful handling of increasingly competitive and complex value analysis efforts. Thus, the underlying rationale for this article is to explore the importance of the creative problem-solving process as it relates to purchasing's participation in VA.

From a macro perspective, the domestic economy is compelled to concentrate on new and emerging approaches to meet the colossal challenges of the developing global economy. One approach is to systematically focus on the improvement of both the effectiveness and the efficiency with which purchasing and related areas in American firms conduct their activities. In particular, creative consideration of alternative approaches to the VA process must be examined and implemented if significant strides are to be made in productivity enhancement. Purchasing professionals should be in the vanguard in pressing for changes in the current way of thinking about value analysis.

At the micro level, individual firms are forced to take proactive stances in developing innovative methods of coping with declining market shares, increased competition, and shorter product life cycles. All functions in a business must work in partnership to effect some degree of change in their capability to operate more effectively. By the very nature of the purchasing function, it is in a critical position to contribute to greater profitability through increased efficiency and effectiveness.

In developing the theme of this presentation, discussions will focus on value analysis and purchasing|s traditional role in the process, steps in VA, parallels between new product development and VA, specific creative approaches, and the managerial implications of the thesis.

WHAT IS VALUE ANALYSIS?

Value analysis as a concept is definitely not a new arrival on the business scene. Much of the original work was developed by Lawrence D. Miles and his colleagues at the General Electric Company near the end of World War II. Work continued into the fifties and culminated in the publication of Mile's first book in 1961. Miles described value analysis as follows:[1]

Value analysis is a philosophy implemented by the use

of a specific set of techniques, a body of knowledge, and

a group of learned skills. It is an organized, creative

approach which has for its purpose the efficient identification

of unnecessary cost, i.e., cost which provides neither

quality nor use nor life nor appearance nor customer

features.

Value analysis results in the orderly utilization of alternative

materials, newer processes, and abilities of specialized

suppliers. It focuses engineering, …