Value Engeenering n Value Analysis

8/9/2019 Value Engeenering n Value Analysis

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Value = Desired performance (P)

Overall Costs (C)

Value can be increased by either improving the

Performance or reducing the cost.

VALUE


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VALUE METHODOLOGYy Value Methodology (also called Value

Engineering, Value Analysis or Value

Management) is a powerful problem-solving toolthat can reduce costs while maintaining orimproving performance and quality requirements.

y It is a function-oriented, systematic team

approach to providing value in a product orservice.


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Continued.

y The value methodology helps organizations compete moreeffectively in local, national and international markets by:

- Decreasing costs- Increasing profits

- Improving quality

- Expanding market share

- Saving time

- Solving problemsy Using resources more effectively


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Value AnalysisVA is an step by step approach to identify the functionsof a product, process, system or service; to establish a

monetary value for that function and then provide thedesired function at an overall minimum cost withoutaffecting any of the existing parameters like Quality,

Maintainability, Productivity, Safety and otherPerformance characteristics.


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Originy Value Engineering began at General Electric Co. during World War II. Because

of the war, there were shortages of skilled labor, raw materials, and componentparts. Lawrence Miles and Harry Erlicher at G.E. looked for acceptablesubstitutes. They noticed that these substitutions often reduced costs, improvedthe product, or both. What started out as an accident of necessity was turned intoa systematic process. They called their technique as Value Analysis.

y In the year 1954, US Navy Bureau of ships adopted same technique in their effortat cost avoidance during the design stage and saved millions of dollars. Theynamed it as Value Engineering. VE follows thought process that is basedexclusively on function, i.e. what something does not what it is.


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DIFFERNCE BETWEEN VALUE ANALYSIS ANDVALUE ENGINEERING

VALUE ANALYSIS

y Indicates application onthe product that is intomanufacturing.

y All factors come togetherincluding workers,subcontractors, engineersto make a team with totalexperience and knowledge

VALUE ENGINEERING

y Indicates application onthe product at its designstage.

y It is always done by aspecific product design(engineers) team.


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WHAT IS THE MEANING OFOVERALL COSTS?

y Overall costs means different to different people.

yFor a producer overall cost is the summation of all

the elements of the cost required to produce aproduct or service such as labour, material,overhead, etc.

yFor a consumer overall cost is the monetary sum

(price) for which the products or services arepurchased in the market.


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The value of a function can beincreased by four methods

1. Decrease the cost while ensuring the same level ofperformance.

2. Enhance the performance at the same cost.

3. Decrease the cost and increase the performance4. Increase both performance and cost ensuring that

performance increases more than the increment inthe cost.


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VALUE ANALYSIS TESTS

y Does its use contribute value?

y Is its cost proportional to its usefulness?

y Does it need all its features?

y Is there anything better for the intended use?

y Can a usable part be made by a lower cost method?


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VALUE ANALYSIS TESTS

y Can a standard product be found which will beusable?

y Is it made on proper tooling, considering quantities

used?y Do materials, reasonable labour, overhead, and

profit total its cost?

y Will another dependable supplier provide it for less?

y Is anyone buying it for less?


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THE VARIOUS TYPES OF

FUNCTION ARE AS FOLLOWS:

Use function and Aesthetic function

Primary function and secondary function

Higher order and secondary function


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USE FUNCTION AND AESTHETIC

FUNCTION

Use function-Performs some action,expresses in active tone

Aesthetic function-Pleases customer,expressed in passive or non-measurabletone


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Primary function and secondary

function

Primary function - Basic purpose forwhich a product exists

Secondary function - Arises out ofspecific design chosen to fulfill theprimary function


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Higher order and secondary function

Higher order function - Reason of

satisfying the basic function

Lower order function - Means of

achieving the basic function


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EXAMPLE

FUNCTION OF A TORCH

GIVE LIGHT FACILITATE VIEWING LIGHT THE BULB

SUPPLY CURRENT INSERT BATTERY

WHY?

HOW ? HOW ?

HOW ?


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Job Plan with Specific Phases

Orientation

Information

Function

Creation

Evaluation

Recommendation

Implementation

Audit/Follow up


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Orientation

To creat awareness and learn the methodology oftools

Training sessions for all supervisory andmanagerial staff on VA & VE

Exposure to techniques like ABC, Pareto etc. forselection of project

Formation of team of experts from variousfunctions


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Information

To collect all the information pertaining tothe project (product)

Work can be divided among team members


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Function

To develop FAST diagram

Start from basic function and probe furtherwith WHY? And HOW?

List down all the functions for all the parts


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Creation

To develop alternate means to achieve these

functions

Brainstorming sessions to generate ideas


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5. Evaluation phase:

The objective of this is to select for further analysis of themost promising of the ideas generated during the creativephase and to subject the ideas to a preliminary screening

to identify those which satisfy the following criteria.

Will it work?

Is it less costlier than the present design?

Is it feasible to implement?


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There are four techniques associatedwith this phase:

Refine and combine ideas: The ideas must be practicable anto make them so we may have to refine an idea or combine twoor more than two ideas

Estabilish cost on all ideas

:

calculating potential costs ofimplementing the ideas.

Develop function alternatives: Mould the individualfunctional solutions into total solutions.

Evaluate by comparison:Once the rough total solutions andtheir related estimates of costs have been established, they are

compared to determine which one will provide the greatest valueadvantage.


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6. Recommendation Phase:To submit the details about the proposed changes withfinancial implications. Report includes proposed changes,reasons of changing, new investments and annual savings.

7. Implementation:To execute the proposed/ accepted changes list down allthe activities and fix up the time frame for each. Make theentire team responsible for all the activities.


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8. Audit / Follow up:

To compare the actual results with that ofexpected. It can be done only after completeexecution of the project. This is the responsibility

of top management alone.


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THE RED POINTER AND RED INK


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On an appliance knob, a strip of bright metalcontaining a red pointer was mounted.

Function: knob conceals the screw and providesthe appearance which the customer wished.

The value audit of the product showed that $20000was spent each year on the production of 1 millionpieces.

Developing alternatives to reduce costs.

A polished stainless steel part was one alternativewhich would accomplish the function and be likedby the customer as well.


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The industrial stylist asked, Why does the red pointer increasethe cost so much?

The answer was that it caused the small part to become a nameplate, which imposed certain costs and restrictions on itsmanufacture and procurement.

Some of the other alternatives, such as the polished stainless

steel, were merely small stampings not using name platetechnology and not limited to the sources of supply who providename plates.

Instructions by stylist:

to take out the red pointer and use polished stainless steel.

the red arrow was not good, that it caused the product to lookmore like a toy and less the mature and he never had liked thered color

The change was made, both improving the customer appearancevalue of the product and eliminating 815,000 of unnecessary cost .


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Although the answer, once developed, and the thinking processseen simple, $15,000 cash each year ($1250 each month) for the

design life of three to four years shows the benefits of anoptimum problem solving system for simple as well as involvedmatters.

Value analysis is a problem-solving system implemented by theuse of a specific set of techniques, a body of knowledge, and agroup of learned skills.

An organized creative approach to efficiently identify unnecessarycosts

Leads to orderly utilization of better approaches, alternativematerials, newer processes, and abilities of specialized suppliers.

It focuses engineering, manufacturing and purchasing attention onone objective-equivalent performance for lower cost.

Step by step procedures for accomplishing its objectives efficientlywith assurance.


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Value Engeenering n Value Analysis

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