4203776 value analysis and value engineering

7/31/2019 4203776 Value Analysis and Value Engineering

1/33


2/33

Value = Desired performance(P)

Overall Costs (C)

Value can be increased by either improving the

Performance or reducing the cost.

VALUE


3/33

VALUE METHODOLOGYValue Methodology (also called Value

Engineering, Value Analysis or ValueManagement) is a powerful problem-

solving tool that can reduce costs whilemaintaining or improving performanceand quality requirements.

It is a function-oriented, systematicteam approach to providing value in aproduct or service.


4/33

Continued.The value methodology helps organizations

compete more effectively in local, national andinternational markets by:

- Decreasing costs

- Increasing profits- Improving quality

- Expanding market share

- Saving time- Solving problemsUsing resources more effectively


5/33

Value AnalysisVA is an step by step approach to identify thefunctions of a product, process, system orservice; to establish a monetary value for thatfunction and then provide the desired functionat an overall minimum cost without affectingany of the existing parameters like Quality,Maintainability, Productivity, Safety and otherPerformance characteristics.


6/33

Value EngineeringValue Engineering is where the value of all

the components used in the construction of aproduct from design to final delivery stage arecompletely analyzed and pursued.


7/33

Origin

Value Engineering began at General Electric Co. during World War II. Becauseof 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 turnedinto a systematic process. They called their technique as Value Analysis.

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


8/33

DIFFERNCE BETWEEN VALUE ANALYSIS ANDVALUE ENGINEERING

VALUE ANALYSISIndicates application on

the product that is intomanufacturing.

All factors come togetherincluding workers,subcontractors, engineersto make a team with total

experience and knowledge

VALUE ENGINEERING Indicates application on

the product at its designstage.

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


9/33

DIFFERNCE BETWEEN VALUE ANALYSIS ANDVALUE ENGINEERING

VALUE ANALYSISIt may change the

present stage of theproduct or operation

It is worked out mostlywith help of knowledgeand experience

VALUE ENGINEERINGthe changes are executed

at the initial stages only.

It requires specific

technical knowledge.


10/33

OVERALL COSTS?

Overall costs means different to different people.

For 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.

For a consumer overall cost is the monetary sum(price) for which the products or services arepurchased in the market.


11/33

increased 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 thatperformance increases more than the increment inthe cost.


12/33

VALUE ANALYSIS TESTS

Does its use contribute value?

Is its cost proportional to its usefulness?

Does it need all its features?

Is there anything better for the intended use? Can a usable part be made by a lower cost method?


13/33

VALUE ANALYSIS TESTS

Can a standard product be found which will beusable?

Is it made on proper tooling, considering quantitiesused?

Do materials, reasonable labour, overhead, andprofit total its cost?

Will another dependable supplier provide it for less?

Is anyone buying it for less?


14/33

FUNCTION OF VA/VE

FUNCTION HERE MEANS NEED


15/33

THE VARIOUS TYPES OF

FUNCTION ARE AS FOLLOWS: Use function and Aesthetic function

Primary function and secondary function

Higher order and secondary function


16/33

USE FUNCTION ANDAESTHETIC FUNCTION

Use function-Performs some action,expresses in active tone

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


17/33

Primary function and

secondary function

Primary function - Basic purpose forwhich a product exists

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


18/33

Higher order and secondary

function

Higher order function - Reason of

satisfying the basic function

Lower order function - Means of

achieving the basic function


19/33

EXAMPLEFUNCTION OF A TORCH

GIVE LIGHT FACILITATE VIEWING LIGHT THE BULB

SUPPLY CURRENT INSERT BATTERY

WHY?

HOW ? HOW ?

HOW ?


20/33

Job Plan with Specific Phases

Orientation

Information

Function

Creation

Evaluation

Recommendation

Implementation

Audit/Follow up


21/33

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. for

selection of project

Formation of team of experts from variousfunctions


22/33

Information

To collect all the information pertaining tothe project (product)

Work can be divided among team members


23/33

Function

To develop FAST diagram

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

List down all the functions for all the parts


24/33

Creation

To develop alternate means to achieve these

functions

Brainstorming sessions to generate ideas


25/33

5. Evaluation phase:

The objective of this is to select for further analysis of themost promising of the ideas generated during the creative

phase and to subject the ideas to a preliminary screening toidentify those which satisfy the following criteria.

Will it work?Is it less costlier than the present design?

Is it feasible to implement?


26/33

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 greatestvalue advantage.


27/33

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 all theactivities and fix up the time frame for each. Make theentire team responsible for all the activities.


28/33

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 responsibilityof top management alone.


29/33

THE RED POINTER AND RED INK


30/33

On an appliance knob, a strip of bright metal

containing 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.


31/33

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.


32/33

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

with assurance.


33/33

4203776 value analysis and value engineering

Documents