This document provides an overview of value analysis, including:
- Classifying value into utility value, esteem value, cost value, and exchange value.
- Origins of value analysis at General Electric after WWII to find acceptable substitutes and reduce costs while maintaining quality.
- Value analysis is a systematic process to reduce costs without compromising quality by analyzing a product's functionality and costs.
- Key steps in the value analysis process include selection and orientation, analysis, recording ideas, innovation/creativity, evaluation, recommendation, and implementation/monitoring.
Value Analysis (VA) is a tool (technique or method) that is used for improving the value of a product or a process of understanding its constituent components and their associated costs. It aims at finding improvements to the components by reducing their cost and increasing the value of the functions of a product or a service.
A critical advantage to using a VA is its potential for reducing costs, which is a benefit that permeates all advantages of the system.
A VA breaks-down a product or service into components, it enables you to analyze each component on its own, evaluating its features and functions in detail efficiency and effectiveness.
Value Analysis (VA) is a tool (technique or method) that is used for improving the value of a product or a process of understanding its constituent components and their associated costs. It aims at finding improvements to the components by reducing their cost and increasing the value of the functions of a product or a service.
A critical advantage to using a VA is its potential for reducing costs, which is a benefit that permeates all advantages of the system.
A VA breaks-down a product or service into components, it enables you to analyze each component on its own, evaluating its features and functions in detail efficiency and effectiveness.
This presentation is designed to give purchasing, materials, supply management, sourcing, contracting, logistics, acquisition and procurement personnel a process of value measurement to quantify the value of purchased goods or services. Learn how to use Value Analysis to target goods and services where cost can be reduced, performance improved, quality enhanced, non-essentials eliminated, downsized, or consolidated through a step-by-step process of value identification and measurement.
The genesis of value analysis and value engineering can be traced to similar, parallel developments in the late 1940’s taking place at General Electric Company and Ford Motor Company. As a concept definition: it is the organized and systematic effort and study directed at analyzing the functional requirements of the system, product, equipment, facility, service or project for the purpose of achieving the lowest overall total cost at the best value. This means consistent with the needed performance, reliability, quality, and maintainability.
Join the trend of many purchasing, sourcing, contracting, and supply management organizations who are reaping the rewards of Value Analysis (VA) and Value Engineering (VE) as a practical tool to improve performance and reduce the cost of goods and services. Their experience with cost reduction projects reveals that by merely determining what things cost and documenting cost breakdowns, one can reduce costs 5%. Improving the choice of material, conceptual design, and methods can further reduce cost by another 10%. Finally, developing a better way to perform what a project or a service was originally intended to do, one can save even more—20-30% and beyond!
Not convinced of the critical importance of value analysis/value engineering VA/VE--- then you must not be interested in product enhancement, service concept augmentation, cost reduction, and profit improvement. Those kinds of payoffs don’t come easily, however. Success depends on three things: understanding of the concept by those who will be involved, strong top management support, and enthusiastic team or project oriented direction to get and keep the program rolling.
No wonder that Purchasing magazine for years dedicated an annual issue to its “Value Analysis of the Year” Awards. Why? According to experts, VA/VE can make a difference: simple projects can take anywhere from one day to six weeks to implement with savings up to $2,000; intermediate projects can range from six weeks to six months with savings of $2,000 to $10,000; and complex projects can take six months to six years with savings ranging from $10,000 to $1 million.
Value Analysis and Value Engineering in Material ManagementManoj Abraham
See the doc file(already uploaded) to see the contends in detail...copy n paste the beolw link...
http://www.slideshare.net/ManojAbraham/v-alue-analysis
Value Management concentrates on the actual needs of the user to focus its resources. It is different to cost-cutting exercises, which achieve economies by using less or cheaper materials.
The Value Management approach involves the use of creative techniques, combined with the latest technical information on materials and construction methods.
Value Analysis and Value Engineering -Function & Evaluation of FunctionJayaprakash Manickaraj
VAVE is a wide topic and i tried to go depth in understanding function and evaluating it. Most of the topic extracted from L.D Miles Book 'Techniques of value Analysis and Engineering
1: Value Analysis provides great turnaround in the operations of the businesses.
2: Use Value Analysis to analyze and understand the detail of cost for specific situations.
3: Use it to find a focus on key areas for innovation.
4: Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.
This presentation is designed to give purchasing, materials, supply management, sourcing, contracting, logistics, acquisition and procurement personnel a process of value measurement to quantify the value of purchased goods or services. Learn how to use Value Analysis to target goods and services where cost can be reduced, performance improved, quality enhanced, non-essentials eliminated, downsized, or consolidated through a step-by-step process of value identification and measurement.
The genesis of value analysis and value engineering can be traced to similar, parallel developments in the late 1940’s taking place at General Electric Company and Ford Motor Company. As a concept definition: it is the organized and systematic effort and study directed at analyzing the functional requirements of the system, product, equipment, facility, service or project for the purpose of achieving the lowest overall total cost at the best value. This means consistent with the needed performance, reliability, quality, and maintainability.
Join the trend of many purchasing, sourcing, contracting, and supply management organizations who are reaping the rewards of Value Analysis (VA) and Value Engineering (VE) as a practical tool to improve performance and reduce the cost of goods and services. Their experience with cost reduction projects reveals that by merely determining what things cost and documenting cost breakdowns, one can reduce costs 5%. Improving the choice of material, conceptual design, and methods can further reduce cost by another 10%. Finally, developing a better way to perform what a project or a service was originally intended to do, one can save even more—20-30% and beyond!
Not convinced of the critical importance of value analysis/value engineering VA/VE--- then you must not be interested in product enhancement, service concept augmentation, cost reduction, and profit improvement. Those kinds of payoffs don’t come easily, however. Success depends on three things: understanding of the concept by those who will be involved, strong top management support, and enthusiastic team or project oriented direction to get and keep the program rolling.
No wonder that Purchasing magazine for years dedicated an annual issue to its “Value Analysis of the Year” Awards. Why? According to experts, VA/VE can make a difference: simple projects can take anywhere from one day to six weeks to implement with savings up to $2,000; intermediate projects can range from six weeks to six months with savings of $2,000 to $10,000; and complex projects can take six months to six years with savings ranging from $10,000 to $1 million.
Value Analysis and Value Engineering in Material ManagementManoj Abraham
See the doc file(already uploaded) to see the contends in detail...copy n paste the beolw link...
http://www.slideshare.net/ManojAbraham/v-alue-analysis
Value Management concentrates on the actual needs of the user to focus its resources. It is different to cost-cutting exercises, which achieve economies by using less or cheaper materials.
The Value Management approach involves the use of creative techniques, combined with the latest technical information on materials and construction methods.
Value Analysis and Value Engineering -Function & Evaluation of FunctionJayaprakash Manickaraj
VAVE is a wide topic and i tried to go depth in understanding function and evaluating it. Most of the topic extracted from L.D Miles Book 'Techniques of value Analysis and Engineering
1: Value Analysis provides great turnaround in the operations of the businesses.
2: Use Value Analysis to analyze and understand the detail of cost for specific situations.
3: Use it to find a focus on key areas for innovation.
4: Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.
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2. Page 2
CLASSIFICATION OF VALUE
Value is the minimum money that has to be expended in purchasing or
manufacturing a product to create the appropriate use or esteem factor.
• Utility value (Use or functional value) – how useful / functional the
product is seen to be.
• Esteem value – the value that customer / user gives to product
attributes (properties, features or attractiveness), not directly contributing
to utility but more relating to aesthetic and subjective value.
• Cost value – the sum of Labor, material and various other costs required
for producing a product.
• Exchange value – Its properties or qualities, which enable us to
exchange it for something else, we want.
Value of a product = Performance of the function / Cost
3. Page 3
ORIGIN
Value Analysis was developed after World War-II in USA at General
Electric (GE). Because of WW-II, there were shortages of skilled labor,
raw materials, and component parts at GE.
Lawrence D. Miles at GE looked for acceptable substitutes. They
noticed that these substitutions often reduced costs, improved
product, or both. This led them to the discovery of a systematic
process for cost reduction without compromising on the desired quality
of products. They named their process as “VALUE ANALYSIS”.
4. Page 4
Value Analysis is an effective tool for cost reduction and the results
accomplished are far greater.
• It improves the effectiveness of work.
• It is an organised approach to a problem.
• It is value applied at the design stage itself.
• It reduces unnecessary costs, obvious and hidden which can be
eliminated without adversely affecting quality, efficiency, safety
and other customer features.
VALUE ANALYSIS
6. Page 6
‘Value Analysis Concept : Low Cost, Best Value’
Best Value = Low Cost + Justified Additions
High
Cost
Low
Cost
Best
Value
7. Page 7
Value Analysis- What it does ?
• Analyzes the functionality of a product.
• States an estimated cost for each function.
• Demonstrates a function as compared with
that of a competitor’s.
8. Page 8
When to use value analysis
• To identify needed product improvements.
• To lower product costs.
• To prioritize product redesign activities.
• To determine the real value of each component.
10. Page 10
Component Competitors Design Importance to customer Cost Priority for redesign
Eraser Same Low 0.12 6
Worse Medium 0.07 12
Same Medium 0.08 11
Same Low 0.06 13
Metal Band Better High 0.23 2
Same High 0.04 15
Better High 0.1 8
Wooden Case Same Medium 0.35 1
Paint Same High 0.2 4
Same High 0.15 5
Same Medium 0.05 14
Better High 0.02 17
Graphite Better Medium 0.03 16
Better High 0.2 3
Same Medium 0.1 9
Better High 0.11 7
Worse Low 0.09 10
11. Page 11
VA WORKABILITY
For many of the world’s leading companies, including
Hewlett Packard, Sony, Panasonic, Toyota, Nissan, and
Ford, VA process of design review has provided major
business returns.
The key to realizing these returns is through using
knowledge of:
• the customer requirements,
• the costs of the product,
• manufacturing process &
• the costs associated with failures due to poor or
inadequate product design.
All these inputs to VA process are vital if decisions
regarding product and process re-design are to yield lower
costs and enhanced customer value.
12. Page 12
Why Value Analysis
is needed ?
• Assessing Customer Needs & Affordability
• Capturing Customer Needs and Priorities
• Obtaining Customer Feedback on Value
• Product Planning
• Reduced material use and cost
• Reduced distribution costs
• Reduced waste
• Improved Profit Margins
• Increased Customer Satisfaction
13. Page 13
Objectives
of Value
Analysis
Saving in
cost
Quality
Promotion
Elimination of
un-necessary
processes
Maximization
of the value of
product
Important
Substitution
New product and
product design
Company
Image
14. Page 14
VA process is based on the application of a systematic workplan that
may be divided into 7 steps as mentioned below:
PROCEDURE
SELECTION & ORIENTATION
ANALYSIS
RECORDING IDEAS
INNOVATION/CREATIVITY
EVALUATION
RECOMMENDATION
IMPLEMENTATION & MONITORING
15. Page 15Value Analysis 15
# Stage Description
1.
SELECTION &
ORIENTATION
To select those critical areas where a potential for cost
reductions is expected.
Use the common Pareto’s ABC analysis.
General scope, restrictions and aims of the study is defined.
2. ANALYSIS
Examine the data at a VA group/team meeting.
Record the minutes of each brainstorming session.
Apply the Tests for Value.
Propose further action.
3.
RECORDING
IDEAS
Write down the minutes of analyses meetings and circulate
them to group/team members for further queries.
It includes the agenda for the next meeting.
4.
INNOVATION/
CREATIVITY
Arrange team meetings in order to discuss the ideas
analyzed and any new information obtained.
Think upon practical measures for reducing costs and
increasing value.
16. Page 16Value Analysis 16
# Stage Description
5. EVALUATION
Investigate suggestions for reducing costs and to make
them practical and acceptable to client management.
Obtain definite prices and costs in order to estimate cost
reductions accurately.
6. RECOMMENDATIONS
Recommend cost reductions to client management.
Present the recommendations in a comprehensive report.
Recommend a member to act as an implementation
consultant for VA recommendations.
7.
IMPLEMENTATION
& MONITORING
Implement the recommendations accepted by the
company management. Monitor the results as suggested
in VA report.
Jot down the feedback of the management upon
completion of VA assignment.
17. Page 17
ADVANTAGES
• It leads to improvements in product design so that, most
appropriate products are produced .
• High quality (value) is maintained.
• All-round efficiency is achieved by eliminating waste of various
types.
• New ideas are generated and incorporated.
• Teams spirit and morale are improved.
• VA improves profitability of products.
• VA provides a process to systematically improve the
existing goods and services. It builds value into a
product or service.