14. Value Engg

8/2/2019 14. Value Engg

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8/2/2019 14. Value Engg


Overview«..Overview«..

Value Analysis (VA) is also known as VALUE EngineeringValue Analysis (VA) is also known as VALUE Engineering

(VE), Value Assur ance and VALUE Management (VM). It is(VE), Value Assur ance and VALUE Management (VM). It is

an appr oach for impr ovement in the per formance of thean appr oach for impr ovement in the per formance of the

pr oducts, systems or pr ocedures and reduction or pr oducts, systems or pr ocedures and reduction or

elimination of cost, without aff ecting the function.elimination of cost, without aff ecting the function.

Value analysis as an or ganization creative appr oach whichValue analysis as an or ganization creative appr oach which

has for its pur pose the eff icient identif ication of has for its pur pose the eff icient identif ication of

unnecessar y cost, i.e., cost which pr ovides neither unnecessar y cost, i.e., cost which pr ovides neither quality, nor use ,nor lif e, nor appear ance, nor customer quality, nor use ,nor lif e, nor appear ance, nor customer

f eatures. VA is normally used in the area like customer f eatures. VA is normally used in the area like customer

service plans in banks, slum developmentservice plans in banks, slum development..

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ValueValue

Value is the customer's subjective evaluation, adjusted for Value is the customer's subjective evaluation, adjusted for

cost, of how well a product meets or exceeds expectations.cost, of how well a product meets or exceeds expectations.

Right combination of Right combination of

Product qualityProduct quality

Fair priceFair price

GoodsGoods

ServicesServices

VALUE

PRICE

FLEXIBILIT Y

QUALITY

SPEED

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Characteristics:Characteristics:--

Value links the customer, firm and operationValue links the customer, firm and operation

management systemmanagement system

Customer specific, not market or product specificCustomer specific, not market or product specific

Combines 4 major attributesCombines 4 major attributes

Importance of attributes differ for different customersImportance of attributes differ for different customers Value today may not be tomorrow. Its dynamicValue today may not be tomorrow. Its dynamic

Value EquationValue Equation

Defines & expresses value as a comparison of what aDefines & expresses value as a comparison of what a

product can do for the customer against what it costs to him. product can do for the customer against what it costs to him.

Value = Performance / CostValue = Performance / Cost

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Importance of Value EquationImportance of Value Equation

It identif ies four major components of It identif ies four major components of

value i.e. cost,quality,speed and flexibilityvalue i.e. cost,quality,speed and flexibility

It identif ies in various ways f irm can create It identif ies in various ways f irm can create value for customer s and compete invalue for customer s and compete in

mar ketplacemar ketplace

Components of value equation canComponents of value equation can

change to enhance value for customer change to enhance value for customer

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Value driven competitionValue driven competition

Approaches«.Approaches«.TimeTime

PlacePlace

No matter No matter Mass customizationMass customization

Risk reductionRisk reduction

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O bjectives & Road blocksO bjectives & Road blocks

Value AnalysisValue Analysis

To provide better value to a product/serviceTo provide better value to a product/service

To improve company¶s competitive positionTo improve company¶s competitive position

To ensure that every element of cost(To ensure that every element of cost(labour labour, materials,, materials,

suppliers, service) contribute proportionately to thesuppliers, service) contribute proportionately to thefunction of the product.function of the product.

R OAD BLOCK SR OAD BLOCK S

We have done it this way for 15yrs.why change now?We have done it this way for 15yrs.why change now?

Our business is differentOur business is different

We don¶t do things that way in our firmWe don¶t do things that way in our firm

It is jolly goodIt is jolly good idea.Letsidea.Lets someone try firstsomeone try first

It has been tried beforeIt has been tried before--in fact we do it all times.in fact we do it all times.

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Applications«. Applications«.

Value analysis in Pr oductionValue analysis in Pr oduction

Value analysis in Pur chasingValue analysis in Pur chasing

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VALUE ENGINEERING PROCESS

THE JOB PLAN IN FOLLOWING SEVEN STEPS:

1. GENERAL PH ASE

2. INFORMATION PH ASE

3. FUNCTION PH ASE

4. CREATION PH ASE5. EVALUATION PH ASE

6. INVESTIGATIN PH ASE

7. RECOMMENDATION PH ASE

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General PhaseGeneral Phase

5 techniques associated in this phase:5 techniques associated in this phase:

Good human relationsGood human relations

Inspire team wor kInspire team wor kWor k on specif iesWor k on specif ies

Over come r oad blocksOver come r oad blocks

Apply good business judgments Apply good business judgments

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Lack of information:Lack of information:

Most people who design a pr oduct are quite often not tooMost people who design a pr oduct are quite often not toosure of the real needs of a user and usually over sure of the real needs of a user and usually over--designdesignthe pr oduct by pr oviding it with f eatures that the user justthe pr oduct by pr oviding it with f eatures that the user justdoes not use.does not use.

The wor ld is advancing exceedingly fast and new The wor ld is advancing exceedingly fast and new technology, new pr oducts, new materials and new technology, new pr oducts, new materials and new pr ocesses are coming up almost ever y day. They create pr ocesses are coming up almost ever y day. They create obsolescence in respect of the old pr ocesses. Costsobsolescence in respect of the old pr ocesses. Costswhich were considered satisfactor y yester day become which were considered satisfactor y yester day become

unnecessar y today. In the face of competition the r oyalunnecessar y today. In the face of competition the r oyalr oad to r uin is to adopt the methods of yester day to the r oad to r uin is to adopt the methods of yester day to the business of today.business of today.

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Information Phase An attempt is made to assess the potential of value impr ovement.

pr oject is studied in detail and all impor tant fact are gathered and

considered. in this phase, fact which are in the form of technical

specif ications or envir onmental specif ications down. development

are considered. also, the engineering dr awings, pr oductionsample, pr oduction data are all kept in mind. The cost data and

wor k specif ications are secured. consumer pref erences are jotted

and testing are studied. quantities and scr ap are taken in account.

a relationship is to be established between cost and specif ication

or requirements.

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Function PhaseFunction Phase

Here the pr oduct is def ined in term of its

functions, in term of its per formance

expectations. These functions are co-

related with cost and their wor th.

Most of the times, an attempt is

made to def ine functions with only two

wor ds --- A ver b and noun. It makes the def inition pretty shar p. It intr oduces an

element of r ationality into the exer cise, by

trimming the f rills.

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Some function Def initionsSome function Def initionsProduct Function

Tea cup Hold tea (liquid)

Light bulb Emit light

Gas lighter Provide ignition

Fan regulator Regulator speed

Match box Provide ignition

Mirror Reflect light

Brake Arrest motion

screwdriver Transfer torque

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Another technique which is used under this Another technique which is used under thisphase is to evaluate function relationship byphase is to evaluate function relationship by

r anking function in descending or der of r anking function in descending or der of impor tance. Simultaneously relative value of impor tance. Simultaneously relative value of their impor tance determined.their impor tance determined.

Paired comparison method is fair ly commonPaired comparison method is fair ly common

amongst resear cher s. it determines numericalamongst resear cher s. it determines numericalvalue of various functions. Here pair s of functionvalue of various functions. Here pair s of functionare compared to know their impor tance and toare compared to know their impor tance and toassess basic or secondar y. Gener ally aassess basic or secondar y. Gener ally a

pr oduct¶s basic function is one ,but it maypr oduct¶s basic function is one ,but it maypossess sever al secondar y functions. Basicpossess sever al secondar y functions. Basicfunction can be restated in more ways than one. function can be restated in more ways than one.

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Creation Phase

Lack of ideas

Most of use want previously tried out materials, designs

processes and procedures. We jump at the first ideas that work

and usually do not bother to find out if better methods are

possible. These days to give a fillip to creative ideas,

brainstorming technique are used. To nurture creativity, positive

thinking is established. Creative ideas are also developed by anumber of check-lists and idea-stimulators.

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Investigation PhaseIt is vir tual extinction of the previous phase. ideas

accepted are here conver ted into acceptable and

wor kable solution to per form the desired function

at the least cost. It may be necessar y tostandar dize, to consult vendor s and specialists,

and to use specialty pr oducts, pr ocesses and

pr ocedures.

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Recommendation Phase:Recommendation Phase:

It is the ultimate phase of VA. Finally selected value

alter native here in presented for implementation on

acceptance. Acceptance is the key to success of VA. Sometimes, acceptance is a result of presentation or a

combination of both. All the relevant data is kept before

management to enable it to take suitable decision.

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Benef its by Value Analysis(VA)Benef its by Value Analysis(VA)

Better pur chasing techniqueBetter pur chasing technique

Better supplier sBetter supplier s

Design reDesign re--evaluation & modif icationevaluation & modif icationBetter manufacturingBetter manufacturing

methods,packaging,material handlingmethods,packaging,material handling

Lower oper ating costs, maintenance costLower oper ating costs, maintenance cost& oper ating expenses& oper ating expenses

Standar dization & substitutionStandar dization & substitution

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Value Analysis TechniquesValue Analysis Techniques

Design analysis

Checklists

Brainstorming

Price analysis

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Alter natives of job plan: Alter natives of job plan:

Instead of the Recommendation phase Instead of the Recommendation phase method we can adopt FAST or DARSIRI,method we can adopt FAST or DARSIRI,which is an acr onym for data Collectionwhich is an acr onym for data Collection

(D), Analysis (A), Recor d of ideas (R),(D), Analysis (A), Recor d of ideas (R),Speculation (S), Investigation (I),Speculation (S), Investigation (I),Recommendation (R), and ImplementationRecommendation (R), and Implementation(I) .(I) .

FAST (Functional Analysis System FAST (Functional Analysis System Techniques)Techniques)

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Fast as VE Technique:Fast as VE Technique:This technique is developed by Charles WThis technique is developed by Charles W

Bytheway(1965), FAST is a visual representation of Bytheway(1965), FAST is a visual representation of functions and identifies the areas of greatestfunctions and identifies the areas of greatestimpact of these function on costs. It is animpact of these function on costs. It is aninteraction between function and cost.interaction between function and cost.

The following step are followed for constructionThe following step are followed for construction

FASTFAST1)1) Use verb and noun for describing functions.Use verb and noun for describing functions.

2)2) These functions are written on small cards.These functions are written on small cards.

3)3) First select the basic function card. :First select the basic function card. :

(i)(i) How is the function performed?How is the function performed?

(ii)(ii) Why is it performed?Why is it performed?(iii)(iii) When is it performed?When is it performed?The logical sequence of function (basic andThe logical sequence of function (basic andsecondary) generate a critical function path. Itsecondary) generate a critical function path. Itconsist of only critical functions.consist of only critical functions.

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Case studyCase study

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Data

collected

Function, cost current(450 amps) C\section, other

conductors and their costs, etc.

Function Conduct Electricity

Cost 52 units per cable.

Worth 17 Units (steel cable with increased cross section could also

conduct at cheaper cost).

Creative

phase

Ideas to use cast iron, steel, aluminum, Nicro-alloys, silver,

etc. generated.

Evaluation After analyzing different ideas aluminum was considered

best and investigated regarding its feasibility, economy and

related problems like bi-metallic corrosion between

aluminum and brass lugs ets.Recomme

ndation

Aluminum cable of 120mm2 *1.5meters with zinc alloy

sleeves and brass lungs recommended.

Saving 30 units per cable (57% cost difference between copper and

aluminum+ cost increase due to addition of zinc alloysleeves .=30*50,000; =15 lakh units er ear

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data collection=====function, cost

function============fur niturecost=========2000RS

wor th=======chipper than ir on just 450RS

creative phase========ideas to use f iber instead of ir on

evaluation===========after analyzing diff erent ideas f iber was considered best

recommendation=======f iber is polymer plastic recycle and

made in just cost of 450 RS

saving===============1550 RS

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Organizational Aspects of VA

VA required top management support top managementsupport. The VA also requires team work.

The VA function can be organization ±its size, operations, product-line etc.It can be administered by staff at the corporateoffice or it may be run on decentralized basis or a balancedcombination of both. A decentralized and local VA group isaccepted as a helpful service.

VA however is not as firmly entrenched as marketing, financeand other corporate functions. There are frequent resistance

problems to VA.

VA is also affected by the management level to which itreports- it must be wide enough to cover all areas affecting thevalidity of the study, high enough to communicate with decision-

making responsible for implementation, powerful enough tocommunication with decision-makers responsible for implementation, powerful enough to control and takeresponsibility for the administration and assignment of VAgroup.

14. Value Engg

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