WHAT IS VALUE ANALYSIS
This report provides a management overview of a ‘process’ known as Value Analysis. Value Analysis (VA) is considered to be a process, as opposed to a simple technique, because it is both an organized approach to improving the profitability of product applications and it utilizes many different techniques in order to achieve this objective. The techniques that support VA activities include ‘common’ techniques used for all value analysis exercises and some that are appropriate under certain conditions (appropriate for the product under consideration), . The VA approach is almost universal and can be used to analyze existing products or services offered by manufacturing companies and service providers alike. For new products, the Value Engineering (VE) approach, which applies the same principles and many of the VA techniques to pre-manufacturing stages such as concept development, design and prototyping.
At the very heart of the VA process review is a concern to identify and eliminate product and service features that add no true value to the customer or the product but incur cost to the process of manufacturing or provision of the service. As such, the VA process is used to offer a higher performing product or service to the customer at a minimal cost as opposed to substituting an existing product with an inferior solution. This basic principle, of offering value at the lowest optimal cost of production, is never compromised. It is the principle that guides all actions within the VA process and allows any improvement ideas to be translated into commercial gains for the company and its customers. The VA process is therefore one of the key features of a business that understands and seeks to achieve Total Quality Management (TQM) in all that it does to satisfy customers. For many of the worlds leading companies, including names like Hewlett Packard, Sony, Panasonic, Toyota, Nissan, and Ford, the VA process of design review has provided major business returns. The key to realizing these returns is knowledge, of the customer requirements, the costs of the product, and an in-depth knowledge of manufacturing process and the costs associated with failures due to poor or inadequate product design. All these inputs to the VA process are vital if decisions regarding product and process re-design are to yield lower costs and enhanced customer value.
The Value Analysis technique was developed after the Second World War in America at General Electric during the late 1940s. Since this time the basic VA approach has evolved and been supplemented with new techniques that have become available and have been integrated with the formal VA process. Today, VA is enjoying a renewed popularity as competitive pressures are forcing companies to re-examine their product ranges in an attempt to offer higher levels of customization without incurring high cost penalties. In parallel, many major corporations are using the VA process with their suppliers to extend the benefits of the approach throughout the supply chain. Businesses, big and small, will therefore benefit from understanding and applying the VA process. It is likely that those companies that do not take the time to develop this capability will face an uncertain future as the lessons and problems of the past are redesigned into the products of the future.
Definition of Value Analysis
Value Analysis can be defined as a process of systematic review that is applied to existing product designs in order to compare the function of the product required by a customer to meet their requirements at the lowest cost consistent with the specified performance and reliability needed.
This is a rather complicated definition and it is worth reducing the definition to key points and elements:
1. Value Analysis (and Value Engineering) is a systematic, formal and organized process of analysis and evaluation. It is not haphazard or informal and it is a management activity that requires planning, control and co-ordination.
2. The analysis concerns the function of a product to meet the demands or application needed by a customer. To meet this functional requirement the review process must include an understanding of the purpose to which the product is used.
3. Understanding the use of a product implies that specifications can be established to assess the level of fit between the product and the value derived by the customer or consumer.
4. To succeed, the formal management process must meet these functional specification and performance criteria consistently in order to give value to the customer.
5. In order to yield a benefit to the company, the formal review process must result in a process of design improvements that serve to lower the production costs of that product whilst maintaining this level of value through function.
