SKEDSOFT

The Focus of Value Analysis

The key focus of the VA approach is therefore the management of ‘functionality’ to yield value for the customer. Let us emphasize this point a little. Not that long ago, consumers of electric kettles were offered a variety of different types of metal-based boiling device. The value of a kettle is derived through heating water and therefore its functionality can be determined (temperature, capacity, reliability, safety etc.). Now faced with the same functionality (to boil water), designers would probably look towards a kettle made of plastic. Plastic has the same functionality as metal in terms of containing and boiling water. The action to boil water is conducted by the same part - known as the element. However the switch from metal to plastic does not impair this value and functionality with the customer –they still want to boil water - but it does result in a cost saving for the manufacturing company. If a company that traditionally made metal kettles did not review its design process then it would be severely disadvantaged when attempting to compete against the lower cost plastic alternative. This is a simple example used only to provide an illustration of the VA concept but it does demonstrate the point of maintaining value whilst reducing costs.

If a company seeks to reduce the costs of producing a product then it must seek out costs that are unnecessary or items of the product that provide no functional value to the customer. If you adopt this approach then the VA process is concerned with removing a specific type of cost. This cost is one that can be removed without negatively affecting the function, quality, reliability, maintainability or benefit required by the customer. As such, the target for all VA activities is to find these costs as opposed to simply re-engineering a product design with no real purpose to the re-engineering exercise. The VA approach is therefore formal and systematic because it is directed towards highlighting and dealing with these ‘recoverable costs’ of production. The objective is to create value for money as opposed to creating new products that do not provide customer satisfaction but are relatively inexpensive.

The rules governing the application of the VA approach are therefore simple:

• No cost can be removed if it compromises the quality of the product or its reliability, as this would lower customer value, create complaints and inevitably lead to the withdrawal of the product or lost sales.

• Saleability is another issue that cannot be compromised, as this is an aspect of the product that makes it attractive to the market and gives it appeal value.

• Any activity that reduces the maintainability of the product increases the cost of ownership to the customer and can lower the value attached to the product.

In essence, the following diagram shows the process of VA and the development of knowledge about the costs of a product in such a way that the costs are gradually decomposed to a high level of detail. At this point, the recoverable losses associated with the current design can be assessed and targeted for reduction to yield, as a result, the same value but at a reduced cost base. In the example, the current costs are decomposed into those related to materials and those related to conversion before analyzing, in greater detail, the materials costs and the opportunities to recover costs through redesign and the  opportunities to recover transformation or conversion costs.