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Value Analysis

Value Analysis. Originated in GE 45 years ago. Father: Lawrence D. Miles of GE. Thousands of success stories.

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Value Analysis

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  1. Value Analysis • Originated in GE 45 years ago. • Father: Lawrence D. Miles of GE. • Thousands of success stories. • Miles got Japanese “High Order of Imperial Merit Medal” in 1983. Only 4 other Americans (Drucker for Management, Deming and Juran for Quality, and Lillian Gilbreth for Method Study) had got it earlier. • Over 10,000 VA exercises have been performed in Japan alone. • Snodgrass and Fowler developed VA further. Value Analysis, Management of Technological Innovation, KV Patri

  2. The following book is a good resource with regard to VA: Theodore C. Fowler, Value Analysis in Design, Van Nostrand Reinhold, 1990, TS171.4.F69. Value Analysis, Management of Technological Innovation, KV Patri

  3. VA helps attack several common reasons for unnecessary costs • Engineers’ other responsibilities • Habits and attitudes • Preconceived ideas • Temporary circumstances • Failure to use available specialists • Fear of personal loss (of face) • Lack of time and information • Prejudice • Lack of ideas • Desire to conform Value Analysis, Management of Technological Innovation, KV Patri

  4. Objectives of VA • Deliver to the customer the required functions at minimum cost. • Foster creativity and innovation. • The concept of WORTH includes the concept of QUALITY. Value Analysis, Management of Technological Innovation, KV Patri

  5. VA is not a mere cost control exercise Cost reduction methods: • What is it? • How can we make it cheaper? VA: • What is it? • What does it do? • Hat must it do? • How can its functions be performed better or for less? Value Analysis, Management of Technological Innovation, KV Patri

  6. Undertake VA as early as possible. Cost of change Savings potential Product Design Stage Production and Use Concept Stage Development Stage Time Applies to both product design and redesign (popular in HK) Value Analysis, Management of Technological Innovation, KV Patri

  7. Value Analysis • Value = Worth/Cost • Cost = Life cycle cost = First cost + Follow-on Cost • Worth = How to measure worth. Assess worth not absolutely but relatively. Value Analysis, Management of Technological Innovation, KV Patri

  8. How is worth decided? • Ultimately, worth is decided by the customer. • We need to anticipate the ‘needs’ and ‘wants’ of the customer. (What is the difference between needs and wants?) • Needs may be measured, but can wants be measured? Value Analysis, Management of Technological Innovation, KV Patri

  9. Assure implementation Follow-up Phase Present solutions to management Presentation Phase 2-3 wk Work Period Development Phase Prove feasibility of solutions 2-3 wk Work Period Synthesize solutions Synthesis Phase 8 Steps of VA Job Plan Creativity Phase Create Ideas and Concepts Incubation 1 wk Analysis Phase Define Value Analysis Projects Function Analysis Function-Cost Function-Worth Information Phase 3 days Prepare cost and function data. Schedule sessions and participants. Collect user/customer data. Preparation Phase 6 weeks Value Analysis, Management of Technological Innovation, KV Patri

  10. The Preparation Phase 1. Select Product - design cycle starts - importance to organization - product with spin-off to the rest of the product line 2. Select Participants - interdisciplinary: design + operating + costing + outreach - one catalyst - selected for interpersonal ability - no more than one knowledgeable design engineer - about 5 members - all high profile employees - democratically elected leader - Value Analysis, Management of Technological Innovation, KV Patri

  11. Design Cost VA Interaction Window Outreach Quality Operations Value Analysis, Management of Technological Innovation, KV Patri

  12. 3. Collect required technical data - Indented costed bill of materials and labor (ICBOML) - Engineering bill of materials - Labor routing sheets - Product/process data, data on competing products - 2 sets of hardware, one assembled and one broken apart - Information on purchased parts and materials: prices, quantities, delivery times, quantity discounts, etc. Value Analysis, Management of Technological Innovation, KV Patri

  13. 4. Collect required cost data - Note that cost is not equal to price. - Do not think that price is cost + markup. - Cost = (Labor + material + over had) $ - Use ICOMBL Value Analysis, Management of Technological Innovation, KV Patri

  14. Upstream VAHow, when we only have a concept? • Base Case - Collect all information from all who have contributed to the idea: * Formal sketches * Marked blueprints * Modified CAD drawings * Informal pad sketches • Give to Methods/Costing engineer to cost it. Value Analysis, Management of Technological Innovation, KV Patri

  15. A customer is anyone who has a stake in the product --not necessarily the only guy who pays for it. ProductUser/Customer Automobile headlight Car owner Repairman Car manufacturer Flashlight Battery Wholesaler Retailer Flashlight Owner Insurance Claim Policy Holder Insurance Company Victim Value Analysis, Management of Technological Innovation, KV Patri

  16. Function Analysis: A simple can opener PartFunctionRealization Subunit 1 1. Separate metal 1. Shearing 2. Tearing 3. Fatigue 4. Melting 5. Drawing thin 6. Chemical erosion Subunit 2 1. Apply power 1. Hand 2. Electric motor 3. Hot wire 4. Hydraulic motor 5. Flame 6. Chemical reaction 7. Mechanical vibration 8. Laser 2. Position 1. Bring can to opener 2. Bring opener to can 3. Have opener built on can Value Analysis, Management of Technological Innovation, KV Patri

  17. Value Analysis • A systematic design review concentrating on the reduction of the direct manufacturing cost of the product while preserving or improving the the values (basically technical, artistic, ergonomic and economic) offered by the product to the customers. • VA operates by: - Identifying value features or specific functions of the product. - Examining alternative ways of achieving these. - Choosing the way that entails least cost coupled with maximum satisfaction for the customer. • VA is performed in project mode by an interdisciplinary team. Value Analysis, Management of Technological Innovation, KV Patri

  18. VA: Stage 1 - Familiarization • All team members get familiar with drawings, specifications, cost breakdowns, un-assembled examples of the product, etc. Advantage is taken of the multi-disciplinary team. The accountant explains the cost figures, the production engineer explains production bottlenecks ... • Find out the present ‘values’, production times and production costs (separate labor and material costs) as accurately as possible. Finding the ‘values’ is more difficult. The marketing representative should be able to explain what customers want and where the competitors have an edge. • Challenge. Assess alternative views. Arrive at a consensus. Value Analysis, Management of Technological Innovation, KV Patri

  19. VA: Stage 2 - Speculation • This is the most important and creative part. • Subject each component, in turn, to critical examination. - The first question always is: “Can we eliminate it?” Surprisingly, many time the answer is ‘Yes’. - If it can be eliminated, do it and make the necessary adjustments to the rest of the parts. - Otherwise, find other cost savings by making some change (combination, substitution, simplification) to it. Techniques for enhancing creativity at this stage include Brain Storming, Synectics, and Lateral Thinking. Value Analysis, Management of Technological Innovation, KV Patri

  20. Brainstorming (1) • Most useful in early stages of design - particularly in the concept development stage or in finding alternatives. • Having a group and face-to-face meeting are essential. The group should consist of people with diverse ideas and backgrounds in order to stimulate thoughts not bound by usual paradigms. • The leader is just a facilitator - just like a cheer leader. He must however exert control if members exhibit inhibitive behavior. • Allow suggestions and ideas to flow freely. Silly, wild, humorous and crazy statements are expected. A large number of suggestions is desired. People are encouraged to build on other’s ideas. No one can criticize other’s ideas. Value Analysis, Management of Technological Innovation, KV Patri

  21. Brainstorming (2) • Only after the ideas have subsided that the evaluation of the ideas takes place. • Members are assigned to sort through the ideas listed during the creative phase, selecting those with most promise. • The procedure, if successful, will provide design avenues that would not have been conceived of by designers working on their own o under a more conventional structure. Value Analysis, Management of Technological Innovation, KV Patri

  22. VA: Stage 3 - Examination After each component has been analyzed in turn, the team may find that there are a small number of changes which are considered ‘valuable’. The effect of each alteration must be examined and the the total effect determined. Only if the team is sure that the product is at least as good as the original should the changes be implemented. Often there will be several courses action available. A decision may have to be taken whether to recommend maximum design improvement or maximum cost saving or a balance of both. Value Analysis, Management of Technological Innovation, KV Patri

  23. VA: Stage 4 - Implementation • Calculate the extent of overall cost saving resulting from the agreed design changes. Consider both labor and material costs of production here. It must also consider the costs of making the changes - new equipment and tooling, redundant stocks of existing materials, etc. • After the changes have been introduced, the team should follow up the results to confirm that its predictions have been realized. If they have not, then the reasons should be identified and appropriate action taken. Value Analysis, Management of Technological Innovation, KV Patri

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