Value Analysis

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 1
Technological Innovation, KV Patri
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.

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
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.

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?
Undertake VA as early as possible.
Cost
Savings of
potential change
Product Production
Concept Development Design and Use
Stage Stage Stage
Time
Applies to both product design and redesign (popular in HK)

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.

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?

Follow-up Phase Assure implementation
Present solutions to management

Presentation Phase
2-3 wk Work Period
Development Phase Prove feasibility of solutions
2-3 wk Work Period
Synthesis Phase Synthesize solutions
8 Steps of
Creativity Phase Create Ideas and Concepts VA
Incubation 1 wk
Job Plan
Analysis Phase Define Value Analysis Projects
Function Analysis
Information Phase Function-Cost
3 days Function-Worth
Prepare cost and function data.

Preparation Phase Schedule sessions and participants.
6 weeks Collect user/customer data.

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
-

Design
Cost
VA
Interaction
Window
Outreach
Quality
Operations

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.

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

Upstream VA
How, 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.
A customer is anyone who has a stake in the product --not
necessarily the only guy who pays for it.
Product User/Customer
Automobile headlight Car owner
Repairman
Car manufacturer
Flashlight Battery Wholesaler
Retailer
Flashlight Owner
Insurance Claim Policy Holder
Insurance Company
Victim
Function Analysis: A simple can opener
Part Function Realization
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
• 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 17
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.

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.

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.
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.

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.

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

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Value Analysis

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Value Analysis

• Originated in GE 45 years ago.

Theodore C. Fowler, Value Analysis in

Value Analysis, Management of 2

Value Analysis, Management of 4

Value Analysis, Management of 6

Value Analysis, Management of 7

Value Analysis, Management of 8

Present solutions to management

2-3 wk Work Period

Development Phase Prove feasibility of solutions

2-3 wk Work Period

Synthesis Phase Synthesize solutions

Prepare cost and function data.

Value Analysis, Management of 9

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