SVKM’S D. J.

Sanghvi College of Engineering

Department of Mechanical Engineering

INDUSTRIAL ENGINEERING
(Course Code: DJMEC 802)

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Overview of Industrial Engineering:

Industrial engineering is a branch of engineering management concerned with how to make or
do things better, crossing a range of disciplines associated with manufacturing industrial or
consumer products. This may involve increasing efficiency, reducing production costs,
improving quality control, ensuring the health and safety of employees, protecting the
environment or complying with government regulations.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Industrial engineers work to reduce any waste of time, money, materials, energy or other
commodities by streamlining procedures and processes. This is achieved through the
application of specialist knowledge and skills to specify, predict and evaluate results from
processes and systems. The results of this allow for new processes and systems to be produced,
with business administration activities overlapping with areas such as production and
manufacturing engineering, operations research, systems and supply chain engineering,
management science and engineering, safety engineering, ergonomic and logistics engineering
and more depending on the needs of the user.
Industrial engineering can be found in a wide range of industries, where it is used to improve
processes and procedures to save time and money while also ensuring safety and quality.
Bringing together specialist knowledge and skills to analyse and evaluate processes and
systems, industrial engineering crosses into areas including business administration,
production and manufacture, operations, systems and supply chains, ergonomics, logistics and
more.
Industrial engineering determines the most effective ways to use the basic factors of production
such as men, machines, materials, information, and energy to make a product or a service.
These factors of production form the link between management goals and operational
performance. Industrial engineering deals with increasing productivity through the
management of men, methods and technology.
The American Institute of Industrial Engineering (AIIE, 1955) has defined the term ‘industrial
engineering’ as given below (Maynard 1963):
Industrial Engineering is concerned with the design, improvement, and installation of
integrated systems of men, machines, materials, and energy. It draws upon specialized
knowledge and skills in the mathematical, physical and social sciences together with the
principles and method of engineering analysis and design to specify, predict, and evaluate the
results to be obtained from such systems.
History:
The roots of industrial engineering can be traced back to the beginning of the Industrial
Revolution in the late 18th Century. As traditional manual operations began to be mechanised
through inventions such as the spinning jenny, the flying shuttle and the steam engine, so it
became possible to manufacture on a larger scale from central locations. As factories and mills
began to spring up across Britain, the notion of an industrialised production system began to
form.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Adam Smith’s influential ‘The Wealth of Nations’ introduced the concepts of the Division of
Labour and the ‘Invisible Hand’ of capitalism, promoting the idea of a factory system before
James Watt and Matthew Boulton created the world’s first integrated machine manufacturing
facility. This included ideas of waste reduction, cost control and increased productivity as well
as skills training for employees.
Charles Babbage’s travels to factories across Britain and the United States in the early part of
the 19th Century extended these ideas, leading to the publication of his book, ‘On the Economy
of Machinery and Manufacturers.’ The book investigated basic industrial engineering concepts
such as how long it takes to a task and whether it can be subdivided into smaller repetitive tasks
to create a faster overall process.
Other early innovations included the creation of the idea of interchangeable parts by Eli
Whitney and Simeon North, who manufactured firearms for the US Government. They found
that, by mass-producing parts that could be used in any finished product, it was possible to save
costs by reducing the need for specialised workers.
Despite these early advances, the industrial engineering discipline began with the introduction
of scientific management and time-and-motion study by Frederick Taylor (1865-1915). His
books, ‘Shop Management’ and ‘The Principles of Scientific Management,’ were published in
the early 20th Century. They introduced several methods for improving efficiencies, including
the development of working standards and production time reductions based on the scientific
method, to allow for high levels of predictability and precision in manual tasks.

Frank Gilbreth and his wife Lillian pioneered what would later become ergonomics when they
categorised human motion into 18 basic elements named ‘therbligs.’ These therbligs broke
movements down into units, allowing even the movements of workers to be optimised to save
time. They also allowed for jobs to be designed based on movements to ascertain how long it
should take to perform.
The first official course in industrial engineering was created by Pennsylvania State University
in 1908. In 1927, the Technische Hochschule in Berlin also introduced an industrial
engineering degree before the first doctoral degree in industrial engineering was awarded by
Cornell University in 1933.
While these academic advances were occurring, Henry Laurence Gantt introduced the Gantt
chart in 1912 to outline the actions and relationship within an organisation and Henry Ford
managed to cut the production time for a car from 700 hours to just 1.5 hours with the use of
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

assembly lines in 1913. Ford also pioneered ‘capitalist welfare,’ whereby financial incentives
were given to employees for increased productivity.
The 1940s saw the development of the concept of Total Quality Management (TQM), which
gained momentum following the end of World War II. TQM emphasises the importance of
quality in products and processes through every phase of an operation and has become essential
to industrial engineering. Six Sigma and the ISO 9000 quality standard have since supplanted
the concepts created by TQM.
The next decades saw further advances in industrial engineering methods, including the
development of material requirements planning. In Japan, theories such as Kaizen and Kanban
emerged, improving quality, delivery schedules, and flexibility in the workplace. These
concepts spread to the West through continuous improvement programmes as industry became
more globalised.
In 1985, Israeli scientist, Eliyahu M. Goldratt developed his Theory of Constraints, which
sought to improve production bottlenecks until they no longer existed. At the same time supply
chain management and customer-oriented business process design came to the fore.
Why is Industrial Engineering Important?
Industrial engineering is important to both producers and end-users of a product. Industrial
engineers improve processes and designs to make things more efficient. This is good for
business as it saves time and money, raw resources, energy and manpower. However, industrial
engineering is not all about profit margins as it also ensures the safety and quality of a product
or process, which is good for both employees and end users.
Analysing, designing, predicting and evaluating processes helps remove roadblocks and creates
higher quality and more efficient processes and devices. An industrial engineer will not only
have made sure the device you are reading this on was made in the most cost-effective manner
(making it cheaper for you to buy), but also makes sure that it is safe and won’t just burst into
flames while you are using it!
What does an Industrial Engineer do?
Industrial engineers work across all stages of production and processing. This may involve
designing a product or process from the beginning or adapting and upgrading, expanding or
reconfiguring an existing process or procedure.
This may involve designing new equipment and writing specifications for equipment bought
from an outside vendor to ensure it meets those requirements. An industrial engineer may be

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

required to repurpose existing equipment or facilities, design new processes or tools and
procedures.
To achieve these tasks, industrial engineers need a basic working knowledge of various areas
of engineering, work processes, tools, equipment and materials in order to design systems and
processes that meet cost, quality, safety and environmental requirements.
Industrial engineers may use computer aided design (CAD) systems to help design equipment
or facilities and computer modelling to simulate processes and supply chains to improve
efficiencies and reduce costs.
Industrial engineers are involved in activities including production and operations planning,
production and operations management, materials handling, and logistics and operations.
Where do Industrial Engineers Work?
Industrial engineers work in a range of different environments, from offices to the settings they
are tasked with improving. This could include watching how a process works in a factory or
examining workflows in a hospital. This data can then be taken and examined using a computer
for solving problems.
The wide range of skills used by industrial engineers means they can work in both managerial
and technical positions. They can be found in a variety of employment settings, including
consulting and engineering, research and development, service industries, logistics,
manufacturing and trade.
Will Industrial Engineering be Automated?
Industrial engineering is very unlikely to be automated. Analysis from a series of employment
websites has determined that there is just a 3% chance of industrial engineering being
automated in the future. This is due to the range and type of activities undertaken by industrial
engineers.
Industrial engineering determines the most effective ways to use the basic factors of production
such as men, machines, materials, information, and energy to make a product or a service.
These factors of production form the link between management goals and operational
performance. Industrial engineering deals with increasing productivity through the
management of men, methods and technology.
What does the Future Look Like?
Industrial engineering was traditionally focused on planning the layouts of assembly lines and
improving worker productivity. However, this has expanded with lean manufacturing systems

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

so that industrial engineers now work to eliminate wastes of time, money, materials, energy,
and other resources.
Today’s industrial engineers use computer simulations and design to map and analyse systems
and processes ready for optimisation. The future looks set to see the continued use of such tools
alongside data science and machine learning in order to further improve processes and
procedures. As the Internet of Things becomes more prevalent, so this is now becoming an
important part of industrial engineering and it seems that this trend will continue and expand
in the future to unite employees, machines, materials, information and more to create better
practices.
Roles undertaken by industrial engineers:
Energy engineering and management
Facilities engineering
Financial engineering
Human factors and safety engineering
Information systems engineering and management
Manufacturing engineering
Methods engineering
Operations engineering, management and optimisation
Organisation development and change management
Policy planning
Production engineering
Quality and reliability engineering
Supply chain management and logistics
Systems engineering, simulation and analysis
The American Institute of Industrial Engineering (AIIE, 1955) has defined the term ‘industrial
engineering’ as given below (Maynard 1963):
Industrial Engineering is concerned with the design, improvement, and installation of
integrated systems of men, machines, materials, and energy. It draws upon specialized
knowledge and skills in the mathematical, physical and social sciences together with the
principles and method of engineering analysis and design to specify, predict, and evaluate the
results to be obtained from such systems.
A number of definitions have been given for industrial engineering. One more widely used and
accepted definition of industrial engineering is given below:
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Industrial engineering may be defined as the art of utilizing scientific principles, psychological
data, and physiological information for designing, improving, and integrating industrial,
management, and human operating procedures. (Nadler 1955).
Industrial engineering is a process of planning, organizing, directing, controlling and managing
the activities of any industry/organization. It organizes and transforms the inputs using various
resources of the organization into value-added products in a controlled and an effective manner.
The evolution of industrial engineering has been defined in five different stages. These stages
are mentioned below as:
Phase 1: Pre-Industrial Revolution Era:
1774: James Watt developed the steam engine.
1776: Adam Smith wrote The Wealth of Nations and advocated the concept of division of
labour, skill development, specialization, etc. (Smith 1776).
1798: Concept of interchangeability of parts was developed by Whitney and was used in
manufacturing of musket (Hatfield 2013).
Phase 2: Industrial Revolution Era
Industrial engineering emerged as a profession during the Industrial Revolution. This was due
to the requirement of technically qualified and skilled people, who were needed to plan,
organize and control the manufacturing processes.
Phase 3: Scientific Management Phase
Following contributions, as mentioned in chronological order, form a major part of Scientific
Management:
1910: F. W. Taylor’s Scientific Management
Fredrick Winslow Taylor (Popularly known as F. W. Taylor) is considered the Father of
Scientific Management.
Taylor’s four principles are enumerated as follows (Taylor 1911):
1. Replace working by ‘rule of thumb,’ use the scientific method to study a work and determine
the most efficient way to perform specific tasks.
2. Job specialization, i.e. rather than simply assign workers to do any job, match worker’s
capability and motivation to their jobs, and train them to work at maximum efficiency.
3. Monitor worker performance, and provide instructions and supervision to ensure that they
are using the most efficient ways of working.
4. Allocate the work between managers and workers so that the managers spend their time on
management, allowing the workers to perform their tasks efficiently.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Second major contributions in the field of scientific management are from Gilbreth family
(Frank B. Gilbreth and his wife, Lillian Gilbreth). Frank B. Gilbreth focused on identification,
analysis, measurement and setting standards for the fundamental motions, which were required
to accomplish a job. His contributions were appreciated to set the standard time and method to
perform a task. Lillian Gilbreth worked on a human relation aspect of engineering.
Another major contribution also came from Henry L. Gantt. He provided the concept of
planning and scheduling the activities on a graphical chart, widely known as Gantt Chart. This
is very helpful in reviewing the progress and updating the schedule of work.
1911: Gilbreth’s Motion Study
1913: Gantt’s Scheduling Chart
1917: Harris Inventory Control
1924: Shewart’s Statistical Control Chart
1927–33: Elton Mayo’s Motivation Theory
1932: Babbage Wage payment and Time Study
1933: Barnes Work Study
Phase 4: Operations Research and Quantitative Management Phase
During World War II, concepts of Operations Research were developed and used to optimize
the resources allocated in the war. During this phase, the concept of linear programming (LP)
was developed by Dantiz. Some of the major developments observed during this phase are
mentioned below as:
1956: First NC machine was developed.
1961: First time Robot was used.
1965: Flexible automation was used.
Phase 5: Automation and Computer-Integrated Manufacturing (Modern Management)
Production Systems
Production is concerned with the transformation of inputs into the required outputs. In other
words, production is a value-addition process through which raw material is converted into
finished goods. At each stage of the production process, some values are added. Some examples
of production are producing furniture, mobile phone, computer, car, etc.
A production system consists of inputs, i.e. raw materials, conversion subsystems, i.e. man and
machine, control system, i.e. quality control and reliability, and outputs, i.e. finished products.
All these components are interrelated to each other as shown in Fig.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Fig. Production system of an organization

OR
Production and productivity
Production and productivity are two different terms having different meanings. Higher
production does not mean higher productivity, and vice versa. Production is related to the
activity of producing goods or services. It is a process of converting inputs into some useful,
value-added products/services. Productivity is concerned with how effectively the resources
are utilized to increase the output of production. The productivity can be improved by
increasing the output for same inputs or keeping constant output for deceased amount of inputs
or increasing the output in greater proportion than the increase in inputs. Productivity may be
calculated using the following formula:
Productivity = Output/Input
Productivity relates the efficient utilization of input resources for producing goods or services.
Production is a measure of the output or volume produced. The emphasis is only on volume of
production and not on how well the inputs or resources are utilized. In contrast, productivity
highlights only on the ratio of the output produced to the inputs used.
Factors Influencing the Productivity
There are various factors that influence productivity of an organization, such as man, machine,
materials, space, energy, time and finance.
Man: The productivity of man depends on the following processes:
1. Selection of an employee
2. The training given to employees
3. Number of personnel required for a job
4. Provision of incentive for workers
Machine: The productivity of a machine depends on the following factors:
1. Number of machines employed
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

2. Replacement policy for existing machines

3. Maintenance plans to avoid machine breakdown
Material: The following factors affect the productivity of a material:
1. Right quality
2. Right quantity
3. Substitutes for the existing material
4. Inspection and quality control programmes
5. Cost of material procurement and handling
Time: It affects the productivity in the following ways:
1. Inspection time for raw material
2. Inspection time for finished products
3. Production time
4. The time required to repair and maintenance work
Space: Utilization of space affects the productivity in the following ways:
1. Plant layout
2. The total area covered for production work
3. Location of different departments and shops
Energy: Use of energy affects the productivity in the following ways:
1. Energy-saving schemes
2. Use of renewable energy sources
3. Use of solar energy
Finance: Availability and efficient use of financial facilities affect the productivity.
Reasons for Lower Productivity
There are various reasons of poor productivity. Some of them are mentioned as follows:
1. Poor production planning and control
2. Low motivation of people
3. Lack of coordination
4. Unavailability of right tools, material and human force
5. Poor product design
6. Lack of standardization
7. Poor working environment
8. Non-standard methods of working
9. No accountability for loss of production
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

10. Government rules and regulations

11. Old age of plant and equipments
12. Weak R & D.
Ways to Improve Productivity
The productivity of any system can be improved either by proper use of resources or by
effective utilization of the system or its processes. Some action plans for productivity
improvement are listed below:
Machine
1. Manual labour is replaced by machines
2. Reliable machines
3. Automation.
Management
1. Motivated workforce
2. Better planning and coordination
3. Effective control over the system.
Process
1. Computerization of the system
2. Use of Management Information System (MIS)
3. Improvement in scheduling
4. Better material flow
5. Fast and accurate retrieval of parts.
Work design
1. Improved job design
2. Better work method
3. On-job training
Work environment
1. Better lighting and illumination
2. Better ventilation
3. Safe workplace
4. Total quality management (TQM).
Programme
1. Quality circle
2. Suggestion scheme
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

3. Incentive scheme
4. Revise pay or policy.
Technology
1. Acquiring new technology such as Electro-Chemical Machining (ECM), etc.
2. Acquiring automated assembly line, for example, Surface-Mounting Technology (SMT) for
printed circuit board assembly unit.
3. Acquiring computer-controlled machines, such as Computer Numerical Control (CNC) or
Direct Numerical Control (DNC).
4. Using Automated Guided Vehicle (AGV) for material transportation.
Manufacturing strategy
1. Changing the manufacturing system from functional to a cellular layout if it is a batch
production unit.
2. Adopting stockless production strategy and JIT framework in the production unit.
3. Keeping the workplace clean and environment-friendly (also termed as green-production
system).
4. Opting for total change in the process/product or strategy if the system is not working
properly (also known as Business Process Re-engineering or BPR).
External environment
1. Better political stability
2. Boosting economy and purchasing capacity of buyers
3. Globalization and open market economy
The Technology used to Improve Productivity
1. Technology-based techniques: Computer-Aided Design (CAD), Computer-Aided
Design and Drafting (CADD), Computer-Aided Engineering (CAE), Computer-Aided
Process Planning (CAPP), Computer-Aided Quality Control (CAQC), Computer-
Aided Instruction (CAI), Computer-Aided Manufacturing (CAM), robotics, Group
Technology (GT) and Total Productive Maintenance (TPM).
2. Product-based techniques: Reliability, simplification, standardization, diversification and
Research and Development (R & D).
3. Material-based techniques: Material Requirement Planning (MRP), Economic Batch
Quantity (EBQ), Economic Order Quantity (EOQ), JIT and material handling.
4. Task-based techniques: Work simplification, work measurement, time study, method study,
job analysis, job evaluation, merit rating, job safety and production scheduling.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

5. Employee-based techniques: Incentive scheme, management by objective, job enlargement,

job enrichment, recognition and punishment, Total Quality Management
(TQM) and zero defects.
Q1.The price index for year 1998 and 1999 are given in table below for 100 being in 1997 as
base year. Calculate different productivity measures for a factory whose financial statement is
given below:
Item 1998 1999
Current Rs.(in Price index Current Rs.(in Price index
000’s) 000’s)
Net Sales 1500 107 2200 130
Labour 200 108 380 135
Materials 800 105 1200 140
Services 300 106 370 120
Depreciation 90 120 -
(After -
compensated
for price rise)

Solution
Item 1998 1999 Productivi
Curre Pric Compensat Curre Pric Compensat ty Rise
nt e ed at 1997 nt e ed at 1997 1998 to
Rs.(in inde (a)/ b)*100 Rs.(in inde (a)/ b)*100 1999
000’s) x 000’s) x
(a) (b)
1. Net Sales 1500 107 1402 2200 130 1692
2. Labour 200 108 185 380 135 355
3. Materials 800 105 762 1200 140 857
4. Services 300 106 283 370 120 308
5. Depreciati 90 90 120 - 120
on (After -
compensa
ted for
price rise)
6. Total 1320 1640
Inputs
7. Net 357 527
output
8. Labour 275 475
Capital
Input =
(2+5)
9. Labour 1.93 1.48 -23.31%
Productivi (Fall)
ty = 7/2
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

10. Labour 1.298 1.109 -14.56%

Capital (Fall)
Productivi
ty = 7/8
11. Total 1.062 1.032 -2.82%
Productivi (Fall)
ty = 1/6

Q2.
Item Year 1 Year 2
Number of output (all of one kind) (Rs. 50000 per unit) 100 200
Labour hours @Rs 10 per hr) 5000 8000
Direct labour cost (in Rs) 40000 45000
Capital Depreciation (in Rs) 5000 6000
Capital book value(in Rs) 20000 25000
Total indirect cost(in Rs) 40000 46000
Foreign exchange used $4500 $100
Energy used @ Rs 4 per watt 500KW 1800KW
Raw material used @Rs 1000 per ton 10 tons 16 tons
Services of consultant hired (Rs) 10000 15000

Calculate:
Labour Productivity Index, Direct labour Productivity Index, Capital Depreciation
Productivity Index, Capital book value Productivity Index, Total indirect cost Productivity
Index, Foreign exchange Productivity Index, Energy used Productivity Index, Raw material
used Productivity Index, Total factor productivity
Q3 Using the information given in Table, calculate the index for the following:
(a) Direct labour productivity
(b) Capital depreciation productivity
(c) Capital book value productivity
(d) Direct cost productivity
(e) Total cost productivity
(f) Energy productivity
Table: Comparative study of productivity for the years 1 and 2.
Item Year 1 Year 2
Number of outputs (all of one kind) (in Rs) 250 300
(10,000 per unit)
Direct labour cost (in Rs) 50000 60000
Capital depreciation (in Rs) 4000 5000
Capital book value (in Rs) 16000 20000
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Total indirect cost (in Rs) 40000 44000

Energy used (@ Rs. 4 per watt) (in kW) 700 2400
Raw material used (@ Rs 1000 per ton) (in tonnes) 12 16

Q4 A company is manufacturing 24,000 components per month by employing 100 workers in

daily 8 hour shift. The company gets additional order to produce additional 6000 components.
The management decides to employ additional workers. What will be production and
productivity level when the number of additional employed workers are (i) 30, (ii) 25, and (iii)
20.

What is Value Engineering?

 Value engineering is an organised creative technique directed at analysing the function
of a product, service or a system with the purpose of achieving the required functions
at the lowest overall cost consistent with all the requirements, which comprise its value
such as performance reliability maintainability appearance etc.
 VE is the study of the relationship of design, function and cost of any project, material
or manufactured by more efficient process, change in source of supply(external or
internal), or possible elimination or incorporation in a related item.
 VE can also be defined as an organized approach to the identification and elimination
of unnecessary cost. Unnecessary cost is Cost which provides neither use, nor life, nor
quality, nor appearance, nor customer features.
 The best way to reduce costs and improve processes without diminishing the quality of
your product is through a process called Value Engineering.
 Value Engineering is a necessary part of the product development processes to ensure
your business remains competitive.
 The good news is, conducting a value analysis or incorporating Value Engineering isn’t
a huge investment. Here are the four areas you should be looking at during the process
as well as the step-by-step process for VA/VE.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Value Engineering starts with product value. Product value is the ratio of product function to
product cost (including the purchase of raw materials and packaging, logistics and shipping
costs, overhead and manpower, and line efficiency). Product function is the work a product is
designed to perform. For instance, the function of a shelving bracket is to hold up the shelf
while looking aesthetically pleasing. While your product may be able to do more than its
original function, it’s important to zero in on what it needs to accomplish in order to sell.
To increase your product value, you either need to increase the product’s function (driving up
the price) or decrease the cost to manufacture it. Value Engineering refers to a set of processes
and methodologies for increasing the product value as it’s being developed whereas Value
Analysis describes these same processes applied to an existing product. Together, these
disciplines are referred to as VA/VE.
VA/VE is the process of making cost-saving changes to the product design, raw materials used,
and manufacturing processes that don’t reduce product quality or functionality. Ideally a
company would invest in Value Engineering that takes place during the initial product design
process. In fact, many organizations use this process to make decisions on material sourcing,
manufacturing processes, and to determine which new products are ready for launch. But if the
product has already launched, and Value Engineering was not employed in the design, running
a value analysis will still allow you deliver more for less. And by producing more with less,
you add value for your company and your end user.
Value:
The value of a product is the relationship between its function and cost. The value of a product
can be improved by minimizing the cost for same function or improving the function of the

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

product for the same cost or increasing the function in higher proportion than the increment in
the cost of the product. Numerically, the value can be expressed as:
Value F = unction/Cost.
The value can be measured in terms of cost paid by the consumer for the required functions or
services of the product. This means that cost is reduced without compromising with the quality
and functions of the product.
Thus, the value analysis is a technique which builds ‘value’ into a product. Value can also be
defined in terms of a combination of quality, efficiency, price and service which ensures the
ultimate economy and satisfaction of the purchaser
Types of Value
Broadly, value is classified into the following categories:
1. Esteem value: It is defined as the qualities, properties and attractiveness for a product/
service to make its ownership desirable.
2. Use value: It is defined as the qualities and properties needed to accomplish a service,
product or work.
3. Cost value: It is defined as the total cost of material, labour, overhead and services to
produce an item (or to deliver a service).
4. Exchange value: It is defined as the property and qualities of a product (or service)
which facilitate its exchange (or trade) for something else that is needed.
Origin and History of Value Engineering
Value engineering or value analysis had its birth during the Second World War. Needless to
say, this was a fertile period for its growth due to world-wide shortage of essential materials.
Lawrence D. Miles was responsible for developing the technique and naming it. Through its
application, G.E.C saved nearly 70 million dollars.
Lawrence Miles and Harry Erlicher at GE looked for acceptable substitutes for materials. They
noticed that these substitutions often reduced costs, improved the product, and in some cases,
both. What started out as an experiment driven by necessity was turned into a systematic
process. They called their technique “Value Analysis”. As others adopted the technique, the
name gradually changed to Value Engineering.
The components of Value Engineering
One of the ways to increase product value is to reduce the costs associated with manufacturing
and delivering a product. This requires you to examine four things: product design, raw

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

materials, processes, and your bookkeeping. Whether you’re working on a new design or
analyzing an old one, here’s where to start.
Optimize the design
The most substantial way to bring costs down is to optimize the design of the product. When
engineers are designing a product, they often do not have insight into component costs, so costs
are not a consideration. However, it’s important for your team to analyze the initial design to
determine if it can be simplified, designed to be manufactured in a more economical way, or if
there are any components that aren’t necessary. By removing any component that doesn’t
directly serve the product’s function, you’ll save on manufacturing costs and raw material
purchases.
Find cost-efficient materials
The second biggest lever for cost reduction is to examine the materials used to manufacture the
product. Just remember, the goal is to lower the material costs without sacrificing product
quality, so the objective is not to cut corners. As long as the product function isn’t affected,
material swaps are a great way to increase your margins. For example, you may find that you
can substitute ferritic stainless steel for austenitic stainless steel or use steel that is pre-
galvanized to cut costs.
Improve processes
You also need to look carefully at the manufacturing, assembly, packaging, and logistics
associated with each product to determine if there are unnecessary steps that can be
streamlined, eliminated, or improved. This may include combining roles for operators on the
line, increasing production rate, laying out the line in a different way, or incorporating basic
automation into the manufacturing process. Even a slight adjustment to the manufacturing
process could result in substantial savings for your company.
Four most common challenges in implementing Value Engineering
Though the processes of Value Engineering and Value Analysis are fairly straightforward,
there are a few challenges that can arise, especially in companies that are not familiar with the
VA/VE process.
Lack of awareness
The biggest reason companies fail to implement Value Engineering is a lack of awareness.
Many middle market businesses are focused on growth and staying lean, so Value Engineering
isn’t on their radar. Though it may seem like a concept meant only for larger organizations,
Value Engineering is important for companies of all sizes and will only help you scale
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

faster. Our experience has shown cost savings of 10-20% for high volume products in several
middle market manufacturing companies.
Lack of resources
Due to resource constraints, many middle market companies struggle to find the bandwidth to
take a step back and alter the manufacturing process to include Value Engineering. Leaders of
product and engineering teams are often focused full-time on managing their teams and don’t
have the time to focus on another project.
Lack of follow-through
Some companies conduct a VA/VE workshop, but don’t take the time to implement the
suggested design or process changes in a timely manner. To achieve commitment and buy-in
from leadership to invest in Value Engineering long-term, the Value Analysis needs to deliver
tangible benefits in six months. Without measurable results—delivered quickly—leadership
may be hesitant to continue their investment in the process.
Lack of customer feedback systems
Even for companies who regularly practice Value Engineering, the process can be challenging
to execute because the needs and priorities of the customer can get distorted as it moves through
the company. Customer feedback is often filtered through an employee and opinions or
criticisms can get lost in translation. Without a system in place that provides accurate customer
feedback on products in the field, the product and engineering teams may be fielding
contrasting requests from various account teams without an understanding of which requests
take priority. The result is a battle of egos and opinion, and progress stalls. It is important to
have account personnel, sales, and/or customer service act as the proxy for the customer to
ensure their position is relayed to the VA/VE team.
Benefits of Value Engineering:
Value engineering differs from standard cost reduction methodologies in a number of ways,
which allows this approach to generate far bigger benefits as shown in (Figure. 1) due to it : 1-
improve project quality, 2- insure efficient investments by mitigating the risks, 3- increase the
revenue by eliminating unnecessary and costly elements.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Value engineering typically delivers at least 10% in lifetime cost savings, without
compromising the quality of outputs or asset functionality.

Value engineering is based on innovative, out of the box thinking, the assessment of all relevant
costs, and a systematic opportunity identification process conducted by a multi-disciplinary
team.

Value Engineering across the Organization:

Three steps are required to roll out and internalize value engineering across the organization
(see Figure 2 below). The first step is to implement the results of the value engineering initiative
along the implementation plan, prioritizing more urgent capital projects in the case of numerous
similar projects. Following this pilot, the second step is to review how the client’s current
strategy, processes and organization structure and capabilities foster/hinder value engineering
through undertaking gap analysis against best practice.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Value Engineering is a process used by companies across the globe to ensure product
functionality is maximized while costs are minimized. By incorporating Value Engineering
into your product development process, you’ll reduce costs, increase margins, and establish a
smarter way to determine which new products justify the investment to bring them to market.
Value analysis, value engineering, value management, value control, value assurance call
it by any name it is highly potent and powerful management technique created to effect
improvements.
Improvement in Design, Performance, Life, productivity, maintainability, service and
warranty
Improvement in size, shape, features, style, appearance, characteristics
Improvement in quality, reliability, quality pre cost.
Improvement in cost of production, maintenance,
Improvement of all kinds, all types, all areas and faces
Continuous and continuing improvements
Systematic identification and elimination of unnecessary costs resulting in:
Increased use of alternatives,
Less expensive material
Cheaper designs
Less costly methods of manufacturing.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

to provide the same performance, quality and in a decrease of overall unit costs and
consequently greater profits.
VE can also be defined as an organized approach to the identification and elimination of
unnecessary cost. Unnecessary cost is Cost which provides neither use, nor life, nor
quality, nor appearance, nor customer features.
VE is an organized procedure for efficient identification of unnecessary cost.
Reasons for unnecessary cost?
• Lack of complete information
• Lack of measuring value
• Lack of cost knowledge
• Honest wrong beliefs
• Lack of communications
• Poor human relations
• Fear of embarrassment
• Customary habits and attitudes
• Traditions/customs
• Rushing the project to completion
Commandments of Value Engineering
Do not use a part that does not contribute to the value of the product.
Do not use a part whose is cost is not proportional to its usefulness.
Do not provide any features to a component that are unnecessary.
Accept the change if part of the required quality can be made out of cheaper and easily
available material.
Use standard parts wherever possible.
If the part of required quality is made by a process or method costing less, then do not use any
alternative method or process.
Use proper tooling and manufacturing methods taking into consideration the quantities.
Use material and part which is best suited for the purpose.
Purchase the part instead of manufacturing in house if suitable supplier can provide the part of
good quality at the reasonable price.
Purposes of VE;
The objective of ‘ best buy’
The objective of ‘ saving in cost’
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

The objective of enhancing the worth.

Value engineering is most effective modern management technique successfully applied

To any economic activity in trade, industry, transport etc.
To any level of work at the shop floor, departments, corporate head quarters,
To any product or service be if tiny or massive, simple or complex, customer built to mass
product
To any job planning, Designing, Construction, Operation, Production, Maintenance
To any process procedure or any practice in any nation.
VE is a process using multidiscipline teams to review projects and standards to identify
high cost functions with improvement potential.

Fig. VE team for construction project

The teams follow the systematic, creative VE job plan to establish an optimum value for
selected functions. Alternatives, which will provide the necessary functions at the most
economical initial capital costs and/or life cycle cost, are developed consistent with
requirements for safety, quality, operation, maintenance, and aesthetics.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

The Five Key Questions of Value Engineering

The essence of the value engineering process can be captured in five questions identified by L.
D. Miles, the founder of value engineering.
These questions are:
What is it?
What does it do?
What does it cost?
What else will do the job?
What does that cost?
The first question deals with identifying the focus of analysis. When associated with a target
costing program, the initial focus is the new product itself. However, as the value engineering
process continues the focus of analysis shifts to major functions and then components.
The second question deals with identifying the functions that the product is expected to
perform. Function analysis is at the heart of VE.
Two types of functions are identified, basic and secondary:' basic function: the principal reason
for the existence of a "thing,'' secondary function: a function that occurs because of the method
selected to carry out the basic function, or those functions that support the basic function.
Secondary functions can be wanted or unwanted.
To understand functions, they should be simply expressed using a verb and a noun. An bright
light bulb "illuminates area." However, the bright light bulb also produces an unwanted
secondary function, "generates heat," because of the method selected to achieve the basic
function.
Fire would also produce both functions, but "generates heat" may be the basic function in that
situation.
Q Three
Component cost is then allocated to the functions and totalled as to the cost and percent
contribution to the overall product cost.
The purpose of this step is to identify functions where value is low compared to cost. These
functions are primary candidates for value engineering.
The value engineer pays specific attention to components that have high costs.
The fourth and fifth questions deal with finding alternative solutions to product design that
provide increased value. This step can require great creativity on the part of the engineers.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

They must develop innovative solutions to the design problems they face. Cumulatively they
must both increase the functionality of products and reduce costs.
Evaluation technique:
1. Function Analysis System Technique (FAST)
What is Function Analysis System Technique (FAST)?

A technique to develop a graphical representation showing the logical relationships between

the functions of a project, product, process or service based on the questions “How” and
“Why”.

Terminology of FAST diagram:

FAST is a logic diagram to describe how a system works. A picture of all the functions showing
their relationships to each other and clearly showing what a function does.
Scope Line: should be drown as dotted lines. The lines behave as the boundary of the project.
While the left scope line separate the scope from the higher order function, the right scope line
isolates it from the causative function.
Each box adopts one unique function. Each function is interrelated to the other functions using
deterministic logic like, how, why, and, when.
Higher Order Function: is the requirement defined by the users. It is placed on the left side
of the scope line.
Basic Function: This is the function for which the project has been conceived. It is placed on
the right side of the left scope line. It the answer to the ”how” of the “higher function”.
The “why” of the “ Basic function” is the “ higher order function.
Required Secondary Function: are required to achieve the basic function. There should
not be more than five to six required secondary functions in the project.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Functions “At the same time” and/or “Are caused by” some other functions: These functions
have to be placed below the function with which they have the relationship of the logic “when”
and should be connected by a vertical line in descending order of importance.
All the Time Functions: There are some functions which respond to the time dimension, but
without having a relationship with any other functions. These functions occur all the time. For
example, “prevent corrosion”, “improve appearance”. These functions have to be placed at the
top right side beside the right dotted line.
On time Function: This occur only once in the life time of the product, service or system. The
serrated portion of the cap of a bottle whose function is to “ authenticate quality.
Causative Function: it is the “lower order function” Itis placed on the right side of the project
scope line.
Critical Path: The line that connects the functions; Higher Order Function, Basic Function,
Required Secondary Function, and lower order function. The functions on the critical paths
will follow only “how” and “why” logic.
Introduction to FAST Diagrams:

1. FAST Diagrams provide a graphical representation of how functions are linked or work
together in a system (product, or process) to deliver the intended goods or services. By
focusing on functions, teams and individuals can focus on what is truly important and
not be constrained by physical features of products or processes, leading to a better
definition of the problem and a clearer path to a solution.
2. In 1964, this function based approach to the analysis of products and processes was
enhanced by the contributions of Charles Bytheway, who provided a graphical
representation and logical structure to the function analysis step of the Value
Methodology. This graphical representation, known as the FAST Diagram (Function
Analysis System Technique), organizes the functions that need to be performed, by the
product, process, or system under study, into a How?/Why? relationship.
3. Today, it is an integral part of the Value Management Job Plan – the six phase process
of a Value Study. The power of the FAST Diagram lies in depicting the logical
relationships that exist between the various functions being performed.
4. As shown in Figure 1, even the FAST Diagram is purposely arranged counter to our
left-to-right convention in reading and writing, with the output function at the left and
the input function at the right, in an attempt to break the user out of conventional
thinking processes.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

You will note in the figure that there are several different classifications of functions. The
two major categories are Basic, and Secondary.
Basic Functions describe the characteristic or task, which, from the user’s point of view,
is the primary reason for the existence of an item. It is what the product or process was
designed to do. Secondary Functions are those designed-in functions which are required
to cause or allow the Basic Function to occur. It is any function that directly contributes to
accomplishing the Basic Function. Secondary Functions can be further sub-divided into
several other categories:
Dependent Critical Functions – functions which must occur for the Basic Function to
occur or be delivered. Independent (Supporting) Functions are those which help the Basic
Function to be delivered better, faster, longer, etc.
Design Criteria are performance requirements applicable to the overall subject system.
These are typically related directly to the Basic Function.
All-the-time Functions are broad requirements applied within the subject scope, and are not
usually directly related to the Basic Function. These would be items assumed in the market
place as being delivered by the product or process, such as a minimum level of quality and
reliability, corrosion resistance, etc.
Logical Linking of Functions.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Referring again to Figure 1, the main path connecting the Lower Order Function (input) to
the Higher Order Function (output) is referred to as the Critical Path. The functions which
lie on this path are referred to as critical path functions, and are connected and arranged
using How?-Why? logic. Moving from the Lower Order Function (input) one asks the
question “Why?” The function to the immediate left needs to answer that question. This
process is carried through from right to left until a logical series of functions can answer
“Why?” from the input to the Higher Order Function (output). Similarly, moving from the
Higher Order Function to the Lower Order Function through the critical path functions,
each successive function must answer the question “How?” At this point it is helpful to
introduce a sample FAST Diagram.
Figure 2 depicts a FAST Diagram for a generic PC Projector – the device commonly used
to project images from a computer onto a projection screen or wall for the purpose of
sharing information with others in the room.

OR

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 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

In addition to this left-right logic path, there is the “When?” logical connection moving
from top to bottom. In Figure 2, “When” the projector “Generates Light” it also must
“Minimize Heat” generated, and “When” it “Transmits Light” it must also “Convert
Signal” to turn the signals from the computer into recognizable patterns of light.
Example Fast Diagram: Mouse Trap
Consider the following FAST diagram for a mouse trap using the how and why logic as
described above. Can you think of other ways to achieve the basic function of kill mouse or the
higher order function to eliminate mice.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Why is the Function Analysis System Technique important?

The Function Analysis System Technique aids in thinking about the problem objectively and
in identifying the scope of the project by showing the logical relationships between functions.
The organization of the functions into a function-logic diagram, such as a FAST diagram
enables participants to identify of all the required functions. The FAST diagram can be used to
verify if, and illustrate how, a proposed solution achieves the needs of the project, and to
identify unnecessary, duplicated or missing functions.
Benefits of the Function Analysis System Technique:
The development of a FAST diagram is a creative thought process which supports
communication between team members.
The development of a FAST diagram helps teams to:
 Develop a shared understanding of the project
 Identify missing functions.
 Define, simplify and clarify the problem.
 Organize and understand the relationships between functions.
 Identify the basic function of the project, process or product.
 Improve communication and consensus.
 Stimulate creativity.
How To Create a FAST Diagram
Three key questions are addressed in a FAST Diagram:
 How do you achieve this function?
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

 Why do you do this function?

 When you do this function, what other functions must you do?
The following diagram illustrates how a function is expanded in "How" and "Why" directions
in a FAST diagram.
Steps in constructing the FAST Diagram
Start with the Functions as identified using Function Analysis:
 Expand the functions in the "How" and "Why" directions:
 Build along the "How" path by asking 'how is the function achieved'? Place the
answer to the right in terms of an active verb and measurable noun.
 Test the logic in the direction of the "Why" path (right to left) by asking 'why is this
function undertaken?'
 When the logic does not work, identify any missing or redundant functions or adjust
the order.
 To identify functions that happen at the same time, ask "when this function is done,
what else is done or caused by the function?"
 The higher order functions (functions towards the left on the FAST Diagram) describe
what is being accomplished and lower order functions (functions towards the right on
the FAST Diagram) describe how they are being accomplished.
 "When" does not refer to time as measured by a clock, but functions that occur
together with or as a result of each other.

Summary of FAST diagram:

FAST: The FAST model is a logic diagram, and not time oriented. There are several methods
used to identify and decompose functions to start the model. One common method is to
randomly "brainstorm" functions by starting with the objective or mission of the system and
brainstorming how it might be accomplished. Once a function is identified, the process is
repeated until all possible ways are exhausted. Then, some of the identified functions become
topics for the brainstorming and the process is one way to organize this is to put the answers to
"How the objective is accomplished in the middle column of the three column matrix. Then the
column on the left side is labeled "WHY" and the column to the right is labeled "HOW." Then,
for every function that is put in the middle column, the answers to "HOW" and "WHY" this
function is accomplished is placed in their respective columns.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Once the objective or higher order function is identified, it is positioned on the far left of the
chart. Then, the question, "How is this function performed?" is asked. The answer is then
positioned directly to the right of the higher order function. This function is the basic function
of the process, product, or service. It defines how the objective function is to be accomplished.
All functions to the right of the basic function describe the approach chosen to achieve the
basic function. These are called "dependent functions." Any function on the HOW or WHY
logic path is a critical path function. If the functions along the WHY direction enter the basic
function, this forms a MAJOR critical path.
MINOR critical paths can be formed if they depict how an independent or supporting function
is accomplished. Independent functions are positioned above the critical path. Activities are
positioned below the critical path. This vertical depiction of the functions is the WHEN
direction. These functions happen at the same time, or, are caused by the critical path functions.
Independent, or supporting functions are functions that do not depend on another function, or
method selected to perform that function.
2. MATRIX METHOD IN VALUE ENGINEERING
In matrix method the most suitable alternative is selected by using a numerical evaluation
technique.
Step1: List all functions required to attain the desired objectives.
Step2: Generate a relative importance matrix by comparing each factors among them. A1 is
filled if function of a row is more or equally important than the function in column. For
example, in table F1 is more important than F3 but less important than F4.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Step3: Sum all rows.

Step4: Arrange functions in descending order of the sum in last column. This is the relative
rank of functions. For example, in Table, the relative rank is F2, F5, F4,F1 and F3.
Step5: Create a weight factor (Wi) for each factor (Fi).(Wi) is determined on the basis of the
impact of Fi on the overall product.
Step6: Evolve alternatives (Aj) to satisfy the overall objective of the product/service. List cost
(Cj) for each Aj.
Step7: Fill evaluation factor (Fij) for each combination of alternative (Aj) and function (Fi) in
the main evaluation matrix. Fij is between 0 to 10 and depends upon the degree of attainment
of the function.
Step 8: Calculate the sum of product Wi and Fij for each alternative (Aij). List it in last column
as Gj.
Step 9: Select alternative on one of the following criteria given below:

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Value Engineering & Value Analysis

Traditionally Value Analysis (VA) is used to describe the application of the ‘techniques to an
existing product or services or after the fact.
VA is useful for products which are Imported, Have long design to market time, High cost
item, Critical parts, etc. One may think of indigenous substitute for imported item.
Shorter lead time and higher speed to market may be achieved through concurrent engineering.
Value Engineering (VE) has been used to refer to the design stage or before the fact.
Value Engineering (VE) approach is used for new products, and applies the same principles
and techniques to pre-manufacturing stages such as concept development, design and
prototyping.
Individual design changes can affect either functionality or cost or both. The application of
value engineering begins with the conceptualization of the product and continues through the
design process until the product is released to manufacturing. Even then the process continues,
but under the name value analysis (VA).
The difference between VA and VE is not in the approach taken or tools used but in the point
at which they occur in the life cycle of the product.
VE is used during the product design and development stages, while VA is used for the
manufacturing stage and for purchased parts.
Potential Value of Value Engineering Applications.
Projects that use Value Engineering in the early development or conceptual stages are generally
more successful due to common understanding of the objectives, deliverables, and
requirements.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

At this point, major design and development resources have not yet been committed and the
manner in which the basic function of the project is to perform has not been established, so
alternative ways may be identified and considered.
Applied with flexibility and creativity, Value Engineering is almost unlimited in its ability to
identify areas of potential savings.

Seven Phases of Value Analysis

There are seven phases in which the value analysis of a product/service is accomplished. These
seven phases are discussed below as:
1 General Phase
In this phase, the project for value analysis is selected and the objective of value analysis is
determined. It is performed in the following steps:
1. Identify and select the project.
2. Establish priorities.
3. Plan a specific project.
4. Constitute a team for value analysis.
5. Prepare terms of reference for the selected project.
6. Fix responsibility for data collection.
2 Information Phase
In this phase, all the necessary information related to the project is gathered. It consists of the
following steps:
1. Collection of facts
2. Determination of costs

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 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

3. Fixation of cost of specifications and requirements.

3 Function Phase
In this phase, the functions of the product are analysed and classified as primary and secondary
functions. The unnecessary functions may be eliminated and necessary or primary functions
may
be improved depending on requirements. It consists of the following steps:
1. Finding the area of value analysis and the functions that the product actually performs.
2. Establishing the relationship between these functions to the cost and worth of providing
the product.
3. Determination of the poor value functions and justification for the value analysis effort.
4. Fixing the reference points using which the cost of alternatives can be compared.
5. Formulation of a minimum cost for a psychological incentive to the consumer.
6. Motivation among product development team for value analysis.
4 Creation Phase
This is also known as innovation phase. In this phase, different ideas are generated to solve a
problem and compared with each other. It consists of the following steps:
1. Idea generation or brainstorming.
2. Determination of problem solution by:
(a) Evaluating all the ideas generated by the team
(b) Making a fair comparison
(c) Determining interrelationships
(d) Anticipating objections, if any
(e) Determining and developing place and time for appropriate action.
5 Evaluation Phase
In this phase, the most promising ideas are evaluated in the following steps:
1. Selecting the most promising ideas generated in the creation phase for further analysis.
2. Screening the ideas by eliciting answers to the following questions:
(a) Will the idea work?
(b) Is it cheaper than the present design?
(c) Is it feasible to implement?
(d) Will it satisfy the user requirements?
3. Finding out the most suitable proposal and obtain its cost.
6 Investigation Phase
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

This is an implementation phase in which the proposal is investigated and converted into a
work
plan. It consists of the following steps:
1. Bringing the partially developed or selected untried ideas to fruition and to find out their
feasibility and limitations.
2. Preparation of a work plan for converting the selected ideas into tangible proposals.
7 Recommendation Phase
In this phase, the final proposal is recommended to the management with benefit and
limitations
of the proposal. It consists of the following steps:
1. Preparation and submission of the planned proposals along with benefits and limitations
to the management.
2. Review of the submitted proposals, if not acceptable to the management.

Advantages of Value Engineering

 Enables people to pinpoint areas that need attention and improvement.
 Provides a method of generating ideas and alternatives for possible solutions to concern.
 Provides a means for evaluating alternatives. .
 Allows one to evaluate and quantify intangibles and to compare apples with oranges.
 Provides a vehicle for dialogue by allowing large amounts of data to be summarized in
concise form, allowing new and better questions to be asked, and using numbers to
communicate in an information-searching mode.
 Documents the rationale behind recommendations and decisions.
 Materially improves the value of goods and services.

VE helps your Organization

• Increase bottom-line profits
• Solve problems
• Use resources more effectively
• Improve costs
• Save time
• Increase market share
• Compete more successfully in national/international markets
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

• Improve resource efficiency

• Improve quality
• Reduce risk
• Manage value objectives
• Resolve issues
• Increase potential for improved return on investments
VE helps you
• Expand your career skills
• Improve your status and visibility within your organization
• Provide additional justification for advancement in your career objectives
• Take command of a problem-solving methodology to use in any situation

Why Use VE?

By using VE we have a powerful proven methodology to:
• Solve problems
• Reduce costs
• Improve quality
• Improve performance
Maintain intended functions
Return on investment has ranged from 10 to 1 to 1,000 to 1. VE (synonymous with VA or VM)
is a function-oriented systematic team approach to provide more value for a program, process,
product, service, system, or technique.
The following questions often lead to creative thinking
Can we do without it?
Why this particular shape?
(If it is flat) can it be round? Or vice versa
Can two parts be combined?
Can one component be made into two?
Why does it need to be so thick?
Can standard part be used?
Can we busy it at cheaper rate?
Is the Cost of useful product reasonable?
Can lower cost design works as well?
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Can another less costly item fill the need?

Will loss expensive material do the job?
Does the function contribute value?
Are the features reasonable?
VE helps to obtain effective answers to the following basic questions
What is the item?
What function does it perform?
What does it cost?
What else will do the same functions?
What will that cost?
VE Check sheet
1. Is the Cost of useful product reasonable?
2. Can lower cost design works as well?
3. Can another less costly item fill the need?
4. Will loss expensive material do the job?
5. Does the function contribute value?
6. Are the features reasonable?
Check list of value engineering:
Subject Basic Question Analysis
Function What functions are Is the function necessary? Can it be
performed? eliminated?
Can another item serve the same function?
Can the function be achieved more easily?
Basic Design Can the design be made Can any part/sub-assembly be eliminated?
simpler? Can the design be changed to simplify the
product?
Does the product have greater capacity than
required?
Can the weight of the part reduce?
Can we change the outside configuration
(shape) to make it cheaper?

Subject: Industrial Engineering MECH /Sem-VIII /B.E.

 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Specifications Are the tolerances and Can the specifications be changed to reduce
finish realistics? the cost of production?
Can any tolerance be relaxed without
affecting the function?
Can the item be re-designed to reduce the
need for tighter tolerances?
Is the finer finish necessary?

Material What is the material Can less expensive alternative material be

specification? used?
Can a more expensive material having easier
machining properties be used with an
advantage?
Are there newly developed materials that can
be used advantageously?
Can the size or weight of material be
reduced?

Standardisation Are the materials or Can the materials be standardised?

components standard? Can standard parts/component be used?
Can waste be reduced by making blank near
to finish size?

Process/Methods Are the best Can alternative cheaper process be used?

process/methods being (without affecting the function)
used? Are all operations necessary?
Can certain operations be eliminated?
Can come of the operations be modified or
combined advantageously?
Can material layout and method of cutting be
changed to minimise process waste?
Can the method be standardized?
Can we change the sequence of operations?
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

Labour What is the cost of direct Can the cost of direct labour be reduced by
labour? modifying the method/process.
Can direct labour be reduced by using
automats, jigs, fixtures etc.?
Can efficiency of labour be increased?

Purchasing Are alternative sources of Can the material be purchased cheaply from
supply available? alternate sources?
Can the quantities to be purchased per lot be
altered to make it cheaper?
Can the supplier reduce the price by
cooperative redesign or revised
specifications?
Can the cost of packing or transport be
reduced?
Are economical bulk buying and discount on
packing material scrutinised?

Application of Value Analysis

Value analysis can be applied to everything like materials, methods, processes, services, etc.
to bring about economics. For applying value analysis, one should naturally start with the items
where the maximum annual saving can be achieved. It implies that items whose total annual
consumption in rupees is high should receive top priority in the application of value analysis.
Similarly, scarce materials, imported materials, or those difficult to obtain should also receive
the attention of the value analyst. Bearing this in mind, value analysis can be systematically
applied to categories of items, such as those listed below, to bring about substantial cost
reduction.
1. Capital goods such as plant, equipment, machinery, tools and appliances.
2. Raw and semi-processed material, including fuel.
3. Subcontracted parts, components, sub-assemblies, etc.
4. Purchased parts, components, sub-assemblies, etc.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

5. Maintenance, repairs and operational items.

6. Furnishing items such as paints, oils, varnishes, etc.
7. Packing materials and packaging.
8. Printing and stationery items.
9. Miscellaneous items of regular consumption.
10. Power, water supply, compressed air, steam and other utilities (services).
11. Materials handling and transportation costs.

QB_Module 01
1. What is industrial engineering? Outline the scope of this area. Explain role of industrial
Engineer.
2. Contributions of Frederick Taylor in IE.
3. Define industrial engineering. and discuss the role of industrial engineer in industrial
engineering
4. Write the objectives of industrial engineering & discuss its techniques.
5. Discuss the scope and objective of industrial engineering. What are the functions of
industrial engineering?
6. What is productivity? Enlist the factors influencing productivity. Explain how each
factor affects productivity.
7. Define productivity & discuss various productivity techniques and list factors
influencing productivity.
8. Define productivity. Give comparison of production and productivity.
9. Discuss the role of systems approach in industrial engineering.
10. How does industrial engineering help to increase the productivity of an organization?
11. Define productivity. How it is different from production. State advantages of
productivity. State ways to improve productivity in industry. Also state factors
influencing the productivity.
12. What is VALUE? Explain in details.
13. Describe the stages in which value analysis is carried out.
14. Describe the importance of VE in industries. Also state the objectives of VE.
15. What is Value Engineering? Write down steps for value engineering with proper
diagram and explain it. State difference between value engineering and value analysis.
16. What is a FAST diagram? Write nine steps in FAST diagram.
Subject: Industrial Engineering MECH /Sem-VIII /B.E.
 SVKM’S D. J. Sanghvi College of Engineering
Department of Mechanical Engineering

17. How to use a numerical evaluation technique (Matrix Method) in value engineering.

Subject: Industrial Engineering MECH /Sem-VIII /B.E.