VALUE ANALYSIS

CONCEPT OF VALUE ANALYSIS

It aims at a systematic identification and elimination of
unnecessary costs.
It critically investigates and analyses the different aspects of
material, purchase, design and production of each and every
component of the product.
Any thing that doesnt add value to the product from customer
point of view is unnecessary cost.
This includes inventory, transportation etc.
It is normally applied to existing rather than new products.

WHAT IS VALUE
Value can be defined as the combination of quality, efficiency,
price and service which ensures the ultimate economy and
satisfaction of the purchaser.

Value = function
cost
FOUR TYPES OF ECONOMIC VALUE
1. Cost value : Sum of all costs to produce the product.
2. Functional Or Use Value : It is the measure of properties, qualities
and features which make the product accomplish a function.

It is the price paid by the buyer in order to ensure that the
product performs the intended functions
3. Esteem Value : It is the measure of properties, features,
attractioness, packaging etc., which increases sales appeal or which
attracts persons and creates in them a desire to posses the product.
It is the price paid by the buyer beyond the use value.
4. Exchange Value : It refers to the price that a customer will offer for
the product, the price being dependent upon the satisfaction (value)
which he derives from the product.

AIMS & OBJECTIVE OF VALUE
ANALYSIS
To maintain the functional objectives of an item at the desired
level.
Three Functions :
Primary
Secondary,
Tertiary
Save money or increase profit
Time consideration : Ease of manufacture, timely delivery of
product etc..
If product is to be for a short duration No quality issues. Ex. Beach
wear.
Quality promotion : Helps in the analyses of repeated failure of a
component or part.
It Can improve quality.



CONTINUE
Standardisation : Standardisation of material, process,
products etc.
Increase the utility of the product.
Ex Mixer Grinder, Vacuum cleaner for Painting.
Improve organisational effectiveness by eliminating wasteful
activities.
Develop logical and analytical approach to solve problems.
Modification and improve product design
Ex. Carburetor cap of bike

DIFFERENCE BETWEEN VA & VE
Though the process is same , the difference lies in the time and
at the stage when the technique is applied.
VA is the application of a set of technique to an existing product
with a view to improve its value It is thus a remedial process.
VE is the application of exactly the same set of techniques to a
new product right from the design stage so that no unwanted
features are added to the product.

WHEN TO APPLY VALUE ANALYSIS
In the development of a new product
ROI of investment in a product is reducing.
Sales of the product is going down
The cost of manufacturing / tooling is rising.
Competitors products are available at low price
Cost of raw material is increasing disproportionate to the
volume of production.
The firm is unable to meet delivery schedule.
Customers complaints regarding performance of the product.
STAGES IN VA OR VA PROCEDURE
1. Orientation Phase : It involves identification of the problem,
selection of projects, formation of teams, laying down objectives
and targets, and in depth training of all team members.
Selection of Project:
Carry out ABC analysis ( Pareto Analysis- to identify vital few
components, process, parts that contribute to the bulk of product cost)
Identify problematic area that may be in production, maintenance,
design, etc..
Formation of Team : It should be form different departments.
2. Information Phase : Collection of all relevant information like
drawings, manufacturing process, tech. specification, cost brake up
etc..
Collect data
Decision and costs Ex. location of a m/c on the plant will affect
material movement (ex. Dairy plant)
Assimilate facts and data into the required form may be on a
standard workbook.



CONTINUE
3. Function phase : This is heart of a value analysis.
One tries to answer :-
What does it do?
How much does it cost?
What is its worth?
Importance of function (ex. Sports shoe)
Type of function : Use function and sell function
Ex. Tie Clip Restrict Movement Improve appearance
Define Function : Define in just two words, a verb and noun.


CONTINUE
Verb Noun
Violin Produce Sound
Gas Cooker Produce Heat
News Paper Provide Information
Other ex. May be: Attract Attention, Improves looks
Why Two words
If not able to define in two words, not all information is
available
It forces to break the problem into simplest elements
It provides better communication

CONTINUE
Identify levels of function :
Primary
Secondary
Tertiary
Estimate function cost : A customer wants to pay for fruit juice
and not for the container yet without container they cant take it
to customer.
Estimate worth of each essential function : worth in VA is the
lowest cost to achieve the basic function. It is derived by creatively
establishing other not so obvious means of accomplishing each
function.


FUNCTIONAL ANALYSIS SYSTEM
TECHNIQUE ( FAST)
This technique answer three questions
why?
How?
When ?
The steps are :
1. Prepare a list of all the function of the assembly or system using the
verb and noun technique.
Example : a ball pen
2. The functions are
1. Make Mark Basic Function.
2. Improve aesthetics
3. Provide grip Secondary Function
4. Control Flow



The Pen consists of Six parts :

CONTINUE
2. Write each function on a small card
3. Select card containing what is considered the basic function.
CONTINUE
4. Apply the logic question why and how an the selected function
to determine the functions right and left of this.

MAKE
MARKS
Communicate
Ideas
Make
Marks
Contain Flow
Contain ink
Ask Why ? Ask How?
CONTINUE
Scope liner identifies scope of the current product. For ex. Idea
may be communicated by film, OHP etc.
All time function are placed on the top RHS of the diagram.
Make
Marks
Contain Ink
Control Flow
Communicate
Ideas
Position
Refill
Provide
Tension
Make
Marks
Contain
Ink
Control
Flow
Communi
cate Ideas
Position
Refill
Provide
Tension
Enclosed
Parts
Restrict
Movement
WHY?
WHY?
HOW?
HOW?
SCOPE LINER
CONTINUE
5. Creation Phase : To identify what else will satisfy the same
needed function
Alex Osborne's Brainstorming :
Carry out for 35-40 minutes, suspend judgment, freewheeling is
allowed, quantify not quality is required
Modify / combine idea to produce result
The Gordon technique :
Similar but the exact problem is not known and is gradually brought
into the focus.
The morphological Analysis techniques.

CONTINUE
6. Evaluation Phase :
During creation phase, The team focuses only on the generation of
idea and not on their relative merits.
Some techniques used at this stage are :
i. Using filters of Safety, Technology and Implementation
Manufacturability to prove the product idea.
ii. Segregation of ideas into long and short term :
1. Make sure if short term ideas ( 3 Months may be ) can ne
implementable.
iii. Ranking : Simple ranking in terms of best and worst ideas.


CONTINUE
iv. Feasibility ranking approach : Evaluate ideas against several
criteria by preparing evaluation Matrix :


Criteria PROPOSALS
I II III IV
Tech. Level 10 5 8 6
Cost of
Implementati
on
9 5 7 3
Potential
Benefit
2 8 7 4
Safety 5 7 10 6
Adherence to
Quality
Standard
7 5 6 8
Total 33 30 38 27
v. Weighted Evaluation : Assign weight to ideas as per their
relative importance.
The Recommendation Phase : If possible, conduct trial before
recommending the changes. Present potential savings if the idea
is implemented.
The implementation Phase :
Plan Action
Record Progress
Organize review meetings
Establish feed back systems

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