Value Analysis and Engineering

Cost Reduction through
Value Analysis and Value Engineering

Essential Product Development for Engineers

Value Analysis and Value Engineering: Commercial Context and Relevance

Value Analysis and Engineering are today, more relevant than ever in manufacturing industry, as companies strive to produce better products for lower cost. This is being driven by customer expectations and often fierce commercial pressure. If your products are to remain competitive and maintain a healthy profit margin, they will need to be analysed for value.

New products should definitely be value engineered before going to production. Some technologies are constantly becoming more affordable and customer expectations are forever changing. Without conducting this sort of review, you are missing out on a great opportunity to reduce your costs and so increase your margins, revenue and competitiveness.

The most successful manufacturing firms, particularly in sectors like automotive, conduct rolling programmes of cost reduction activities. This includes value analysis and other production based tasks. In this way, they deliver year-on-year savings.

Realistically, for many companies their products and their particularly industry sector, may not warrant this level of continuous improvement (not yet anyway!). As a result, many products will never have been value-analysed. In some ways this is good news, as the cost savings and improvements that can be obtained without too much effort are significant, potentially making a real difference to the bottom line.

What we do know is, in many industry sectors profit margins are certainly being squeezed and other costs such as materials and energy tend to increase. Value analysis and value engineering represent a relatively easy way of redressing this balance (certainly easier than increasing the volume of sales to the equivalent amount, in the time it takes to conduct a value analysis project).

Imagine the significant difference it would make to your commercial position, as well as the competitive advantage it would give you, if you implemented even a small percentage of the cost savings industry’s best performers do.  How to go about doing this is spelt out below.

 

More Value Analysis and Engineering Cost Reduction Tips...

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Value Analysis and Engineering explanation and examples

Value Analysis & Value Engineering – Scope of Activity

Both Value Analysis and Value Engineering are concerned with producing lower cost, better functioning products. These techniques involve undertaking activities to either reduce the cost of a product, improve its function or ultimately both. Improvements in one area should not have an adverse effect on the other.

Value analysis and engineering activities are undertaken by teams drawn from departments across the company, often in regular contact with suppliers. The overriding aim is to increase the value of the product to the customer (through cost reduction, improved function or both), by analysis and re-engineering.

Value analysis and engineering can be undertaken on all the following;

• Individual parts
• Assemblies
• Whole products
• Groups of products
• Systems composed of groups of products  
• Bought-out parts
• Services and production systems (although these are less common)

 

The scope of the exercise is up to you and your cost reduction team. In practice you will probably choose to conduct one or two value analysis exercises on individual products or assemblies, until you become more proficient at them.

Before talking about the specific tasks that value analysis and engineering encompass, it is important to define them both so you are clear on the difference between the two.

Value Analysis and Engineering

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Next... Value Analysis and Value Engineering (VA/VE): Definitions and Benefits

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