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A project report submitted in partial fulfillment of the requirement for the award of the degree of Master of Science Engineering Business Management. The thesis entitled "concept and Techniques of Value Analysis to Effectively Control Cost" has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.
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Concepts and Techniques of Value Analysis to Effectively Control Cost
A project report submitted in partial fulfillment of the requirement for the award of the degree of Master of Science Engineering Business Management. The thesis entitled "concept and Techniques of Value Analysis to Effectively Control Cost" has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.
A project report submitted in partial fulfillment of the requirement for the award of the degree of Master of Science Engineering Business Management. The thesis entitled "concept and Techniques of Value Analysis to Effectively Control Cost" has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.
UNIVERSITI TEKNOLOGI MALAYSIA CONCEPTS AND TECHNIQUES OF VALUE ANALYSIS TO EFFECTIVELY CONTROL COST
NOR AMALINA BINTI MOHAMED DANI
A project report submitted in partial fulfillment of the requirement for the award of the degree of Master of Science Engineering Business Management
Razak School of Engineering and Advanced Technology Universiti Teknologi Malaysia
JANUARY 2014 I/We* hereby declare that I/We* have read this thesis and in my/our* opinion this thesis is sufficient in terms of scope and quality for the award of the degree of Master of Science (Engineering Business Management).
Signature : . Name of Supervisor 1 : Dr. Mohamed Azlan Bin Suhot Date :
Signature : Name of Supervisor II : Dr. Mohd Khairi Abu Husain Date :
*Delete as necessary
ii I declare that this thesis entitled Concept and Techniques of Value Analysis to Effectively Control Cost is the result of my own research except as cited in the references. The thesis has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.
Signature : Name : Nor Amalina Binti Mohamed Dani Date :
iii
To my beloved mother and family for their endless love and support
iv
ACKNOWLEDGEMENT
First and foremost, I would like to express my greatest gratitude to Almighty God for giving me strength and courage to finally complete this project with the best that I could. Indeed, without His Help and Well, nothing will be accomplished.
My deep and sincere gratitude goes to my most respected supervisors, Dr. Mohamed Azlan bin Suhot and Dr. Mohd Khairi bin Abu Husain for the encouragement, guidance and motivation throughout the completion of this project. This project could not have been done so well without their sincere comments and encouragements. It was a great privilege to work under their supervision.
My heartfelt thanks go to Mr. Zulhasni Abdul Rahim, TRIZ Specialist who has provided guidance and assistance throughout the project. I shall never forget the endless encouragement and assistance he has provided. I would also like to thanks to Proton Holding Berhad especially Vehicle Management Department for providing the resources for my project. I would also like to take this opportunity to extend my sincere thanks to all my classmates and whoever that have helped me directly or indirectly throughout the completion of this project. The uphill struggle is hard and could not have been achieved without the inspiration and motivation from the people around me. I owe them so much and I wish them the best in their future endeavors.
Last but not least, I would like to acknowledge the endless love, passion, and support of my beloved mother and family. Thank you for the unconditional support and encouragement to pursue my interests and dreams to make the best character out of me. I will always be grateful to have both of you.
v
ABSTRACT
Value analysis is one of the most widely used cost reduction techniques. It emphasizes on finding new ways of getting equal or better performance from a product at a lesser cost without affecting its quality function, utility and reliability. The research aimed to assess and investigate the application of value analysis, and how this rolls out in practice within the manufacturing context, to study the degree of awareness and understanding of value analysis and to study the drivers and obstacles in implementing value analysis in local manufacturing industry. The basics of Value Analysis methodology and its different phases are explained in a brief which can be implemented to a product for its optimization. It explores each part of the Value Analysis job plan for the successful application of the technique. Each part of VA job plan is discussed and executed to get the detailed information about the product. The methodology used in this study is qualitative approach using data extracted from case study and semi structure interviews. PREVE's car seat was selected for the value analysis study. A case study has been discussed and an analysis has been carried out by this process to achieve product optimization. A thorough analysis has been done for choosing the most viable option from the various feasible choices available to attain a concrete solution. At the end the results obtained after the implementation of this technique are discussed. The management support and initiatives, product diversities, competition, customer requirement and adequate knowledge and awareness were the influential factors in VA adoption. Whilst, lack of commitment and communication and problem solving and idea generated during VA workshop are the impeding factors found in the study.
vi
ABSTRAK
Analisis nilai merupakan salah satu teknik pengurangan kos yang paling meluas digunakan. Ia telah menekankan penemuan cara-cara baru untuk mendapatkan prestasi yang sama dengan atau lebih baik dari produk pada harga yang lebih rendah tanpa menjejaskan fungsi kualiti, utiliti dan reliabiliti. Kajian ini adalah bertujuan untuk menilai dan meneroka aplikasi analisis nilai, dan bagaimana aplikasi analisis nilai ini digunakan dalam konteks pembuatan, mengkaji tahap kesedaran dan kefahaman tentang analisis nilai dan mengkaji cabaran dan halangan dalam melaksanakan analisis nilai dalam industri pembuatan tempatan. Kaedah asas analisis nilai dan fasa-fasa yang berbeza diterangkan secara ringkas dan setiap bahagian rancangan kerja analisis nilai diterokai bagi menjayakan aplikasi dan mengoptimumkan sesuatu produk. Pendekatan secara kualitatif digunakan dalam kajian ini dan data diperolehi diekstrak daripada kajian kes dan semi struktur temubual. Kerusi kereta Preve di pilih untuk kajian nilai analisis ini. Kajian kes telah dibincangkan dan analisis yang menyeluruh telah dilakukan untuk memilih alternatif yang paling sesuai dari alternative yang tersenarai bagi mencapai satu penyelesaian yang konkrit. Sokongan dan inisiatif pengurusan, produk diversiti, persaingan, keperluan pelanggan dan kesedaran dan pengetahuan yang cukup adalah faktor- faktor yang mempengaruhi dalam penggunaan analisis nilai. Manakala, kekurangan komitmen dan komunikasi dan penyelesaian masalah dan idea yang dihasilkan semasa proses analisis nilai merupakan faktor-faktor yang menghalang yang terdapat dalam kajian ini.
vii
TABLE OF CONTENTS
CHAPTER TITLE PAGE
DECLARATION ii DEDICATION iii ACKNOWLEDGEMENTS iv ABSTRACTS v ABSTRAK vi TABLE OF CONTENTS vii LIST OF TABLES xii LIST OF FIGURES xiii LIST OF ABBREVIATIONS xiv LIST OF APPENDICES xv LIST OF SYMBOLS xvi
1 INTRODUCTION 1.0 Introduction 1 1.1 Background of Study 1 - 3 1.2 Scope of the Study 4 1.3 Problem Statement 4 - 5 1.4 Objectives of the Research 5 viii
1.5 Chapter Scheme 6
2 LITERATURE REVIEW 2.0 Introduction 7 2.1 History of Value Analysis 7 - 10 2.2 Definition of Value Analysis 10 - 12 2.3 Value Analysis 12 - 14 2.3.1 Value Analysis Methodology 14 - 19 2.3.2 How Does Value Analysis Work 20 2.4 Value Analysis Application - Case Studies 21 - 25
3 RESEARCH METHODOLOGY 3.0 Introduction 26 3.1 Overview of the Methodology 27 3.2 Data Collection Instruments 28 - 33
4 RESULTS & DISCUSSION 4.0 Introduction 34
Part A: Companys Background and Adoption of Value Analysis
5 CONCLUSIONS 5.1 Conclusions 68 - 71 5.2 Limitation and Future Works 71 72
x
REFERENCES 73 76 APPENDICES 77 xi
LIST OF TABLES
TABLE NO. TITLE PAGE 2.1 VA Job Plans from Different Experts/Societies 15 4.1 Defining Functions 45 - 46 4.2 Functional Cost Analysis 51 4.3a Idea Generation Head Restraint 53 - 54 4.3b Idea Generation Back Protector 54 4.4 Criteria Definitions 56 4.5 Allotted Point of Criteria 57 4.6 Comparisons of Classifications 57 4.7 Matrix Evaluation Process 58 4.8a Percentage Weightage 58 4.8b Grading for Evaluation 59 4.9a Criteria Weighing Process Head Restraint 60 4.9b Criteria Weighing Process Back Protector 61
xii
LIST OF FIGURES
FIGURE NO. TITLE PAGE
2.1 Value Study Process Flow Diagram 19 3.1 Steps of Case Study 29 3.2 The Interview Process Flow 31 4.1 The Sectional of the Car Seat 41 4.2 The Explode View of Car Seat 43 4.3 FAST Diagram 48 4.4 Proposed Idea for Implementation Back Protector 63 4.5 Proposed Idea for Implementation Head Restraint 64
xiii
LIST OF ABBREVIATIONS
DEA Data Envelopment Analysis DFA Design for Assembly FAST Functional Analysis System Technique MVF Multi Vehicle Purpose PROPEX Process and Operational Excellence QFD Quality Function Deployment VA Value Analysis VCR Vehicle Cost Reduction VE Value Engineering VM Value Management
xiv
LIST OF APPENDICES
APPENDIX TITLE PAGE 1 Interview Questionnaires 77
xv
LIST OF SYMBOLS
Applicable Applicable but certain condition Not Applicable
xvi CONCEPTS AND TECHNIQUES OF VALUE ANALYSIS TO EFFECTIVELY CONTROL COST
NOR AMALINA BINTI MOHAMED DANI
UNIVERSITI TEKNOLOGI MALAYSIA CONCEPTS AND TECHNIQUES OF VALUE ANALYSIS TO EFFECTIVELY CONTROL COST
NOR AMALINA BINTI MOHAMED DANI
A project report submitted in partial fulfillment of the requirement for the award of the degree of Master of Science Engineering Business Management
Razak School of Engineering and Advanced Technology Universiti Teknologi Malaysia
JANUARY 2014 I/We* hereby declare that I/We* have read this thesis and in my/our* opinion this thesis is sufficient in terms of scope and quality for the award of the degree of Master of Science (Engineering Business Management).
Signature : . Name of Supervisor 1 : Dr. Mohamed Azlan Bin Suhot Date :
Signature : Name of Supervisor II : Dr. Mohd Khairi Abu Husain Date :
*Delete as necessary
ii I declare that this thesis entitled Concept and Techniques of Value Analysis to Effectively Control Cost is the result of my own research except as cited in the references. The thesis has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.
Signature : Name : Nor Amalina Binti Mohamed Dani Date :
iii
To my beloved mother and family for their endless love and support
iv
ACKNOWLEDGEMENT
First and foremost, I would like to express my greatest gratitude to Almighty God for giving me strength and courage to finally complete this project with the best that I could. Indeed, without His Help and Well, nothing will be accomplished.
My deep and sincere gratitude goes to my most respected supervisors, Dr. Mohamed Azlan bin Suhot and Dr. Mohd Khairi bin Abu Husain for the encouragement, guidance and motivation throughout the completion of this project. This project could not have been done so well without their sincere comments and encouragements. It was a great privilege to work under their supervision.
My heartfelt thanks go to Mr. Zulhasni Abdul Rahim, TRIZ Specialist who has provided guidance and assistance throughout the project. I shall never forget the endless encouragement and assistance he has provided. I would also like to thanks to Proton Holding Berhad especially Vehicle Management Department for providing the resources for my project. I would also like to take this opportunity to extend my sincere thanks to all my classmates and whoever that have helped me directly or indirectly throughout the completion of this project. The uphill struggle is hard and could not have been achieved without the inspiration and motivation from the people around me. I owe them so much and I wish them the best in their future endeavors.
Last but not least, I would like to acknowledge the endless love, passion, and support of my beloved mother and family. Thank you for the unconditional support and encouragement to pursue my interests and dreams to make the best character out of me. I will always be grateful to have both of you.
v
ABSTRACT
Value analysis is one of the most widely used cost reduction techniques. It emphasizes on finding new ways of getting equal or better performance from a product at a lesser cost without affecting its quality function, utility and reliability. The research aimed to assess and investigate the application of value analysis, and how this rolls out in practice within the manufacturing context, to study the degree of awareness and understanding of value analysis and to study the drivers and obstacles in implementing value analysis in local manufacturing industry. The basics of Value Analysis methodology and its different phases are explained in a brief which can be implemented to a product for its optimization. It explores each part of the Value Analysis job plan for the successful application of the technique. Each part of VA job plan is discussed and executed to get the detailed information about the product. The methodology used in this study is qualitative approach using data extracted from case study and semi structure interviews. PREVE's car seat was selected for the value analysis study. A case study has been discussed and an analysis has been carried out by this process to achieve product optimization. A thorough analysis has been done for choosing the most viable option from the various feasible choices available to attain a concrete solution. At the end the results obtained after the implementation of this technique are discussed. The management support and initiatives, product diversities, competition, customer requirement and adequate knowledge and awareness were the influential factors in VA adoption. Whilst, lack of commitment and communication and problem solving and idea generated during VA workshop are the impeding factors found in the study.
vi
ABSTRAK
Analisis nilai merupakan salah satu teknik pengurangan kos yang paling meluas digunakan. Ia telah menekankan penemuan cara-cara baru untuk mendapatkan prestasi yang sama dengan atau lebih baik dari produk pada harga yang lebih rendah tanpa menjejaskan fungsi kualiti, utiliti dan reliabiliti. Kajian ini adalah bertujuan untuk menilai dan meneroka aplikasi analisis nilai, dan bagaimana aplikasi analisis nilai ini digunakan dalam konteks pembuatan, mengkaji tahap kesedaran dan kefahaman tentang analisis nilai dan mengkaji cabaran dan halangan dalam melaksanakan analisis nilai dalam industri pembuatan tempatan. Kaedah asas analisis nilai dan fasa-fasa yang berbeza diterangkan secara ringkas dan setiap bahagian rancangan kerja analisis nilai diterokai bagi menjayakan aplikasi dan mengoptimumkan sesuatu produk. Pendekatan secara kualitatif digunakan dalam kajian ini dan data diperolehi diekstrak daripada kajian kes dan semi struktur temubual. Kerusi kereta Preve di pilih untuk kajian nilai analisis ini. Kajian kes telah dibincangkan dan analisis yang menyeluruh telah dilakukan untuk memilih alternatif yang paling sesuai dari alternative yang tersenarai bagi mencapai satu penyelesaian yang konkrit. Sokongan dan inisiatif pengurusan, produk diversiti, persaingan, keperluan pelanggan dan kesedaran dan pengetahuan yang cukup adalah faktor- faktor yang mempengaruhi dalam penggunaan analisis nilai. Manakala, kekurangan komitmen dan komunikasi dan penyelesaian masalah dan idea yang dihasilkan semasa proses analisis nilai merupakan faktor-faktor yang menghalang yang terdapat dalam kajian ini.
vii
TABLE OF CONTENTS
CHAPTER TITLE PAGE
DECLARATION ii DEDICATION iii ACKNOWLEDGEMENTS iv ABSTRACTS v ABSTRAK vi TABLE OF CONTENTS vii LIST OF TABLES xii LIST OF FIGURES xiii LIST OF ABBREVIATIONS xiv LIST OF APPENDICES xv LIST OF SYMBOLS xvi
1 INTRODUCTION 1.0 Introduction 1 1.1 Background of Study 1 - 3 1.2 Scope of the Study 4 1.3 Problem Statement 4 - 5 1.4 Objectives of the Research 5 viii
1.5 Chapter Scheme 6
2 LITERATURE REVIEW 2.0 Introduction 7 2.1 History of Value Analysis 7 - 10 2.2 Definition of Value Analysis 10 - 12 2.3 Value Analysis 12 - 14 2.3.1 Value Analysis Methodology 14 - 19 2.3.2 How Does Value Analysis Work 20 2.4 Value Analysis Application - Case Studies 21 - 25
3 RESEARCH METHODOLOGY 3.0 Introduction 26 3.1 Overview of the Methodology 27 3.2 Data Collection Instruments 28 - 33
4 RESULTS & DISCUSSION 4.0 Introduction 34
Part A: Companys Background and Adoption of Value Analysis
5 CONCLUSIONS 5.1 Conclusions 68 - 71 5.2 Limitation and Future Works 71 72
x
REFERENCES 73 76 APPENDICES 77 xi
LIST OF TABLES
TABLE NO. TITLE PAGE 2.1 VA Job Plans from Different Experts/Societies 15 4.1 Defining Functions 45 - 46 4.2 Functional Cost Analysis 51 4.3a Idea Generation Head Restraint 53 - 54 4.3b Idea Generation Back Protector 54 4.4 Criteria Definitions 56 4.5 Allotted Point of Criteria 57 4.6 Comparisons of Classifications 57 4.7 Matrix Evaluation Process 58 4.8a Percentage Weightage 58 4.8b Grading for Evaluation 59 4.9a Criteria Weighing Process Head Restraint 60 4.9b Criteria Weighing Process Back Protector 61
xii 1
LIST OF FIGURES
FIGURE NO. TITLE PAGE
2.1 Value Study Process Flow Diagram 19 3.1 Steps of Case Study 29 3.2 The Interview Process Flow 31 4.1 The Sectional of the Car Seat 41 4.2 The Explode View of Car Seat 43 4.3 FAST Diagram 48 4.4 Proposed Idea for Implementation Back Protector 63 4.5 Proposed Idea for Implementation Head Restraint 64
xiii 1
LIST OF ABBREVIATIONS
DEA Data Envelopment Analysis DFA Design for Assembly FAST Functional Analysis System Technique MVF Multi Vehicle Purpose PROPEX Process and Operational Excellence QFD Quality Function Deployment VA Value Analysis VCR Vehicle Cost Reduction VE Value Engineering VM Value Management
xiv 1
LIST OF APPENDICES
APPENDIX TITLE PAGE 1 Interview Questionnaires 77
xv 1
LIST OF SYMBOLS
Applicable Applicable but certain condition Not Applicable
xvi 1
CHAPTER 1
INTRODUCTION
The introduction includes 4 subsections. First of all, the background of study shows the importance of study and interest of the topic. Second, the scope of the study will be addressed in order to provide clear focus and outline the concepts. Then, the problem area will discussed and lead to the purpose of this study.
1.1 Background of Study
All organizations strive to create value for their customers. Value analysis, therefore is a scientific method to increase this value. It has evolved into an innovative tool that develops alternative through evaluation of creative ideas. Value analysis aims to simplify products and process. Thereby, increasing efficiency in managing projects, resolve problems, encourage innovation and improve communication across organization. Value analysis enables organization to contribute in the value addition process by continuous focus on product design and services. Value analysis provides a structure through cost saving initiatives, risk reduction and continuous improvement. This study will analyze the process by which 2
value analysis is applied in an organization to achieve reduced cost and improved quality.
Value Analysis is an important and powerful tool for improvement in the performance of the products, systems or procedures. It is a cost effective approach which improves the performance without jeopardizing the function(s) and without compromising on quality, reliability etc. Miles defined Value Analysis in his book, (Miles, 1987) as an organized creative approach which has for its purpose the efficient identification of unnecessary cost i.e. cost which provides neither quality nor use, nor life, nor appearance, nor customer features.
According to Miles (1963), the reasons for the unnecessary cost incurred are due to poor design and incorrect materials selection, poor build ability and habits. Value analysis should not be treated as a mere cost reduction technique or cheapening of the product. It is more comprehensive and the improvement in value is attained without any sacrifice in quality, reliability maintainability, availability, esthetics etc. When unnecessary cost of a product or system, which is irrelevant to the specific functions, is removed, cost is reduced performance enhanced and maintained (Fong, 1999). Miles was responsible for the establishment of value analysis and since then the technique is very much accepted in various industries. There is consensus that Miles is regarded as the Father of VE (Davies, 2004).
Value analysis can be used over and across all the design, manufacturing and purchasing phases towards a common objective; to obtain from a product an equivalent performance, or even improve it in such a way to that its cost is reduced. Value analysis technique is applicable to all type of sectors, business or economic sector which include construction, service, government, agriculture, education and healthcare (McDowell, 1996). Initially, value analysis was introduced in manufacturing industries.
3
Costs are the direct product of people and depend on their knowledge or lack of it, logic, attitudes and feelings and environment. To minimize cost, the causes must deal with; to deal with the causes, the overall strategy which called value analysis was created (Wixson, 1987). This cost reduction usually entails an improvement in the product quality and other product enhancement such as lead time reduction, weight cut, improved manufacturability, enhanced operation, increased safety, etc.
Cost management is a continuous process which integrated activity within an organizations which include products or services entire life cycle. It is most effectively applied during pre-production phases (planning and design) where the greatest impact can be achieved and would be effective if it is part of the company policy, suitable environment and availability resources within the company (Yoshikawa, Innes and Michelle, 1995). One of the key methods in cost management is value analysis and that aims to provide better products or services for lesser cost (David, 1999).
An organization needs to reduce unnecessary cost by identifying and eliminating waste at the earliest opportunity. Therefore, value analysis is an effective tool for cost reduction and the results accomplished are far greater.
4
1.2 Scope of the Study
The scope of this study involves the following:
i. This research is basically to study the extent of use value analysis, reason for its adoption and the factors that influence and impede its adoption within material or component of manufacturing in the company.
ii. This study will be conducted in a manufacturing company in which value analysis is being used or adopted.
iii. The scope of the research is to meet the mentioned objective. The focus will be highlighted to the concepts and techniques of value analysis applied and how this rolls out in practice within the manufacturing context, particularly in design and build projects to effectively control cost.
1.3 Problem Statement
Value analysis methodology has become very useful in process design and manufacturing as a tool that can optimize projects administration, business and manufacturing processes and scheduling facilitation. The benefits of value analysis include decreasing costs, increasing profits, improving quality, improving speed of service delivery and performance, and enhancing customer satisfaction. Various interventions have been sought and implemented by the manufacturing sector to 5
improve on production performance and service delivery systems approaches. This study is to know how the manufacturing company implement or practice of the value analysis and to identify whether the level of cost savings and improvement in functionality or quality of manufacturing company able to achieve from value analysis.
1.4 Objectives of the Research
Motivated by the mentioned problems, the objectives of this research are defined as the followings:
1) To assess and investigate the application of value analysis, and how this rolls out in practice within the manufacturing context.
2) To study the degree of awareness and understanding of value analysis in local manufacturing industry.
3) To study the drivers and obstacles in implementing value analysis in local manufacturing industry.
6
1.5 Chapter Scheme
Chapter 1 presents introduction of the study which contains background studies, problem statement, objectives of the study and the scope of the study. Chapter 2 elaborates the critical review of literature related to the concepts and techniques of value analysis to effectively control cost. Chapter 3 elaborates the method used in this study, which involves case study on value analysis in the case company and semi structured interview. Chapter 4 explains the results, their analysis and discussion. Chapter 5 concludes the findings of the concepts and techniques of value analysis to effectively control cost as well as the future work of this study.
7
CHAPTER 2
LITERATURE REVIEW
2.0 Introduction
In this chapter, all the important information related of this project is stated. The literature review can give a brief explanation about the concept and technique of value analysis. Some of the points in this chapter can give extra information which is useful while doing this project.
2.1 History of Value Analysis
Value Analysis was conceived in the early 1940s by Lawrence D. Miles while he was employed by General Electric, a major defense contractor which was facing the scarcity of strategic materials needed to produce their products during World War II. Miles realized that if value and related innovation improvements could be systematically managed then General Electric would have a competitive advantage in the marketplace. With that in mind, Miles accepted the challenge and devised the 8
function analysis concept, which he integrated into an innovative process he later termed value analysis (Miles, 1972; SAVE International, 2007).
Miles understood that products are purchased for what they can do either through the work they perform or the pleasing aesthetic qualities they provide. Using this as his foundational information, he focused on understanding the function of the component being manufactured. He questioned whether the design could be improved or if a different material or concept could achieve the function. These specialized teams typically address project-related issues such as increased sales revenue, improved product performance, and reduced resource usage (Miles, 1972; SAVE International, 2007).
To focus on the function itself, he used an active verb and a measurable noun in combination to characterize the benefit that a parts function provides. He then searched for other ways or methods to achieve the benefit of that intended function. From this research, function analysis, the key foundation of value methodologies was developed and has become a tool to help individuals and teams manage the way a concept is understood. These specialized teams typically address project-related issues such as increased sales revenue, improved product performance, and reduced resource usage (Miles, 1972).
The U.S. Army and Navy, and other companies, soon realized the success of Larry Miles methods. As the application of value analysis expanded, there was also a change in context from review of existing parts to improving conceptual designs. This was one of two factors that marked the emergence of value engineering. The other was a desire by the U.S. Navy to use the Value Analysis techniques for project improvement in the early 1950s when there was a moratorium on hiring analysts. Since engineering positions were available, individuals practicing this new discipline were employed as Value Engineers (SAVE International, 2007).
9
As the value methodology gained in popularity, a group of practitioners formed a learning society to share insights and advance their innovative capabilities. Thus, in 1959, the Society of American Value Engineers was incorporated in Washington, DC. Soon, the value methodology was used in government, private sector, manufacturing and the construction industries to improve the value of projects and afterwards value concepts was spread worldwide.
The Department of Defenses Bureau of Ships (now the Navy Ships System Command) 1954, was the first government organization implement a formal program. They called the program Value Engineering (VE) to reflect the emphasis on their objective and type of organization which was engineering. The name is now the most commonly used and well accepted since the chartering of Society of American Value Engineers (SAVE) in 1959. However, it was not late until 1961 that the program was formally implemented throughout the Department of Defense in USA (SAVE International, 2007).
Before the death of Miles in 1985, the Value Analysis process had gained world-wide acceptance. In 1970, value analysis practices and applications were introduced in other parts of the world namely, Japan, Italy, Australia and Canada (Cheah and Ting, 2005). In later years, it usages spread to Australia, New Zealand and the United Kingdom (Mazlan, 2002). Concurrent with this growth, a number of other value improving tools, techniques, and processes emerged, many of which were complementary to and were integrated with the value concepts. In an effort to attract the developers and practitioners of these emerging methods to our membership, the name of the society was changed to SAVE International in 1996 (Save International, 2007).
In Malaysia, value analysis (known as Value Management) was formally introduced in 1986 (Jaapar and Torrance, 2007) by Roy Barton from Canberra University, Australia to the Quantity Surveying Department in the Universiti Teknologi Malaysia. Mohd Mazlan was privileged to be the one of the participants in 10
that value management training program. During the year of 1999, the first National Seminar on Value Management was organized by IKRAM, JKR, officiated by Tun Daim Zainudin, then Minister of Finance Malaysia. In his opening speech, he strongly suggested the industry to take up Value Management on board due to the benefits offered by the concept.
Institute of Value Management of Malaysia (IVMM) was registered in May 2000, due to the positive response from the construction and manufacturing industries and formalized with 20 founding members to promote awareness of the technique and its benefits. Currently the membership of the Institute has grown to over 200 members.
2.2 Definition of Value Analysis
Value has been defined in different ways by the different authors. The definition of VA given by Miles has been presented in Chapter 1. The definitions and elaboration to value analysis given by other eminent experts, practicing organization and VA societies have been included in subsequent paragraphs.
John H. Fasal (1972), Value analysis is the methodical investigation of all components of an existing product with the goal of discovering and eliminating unnecessary costs without interfering with the effectiveness of the product. In value analysis, the systematic analysis of a product is performed in terms of an already existing prototype of the product; all information concerning the actual costs and all specifications determining required performances are obtained from past experience with the prototype itself.
11
Zimmerman and Hart (1988) Value analysis is a proven management technique using systematized approach to seek out the best functional balance between cost, reliability and performance of a product or project. The programme seeks to improve the management capability of people to promote progressive change by identifying and removing unnecessary cost.
Rich and Holweg (2000) Value analysis can be defined as a process of systematic review that is applied to existing products designs in order to compare the function of the product required by a customer to meet their requirements at the lowest cost consistent with the specified performance and reliability needed.
DellIsola (2003) Value analysis (also referred as Value Engineering) as an organized, systematic and multidiscipline team approach that analyzes the function of systems, equipment, facilities, services and supplies for the purpose of eliminating unnecessary costs while maintaining the required performance, quality and safety of the functions required by customers. The application of value analysis is also extended to services or organizations such as hospitals and government agencies and was also popular among the construction industry.
Society of Japanese Value Engineering (SJVE) Value analysis is defined as a systematic approach to analyzing functional requirements of products or services for the purposes of achieving the essential functions at the lowest total cost. This reflects that VA is applied to products and services through analyzing each of the functions involved. SJVE also suggested that the services where VA can be applied include software items in manufacturing organization.
12
Society of American Value Engineers (SAVE) Value analysis is a professionally applied, function-oriented, systematic team approach used to analyze and improve value in a product, facility design, system or service - a powerful methodology for solving problems and or reducing costs while improving performance and quality requirements.
2.3 Value Analysis
Value analysis is one of the most widely used cost reduction techniques. It emphasizes on finding new ways of getting equal or better performance from a product at a lesser cost without affecting its quality function, utility and reliability. Value analysis bring clearly the areas where the cost of product can be decreased by pointing out the unnecessary items or component in which have had once some utility but now redundant therefore has to dispensable, the possibilities of component substitution with reduced cost without affecting the quality of the product and the lastly, the possibilities of overall simplification in design or manufacture of a product.
The objective of Value Analysis is to achieve equivalent performance for lower cost without reducing in the slightest degree of quality, safety, life, reliability, dependability and the features and attractiveness that the customer wants (Miles,1972). The aim of Value Analysis is also to achieve an assigned target product cost by (i) identifying improved product designs that reduce the products cost without sacrificing functionality and/or (ii) eliminating unnecessary functions that increase the products costs and for which customers are not prepared to pay extra for (Miles, 1972).
13
Zimmerman (1982) stated that the goal of VA study is to realize true value for the owner. The value may come in the form of removing unnecessary cost to the project or it may come in the form of providing a more workable product that would decrease the costs of arising and operating the facility. Value is that elusive commodity that all attempt to achieve in design. Value in the context is considered to be value for money that is received in return of a project or service.
Value analysis defines a basic function as anything that makes the product work or sell. A function that is defined as basic cannot change. Secondary functions also called supporting function could be modified or eliminated to reduce product cost (Crow, 2002). As VA progressed to larger and more complex products and systems, emphasis shifted to "upstream" product development activities where VA can be more effectively applied to a product before it reaches the production phase. However, as products have become more complex and sophisticated, the technique needed to be adapted to the systems approach that is involved in many products today. As a result, value analysis evolved into the "Function Analysis System Technique" (FAST) which is discussed later.
Value analysis and value engineering look synonymous but the difference between them is; (Stoll, 1999)
i. Value Analysis A remedial process where the techniques are applied to an existing product with a view to improving its value
ii. Value Engineering A technique applied when a new product is at the design stage to ensure no bad features is included.
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Schwarz and McConkey (1974) consider that whatever title is used for the methodology, VA and VE or VM, they will use the techniques and job plan to achieve similar aims. Cheah and Ting (2005) acknowledge the distinctions between VA, VE and VM, with VM being a style of management applied at corporate levels, while VA and VE apply tools and methods at the operational level.
2.3.1 Value Analysis Methodology
The value analysis methodology is based on a multi-stage job plan, sometimes also called as "value analysis job plan". Some sources list five phases, while others range up to eight. Table 2.1 shows the sequence of phases of different job plan given by some leading experts or practitioner and societies exercising value analysis job plan.
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Table 2.1: VA Job Plans from Different Experts/Societies
The Job Plan outlines sequential phases to be followed which support team synergy within a structured process, as opposed to a collection of individual opinions. The activities conducted during each phase of the Job Plan will stimulate the team to identify ideas and develop them into alternatives to the original concept or design. The principal phases of the job plan are information, speculative, analytical and proposal. However, in practice, the VA job plan can be divided into following six phases (Miles, 1972; SAVE International, 2007);
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i. I nformation Phase
During this phase, the team gathers as much as possible about the design, background, constraints and projected costs of the project. The team is made familiar with the present state of the project. All team members participated in a functional analysis of the project as a whole, and then of its component parts, to determine the true needs of the project. Areas of high cost or low worth are identified.
ii. Functional Analysis Phase
During the functional analysis phase, the project will be analyzed in order to clarify the required functions. It tries to identify what functions are important and which performance characteristics are required for these functions.
iii. Creativity Phase
This step requires a certain amount of creative thinking by the team. A technique that is useful for this type of analysis is brainstorming. This stage is concerned with developing alternative, more cost effective ways of achieving the basic function. All rules of brainstorming are allowed, and criticism needs to be avoided as it could cease the flow of ideas. Simply list down all ideas, not regarding whether they sound apparently ridiculous. Two powerful techniques to promote creativity are as follows:
a. Establish positive thinking: Here, the team split-up the judicial part of the mind from the creative part by insisting that they do not attempt to judge an idea simultaneously when it is being created.
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b. Develop creative ideas: This is done by cultivating abandoned thinking and developing a multitude of ideas and approaches for accomplishing the defined functions. The desired thing at this point is a large number of ideas, no matter whether they look ridiculous. A number of check-lists and idea-stimulators could be used for the purpose.
iv. Analytical Phase
Analytical phase of the value analysis job plan has following two basic objectives;
a. To select tor further analysis, the most promising of the idea generated during the creativity phase and;
b. To submit these ideas to preliminary screening and to identifying the meaningful and feasible ideas.
During this phase, the ideas must be refined to meet the necessary environmental operating conditions of the particular situation. Ideas obviously, do not meet these requirements are dropped. Ideas having potential, but beyond the capability of present technology are put aside for possible discussion with the concerned parties. The remaining ideas arc potentially workable aids are cost analyzed.
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v. Evaluation Phase
In this phase of the workshop, the VA team judges the ideas developed during the creative phase. The VA team ranks the ideas. Ideas found to be irrelevant or not worthy of additional study are disregarded; those ideas that represent the greatest potential for cost savings and improvements are selected for development. A weighted evaluation is applied in some cases to account for project impacts other than costs (both capital and life cycle).
Ideally, the VA team would like to evaluate all attractive ideas but time constraints often limit the number of ideas that can be developed during the workshop. As a result, the team focuses on the higher ranked ideas. This phase is designed so that the most significant ideas are isolated and prioritized
vi. Recommendation Phase
In the development phase, final recommendations are developed from the alternatives selected during the analysis phase. Detailed technical and economic testing is conducted and the probability of successful implementation is assessed.
The presentation phase is actually presenting the best alternative (or alternatives) to those who have the authority to implement the proposed solutions that are acceptable.
During the implementation and follow-up phase, management must assure that approved recommendations are converted into actions. Until this is done, savings to offset the cost of the study will not be realized. 19
Figure 2.1 illustrates the Job Plan process flow. Each of the Job Plan phases must be performed in sequence because each phase provides information and understanding necessary for the successful execution of the next phase.
Figure 2.1: Value Study Process Flow Diagram (Source: SAVE International Value Standard Edition 2007)
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2.3.2 How Does Value Analysis Work?
Value Analysis reduces costs by eliminating wasteful practices. This can be done in several areas;
i. Material Substitution Value Analysis promotes the substitution of materials and methods with less expensive alternatives, without sacrificing functionality. It is focused solely on the functions of various components and materials, rather than their physical attributes. The substitution of materials and methods were often found to reduce costs and provided equal or better performance. The unnecessarily expensive inputs sometimes can be replaced by less expensive one that functions just as well (John Kelly and Steven Male, 2013).
ii. Process efficiency and optimization of production More efficient processes or steps can be used and the product or the program can be redesigned so that it is easier to produce or accomplish. Reducing unnecessary parts or steps, unnecessary precision and unnecessary production operations can lower costs, and increase manufacturability, reliability and profits. Process engineering can be used to increase process efficiency (Kaufman, 2009).
iii. Energy Utilization Utilizing energy efficient equipment will create more value in the long run despite its initial investment.
iv. Avoiding products with more features than required will minimize cost.
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2.4 Value Analysis Application Case Studies
In the beginning, period the method of value analysis was used to investigation products but after years, its range of application was broadened. Nowadays, the value analysis is used to rationalizing of the course of technological processes, administrative procedures, and organization of auxiliary processes; organizational structures etc. (Roszak, 2007). The analysis of value is one of the basic methods of preparation and undertaking the decision of choice of correct solution, it enables to solve complex problems in a transparent and effective way (Roszak, 2008)
Amit Sharma and Harshit Srivastava (2011) conducted study of a bath fitting product namely Conc. Flush Valve in which the material of the product is changed according to the value analysis methodology. In their study, they have incorporated a tool name as Decision Matrix. A proper decision matrix is prepared for choosing the appropriate alternative from the feasible choices available. The material is chosen such that cost is reduced without affecting the value of the product and its design.
The push button has been found to be costly and the cost to the part made out from it is also costly. It is recommended that the push button should be made in the factory without changing the design of it through process die casting. At the present, push button is made from brass and is proposed to change the push button made from Zamak (an aluminum alloy) which is cheaper than brass and with the use of the same process the excessive cost of machining is also eliminated.
Kurtys (1998) stated that determination of the costs of functions is very important during the comparative investigations when the product is compared to other products of the competition or different enterprises because it permits to find the weak point of the compared article. It is also used in comparing with the products 22
not comprising all the functions and mainly in the case of products making the same functions.
Chougule and Kallurkar (2012) have conducted a study on the use of value analysis techniques for cost reduction in production industry for Universal Testing Machine. Six of components from Universal Testing Machine have been applied for value analysis techniques for the cost reduction. The unnecessary increase cost is due to the use of expensive material and increase in variety of hardware items thereby increasing the inventory.
Value engineering is executed in this case study by implementing design modifications and change in materials of component. The design modification was suggested for Dial Bracket and Top Bearing in order to reduce the weight and material requirement and consequently the cost. The Recorder Gears, Range Selector Knob and Hand Wheel of Brass, Cast Iron are replaced by Nylon. The execution of value analysis and value engineering techniques to selected six components results in net saving of 20%.
Amit Sharma and Belokar (2012) made a study on enhancing value of Slit Housing. Slit Housing is used as a component in assembly of microscope in the field of eye inspection at moisture free environment. The present specification of this part and its material used are costlier than the average industry cost. This product is chosen because of the increased competition from different manufacturers in the same category. Value analysis is executed in this case study by increase the value of the product by substituting another material in place of the one that is currently in use.
By changing the materials of component to ABS plastic, there are various advantages have been observed in terms of cost reduction, increase in overall production, reduction in manpower, and reduction in scrap. The execution of value 23
analysis to the slit housing resulted net saving per product: Rs 57.32, percentage saving per product: 36.79%, annual demand of the product: 10,000 units, total annual saving: Rs 573,200 and value improvement: 58.20%.
Amit Sharma and Belokar (2012) made a study on Focus Adjustment Knob (Model SL250) for Slit Lamp in microscope which is used to adjust the focus of lens for magnification purpose. The present specifications of this part and its material used are costlier than the average industry cost. In their study, they have used the concept of VA to analysis the focus adjustment knob of microscope and with the critical evaluation of it they were able to increase the value of the product by substituting another material in place of the one that is currently in use. Value of this product can be increased by maintaining its functions and reducing its cost or keeping the cost constant and increasing the functionality of the product
The best feasible solution from the available alternatives is chosen through the feasibility ranking table; i) Change the material to steel ii) Use Nylon unit iii) Use existing material. From the table, it is seen that the alternative (ii) Use Nylon Unit has the maximum value. By changing the material of component to Nylon unit, there are various advantages have been observed in terms of cost reduction, increase in overall production, reduction in manpower, and reduction in scrap. The total savings after the implementation of VA are; cost before analysis: Rs 29.99, total cost of nylon knob: Rs 18.40, saving per product: Rs 11.59, percentage saving per product: 38.64 %, annual demand of the product: 8000 units, total annual saving: Rs 92,720 and value improvement: 62.98%.
Ignacio, El-Diraby and Hesham (2007) made a study integrating the value analysis and Quality Function Deployment for evaluating design alternative. The proposed approach uses value analysis, quality function deployment (QFD) and data envelopment analysis (DEA) to optimize the owner decision. The integrated framework is able to elicit customer requirement through the FAST, relate various design options to each customer requirement through use of QFD and lastly, provide 24
a decision support environment to assist in selecting the most suitable alternative. These frameworks were successfully used on a high tech research facility construction project.
In the study made by Roszak and Szewieczek (2007), cog wheels were produced in two different technological processes. The analyses of the processes are based on the value analysis that allows evaluating of applied technologies of production. The entrance materials for analyzed processes were steel 18CrNi8 for cog wheel 1 produced from forged shape, and steel 41Cr4 for cog wheel 2 produced from rod. In the technological process of cog wheels 1, there are carbureting, volumetric tempering and absolving; however in technological process of cog wheel 2, there are preliminary volumetric tempering as well as absolving and inductive tempering. The differences in kind of operation thermal processing result from different entrance materials to processes and their characteristic.
In their study was indicating that the use of forged shape in realization of presented productive process allows getting more profitable cost results, it means that the process is cheaper. The analysis of functions makes it possible to separate from existing technological, constructional or organizational solutions. It enables to look at the product in a new way what permits to find completely new interesting and original solution and distinguishes it from the traditional methods.
Based on the literature review, it can be concluded that value analysis is one of the most widely used cost reduction techniques. It emphasizes on finding new ways of getting equal or better performance from a product at a lesser cost without affecting its quality function, utility and reliability. Value analysis bring clearly the areas where the cost of product can be decreased by pointing out the unnecessary items or component in which have had once some utility but now redundant therefore has to dispensable, the possibilities of component substitution with reduced cost without affecting the quality of the product and the lastly, the possibilities of overall 25
simplification in design or manufacture of a product. It also provides a process to systematically improve the existing goods and builds value into a product.
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CHAPTER 3
RESEARCH METHODOLOGY
3.0 Introduction
This chapter elaborates the methodology used for this study. According to Emory and Cooper (1991), in order to obtain the research objectives stated, research design is used to plan the overall programme and structure of the problem under investigation thus empirical evidence can be discovered. Thus, the choice of research methodology employed depends on the nature, features and context of research. This research aimed to assess and investigate the application of VA and how this rolls out in practice within manufacturing context, awareness and understanding of VA and obstacle in implementing VA. Therefore, a case-study and semi-structure interview was employed.
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3.1 Overview of the Methodology
In this study, qualitative approach is chosen to carry out the research problem and reach the purpose of this thesis. Qualitative research has been described by Creswell (1998), as being exploratory and attitudinal seeking to the research explain, to understand, to explore and to evaluate opinion or perception. Qualitative research is intended to penetrate to the deeper significance that the subject of the research ascribes to the topic being researched which involves an interpretive, naturalistic approach to the subject and gives priority to what data contribute to important research questions or existing information.
Primary Data Case-study and semi structured interviews was employed. These are an appropriate approach for this study. Case study will provide rich raw material for advancing theoretical ideas and provide insight at all stages of the theory building process. Semi structured interview will extensively able to explore on the actual scenario and latest progress that occurs in the industry (Kotabe, Parente and Murray, 2007; Enkel and Gassman, 2010).
Secondary data Secondary data collected include company annual reports, progress reports, press releases, electronics websites and research publications. Basically, the secondary data were used to enhance or sometimes to support primary findings.
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3.2 Data Collection Instruments
The data collection effort for this study was extensive and a wide variety of data was collected.
a) Case Study
A case study is a research method selected for this study which allows for an in-depth examination of events, phenomena, or other observations within real life context for purposes of investigation, theory development and testing or simply as a tool for learning. Researcher Yin (1984) defines the case study method as an empirical inquiry that investigates a contemporary phenomenon within its real life context; when the boundaries between phenomenon and context are not clearly evident and in which multiple source of evidence are used.
Merriam defines a qualitative case study as an intensive, holistic description and analysis of a single instance, phenomenon or social unit. In this study, PREVE's car seat was selected as case study for the study of value analysis amongst other of the car seat of various car produce by PROTON and the present paper is the result of the study undertaken.
The flow of the case study process adapted from (Tellis, 2007) is shown in Figure 3.1
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Figure 3.1: Steps of Case Study
The following are some of data collection techniques employed in case study;
i. I nterview Data
In this study, an interview is chosen in order to collect data because this method is useful for a researcher to focus on a particular topic and gain information from individuals (Hesse- Biber and Leavy, 2005). The goal of interview is to deeply explore the respondents point of view, feelings and perspectives (Douglas, 1985).
A semi-structure interview is open, allowing new ideas to be brought up during the interview as a result of what the interviewee 30
says. Semi structured interviews are employed because are useful for asking a set of questions to guide the conversation. Moreover, semi structured interviews allow interviewees freedom to talk about what is of interest or important to them (Hesse-Biber and Leavy, 2005). This can lead to a new and unexpected direction to develop and explore new topics.
All interviews were solely conducted through in semi structure interviews. Semi-structure interviews were conducted with VCR personnels involved in the VA process. Four VCR personnel were selected. Two interviewees were TRIZ Specialists and another two interviewees were VCR Engineers that are responsible to analyze and evaluate components to improve the material usage, overall design and manufacturing process and also develop benchmarking cost center for all PROTON models and DRB-HICOM subsidiaries.
Arrangements for the interview session were set earlier, to ensure availability of the interviewees. Objective of the interview and questions for interview session were given in advance to interviewees via e-mail. All informants were given the same set of questions, to ensure consistency between interviews.
During the interview, informants were asked to provide their background information which included their qualification, years of experience with the present company, educational background and their job responsibilities. They were also asked to provide information on their involvement and views on VA. This has enhanced the research findings as it has provided a holistic perspective of VA practice that has taken place within the case company, awareness and understanding of VA, challenge and 31
obstacle in implementing VA. In addition, each transcript once completed was sent to respective interviewees for content validation. Interviewees responded on any mistakes, improved and clarified to ensure validity and reliability of the information (Binder, 2008).
Interview data have been cross checked for any conflicting or inconsistent findings by relying upon responses from multiple respondents (Alam, 2005). Interview transcripts were analyzed; direct and indirect answers were determined, and those answers that have similar meaning were grouped together. The extent of the interview data were corroborated with reviewed of documents such as VA report and continual improvement reports.
Data was triangulated to enhance the construct validity of findings (Brewerton and Millward, 2003; Yin, 2003). The flow of the interview process adapted from (Yahaya, 2008) is shown in Figure 3.2
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Figure 3.2: The I nterview Process Flow
ii. Documents and records
The third method of data collection is through analyzing the written documents. Company records and documentation relating to VA were inspected. The documents include reports on VA exercises undertaken and continual improvement procedural rules. The VA documents and reports, current customers and suppliers lists, types of materials and products list are reviewed and analyzed too. Further information on the companys background was also gathered from the internet and professional journal. These documents were collected and analyzed.
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iii. Archival Sources
As part of data collection process, archival source is also collected. Most of information about the companys background was gathered from the companys website. The information included the companys profile, products and facilities, subsidiaries company and product produced.
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CHAPTER 4
FINDINGS AND DISCUSSION
4.0 Introduction
This chapter will present the findings and discussion of the research study undertaken. The findings and discussion is divided into to three parts. Part A shows the case companys background and adoption of VA. Secondly, Part B illustrate the product information and enlighten the six phases of value analysis systematic approach undertaken in the project as per discussed in literature review. Then, Part C will discuss the awareness and knowledge of VA and thus, provided a holistic view of the VA.
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Part A: Companys Background and Adoption of VA
4.1 Perusahaan Otomobil Nasional Berhad (PROTON)
The Malaysian automobile manufacturer, PROTON (Perusahaan Otomobil Nasional Berhad) which is the subject of this case study was established over 25 years ago. One of the main objectives for the creation of PROTON was to propel Malaysia into the 21 st century as an industrialized nation where the acquisition of technological knowledge, know-how expertise would help the country achieve short term and long term goals. From a Government-Linked Company, year 2012 marked a new phase for PROTON as the national car maker now a private entity following its takeover by DRB HICOM Berhad.
The company is located at HICOM Industrial Estate, Shah Alam; one of the big industrial area in Malaysia. The PROTON Shah Alam manufacturing complex includes the original Main Plant and Multi Vehicle Factory (MVF). The plant contains a separate engine machining and assembly building within the complex where cylinder blocks, crankshaft and camshafts for the CamPro engine are machined and subsequently assembled.
The Main Plant's capacity is 150,000 units while the MVF capacity is 50,000 giving a total capacity of 200,000 units per year. Currently, the main plant currently produces the Saga, Waja and Arena models. The Saga is the highest volume model produced, averaging about 6,378 units a month during the period under review, and is expected to increase to 7,300 units a month for the next financial year (Annual Report, 2011). DRB-HICOM Berhad plans to redevelop PROTONs manufacturing complex in Shah Alam into an integrated development that will generate around RM4 billion in gross development value (Business Times, 2013).
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As a global automotive challenger, PROTON conducts research in its centers throughout the world, on new technologies to create cars that are unique in both design and driving performance. To boost the quality of its products, PROTON performs a continuous company-wide quality improvement programme and quality- conscious work culture that assures quality in everything (products and individuals), quality in the way things are done (doing it right the first time), quality in spending, including reducing materials costs, high-quality products (end products must be of the right technology and designed to meet market expectations); and quality services to customers, including after-sales support (Annual Report, 2011).
Throughout the past 25 years of operations, PROTON has garnered many awards and recognition from the automotive industry. The latest on February 2013, the Preve was awarded with 5 stars rating by Australasian New Car Assessment Program (ANCAP) Safety Rating, a historical first for PROTON.
4.1.1 Vehicle Cost Reduction
The Vehicle Cost Reduction was established on 1 st February 2010. The VCR team is a group of fully trained engineers that are responsible for generating and analyzing cost saving ideas to accomplished Process and Operational Excellence (PROPEX) goals. The Process and Operational Excellence (PROPEX) project is already in its one and a half years journey and is gaining momentum.
Eventually, PROPEX will increase PROTONs profit margin without sacrificing customer satisfaction and of course avoid increment of On the Road (OTR) price regardless of material cost increases amongst others (Annual Report, 2011). Many initiatives across PROPEX are now in the implementation mode. One of the initiatives is known as Complexity Management. 37
Besides this, the team also plays an important role to make sure all feasible ideas are implemented. Currently, there are 6 full time PROTON engineers run the whole streamline. The Companys main VCR objectives are to;
Minimize effect of material cost increase to the car price Consider cost improving activities even at designing stage
4.2 Adoption of VA
4.2.1 Reasons and Objectives of VA
The Malaysian automotive industry is perceived as an engine of industrial which provides technological capabilities, generates inter industry linkages and is also seen as a source of national pride (Gabilaia, 2001). Increased global competitive and complexity within Malaysian automotive sector has led the case company to find ways to maximized products, values, processes, projects or services. Due to intense competition and uncertain business environment, have put significant pressure on case company to make sound business decisions. Therefore, it is pertinent to the case company to conduct VA exercise in order to manage cost of parts and components regardless of the degree of competition exist in the market
The main reason why VA was applied within case company in the first place, was to focus on reducing costs of components and parts, followed by it is a useful and efficient method to reduce unnecessary costs as well as it is a value enhancing tool. According to researchers, the application of VA is due to several reasons. These includes promoting image (Cheah and Ting, 2005), fulfilling customer requirements (Prasad, 1998), meeting quality requirements (Chakravathy, 1991; Fong, 1998b; Chin et al., 2005) and becoming competitive (Sharma et.al, 2006). 38
The objectives of conducting VA within the case company are to achieve minimum cost saving target, to reduce cost of material and parts and also to be able compete successfully with other automotive companies. VA as an innovative tool has been applied within the case company due to its relative advantages over other techniques and through VA exercises the case company was able to achieve material cost reduction of its parts and components. The resultant of material change, for example in the case of car seat enables company to standardize its material utilization. It seems that VA exercise enable cost management or cost control to be practice effectively within the company.
The cost saving achieved through VA enable the company achieve its Key Performance Index (KPI) and improve cost effectiveness and also promote team cohesiveness among the parties involved in the VA exercises. The case company had always been engaged in planning and undertakings ways and means to reduce costs while improving the quality and safety aspects of its vehicles. Even though cost was reduced however, it did not affect the quality and reliability of products. As pointed out by the Proton Executive Chairman,
We have done the VE exercise to ensure that despite the price reduction, we have enhanced the quality, safety and features of our vehicles.
(News Straits Times, 2013)
The management support and initiatives also have influence to VA adoption. The developing and establishing VA program requires support and commitment from the top management. The adoption of VA within case company was perceived as directive from the top management and decisions pertaining to VA exercises required the approval of management. According to Rogers, majority of organizations has collective and authority innovation decision. According to informants, VA was adopted by company with the aim of meeting quality products requirement stipulated by the customer and consistent with the corporate objectives. VA is believed to be 39
compatible with the other technique adopted by company which includes quality management system.
The case company has a wide range of automotive parts and component, manufacturing facilities and also strong R&D capabilities that contributed to the company securing long term contract from various customers. The wide range of manufactured parts and components in the case company has resulted in a variety of continuous improvement such as VA being implemented. Material diversity and production volume of each parts and components have essentially influenced the adoption of VA. This finding concurs with Cooper (1998) and Bjornenak (1997), the diversity of products within the case company has influenced the adoption of VA.
The implementation of VA can be seen as a convenient and relevant exercise to reduce price of materials, components and parts. Therefore, VA was applied as a routine exercise for cost reduction within the case company. The continuous VA exercises thus, the case company was able to achieve material cost reduction in the manufacturing of its parts and components, target cost saving and enable cost management or cost control to be practice effectively within the company.
The national carmaker's revenue rose 9.03 per cent to RM 8,969.9 million from RM 8,226.9 million a year earlier (Annual Report, 2011). One of the reasons of this achievement is due to the introduction of new models with higher profit margins, stronger sales volume and savings from group-wide cost-reduction initiatives.
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4.2.2 Challenges in VA Implementation
This sub section explains the challenges in VA implementation within the case company. The major hindrance of implementing VA within the case company is lack of commitment and communication for VA workshop. The lack of communication and commitment on the VA project affect the development of a VA. Value Analysis is a team process and requires strong team working and interdisciplinary to face decision making. The group decisional process can be very difficult and unproductive if not managed in the proper way (Nunamaker et. al., 1997).
Value studies rely on the synergy of teams working together to solve a common problem. The individual strengths of every team member are molded into a dynamic team that achieves often startling results. Effective team members typically possess many attributes, including the ability to think outside the box and a willingness to examine solutions beyond the standard ones.
Another impediment to VA is problems solving and idea generated during value analysis process. During the process of idea generation, personal and/or social blocks from this situation can arise. Unfortunately these blocks are often out of awareness, or consciousness. These uncertainties distorted creative and intellectual abilities. Therefore, to remove obstacles to creativity, identifying the hurdles was needed on the creative process. The application of VA could cause delays and result in more time needed for completion.
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Part B: Product Information and Implementation of VA
4.3 PROTON PREVE's car seat
Amongst the car seat of various car produce by PROTON, PREVE's car seat was selected for the value analysis study and the present paper is the result of the study undertaken. Car seats are an essential part of the driving compartment in a vehicle. The seat is the car subsystem most important in determining the quality of the life spent travailing in a car. The standard car seat is designed to support thigh, the buttocks, lower and upper back and head support. Most of vehicles have three main parts; the seat back, seat base and the headrest. These components are usually constructed from foam to provide comfort to the rider. As mentioned by Na et al. (2005), drivers comfort was as important as the functional and aesthetic design of automobiles since consumers are more and more concerned about safety and comfortable driving. Nowadays, with drivers spending more time in their car on longer commutes, they expect a comfortable ride (Matthew, 2010).
There are several car seat parts that make up a car seat. These include rails, latches, seat, frames, spring and seat covers. Each part is assembled individually with special tools and equipment to create an entire car seat. The sectional of the car seat presented at Figure 4.1. The present specification of this part and its material used are costlier than the average industry cost. Therefore, a need was felt to improve the cost of the product without affecting the quality which is possibly only through value analysis study. Value of this product can be increased by maintaining its function and reducing its cost by changing the alternatives material.
In the global automotive seating market, suppliers must offer seats that are more comfortable, durable, safer and also lighter and cheaper. These market drivers have led manufacturers to use alternative and advanced materials in designing seats.
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Figure 4.1: The sectional of the car seat
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4.4 Implementation of VA
The job plan provides the framework undertaking VA in a planned and systematic manner. Normally, the job plan is organized by a value team leader. The value analysis systematic approach followed in this car seat project comprises a six phases job plan as per discussed in literature review. The process of implementation of value analysis is discussed as follows;
i. I nformation Phase
The purpose of this phase is to gain an understanding of the project being studied and to obtain all essential facts relating to the project. During the this phase, the VA team made familiar with the present state of the car seat and gains as much information as possible about the design, background, constraint and projected costs of the project. The following items are generally prepared prior to the VA workshop;
a. Technical drawing b. Technical specifications c. Bill of materials d. Number of components/parts list
All team members participated in a functional analysis of the project as a whole. The VA team performs functional analysis of parts or component to determine the true needs of the project and identify the cost areas. The area of high cost and low are identified. The criteria for the selection of parts and components for VA exercises depends on the most contribution to cost saving. Part or component that contributed to most cost saving would then be selected.
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The explode view of car seat for the value analysis is given at Figure 4.2. It represents the various components of the car seat.
Figure 4.2: The explode view of car seat
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ii. Functional Phase
Once the team selects the project and gathers all the relevant data and information concerning car seat, the next step would be to identify and list all the functions that are performed by the product. These functions therefore make the car seat work effectively or contribute to the salability of the product. Function can be defined, as the use demanded of a part of a product and the esteem value that it provides. Functional analysis outlines the basic function of a product using a verb and a noun. There are two types of functions; basic and secondary function within the scope of a study item.
i. Basic function is the main reason for the existence of the product and if it is eliminated, the product cannot serve the need of the user. Basic function will not disappear even in a different design approach.
ii. Secondary functions or sometimes called as support functions play only enabling role; merely to make the basic function achievable. Secondary functions are considered to make no contribution to worth but add directly to the cost. Consequently, value improvement efforts aim at minimizing the number of secondary in the project and hence the necessity of identifying the secondary functions.
While classifying the functions into basic or secondary, it is important to look for the basic functions of the whole project rather than the basic function of individual part since the basic function. This may seem trivial at first and almost necessary but in fact it is a very important since all subsequent actions originate from this step. The effort to probe the functions paves the way for deeper thinking process and a greater creativity that lead to generation of large number of ideas. The defining function of car seat is illustrated in Table 4.1. 46
Table 4.1: Defining Functions
VERB NOUN BASIC SECONDARY Absorb Weight Support Weight Comfort User Aid Cover/Shape Emphasize Appearance Comfort User Repel Water Prevent Tire Support Weight Hold Safety Lamba Locate Head restraint Locate Lean restraint knob Support Weight Locate Buckle Comfort User Hold Spring Hold Foam Absorb Weight Comfort User 4 Cushion Frame 5 Cushion Spring 1 Foam 2 Upholstrey (Cover) 3 Back Frame NO. PARTS FUNCTION RESTRICTIONS (SPEC.) FUNCTION CLASSIFICATION REMARKS 47
VERB NOUN BASIC SECONDARY Comfort User Move Position Change Position Control Angle Secure Position Secure Position Move Position Change Position Comfort User Secure Position Move Position Change Position Comfort User Support Head restraint Secure Position Comfort User Protect User Comfort User Attract User Comfort User Minimize Position Maximize Position Secure Position 12 Wire Frame Aid Upholstrey REMARKS 6 Reclainer Level 7 High Adjuster NO. PARTS FUNCTION RESTRICTIONS (SPEC.) FUNCTION CLASSIFICATION 11 Slider Bar (Adjust backward and forward) 8 Plastic Lumbar 9 Head Restraint Knob 10 Head Restraint 48
In order to establish inter-relationship of the function and the true light of the project, the preparation of Function Analysis System Techniques diagram was taken up next. The FAST (Functional Analysis System Technique) diagram as described by Kaufman has been used to map and organize the functional context of the project.
FAST is a powerful analysis process to analyze the functions and reduce the cost of physical components, assemblies, hardware products and construction projects. Function analysis techniques are used in defining, analyzing and understanding the functions of car seat, how the functions relate to one another and which required attention if the value of car seat is to be improved.
The VA teams has developed the FAST diagram starting from the highest order function of the components which is crucial as it support its output i.e. support weight. Indeed, the functions makes sure that car seat are comfortable, has the right adjustment possibilities, safety and etc. The Figure 4.3 illustrates the FAST diagram of car seat.
The FAST diagram begins with the root function support weight. The exercised was started by placing the basic function; allocate bottom space, allocate back space and align user at the left hand side. Then the supporting functions which are assure convenience, assure dependability, satisfy user and attract user are placed below and questioning how and locating and placing the correct answer or function next to it. Then why question was asked to check the function at the left hand side.
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Figure 4.3: FAST Diagram (Source: Perusahaan Otomobil Nasional Berhad) 50
This questioning of how and why had led to the team members to a lot of discussion and debate resulting in redefining of some of the functions. The team was decided to focus on functions related to the critical path of assure dependability and satisfy user.
All the functions that having relationship with the function assures dependability and satisfy user have been carefully detailed. The important redefining was head restraint and back protector for the functions of assures dependability and satisfy user that will triggering generation of creative ideas in the creative phase. The debate and underlying thinking process in the preparation of the FAST diagram were of enormous help for the success of the project. The costs for all functions were allocated from the data developed. The function cost analysis is given at Table 4.2.
The function costing or analysis questions every cent being spent for the correct function it is designed to serve. The target cost for the all functions were stated so that allowable amount of cost incurred on a part or components still earn the required profit from that product. Target costing is a disciplined process for determining and achieving a full- stream cost at which a proposed product with specified functionality, performance, and quality must be produced in order to generate the desired profitability at the products anticipated selling price over a specified period of time in the future (Clifton, Bird, Albano and Townsend, 2004).
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The percentage weightage figures also are used in setting the goals for the alternatives to be generated for the selected functions. The functions selected on the basis of high cost (C- F) for taking to the next creation phase are i) Protect Component and ii) Comfort User.
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Table 4.2: Functional Cost Analysis
FUNC. NO. FUNCTION FIELD PERCENTAGE WEIGHTAGE CURRENT COST [C] TARGET% TARGET COST [F] C-F PRIORITY 1 Allocate bottom space 3% 15.00 8.00 7.00 2 Allocate back space 18.00 10.00 8.00 3 Align user 1% 20.00 15.00 5.00 4 Assure convenience 2% 55.00 20% 36.00 19.00 5 Assure dependability 18.00 13.00 5.00 6 Attract user 18.00 13.00 5.00 7 Satisy User 30% 65.00 35% 35.00 30.00 8 Protect component 40% 80.00 35% 43.00 37.00 9 Strengthen component 5% 28.00 18.00 10.00 10 Comfort user 3% 10.00 8.00 2.00 11 Repeal water 2.5% 14.00 9.00 5.00 12 Transmit warning signal 2.5% 14.00 9.00 5.00 13 Protect user 1% 13.00 7.00 6.00 14 Enhance appearance 20.00 10.00 10.00 15 Absorb weight 23.00 13.00 10.00 16 Control angle 24.00 13.00 11.00 17 Provide high adjustment 18.00 12.00 6.00 18 Provide slider forward/backward 9% 22.00 10% 12.00 10.00 19 Detect force 25.00 16.00 9.00 RM500.00 RM300.00 RM200.00 FUNCTIONAL COST ANALYSIS FRONT SEAT ASSEMBLY RH 53
iii. Creative Phase
The purpose of this phase is to produce large number of ideas for accomplishing the functions under consideration. The team uses a group interaction process to process to identify alternative ideas for accomplishing the function of component or sub component of car seat. This effort begins as soon as enough information has been gathered, reviewed and understood.
There are several formal idea stimulation exercises that may be used during this phase of VA study. The VA team identified a list of alternatives through brainstorming process in order to find new suitable solutions. All rules of brainstorming are allowed, and criticism needs to be avoided as it could cease the flow of ideas. Simply list down all ideas, not regarding whether they sound apparently ridiculous. The greater number of ideas conceived, the more likely that among them will be something that may eventually lead to better value. The idea generation for head restraint and back protector are represented in Table 4.3a and Table 4.3b
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Table 4.3a: Idea Generation Head Restraint
PRODUCT : Driver Seat FUNCTION NO : F4 FUNCTION REQUIRING IDEAS : Verb Easy Noun Adjustment CURRENT CONDITION : Toggle Bar/Plastic Lever NO. IDEA Economy Technical Cost Reduction 1 Reduce size 2 Reduce diameter 3 Change shape 4 Change material 5 Change coating process 6 Reduce thickness 7 One-side adjustment 8 Electric adjustment 9 Reduce rivet quantity 10 Change rivets to snap fit 11 Eliminate paint process 12 Commonize lever 13 Clip type for seat mounting 14 Combine function of reclaining, height adjuster and sliding
15 Push button 16 Railing to fabricate directly to or platform (Reduce parts/cost/process)
17 Commonize grommet to other model 18 Commonize headrest - head rest guide 19 Head rest guide - half chrome (visible area)
20 Change material within specs - head rest guide
IDEA SHEET IDEA GENERATION/EVALUATION OF IDEAS 55
Table 4.3b: Idea Generation Back Protector
NO. IDEA Economy Technical Cost Reduction 21 Head rest foam - solid to hollow (reduce material)
22 Decrease foam thickness 23 Combine head rest with seat body Symbols: Applicable Applicable but certain condition Not applicable PRODUCT : Driver Seat FUNCTION NO : F7 FUNCTION REQUIRING IDEAS : Verb Protect Noun Components CURRENT CONDITION : Back Protector/Anchor Cover NO. IDEA Economy Technical Cost Reduction 1 Reduce size of back protector 2 Deletion anchor cover - replace by rubber to cover sharp edge
Applicable Applicable but certain condition Not Applicable Symbols: IDEA SHEET IDEA GENERATION/EVALUATION OF IDEAS 56
iv. Analytical Phase
Here the ideas were refined, combined and screened to remove non workable ones from the list. The shortlisted workable solutions are given below;
Component/Part Alternatives
Back protector Reduce size of back protector
Deletion anchor cover - replace by rubber to cover sharp edge Head rest Reduce diameter Change material Reduce rivet quantity Commonize grommet to other model Commonize headrest - head rest guide Head rest guide - half chrome (visible area) Change material within specs - head rest guide Decrease foam thickness
The selected ideas were further investigate to know their rating as workable solutions. This is to assess the feasibility, technical adequacy, advantages and limitation in detail. This portion of the effort includes developing detailed technical and economic data for the shortlisted ideas, facilitating further detailed evaluation.
v. Evaluation Phase
Starting from the data collected in the Information Phase, the functions devised and organized in the Functional Phase and the alternatives designated in the Creative Phase, the VA team performed a set of evaluations to select the most promising ideas shortlisted during the Analytical Phase. In this phase of the workshop, the VA team judges the ideas developed during the creative phase. 57
The VA team ranks the ideas. Ideas found to be irrelevant or not worthy of additional study are disregarded; those ideas that represent the greatest potential for cost savings and improvements are selected for development.
The criteria were established which each alternative shall meet in order to be considered further. Five criteria were identified and are presented in Table 4.4 below;
Table 4.4: Criteria Definitions Criteria Definitions Cost Lower cost of implementation Function The use of a part of a product and the esteem value that it provides. Quality Ability to meet specific requirement Reliability The ability of component to perform its required functions Safety Conditions for consumers' safety
The criteria were listed with the symbols A, B, C, D and E. The required weightage points were initially allotted each criterion out of maximum of 100 point as described in Table 4.5 below;
Table 4.5: Allotted Point of Criteria SYMBOL CRI TERIA MAX. POI NTS ALLOTTED POI NTS A Cost 100 70 B Function 100 75 C Quality 100 70 D Reliability 100 65 E Safety 100 80 TOTAL 500 360
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Further steps, the remaining of 140 points from the total of 500 points are distributed equally among 10 comparisons giving each comparison a maximum of 14 points for further analysis. The weight sharing of 14 pints for the comparisons of major, medium, minor and equal classifications was done below;
Table 4.6: Comparisons of Classifications
Major Difference 13 1 Medium Difference 11 3 Minor Difference 9 5 Equal 7 7
Next, the criteria were compared in pairs, and weightage points were allotted as shown in the matrix overleaf;
Table 4.7: Matrix Evaluation Process
B C D E TOTAL A A 7 A 7 A 9 A 11 34
B 7 C 7 D 5 E 3
B B 9 B 11 B 9 36
C 5 C 3 C 5
C C 9 C 11 32
D 5 E 3
D D 13 26
E 1
E 12
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The tabulation of final scoring is as shown below;
Table 4.8a: Percentage Weightage
ALLOTED POI NTS FROM MATRI X TOTAL % WEI GHTAGE 70 34 104 21 75 36 111 22 70 32 102 20 65 26 91 18 80 12 92 19 360 140 500 100
After the weightages for the criteria have been calculated, the ideas for each function can be evaluated by allotting the value point of each idea. Each idea was considered and evaluated against all the criteria. The grading used for evaluation of the ideas is as below:
Table 4.8b: Grading for Evaluation
Grading for Evaluation Excellent 5 Very Good 4 Good 3 Satisfactory 2 Poor 1
After completion of evaluation process for all ideas, the evaluation results thus arrived at Table 4.9a and Table 4.9b
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Table 4.9a: Criteria Weighing Process Head Restraint
head rest guide ALTERNATIVES CRITERIA TOTAL WEIGHTAGES RANK HEAD REST NO. 341 8 Decrease foam thickness 397 5 Commonize head rest - head rest guide 300 6 Head rest guide - half chrome (visible area) 280 3 Reduce rivet quantity 258 4 Commonize grommet to other model 282 1 Reduce diameter 61
Table 4.9b: Criteria Weighing Process Back Protector
Cost Function Quality Reliability Safety 21 22 20 18 19 3 3 4 3 4 63 66 80 54 76 339 4 5 4 3 5 84 110 80 54 95 423 RANK BACK PROTECTOR NO. ALTERNATIVES CRITERIA TOTAL WEIGHTAGES 1 Reduce size of back protector 2 Deletion anchor cover - replace by rubber to cover sharp edge 62
vi. Recommendation
The purpose of this phase is to prepare and submit the planned proposals with advantages and limitations to the management and also to review the proposals if any reason, these are unacceptable to the management. The cost estimates were worked out with sufficient accuracy to support the validity of the saving potential calculations. The proposals with the expected savings were also indicated.
COST SUMMARY
Present Cost Proposed I dea for I mplementation Potential Saving % Back Protector RM 65.00 Replace leather to fabric 35%
COST SUMMARY
Present Cost
Proposed I dea for I mplementation Potential Saving % Head Rest RM 80.00 Change leather to fabric 35% Reduce foam
The final implementation plans recommended and presented to the top management are as below presented in Figures 4.4 and 4.5 63
Figure 4.4: Proposed Idea for Implementation Back Protector 64
Figure 4.5: Proposed Idea for Implementation Head Restraint 65
4.6 Conclusion
In the case study discussed above, the case company has used the concept of Value Analysis to analysis the car seat and with the critical evaluation of it the case company was able to increase the value of the product by substituting another material in place of the one that is currently in use. The various advantages have been observed in terms of cost reduction.
In future, the alteration of design of the product and integrate this technique with various other prevailing industrial engineering tools will bring down the cost by substantial margin and thereby increasing the value of the product. The tools like QFD, TRIZ and VE can be integrated with VA which can be further enhance the value of product. 66
Part C: VA Awareness and Knowledge
4.7 Awareness and Knowledge of VA
This sub-section aims to discover the awareness and knowledge of VA within the case company. The awareness and knowledge about VA general concepts and it implementation within the case company were focused only on VCR. Semi- structures interviews were conducted with VCR personnel. Four interviewees were selected. Two interviewees were TRIZ Specialists and another two interviewees were VCR Engineers. The informants were asked to provide years of experience, job responsibility and information on their involvement and views on VA.
Based on interview conducted, the informants had an understanding of the concepts and technique of VA and were generally aware and had sufficient knowledge on VA and its practice within their organizations. VA culture includes awareness and sufficient knowledge of existing methods and tools besides an awareness of managerial and environmental conditions, which facilitate VA to thrive within an organization (Aliza, 2010). This result revealed that VA culture was present within the case company and most of the VCR staffs were aware and possessed sufficient knowledge of VA.
The informants were required to indicate whether they had attended seminars, courses or training pertaining to VA. They were also required to provide information the types of VA training that they had attended. Seminars or conference, courses and on-job training were the more common type of VA training provided to enhance employees knowledge on VA application in this case company. According to informants, more than 50 current technical and management staff have received value analysis training. Therefore, it can be concluded that most of VA training activities were obtained and developed within the case company. These types of VA training 67
are the most important element of a comprehensive VA program. The continual emphasis placed on training has put VA reach at its full potential.
According to informants, VA trainings have enabled a VA culture to be nurtured and developed within the case company. Hence, this had developed awareness and built competence amongst the employees. Thus, this result further confirms a relatively high level of awareness and sufficient knowledge of informants on VA and its application. This finding concurs with Fredrickson et al. (2004) and Liu (2003) that public media which include trainings, seminars and books have influenced the adoption of VA within the company.
Overall, most of the VCR staffs were aware and possessed sufficient knowledge of VA, as evidence showed that they had attended seminars or courses and training pertaining to VA. The appropriate knowledge of VA concept and tools, and coupled with the awareness of the managerial and environmental conditions suitable for VA makes possible a common way of thinking towards facilitating VA within the case company.
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CHAPTER 5
CONCLUSIONS AND RECOMMENDATIONS
This chapter will provide the general conclusions from research study. It concludes the findings of the concepts and techniques of value analysis to effectively control cost as well as the future work of this study.
5.0 Conclusion
This study explores the concepts and techniques of value analysis applied and how this rolls out in practice within the case company. The adoption of VA as an innovation tool and the influential and the impeding factors are also identified within the case company. In this study, qualitative approach is chosen to carry out the research problem and reach the purpose of this thesis. Case-study and semi structured interviews was employed. These are an appropriate approach for this study.
Value analysis is one of the most widely used cost reduction techniques. It emphasizes on finding new ways of getting equal or better performance from a product at a lesser cost without affecting its quality function, utility and reliability. 69
Value analysis bring clearly the areas where the cost of product of the case company can be decreased by pointing out the unnecessary items or component in which have had once some utility but now redundant therefore has to dispensable, the possibilities of component substitution with reduced cost without affecting the quality of the product and the lastly, the possibilities of overall simplification in design or manufacture of a product.
VA was applied as a routine exercise for cost reduction within the case company. To perform the implementation, the case company followed the approach as described in literature review that deals with six phases. The Job Plan outlines sequential phases to be followed and the implementation of VA within case company was in structured and systematic manner. The case company has fully exploit the potential of maximum application of VA and enjoyed considerable amount of cost saving. This finding concurs with Omigbodun and Yoshikawa, VA should be applied in a structured and systematic manner using proper tools which can be realize the optimum benefit of VA. The cost saving achieved through VA enable the company achieve its Key Performance Index (KPI) and improve cost effectiveness.
The main reasons of VA was applied within case company in the first place, was to focus on reducing costs of components and parts, and followed by it is a useful and efficient method to reduce unnecessary costs as well as it is a value enhancing tool. The objectives of adopting of VA within case company are to achieve minimum cost saving target, to reduce cost of material and parts and also to be able compete successfully with other automotive companies. VA was used as a cost control or cost reduction within the case company by focusing of VA exercise on material as material cost constitutes a significant of total cost of production of the parts or components.
The impediment factors to VA adoption are lack of communication and commitment and problem solving and idea generated during VA workshop. The prime factor of the success or failure of a study is how VA team members conduct 70
themselves in dealing with others. In order to assure success, communication and commitment from people at all levels in an organization must be gained. Their commitment and cooperation must come as part of the creative spirit. During the process of idea generation, personal and/or social blocks from this situation can arise. Therefore, to remove obstacles to creativity, identifying the hurdles was needed on the creative process to avoid application of VA delays.
PREVE's car seat was selected for the value analysis study. The present specification of this part and its material are costlier than the average industry cost. Therefore, a need was felt to improve the cost of the product without affecting the quality which is possibly only through value analysis study. The case company has used the concept of Value Analysis to analyze the car seat and with the critical evaluation of it; the case company was able to increase the value of the product by substituting another material in place of the one that is currently in use. The value analysis systematic approach followed in this car seat project comprises a six phases job plan as per discussed in literature review. The resultant of material change enables company to standardize its material utilization. It seems that VA exercise enable cost management or cost control to be practice effectively within the company.
The finding revealed that VA culture was present within the case company and the majorities of the VCR staffs were aware and possessed sufficient knowledge of VA. Seminars or conference, courses and on-job training were the more common type of VA training provided to enhance employees knowledge on VA application in the company. The continual emphasis placed on training has put VA reach at its full potential and enabled a VA culture to be nurtured and developed within the case company
Overall, the results provided evidence that VA was used as a cost control or cost reduction within the case company and the implementation of VA within case company was in structured and systematic manner consistent with the job plan 71
approach. The management support and initiatives, product diversities, competition and customer requirement were the influential factors in VA adoption. The impeding factors to VA adoption are lack of commitment and communication and problem solving and idea generated during VA workshop. Parties involvements in VA were aware and possessed sufficient knowledge of VA. They have proper training and courses on the fundamentals of VA tools.
5.2 Recommendations and Future Research
Due to time limitations and constraints in getting full cooperation from the case company, this study only concludes the findings of case study done in a short time frame. The data were only focused on VCR and should have been lengthened, so as to obtain a much reliable data. The awareness and knowledge of VA should be investigated to the wider population. The findings are only associated with VCR.
Besides, the case company refused to share their internal data as they want to comply with their companys policy of not giving outsiders any information concerning the company. The situations occurs some privately-owned companies, especially those that are highly profitable and operates internationally, refused to share their internal data as they want to comply with their companys policy of not giving outsiders any information concerning the company, especially their business strategies and the way they perform their work. This is due to the reason that, a highly successful company will always ensure that their core competencies are not copied by their competitors.
Future research on concepts and technique of value analysis to effectively control cost should also involve the study on VA with other automobile manufacturing and others sector, comparing VA practices in order to determine the 72
similarities and dissimilarities and the influential factors adoption of VA and the degree of awareness and knowledge between two sectors.
Little is known about TRIZ (Theory of the Solution of Inventive Problems) thus, further research in comparing VA and TRIZ practices should be examined. TRIZ is powerful methodologies based on empirical data that can be providing solution concepts for a wide range of technical and non-technical problems (Altshuller Institute, 2010). Both VA and TRIZ have relative strengths and weaknesses. The combination of VA with TRIZ would offer an opportunity to identify higher value solutions more quickly than either technique alone as TRIZ can generate a large set of potential solutions that are highly innovative.
Design for Assembly (DFA) is a methodology which improves the manufacturability of assembled products and primarily intended to reduce the assembly costs of a product by simplifying the product design. It does so by first, reducing the number of parts in the product design, and then by ensuring that remaining parts are easily assembled. DFA constitute the approach of simplification which results in cost reduction and productivity improvement while VA constitutes approach of cost reduction. Thus, further research for integration of DFA and VA should be examined as both techniques will bring down the cost and thereby increasing the value of the product.
As we all know, the world is dynamic and of course, there is uncertainty of trends that will happen in the near future. Due to intense competition and uncertain business environment, have put significant pressure on companies to make sound business decisions. Thus, future study is needed to examine if there is a new ways of reduction cost or engineering tools to effectively control cost in order to fore run the global competition. 73
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APPENDIX
INTERVIEW QUESTIONS 1. How many years of experience do you have in VA? 2. In your experience, how useful is VA as a tool/methodology 3. What influenced the initial adoption of VA in Proton? 4. What formal goals does Proton define for VA studies? 5. What outputs does Proton expect from VA studies? 6. Are risk issues considered when undertaking VA studies in Proton? 7. Are quality management issues considered when undertaking VA studies in Proton? 8. What types of VA training provided by Proton? 9. Who is being trained in VA? How many of Protons current technical and management staff have received VA training? 10. How would you describe the level of top management support of VA within your organization? 11. What level of cost savings Proton typically able to achieve from a Value Analysis study? 12. What improvement in functionality or quality Proton typically able to achieve from VA study? 13. What aspects of Protons VA do you consider the strongest and weakest? Why? 14. What opportunities and threats exist for your organizations VA program? lxxviii