Innovation & RnD Management

Value Analysis/Value Engineering & New Product Development

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DR. SRI BRAMANTORO ABDINAGORO

INDUSTRIAL PROJECT MANAGEMENT

DEPARTMENT OF METALLURGY & MATERIALS

FACULTY OF ENGINEERING-UNIVERSITY OF INDONESIA

2018
 Humor in Product Design
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As the customer wanted it. As Marketing

interpreted it.

© 1984-1994 T/Maker Co. © 1984-1994 T/Maker Co.

As Operations made it. As Engineering

designed it.

© 1984-1994 T/Maker Co. © 1984-1994 T/Maker Co.

POM - J. Galván
 What is a Product?
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 Need-satisfying offering of an organization

 Example

P&G
does not sell laundry detergent
P&G sells the benefit of clean clothes
 Customers buy satisfaction, not parts
 May be a good or a service

POM - J. Galván
 Product Strategy Options
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• Product differentiation
• Low cost
• Rapid response

POM - J. Galván
 Generation of New Product Opportunities
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 Economic change
 Sociological and demographic change
 Technological change
 Political/legal change
 Changes in
 market practice
 professional standards

 suppliers and distributors

POM - J. Galván
 Product Components
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Product

Brand Product
Package
(Name) Idea

Physical Quality Service

Features
Good Level (Warranty)

POM - J. Galván
Value Engineering the Forgotten Lean Tool
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 Value Engineering (VE) is an intensive, interdisciplinary

problem solving activity that focuses on improving the value of
the functions that are required to accomplish the goal, or
objective of any product, process, service, or organization.
 VALUE METHODOLOGY
“The systematic application of recognized techniques
which identify the functions of the product or service,
establish the worth of those functions, and provide
the necessary functions to meet the required
performance at the lowest overall cost.”
John M. Bryant, VM Standard, Society of American Value Engineers, Oct. 1998
 Concept of Value
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FUNCTION
VALUE =
COST
 When is VE used
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 Value Engineering is used to determine the best design

alternatives for Projects, Processes, Products, or
Services
 Value Engineering is used to reduce cost on existing
Projects, Processes, Products, or Services.
 Value Engineering is used to improve quality, increase
reliability and availability, and customer satisfaction .
 Value Engineering is also used to improve
organizational performance.
 Value Engineering is a powerful tool used to identify
problems and develop recommended solutions.
 Six Sigma Process
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 A) Identify what the customer wants.
Define the  B) Organize an improvement team.
Problem  C) Create a process flow chart - (SIPOC)

 A) Select “Critical to Quality Characteristic” metrics.

 B) Define Performance Standards.
Measure  C) Validate the measurement System.
 D) Establish baseline performance in terms of Sigma Capability -
Defects per Million Opportunities.

 A) Identify significant characteristics and establish process capability.

Analyze  B) Define performance targets for significant characteristics.
 C) Identify root cause of process variation.

 A) Identify and evaluate potential solutions.

 B) Implement short-term countermeasures.
Improve  C) Implement long term corrective actions.
 D) Identify systemic indirect effects and unintended consequences of
improvement ideas.
 E) Establish operating tolerances for new process.

 A) Verify corrective actions and validate new measurement systems.

Control  B) Determine process capability.
 C) Establish and implement control plan.

End  Move on to next highest priority process.

 Competitive Advantage
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 Quality is defined as “conformance to

specification.”
Function
 Value is defined as:
Cost
 You can’t have one without the other!

 Competitive Advantage = Quality + Value

 Six Step Value Engineering Job Plan
Information Clearly identify the problem(s) to be solved, and
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gather information on the background, functions and
Phase
requirements of the product, process, or system.

Creativity Brainstorm ideas on how to improve the high cost,

Phase broken, or inadequately performed key functions.

Screen ideas for acceptance, score remaining ideas on

Evaluation a scale and group ideas into categories. Develop
Phase design scenarios, and selection criteria. Rate and
rank ideas.

Planning Plan how to sell ideas to management, identify key

Phase recommendations, plan management presentation.

Reporting Give oral presentation to management, or develop

Phase written report.

Get management approval for go-ahead, make

Implementation management plan, make assignments, implement,
Phase follow-up.
 Mapping VE to 6
VA/VE 6s
13 Value-based
 Value-based Define the
decision
Information
Problem decision process
Phase
process
Creativity
Measure  Uses statistical
Phase
 Uses functional approach
approach
Evaluation
Phase
 Follows a very Analyze  Follows a very
structured, structured,
Planning
organized plan Phase
organized plan

Focus on Reporting Improve  Focus on maximum

Phase
maximum possible possible solution based
solution based on on analytical
creativity Implementation optimization
techniques. Phase
Control techniques.

Michael Mladjenovic - Intier Automotive Interiors, Toronto, CA

VE Job Plan with 6s

Michael Mladjenovic - Intier Automotive Interiors, Toronto, CA

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 How and When is Value Engineering Applied?
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How
 Interdisciplinary Team
 Formal Job Plan
 Trained Facilitators
 Function Analysis/FAST
 Documentation
When
 Problem Solving/Decision
Analysis
 Strategic Planning
 New Product Development
 Re-engineering efforts
Customer Oriented FAST Model
Vacuum Cleaner
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HOW WHY

Basic Functions
Receive Air
Move Accelerate Air
Air
Clean Air

Loosen Dirt
Clean Remove Entrain Dirt
Surface Dirt
Convey Dirt

Entrap Dirt
Store
Dirt
Collect Dirt

Supporting Functions Display Directions

Simplify Directions
Furnish Instructions

Clean Exterior

Clean filter
Assure Facilitate Upkeep
Convenience Dispose Dirt

Signal Bag Change

Aid Service

Minimize Storage

Enhance Portability
Assure
Dependability

Satisfy
User
 Potential Savings from VE
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No engineering Document Revision
Change Revision
Re-Test/Re-qualification
Drawings Released Tooling Changes

Net Savings from VE

Total Cost of VE Implementation

VE Implementation
beyond this point
results in a net loss.
Engineering
&Production
Concept Design Release Production
 Why use Value Engineering?
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Save Time
Save Money
Build Teamwork
Improve Quality
Satisfy Customer
VE Task Team/Quality Process Improvement Team
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Core Team
Support
Support

Support Support

Support Support

5 to 8 PARTICIPANTS
OPTIMAL
The Synergistic Effect of Value Analysis/Value
Engineering
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INFORMATION HELD BY
ONE MEMBER ONLY

INFORMATION HELD BY
TWO OR MORE MEMBERS

INFORMATION OR
EXPERIENCE COMMON TO
ALL
 Concepts of Value - Desirable
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Ideal Good Acceptable Passable

Function Function
Value =
Cost
Cost
Concepts of Value - Undesirable
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Undesirable but Passable

(cheapening the product)

Function Function
Value =
Cost
Cost
 Your Homeworks...
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 Looking for examples :

 2 (two) “new” products that you analize with VAVE..

 2 (two) companies ( 1 Indonesia company & 1 International

company) who have R&D function intensively and explain it