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Unit 14

Value Engineering

Value Engineering/ Value Analysis

Value Engineering (VE) or value analysis is a methodology by which we try to minimize the cost and improve the revenue of a product or an operation. It was developed by General Electric Corporations (GEC). Value engineering has gained popularity due to its potential for gaining high Returns on Investment (ROI). The different aspects of value engineering can be encapsulated into a sequence of steps known as a Job Plan. Value engineering in any organizations helps to identify:

The problem or situation that needs to be changed/improved


All that is good about the existing situation The improvements required in the situation

The functions to be performed


The ways of performing each function The best ways among the selected functions
The steps to be followed to implement the function
2

The person who executes the function, It should be remembered that we are not seeking

Relevance of VE in Modern Manufacturing

Modern Manufacturing is seen with the management approach which consists of adopting techniques like TQM, JIT, Kanban, concurrent engineering, lean manufacturing, TPM, group technology, cellular manufacturing, and others. Four basic types of value Use value The properties or characteristics of an item or service that enables performance to satisfy the customer. Esteem value The properties or characteristics of an item or service that makes it desirable to possess. Exchange value - The properties or characteristics of an item or service that enables its exchange with another item. Cost value The total of materials, labour, and other costs that make up a product or service.

Process of Value Analysis


1. Data gathering
2. Analysis and valuation of functions 3. Idea generation and evaluation of substitutes

4. Implementation and regulation

VE Approaches and Aim

Now-a-days, the principles of value engineering starts at the product concept and design and is carried down the value chain.

The aim of value engineering is to effect economies by investigating every opportunity and discovering new materials and methods to achieve high quality performance.
The aims of value engineering can be listed as:

Product simplification
Better and less costly materials Improved product design

High efficiency in the processes


Economy in all activities Pre-sourcing: The process of involving suppliers from the design stage is called presourcing.

Supplier evaluation and certification

Material procurement procedures


Inspection and issue procedures Production planning and control systems

Quality control methods


Process of design and evaluation Management Information Systems

Labour relations and compensation systems


Culture of productivity and quality

Providing Value to the Customers


Promote employee involvement in value work
Act on customers voice Enhance product reliability

Ensure efficient procurement practices for better value


Streamline business processes

Benefits
Cost reduction
Overall cost consciousness A culture of effecting savings across organization

Streamlining of administration and creation of transparency in all dealings even with outsiders
Development of reliable suppliers

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