Define value engineering and analysis. Discuss at least one method of the approach for VE/VA.
Solution: Value Engineering is a systematic method to improve the "Value" of goods and services by using an examination of function. Value, as defined, is the ratio of Function to Cost. Value can therefore be increased by either improving the Function or reducing the cost. It is a primary tenet of Value Engineering that basic functions be preserved and not be reduced as a consequence of pursuing Value improvements. Value Engineering is a body of knowledge as a technique in which the value of a system's outputs is optimized by crafting a mix of performance (Function) and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers. Value Engineering uses rational logic (a unique "how" - "why" questioning technique) and the analysis of Function to identify relationships that increase Value. It is considered a quantitative method similar to the Scientific Method, which focuses on Hypothesis - Conclusion to test relationships, and Operations Research, which uses model building to identify predictive relationships.
VALUE ANALYSIS -- The Job Plan
Value Engineering is often done by systematically following a multi-stage Job Plan. IT IS a 8-step procedure , called the Value Analysis Job Plan. Others have varied the Job Plan to fit their constraints. One modern version has the following eight steps: PREPARATION
INFORMATION
ANALYSIS
CREATION
EVALUATION
DEVELOPMENT
PRESENTATION
FOLLOW-UP
Four basic steps in the VALUE ANALYSIS Job Plan are:
Information gathering - This asks what the requirements are for the object. Function analysis, an important technique in value engineering, is usually done in this initial stage. It tries to determine what functions or performance characteristics are important. It asks questions like; What does the object do? What must it do? What should it do? What could it do? What must it not do?
Alternative generation (Creation) - In this stage value engineers ask; What are the various alternative ways of meeting requirements? What else will perform the desired function?
Evaluation - In this stage all the alternatives are assessed by evaluating how well they meet the required functions and how great will the cost savings be.
Presentation - In the final stage, the best alternative will be chosen and presented to the client for final decision.
Value engineering is an approach to productivity improvement that attempts to increase the value obtained by a customer of a product by offering the same level of functionality at a lower cost.
Value engineering is sometimes used to apply to this process of cost reduction prior to manufacture, while "value analysis" applies the process to products currently being manufactured. Both attempt to eliminate costs that do not contribute to the value and performance of the product (or service, but the approach is more common in manufacturing). Value engineering, thus, critically examines the contribution made to product value by each feature of a design. It then looks to deliver the same contribution at lower cost. Different types of value are recognized by the approach :
Use value relates to the attributes of a product which enable it to perform its function.
Cost value is the total cost of producing the product.
Esteem value is the additional premium price which a product can attract because of its intrinsic attractiveness to purchasers.
Exchange value is the sum of the attributes which enable the product to be exchanged or sold. Although the relative magnitude of these different types of value will vary between products, and perhaps over the life of a product, VE attempts to identify the contribution of each feature to each type of value through systematic analysis and structured creativity enhancing techniques. Value engineering programs are best delivered by multi-skilled teams consisting of designers, purchasing specialists, operations personnel, and financial analysts. Pareto analysis is often used to prioritise those parts of the total design that are most worthy of attention. These are then subject to rigorous scrutiny. The team analyses the function and cost of those elements and tries to find any similar components that could do the same job at lower cost.
Common results are a reduction in the number of components, the use of cheaper materials, or a simplification of the process
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VALUE ENGINEERING CAN BE APPLIED TO ANY MANUFACTURING,
HERE IS AN EXAMPL E OF TRACTOR MANUFACTURING
1.TRACTOR DESIGN
-make the design simple
- easy to use
-reduce COMPLICATED / expensive parts.
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2.TRACTORS RAW MATERIAL / PARTS PROCUREMENT
-establish the demand planning system [ reduce the fluctuations in production]
-establish the inventories of raw materials [ reduce the cost of stock holding]
-establish the economic order quantity [ """"""""""""""""""""""""""""""]
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3. TRACTORS PRODUCTION PLANNING
-establish an effective / efficient production planning system [ cost savings]
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4.TRACTORS PRODUCTION
-establish a lean production [ cost effective]
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5. TRACTORS TOTAL QUALITY ASSURANCE.
-set up quality assurance system to reduce quality problems/ rejections]
[ cost savings ]
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6.TRACTORS FINISHED GOOD INVENTORY
-match the finished stock inventory to market demand / sales requirements]
[ cost saving in stock holding ]
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7.TRACTORS CUSTOMER SERVICE
-provide effective customer order processing/order service/
timely despatch to customers.
[ adds value to customers / reduces distribution cost]
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8.TRACTORS AFTER SALES SERVICE
-offer warranty/ after sales service to customers
[ adds value to the product and increases sales ]
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TRACTORS MANUFACTURER CAN ADD VALUE/ REDUCE COST
BY APPLYING THE VALUE ANALYSIS -JOB PLAN TO EACH
OF THE ABOVE LISTED 8 STAGES OF TRACTORS MANUFACTURING.
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