Application Of Value Analysis

APPLICATION OF VALUE ANALYSIS

Value analysis can be applied universally, i.e., to everything – materials, methods, processes, services, etc., where it is intended to bring about economics. One should naturally start with items where the maximum annual saving can be achieved. This immediately suggests that items whose total annual consumption in Rupees is high should receive top priorities in the application of Value Analysis. In the same manner, scarce materials, imported materials, or those difficult to obtain should also receive the attention of the value analyst. Bearing this in mind, Value Analysis can be systematically applied to categories of items, such as those listed below in order to bring about substantial cost reduction.

1. Capital goods – plant, equipment, machinery, tools and appliances;

2. Raw and semi-processed material, including fuel;

3. Sub-contracted parts, components, sub-assemblies, etc;

4. Purchased parts, components, sub-assemblies, etc.,

5. Maintenance, repairs, and operational items;

6. Finishing items such as paints, oils, varnishes, etc.

7. Packing materials and packaging;

8. Printing and Stationery items;

9. Miscellaneous items of regular consumptions;

10. Power, water supply, compressed air, steam and other utilities (services) and

11. Materials handling and transportation costs.

As mentioned earlier, items where the saving can be substantial should obviously be taken up first. Also, items which are imported, or difficult to obtain, and monopoly items, should receive high priority.

However, even if no economy can be effected immediately by Value Analysis on any particular item, then usefulness of the technique should not be forgotten altogether. The item should be taken up again for value analysis after six months or a year, the period being dictated by the findings of the investigation.

New ideas may come to your mind at some other time. Also, it should be noted that the conditions in the market keep on changing fast, and new materials,  new suppliers, and new processes come into existence rapidly as a result of phenomenal technological progress taking place at present.

A frequent and systematic review of the items already value analyzed, with advantage, may result in further economies.