Types Of Value Analysis

Types Of Value Analysis

VA for Existing Products

One of the best approaches to VA is simply to select an existing product that is sold in relatively large volumes. This product, or product family, will tend to have a great deal of the basic information, and documented history, which can be used quickly as opposed to a newly introduced product where such a history is not available. An existing product unites all the different managers in a business, each with an opinion and list of complaints concerning the ability to convert the design into a ‘saleable’ product. Therefore any team that is created for the purpose of VA will understand their own problems but not necessarily the cause of  these problems across the entire business. These opinions regarding poor performance (and documented evidence of failures) are vital to the discussions and understanding of how the product attracts costs as it is converted from a drawing to a finished product. These discussions therefore allow learning to take place and allow all managers to understand the limitations to the scope of product redesign and re-engineering activities. These issues include:

• The inability to change existing product designs due to the need to redesign tooling and the expense of such an initiative.

• The project team may have a finite duration before the project is concluded and therefore time will dictate what can be achieved.

• The high levels of purchased costs may imply a need to engage with suppliers in the VA process. This initiative will be constrained by a number of issues such as the timing of the project, the availability of resources from the supplier, the location of the suppliers, and other constraints.

VA for New Products – Value Engineering

For new products, the team will need to modify the VA approach and will operate in an environment that is less certain and has poor levels of available information upon which to make decisions. In this case, the analysis and systematic process of review for new products is known as Value Engineering (VE). The VE approach is similar to that of Value Analysis but requires a much greater level of investment by the organization in terms of the skilled, experienced and proficient human resources seconded to the group. For more detailed information on Value Engineering as opposed to Value Analysis please refer to the  references listed at the end of this report.

VA for Product Families- Horizontal Deployment.

The final form of VA is results when there is scope for the ‘horizontal deployment’ of the results of a VA exercise with a single product or family of products. Under conditions where the value analysis project team finds commonalties with many products manufactured by the company, then it is possible to extend the benefits to all these other products concurrently. In this manner, all affected products can be changed quickly to bring major commercial benefits and to introduce the improvement on a ‘factory-wide basis’. This is particularly the case when supplying companies offer improvements that affect all the products to  which their materials or parts are used. The horizontal deployment activity has many advantages both in terms of financial savings and also the relatively short amount of time required to introduce the required changes to the product design.

Competitive VA

VA techniques are not simply the prerogative of the business that designed the product. Instead VA is often used as a competitive weapon and applied to the analysis of competitor products in order to calculate the costs of other company’s products. This is often termed ‘strip down’ but is effectively the reverse value analysis. Here the VA team are applied to understanding the design and conversion costs of a competitor product. The results of the analysis is to understand how competitor products are made, what weaknesses exist, and at what costs of production together with an understanding of what innovations have been incorporated by the competitor company.

It is recommended that the best initial approach, for companies with no real experience of VA, is to select a single product that is currently in production and has a long life ahead. This approach offers the ability to gain experience, to learn as a team, and to test the tools and techniques with a product that has known characteristics and failings. In the short term it is most important to develop the skills of VA, including understanding the right questions to ask, and finally to develop a skeleton but formal process for all VA groups to follow and refine.