Sunday, 27 June 2021

Limitations of VAVE in Indian Domestic Market

Similar to other technique, value engineering has its own limitations. The most common limitations are that the man-made excuses are the blocks in implementing these plans of value engineering. The most common limitations are as follows.

·       Lack of motivation
·       Resistive to change or adopt new techniques
·       Inertia to do something innovative
·       Lack of knowledge and patience
·       Attitude of ‘It will not work in India
·       We are very small or very big industry
·       This has been tried earlier and failed
·       The change is too big
·       Let competitors try before we try
·       Difficulty of teams meeting or team meeting for getting consensus


Sunday, 29 March 2020

Value Maximization Approach in Manufacturing

Value Maximization Approach in Manufacturing

There are several steps to achieve and by doing you can add the value in your product.

[A] Cleanup the Unnecessary Parts from the component

[B] Design the component for optimum factor of safety

[C] Select alternative material for your assembly, in order to maintain the value of the product

[D] Reduce tooling cost by 25 % in resulting sustainable manufacturing cost of the product.

In this way, you can reduce the product cost by 20%. But, it is not like I have written....

Sunday, 2 June 2019

Executive Summary of Project Report

This Project Report presents the basic fundamental of value engineering that can be implemented in any product to optimize its value. A case study of L&T Technology Services is discussed in which the material, design of components is changed according to the value engineering methodology. In the present case study, it is observed that the unnecessary increase in cost is due to the use of expensive material, increase in variety of items and thereby increasing the inventory and so on. Therefore, selected some components and applied value engineering technique for the cost reduction of these components.
Value Engineering is an effective tool in identifying areas where cost reduction can be achieved. In order to effectively do this, various approaches in specific areas of focus are discussed in this report.

L.D. Miles, Design Engineer in G.E.C. USA organized the technique of ‘Value Analysis (VA)’ while attempting to reduce the manufacturing cost of some products. His attempt was to search for unnecessary manufacturing cost and indicate the ways to reduce it without lowering down the performance of product. However in India, Value Engineering (VE) is mostly associated to any alternative design with the intension to cost cutting exercise for a project, which is merely one of the initial intension of the Value Engineering (VE).

This project report outlines the basic frame work of value Engineering and present a case study showing the merits of VAVE. In the report it is observed that the unnecessary increase in cost is due to use of expensive material, complicated design, increase in variety of items and thereby increasing the inventory. Therefore by Value Engineering technique, Design modification for parts and Assembly, use of alternative less expensive material are suggested in this and thereby which cost reduction is achieved.

The major automotive companies have pursued several differentiation strategies in the production of passenger cars. Technology and market changes created potential for Henry Ford to modify the rules of the game by adopting the classic strategy of leadership by cost, based on lower production costs of a standard model sold at low price. Ford dominated the industry quickly at a world level. However, by the end of the 1920s, economic growth, growing familiarity with the automobile and technological changes had created adequate potential for General Motors to change the rules once again, using the strategy of differentiation with a wide range of products and details at a premium price. With the growing increase in competition, in the most recent decades, companies sought to create higher value in their products for customers. Japanese companies like Toyota succeeded in doing so, with products of higher quality at a lower cost. Therefore, Automotive Original Equipment Manufacturers (OEMs) must include projects designed to lower product cost and to enhance the value to the customer as growing competitiveness, leads to customers demanding products with better quality and functionality, without an increase in price (Roy et al., 2004). The performance of a product and a good part of its cost are defined in its development (Dekker and Smidt, 2003) and for that reason, in order to optimize these two parameters, a correct approach of cost management in the PDP is necessary.

This report demonstrates the importance of developing products not only with quality, but also with cost and functionality in conformity with customer values. The various approaches discussed in this project report, helped to carry out a systematic study and re-design of systems and components pertaining have also helped achieve a successful cost reduction for each of the vehicles and the cost reduction numbers achieved against the various products.

Table Of Contents

Acknowledgement                                                                                          Page No.            04
Executive Summary                                                                                                                   05
Table of Contents                                                                                                                       07
1. Introduction of Value Analysis and Value Engineering (VAVE)                                           08
Value Analysis                                                                                                               10
Value Engineering                                                                                                          11
2. Stages and Phases of Value Analysis and Value Engineering (VAVE)                                  28
3. Value Analysis and Value Engineering (VAVE) Methods and Process                                  43
The Value Analysis Method                                                                                           44

Value Analysis Process                                                                                                   45
Merits of the VAVE                                                                                                         48
Limitations of VAVE                                                                                                       50

4. Tools and Techniques in Value Analysis and Value Engineering (VAVE)                              51
5. Illustrations and Case Study of Value Analysis and Value Engineering (VAVE)                    60
Field Case Study by L&T Technology Services On Value Engineering:
Cost Reduction of Vehicle Components                                                                        65       
6. Summary and Conclusion of the Project Study                                                                     77
Bibliographic References                                                                                                           80


Lawrence Miles conceived of Value Analysis/ Engineering (VA/VE) in the 1945 based on the application of function analysis to the component parts of a product. Component cost reduction was an effective and popular way to improve value when direct labour and material cost determined the success of a product. The value analysis/engineering technique supported cost reduction activities by relating the cost of components to their function contributions.

The Value Analysis/Engineering technique was developed after the Second World War in America at General Electric during the late 1940s. Since this time the basic VA/VE approach has evolved and been supplemented with new techniques that have become available and have been integrated with the formal VA/VE process. Today, VA/VE is enjoying a renewed popularity as competitive pressures are forcing companies to re-examine their product ranges in an attempt to offer higher levels of customization without incurring high cost penalties. In parallel, many major corporations are using the VA/VE process with their suppliers to extend the benefits of the approach throughout the supply chain. Businesses, big and small, will therefore benefit from understanding and applying the VA/VE process. It is likely that those companies that do not take the time to develop this capability will face an uncertain future as the lessons and problems of the past are redesigned into the products of the future.

Value analysis/engineering defines a basic function as anything that makes the product work or sells. A function that is defined as "basic" cannot change. Secondary functions, also called supporting functions, described the manner in which the basic function(s) were implemented. Secondary functions could be modified or eliminated to reduce product cost.
As VA/VE progressed to larger and more complex products and systems, emphasis shifted to upstream product development activities where VA can be more effectively applied to a product before it reaches the production phase. However, as products have become more complex and sophisticated, the technique needed to be adapted to the "systems" approach that is involved in many products today. As a result, value analysis evolved into the "Function Analysis System Technique (FAST) which is discussed later.

Value Analysis (VA)

This report provides a management overview of a process known as Value Analysis. Value Analysis (VA) is considered to be a process, as opposed to a simple technique, because it is both an organized approach to improving the profitability of product applications and it utilizes many different techniques in order to achieve this objective. The techniques that support VA activities include common techniques used for all value analysis exercises and some that are appropriate under certain conditions (appropriate for the product under consideration), see also chapter.
The VA approach is almost universal and can be used to analyze existing products or services offered by manufacturing companies and service providers alike.
For new products, the Value Engineering (VE) approach, this applies the same principles and many of the VA techniques to pre-manufacturing stages such as concept development, design and prototyping.

At the very heart of the VA process review is a concern to identify and eliminate product and service features that add no true value to the customer or the product but incur cost to the process of manufacturing or provision of the service. As such, the VA process is used to offer a higher performing product or service to the customer at a minimal cost as opposed to substituting an existing product with an inferior solution. This basic principle, of offering value at the lowest optimal cost of production, is never compromised. It is the principle that guides all actions within the VA process and allows any improvement ideas to be translated into commercial gains for the company and its customers. The VA process is therefore one of the key features of a business that understands and seeks to achieve Total Quality Management (TQM) in all that it does to satisfy customers. For many of the world's leading companies, including names like Hewlett Packard, Sony, Panasonic, Toyota, Nissan, and Ford, the VA process of design review has provided major business returns. The key to realizing these returns is knowledge, of the customer requirements, the costs of the product, and an in-depth knowledge of manufacturing process and the costs associated with failures due to poor or inadequate product design. All these inputs to the VA process are vital if decisions regarding product and process re-design are to yield lower costs and enhanced customer value.

Definition of Value Analysis
Value Analysis can be defined as a process of systematic review that is applied to existing product designs in order to compare the function of the product required by a customer to meet their requirements at the lowest cost consistent with the specified performance and reliability needed. This is a rather complicated definition and it is worth reducing the definition to key points and elements:

1. Value Analysis and Value Engineering is a systematic, formal and organized process of analysis and evaluation. It is not haphazard or informal and it is a management activity that requires planning, control and co-ordination.

2. The analysis concerns the function of a product to meet the demands or application needed by a customer. To meet this functional requirement the review process must include an understanding of the purpose to which the product is used.

3. Understanding the use of a product implies that specifications can be established to assess the level of fit between the product and the value derived by the customer or consumer.

4. To succeed, the formal management process must meet these functional specification and performance criteria consistently in order to give value to the customer.

5. In order to yield a benefit to the company, the formal review process must result in a process of design improvements that serve to lower the production costs of that product whilst maintaining this level of value through function.

Value Engineering (VE)
Value Engineering (VE) is concerned with new products. It is applied during product development. The focus is on reducing costs, improving function or both, by way of teamwork-based product evaluation and analysis. This takes place before any capital is invested in tooling, plant or equipment.
This is very significant, because according to many reports, up to 80% of a product’s costs (throughout the rest of its life-cycle), are locked in at the design development stage. This is understandable when you consider the design of any product determines many factors, such as tooling, plant and equipment, labour and skills, training costs, materials, shipping, installation, maintenance, as well as decommissioning and recycle costs.

Therefore value engineering should be considered a crucial activity late on in the product development process and is certainly a wise commercial investment, with regard to the time it takes. It is strongly recommended you build value engineering into your new product development process, to make it more robust and for sound commercial reasons.

Value Analysis and Value Engineering
VA / VE is an orderly and creative method to increase the value of an item. This item can be a product, a system, a process, a procedure, a plan, a machine, equipment, tool, a service or a method of working.

Value Analysis / Value Engineering is defined as the professionally applied, team based, function - oriented, systematic application of recognized techniques (function analysis) which-
  • Identify the "function of a product, process, project, facility design, system or service,
  •  Establish a monetary value for that function,
  •  Provide the necessary function (defined by the customer to meet his / her requirements).
  • Consistent with the specified performance and reliability needed at the lowest Life cycle cost (cost over the expected life).
  •  And thus Increases customer satisfaction and adds value to the investment.
  • Value analysis involves identifying product function (s) relating to cost and price analyzing the design and construction with an eye for eliminating elements not contributing to function.
  • Some designers think VA undermines good design. If the design was sound the start VA is redundant. Yet designs and technology change.
  • Sound, innovative designs age and become uncompetitive - rivals catch up.
  • Remember car windscreens are today glued into place by robots (adhesive technology).
The following Figure shows the representation of the VA and VE.

Objectives of Value Analysis/Engineering
  • The  VA / VE  objectives  is  to  find  and  improve  on  value  mismatches  in  products,  processes  and  capital  projects.
  • Find  important  functions – define  necessary  versus  un - necessary  functions 
  • Find and improve on low performing functions.
  • Define  and  segregate  the  necessary functions  from  the  unnecessary  functions  and  thereby  creatively  develop  alternative  means  of  accomplishing  the  necessary  functions  at  lower  total (life cycle) cost.
Defining Cost and Value

Any attempt to improve the value of a product must consider two elements, the first concerns the use of the product (known as Use value) and the second source of value comes from ownership (Esteem value). This can be shown as the difference between a luxury car and a basic small car that each has the same engine. From a use point of view both cars conduct the same function – they both offer safe economical travel (Use value) – but the luxury car has a greater esteem value. The difference between a gold-plated ball pen and a disposable pen is another example. However, use value and the price paid for a product are rarely the same, the difference is actually the esteem value, so even though the disposable pen is priced at X the use value may be far less. It is important for all managers to understand the nature of costs in the factory and for any given product. Whilst there is no direct relationship between ‘Cost’ (for the factory) and customer ‘Value’ in use and esteem, this education process is important. A shocking figure, which is often used as a general measure, is that typically 80% of the manufacturing costs of a product will be determined once the design drawing has been released for manufacturing. The costs of production are therefore ‘frozen’ and determined at this point. These costs include the materials used, the technology employed, the time required to manufacture the product and such like. Therefore, the design process creates many constraints for the business and fixes a high degree of the total product cost. It is therefore a process that demands periodic review in order to recover any ‘avoidable’ costs that can be removed throughout the life of the product (by correcting weaknesses or exploiting new processes, materials or methods) and lowering the costs of production whilst maintaining its Use value to the customer. Basically, there are three key costs of a product:

• Cost of the parts purchased (These are costs associated with the supply of parts and materials).
• Cost of direct labour used to convert products.
• Cost of factory overheads that recover the expenses of production.

Although there are three elements of total cost accumulation it is traditionally the case that cost reduction activities have focused on the labour element of a product. Activities such as work-study, incentive payments and automation have compressed labour costs and as a result there is little to be gained, for most companies, in attempting to reduce this further. Instead, comparatively greater gains and opportunities lie in the redesign and review of the products themselves to remove unnecessary materials and overhead costs. This approach to the total costs of a product involves taking a much broader look at the way costs in the factory accumulate and the relationship between costs and value generation. These new sources of costs and evaluations would therefore include such sources as:

• Cost of manufacture
• Cost of assembly
• Cost of poor quality
• Cost of warranty

A detailed understanding of how costs are rapidly accumulated throughout the process of design to the dispatch of the product is key to exploiting the process of VA. All VA activities are aimed at the reduction of avoidable and unnecessary costs, without compromising customer value, and therefore the VA process should target the largest sources of potential cost reduction rather being and indiscriminate or unsystematic process (such as focusing on labour alone). It is therefore preferable to take the holistic approach to understanding costs and losses in the entire system of design and conversion of value in order to determine how to achieve customer service functionality at a minimal cost per unit. The following Pie chart shows the cost reduction approach of the VA and VE.

The Value Equation
Value analysis  is  evaluates  a  product  utility,  esteem  and  market  values,  each  of  which  are  defined  below :

Utility value – how useful /functional the product is seen to be.
Esteem  value – the  value  that  customer / user  gives to product  attributes, not  directly  contributing  to  utility  but  more  relating  to  aesthetic  and  subjective  value.  Esteem issues and functionality should not be overlooked or compromised.
Market  value – what  market  is  prepared  to  pay  for  the  product.
Market value = Utility value + Esteem value   
The Concept of Value
The value of a product will be interpreted in different ways by different customers. Its common characteristic is a high level of performance, capability, emotional appeal, style, etc. relative to its cost. This can also be expressed as maximizing the function of a product relative to its cost:

Value = (Performance + Capability)/Cost = Function/Cost
Value is not a matter of minimizing cost. In some cases the value of a product can be increased by increasing its function (performance or capability) and cost as long as the added function increases more than its added cost. The concept of functional worth can be important. Functional worth is the lowest cost to provide a given function. However, there are less tangible selling functions involved in a product to make it of value to a customer.

How Is Value Analysis Different From Value Engineering?

Traditionally, Value Analysis (VA) is used to describe the application of the techniques to an existing product or services or after the fact.

· Value Engineering (VE) has been used to refer to the design stage or before the fact. Value Engineering (VE) approach is used for new products, and applies the same principles and techniques to pre-manufacturing stages such as concept development, design and prototyping.

· Value Analysis and Value Engineering (VE) is a powerful Change Management and Problem Solving' tool with over a century of worldwide application track record.

· VE is used to create functional breakthroughs by targeting value mismatches during product, process, and project design.

· VA is also a vital tool to deal with post product release problems and process improvement innovation.

· Value Analysis (VA) is considered to be a process, as opposed to a simple technique, because it is both an organized approach to improving the profitability of product applications and it utilizes many different techniques in order to achieve this objective.

· The techniques that support VA activities include 'common' techniques used for all VA exercises and some that are appropriate for the product under consideration.

· A few other names for VA / VE are - Value Management, Value Planning, etc.

· Value Analysis process attacks unnecessary costs and is thus one of the most effective ways to increase an organization's profitability.

· A truly effective value improvement program cannot only reduce costs, but also improve operations and product performance.

· The VA approach can be effectively used to analyze existing products or services offered by manufacturing companies and service providers alike.

· The VA / VE methodology involves function analysis and everything has a function. Therefore the methodology has universal application.·       Value Analysis/Value Engineering can be applied with equal success to any cost generating areas.

Why Use Value Analysis and Value Engineering
In reality, a complex number of reasons exists that necessitate the structured approach of value analysis as a means of logical cost reduction. These reasons can be divided into two key sources, those that lie within the business and secondly those that are stimulated by the market for the product or service. Within the business Design related issues, the major reasons why VA/VE exercises are conducted actually originate from the design process itself and the lack of control systems concerning reviews of product performance once the product has entered the production stage. Some of the problems associated with a lack of proper design review systems are listed below:

·       The designer may not be aware of best practice with which to develop an optimal design. The designer may also be unaware of the cost implications of one design over another due to insufficient information or a poor understanding of new materials and technologies that could be used to make the product. Therefore the review process allows the opportunity to incorporate these new sources of cost reduction. The process also offers vital information feedback to the designer regarding the performance of the design in production.

·       The designer may have produced a drawing that was intended for technology that has been replaced by the company since the product went into full production. The VA/VE process also allows these changes to be incorporated formally.

·       Traditional thinking and customary practice may have led the designer to believe that a particular solution was the best without questioning the line of logic. Instead, the belief that a traditional and proven solution will be adequate for a modern consumer can create products that do not entirely provide the value sought by the customer. The review forces the designer and other professional managers to assess the ‘fit’ between what the customer ‘wants’ and the solution provided by the company.

·       The designer, under time pressure to create designs for immediate production and sale, may be forced to cut corners and pay insufficient attention to the design itself due to the pressure to release a design for production. Therefore insufficient or inadequate analyses may have been undertaken during the planning of the product characteristics and the relative costs of different designs. Therefore the pressure to sell a physical product, and collapse the time from the drawing board to the salesman, can mean that designers are forced to compromise the quality of the design in order to simply meet the commercial pressure to release products to the market. The VA process forces a review of these designs and allows the weaknesses in existing products to be addressed through periodic reviews. It is therefore a routine that allows corrective actions to be taken. Obviously, these problems conspire against the designer, cause frustration for designers and also become sources of discontent for other employees in a business. These frustrations caused by poor design activities, impact on the engineers in the factory who have to try and manufacture the product in a less than optimal way. Production operators also face the problem of continually adjusting the product to meet quality standards and in so doing slow the rate of production and output. Therefore any small error that deviates from the optimal design will create costs in the factory. It is these costs that can be recovered, reduced and managed through the formal process of VA/VE. The VA process is also a means of learning from past mistakes and constantly refining the ability to create ‘right first time’ designs in less time for the business which is a source of competitive advantage. If a product was designed optimally and ‘right first time’, which is actually against the law of probability, then the product would offer the most value in providing the function sought by the customer in the most reliable way and lowest cost. The Value Analysis approach is therefore the means of maintaining the value proposition for the customer through periodic reviews that serve to continuously improve the process of ‘design to marketplace’. It is therefore a key strategic capability for any business that seeks to differentiate its products from the competition. At the very least, the VA process allows a company to correct design weaknesses after the product has entered production and therefore to cease paying for activities that add no value for the customer offer but costs which tend to be passed on to the customer. In essence, VA/VE is used to maintain the fit between the product, low costs, and high perceived customer value.

Further internal reasons for conducting VA/VE exercises include:
·       Products with known problems that from the pilot production stage continue to be produced but require remedial, corrective actions, and engineering change requests.

·       Customer Demands: Most markets require suppliers to offer a range of products and to continuously increase this offering. To avoid an explosion in the number of unique parts associated each new product many companies have introduced standard components, platform strategies and supplier rationalization programs. The ability to design products is seen as key to maintaining the quality, cost and delivery performance of the product. Some customers, especially those in mature markets, need to continuously reduce the costs of products in order to compete against comparatively cheaper imports. The increasing trend, across Europe, for businesses to buy in rather than make all the elements of a product means that new supplier of materials must be educated in the VA/VE process in order to use the specialist skills of the supplier to reduce the costs of supplied materials continuously.
·       Safety and Compliance Requirements for products in the market or being sold within markets that have different safety legislation implies that VA/VE activities must be used to review the compliance of a product with the prevailing legislation and changes to that legislation.

·    The Improvement of Product Margins: VA/E is often used to combat the perpetual and expected price reductions between a supplier and a customer. Therefore as a protective measure many businesses employ VA/VE to reduce costs and to protect their own profit margins.

·       Corrective Action: To redress known problems with existing product designs or to reduce the costs associated with failure (including warranty, complaints and poor quality within the factory and with the customer). In conditions where the market determines the price, any attempt to reduce costs or recover losses through redesign and improvement activities will provide a major return to the business throughout the life of the product. This total lifecycle saving can amount to a large financial saving.

Market induced Reasons
There are many modern competitive trends and pressures that make the VA/VE approach a valuable activity within any business. These pressures include:

Pricing Practice: The traditional approach to setting the price of a product has been to determine the costs of the product and then to add a ‘margin’ to provide the profit (known as ‘cost plus’ pricing). However in the modern competitive environment, the market tends to determine the acceptable price that can be commended for a product. As such, companies with high costs and a relatively fixed market price will command less profit if costs are not managed properly and reduced continuously. The VA process accommodates this need to manage and continuously seek ways of reducing product costs.

The Advent of E-Commerce: The new information technology available to customers means that product purchasing is now a global exercise. Therefore in order to maintain a relationship with an existing customer and to protect this relationship, enhancing the value and lowering the costs of existing products will be vital to competitiveness.

Reducing Complexity: The general trend in European industry is to rationalize the number of suppliers to a business and to reduce the vast number of parts that were traditionally bought and stocked. Therefore, the ability to redesign products to incorporate common parts will lead to financial savings in space and the costs of inventory.

Compliance with Quality Regulations: Most of the quality management systems, such as ISO9000 series, require companies to operate a formal design review process to ensure that the quality of the product can be assured. This is an element of the quality accreditation system that is monitored and audited by external agencies. As such, companies that fail to comply with these procedures will fail to qualify for the quality award and can lose business as a result.

New Technology and Materials: The discovery and invention of new processes and materials means that this form of innovation can be incorporated within existing product designs such that the reliability and quality of the product can be improved whilst simultaneously reducing costs. This market intelligence and the ability to take advantage of innovation for product designs are vital to improving the performance of the product and the factory.

Environmentalism: The growing awareness of environmental issues is reshaping the buying behavior of customers and consumers in Europe. It is effectively redefining the esteem value of a product and can, through legislation, affect what materials can be used in the production of products and therefore environmental pressures serve to redefine the use value through changes in product specifications (for example CFC gases in refrigerators and aerosols). In addition many companies, notably vehicle producers, have begun to direct attention towards reducing the weight (and material content) of purchased parts to meet environmental and efficiency targets for themselves.

Types of Value Analysis and Value Engineering Exercises
There are few exercises of VAVE and discussed below.

Existing Products - Value Analysis
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.

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 Value Analysis (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 is 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.

Keys to Success of VAVE Implementation
There are many keys to the success of a VA program and it is wise to consider these issues before commencing the project, as errors in the project plan are difficult to correct, without causing frustration, once the VA project has started. One of the most important initial steps in developing the VA process is to create a formal team of individuals to conduct the exercise. These individuals must be drawn from different parts of the business that affect the costs associated with design, manufacturing, supply and other relevant functions. In addition, the team must be focused on a product or product family in order to begin the exercise. Further key success factors include:

• Gain approval of senior management to conduct a Value Analysis exercise. Senior management support, endorsement and mandate for the VA project provides legitimacy and importance to the project within the business. This approval process also removes many of the obstacles that can prevent progress from being made by the team.

• Enlist a senior manager as a champion of the project to report back directly to the board of directors and also to act as the program leader.

• Once a program team has been developed it is important to select an operational leader to co-ordinate the efforts, monitor progress and to support the project champion. This leader will remain with the VA team throughout the life of the project and will be the central linking pin between the team and the senior management champion.

• Establish the reporting procedure for the team and the timing of the project. This project plan needs to be formal and displayed as a means of controlling and evaluating achievements against time.

• Present the VA concept and objectives of the team to all the middle and senior managers in the business. Widespread communication of the VA project is important so that other employees, particularly managers (who may not be involved directly with the process) understand the need to support the project either directly by assigning staff or indirectly through the provision of data.

• Maintain a list of those business functions that should receive a regular communication of progress even though they may not be directly involved with the project. This process allows other individuals in the business to be informed about the progress and findings of the group. This form of promotion is important as it maintains a momentum and communicates the findings of the team as widely as possible.

• Provide an office space and co-locate the team members where practical and possible to do so. The ability to locate a VA improvement group in one area of the business is important and assists the communication within the group. A convenient area can also be used to dismantle the product and also the walls of the area can be used to record, on paper charts, the issues that have been discovered by the team (and the associated actions that must be undertaken).

• Select the product for the first study. Ideally the existing product, or family of products, will be one that is established, sells in volume and has a relatively long life expectancy.

• Write down the objectives of the project and the key project review points. Estimate the targets to be achieved by the project. These objectives provide a reference point and framework for the exercise. The objectives also focus attention on the outputs and achievements required by the company.

• Select and inform any personnel who will act in a part time or temporary role during the project. This process is used to schedule the availability of key specialist human resources to support the team throughout the duration of the project.

• Train the team in both the process of VA and also in basic team building activities. It is important that all members understand the nature of the project and its importance. The initial team building exercises are also a good way of understanding the attitude of all members to the project – especially those with reservations or a negative attitude to what can be achieved. As with most team exercises there is a requirement to allow the team to build and bond as a unit. It is often difficult for individuals, drawn from throughout the factory, to understand the language that is used throughout the business and also to understand the ‘design to market’ process when their own role impacts on a small section of this large and complex process.

CHAPTER: 2      

This section briefly describes stages and phases of the VAVE that have been identified by this report. These references may provide useful signposts for companies that are considering VAVE process. The various stages of the VAVE are discussed below.

Stage 1 – Orientation and Information Phase
The Objective of the Information Phase is to complete the value study data package started in the Pre-Study work. If not done during the Pre-Study activities, the project sponsor and designer brief the value study team, providing an opportunity for the team to ask questions based on their data research. If a site visitation was not possible during Pre-Study, .It should be completed during this phase.
The study team agrees to the most appropriate targets for improvement such as value, cost, performance, and schedule factors. These are reviewed with appropriate management, such as the project manager, value study sponsor, and designer, to obtain concurrence. Finally, the scope statement is reviewed for any adjustments due to additional information gathered during the information Phase.

Forming the Value Analysis Team
If it is accepted that costs accumulate from the design office all the way to the customer and that this is not the fault of any individual then the VA process can be used to build a proper and effective system of control. Adopting the ‘company-wide’ perspective for VA activities is therefore critical if real financial and efficiency savings are to be made across the business. It may seem illogical that the best resources are used by the project but a VA program is an investment made by the company to minimize the costs of a product and therefore the project requires the best skills that a company can afford. It is therefore important that the collective members of the VA team must possess the right skills, have access to the relevant information and be capable of working as a team in a thorough and professional manner. The typical representatives involved in a VA team would include:

Designers due to the responsibility they hold for the product itself and their knowledge of design activities and the decisions taken at the early stages of the product lifecycle (specifications, materials selected and the constraints this imposes on other departments and in the business).

Manufacturing engineers and production engineers. These employees have a ‘natural’ requirement to be involved with the VA process as they have a direct impact on the ability to make a product efficiently and cost effectively. These people determine how the product is to be made. Other engineering related personnel could include industrial engineers and production managers who have a responsibility to manage the process and therefore are concerned with the reduction of conversion costs.

Purchasing specialists. These employees have a detailed knowledge of the purchasing requirements that result from a product design and convert these design requirements into material specifications. As such, these employees have an interest in where materials are sourced including what alternatives have been suggested by existing suppliers to the business.

Operational staff, those people who actually make the product or deliver the service represent a vital source of information especially concerning the difficulties and problems associated with manufacturing and assembly. It should be emphasized that teams need to be created as quickly as possible and may need to be trained in general team skills to assist the development of this cross-functional group. As previously mentioned, team-building exercises may be used, external facilitation may be sought and teams may also become co-located to assist the team development process. One of the first activities conducted by the team, as an introduction to the VA process and also to commence team development, is to understand and ‘walk’ the process from product design all the way to product dispatch. This group activity allows every member of the team to understand what actually happened in the process of product conversion, to meet the people involved in the process and to understand their individual problems and general product concerns. For many of the team members this process will be novel and an activity that they have not conducted for some time (in some cases the individual has never followed a product from materials to shipment). At each stage of this tour, the team member concerned with the stage of conversion should provide an overview of the activities in the area but operational questions should be addressed to those employees that are observed working in the area.

An Extended Team Approach
A purely internal VA process is limited in that improvements can only be aimed at the processes within the factory. As companies engage in greater levels of purchasing from suppliers, then the relative percentage of supplied costs to the overall cost of the product rises. This implies the need to enlist the support and participation of suppliers but also to complete the process and involve customers, too. The integration of suppliers has proven to be a major advantage for companies such as Japanese manufacturers who actively seek the involvement of suppliers during the total design process of products such as electronics and automobiles. Indeed, for many Japanese companies, the suppliers are deliberately organized into groups to allow an efficient and effective process of supplier engagement. This group approach allows a much greater level of participation and dynamism to develop with and between suppliers as they work together to solve common problems. The integration of suppliers and customers offers many additional benefits to the VA process teams.

Selecting the Product
Once the size and makeup of the VA team is determined and roles have been established then the next step is to determine which product, or product family, will be the subject of the study. Essentially, VA can be applied to any product however certain commercial attributes will make the VA process more commercially important and potentially profitable to the business. The criteria and attributes that can be applied in the product selection stage include products with:

• Known problems or those that have generated complaints or costly warranty returns.
• Forecast sales volumes that are due to rise, grow or maintain a high level of sales.
• Below average margins.

To understand properly the function of a product the team must experience the product and this stage is important for both team building and creating a common understanding (including a common language) regarding the different components of the product under study. This is the first stage in functional analysis and provides a product overview for the team. It is essential that the team spends time getting to understand the product and how it travels through the factory as this information will provide the skeleton upon which later analyses will build and refine the details of the product functionality and costs. This stage is therefore a ‘gathering’ stage where the team will be expected to collect basic information about the product under study. In this preparation it is beneficial to get the team to collect and display items such as:

A fully assembled product. The finished product is placed on a table and allows the team to study the product that is presented to the customer. It is common to find that, in the process of understanding, the team uses identification labels to highlight (and provide the correct name for) elements of the product. As such the working parts of the product can be identified and used as a reference for the team. To illustrate this process, the identification of key elements of a computer printer may highlight the On\Off switch, indicator lights, power-input socket, paper trays and such like.

Product sub-assemblies. The finished product allows the team a limited amount of product knowledge therefore it is desirable to collect sub-assemblies for analysis. In the case of the computer printer, this may include the inkjet cartridge carrier system, the drive mechanism, the power transformer system, and such like. Once again these items will be displayed and identified with their correct names.

Product Parts mounted on a board. For each sub assembly the team may build an ‘exploded’ bill of materials list and in the same way as before, the product will be dismantled, separated and identified. In the case of the inkjet printer cartridge carrier this may include such items as the printer cartridge holder, retaining clips to hold the cartridges in place, the communications cable, and the printed circuit board control unit.

Examples of raw materials such as polymer plastic, steel sheet, aluminum profile and such like.
Examples of scrap produced at the various stages of the manufacturing process. These items provide valuable insights into the causes of waste and the hidden costs of poor design or poor operation.

Competitor products. These products are ideal and should be displayed for the team to review and compare rival systems with the systems that are used in the focal product. As such, the cartridge system can be compared with the system in the rival product. Ideally, the competitor product would be displayed in the same manner (the final product, subassembly and parts), as the focal product has been prepared.

Obviously, the collection of these support materials is greatly enhanced when the team is colocated in an area where these items can be displayed and examined properly. At several companies visited by the author, the team area has often been located near to the production process and in full display of workers as they pass the area. This allows interest to be maintained and also tends to encourage comments from line workers regarding innovative ideas or problems that they experience with certain sub-assemblies or parts. In addition, it allows meetings with employees to be conducted in a central location and does not create a disturbance to the normal working day of people involved with the VA process. The visible nature of the team and their activities is a good way of promoting the initiative and serves as a good communication device as opposed to locating the team in a distant and secluded part of the building. It is also a central position when conducting senior management reviews as the area represents a visual storyboard of the history of project and its progress.
In addition to the physical product requirements of this initial stage of gathering, it is also worth collecting as much supporting paperwork as possible. Items such as the following are useful documents to have for reference:

The original design brief. This specifies and provides a summary of the product design criteria and allows the historical decisions regarding the product to be seen in context.
Cut away drawings. These forms of diagrammatic and pictorial documents are useful as they can be used to support the physical understanding of the product under review.
Costing information collected from the accounts department is useful as it reveals how the costs are theoretically accumulated from materials, conversion, overhead application and other sources. This is a good reference and benchmark that allows improvement activities to be costed and justified.
Purchase specification including supplier details. This data is provided by the Purchasing Department, it lists the key criteria and specification of materials and parts used in the conversion process.
Manufacturing process schematic. A diagram, routing information or cartoon of the manufacturing process is useful as it allows the team to understand the movement of materials through the factory. The diagram also allows notes to be added to the diagram (often in the form of Post-It notes to identify critical areas, bottlenecks and processes with poor quality yields).

Manufacturing quality loss charts. These operational charts reveal the sources and frequency of losses and additional cost accumulation in the conversion process. These charts may also include the problem-solving charts used by teams in the area to highlight the key causes of failure and the quantification of the number of product failures.

In summary, this first stage of the team development and data collection and the team should invest an appropriate amount of time collecting and generating this basic set of information requirements. It should be noted that many companies will have the information needed by the team but not necessarily in one place or in the format required by the team. It is important that this information is collated and stored centrally, as these are vital reference documents that will form part of the closing report stage of the project. Useful Techniques for the preparation stage:

Team brainstorm of project requirements, critical path, losses at each stage of the design to customer process.

 • Refinement of the detailed product-process map (the recording of the stages of the process with comments related to costs, quality and known problems at each stage.

• Development of the cause and effect, bar chart of problems and pareto analysis of failures in the conversion process. Development of Failure Modes Effect Analysis chart (FMEA).

• Development of a chart that displays the process and costs of each process stage to demonstrate the points in the conversion process that generate the most costs.

• Review of customer complaints (or survey) with associated cause-and-effect and pareto analyses.
• Benchmarking information where available or practical to collect.

Stage 2 - Functional Identification and Functional Analysis Phase
This stage of the VAVE exercise is to commence the analysis of the product by identifying systematically the most important functions of a product or service. This is known as functional analysis. ‘Function’ can be defined, as the use demanded of a part pr a product and the esteem value that it provides. These functions therefore make the product work effectively or contribute to the ‘saleability’ of the product. Functional analysis outlines the basic function of a product using a verb and a noun such as ‘boil water’ as in the case of our kettle. These are several steps within this stage:

A. Describe the Functions
The first step is to systematically analyze and describe the functions that the product undertakes. The basic functions of the product or service are listed, or brainstormed out. A function is best described by a verb or noun, such as ‘make sound’ or ‘transfer pressure’, or ‘record personal details’. The question to be answered is ‘what functions does this product/service undertake?’. Typically here will be half a dozen or more activities. There is a temptation to take the basic function for granted, but do not do this, as working through them often gives very valuable insights into the value and functionality of the product and nothing should be taken for granted by the team. For instance, for as domestic heat time controller, some possible functions are ‘activate at required times’, ‘encourage economy’, and ‘supply heat when required’. This is often a slow but enjoyable stage of the VA process and it is not an activity that many of the team will have experienced before. Once again, it is important to document all discussions and team exercises for later reference. A customer requires two types of function in any product or service: ‘work’ functions and ‘sell’ functions. For instance a postage stamp has the work functions of ‘authorize carriage’ and ‘evidence of payment’, and sell functions are ‘attract identification’ and ‘allow collection opportunity’. The team should brainstorm these ‘work’ and ‘sell’ functions of the product. It is useful to brainstorm these issues using Post-It notes and to record the results of this exercise on a standard form for this activity. Some of the key issues for checking are listed in appendix A. It is important to take time during this stage because the most important function is not always immediately clear and an inappropriate choice, by the team can lead to a very different solution. It is therefore important to enlist external support and facilitation if the team is inexperienced. The functions discovered by the team can be grouped and recorded using the Tree Diagram approach, also known as the FAST method (Function Analysis System Technique) in VAVE.

B. Rank the Functions by pair-wise Comparison
The next step uses pair-wise comparison to rank the functions. This is often done as a group activity, reaching a consensus about each pair. It works like this: each function is compared for importance with each other function, using e.g. a table (see figure). The most important of the two functions is identified and written on the table. Always decide which function is more important, do not allow the ‘cop out’ of saying that both are equally important. Then the group decides if the difference in importance is minor (1 point), medium (2 points), or major (3 points). The group discussion on importance usually makes this easy, and points made are written on the table. After all pairs have been compared, the scores for each function are added up – the higher the score, the more important the function. Experiences here show that in most studies one or two functions emerge as being by far the most important ones. These functions are those to concentrate subsequent efforts on. This stage of identifying the most important or ‘basic’ functions is very important from the point of view of gaining group consensus.

Useful Techniques for Functional Analysis:
• Structured tree diagram analysis.
• Strengths, Weaknesses, Opportunities and Threats analysis (SWOT).
• Quality Function Deployment chart development to understand customer ‘wants’.

Stage 3 - Creative Brainstorming Phase
This stage requires a certain amount of creative thinking by the team. A technique that is useful for this type of analysis is brainstorming which allows all the members of the team to participate and for some strange yet ultimately commercial ideas to be promoted amongst the team. This stage is concerned with developing alternative, more cost effective ways of achieving the basic function. All rules of brainstorming are allowed, and criticism needs to be avoided as it could cease the flow of ideas. Simply list down all ideas, not regarding whether they sound apparently ridiculous. Various ‘tricks’ can be used, such as

• Deliberate short periods of silence. These deliberate periods of reflection allow the team members to refocus their thoughts and to avoid the trap of following one line of thought to far.

• Writing ideas on cards anonymously. This approach is particularly good for team members who are shy or feel inferior to the specialists in the group. Using this approach each team member is issued with a number of paper cards and uses these to write down 2 Op cit their ideas. At a point in time, all the cards are collected, discussed and grouped. This is a good way of gaining high levels of participation from the entire team.

• Sequencing suggestions in a ‘round-robin’ fashion. This process involves the team situated at a table. Each person nominates an idea for the team and then the responsibility passes to the person on his or her right. As the process unfolds, several cycles of the entire table will produce a large number of ideas which will eventually become exhausted. Therefore the team will amass a great quantity of ideas for discussion in a relatively short time period.

• Making sketches. Many of the specialists in the group will be more comfortable drawing their ideas rather than verbalizing them. This is true of engineers who find verbalizing complex solutions difficult but drawing them somewhat easier. In this process, the teams are allowed to draw potential improvement ideas for discussion.

• Explaining the product to an ‘extra-terrestrial’ customer3. This process is interesting and somewhat challenging, as the team must describe the functionality to a person that has no concept of the product or its application. This process sounds very easy but in reality is quite difficult as the team will constantly review their efforts to describe the product and therefore add greater and greater levels of detail that often go unexpressed. This process usually involves a high degree of humor and is a fun activity that ensures everyone in the team understands the functionality of the product. In effect, this process creates a common understanding and a baseline that can be shared with all team members regardless of their level of specialist knowledge. These techniques have been proven to generate high levels of enthusiasm, high levels of participation and also a high quantity and quality of innovation. The real key is to make the process fun and allow individuals to ‘spark’ ideas from their other team members. It is also a good way of ‘becoming the customer’ and undertaking a critical review of value by looking at the product in a neutral manner. It should be noted that many people have unrealistic expectations of this process and expect radical innovations in product design and often this is not the case. Breakthrough innovations are possible but it is more important to improve in the right direction and allow the team to ‘up-skill’. As such, any improvement in cost effectiveness is a worthy result and one that benefits the company – a major radical breakthrough is either the result of new innovations that are available since the design of the product or other factors. In addition, a radical innovation implies that the initial design of the product must have been particularly poor and this is seldom the case. Designs tend to be more or less right and are always capable of improvement towards the optimal cost stage.

Stage 4 - Analysis and Evaluation Phase

The stage is to evaluate the ‘cost’ and ‘worth’ of each function. This is not an exact process but allows the existing cost of the product to be apportioned between the functions based on the assumptions that have been made by the team. The worth is determined by estimating the lowest cost of producing each basic function if cut down to its minimum. The value potential is therefore the difference between the cost and the worth figures. In some cases it might be necessary to for the team to take a break while specialist team members, or seconded resources, evaluate the costs and feasibility of some of their suggestions that have been generated. 3 Humor can foster this stage to a great extent. At this stage, the options available to the team are therefore to modify the design of the product to:

• Completely eliminate the part from the design as it serves no useful purpose and has no customer value but only a cost.

• Replace, substitute or modify the part and therefore lower the cost of the product by making an improvement to it. The results of these team deliberations and evaluations of the different alternatives and potential changes can be recorded using a cost-benefit chart. This chart displays the costs of the improvement on one axis, and the associated benefits along the other. At this point the team has developed and justified improvements to the product and this stage usually concludes with a project report with recommendations. In addition, the team will develop a brief presentation to senior management as a summary of their findings and recommendations. The presentation and report will usually contain the following sections:

1. The subject, product and VA project team brief mandated by senior management
2. The business conditions and justification to improve the cost performance or value enhancement of the product.
3. The current costs of the product and the failures in the conversion process that represent the hidden costs of poor design.
4. An analysis of the product and its functionality for customers.
5. The proposed changes and the commercial reasons for it.
6. The comparison of actual costs now and post-implementation costs.
7. The savings year on year based on future expected volumes.
8. The expenditure items required.
9. The process of implementing the change and the proposal (including timing of the different phases)
10. A list of issues that could not be resolved by the team but are worthy of future analysis.
11. A complete list of appendices containing all the materials collected used and recorded during the lifecycle of the team. The next stage is to gain a formal agreement by the senior management team to proceed and schedule the timed implementation of the recommended changes.

Stage 5 - Implementation and Verification Phase

The final stage of the VA team is to report the findings to the senior management team and to gain permission to implement the findings of the report. This is the most rewarding stage as the many hours of brainstorming; classification and calculation begin to become ‘the new product’ and ‘the new way of manufacturing’. At this point, each product or service that is conducted is done so with the knowledge that it generates profit for the business and generates value for the customer in the most effective and efficient way. It should be noted that changes need to be scheduled in order to prevent ‘change overload’ within the factory whereby many elements of a product are replaced or modified and also to allow specialist departments such as the Purchasing Department to make the necessary changes to material and part specifications. These activities need to be phased to avoid the chaos of multiple changes happening at once and to allow the anticipated cost savings to be tracked and monitored. Indeed, it may be necessary to track the improvement in the quality performance of the product (in the factory) over many months before the improvements can be proven to work. This is especially true where the company has to run down the existing stocks of the problem part before introducing the modified part.

It is necessary to ensure that the group that implements the idea informs of the savings produced and other benefits. If needed, the VAVE team helps them to establish the way the implementation will be checked and the savings calculated.
Every step of the process is geared toward obtaining a result that increases the ROI (return on investment) or value for the client (ourselves, our employer, etc.).
The VAVE team must have a record of the results and a series of "fall back" positions to use as the Project progresses.

The following Figure shows the different stages of the Value Analysis and Value Engineering (VAVE).

Cases of VA/VE Success
There are various cases of VAVE success and discuss below.
1.    A manufacturer of domestic water heaters conducted a VA analysis. It found that the customer derived value from the cost efficiency and reliability of the product. In addition, the company found that the largest source of failures resulted from internal moving parts that failed frequently. The VA exercise resulted in a decrease in these moving parts (valves etc.) and a replacement of other problem items with more cost-effective alternatives. The reliability of the product has resulted in no complaints from customers and a reduction of moving parts to only three parts.

2.     A lighting company has achieved savings of 6 times the costs of its value analysis exercises. One product has achieved a 250% increase in sales over its predecessor. Now the company has trained over 15% of its workforce in VA techniques.

3.     A small company producing cooling radiators for machinery involved its suppliers in the redesign of the existing product range with the result of a much better product and half the conversion costs of the previous product sold to the market.

4.     An office stationary company conducted a VA exercise on a range of paper stapling devices and hole punching devices. The team found that the traditional designs had always incorporated metal as the main material. After several exercises that looked at the way in which the products were used and also the function required of the product, the company converted the product from metal to a plastic design at a major cost saving.

5.     Toy Company redesigned a model product, as a result of a VA exercise, and reduced the many different metal fasteners with just one type creating a saving for the company and the supplier.



In all problem solving techniques, we are trying to change a condition by means of a solution that is unique and relevant. If we describe in detail what we are trying to accomplish, we tend to describe a solution and miss the opportunity to engage in divergent thinking about other alternatives. When trying to describe problems that affect us, we become locked in to a course of action without realizing it, because of our own bias. Conversely, the more abstractly we can define the function of what we are trying to accomplish, the more opportunities we will have for divergent thinking.

This high level of abstraction can be achieved by describing what is to be accomplished with a verb and a noun. In this discipline, the verb answers the question, "What is to be done?" or, "What is it to do?" The verb defines the required action. The noun answers the question, "What is it being done to?" The noun tells what is acted upon. Identifying the function by a verb-noun is not as simple a matter as it appears.

Identifying the function in the broadest possible terms provides the greatest potential for divergent thinking because it gives the greatest freedom for creatively developing alternatives. A function should be identified as to what is to be accomplished by a solution and not how it is to be accomplished. How the function is identified determines the scope, or range of solutions that can be considered.

That functions designated as "basic" represent the operative function of the item or product and must be maintained and protected. Determining the basic function of single components can be relatively simple. By definition then, functions designated as "basic" will not change, but the way those functions are implemented is open to innovative speculation.

The cost contribution of the basic function does not, by itself, establish the value of the product. Few products are sold on the basis of their basic function alone. If this were so, the market for "no name" brands would be more popular than it is today. Although the cost contribution of the basic function is relatively small, its loss will cause the loss of the market value of the product.
One objective of value analysis or function analysis, to improve value by reducing the cost-function relationship of a product, is achieved by eliminating or combining as many secondary functions as possible.

·       The key component of VANE process is its use of a carefully crafted and thoroughly tested job plan.
·       Adherence to the job plan focuses efforts on its specific decision process: that contains the right kind of emphasis, timing and elements to secure a high quality product.
·       The job plan and its sub-elements do this by highlighting and focusing everyone on the involved issues, essential needs, criteria, problems, objectives and concerns.
·       The eight-step job plan is displayed below.

Questioning Techniques
  • Various questioning techniques are used in VAVE process.
The Primary Questions
·       The questioning sequence used follows a well-established pattern which examines ­
·       The PURPOSE for which the activities are undertaken
·       The PLACE at which the activities are undertaken
·       The SEQUENCE in which the activities are undertaken
·       The PERSON by whom the activities are undertaken
·       The MEANS by which the activities are undertaken with a view to activity

In the first stage of the questioning technique, the Purpose, Place, Sequence, Person, ' Mean of every activity recorded is systematically queried, and a reason for each reply is sought.

  • What is actually done?
  • Why is the activity necessary at all?
In order to ELIMINATE unnecessary parts of the job.
  • Where is it being done?
  • Why is it done at that particular place?
  • When is it done?
  • Why is it done at that particular time?
  • Who is doing it?
  • Why is it done by that particular person?
In order to COMBINE wherever possible or REARRANGE the sequence of operations for more effective results.

  • How is it being done?
  • Why is it being done in that particular order to SIMPLIFY operation.

The Secondary Questions
  • The secondary questions cover the second stage of the questioning technique, during which the answers to the primary questions are subjected to further query to determine whether possible alternatives of place, sequence, persons and/or means are practicable and preferable as a means of improvement over the existing method.
  • Thus, during this second stage of questioning, having asked already, about every activity recorded, what is done and shy is it done, the method study man goes on to inquire what else might be done?
  • And, hence: What should be done?
  • In the same way, the answers already obtained on place, sequence, person and means are subjected to further inquiry.
  • Combining the two primary questions with the two secondary questions under each of the head: purpose, place, etc. yields the following list, which sets out the questioning technique in full:
  • What is done?
  • Why is it done?
  • What else might be done? What should be done?
  • Where is it done?
  • Why is it done there? Where else might it be done? Where should it be done?
  • When is it done?
  • Why is it done then?
  • When might it be done?
  • When should it be done?
  • Who does it? Why does that person do it? Who else might do it? Who should do it?
  • How is it done? Why is it done that way? How else might it be done? How should it be done?
  • Do not be distracted by mere aggregate functions such as the rubber on a pencil's end' or the ice producing part of a refrigerator.
  • These were functions added since it was.  economical or easy to do so.
  • They have no relationship with the main function.

Merits of the VAVE
Value analysis is really a very valuable technique of cost reduction and quality improvement. The merits of the VAVE are as follows:

1. Improvement in Product Design
It leads to improvements in the product design so that more useful products are given shape. Now in case of ball points, we do not have clogging, there is easy and even flow of ink and rubber pad is surrounding that reduces figures fatigue.

2. High Quality is maintained
High quality implies higher value. Thus, dry cells were leaking; now they are leak proof; they are pen size with same power. Latest is that they are rechargeable.

3. Elimination of Wastage
Value analysis improves the overall efficiency by eliminating the wastages of various types. It was a problem to correct the mistakes. It was done by pasting a paper. Now, pens are there and liquid paper is developed which dries fast and can write back.

4. Savings in Costs
The main aim of value analysis is to cut the unwanted costs by retaining all the features of performance or even bettering the performance. Good deal of research and development has taken place. Now milk, oils, purees pulp can be packed in tetra packing presuming the qualities and the tetra pack is degradable unlike plastic packs.

5. Generation of New Ideas and Products
In case of took brushes, those in 1930’s were flat and hard, over 60 to 70 years brushes have come making brushing teeth easy, cosy and dosy as it glides and massages gums.

6. Encourages Team-Spirit and Morale
Value analysis is a tool which is not handled by one, but groups or teams and an organization itself is a team of personnel having specification. A product is the product of all team efforts. Therefore, it fosters team spirit and manures employee morale as they are pulling together for greater success.

7. Neglected Areas are brought under Focus
The organizational areas which need attention and improvement are brought under the spot-light and even the weakest gets a chance of getting stronger and more useful finally join’s the main strain.

8. Qualification of Intangibles
The whole process of value analysis is an exercise of converting the intangibles to tangible for decision making purpose. It is really difficult to make decisions on the issues where the things are (variables) not quantifiable.

However, value analysis does it. The decision makers are provided with qualified data and on the basis of decisions are made. Such decisions are bound to be sound.

9. Wide Spectrum of Application
The principles and techniques of value analysis can be applied to all areas-man be purchasing, hardware, products, systems, procedures and so on.

10. Building and Improving Company Image
The company’s status or image or personality is built up or improved to a great extent. Improvement in quality and reduction in cost means competitive product and good name in product market; it is a good pay master as sales and profits higher and labour market it enjoys reputation; it capital market, nobody hesitates to invest as it is a quality company.

Limitations of VAVE
Like any other cost reduction technique, value analysis has its own limitations. The most common limitations are that the man-made excuses are the blocks in implementing these plans of value analysis. The most common excuses are given below.

·       Lack of motivation
·       Resistive to change
·       Inertia
·       Lack of knowledge and patience
·       Attitude of ‘It will not work in India
·       We are very small or very big
·       This has been tried earlier and failed
·       The change is too big
·       Let competitors try before we try
·       Difficulty of teams meeting or team meeting for getting consensus.

These limitations are man-made and can be over-come one the company divides to implement. However, they should be educated of the plus and minus points and the main beneficiaries are those that are to be told and they are to be taken into confidence.


This section briefly describes tools and techniques that have been identified by this report. These references may provide useful signposts for companies that are considering which tools to use during the process of VAVE.

Product Platforms
Platform designs offer a high degree of standardization as well as the ability to customize products in the final stages of manufacturing and assembly. This maximizes the number of core items and allows a business to ‘create’ new products with minor modifications. The benefits of this approach are economies of scale associated with core parts, the familiarity of workers through repetitive assembly of these parts thereby gaining efficiency and finally the small inventory requirement to enable customization. An example of a platform strategy would include the development of a stapling device that has an universal pressing mechanism but has a colour-coded outer cover that allows the product to be customized to the requirements of the purchaser. Another example would be a car company that has many common parts between vehicle ranges (all cars of the same size) but customizes the product to order at the latest possible stage (i.e. adding the specific customer requirements such as air conditioning, CD player, anti-lock brakes).

 Concurrent/Simultaneous Engineering, Participative Design/Engineering
A practice that involves the participation of all functional areas of the firm in the product design activity as a means to compress the time between concept to launch. Suppliers and customers are often included. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs. Synonyms are co-design, concurrent design or engineering, parallel engineering, simultaneous design/engineering, team design/engineering. In the case of a company that manufactures telephone systems this practice reduced the time from design to sales in the market by one third of an existing product.

Quality Function Deployment (QFD)
A methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the resulting product design process and the design and operation of the supporting production management system. QFD can be viewed as a set of communication and translation tools. QFD tries to eliminate the gap between what the customer wants in a new product and what the product is capable of delivering. QFD often leads to a clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer. For related topics see also ‘House of quality’. This technique that was developed by Mitsubishi Heavy Industries to design ocean vessels has been used with tremendous effect by electronics and automotive companies although the technique is now popular in other sectors.

Process mapping
Process mapping is a step-by-step analysis of the design to customer process. At each stage in the process, the team record the activity, its duration, the number of people involved and any comments related to the process (especially any costs or failures at that stage). Each stage is listed as the process happens and the chart provides a good means of analysing what happens to the data and physical product as it moves through the business. The completed chart also allows the team to identify stages that can be eliminated, reduced in duration, or those that cause the greatest amount of problems. The purpose is therefore to understand the process and to streamline it. This chart also allows a flow chart to be produced as a standard operating procedure to control the process in the future. An associated technique, an evolution of the flow chart that is used by many advanced VA companies is ‘four fields mapping’. This technique plots all the stages and tasks associated with the design process against the business departments involved in the total process. It shows who is involved when and at what stage, where decisions must be taken and what standards must be achieved in order to progress from one stage to another. The four fields mapping technique is therefore both a procedure and can also be a form of project control chart.

Design for Manufacture/Assembly (DFX)
A product development approach that involves the manufacturing function in the initial stages of the product design to ensure ease of manufacturing and assembly. Since its introduction, the concept has been extended to design for ‘remanufacture’ or even design for ‘supply chain management’, involving suppliers in the design stage. It is generally referred to as DFX. As most of the design weaknesses of a product become visible in the production process this approach and set of techniques can result in very large savings in efficiency, time, and also quality losses.

Design FMEA
 Design Failure Mode Effects Analysis (FMEA) is a procedure in which each potential failure mode in every sub-item of an item is analyzed to determine its effect on other sub-items and on the required function of the item. This approach is a means of identifying the sources and frequency of failure in order to prevent (or to target) areas of weakness in the product design.

Kano Model
The Kano model relates three factors (which Kano argues are present in every product or service) to the degree of implementation. Kano’s three factors are ‘basic’ (or must be), performance (more is better), and delighter (excitement factors). The degree of customer satisfaction ranks from disgust to neutral and finally delights. This technique is best illustrated by a product such as a computer printer. At the basic level the printer must be safe, in terms of performance it is typically measured in a number of pages per minute and an excitement factor could be that the printer can also receive fax transmissions. It should be noted that these basic, performance and excitement factors that represent value are not static and what was once an excitement factor will often become a performance factor over time. Take motor cars as an example, once central locking, airbags, and ABS systems were excitement factors – today we take for granted that they are merely performance factors.

Taguchi Methods
A concept of off-line quality control methods conducted at the product and process design stages in the product development cycle. This concept, expressed by Genichi Taguchi, encompasses three phases of product design: system design, parameter design, and tolerance design. The goal is to reduce quality loss by reducing the product’s characteristics during the parameter phase of product development. This process is founded upon the experimental testing of designs. The Taguchi technique involves some complex mathematical calculations to refine the design process and to get a better, more accurate, design in less time.

Target Pricing \ Costing
This is a practice which uses a known market price (a price that the market will tolerate) as the starting point for the review of products to eliminate waste and costs as a means of generating a margin for the product. This process provides a good objective for product designs and increases the ‘price’ attractiveness of the product in the market. It is therefore a good means of focusing the design process.

Product Variety Funnel
This is a diagram that shows, for each stage of manufacture and conversion, the number of products that result from a single input (in the form of a line chart). For example, a car company may start with a basic hatchback vehicle, once it is painted there may be 14 different types of this vehicle, then one of three engines can be added (expanding the funnel by a factor of three) and so on throughout the production process. As such, it is common to find that many car companies actually offer 90,000 different variants of the one input. This diagram provides valuable insights into the ability to configure vehicles to order and indicates the point at which the funnel expands rapidly. Anything to the right of this point indicates that the product is specific and to the left it is relatively flexible to be used in a number of final products. This technique has obvious links to customization, platforms and time compression methods.

Cause and Effect Analysis
A tool for analyzing process dispersion and it is also referred to as the Ishikawa diagram and the fishbone diagram. The diagram illustrates the main causes and sub-causes leading to an effect (symptom). The cause-and-effect diagram is one of the seven tools of quality. This technique is often termed the ‘fishbone’ diagram as the chart resembles a form of skeleton. This is a great way of collecting information regarding failures of a product in the manufacturing process by segregating failures into distinct themes such as materials, methods, people, and such like.

Check Sheets
It is a simple data-recording device and the check sheet is designed by the user, which facilitates the user’s interpretation of the results. The check sheet is one of the seven tools of quality, and should not be confused with data sheets or checklists. The person conducting the analysis therefore monitors and records each time a failure is detected. The number of failures is often converted into a bar chart to show the amount of failures by the source of the failure. Also, it is common to then convert the bar chart into a pareto chart (an 80:20) chart that shows the most important sources of failure. The rule of thumb applied to pareto analysis is that 80% of the frequency of failure can be traced to only 20% of the sources of failure. Therefore targeting the 20% of sources will bring immediate and effective results for the redesign of the product.

Tree Diagram (FAST)
A tree diagram is a tool to systematically decompose customer requirements or other goals into a logic hierarchy. In the case of VA, the starting point could be the customer requirements for value. From this box a series of arrows would extend to all the different functions that create value for the customer and then each one of these would be broken into sub-elements as the chart is drawn. The chart is therefore a carefully layered series of relationships. The chart is very useful when analyzing complex situations such as under VA conditions, it constantly refines and specifies what is needed at each level or tier of analysis to achieve the starting point goal. The technique also reduces the time required when conducting analyses. On completion, the chart represents the entire list of variables that need to be analyzed by the team. The technique is also known as FAST for VA purposes and this acronym stands for Functional Analysis Systems Technique.

Computer Aided Design (CAD)
This process involves the use of computer generated designs for flexibility during the product design stage. It allows the designer to make, test and revise drawings before they are released to the manufacturing department. The use of computer based designs also allows the process to evolve into computer aided manufacturing (direct computer to machine manufacturing), rapid prototyping via disk or downloaded information and the ability to export data (and drawings to suppliers).

Computer Aided Engineering (CAE)
Computer Aided Engineering (CAE) is the most important and essential tool in product development process. Huge challenge is faced by the companies while integrating CAD and CAE in their design process. The previous studies do not clearly give the impact of CAD and CAE on product development process and particularly its impact on cost and time of development. The study is carried out to show the importance of CAD and CAE as a tool of product development and its effect on the development cost and time when implemented early in the process

Different ways you can use VA/VE within your manufacturing environment
VA/VE can be applied in various ways to achieve product/process cost savings.
First decide the manufacturing area that is most critical: New Product Development or Items Currently in Production.

Next, decide if you will focus within your four walls, outside your four walls, or both.
  • Internal VA/VE Focus:  Improvement areas that you control
  • External VA/VE Focus:  Supplier development and cost reduction
  • Joint Internal/External VA/VE Focus:  Total value chain improvement

Value Analysis and Value Engineering Termology
Need : These  are  users  expectations,  may  be  expressed  explicitly,  or  may  be  latent.
Value : Value  is  an  imprecise  word,  its  meaning  depends  both  on  the  user  and  on  the  context.
  • For  example  a  typewriter  ribbon  or  a  word – processing  package  may  have  good  value  while  the  typewriter  or  computer  may  not  have.
  • In  an  engineering  context  the  distinction  can  be  important,  as  any  cosmetic  changes  brought  about  by  Value  Analysis  or  by  means  of  any  other  technique  are  waste  of  time  if  the  total  product  is  unacceptable  to  the  market.
  • Value  is  a  quantity,  which  enhances  customer  satisfaction  or  slashes  the  expense  attributable  to  the  product
In value method terms:
Value = Worth / Cost
Value of an item = Performance of its function / Cost
Value = Σ (+) / Σ (-)  =Σ (Benefits)  / Σ (Costs)

  1. Value  greater  than  1.0, the  item  is  perceived  to  be  fair  or  having  good  value.
  2. Value  is  less  than 1.0,  the  item  is  perceived  to  be  having  poor value.
  3. When  an  item  has  a perceived  worth  that  far  exceeds  the  life – cycle  cost,  we  usually  consider  purchasing  the  item.
  4. An  item  that  does  its  function  better  than  another,  has  more  value.  Between  two  items  that  perform  their  function  equally  well,  the  one  that  costs  less  is  more  valuable.
Different  customers  will  interpret  the  value  of  a  product  in  different  ways.
The  “performance  of  its  functions”  could  include  that  it  is  beautiful  (where needed)  or  it  lends  an  image  to  the  user / possessor (where  desired )
Its  common  characteristic  is  a  high  level  performance,  capabilities,  emotional  appeal,  style,  etc. relative  to  its  cost.
This  can  also  be  expressed  as  maximizing  the  function  of  product  relative  to  its  cost :
Value = (performance + capability / cost)
                        = Function / cost
  • The use of functions and a function - logic process to describe needs, purposes   and consequences is at the heart of Value Engineering.
  • The use of function - logic helps  people realize and overcome many of the preconceived biases.
  • Function allows definition of each task in a process or one of its activities in terms of end goals and  not  solutions.
  • A function is described by a verb (action) and an object / noun (preferably  measurable).
  • Placing those functions in a decision - logic diagram helps reach a common   understanding.
  • This powerful verb- noun combination helps remove people from the "I want" position  to  the basic needs involved.
  • It also helps people see what parts of their decisions rely on  critical features, and where decisions are requiring substantial support to maintain them   (potential value-mismatches)

   CHAPTER: 5 

There are various real world VAVE examples and few are discussing here.
Example: 1
FUNCTIONS                          Verb/Noun                    Function type
  • Remove                                   Dirt                               Primary / essential
  • Rinse                                       Content                         Supportive
  • Extract                                    Water                            Supportive

Example: 2
FUNCTIONS                       Verb/Noun                    Function type                    
  • Produce                                Light                            Primary / Essential
  • Protect                                  Filament                       Supportive
  • Provide                                 Decorative                    Aesthetic
·       Be                                        Interchangeable             Supportive

Example: 3
FUNCTIONS                        Verb/Noun                    Function type
  • Enable                                     Writing                         Primary / Essential
  • Discharge                                 Ink                               Supportive                      
  • Refill                                        Ink                               Supportive
  • Protect                                      Nib                              Supportive
The above examples list only a few of the more important functions, If possible it is to restrict the number of functions to between 5 and 8.
  • If the number of functions Listed works out to be more than this it is prudent to break down the project into sub-assembly.
  • A good example of this is the motorcar.
  • If we ask a random sample of population to list the functions that they desire of a motor vehicle and their respective rankings, a list somewhat similar to the one given below emerge.
1. Transport people
2. Provide safety
3. Provide comfort
4. Transport luggage
5. Provide protection
6. Provide controls
7. So on
The functions listed above are isolated and too large for consideration and it is better consider the vehicle as two sub-assemblies.

  • Taking the chassis as a sub-assembly determines the functions it supports
            1.         Produce                       torque                          (engine)
            2.         Control                        direction                      (steering)
            3.         Provide                       retardation                   (brakes)
            4.       Convert                         torque                          (transmission/gears)
            5.         Provide                       flexibility                    (suspension)
            6.         Control                        fuel                              (pump accelerator etc.)
            7.         So on
  • To drill drown further each of these functions represent a sub-assembly in itself 1 can be further studied in detail, and if taken to its logical conclusion we could analyses function of the car down to its last component level and beyond.
  • The underlying objective of determining the functions of a product is that it becomes possible to determine a cost of the function.
  • Cost: Cost is the expenditure economically justified by production or resource   utilization (product, service or combination of  the two),
  • Costs attributable to a function activity represent the total necessary or approved expenditures for the realization function.

When to use it?

·       Use Value Analysis to analyze and understand the detail of specific situations.
·       Use it to find a focus on key areas for innovation.
·       Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.
·       It is particularly suited to physical and mechanical problems, but can also be used in other areas.








In analyzing a pen, the following table is used to connect components with the functions to which they contribute and hence identify areas of focus.

This case study encompasses the cost reduction exercises performed on three off-road vehicles, one on-road electric utility vehicle and one on-road hybrid vehicle. Areas of powertrain were excluded from the scope of the study for the very reason of a huge re-engineering and changeover cost involved with any change in these areas. Also the study does not look into the aspects of de-contenting/de-featuring of the vehicles in order to reduce cost.

Which Costs to Target for Reduction?
An automobile is a complex system made of multiple sub-systems and interfaces. Thus when a cost reduction exercise targets a complete automobile it becomes imperative to understand the build-up of costs in the product. A cost build-up in a vehicle starts right from the concepts designed for the simplest of the support brackets up to the last operation on the assembly line and further till the vehicle lands in the display section of showroom. Of the various costs that come into picture during this process, there are many which can be directly controlled and few which would otherwise need a large scale re-engineering of the complete vehicle programme to achieve control over the cost.

Starting with the final built-up cost i.e. the sales price of the vehicle, it is made up of two components: price to dealer and dealer’s commission. The component of price-to-dealer is made up by summation of total cost of vehicle and cost of sales. The total cost of sales again is a combination of total manufacturing cost and general overheads. This total manufacturing cost is once again made up of components such as total direct material cost, cost of value addition (i.e. assembly, painting, testing, etc.) and factory costs and overheads. Hence it is the total direct manufacturing cost of the vehicle that becomes the base reduction cost as there is no engineering control over the other components.

Cost Flow Analysis
Similar to Value stream mapping, the first step in this exercise is to understand how the cost flows inside the vehicle. This helps in the identification of and differentiation between high cost items and low cost items in the vehicle. Based on this knowledge of the cost, we judge whether the cost of any component justifies its function or rather the value it delivers. Also known as the Function Cost Worth (FCW) Analysis, it helps us in realizing and shortlisting areas with high, medium and low potential of cost reduction.

Approaches to Cost Reduction
The overall approach to the complete cost reduction is multifaceted and involves many variables like form, function, fit, etc. that need to be looked into and balanced both in isolation as well as in conjunction to others evaluating the downstream implications of these on the overall design. Thus there needs to be an outline which helps in systematically evaluating the designs as well as ensuring a broad level perspective on all major aspects of the product development.

Direct Material Cost Reduction (DMCR)
This is first and one of the most direct approaches to cost reduction. Cost reduction via material can be realized in two major ways, first is to reduce the material from any design while second is to design with a cheaper material alternative. Before going for a material reduction, it is important to understand the end function of the design and analyse how the design behaves under load conditions i.e. how are the stresses generated and distributed in the design. This can provide insights into areas which may have significant material but do not contribute much to the load sharing in the design. Such areas can be re-designed with less material and yet not change the form of the component significantly.

It is not possible to build a part that exactly planed but its fitment can match it. The engineering drawing is the controlling document that ensures the manufacturability of part. It creates with GD&T and controlled precisely so that machinists and quality engineers will use, print dimensions, and drawing notes to develop a manufacturing process and inspection methodology. It will construct high-precision components and matching the designer’s original vision.
Drawing is a graphical and GD&T is a symbolic language that communicates ideas and information from one engineer to another.
Levels of Design
Three levels of design are considered in engineering design, which are as follows:
System Design: Design of a system which fulfill the specific function and purpose.
Parameters Design: Mechanical parameters, electrical parameters, thermal parameters, quantity parameters designing... of a system.
Tolerance Design: Design for tolerances for fitment of assembly.
Specification and Tolerance
10 ± 0.5: Specification is 10 and tolerance is 1.
Part to Part variation is control by Size tolerance
Within Part variation is control by Geometric Tolerance (Shape)
Size Tolerance > Geometric (Shape) Tolerance e.g. ±1 > ± 1/32 (0.03)
Tolerance: Allowance for specific variation
Size tolerance is independent tolerance while Geometric tolerance controlled by its Feature Control Frame (FCF).
14 GD&T characteristics in 5 categories = 14.5

1. FORM = (4)
1. Flatness, 
2. Straightness 
3. Circularity 
4. Cylindricity
1. Perpendicularity 
2. Parallelism  
3. Angularity
3. LOCATION = (3) 
1. Symmetry 
2. Position
3. Concentricity
4. RUNOUT = (2) 
1. Circular run-out 
2. Total run-out
5. PROFILE = (2) 
1. Profile of a line
2. Profile of a surface
8/4/2 Rule for Datums : 8Yes / 4No / 2Yes or No
(Orientation+Location +Runout) / Form / Profile
Symbols except for the Form tolerances (straightness, flatness, circularity and cylindricity) can use datums.
Basic Rules of Drawing
Dimensions are measured at 68°F (degree fahrenheit) or 20°C in mechanical engineering system design.
               (68°F − 32) × 5/9 = 20°C
Minimum, Maximum, Basic, Stroke and Reference dimensions never have any tolerances limit. These dimensions are free from tolerances.
Dimensions shall have only one interpretation in engineering drawing. It never gives you conflict in between the interpretation and understanding of drawing.
Reference dimensions should be kept as minimum value.
Centerlines and featurelines are at right angle and angle is not mentioned in drawing.
No zero allowed before decimal and digits must be equal after decimal in Inch unit system. For example; .12, .25 and .50 . It should not be 0.12, 0.25 and .5 in this case.
Zero is must before decimal and no extra zero allowed after decimal in MM unit system. For example; 0.12, 0.25 and 0.5 It should not be .12, .25 and .50
Primary datum control the Orientation of the feature in the drawing.
All associates dimensions are basic dimensions (tolerance free) in profile tolerance.

Redesign of brake lever: (a) existing, (b) proposed.
The redesign of a brake lever, as shown in Figure is an example of cost reduction through material reduction. Based on the study of load distribution through the existing lever, a re-design is proposed with similar stress distribution pattern. The re-designed lever has 28% less material compared to the existing.

Other approach of DMCR is by re-designing the existing component using an alternate material. In this approach many aspects of the initial design such as load bearing capacity, size, shape, manufacturability and other parameters are altered due to change in material. Thus the re-designing in such cases is extensive or sometimes completely new. It is important to keep in mind that when the material of the existing design is completely changes, there are many downstream implications of raw material, inventory, manufacturability and processing, assembling, handling, etc. that come into picture and so does the costs attached with these. Thus it is of utmost importance that the cost reduction is calculated considering the changes in the downstream cost components.

Below Figure shows an example of plastic cargo box which has been redesigned in sheet-metal. In this changeover from plastic to sheet-metal, all the downstream costs such as tooling, assembling, welding, etc. has been evaluated and compared to each other and the calculations present a savings of $36 per piece over the plastic variant. The new design has an added advantage of better load handling over the previous design. Hence, a change of material in this case has not only saved cost but also improved the end function of the component which is an additional value proposition to the OEM.
Redesign of Cargo-Box: (a) new design in sheet-metal.
A third approach to DMCR is to go for a Weight optimization of complex components using Finite Element Analysis (FEA) Techniques or to perform a Factor of Safety (FOS) Analysis on the existing designs to identify areas with more-than-necessary material conditions.

Manufacturing Process Cost Reduction (MPCR)
The Manufacturing Process Cost Reduction approach focuses on the manufacturability and assembly aspects of the designs and to evaluate and identify possibilities of manufacturing the same component using alternate cost effective processes, or look for changing the way of assembling of components or their level of assembling or the type of fastening techniques and such other aspects. A secondary objective of this approach is to save cost through simplification of the overall production process and reduce lead time. Although these factors indirectly influence the design still they are important and integral to the overall vehicle cost and hence an evaluation of these aspects becomes imperative.
Redesign for Manufacturability (DFM) of Shift Cable Bracket
Above Figure demonstrates the MPCR approach by highlighting how minor re-designs can lead to better manufacturability of the components. They can not only improve their end functionality but also simplify the overall design in the process. Yet the reach of the MPCR approach is not limited to design of components but can be extended over the improvement and simplification of manufacturing processes too. Below Figure highlights this point in much detail.
Redesign of chassis support for reduced sheet scrap
Above Figure shows the re-designed chassis support along with the strip layout before and after the redesign. A minor change in the profile of the pillar had improved the strip utilization by 24% and helped lower the corresponding scrap losses and the costs associated with each respectively. Similar to the examples discussed above the same approach can also be effectively utilized to analyze the assembly aspects of the designs.
Redesign for Assembly (DFA) of Suspension Control Arm

Above Figure shows the redesign of suspension control arm of a double wish-bone type suspension. The initial suspension arm was fabricated using 10 pieces welded together. Also a closer look at the design would show that the welds would experience shear stresses when under load. The re-designed arm improves the existing design in many aspects. Firstly, it reduces the piece count to 5 with is straightway half of the existing. Secondly, the new design has pieces welded together in such a manner so that the welds do not experience any loading but the loads are shared by the structural members themselves. Thus, this redesign not only reduces cost but also maintains the end functions and reduces the failure rate of the design.

Parts Standard Cost Reduction (PSCR)
The Parts Standard Cost Reduction approach focuses on bringing about standardization in the designs. This also means to improve the overall modularity of the systems as well as to promote part communization as much as possible in the overall design of the vehicle. One of the biggest areas where cost reduction through standardization can be realized is the use of fasteners throughout the vehicle. This would need a study and documentation of all the fasteners used in the vehicles and then analyzing the variety of fasteners used. Based on the criticality of the area of application, decisions can be made on which sizes of fasteners can be replaced by the next higher common size. From the design standpoint, this may be an area where a replaced fastener may be of a higher specification then demanded by the design and the design may be said to be an overdesigned one, but by increasing the volume of fasteners of specific size we are actually reducing the variety and hence all the costs related to a particular type can be completely eliminated.
Similar to fastener communization, there can also be communization possible between variants of the same vehicle. This not only eliminates many components which otherwise would have been fulfilling same end function in the variants of the vehicle but also brings about uniformity in the operations. All these leads to reduction of the many cost components otherwise attached to these different designs and accumulate in the overall cost built-up.

Supply Chain Cost Reduction (SCCR)
Countries like India and China, with their new found capabilities of cheap labour and large scale high volume production, present opportunities for low cost sourcing. It has been realized that for many of the sourced components, landing costs of parts sourced from these countries are much less than those from European manufacturers. Additionally, cost reduction can also be realized by locating of sources nearer to the production facilities or markets rather than to stick with the existing supplier base.

Second area of focus on the SCCR approach is the assessment of logistic network and optimizing these costs through re-design for improved containerization and improved handling.
Although the approaches discussed here are in isolation yet most of the time the areas and approaches overlap. It is obvious that re-designs in any of these areas have downstream implications to the overall system and hence the best way out is a design which encompasses combination of best possible attributes of all the above approaches. The discussed approaches to cost reduction merely provides an outline to a systematic study of the entire vehicle but it is the job of the engineer to objectively evaluate the downstream engineering changes such as tool changes, process changeovers, assembly line modifications, and others. The key to any successful re-design lies with a smart trade-off between many of the design variables which affect the overall design of the vehicle.

Cost Reduction through Design Innovation (CRDI)
Below Figure shows the redesign of a chassis of an on-road utility vehicle from backbone type to ladder type. With a new ladder type chassis, it became possible to relocate battery boxes, eliminate counterweights, simplify overall routings, install cheap leaf suspensions in place of costly double wishbone suspensions, and reduce the weld in the chassis by 60%. Additionally, it improved the stress distribution on the chassis and eliminated high stress areas having high chances of failure thus in turn improving product life.
Chassis Redesign from Backbone to Ladder Type

Not often we come across changes or redesigns which can trigger resultant engineering changes to such a scale that it becomes an almost new product development in itself. Also the changeover investment is huge and with longer periods for Return of Investments (ROIs). Such changeovers can be justifiably termed as Cost Reduction through Design Innovations. While these provide an unprecedented scope & flexibility for changeovers, CRDI also have the highest changeover costs linked with them and hence although powerful, these are tools that must be used judiciously.

CRDI can be effectively realized in terms of system level simplification, as in the case of example shown in above figure where a complete vehicle layout is simplified. These Innovations should target towards a systematic combination of multiple functions in turn eliminating several others and thus lowering the cost. The cost reduction proposals attached to such Innovations have to be considerably larger in order to manage ROI periods.

Project Outcomes
The various approaches discussed above, helped to carry out a systematic study and re-design of systems and components pertaining to on-road & off-road vehicles have also helped achieve a successful cost reduction for each of the vehicles. Table 1 lists the cost reduction numbers achieved against the various products.

Table: Final cost reduction figures for various vehicles
Module wise cost savings & idea count for Off-Road Vehicle
Module wise cost savings & idea count for Electric On-Road Vehicle
Approach-wise cost saving percentages for Off-Road Vehicle

Conclusions of the Case Study
The exercise was collaborative effort by L&T Technology Services and a client, who as a process had been constantly reducing cost of their vehicles over every year. L&T Technology Services was invited to take a fresh look at the selected vehicles for Value Engineering of the vehicle. This was a First time for L&T Technology Services & the major challenges were to precisely identify which costs to reduce and at the same time manage the downstream implications on the overall engineering changes, implementation period, costs of change-over and expected ROIs. In answer to these challenges, a multifaceted approach to cost reduction was employed. The areas of major focus were: Chassis, Suspensions, ROPS, Intake System, Seats, Trims and Electricals. The cost reduction cycle also employed special exercises such as FEM analysis, Material optimization for plastic and casting components, Welding optimization, Cost vs. Weight Analysis and human simulation.
With this designed approach L&T Technology Services have been able to successfully offer a 8-19 % reduction in cost per product to the client, leading to the beginning of a promising engagement in the niche area termed “Special Projects” with specific focus on the activities of Vehicle Teardown, Competitor Benchmarking, Should Costing and Sourcing, and such other exercises enabling the customer to gain a competitive edge in an already mature market & re-vamping products for market re-launch.

Today L&T Technology Services has completed projects amounting to USD 3 Million and have prospects worth USD 2 Million in pipeline. L&T Technology Services, not only has created a successful long term partnership with the client but has also added a unique offering to its list establishing itself as one of the first and foremost runners in the areas of Vehicle VA/VE.


This study report has provided an overview and insight into the Value Analysis and Value Engineering (VAVE) process. No Company can take seriously Total Quality Management without operating a formalized system of Value Analysis. No business that wishes to become lean will ever succeed if product designs remain unchanged because no amount of continuous improvement in the manufacturing process can release the costs of a poor design or a design that has not changed for many years.

However, poor product reviews or an informal process, that is restricted to only to a review of the design by the design department, will yield only limited success in eliminating ‘avoidable costs’. These efforts will miss the many opportunities to make manufacturing and assembly easier, quicker, less complex and less costly. Thus margins will not be improved significantly because only a small part of the total process has been managed correctly. As such, this type of superficial activity will not generate increased profit and the revenue stream that will be needed to finance new products and new investments in technology.

A properly managed and effective VAVE process will easily repay the time invested by managers over the life of the product and a truly effective process will yield significant competitive advantage for companies that exploit it. For businesses that supply other organizations, the ability to design and redesign products opens the possibility of true, meaningful, profitable and long-term partnership with a customer. Each progressive step that secures a greater design responsibility for the supplier will, in parallel, make the supplier increasingly more important to the competitive advantage of the customer organization and will increase the benefits to both companies.
In an environment where budgets are often reduced, the market determines the selling price of a product and consumers demand a greater variety of products, VAVE is one technique that companies cannot afford to ignore because for every day that the technique is not employed is money that will leave the business forever. Money that cannot be recovered once the product has been sold. The benefits of a formalized and effective VAVE process are therefore many and include some key sources of competitive advantage for any business including:

• Speed of getting an effective design into the market without problems and through error-free manufacturing and assembly processes.
• Reliability and durability of the product in the market which enhances the reputation of the product and the company.
• Low overall cost which enhances product margin and also releases finances within the business as well as allowing the ability to engage in price competition.
• Enhanced quality and compliance with minimal costs of warranty that allows a company to differentiate its products based this perceived quality (of use and esteem).
• Differentiation by creating product designs as platforms, which facilitate ‘last minute’ or late configuration of the product to meet customer, orders regional preferences or any other geographical constraint (such as product laws of a certain region).
• Finally, the VA process satisfies the primary goal of any business – to make a profit and survive.

As a process, VA/VE is very robust and offers tangible, financial and people-based benefits. The process eliminates unnecessary weight, it removes unnecessary costs and importantly it allows people to understand products, processes and continuous improvement. Very few modern management techniques allow this form of participation and involvement and even fewer have such a profound impact on the bottom line of the business’s trading accounts. For companies that do not employ this technique, there is one very frightening thought that for every product that the company makes one or two may be bought by competitors and subjected to value analysis. Therefore, these competitors can easily recover the ground lost to any breakthrough new product with half the effort and half the expense of starting from the beginning. These competitors can also take the new product and streamline it to offer maximum value at minimum cost thereby creating a new product without any real expense. This is perhaps the most frightening through of all.


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