Value engineering is used to increase the value of products. Value is a ratio of function to cost. The value of a product can be increased by reducing its cost or increasing the function. Value engineering is an organized technique to reduce the cost of a product without compromising with its quality, reliability, performance, appearance, safety, utility etc. The possible functions by which the cost of a product can be reduced are
- Modification in design of product
- By adopting the most efficient manufacturing process
- By changing the source of supply of material
- Possible elimination or addition in the related system
The aim of value engineering is to systematic identification and elimination of unnecessary costs. It is applied for existing products rather than new products.
Objectives of value engineering/value analysis:
Increased profits – With the cost reduction of a product, the profits of an organization increased. This results in time reduction. It also ensures greater returns on invested capital. The competitive position of company also improves.
Improved product Design – With the modification in design, the customer will get a new and more acceptable product.
Efficiency – It increases the efficiency of employees as it motivates them to come forward with their creative ideas. It also makes contributions to improve human factors such as creativity, team work and positive attitude among employees. The team approach also improves the decision making.
Time consideration – A product has value for the customer if it is available to him on time. So time element has great importance in value engineering. It may have no value if it arrives later.
Improvement in quality – This results in improvement in quality, reliability, performance and maintainability of a product.
Steps for value analysis:
- Establish the objectives – Example – cost reduction, function improvement
- Orientation/preparation – Make a team for design, marketing, purchasing etc and fix a proper schedule.
- Information gathering – Information of cost, physical parameters, schedule etc
- Innovation/Creativity – A brainstorming session can be held to explore all possible alternatives.
- Option evaluation – Evaluate all possible solutions and select the best alternative.
- Implementation and monitoring – Make a plan for implementation of change.