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.
INTRODUCTION
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.
Acknowledgement Page No. 04
1.
Introduction of Value Analysis and Value Engineering (VAVE) 08
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
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
INTRODUCTION OF VALUE ANALYSIS AND VALUE ENGINEERING
(VA/VE)
HISTORY
AND INTRODUCTION OF VALUE ANALYSIS/ ENGINEERING / MANAGEMENT
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.
STAGES AND PHASES OF VALUE ANALYSIS AND VALUE ENGINEERING
(VAVE)
STAGES
AND PHASES OF VALUE ANALYSIS AND VALUE ENGINEERING (VAVE)
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.
Preparation
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.
VALUE ANALYSIS AND VALUE ENGINEERING METHODS
AND PROCESS
THE
VALUE ANALYSIS METHOD
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.
VALUE
ANALYSIS PROCESS
·
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
·
ELIMINATING
·
COMBINING
·
REARRANGING
·
SIMPLIFYING
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.
PURPOSE
- What is actually done?
- Why is the activity necessary at all?
In order to ELIMINATE
unnecessary parts of the job.
PLACE
- Where is it being done?
- Why is it done at that particular place?
SEQUENCE
- When is it done?
- Why is it done at that particular time?
PERSON
- 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.
MEANS
- How is it being done?
- Why is it being done in that particular way.in 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:
PURPOSE
- What
is done?
- Why
is it done?
- What
else might be done? What should be done?
PLACE
- Where
is it done?
- Why
is it done there? Where else might it be done? Where should it be done?
SEQUENCE
- When
is it done?
- Why
is it done then?
- When
might it be done?
- When
should it be done?
PERSON
- Who
does it? Why does that person do it? Who else might do it? Who should do
it?
MEANS
- 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.
TOOLS AND TECHNIQUES
IN VALUE ANALYSIS AND VALUE ENGINEERING (VA/VE)
RELATED TOOLS AND
TECHNIQUES
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
OR
Value of an item = Performance of its
function / Cost
OR
Value = Σ (+) / Σ (-) =Σ (Benefits)
/ Σ
(Costs)
- Value
greater than 1.0, the
item is perceived to
be fair or
having good value.
- Value
is less than 1.0, the
item is perceived to
be having poor value.
- When
an item has
a perceived worth that
far exceeds the
life – cycle cost, we
usually consider purchasing the
item.
- 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
Function:
- 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
ILLUSTRATIONS
AND CASE STUDY OF VALUE ANALYSIS AND VALUE ENGINEERING (VA/VE)
There are various
real world VAVE examples and few are discussing here.
Example: 1
PRODUCT: WASHING
MACHINE
FUNCTIONS Verb/Noun
Function type
- Remove Dirt Primary /
essential
- Rinse Content Supportive
- Extract Water Supportive
Example: 2
PRODUCT:
INCANDESCENT BULB
FUNCTIONS Verb/Noun Function type
- Produce Light Primary /
Essential
- Protect
Filament Supportive
- Provide
Decorative
Aesthetic
·
Be
Interchangeable
Supportive
Example: 3
PRODUCT: FOUNTAIN
PEN
FUNCTIONS Verb/Noun Function type
- Enable Writing Primary /
Essential
- Discharge Ink
Supportive
- Refill Ink 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.
Example
- 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.
Example
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.
FIELD CASE
STUDY BY L&T TECHNOLOGY SERVICES ON VALUE ENGINEERING: COST REDUCTION OF VEHICLE
COMPONENTS
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
2. ORIENTATION = (3)
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.
SUMMARY
AND CONCLUSION OF THE PROJECT STUDY
SUMMARY AND
CONCLUSION
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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