VALUE ENGINEERING

Continuous Improvement

May 03

INTRODUCTION TO VALUE ENGINEERING

During the World War II, when many critical components were difficult to procure, VA / VE emerged in the industrial community. The problem forced the use of substitute material and design in many manufacturing concerns.

The Value Engineering concept was developed and implemented at General Electric Co, U.S by Mr. Lawrence D.Miles during the second world war. These proven concepts in GE were accepted and being practiced in the world industries since then.

VALUE ENGINEERING DEFINED

Value Engineering is defined as an organised effort directed at analyzing the function of systems, equipment, installation, operation. Maintenance, repair, replacement, facilities, procedures and supplies for the purpose of achieving the required function at the lowest total cost of effective ownership, consistent with requirements for performance, reliability, quality and maintainability.

Value Engineering is a organised way of thinking through a functional approach which involves an objective appraisal of functions performed by parts, components, products, equipments, procedures, services, etc. in short , anything that costs money, or can be measured by other means. The VE approach is aimed at providing the necessary function for the lowest cost. It is designed to check the upward spiral of costs, while assuring product reliability, performance, maintainability and quality. Value Engineering is seen as systematic and creative approach for increasing the return on investment on components, systems, facilities, procedures and material acquired and operated.

Value Engineering Management Structure

A VE Program is an organised set of definite tasks which support or apply the VE discipline to major elements of an organisation. An effective and sustained VE program will usually have: Periodic top management attention to insure implementation and continuing attention by middle management. A key individual well versed in VE principles and techniques to manage Value Engineering program. VE objectives, policies, responsibilities & reporting requirements firmly established and implemented. A strong VE training & executive briefing program. Management attention to insure that the VE discipline is used to earn additional income.

AREAS APPLICABLE FOR VALUE ENGINEERING

VE is a fundamental approach which challenges everything and takes nothing for granted, including the necessity, for the existence of the product.

Value Engg. is applicable to

systems
equipment facilities procedures

methods
software and supplies.

AREAS APPLICABLE FOR VALUE ENGINEERING

The following are some of the areas to which VE has been successfully applied.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Construction Design or equipment modification Equipment or logistic support Equipment maintenance Installation Operation Maintenance Repair & replacement Facilities, master plans & concepts Manufacturing process

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Material handling and transportation Packing and preservation Procedures and reports Procurement and re-procurement Quality assurance and reliability Salvage rejected and excess material Specifications and drawings Technical and logistic data Testing, test equipments & procedure Tooling

Advantages of Value Engineering

Seven factors in order of percent of total savings were: 1 2 3 4 Advances in technology Excessive cost Incorporation of new materials, components, techniques or process not available at the time of the previous design effort. Prior design proved technically adequate, but subsequent cost analysis revealed excessive cost.

The questioning of Users specifications are to be examined, questioned, specifications determined to be inappropriate, out-of-date or over specified. Additional effort design Application of additional skills, ideas and information available but not utilised during previous design effort.

5
6

Changes in users Users modification or redefinition of mission, function or need application of item
Feed back from test / use Design modification based on user tests or field experience suggesting that specified parameters governing previous design were unrealistic or exaggerated

Design deficiencies

Prior design proved inadequate in use (eg was characterised by inadequate performance, excessive failure rates or technical deficiency.

VALUE ENGINEERING Good Value Concept

Value is a function of both performance and cost. The value of a product or service can be described as good if it delivers the required basic function for the lowest cost and poor if it costs too much or fails to perform the required function. Good value cannot be obtained by the simple procedure of cutting costs, particularly if there is any lowering of quality or reliability. Safety, appearance and maintainability are important and cannot be sacrificed. Therefore good value can truly be obtained only when the cost of all necessary features is brought into balance with the cost of attaining the essential function of the product.

Costs are frequently on the hands of design engineers, production workers.Further complications may arise in achieving the highest value at the lowest cost as the product may be conceived by one group, designed by another, refined by a third and implemented by a fourth. Every phase in the development of a product involves new people, some of whom may not care about costs or have no direct responsibility for them.

Basic questioning in VA / VE
Expenditures to increase the functional capability of an item beyond that which is needed also are of little value to the user. Thus anything less than the necessary functional capability is unacceptable; anything more is unnecessary and wasteful. To achieve optimum value, functions must be carefully defined so that their associated costs may be determined and properly assigned. The VE approach requires the development of valid and complete answers for the following six questions:

What is the item? What MUST it do (its function)? What does it cost? What is it worth (the least possible cost to perform the function)? What else would work? What does that cost?

Value Engineering Types of Information to be gathered

Types of Information Physical data Shape, dimension,

material, colour, weight.

Restrictional data Information on

required restrictions concerning: Tolerances, methods, performance, procedures, operations, time, schedule, cost, etc.

Methods data Information on how it is:

operated, constructed, made, shipped, fabricated, written,developed, installed, packaged, repaired, operated, maintained, organised, replaced etc.

Cost Data Major breakdown of costs of

labour, material and markups for the elements of physical restrictional data as they relate to: Design, acquisition, operation, maintenance and disposal.

Performance Data Information on

what is present performance is, and what its performance requirements should be in areas of: Design , operation, maintenance, utilisation, utility, etc.

Quantity Data The anticipated volume or

repetition of use for the present and future.

Value Engineering Questions to simulate ideas

Questions to Stimulate Ideas
Eliminate Combine:
Can it be eliminated entirely? Can part of it be eliminated? Can two parts be combined into one? Is there duplication? Can the number of different lengths, colors, types be reduced?

Maintain Operate:
Is it accessible? Are service calls excessive? Would you like to own and pay for its maintenance? Is labour inordinate to cost of materials? How often is it actually used? Does it cause problems? Have users established procedures to get around it?

Standardise Simplify:
Could standard part be used? Would modified standard part work? Does the standard contribute to cost? Does anything prevent it from being standardised? Is it too complex? Can connections be simplified?

Requirements Cost:
Are any requirements excessive? Can less expensive materials be used? Is it proprietary? Are factors of safety too high? Are calculation always rounded off on the higher side? Would lighter gauge materials work? Could a different finish be used?

Challenge Identify:
Does it do more than is required? Dose it cost more than it is worth? Is someone else buying it at lower cost? What is special about it? Is it justified? Can tolerances be relaxed? Have drawings & specifications been coordinated?

Functions & activities to be taken up for VA / VE

S. No
1

Dept / Process
Materials

VE Scope / Activities
1 Alternate sourcing 2 Reducing multi point procurement 3 indigeniousation 4 Salvage, rejected and excess material 5 Timely supply of materials for production 6 Logistics 7 Communication cost / traveling cost 8 Packing and forwarding 9 Standardising economic order batch quantity 10 Alternate Materials 11 Standardisation of costing systems for purchasing / job ordering (eg spares, m/c components, plastic, pressed components) 12 Standardising the tolerance limits 13 Improving yield for raw materials 14 Negotiation

Measure

Functions & activities to be taken up for VA / VE

S. No
2

Dept / Process
PDE

VE Scope / Activities
1 Standardisation of components 2 Standardising the tolerance limits 3 Reducing ECNs 4 Testing, test equipments & procedure 5 indigeniousation 6 Alternate Materials / sourcing 7 Standardisation of costing systems for purchasing / job ordering (eg spares, m/c components, plastic, pressed components) 8 Design for yield 9 Material cost reduction 10 Reduction of new products lead time to gain advance sales turnover

Measure

Functions & activities to be taken up for VA / VE

S. No
3

Dept / Process
P&S

VE Scope / Activities
1 Reducing in process inventory 2 Manufacturing process improvements like reducing cycle time, elimination / combination of process 3 Rework & rejection elimination in process, customer line rejections / warranty claims 4 Improving productivity standards 5 Improving OEE 1 Reducing inventory (consumption on the basis of NM / SM) 2 Maintaining stock accuracy 3 Reducing packing & storing cost 4 Implementing FIFO system 5 Creating norms for standardising the safe stock levels to be maintained for components / spares / RM

Measure

Stores

Functions & activities to be taken up for VA / VE

S. No
5

Dept / Process
PMD

VE Scope / Activities
1 Decreasing MTTR 2 Increasing MTBF 3 Reducing spares cost 4 Reducing spares inventory 5 Equipment maintenance 6 Installation 7 Operation 8 Maintenance 9 Repair & replacement 10 Reducing consumables intake like lubricants, oils, electricity and water.

Measure

Functions & activities to be taken up for VA / VE

S. No
6

Dept / Process
Tool Room

VE Scope / Activities
1 Standardisation of tool elements 2 Standardising the tolerance limits 3 Alternate sourcing for vendor tools 7 Standardisation of costing systems for purchase ordering (eg spares, components of plastic, pressed tool elements) 8 Design for yield 9 Incorporation of SMED techniques 10 Reduction of new tools manufacturing lead time to gain advance sales turnover 11 Decreasing MTTR for production tools 12 Increasing MTBF

Measure

Functions & activities to be taken up for VA / VE

S. No
7

Dept / Process
Mfg Engg

VE Scope / Activities
1 Optimum design of machine / assy line for productivity, maintenance etc. 2 Ensuring quick changeover through jigs & fixtures. 3 In-house manufacturing of SPMs & assy lines 4 Enhancement of flexibility & life cycle by less investments. 5 Increase in the process quality to reduce rework, inspection by improving the process capability 6 Reduction of new assy lines / machines manufacturing lead time to gain advance sales turnover 1 Study & improve imbalance in assy line 2 Continuously reducing the time standards of critical process 3 Implement time, motion & method studies to improve productivity levels (SCARE) 4 Line efficiency improvements

Measure

TIE

Functions & activities to be taken up for VA / VE

S. No
9

Dept / Process
Quality

VE Scope / Activities
1 Establishing quality standards at vendor end for reducing rework / rejections. 2 Identifying improvements pertaining to design, process during audits 3 Introduction of qualifying gauges where ever possible to reduce the inspection cost

Measure