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Value Analysis

Value analysis aims to identify and eliminate unnecessary costs through alternative, less expensive materials, designs, or processes that provide the same performance, quality, and efficiency at a lower overall unit cost and higher profits. It examines all facets of a product's function and cost to determine if costs can be reduced or eliminated while retaining performance and quality. The objective is to decide what a product should do, then analyze and improve its performance while reducing costs to obtain the same quality in a cheaper way. Value analysis uses techniques like functional cost analysis and the ten tests of value to systematically study components and their costs.

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211 views11 pages

Value Analysis

Value analysis aims to identify and eliminate unnecessary costs through alternative, less expensive materials, designs, or processes that provide the same performance, quality, and efficiency at a lower overall unit cost and higher profits. It examines all facets of a product's function and cost to determine if costs can be reduced or eliminated while retaining performance and quality. The objective is to decide what a product should do, then analyze and improve its performance while reducing costs to obtain the same quality in a cheaper way. Value analysis uses techniques like functional cost analysis and the ten tests of value to systematically study components and their costs.

Uploaded by

Ruban Thomas
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Value Analysis

Value Analysis
Value analysis aims at identification and elimination of unnecessary costs through the increased use of alternative, less expensive material, design, process to provide the same performance, quality and efficiency with decrease in overall unit cost and consequently generate higher profits.

Type of Values
Esteem Value: It is the desire to secure a object for status or
prestige. Possession of the object helps to associate with certain people, place or thing. Exchange value: Possession of the object gives a value that makes it possible of being traded for other items. Use value:

Value Analysis Objective and Approach


Value analysis can be defined as a technique which examines all the facets of a function and cost of a product in order to determine whether the cost can be reduced or altogether eliminated, while retaining all the features of performance and/or quality of a product. It is a cost reduction technique. Objective is to decide what a product should do and then to analyze and improve upon its performance and to reduce cost. To obtain the same quality of the product and achieve the necessary function in a cheaper way. Unnecessary cost represent the cost which neither provides an important function nor quality, nor life, nor even appearance of the product.

Value Analysis Objective and Approach


Ten tests of value
1. What are the precise functions of the item? 2. Which ones can be eliminated? 3. If the item is not standard can it be substituted by a standard item? 4. Are there any similar items in use that can be substituted. 5. Can the item be re-designed to allow greater tolerance? 6. Will a design change permit the item to be made from a lower cost process or a lower cost material? 7. Could the item be produced at a least cost? 8. Are the finishing requirements greater than necessary?

Value Analysis Objective and Approach


9. If different sizes of the item are stocked, can some of these be combined to reduce inventory and thus get the advantage of quantity buying 10. Are there any possible economies in packaging technique? Every material, every part, every operation must pass tests so as to improve upon work methods, control wastage and reduce costs.

Value Analysis Objective and Approach


Function Cost-matrix Apportion some of the total cost to each of the functions Allocation of cost to functions provides a measure that can act as a common denominator. Functioncost matrix reveals areas of bad value and establishes high cost functions.
Functional Cost by comparison Function is divided into primary and secondary function and costs are assigned to each function.

Value Analysis Objective and Approach


Synthetic cost
Ascertain the cost of individual functions by dividing the functions To ascertain the cost of individual functions it is necessary to consider the labour and material costs associated with each feature. Creativity and divergent thinking helps in giving simple solutions to difficult problem.

Compiling functional cost for an assembly


Ascertain that the assembly covers only the function under consideration and does not involve other components.

Value Analysis Objective and Approach


Once the level of study of the complete assembly has been decided , the components can be studied and costs apportioned to the individual function. It is often found that one or two main components contribute to all functions, and remainder only a few. Process of compiling the matrix leads to a greater understanding of the functions and their interaction.

Elements of study Information phase

Activities of the study


Define and price the function Obtain and interpret all the facts Determine alternative solutions Determine and compare feasibility Determine and compare suitability What it is? What does it cost?

Speculation phase Analysis Phase

How else can the job be done? At what cost? Is this better than that? How much better? why?

Decision and action phase

Audit alternatives of selection Use operating experience to effect further improvement Get departmental and managerial approvals Prepare new specifications Review key alternatives with all departments and vendors concerned Selective alternatives

Evaluation Phase

Value Analysis
Design Analysis
Methodical study of all phases of the design of an item relative to its function. Focuses attention on the function rather than the part characteristics. In this viewpoint design simplification are more apparent than is possible under original design conditions. Multi disciplinary team with varied experience and background are involved in the VA study. Application of the study can bring tremendous savings in manufacturing and construction activities.

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