Process of Value Analysis: Value analysis is a technique of cost reduction. It involves study of cost in relation to product design. Before making or buying a product/material/equipment, a study of its value is made. The purpose is to reduce the cost of the prescribed function without sacrificing the required standard of performance. First, the required function is determined and then the best way to perform it at a lower cost is found. Value analysis is a supplementary device in addition to the conventional cost reduction methods.
Value analysis is a systematic application of established techniques to identify the functions of a product or component and to provide the desired functions at the lowest total cost. It is a creative approach to eliminating unnecessary costs which add neither to quality nor to the appearance of the product.
Process of Value Analysis In Production and Operation Management :
Value analysis is a rational and structured process consisting of:
(a) functional analysis to define the reason for the existence of a product of its components,
(b) creativity analysis for generating new and better alternatives, and
(c) measurement for evaluating the value of present and future concepts.
Difference Between Value Analysis and Value Engineering
Value analysis is closely related to value engineering, though the two are not identical. Value analysis refers to the work done in this regard by purchasing department whereas work which engineers do in this area is called value engineering. Value analysis requires close co-operation between purchase, engineering, production and costing departments and also that of the vendor’s expertise. It is a team job requiring lot of discussion and deliberations. Any new idea is fully investigated to analyze its feasibility. The product is considered from all angles and all possible alternatives are explored. The main questions asked under value analysis include
(1) Is the cost vis-a-vis the usefulness of the product reasonable ?
(2) Can lower cost design work as well ?
(3) Can another less costly item fill the need ?
(4) Will less expensive material do the job ?
(5) Does the function contribute value ?
(6) Are the features reasonable ?
(7) Can scrap be reduced by changing the design or material ?
(8) Is there an alternative product/process design which is less expensive?
Procedure in Value Analysis
There is no standard approach or procedure to value analysis. However, the stages involved in a value exercise consist of the following
1. Ascertaining the needs and wants of customers.
2. Specifying the functions of products and components.
3. Determining the appropriate cost for desired performance. The appropriate cost for a particular purpose is the basis of value.
4. Identifying better alternatives in terms of work procedures, work design, product usage, etc. This is the work of engineers and technicians.
Value analysis takes into consideration both functional and aesthetic requirements of a product. Functional or use value means the product should be able to serve the purpose for which it is intended. For example, the function of a pen is to provide proper flow of ink. If a product does its job, it has use value. Thus, use value refers to the properties and qualities which make the product useful and enable it to serve its purpose.
Aesthetic or esteem value means the product should be pleasing in appearance or look. This side of product design may induce people to buy it It also includes special or attractive features in a product. However, this may involve increase in the cost and price of the product. Therefore, only that much esteem value should be built in to the product which is necessary. A comparison with competitive products helps in determining whether the use and esteem functions are properly balanced and the customer is getting his money s worth.
After such comparisons, possibilities of substituting its material, parts, process, etc., are analyzed to develop better alternatives. Thus,a product or service is said to have good value if it can give desired performance at reasonable cost. For example, the value of brakes in a motor car is very high. Value may be changed by changing either the cost or performance of the product or both.
