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, about 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.
The society of American Value Engineers define Value Engineering as—the systematic application of recognised techniques which identify the function of a product or service, establish a monetary value for that function, and provides the necessary function reliably at the lowest overall cost.
The value engineering can be defined simply as: It is a systematic, step-by-step approach, to achieve the desired functions of a system, service, process or product at an overall minimum cost, without deteriorating the quality, performance, reliability, safety or environment.
Effectiveness of Value Engineering:
It assures cost effectiveness:
- It is cost avoidance instead of cost reduction.
- It locates all frills and gold plating’s.
- It segregates the necessary from unnecessary.
- It is an organised study of functions and cost.
- It is hot a crash cost reduction method.
- It is a combined effort of several departments.
- It is not a sacrifice of quality
- It is not a mere criticism of existing system, method, design or process but an appraisal of practical alternatives.
Qualitative Advantages of V.E.:
(i) Better understanding between department and individuals and so better co-operation.
(ii) Continuous updating of data base management.
(iii) For techno-economic excellence, introspection by individuals and departments possible.
(iv) Tendency to think functions rather than parts i.e. the hardware,
(v) Improved capability and preparedness to cope with changes in demand and quality.
(vi) Since value management involves individual’s participation in decision making, there is improvement in morale and commitment of the individuals.
(vii) Atmosphere of creativity in the organisation. Individuals are encouraged to put forward suggestion which lead to ultimate cost reduction and better functioning.
(viii) It leads to job satisfaction as there is professional autonomy to face technical challenges.
(ix) It gives opportunities to individuals to prove their skill, ingenuity, and creativity.
(x) It acts as a motivator towards higher productivity of the organisation.
(xi) It encourages joint decision making so shouldering of responsibility by all.
(xii) Improved system, procedures, and communications.
Qualitative Advantages of V.E.:
(i) Higher productivity.
(ii) Simplified manufacturing process
(iii) Overall cost reduction.
(iv) Better performance
(v) Higher reliability
(vi) Reduction in lead time
(vii) Better quality
(viii) Easy maintainability
(ix) Improved appearance.
(x) Simplified design.
(xi) Reduced rejections.
(xii) Less close and rigid tolerance.
(xiii) Higher market share.
(xiv) Higher profit.
(xv) Less after-sales service requirements.
(xvi) Reduced down time of machine or process.
(xvii) Decision on to-make-or-to-buy, easy and correct.
(xviii) Better packaging.
(xix) Improved logistics.
(xx) Application of group technology possible.
(xxi) Accommodating customer’s various requirements possible, hence greater customer’s satisfaction.
(xxii) Export probability enhances.
(xxiii) Enhanced value of product/service.
(xxiv) Optimum utilisation of resources, materials, machines, facilities manpower and money.