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• Introduction VE • Level of functions

• Why Product cost more ? • Function cost
• VE defined • Value Potential
• Value Orientation • Functional analysis System
• Selection of projects Technique (FAST)
• Selection of team leader • The creation phase
• Selection of team • Brain storming
members • Decision matrix
• Information Phase • The implementation phase
• Function Phase • The Audit phase
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• Lack of information
• Honest wrong belief
• Temporary circumstances
• Habits & attitudes
• Lack of ideas

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• Lack of information
• Honest wrong belief
• Temporary circumstances
• Habits & attitudes
• Lack of ideas

Lack of information leads to wrong

decisions which always make for
increased costs 4
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• Lack of information
• Honest wrong belief
• Temporary circumstances
• Habits & attitudes
• Lack of ideas

The unnecessary cost result from

accepting opinions, beliefs, and theories
without justifications and verification
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• Lack of information
• Honest wrong belief
• Temporary circumstances
• Habits & attitudes
• Lack of ideas

Sometimes, lack of information is reflected in continued

application of product, processes, services of systems to
overcome a particular situation repeatedly even after the situation
has altered.

E.g : The process adopted for making prototype, by D & D6 is

continued even for mass production.
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• Lack of information
• Honest wrong belief
• Temporary circumstances
• Habits & attitudes
• Lack of ideas

Our old habits die hard and result in

unnecessary cost most of the time.

If man fears one thing most , then it is the

need to change.

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Can we change our habits and attitudes ?
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• Lack of information
• Honest wrong belief
• Temporary circumstances
• Habits & attitudes
• Lack of ideas
This is sincerely caused by insufficient use of
knowledge and skills of various specialist in the
company and outsides. This could also be result of
lack of creative thinking and lack of time.Many of us
become myopic in our resourcefulness and do not
ask for help from specialists available elsewhere in
the company. 8
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Generally, Unnecessary cost do not

arise simply for one of the reasons we
have discussed. It is due to a combination
of any of the above reason. This cost are
not seen or identified so easily by anyone.

VE is a technique which helps

unearth unnecessary costs,
and helps minimize, if not
eliminate, then completely. 9
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VE is a systematic,
step - by - step approach,
intended to achieve the
desired functions of a product,
process, system or service at
an overall minimum cost
without in anyway affecting
quality,reliability, performance,
delivery, safety or the
environment.
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VE

IS

More than
A COST REDUCTION TECHNIQUE

1+1=3 11
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Improve the product

by identifying

Unnecessary costs

and

eliminating them.

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VE is the most powerful and

highly versatile technique and
may be applied for cost
improvements in practically all
areas - Product, Process,
Services and Systems.
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VE can be applied anywhere in VSL.

Production QA

Stores

Commercial /
Administration
Purchase
D&D
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Maintenance Marketing
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VE is different than the other COST
REDUCTION methods

• Highly systematic
• Team approach
• Bringing together talents & Expertise
• Identify unnecessary cost - Focussing
the product function
• Use creative ideas - Minimize
unnecessary costs.
• Directly contributes to improve operating
performance at reduced cost. 15
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Has two faces with all the advantages

to the user.

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• Meeting functional needs

of customer
• Proper design • Cutting down costs in :
specifications - Manufacturing
• Product characteristics - Purchasing
• Improve sales - New product
• Increase market share development
• Improve service to - Sales & distribution
customer - Other areas directly
• Enhancing company’s enhancing company’s
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image profit
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When we analyze the

A value oriented
Company as a whole is
customer driven and cost
conscious. It is important
that every department in
the Company has a
similar orientation, for the
overall success of the
Company.
Organisation structure and
the role of individual
department, it is obvious
that one department’s
output becomes input for
one or more departments.
In some cases, it could
also become a two way
process like the Computer
service department of any
Company. The Computer
service department is a
customer of Finance,
Personnel, Industrial
Engineering and others.
While almost all
departments in the
company are it’s Customer.

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Value (V) = Needed Performance (P)

Overall Cost (C)
Value can be increased by several means :

1) V P 3) V P
= =
C C

2) P 4)
V P
V = =
C C
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JOB PLAN :
A job plan is a typical American term used in
Value engineering to indicate all the steps
required to be carried out by VE team.

The orientation phase lays stress on three

aspects :
1. Training
2. Selection of projects
3. Selection of appropriate team

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• A sacrifice to quality • A rejection of

complacency
• A crash cost reduction • An objective appraisal
method of practical alternatives
• A one time gimmick • A continuing dynamic
programme
• A monopoly of one • A co-operative effort of
department several departments
• A criticism of existing • An organised study of
design,process, method functions and cost
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or system
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LEVEL DURATION COURSE

COVERAGE
Top Management Half day Concepts,applications &
MD,President & benefits through case
others on the studies
board

Senior One day Concepts, applications

Management plus implementation
(General strategies
Managers & Head
Of
Departments)

Middle Two days Concepts,applications

Management plus VE methodology
(Sectional Heads &
Senior Engineers /
Officers

Supervisors One / Two days Awareness programmes

through number of22case
studies.
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• ABC analysis
• Problematic area
• Production problems
• Maintenance problems
• Vendor development problems
• Design problems
• Old designs, Specifications & Standards
• Low-Yield products
• New projects/Processes/Products/Systems

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ABC Analysis :

ABC analysis also called pereto analysis, is

being carried out to identify the vital few
components, parts or processes that
contributes to the bulk of the total cost.

This generally follows the paretola of 20-80

which means that 20% of the total items
contribute to 80% of the total costs.
According to the value of items we can 24
define them in a category of A, B, C.
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Problematic area :

There are many areas where

problems are faced while
manufacturing a product.

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PRODUCTION PROBLEMS :

Troublesome areas in
production may be ideal for the
application of VE

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MAINTENANCE PROBLEM :

VE helps relieving
maintenance department from
attending to unpredictable and
frequent failures and helping
them do more planned work.
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VENDOR DEVELOPMENT
PROBLEMS :

Value Analysis while VE

study results in easy
development of
components and products
with consistent quality at
reduced price.
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DESIGN PROBLEMS :

By adopting VE techniques ,
D & D can achieve design
standardisation,import
substitution at reduced cost.

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OLD DESIGNS,SPECIFICATIONS &

STANDARDS :

Technology has been changing so fast

in the last two decades,particularly in
the areas of material science,
manufacturing systems and many
others.I.e. : necessitates a fresh look at
all the old designs, specifications and
standards. As a general rule one may
say that old designs more than ten
years old should be taken up for VE.
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LOW YIELD PRODUCTS :

Products that have low yield

are very good subject for
value analysis studies

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NEW PROJECTS / PROCESSES / PRODUCTS / SYSTEMS :

VE potential is very
D&D high at the design /
project formulation
VALUE POTENTIAL

stage. Figure below

gives an idea where the
Prototype
Development
savings potential is
maximum and where
VE should be actually
Production begin.

PRODUCT LIFE
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• Should be fairly a senior person

• Should be from the related department of the project
• Should be familiar with VE concepts and techniques

ABILITIES OF LEADER :

• Sound knowledge about the project

• Should be able to get willing support of others
specialists within the organisation as well as from the
outside
• Should motivate his team members
• Should have good ideas on improving the methods,
process and design while achieving the basic
function.

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The team members should be from different

departments and be experts in their own
areas of operation. Only those whose
knowledge and expertise will be of direct
use to the VE project should be chosen as
members.

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This is second step of VE job plan.The steps involved in the

Information Phase are :
• Collecting data
• Decision & Costs
• The use of workbook
• Human relations
• Consumption
• Costs
• Design
This phase identifies all costs that can be directly associated with
the product, Process, Service or System.

While working in this phase the team tries to answer the question
“What is it ? “
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Function phase determines the

answers to the following three vital
questions :

• What does it do?

• How much does it cost ?
• What is it’s worth ?

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Function is that a product does in order to “WORK” or “SELL”

E.g. : Seat

• “USE” or “WORK” function :

Seating,Comfort,Safety,Reclining,Sliding,Restrict
movement,Cover,Fastening,Supporting,Resting,Locking,Releasin
g,Deflecting,Strength,Durability,Packaging,Ease of use,Ease of
service and repair etc.
• “AESTHETIC” and “SELL” function :
Uniqueness,Appearance,Finish,Colour,Texture,Shape,Style,Quali
ty,Reliability,Prestige etc.

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• How much does it cost ?

This involves Function - Cost

analysis, where cost are apportioned
to each function to determine how
much it cost to achieve the basic
function , and how much the
secondary functions cost.
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• What is it’s Worth ?

Worth is defined as the lowest cost to

achieve the basic function.

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THE RULE FOR DEFINING FUNCTION

The expression of the functions must be
accomplished in just two words, “A Verb” and “A
Noun”
ITEM / FUNCTION
PRODUCT VERB NOUN
• Seat • Provide • Support
• Recliner • Incline • Backrest
• Slider • Move / Slide • Seat
• Recliner Lever • Release • Sector
• Recliner Knob • Provide • Grip
• PU pad • Provide • Cushioning
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• Trims • Cover • PU / Frame
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• Higher /Basic order function

• Lower/Secondary order function.

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“All cost is for function”

• A customer does not want to pay for unnecessary functions.
Unnecessary functions can offer be avoided by a creative solution but
there are times when they cannot be avoided completely .

• Customer buys “ The Products & Services” for A FUNCTION.

• The entire product cost has to satisfy all the functional requirements

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