Value Engineering, Why, How and What?
?Value Engineering ‘Why apply value engineering?’
Value engineering lost cost issues on and off, the performance and quality of the product are improved. During product development, value engineering is used to realize significant cost savings. Often an optimization has already taken place, such as other manufacturing methods or a purchasing process. Major savings can then only be realized at a functional level.
'For better performing products and machines'
Summary
‘Function costs and function values’ We use machines and devices based on the value that each function has for the customer. Value engineering is a logical, quantitative design method, in which the actual function costs and the essential function values are inventoried. Both the functional, ergonomic and aesthetic components of your product can be improved.
‘Multidisciplinary approach’ A team is formed from marketing, purchasing, sales and R&D to critically examine the costs of functions together.
The following questions are examined together: ? What are the costs per function?
? Are these costs acceptable for a function? ? What does the customer find a certain function worth?
? Is a function necessary?
? Can we function by increasing the value of a product?
Based on this analysis, the strategy for optimization is determined. In the realization phase, alternative solutions for the critical functions are devised and tested for sustainability.
More about our approach and examples on our website:
For better performing business
Value engineering, How? The Method!
Part 1. The analysis
'From part costs to function costs'
In the analysis phase, sales and marketing indicate which product performance and at what costs a customer can be enticed to purchase. R&D needs to know at what product costs the product must perform. Value engineering is therefore a multidisciplinary approach and contains an analysis method in which both commercial and technical departments work together.
Function cost charts are used in the analysis. This is an overview of the current costs of the features present in a product, highlighting the features with the greatest potential for cost reduction.
Functional thinking
Because function thinking and concept of function are not clear to everyone, we explain:
In this analysis phase, functions of the current product are first collected. We define the concept of 'function' as "what the product or machine must do". In the case of a crane, this is “lifting a load”. We describe this without naming the solution. This offers designers the space to come up with other solutions that are cheaper or better for lifting a load.
Once all functions have been described, the components that contribute to the functions are specified. The cost price of the components is known and in this way the costs for each function can be mapped out.
The figure above shows a bar chart with function costs of an industrial cleaning machine. The main function of the machine is to clean components. This is the actual function for which the customer purchases the machine. In addition, there are functions that contribute to operation, safety or provide an attractive appearance and therefore also have value for the user.
Suspicious functions
When the costs per function are defined, it is possible to name the suspect or critical functions. These functions cost relatively much and therefore have more potential for major cost reductions. The features are also assessed for quality and performance. Or are there functions that are not yet available but that the customer does value?
It is also important to ask the question: Is the customer willing to pay this price for these functions? Or does the customer actually need that function?
“functions can be compared to customer features.” As a result, in addition to the function cost charts, we also show the relative value that a customer attaches to these functions. This relative value, which is in fact the market insights, is then provided by the commercial department of the company. The figure below illustrates a function cost versus value comparison.
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Part 2. The creative phase, less costs and more value
Solution strategies and concept development
With Value engineering we divide the solution strategies over three levels in order to achieve cost savings or value increases.
In general, functional adjustments lead to the greatest cost savings. However, solutions at a functional level can have a greater impact on the implementation (including a longer development time, a higher development budget for implementation and a budget may be required for investments in production and assembly).
After selecting the desired strategie and solutions, concepts are developed. These concepts are then tested for technical and economic feasibility (Research processes). Implementation of the chosen concepts is then carried out systematically, with e.g. TRIZ or Systematic Design.
Interested in value engineering?
Scope of application
Value engineering is very suitable for initiating product innovation and can be used for the following situations:
? Increasing customer values and reducing costs;
? Smart Customization and Engineering-to-Assembly (ETA);
? Issues where product designs must match high mix – low volume production (HMLV);
? Situations where Engineering-To-Order (ETO) moves to a Configure-To-Order (CTO) to reduce engineering hours;
? Creating a strategic innovation roadmap for the short and long term;
? Continuous improvement. Periodically performing the value analysis always shows potential for cost savings;
? As a performance indicator through continuous benchmarking of own products.
Our role
We carry out value engineering based on your needs and questions. A selection of the options:
? Facilitating value engineering processes of your team;
? Project management (organization and supervision) of value engineering processes;
? Carrying out concept studies and engineering;
? Depending on the outcome of the value analysis, we can use IDpartners' expertise in the field of industrial design, UX design, engineering and market-oriented innovation processes (see www.idpartners.nl);
? Coaching companies in the field of value engineering in post-processes/follow-up processes;
We also have the option to train your R&D department in value engineering. We will teach you the approach based on your business case and practice cases.
Our role is always coordinated with the client per assignment. We will make a suitable quotation for you based on a no-obligation preliminary consultation.
Knowing more?
We would be happy to discuss this with you. We can be reached by telephone on 053-4301701. Contact person: Jacques Stevens [email protected]