VALUE ENGINEERING

What is “VALUE” ?The minimum money which has to

be expended in purchasing or manufacturing a product to create a appropriate use of esteem factors.

VALUE ENGINEERINGValue engineering is a total of

management which approaches the question of saving cost from the point of view of ‘value’.

Requires co-operation of all functional departments.

In large organisations, there are value engineering teams having full time jobs.

Value and cost

Value = Function Cost

Value: What the product is worth to the customer.

Function: Properties and qualities of product.

Cost: Money value of materials used, Labour & indirect costs.

Suggestion schemes

Suggestion scheme facilitates the work of value engineering team.

The scheme helps in the changes of value engineering and makes it implementation easier.

Requirement of a productUse.Esteem.It is essential to be considered how

much to be added in order to sell the part.

The reasonable price of a product can be obtained by comparing with a comparative product.

VALUE ENGINEERING APPROACH

Value Engineering Approach No standard approach – discuss with team members.Subject Basic

question Analysis Answer

Function What functions are performed?

1) Is there any possibility of elimination?

2) What alternative methods are available?

 

Material What is the material specification?

1) Can alternative material be used?

2) Can the specification be amended?

 

  What quantity of material should be used?

1) Is the size or weight of material excessive?

2) Can the quality be reduced?

3) Will a cheaper material serve the same purpose?

4) Is the cutting done economically without waste?

 

Value Engineering Approach

Subject Basic question

Analysis Answer

Labour 

Which are the direct labour costs?

1) Are all the operations necessary?

2) Will alternative operations be cheaper?

3) Can certain assembly operations be modified?

 

Process Are the best Processes being used?

1) Are all the operations necessary?

2) Will alternative operations be cheaper?

3) Can certain assembly operations be modified?

 

Standardization

Are the materials or components standard?

1) Can the materials be standardized?

2) Can a number of product use standard (common) parts?

3) Can methods be standardized?

 

PRODUCT DEVELOPMENT

ANDVALUE

ENGINEERING

1. Product Design and Development

1. Factors considered in product design Customer’s requirement.Operator’s Convenience.Types of materials.Work methods and equipment.

2. Design.3. Planning.4. Specialized function.5. Visible in long run.

1. Product Design and Development

Overall quality and performance.Work together to reduce cost.Latest developments.Service function.Desired objective.

2. Application of Value Engineering

1. Elimination of undesirable features.

2. The main purpose is to improve quality and to reduce unit costs.Reduce cost and prices.Reduction of undesirable

materials.3. Benefits.

3. Simplification of Product

VALUE ENGINEERING CAN BE APPLIED TO ANY MANUFACTURING, HERE IS AN EXAMPLE OF TRACTOR MANUFACTURING FIRM IN THE FOLLOWING AREAS 

1.TRACTOR DESIGN make the design simple 

easy to use  reduce COMPLICATED / expensive parts. 

2.TRACTORS RAW MATERIAL / PARTS PROCUREMENT 

establish the demand planning system [ reduce the fluctuations in production] 

establish the inventories of raw materials [ reduce the cost of stock holding] -establish the economic order quantity 

3. TRACTORS PRODUCTION PLANNING establish an effective / efficient production

planning system [ cost savings] 

4.TRACTORS PRODUCTION  establish a lean production [ cost effective]

 5. TRACTORS TOTAL QUALITY

ASSURANCE. • set up quality assurance system to reduce

quality problems/ rejections[ cost savings ] 

6.TRACTORS FINISHED GOOD INVENTORY 

• match the finished stock inventory to market demand / sales requirements] [ cost saving In stock holding ] 

7.TRACTORS CUSTOMER SERVICE • provide effective customer order

processing/order service/ timely despatch to customers. [ adds value to customers / reduces distribution cost] 

8.TRACTORS AFTER SALES SERVICE offer warranty/ after sales service to

customers [ adds value to the product and increases sales ]