ORIGIN

Value Engineering began at General Electric Co. during World War II. Because of the war, there were shortages of skilled labor, raw materials, and component parts. Lawrence Miles and Harry Erlicher at G.E. looked for acceptable substitutes. They noticed that these substitutions often reduced costs, improved the product, or both. What started out as an accident of necessity was turned into a systematic process. They called their technique as Value Analysis. In the year 1954, US Navy Bureau of ships adopted same technique in their effort at cost avoidance during the design stage and saved millions of dollars. They named it as Value Engineering. VE follows thought process that is based exclusively on function, i.e. what something does not what it is. Value Engineering Value Engineering is where the value of all the components used in the construction of a product from design to final delivery stage are completely analyzed and pursued. VALUE(P) = Desired performance --------------------------Overall Costs(C) Value can be increased by either improving the Performance or reducing the cost. APPLICATIONS OF VALUE ENGINEERING: Automobile Industry. Heavy Electric Equipment Industries

 Ship Builders Railways & Heavy Vehicles Mfr. Electrical & Communication Machinery Mfr. Fabrication Industries Process Industries Metal, Fibre, Food, Chemical & Steel Architectural & Construction Firms and also All Service Sectors DEFINITION VALUE ENGINEERING : VE is an analytical, Step-wise, organised, creative team-approach designed to examine all the facets of cost & functions of a PRODUCT/EQUIPMENT/ SYSTEM to identify and eliminate unnecessary costs which are incurred in: QUALITY APPEARANCE LIFE/RELIABILITY CUSTOMER FEATURE

Some Close Cousins of Value Engineering:Over a period many other terms or methodologies have evolved based on the same functional approach but laying emphasis on some specific type of objectives. Some of these terms do not even use the term Value. For example: Value Management Value Assurance

 Zero Based Budgeting

Business Process Re-engineering etc.

VALUE ANALYSIS VS COST REDUCTION

COST REDUCTION

VALUE ANALYSIS

Formula

Value = Cost

(Quality) Value =

Worth ----------Cost

Questions

*0 *2

What is it? How can we make it for less?

*1 *3 *4 *5

What is it? What does it do? What must it do? How can its functions

Aims

Reduce cost of present product

be performed for less Provide user-required functions at lowest cost

PRINCIPLES OF VALUE ENGINEERING *6 *7 *8 *9 User-First Attitude Functional Approach Team Approach Creative Approach

VALUE ENGINEERING BASICS JOB PLANS The basic framework for conducting a value study is the Job Plan. Value Engineering is a systematic approach and it has a well-considered job plan that needs to be adhered to maximise the effectiveness of the technique. A typical job plan is given below: Selection of the project and the team members Collection of Information Function identification and analysis Creation idea generation Evaluation of ideas Investigation of alternative solution Final recommendations and presentation The above plans provide a systematic and orderly approach to conducting a study. The plan includes both analytical and creative phases. Each phase has its rules that are designed to increase the effectiveness of the phase.

VALUE ENGINEERING JOB PLAN

1. GENERAL/ORIENTATION PHASE Use good human relations Inspire team Work Work on specifics Overcome roadblocks Apply good business judgement

2. INFORMATION PHASE Secure the facts Determine the costs Fix costs on specifications and requirements 3. FUNCTION PHASE Define the functions Evaluate functional relationships 4. CREATIVE PHASE Establish positive thinking Develop Creative ideas 5. EVALUATION PHASE Refine and combine ideas Establish costs on all ideas Develop alternative ideas for functions Evaluate by comparison 6. INVESTIGATION PHASE Use company and industry standards Consults vendors and specialists Use specialty products, processes and procedures 7. RECOMMENDATION PHASE: Present facts Present costs Motivate positive action

INFLUENCE OF SELECTION OF TIME ON VALUE ENGINEERING(VE) APPLICATION PHASE CONCEPT FORMULATION PHASE VALUE ENGINEEING EMPHASIS VE studies during this phase are directed at: Furnishing inputs needed to ensure the most economical decisions to achieve the functions sought. achieving low total cost of ownership (rather than just low acquisition cost)

TENTATIVE DESIGN PHASE

VE studies during this phase add value by analysing and developing alternatives for the following: Essential requirements Technical characteristics Design tasks

FINAL DESIGN PHASE

VE studies during this phase are limited to:

Eliminating unnecessarily restrictive detail and

CONSTRUCTION/ MANUFACTURING PHASE

eliminating items not necessary. Redesign effort at this stage cannot be economically accomplished due to the implementation costs involved. VE studies during this phase result in: Extension of an item's life Reduced repair costs Savings in energy and other operating costs Reduction in the number of supply items in stock. VE can be performed both internally and by the contractor/vendor.

Value Methodology (also called Value Engineering, Value Analysis or Value Management) is a powerful problem- solving tool that can reduce costs while maintaining or improving performance and quality requirements. It is a functionoriented, systematic team approach to providing value in a product or service.

The value methodology helps organizations compete more effectively in local, national and international markets by: -Decreasing costs, -Increasing profits, -Improving quality, -Expanding market share, -Saving time, -Solving problems, -Using resources more effectively. VALUE ANALYSIS & VALUE ENGINEERING Value analysis is systematic ,creative and organized approach & to identify unnecessary cost.Value engineering is a technique of application to eliminate unnecessary cost. Generally value analysis is based for cost values. Unless otherwise is specified. Value Analysis is an effective tool for cost reduction and the results accomplished are far greater. It improves the effectiveness of work that has been conventionally performed as it questions and probes into the very purpose, design, method of manufacture, etc., of the product with a view to pinpointing unnecessary costs, obvious and hidden which can be eliminated without adversely affecting quality, efficiency, safety and other customer features.

VALUE AND VALUE ANALYSIS Let us consider at this stage what is meant by Value. Value is itself is some what difficult to define. It means different things to different people.

Value Analysis VA is an step by step approach to identify the functions of a product, process, system or service; to establish a monetary value for that function and then provide the desired function at an overall minimum cost without affecting any of the existing parameters like Quality, Maintainability, Productivity, Safety and other Performance characteristics. Also, it is often confused with the cost and price of a product or service. One way of defining the value of an item is: Worth to you Value = -----------------Price you pay This means that if you feel that you have your moneys worth, then you have received 100 per cent value. Which indicates that Value has a subjective aspect, for what is good value for one person need not necessarily be so far another. In general, if for any function or a product or a service, you feel you are paying too much, or it costs you more than you think it should, there is scope for improving its value into it. This leads us on to another useful way of looking at value. Value is the least cost that can accomplish reliably a function or a service. This implies that in achieving reduced cost, the quality and performance of the item are maintained. It follows, therefore, that value analysis is a technique which builds Value into an item. Value can also be defined as that combination of quality, efficiency price, and service which ensures the ultimate economy and satisfaction of the purchaser. Value Analysis can be understood as a technique which helps everyone to determine this combination. It can be seen, therefore, that several components make up Value. There is value arising from the function or end use of an item, and from its ability to perform a useful function reliable. There is the subjective aspect of value in terms of esteem or prestige value or artistic value; for example, the extra chrome 63 and styling used to sell automobiles, or the neck-tie or diamond ring you may wear. Again, there is the cost value made up of the material and labour costs,

overheads and any other costs incurred in producing the item. However, in the popular mind, this is closely associated with esteem value, as there is a mistaken belief that because something costs more it is worth more. Finally, there is the resale or exchange value which may be taken as the ability to part with money for possessing a particular product. In addition we have place value with regard to the usefulness of a product at a particular place. VARIOUS VALUES CONSIDERED BY VALUE ANALYSEE 1) Huge or functional Value:It is due to the characteristic, quality, attributes, property of the product by virtue of which the product performs intended function most satisfactorily with minimum maintenance. 2) Aesthetic Value:It is due to characteristic ,attributes, property, quality because of which product becomes attractive, elegant looking, creates sales appeal, color shade, style, texture ,etc. 3) Exchange Value:It is in terms of the amount of any other commodity that can be obtained in exchange of the commodity under consideration . It depends on time and place. 4) Esteem Value:It is due to special characteristics, some manufacturers enjoy customer goodwill and historical prestige. 5) Cost Value:It is the total of all the costs incurred to manufacture a product .i.e Unnecessary cost due to ; Bad product design, Inefficient manufacturing method, Inefficient manufacturing processes,

 Lack of Standardization, Choose of wrong machine and tools, Bad Layout, Bad working conditions, Accidents to the worker, Machine breakdown, Bad quality Raw material, Lack of training to the workers, Excessive variety of products, Frequent changes in product design, Improper material handling, Defective packaging of product, Waiting, Searching, Bad house keeping, etc.

Benefits of Value Analysis

VA is an effective problem solving and quality assurance tool that can facilitate Caltrans goals, to maximize Safety, Mobility, Delivery, Stewardship, and Service. VA studies should be considered to: Meet or exceed standards and safety objectives Foster a team approach to problem solving and project development Improving a projects performance while maximizing quality Identify and develop strategies to mitigate or avoid risks and the associated costs Identify opportunities which promote Context Sensitive Solutions Validate projects scope, need and purpose, and baseline design

APPLICATION OF VALUE ANALYSIS Value analysis can be applied universally, i.e., to everything materials, methods, processes, services, etc., where it is intended to bring about economics. One should naturally start with items where the maximum annual saving can be achieved. This immediately suggests that items whose total annual consumption in Rupees is high should receive top priorities in the application of Value Analysis. In the same manner, scarce materials, imported materials, or those difficult to obtain should also receive the attention of the value analyst. Bearing this in mind, Value Analysis can be systematically applied to categories of items, such as those listed below in order to bring about substantial cost reduction. 1. Capital goods plant, equipment, machinery, tools and appliances; 2. Raw and semi-processed material, including fuel; 3. Sub-contracted parts, components, sub-assemblies, etc; 4. Purchased parts, components, sub-assemblies, etc., 5. Maintenance, repairs, and operational items; 6. Finishing items such as paints, oils, varnishes, etc. 7. Packing materials and packaging; 8. Printing and Stationery items; 9. Miscellaneous items of regular consumptions; 10. Power, water supply, compressed air, steam and other utilities (services) and 11. Materials handling and transportation costs. As mentioned earlier, items where the saving can be substantial should obviously be taken up first. Also, items which are imported, or difficult to obtain, and monopoly items, should receive high priority. However, even if no economy can be effected immediately by Value Analysis on any particular item, then usefulness of the technique should not be forgotten altogether. The item should be taken up again for value analysis after six months or a year, the period

being dictated by the findings of the investigation. New ideas may come to your mind at some other time. Also, it should be noted that the conditions in the market keep on changing fast, and new materials, new suppliers, and new processes come into existence rapidly as a result of phenomenal technological progress taking place at present. A frequent and systematic review of the items already value analyzed, with advantage, may result in further economies. ORGANISATION FOR VALUE ANALYSIS Value analysis is a staff function like, for instance, Industrial Engineering, and should be organized as much. It should be directly under a high-ranking officer from the Senior Management of an undertaking. This is necessary because Value Analysis concerns all departments, and the analyst must have access to them and to their records, performance, costs, etc. Depending upon the size of the undertaking and its scale of operations, there can be a Central Value Analysis Cell to co-ordinate the work of individual analysts attached to the design, purchase, production, and engineering departments. Where there is only one Value Analyst, he may be attached to the Industrial Engineering Department or to the Purchase Department. Value Analysis is essentially a team effort. What particular items to be taken up for value analysis, and what action is to be taken is usually decided by a small committee comprising representatives from the Design, Production, Purchase and Accounts Departments. Any other departmental representative can be coopted if and when necessary. It is the Purchase Manager (or Material Manager) who has to initiate action, convene meetings at regular intervals, and see that substantial results are obtained. A large share of the initial phase of the Value Analysis work will be done by the Purchase Manager, or by other departments, at his instance. It is his responsibility to seek the maximum value when a product requirement comes upto the point of purchase. It is his duty to challenge wasteful and avoidable costs inherent in the items he is asked to buy. It is, therefore,

inevitable that a large part of whatever Value Analysis work is done is initiated by the Purchase Manager.

WHEN VALUE ANALYSIS A product goes through 3 stages (1) Developmental (2) Growth and (3) Maturity before being out of date. Consider now the design efforts put on a product. At developmental stages the design effort is the maximum. At the growth stage the effort is much less and is mainly modifications and changes. At maturity stage hardly any design attention is needed. The value of the product slowly increases in development and growth stages as more features are added and desired changes and modifications are effected. At maturity stage the value increases to peak and then slowly starts reduction because of competition, change of customer tastes and other factors till the product falls out and becomes out of date. It is this stage where value analysis can, still enhance the value by cost reduction and lengthen the Maturity period of a product. Thus when the design effort is diverted to other products, it is the time for value analysis to be undertaken. The success of value analysis for one product of course be made use of in the design of other products by development wing.

DIFFERENCE BETWEEN VALUE ANLAYSIS AND VALUE ENGINEERING . VALUE ANALYSIS VALUE ENGINEERING

Indicates application on the product that is into

its manufacturing. All factors come together including workers, subcontractors, engineers to make a team with total experience and knowledge. It may change the present stage of the product

* Indicates application on the product at design stage. * It is always done by a specific product design (engineers )team.

* The changes are executed at the initial stages only.

or operation. It is worked out mostly with help of knowledge * It requires specific technical knowledge and experience.

VALUE ANALYSIS JOB PLAN

Several versions of the VA Job Plan can be found in different literature. Some give file, others six and yet many other seven phases. It is the systematic approach which is more important to achieve the desired objectives. The phases of VA Job Plan are as follows: SELECTION & ORIENTATION ANALYSIS RECORDING IDEAS SPECULATION INVESTIGATION RECOMMENDATION IMPLEMENTATION 1) SELECTION & - to select those problems areas ORIENTATION where a potential for net higher Savings is expected - use the common paretos ABC analysis - general scope, restrictions and aims of the study is defined 2) ANALYSIS - to examine the data at a coordinated syndicate meeting - to appoint a secretary to record the minutes - to apply the Tests for Value - to propose further actions 3) RECORDING IDEAS - the secretary writes clearly the minutes of the analysis meeting and circulates them to syndicate members - it includes the agenda for the next meeting 4) SPECULATION - to hold additional syndicate 64 meetings in order to discuss the ideas analysed and any new information obtained. - to speculate upon practical measures for reducing costs and increasing value. 5) INVESTIGATION - to investigate suggestions for reducing costs and to make them practical and acceptable - to obtain definite prices and costs in order to estimate savings accurately. 6) RECOMMENDATION - recommended practical savings to management for implementing - to present the recommendations as a comprehensive report - to appoint a member to act as an implementation consultant.

7) IMPLEMENTATION - to decide on future plans for the company for which the authority of the management is needed - to implement the recommendations acceptable to the management. The value of a function can be increased by four methods: 1. Decrease the cost while ensuring the same level of performance. 2. Enhance the performance at the same cost. 3. Decrease the cost and increase the performance 4. Increase both performance and cost ensuring that performance increases more than the increment in the cost.

ORGANISATION FOR VALUE ANALYSIS Value analysis is a staff function like, for instance, Industrial Engineering, and should be organized as much. It should be directly under a high-ranking officer from the Senior Management of an undertaking. This is necessary because Value Analysis concerns all departments, and the analyst must have access to them and to their records, performance, costs, etc. Depending upon the size of the undertaking and its scale of operations, there can be a Central Value Analysis Cell to co-ordinate the work of individual analysts attached to the design, purchase, production, and engineering departments. Where there is only one Value Analyst, he may be attached to the Industrial Engineering Department or to the Purchase Department. Value Analysis is essentially a team effort. What particular items to be taken up for value analysis, and what action is to be taken is usually decided by a small committee comprising representatives from the Design, Production, Purchase and Accounts Departments. Any other departmental representative can be coopted if and when necessary. It is the Purchase Manager (or Material Manager) who has to initiate action, convene meetings at regular intervals, and see that substantial results are obtained. A large share of the initial phase of the Value Analysis work will be

done by the Purchase Manager, or by other departments, at his instance. It is his responsibility to seek the maximum value when a product requirement comes upto the point of purchase. It is his duty to challenge wasteful and avoidable costs inherent in the items he is asked to buy. It is, therefore, inevitable that a large part of whatever Value Analysis work is done is initiated by the Purchase Manager. VALUE ENGINEERING Value engineering is the term applied to value analysis done the design and prototype stage of a product. The potentials of saving are a more in case value analysis is done at design stage. Other advantages is that any changes at this stage are less costly than to effect the same at a latter stage, when the production is in full swing. There are a few limitations however on value engineering work. At the design and proto-type stage, the time is rather short since a company wants to put a new product in the market before any of its competitors can set in and value engineering will have a very short time to apply their techniques. Evaluation of the value at this stage becomes difficult in absence of any customer reaction and opinion. WHEN VALUE ANALYSIS A product goes through 3 stages (1) Developmental (2) Growth and (3) Maturity before being out of date. Consider now the design efforts put on a product. At developmental stages the design effort is the maximum. At the growth stage the effort is much less and is mainly modifications and changes. At maturity stage hardly any design attention is needed. The value of the product slowly increases in development and growth stages as more features are added and desired changes and modifications are effected. At maturity stage the value increases to peak and then slowly starts reduction because of competition, change of customer tastes and other factors till the product falls out and becomes out of date. It is this stage where value analysis can, still enhance the value by cost reduction and lengthen the Maturity period of a product. Thus when the design effort is diverted to

other products, it is the time for value analysis to be undertaken. The success of value analysis for one product of course be made use of in the design of other products by development wing.

CASE STUDY

Cost Reduction of a product through Value Analysis & Value Engineering

Introduction: The current business scenario is very demanding with a continuous demand from the market forces to reduce the product price. The pricing as demanded by the market, forces the businesses to reduce product development and manufacturing costs to remain competitive. Manufacturing costs of a product can be broadly categorized in the following heads: Raw material Labor Process that is technology driven Product engineers are constantly faced with the following challenges: Reduce production cost Reduce the material cost Value Analysis & Value Engineering (VAVE) methods are very important and useful in driving down the product cost which helps companies retain market share and sustain their profitability. At QuEST, we uncover those projects of our customer which have a good potential to improve profits. QuEST has a team of engineers who specialize in VAVE to achieve cost reductions of products. A typical VAVE exercise could reduce the total cost of a product by 5-40%. The typical elements of a VAVE exercise are as follows : Information: Understand the current state of the project and constraints / requirements.

 Function Analysis: Understand the project from a functional perspective; what must the project do, rather than how the project is currently conceived. The function describes what something does and function analysis is the process where the team reviews the project's functions to determine those that could be improved. Function Analysis can be enhanced through the use of a graphical mapping tool known as the Function Analysis System Technique (FAST). FAST applies intuitive logic to test functions, create a common language for a team, and test the validity of the functions in the project. Creative: Generate a quantity of ideas related to other ways to perform the functions. Evaluation: Reduce the quantity of ideas that have been identified to a short list of ideas with the greatest potential to improve the project and meet the Value Engineering study objective. Development: Further analyze and develop the short list of ideas and develop those with merit into value alternatives. Presentation Phase / Implementation: Present value alternatives to management team and other project stakeholders or decision makers.

5. Typical Flowchart

An example : The approach to a real life problem and the methodology followed by QuEST to reduce the product cost is demonstrated through the following example. 5.1 Background and Problem statement: One of the customers of QuEST is a leading manufacturer of industrial components for control applications. This unit is very popular in high end applications. The customer wanted to develop a unit that not only costs 25% less but whose performance exceeds that of the existing product.

5.2 Challenges: Redesign of parts considering minimum impact on existing tooling Redesigned modules should enable field replacement Logic/Software compatibility with field units Ease of assembly Design must match existing housings and connectors No modification of standardized parts in the product family 5.4 Value Engineering Study : QuEST team captured the detailed requirements of the project from the Voice of Customer (VOC) during the kick off meeting. It helped to identify areas where cost could be reduced and which functions needed to be improved to provide competitive advantage. The requirements were listed and prioritized as primary and secondary. These prioritized Needs and Wants were ranked. Quality Function Deployment (QFD) tool was used to prioritize the Hows that affected the Needs and Wants of the customer. The customer also actively participated in this exercise. Vital few options were prioritized from the trivial many. Design requirement ranks were sorted in descending order and those which addressed 70% of the requirements were selected. Thus CTQs or performance characteristics were identified and agreed upon with the customer. The team then carried out the ABC analysis on the BOM. Components with more than 80% of the product cost were identified. CTQ (Critical to Quality)

Matches basic function and performance characteristics

One to one module replacement Same Outer dimensions for the modules Logic/Software compatibility with field units

No modification in standardized parts in Product family.

Design must match existing housings and connectors Reduce the cost of direct material by 25% or more.

Next, the VAVE team laid down the Functions of each item of the product for Value analysis. This enhanced the understanding of the product functionality. This also helped to understand the Form, Fit & Functions of each of the items & sub-assemblies. With this study, the VAVE team had divided the main project into many sub-projects with respect to subassemblies to have diversified results for subassemblies and parts. This function diagram threw up many questions to the team which enabled them to come up with a number of new ideas. How the Product is sized? What design parameters were employed for this product? Focus on high cost components and challenge by asking why do we need this part and what value does it provide to our customer? How else we can design/make it. Understand design change impact on subassembly or overall product. System level appraisal is desirable to consider different methods or concepts for delivering the same or better value. Component level assessment is lookedfor to consider alternate materials, processes, and more efficient designs. One of the guiding principles of lean design is to eliminate or standardize. Can a part be combined with others and thereby be eliminated? If not, can it be made common with other parts in the product, without compromising FFF (Form Fit & Function). This typically provides quick savings. Identify and capture all cost reduction opportunities.

The team applied the concept of Pugh Matrix for system & component level. Rankings were discussed with team, collated and analyzed for choosing the optimum concepts. Next, FMEA was conducted on the selected concepts to further fine tune the results. Failure modes with high Risk Priority Number (RPN) were identified. Failure modes were prioritized and communicated to the designers to address these risks. Alternate solutions and improvement were discussed and finalized. 3D solid modeling was done to visualize the product. It also helped to simulate the active and passive conditions of the product. Components were standardized to reduce the part count. Simulation and testing against the CTQs helped to optimize the product for performances. Design calculations were performed to verify the design for gears, springs, snaps in the plastic members, etc.. Also the DFMA was conducted on various aspects of the design & CTQs. A detailed Differential Cost Analysis was conducted with the customer and their suppliers. The result showed significant cost reduction of each part of the product. It was observed that the costs were reduced mainly due to alternate materials usage, the process and by elimination/replacement of a part by integrating with the adjacent one. Costs of direct material were compared for the original and new design. A significant 38% of savings in direct material cost was realized by this project. The team also achieved a reduction of 34% in the part count. This has resulted in many intangible benefits like savings in procurement costs, Inspection costs, Inventory cost, transportation, reduced variation, reduced assembly costs & Time, etc. 6. Conclusion: QuEST Value Engineering team achieved 38% of savings in direct material cost and reduced part count by 34% in this project. Having a Paint brush does not make one a painter. While we strive to implement the different VAVE tools, we realize that the years of experience in product design & development is very essential to achieve the desired objective. VAVE tools and techniques, if applied properly, with trained & experienced resources will provide an extremely powerful suite to improve productivity, lower cost, improve quality and also shorten the time-to-market.

Acronym: VAVE : Value Analysis & Value Engineering FAST : Function Analysis System Technique VOC : Voice of Customer QFD : Quality Function Deployment CTQ : Critical To Quality BOM : Bill of Material FFF : Form, Fit & Function FMEA : Failure Mode and Effects Analysis DFMA : Design for Manufacturing and Assembly

CONCLUSION
Value analysis is a technique with immense possibilities, and systematically employed, it can achieve great economies and increased efficiency. Although good results have been obtained in several individual cases in some industries, only a large scale and systematic application of this technique in all industries, and in defence production, can result in substantial economies on a national scale. This valuable technique, if systematically employed, promises rich dividends, and, among other things, enables greater use of indigenous raw materials and equipment by import substitution. It is, therefore, of special significance to a developing country like India which has adopted a programme of rapid industrialization in the face of paucity of foreign exchange and other handicaps. No Company can take seriously Total Quality Management without operating a formalized system of Value Analysis. No business that wishes to become lean will ever succeed if product designs remain unchanged because no amount of continuous improvement in the manufacturing process can release the costs of a poor design or a design that has not changed for many years. However, poor product reviews or an informal process, that is restricted to only to a review of the design by the design department, will yield only limited success in eliminating avoidable costs. These efforts will miss the many opportunities to make manufacturing and assembly easier, quicker, less complex and less costly. Thus margins will not be improved significantly because only a small part of the total process has been managed correctly. As such, this type of superficial activity will not generate increased profit and the revenue stream that will be needed to finance new products and new investments in technology. A properly managed and effective VA process will easily repay the time invested by managers over the life of the product and a truly effective process will yield significant competitive advantage for companies that exploit it. For

businesses that supply other organizations, the ability to design and redesign products opens the possibility of true, meaningful, profitable and long-term partnership with a customer. Each progressive step that secures a greater design responsibility for the supplier will, in parallel, make the supplier increasingly more important to the competitive advantage of the customer organization and will increase the benefits to both companies. In an environment where budgets are often reduced, the market determines the selling price of a product and consumers demand a greater variety of products, VA is one technique that companies cannot afford to ignore because for every day that the technique is not employed is money that will leave the business forever. Money that cannot be recovered once the product has been sold. The benefits of a formalized and effective VA process are therefore many and include some key sources of competitive advantage for any business including: Speed of getting an effective design into the market without problems and through error-free manufacturing and assembly processes, Reliability and durability of the product in the market which enhances the reputation of the product and the company, Low overall cost which enhances product margin and also releases finances within the business as well as allowing the ability to engage in price competition, Enhanced quality and compliance with minimal costs of warranty that allows a company to differentiate its products based this perceived quality (of use and esteem). Differentiation by creating product designs as platforms, which facilitate last minute or late configuration of the product to meet customer, orders regional preferences or any other geographical constraint (such as product laws of a certain region). Finally, the VA process satisfies the primary goal of any business to make a profit and survive. As a process, VA is very robust and offers tangible, financial and people-based benefits. The process eliminates unnecessary weight, it removes unnecessary costs and importantly it allows people to understand products, processes and continuous improvement. Very few modern management techniques allow this form of participation

and involvement and even fewer have such a profound impact on the bottom line of the businesss trading accounts. For companies that do not employ this technique, there is one very frightening thought, that for every product that the company makes one or two may be bought by competitors and subjected to value analysis. Therefore, these competitors can easily recover the ground lost to any breakthrough new product with half the effort and half the expense of starting from the beginning. These competitors can also take the new product and streamline it to offer maximum value at minimum cost thereby creating a new product without any real expense. This is perhaps the most frightening though of all.