Sunteți pe pagina 1din 334

d:\scanned\1327a.

tif Page 1

d:\scanned\1327c.tif Page 1

d:\scanned\1327c.tif

TABLE OF CONTENTS Section I X

(cont'd) Page No.

Reference Material on Developing and Managing Value Engineering Programmes 200 Value Engineering - What it is and its Contribution to Business 201 Essential Ingredients for a Successful 204 Value Engineering Programme Setting up and Managing a Value Analysis (~ngineering)Programme Some tips on how to get a Value Engineering Programme going Management Considerations for a Value Engineering Programme Value Engineering -v- Cost Reduction and Cost Reduction Programme Check List Value Engineering in Cost Target Programmes and A Cost Target Programme Policy and Procedure Value Engineering in Government Creep Some Thoughts on Human Relations, Communication and Attitudes in Value Engineering Activities Tests for Value - Value Analysis Check Sheet

SECTION I

INTiZODUCTION TO VALUE ENGINEERING

TIIE CONCEPTS AND SCOI'h

OF VALUE E,NGINbERING

(An Overall Look at the ~ e t h o d o l o ~ ~ ) By: Frederick S . Sherwin 1.

ZNTHODUCTION
Between the late 1940's and middle 1950's the terms Value Analysis and Value Engineering came into use in Industry and Government. They identify a systematic method o f approaching the problem of unnecessarily high product costs, First developed by General Electric Company under the direction of Mr, L,D, Miles the system has been adopted widely by industry and government. Everyone will agree that any problem can be solved better and faster when a system is employed. So it is with the cost problem, and the Value Analysis system has been proved to be extremely effective by the successful application to all k i ~ d s of products, When the system is used by technically qualified personnel concerned with product design or improvement Value Engineering is performed. However, the Value Analysis system can be employed by anyone a s a decision making process to help them attain better Value in product or service. With this understanding the one term "Value Engineering" will be used hereafter,

Broadly defined "Value Engineering" is a functionally oriented system which consists of a "Job Plan" and as many as 30 techniques (see page 11 of Workbook for Chart of Techniques) which are applied to:
1. Clearly and adequately define the function which a user wants from a part, product, system or service.
2, Establish an .appropriate cost objective for the worth of this function.

3. Creatively develop, search out and apply the knowledge needed to reliably achieve this function for that cost,

111. &HEN T O U S E VALUE LMGINEEHIWG:

Value Engineering is an important tool to help all people identify unnecessary product costs and develop lower cost alternate 8nlutions. it can be used at all stages of product design, development and production by all decision making functions of the business, jointly pnd individually, With shorter design and production cycles and the need to minimize design changes and non-recurring tool.ing costs, it is desirable to apply Value hhgineering as early as possible, A VaZue Engineering Program should not be isolated to one functional area of a business, hut should be a company wide program with all decision making areas participating in an integrated effort,

The minimization of costs associated with producing a product and operating a business is a complex problem * w h i c h cannot be left to chance, part time endeavors, or h i + or miss approaches. The technological explosion, increasing psoauct complexity, communication problems, increased national and world competition, information and data retrieval difficulties and many other factors compound the problem.

A low cost, reliable, functional product i s only achieved with the optimum combination of design csnfigurations, materials, products and components, processes and methods and procurement sources. As few as half a dozen alternatives in each area can result in thousands of possible solutions. 'I'hus, both a systematic approach and the integrated effort of many people with specialized knowledge are required to achieve the best Value Product. The concepts and techniques o f Value Engineering can help people to do their jobs better and thiis achieve this oh jective.

V.

DBE'I.NI'I'ION OF TERMS :

Many terms are used which have a special significance to the field o f Value Engineering and to the people who sre directing as? participating in programs employing Value Engineering techniques, A general understanding of the meaning of these terms is essential to understand the concepts and scope of Valt~e Ongineering,

VALUE h ; N G I N E E H l N G STITDY OH P R O J E C T :

A systematic, objective appraisal o f all the elements o f specifications requirements, designs, production, procurement, installation and maintenance of a part, product, equipment or service aimed at achieving the necessary functional performance reliably for the least total cost. T l ~ i sstudy should employ the Val-ue Engineering Job Plan and as many of the techniques as necessary to accomplish the desired results or cost objectives.

Value is a measure of the relationship of functional performance to cost. Good value exists when the customer or user obtains the desired function for the least total cost. Value is a relative term determined by the comparision of alternate solutions. Theoretically, a best or maximum value would exist at any one instant, but there are so many complex variables that its achievement is nearly impossible. Value Engineering generally concerns itself with "Use" or "Functional" Value as contrasted to "esteen" or "prestige" Value. However, where product appearance, attractiveness and sales features are important, the Value objective would be to obtain these qualities for the least total cost.
COST : -

Product Cost in the sum of labor, material, overhead and other costs to produce the product or service, Total Cost to a user is the sum of purchase price, installation, operation and maintenance costs, Good Value Engineering work should be customer-oriented and result in product designs or services which not only permit the lowest selling price, but also minimize the user's operational costs. When employed by qualified people the Value Engineering system should lead to a reliable product or service with the lowest total cost. Unnecessary Costs are those costs not necessary for the achievement of the basic functions: theoretically, all costs above the maximum value or, more practically, all costs above the achievable Value level for the functiion.

Unnecessary costs occur in all products to various deerees. I n mass produced consulner products up to 25?, in industrial or commercial products, up to 5091, and in highly technical, advance state-of-the-art, and miPi tary products, up to 7 5 % . There are basic environmental and human factors reasons for this which exist in all industries a s a rule rather than an exception. Some o f these condjtions which exist during the decision making processes are: Incomplete information - Failure to get all the facts, lack of time and misunderstandine requirements. lnsuffi cient Creativity - Failure to generate a large number of possible solutions to a problem leaves a large number o f unexplored possibilities. Temporary or time cj.rcumstances which force or accept a solution to meet short schedules without search for the lowest cost solutions. Honest wrong beliefs which exist in a l . 1 people as a result o f opinions and experiences, rather than f'acts. liabits and attitudes which perpetuate poor value soli~tjona. Insufficient value motivati on resulting from the lack of clearly defined value targets and measurement o f performance relatjve to these objectives. The Job Plan and Techniques o f Value Engineering help people to overcome or improve the above situation, thus obtain better value, often in less time and with less effort. FUNCTION : Function is that capability or attribute which makes a product work or sell, "Use" values require functions that cause the product to perform (work). "12steem1'values require functions that cause the product to sell,

I n Value Engineering i t i s d e s i r a b l e t o d e f i n e f u n c t i o n s b y u s i n g two w o r d s , a v e r b a n d a n o u n , F o r example, conduct c u r r e n t , i n s u l a t e v o l t a g e , s u p p o r t weight. T h i s a p p r o a c h s e g r e g a t e s and c l a r i f i e s f u n c t i o n a l o b j e c t i v e s as t h e t a r g e t s f o r Value E n g i n e e r i n g S t u d i e s , and s e p a r a t e s b a s i c f u n c t i o n s from s e c o n d a r y f u n c t i o n s , o p e r a t i o n a l r e q u i r e m e n t s , and f e a t u r e s .

BASIC O H P I t I M A R Y F U N C T l O N S :
The "I3asj.c" f u n c t i o n i s t h e p r i m e r e a s o n f o r t h e e x i s t e n c e of a p a r t , p r o d u c t , equipment, system o r s e r v i c e . For example, t h e b a s i c f u n c t i o n o f a r e f r i g e r a t o r would h e t o f f p r e s e r v e f o o d " , an a u t o m o b i l e " t r a n s p o r t weight ( p a s s e n g e r s ) " a r e s i s t o r Ifreduce c l i r r e n t f f e t c .

Secondary f u n c t i o n s a r e t h o s e f u n c t i o n s performed by a p a r t , p r o d u c t , e q u i p m e n t , s y s t e m o r s e r v i c e which: a.

Do n o t d i r e c t l y c o n t r i b u t e t o t h e
b a s i c work o r s e l l f u n c t i o n o r , Are o f l e s s e r i m p o r t a n c e t h a n t h e b a s i c function o r , Support t h e basic f u n c t i o n , but a r e n o t customer d e s i r e d ,

b.

c,

Secondary f u n c t i o n s a r e o f t e n performed by components o f a p r o d u c t o r e q u i ~ m e n tt o s u p p o r t t h e a c h i e v e m e n t o f a b a s i c f u n c t i o n because of t h e s e l e c t e d design concept, I n t h i s r e g a r d some s e c o n d a r y f u n c t i o n s a r e e s s e n t i a l f o r performance. F o r example, t h e g l a s s i n an e l e c t r i c an e s s e n t i a l secondary l i g h t blub f'excludes a i r f f function. Other secondary functions a r e non-essential. A refrigerator may "make i c e " i n a d d i t i o n t o p r e s e r v e f o o d " . The l i g h t s o f a c a r w i l l " i l l u m i n a t e t h e r o a d " b u t do n o t c o n t r i b u t e t o " t r a n s p o r t i n g w e i g h t " .

.....

The o b j e c t i v e o f a V a l u e E n g i n e e r i n g S t u d y i s t o e l i m i n a t e a l l n o n - e s s e n t i a l s e c o n d a r y f u n c t i o n s and r e d i ~ c et h e c o s t a s s o c i a t e d w i t h e s s e n t i a l s e c o n d a r y functions so that the c o ~ t of achieving the b a s i c function a p p r o a c h e s t h e e v a l u a t i o n o f f u n c t i o n a l w o r t h (maximum o r good v a l u e ) .

The I h n c t i o n a l a p p r o a c h c o n c e p t s o f V a l u e t n g i n e e r i n e d i s t i n p i s h i t f r o m t h e t y p e o f c o s t r e d u c t i o n work t h a t i s e s s e n t i a l l y hardware o r i e n t e d (aimed a t minimizing c o s t s o f e x i s t i n g h a r d w a r e ) . Both a p p r o a c h e s a r e i m p o r t a n t and e s s e n t i a l t o minimize c o s t s . Product d i r e c t e d v a l u e e n g i n e e r i n g s t u d i e s g e n e r a l l y a r e n o t aimed a t improving t h e state-of-the-art i n either the technical o r p r o d ~ l c t i o na r e a s . V a l 1 1 e E n g i n e e r i n g c o n c e p t s , h o w e v e r , c a n be a p p l i e d t o i m p r o v e p r o d u c t j o n e q u i p m e n t o r c a p a bi l i t i e s .

'Fl~e value engineering job plan and techniques a r e d e s i g n e d t o c a r r y o11t t h e t h r e e s t e p f t ~ n c t i o n a la p p r o a c h of:

1,

Defining Functions, Evaluating Functions, Developing A l t e r n a t i v e s .

2.

3.

The f u n d a m e n t a l q u e s t i - o n s which m u s t b e a n s w e r e d i n conducting the value engineering study are:


1. What i s t h e p a r t , p r o d u c t , o r s e r v i c e under study ? 2.

equiptnent,system

What d o e s i t c o s t ?

3. W h a t d o e s i t do ? O r what i s t h e f u n c t i o n a l requirement ?

4.
5.
6.

What i s t h e v a l u e o r w o r t h o f t h e f u n c t i o n ? What e l s e w i l l do t h e j o b ? What w i l l t h a t c o s t ? What i s t h e b e s t a l t e r n a t e s o l u t i o n ?

7.

A n s w e r s t o t h e s e q u e s t i o n s w i l l b e f o u n d hy u s i n g t h e value engineering job p l a n and techniques. The j o b p l a n i s t h e s y s t e m a t i c o r g a n i z e d p l a n o r a p p r o a c h f o r c a r r y i n g o u t a v a l u e e n g i n e e r i n g s t u d y . It c o n s i s t s of f i v e s t e p s o r phases :

1.
2,

Information Phase Creation Phase Evaluation Phase Investigation Phase Hecomn~endat~on or Implementation Phase

3.

4.
5.

Note: The value engineering job plan used by varioi~s companies and organisati-ons may employ different words to identify phases o f job plan such as: Information Speculation Analytical Program Planning Program Execution Summary Orientation Information Speculative Analysis Decision Exec11tion

(04

However, fundamentally, the same organized approach and techniques are being used and a value engineering plan is being followed; thus, basically the same decision m a k i n g process, actions and techniques are employed. As in many fields, semantics is a problem, but it is the interpretation of the words, and the resultant actions or behavior patterns which are jrnportant.
A.
S ELECT1 ON

OF VALUE E N G I N P X l t I N G STUDY PROJECTS

Prior to application of the value engineering job plan, it is necessary to select suitable objects for the study. This selection is done many ways but it is essential that some organized method be used to direct the value engineering effort to those areas which will yield the greatest return for the investment in time and money. In a company or division with diversified products, it will be necessary first to select a product or program, then to select specific areas within the product or program. In other companies or divisions it may be necessary to select specific cost centers, or high dollar product or component areas, Generally, market analysis and cost analysis techniques should be used to pinpoint product areas where value engineering concepts should be applied. These analyses should reveal answers to key questions, such as :

a.

Are s u f f i c i e n t q u a n t i t i e s g o i n g t o b e produced ?
Are sufficient expended ?

b. c. d,

I"01~nds a n t i c i p a t e d t o b e

1s p r i c e a n i m p o r t a n t f a c t o r i n s a l e s ? Is c o m p e t i t i o n i n t e n s e 7 '
Coes t h e c u s t o m e r r e q u i r e v a l u e e n g i n e e r i n g - ?

e.
f.

Is t h e r e a p r o f i t i n c e n t i v e f o r value encineering ?

On e x i s t i n g p r o d u c t l i n e s c e r t a i n c r i t e r i a s h o u l d be c o n t i n u a l l y reviewed t o a s c e r t a i n i f a value engineering study should be conducted.

a,
b. c.

A r e p r o f i t s low ?

Is c o m p e t i t i o n g r e a t ?

Is p r i c e important f o r f u t u r e business 3

d. Uoes t h e c o n t r a c t u a l s i t u a t i o n o f f e r o p p o r t u n i t i e s f o r value engineering studies 3

When t h e p r o d u c t h a s b c e n s e l e c t e d , i t i s n e c e s s a r y t o iridentify s p e c i f i c f u n c t i o n a l a r e a s w i t h i n t h e p r o d u c t w h e r e t h e v a l u e enej n e e r i n g e f f o r t s h o u l d b e d i r e c t e d . H e r e a g a i n c o s t a n a l v s i s t e c h n i q u e s ( s e e S e c t i o n 1X o f t h e p r o j e c t workbook) c a n be a p p l i e d t o h i g h l i g h t t h e best areas f o r value engineering. Basically, t h i s i n v o l v e s i d e n t i f y i n g h i g h d o l l a r , p o o r v a l u e a r e a s where t h e t e c h n i c a l o r performance problems have been e s s e n t i a l l y s o l v e d . H o w e v e r , t h e r e may b e some a r e a s w h e r e v a l u e e n g i n e e r i n g t e c h n i q u e s may b e u s e d t o s o l v e b o t h t h e p e r f o r m a n c e and c o s t p r o b l e m s i m u l t a n e o u s l y . Once t h e f u n c t i o n a l a r e a ( v a l u e e n g i n e e r j n g p r o j e c t ) h a s b e e n s e l e c t e d , t h e s t u d y c a n commence a s s u m i n g , o f c o u r s e , t h a t s u i t a b l e t r a i n e d manpower i s a v a i l a b l e , Generally, a value enzineering study requires the i n t e g r a t e d e f f o r t o f many p e o p l e w o r k i n g as a t e a m . T h e design o r product engineer with product r e s p o n s i b i l i t y should d i r e c t and/or p a r t i c i p a t e i n t h e e f f o r t c a l l i n g u p o n o t h e r t e a m members a n d / o r s p e c i a l s u p p o r t i n g functions a s necessary.

I d e a l l y , a l l p a r t i c i p a n t s s h o u l d h a v e h a d a t l e a s t 40 hours of basic value engineering training. However, a t l e a s t o n e f u l l t i m e member o f t h e t e a m s h o u l d h a v e t r a i n i n g , end a v a l u e engineering s p e c i a l i s t should be a v a i l a b l e f o r g u i d a n c e a n d c o n s u l t a t i o n , as r e q u i r e d . With a p r o j e c t s e l e c t e d and a team o r i n d i v i d u a l assigned, t h e value engineering j o b plan should be a p p l i e d i n t e n s e l y and t h o r o u g h l y .

No a t t e m p t h a s b e e n made h e r e t o d i s c u s s i n d e t a i l a l l t h e f a c e t s o f e a c h vallle e n g i n e e r i n g t e c h n j q v e , b u t t h e s j g n i f i c ~ n ta n d e s s e n t i a l e l e m e n t s i n v o l v e d i n v a l u e e n g i n e e r i n g s t u d i e s h a v e been h i g h l i g h t e d . T h e r e a r e o t h e r t e c h n i q u e s s u c h as t h e f o l l o w i n g g e n e r a l t e c h n i q u e s w l ~ i c hs h o u l d be e m p l o y e d t h r o i ~ g h o u t the job plan: I J s i n g g o o d human r e l a t i o n s W o r k i n g on s p e c i f i c s n o t g e n e r a l i t i e s Overcoming r o w l b l ocks

U s i n g trearnwork T l t e s ~a r e a1 1 i m p o r t a n t a s l \ e c t s o f g o o d v a l u e engineering w o r k a n d l a c k o f c o m p e t e n c e o r know 1 e d g e i n t h e s e a r e a s c a n o f t e n mean t h e d i f f e r e n c e b e t w e e n the s u c c e s s o r f a i l u r e o f tlre v a l u e e n g i n e e r i n g s t l ~ d y . T h e V a l u e l.'nt;inecring I'ro,ject luorkbook i d e n t i f i e s all the techniques, Further information is contained i n t h i s r e f e r e n c e manual and from o t h e r s o u r c e s . V I I I. MANAGM\1ENT1S P A R T I N A VAT U B bJNGINE:EHING PROGRAM
Dr. IhRridge, President of California I n s t i t u t e of T e c h n o l o g y , o n c e s a i d , " I t ' s i n t h e a p p l i c a t i o n o f k n o b l e d g e t h a t t h e d i f f i c u l t y comes, n o t i n t h e knowledge This i s appropriate t o the application of the itself." knowledge embodied i n v a l u e e n ~ i n e e r i n g .

A s f u n d a m e n t a l a n d e f f e c t i v e as t h e y a r e , v a l u e e n g i n e e r i n g t e c h n i q u e s w i 11 n o t b e u s e d e f f e c t i v e l y on a b r o a d base u n l e s s t h e e f f o r t i s d i r e c t e d , o r g a n i z e d T h e r e f o r e , i t i s each m a n a g e r l s a n d m e a s u r e h by m a n a g e m e n t .

a n d s u p e r v i s o r ' s responsibility t o s p o n s o r a n d ' p r o m o t e v a l u e e n g i n e e r i n g s t u d i e s and r e l a t e d a c t i v i t i e s . I n o r d e r f o r t h e s e s t u d i e s t o trike p l a c e , d e c i s i o n - m a k i n g p e o p l e s h o u l d be t a u g h t v a l u e e n g i n e e r i n g p r j n c i p l e s and be p r o v i d e d w i t h s p e c i a l i z e d s u p p o r t and g u i d a n c e i n the field. O n l y m a n a g e m e n t c a n wake t h e s e t h i n g s h a p p e n .

( O r i g i n a l l y g i v e n a t t h e ASTME c o n f e r e n c e i n New York C i t y , M ~ r c h1.9, 1963 u n d e r t h e t i t l e o f " 4 U e f i n i t i o n o f V a l u e A n a l y s i s With I t s P h i l o s o p h y , T e c h n i q u e s and O p e r a t i o n " by X,.T). V i l e s , Manager V a l u e S e r v i c e , G e n e r a l E l e c t r i c Company, S c h e n e c t a d y , New ~ o r k )

....

3- w i l l show t h a t V a l u e A n a l y s i s i s a s y s t e m , a r r a n g e d , composed o f

.. .

specifically

many known p a r t s , a f e w modified o n e s , and a f e w new o n e s , accompljshment o f one s o l e purpose unnecessary c o s t ,

for the the i d e n t i f i c a t i o n of

...

B a s i c t r u t h i.s o f t e n b e s t corritr~unicated b y a l l e g o r y .
A t r u c k b r o u g h t t o my home, f o u r b o x e s , I n tllem I f o u n d wire, mahogany, c a s t i n g s , s c r e w s , p a i n t a n d a s s o r t e d f a s t e n i n g s . E a c h i s a n e e d e d e l e m e n t i n i t s own r i g h t . k i r e may d r y c l o t h e s , c a r r y comnunication, hang b r i d g e s , k e e p t h e hogs o u t o f t h e cabbage p a t c h . Mahogany may s u p p o r t t h e t a b l e , make m o l d i n g p a t t e r n s o r adorn t h e p r e s i d e n t ' s yacht. There i s nothing new a b o u t t h e m .

I,ates, 1 r e t u r n t o f i n d t h a t t h e s e elements have been p u t t o g e t h e r i n t o o n e s y s t e m . T h i s s y s t e m i s now c a l l e d a piano. I n t h i s system,every element i s a p p r o p r i a t e l y a r r a n g e , i n v i e w , a n d r e a d i l y a t h a n d t o make p o s s i b l e s o l e l y o n e p u r p o s e -- t h e p e r f o r m a n c e o f good m u s i c , The new v a l u e c a n e , not f r o m t h e a m o u n t t h a t i s new o r n o t new, b u t f r o m t h e f a c t that a l l o f t h e m a t e r i a l s w e r e p r o p e r l y a r r a n g e d , w e r e a t h a n d , c o u l d a n d w o u l d now h e u s e d f o r o n e p u r p o s e a n d w o u l d p r o m o t e a c c o m p l j sh:nent a t v e r y h i g h e f f i c i e n c y . S t u d y i n g i t s h i s t o r y , I f o u n d t h a t , when f i r s t c r e a t e d , t h e s y s t e m was s h o r t some t o n e s . S e a r c h f o u n d some l i t t l e known hilt v e r y s a t i s f a c t o r y w i r e a n d b r o ~ l g h ti t i n t o p l a c e . N e e d , t h e n , c a u s e d a f e w new w i r e s t o he d e v e l o p e d , and p u t i n t o p l a c e .

--

A n o t h e r i n t e r e s t i n g f i n d w a s t h a t , w h i l e some o f t h e w i r e s From t h e f e n c e , t h e c l o t h e s l i n e , e t c . w h i c h p e r m a n e n t l y a c c o m p l i s ~ i e d t h e i r o t h e r f u n c t i o n s we1 1 when u s e d f o r t h i s p u r p o s e , were a l i t t l e o f f t u n e , q u i c k l y l o s t t h e i r t o n a l accuracy, required great s k i l l t o use, o r required skilled tuners constantly. T h e r e s u l t w a s t h p t some e x i s t i n g w i r e s were modified,

Now, u s i n g l a r g e l y e x i s t i n c m a t e r i a l s , m o d i f y i n g s o m e , a n d a d d i n g a f e w new o n e s , t h e n a r r a n g i n g a l l i n a n e f f i c i e n t s y s t e m f o r a c c o r n p l - i s h i n p ; o n e s p e c i f i c p u r p o s e , new h o r i z o n s i n m u s i c w e r e w i t h i n r e a c h o f many m o r e v e o p l e . S t i l l , m a j o r p r o b l e m s e x i s t e d , Sowe l i k e d t h e l o w s o u n d s a n d some t h e hi[;h. N o t k n o w i n g how t o u s e i t , a n d o f t e n , s e v e r a l u s i n g i t a t o n c e , a u d i b l e mayhem r e s u l t e c l . Slowly, t h e n , t h e r e developed u n d e r s t a n d i n g and s k i l l i n u s i n g j t , 1 t w a s f o u n d t h a t f o r some m u s i c , c e r t a i n k e y s w e r e u s e d a n d f o r o t h e r , o t h e r k e y s . F r o m t h i s b e g i n n i n e ; ernereed t r a i n i n g . L a t e r , i t h e c a m e o b v i n i ~ st h a t o n l y w i t h much t a l e n t a n d some t r a i n i n g o r much t r a i n i n e a n d some t a l e n t c o u l d t h e n o r m a l . c a p a h i l i t i e s o f t h e s y s t ~ mh e u t i l i z e d , Wisdom a n d u n d e r s t a n d i n g g r e w , a s t h e s y s t e m f o u n d i t s place i n its culture, 1.
2.

Fllisic c a n h e made b y many m e t h o d s ,


A wide range of n l t r ~c i can he c l ' f i c i e n t l y t h e piano.

made o n

3.

Tlepth t r a i n i n g i n p i a n o a n d i t s ~ i s ca r e e s s e n t i a l jf i t s c a p a h i l i t i e s are t o be u t i l i z e d , V e r y i r r i t a t i n g s o u n d s o f t e n r e s u l t when t h e u n t r n i n e d a p p l i e s vigor t o t h e k e y h o a r d . T h e n e a r b y e n v i r o n m e n t r e v o l t s against the creation and, if' possible, tosses i t out,

4.

By c o m p a r i s o n
1.

....

V a l u e A n a l y s i s o r V a l u e 1 ~ , 1 1 ~ i n e c . r iin s~ a n a s r a n p r n e n t o f t e c h n i q u e s , some o l d , some m o d i f i e d , pitch w i t h i t s own s p e c i f i c u s e f u l l n e s ~ , a n d some n e w , for t h e a c o o m p l i s h m e n t o f o n e s p e c i f i c p u r p o s e --- t h e e f f ' i c i e n t i . d e n t i f i c a t i o r 1 of u n n e c e s s a r y c o s t - - - b e f o r e , during, o r a f t e r the fact.

2.

The s y s t e m h a s l a r g e c a p a b i l i t y . Its c a p a b i l i t i e s can be recognized by a l l , b u t only u t i l i z e d by t h o s e w i t h d e p t h s t r a i n i n g and developed s k i 1 1.

3,

4.

I t i s a n a b o m i n a t i o n when i n a n e n v i r o n m e n t w h e r e t h e s y s t e m i s n o t i ~ n d e r s t o o d o r when i t i s u s e d by those untrained o r unskilled.


A l l p a r t s necessary t o accomplish almost any o f its t y p e o f t a s k are i n c l u d e d ; however, o n l y t h e p a r t s needed a r e used t o accomplish a n y one s p e c i f j c t a s k .

5.

P e r h a p s a f u r t h e r a l l e g o r y w i l l b e h e l p f u l . . A s m a l l box c n n t a i n i n t y t h r e e s c o r e o f b u t t o n s , n d o z e n w i r e s a n d a half d o z e n s t i c k s w a s d e l i v e r e d t o my d e s k . T h e s e a r e s t a n d a r d r n a t c r i a l s , u s e f u l f o r many p u r p o s e s . S o o n , as 1 w a t c h e d , I saw t h e g e b u t t o n s a n d w i r e s and s t i c k s a r r a n g e d i n t o a n a b a c u s . l t w a s now a s p e c i f i c s y s t e m f o r o n e s p e c i f i c pllrpose - - t h a t o f making computations. I t h e n l e n r n e d t h a t i n c o n t e s t s between o u r most up-to-date e l e c t r i c a l equipment w i t h t r a i n e d o p e r a t o r s and t h a ~b a c u s w i t h t r a i n e d o p e r a t o r s , i t i s j u s t t o u c h and go t o d e t e r m i n e which js f a s t e r . T h i s sinlple system of b u t t o n ? and w i r e and s t i c k s w i l l c a r r y o u t c o m p u t a t i o n s a c c u r a t e w i t h i n one up t o one hundred m i l l i o n , It i s a specif'ic arrangement o r system Again, what i s i t ? c o n t a i n i n g e x a c t l y what i s r e q u i r e d t o accaniplish one s p e c i f i c p u r p o s e w i t h o v e r w h e l m i n g e f f i c i e n c y when u s e d b y a t r a i n e d a n d s k i l l e d o p e r a t o r who k n o w s how t o d e v e l o p a l l o f its potential. may a s k , "13ut w h a t a r e some o f t h e k e y s o n t h e V a l u e A s e g m e n t o f t h e k e y b o a r d c o v e r s e a c h sf A n a l p i s p i a n o ?ll t h e f o l l o w i n g and d o z e n s o f o t h c r s

..,

i n d u s t r i a l e n ~ i n c c r i n gp r a c t i c e s , work s i m p l i f i c a t i o n , m a n u f a c t u r i n g engineering, econnrr~icd e s i g n t e c h n i q u e s , d e p t h p r o c e s s knowledge, s u p p l i e r s p e c i a l t y knowledge and t e c h n i q u e , good b u y i n g creativity etc.

Each o f t h e s e g r o u p s o f k e y s h a s i t s c o n t r i b u t i o n t o make and t h e answer t o t h e problem o f s e c u r i n g a p p r o p r i a t e c o s t i n a n y s p e c i f i c s y s t e m o r d e v i c e may l i e i n a n y o n e o r s e v e r a l o f them.

A c o m p l e t e d e f i n i t i o n of V a l u e A n a l y s i s t h e n i s , "Value A n a l y s i s i s a n arrangement of t e c h n i q u e s which

...

makes c l e a r p r e c i s e l y t h e f u n c t i o n s t h e customer wants,

... ... e s t a b l i s h e s t h e a p p r o p r i a t e c o s t f o r e ~ c h f u n c t i o n by coniparison, .. , c a i l s e s r e q u i r e d knowledge, c r e a t i v i t y , and i n i t i a t i v e t o h e u s e d t o accon1pli.sh e a c h f u n c t i o n

for that cost,"

I t i s seem t h a t some o f t h e t e c h n i q u e s - - t h e k e y s on t h e p i a n o a r e f o r t h e p u r p o s e o f c l a r i f y i n g f u n c t i o n s a n d some a r e f o r e s t a b l i s h i n g a p p r o p r i a t e c o s t s by c o m p a r i s o n . I t w i l l a l s o b e s e e n t h a t some o f t h e t e c h n i q u e s " c a u s e " t h e r e q u i r e d k n o w l e d g e , c r e a t i v i t y , a n d i n i t i a t i v e t o b e u s e d . It i s i n t h i s a r e a t h a t i t w a s n e c e s s a r y t o d e v e l o p some m o d i f i c a t i o n s , some e x t e n s i o n s , some s p e c i a l i z a t i o n i n t e c h n i q u e s u s e d b y e n g i n e e r i n g , b y m a n u f a c t u r i n g , bu p u r c h a s i n g , b y m a r k e t i n g , a n d o t h e r s , i n o r d e r t o d e v e l o p maximum p o t e n t i a l i n t h e elimination of unnecessary costs. It i s p r o d u c t i v e t o s t u d y t h e c a u s e s o f u n n e c e s s a r y c o s t . They may w e l l b e d i v i d e d i n t o s e v e n c a t e g o r i e s . The d e c i s i o n s w h i c h a l l o w t o o rnllch u n n e c e s s a r y c o s t t o r e m a i n may be t h e d e c i s i o n s i n a n y o n e o f t h e s e v e n a r e a s ,
l h e a c t i o n of t h e Value E n g i n e e r i n g system i s t o i d e n t i f y wllich o f t h e s e v e n a r e a s h o l d s t h e s o l u t i o n t o e a c h s p e c i f i c i n t e g e r o f u n n e c e s s a r y c o s t . The n e c e s s a r y knowl.edge, c r e a t i v i t y and i n i t i a t i v e c a n b e u s e d e x c l u s i v e l y w h e r e n e e d e d a n d t o t h e e x t e n t n e e d e d t o end t h e c o s t p r o b l e m . The s e v e n a r e a s a r e :
1.
7 7

Manaf;ement O r g a n i z a t i o n
If t h e o r g a n i z a t i o n i s n o t b e s t s u i t e d t o t h e t a s k t o be performed, i t can only produce p o o r e r p e r f o r m a n c e i n t h e n r o c l u c t o r e x t r a c o s t . If p o o r e r p e r f o r m a n c e r e s u l t s , t e s t s w i l l n o r m a l l y f o l l o w and i t w i l l he p r o m p t l y c o r r e c t e d , I f , h o w e v e r , h i g h e r c o s t s r e s u l t , they often continue,

2,

Marlceti n;.; C o n c e p t - - c u s t o w e r f ' u n c t i o n a l u n d e r s t a n d i n g .


T h e c u s t o m e r p u r c h ~ s e sa p r o d u c t t o a c c o m p l i s h f u n c t i o n s i ' o r him. T h e s e a r e e x c l u s i v e l y " u s e " f u n c t i o n s and " e s t e e m " f u n c t i o n s , To t h e e x t e n t t h a t t h e c u s t o m e r 11as n o t b e e n c a u s e d t o c l e a r l y u n d e r s t a n d and c o r r ~ n ~ i ~ n i c a jt ues t t h e f u n c t i o n s h e w a n t s t o b11y a n d p a y f o r arid t o t h e e x t e n t t h n t t h i s i n f o r m a a n d manut i on i s n o t b a s i c t o t h t . e n ~ i n e e r i n g f a c t u r i n g p r o c e s s e s , e x t r a c o s t remains i n t h e system o r product o r service.

3.

E n g i n e e r i n g C o n c e p t and A p p r o a c h A f t e r t h e f i ~ n c t i o n sw h i c h a r e t o b e ! ~ r o v i d e d t o t h e c i ~ s t u m e ra r e d e t e r m i n e d , t h e e f ' f ' e c t i v e n e s s u s e d i n e s t a b l i s h i n g t h e e n g i n e e r i n g c o n c e p t w h i c h w i J 1 be d e t a i l e d a n d i m p l e m e n t e d i n t r o d i ~ c e se i t h e r p o s i t i v e o r n e g a t i v e f a c t o r s i n t h e c o s t a r e a which remain r e g a r d l e s s o f a c t i o n s o f a n y o t h e r s , Milch u n n e c e s s a r y c o a t i s o f t e n allowed t o remain because t h e work i n t h e e n g i n e e r i n g c o n c e p t s t a g e w a s n o t optjmum.

4.

jsnfyineering D e t a i l

After the concept, t h a t i s , the c apprnacl~ L'or a c c o r n p l i s h i n g t h e f u n c t i o n s i s e s t a b l i s h e d , t h i s m u s t b e i m p l e m e n t e d by c h o i c e o f r l ? a t e r i ; . l s , s h a p e s , a s s e m b l i e s , methods, f u n c t i o n s , t o l e r a n c e s , e t c . A p i ~ r o p r i a t e c o s t c a n a l s o h e L o s t i n t h i s work a r e a ,


'rlasi

5.

M a n u f a c t u r i n g Concept o r Approach How much or how l i t t l e a l ~ t o r n a t i o n ? lIow rn11ch What m a c h i n e s and t o make ? How much t o b u y ? f a c t o r y layout ? If t h i s m;inufacturing c o ~ c e p t u a l and p l a n n i n g work i s n o t c o m p e t i t i v e l y d o n e , a p p r o p r i a t e c o s t c a n be l o s t .

6.

Manufacturing Uperation That appropriate cost w i l I he l o s t i n a c a r e l e s s l y , l o o s e l y , i n e f f i c i e n t l y operated f a c t o r y i s s o obvious t h a t i t n e e d s no e l a b o r a t i o n .

7.

Purchasing o r M a t e r i a l s Procurement k o r k
A s i g n i f i c a n t amount o f c o s t i s n o r m a l l y s p e n t by p u r c h a s i n g . To t h e e x t e n t t h a t p u r c h a s i n g recognizes its potential t o contribute t o p r o f i t s , s t a f f s i t s e l f w i t h competent b u y e r s and n e g o t i a t o r s , b u y s f u n c t i o n a s n e a r l y as p r a c t i c a b l e , a s s u m e s A major r o l e i n g e t t i n g a wide v a r i e t y o f s o l u t i o n s , f o r t h e n e e d s o f t h e e n g i n e e r , from t h e a v a i l a b l e s u p p l i e r market, i t i s eliminating t h e p o s s i b i l i t y that s i g n i f i c a n t u n n e c e s s a r y c o s t s a r e l o s t i n t h i s area.

V a l u e A n a l y s j s i s a sy,qtem, a c o m p l e t e s e t o f t e c h n i q u e s , p r o p e r l y a r r a n g e d , f o r t h e s o l e pl1r;\ose o f e f f j c i e n t l y i d e n t i f y j n g u n n e c e s s a r y c o s t , b e f o r e , d u r i n g , o r a f t e r the f a c t . Some o f t h e t e c h n i q u e s a r e f a m i l i a r , sortie m o d i f i e d , some new. 'rhe e f f e c t i v e n e s s i n u t j l i z i n g t h i s s y s t e m d e p e n d s upon t h e u n d e r s t a n d i n g , t r a i n i n g , a n d s k i l l o f t h e v a l u e e n e i n e e r s , as w e l l as t h e u n d e r s t a n d i n g o f a l l b ~ ~ ne s sjs peop1.e i n t h e e n v i r o n m e n t i n w h i c h i t o p e r a t e s . Value c o n s i s t s o f a p p r o p r i a t e performance and a p p r o p r i a t e c o s t s . Good e n g i n e e r i n g t e c h n i q u e s , m e a s u r e m e n t s , and t e s t s n o r m a l l y a r e used t h r o u g h o u t t h e performance a r e a . The t e c h n o l o g y o f V a l u e A n a l y s i s o r E n g i n e e r i n g i s growing toward a s i m i l a r d e g r e e o f measurement, o f t e s t , o f d e f i n i t e n e s s i n t h e work o f a c h i e v i n g a p p r o p r i a t e c o s t .

C.

VALUE

ENGINEERING

F o r m e r l y Manager-Value A n a l y g i s G e n e r a 1 Fll e c t r i c Cornpany

T r a d i t i o n a l l y , i n A m e r i c a n i n d u s t r y , men o f h i e h e s t a b i l i t i e s have been used i n "performance" e n c i n e e r i n g ; i .e. providing a lovger l j f e t o the turbine, b e t t e r efficiency t o t h e m o t o r , m o r e a c c ~ ~ r a ct y o the weapon. V a l u e r e c e i v e d a t t e n t j on, h u t , v e r y d e f i n i t e l y , secondary.
T h e d e v e l o p m e n t o f t h e body o f knnwledge and tectlniqiies consti t ~ l t e V a l i ~ eA n a l y s i s o r V a l t i e I ~ ~ n g i n e ~ r w in as g the r e s u l t o f a n e x p e r i r ~ n tt o d e t e r m i n e w h a t t y p e o f v a l u e c o u l d b e a c h i e v e d i f s a m e men of h i f y h e s t a b i l i t y w e r e {:iven t h e a s s i f ~ n m e n t o n p r o d i i o t s h a v i n g s l ~tia b 1 e p e r f o r m a n c e , o f
wh j ch

m a i n t a i n i n g c o m p l e t e l y t h j s e s s e n t i a1 p e r f o r v a n c e , s a f e t y f a c t o r , l i f e , q i ~ a l i t y ,e t c . b u t a c c o m p l i s h i n g i t a t v e r y r n ~ ~ c lh o w e r c o d . N a t u r a l l y , t h e f i r s t s t u d i e s w e r e made o n e x i s t i n g n r o d t ~ c t s . T h e y showed t h e s t a r t l i n g f a c t s t h a t n o r m a l l ? c o s t s c o u l d t-1; r e d u c e d f r o m 2.5 t o 5 0 p e r c e n t . P r o g r e s s i v e l y , t h e n , as knowledee w a s accumulated and t e c h n i q u e s w e r e d e v e l o p e d , t h e V a l u e Program h a s grown i n t o t h e a p p l i c a t i o n of c e r t a i n t e c h n i q u e s b e f o r e d e s i g n , d u r j n g d e s i f ~ n ,a n d a f t e r d e s i g n . T~'xpcre i n c e showed t h a t t h e e x t r a v a l u e w a s o b t a i n a b l e " a c r o s s t h e h o a r d f f i n a l l f u n c t i o n s o f t h e h i ~ s i n e s s( e n g i n e e r i ng, r a n u f a c t i i r i n g , p u r c h a s i n g , manall;emcnt) a n d e s p e c i a l l y t t i r o i ~ g hi n d i v i d u a l p r o j e c t s r e q u i r i n g a c t i o n i n more t h a n one o f t h e b u s i n e s s areas, For example:
1. ? I a n ~ l f a c t u r i n g was p r o v i d i n g s m a l l l e n g t h s o f t u b i n g c e n t s e a c h . P u r c h a s i n g c o u l d hiiy t h e m c o m p l e t e l y less t h a n was d e l i v e r e d from a s p e c i a l i s t a t 1 c e n t each C o r n : e r l y b e i n g p a i d f o r t h e r a w m a t e r i a l i n 20 f t . l e n g t h s .
14

~t

2. A s t a i n l e s s biitton w a s produced on s c r e w machines a t 6 c e n t s . I t c o u l d n o t b e made o n c o l d h e a d i n g e q u i p m e n t b e r a u ~ eo f o n e d e t a i l i n i t s s h a p e . When i t w a s shown t h a t t h e b i i t t o n c o ~ l l db e p r o v i d e d f o r 2 c e n t s w i t h a m i n o r c h a n g e , i t i - m v e d l a t e l y b e c a m e a p p a r e n t t h a t t h i s o n e d e t a i l made n o c o n t r i b u t i o n t o t h e p r o d u c t ' s p e r f o r m a n c e s o t h a t by t h e e n c i n e ~ r i n gc h a n g e , a n i c 3 e n t i c a l p r o d u c t w a s p r o v i d e d f o r o n e t h i r d t l ~ ec o s t .

3. A p u r r h a s i n [ ; a g e n t was t ) i l y i n g a c a p a c i t o r i n r a t h e r l a r g e q l i a n t i t i e s a t w h a t h e b e l i e v e d t o he t h e b e s t p r i c e f o r a r e l i a b l e c a p a c i t o r . O b j e c t i v e s t u d i e s showed t h a t b y c h a n g i n g t h e types o f tc.rmina1.s o n t h c c a p a c i t o r , a r e d u c t i o n o f many t h o u s a n d s o f d 0 l l ~ r se a c h y e a r r e s u l t e d i n p ~ l r c h ~ sc e o s t w j t h f u r t h e r r e d l i e t i onw thrc1lf;h s i m p l i f i c a t i o n o f assembly t o the p r o d ~ l c t .

$ 5 t o $6.

T h e l l v a l u e " o f t l ~ si c l o c k i s n o r m a l l y e s t i m a t e d a t a b o u t Why? a s we n o r m a l l y b e l j r v e , l t r r h a t l s a b o u t w h a t i t c o s t s , l f H o w e v e r , t h e i m p o r t ~ n c eo f f u n c t i o n i s b r o u g h t i n t o c l e a r f o c u s by d e s t r o y i n g t h e c l o c k . Now, i t s c o s t h a s n o t d e c r e a s e d , A c t u a l l v a d d i t i o n a l l a b o r h a s b e e n p e r f o r m e d on i t . A n d , w h a t i s i t 3 v a ! i ~ e ? 1 ) e c r e a s e d f r o m $5 t o 2 5 c e n t s . Why? T h e f u n c t i o n h a s c h a n p d . T h e r e f o r e , a l l a n a l y s i s , s t u d y and e r , e ; i n e ~ rn i g o f v a l u e f i n d t h e i r colnmon rlenomi n a t o r i n s t u d y o f f u n c t i o n nnd t h e d e v e l o p m e n t o f a l t e r n a t e m e a n s f o r o b t a i n i n g f u n c t i o n . F u n c t i o n must n o t he l i m i t e d t o t h e u$e b e c a i ~ s e ,w i t h x a n y p r o d r l c t . ; , a p p e a r a n c e a n d a t t r a c t i v e n e s s h a v e l a r g e r d r a w i n g p o w e r t h a n t h e t ~ s ef a c t o r s w h i c b a r e taken f o r cyanted. F u n c t i o n , t h e l l , i n o u r d i ~ r u s s i o nm i l s t be roneidered those q u a l i t i e s of a product w h i c h cacse it t o p e r f o r m i t s t l s e f u l work and a l s o t h o s e which callse t h e c u s t o m e r t o want t o buy and o w n i t .

A g r o u p of s p e c i a l t e c h n i q u e s h a v e b e e n a s s e m b l e d f r o m var i u l i s d i s c i p l i n e s t o assi s t d i r - e c t l y i n m o r e e f f ' i - c i t n t . , m o r e o f t e n , and s o o n e r a c h i e v i n g b e t t e r valile i n the ~ ) - r o r l t ~ r t . Some o f t k ~ em o s t i m p o r t a n t o f t h e s e V a l ~ i e j n a l y s i s o r V a l u e E n g i n e e r i n g t e c h n i qiles a r e i n c lirded

1.

C l e a r l y t i e t e r n l i n e t h e r ~ q urje d f l i n c t i o n .

E x a c t l y 1 , h a t d o e s t h e p r o d ~ i c td o ; e x a c t l y w h a t d o e s e a c h a s e e m b l y on i t d o ; e x : ~ c t l yw h a t i ? t h e f u n c t i o n o f e a c h s u b a s s e m h l y a n d p a r t ? ( p a g e 1 8 , P a r a g r a p h 4. 4 . I ) *
2.

E v a l u a t e by c o r n ! m r i s o n ,

What d o e s i t n o w c o s t t o a c c o m p l i s h e a c h o f t h e s e f u n c t i o n s o r s u b f u n c t i o n s ? 3y what a l t e r n a t e ways m i g h t t h e y

These a r e page and paragraph r e f e r e n c e s i n t h e P r o j e c t Workbook f o r a d d i t i o n a l i n f o r m a t i o n on t h e t e c h n i q u e s ,

be accomplished and what would the alternates cost? Compare the costs for accomplishing somewhat similar functions in many diverse fields and by many diverse means. The '%alueV of the item may then be stated as the lowest cost of reliably accornplishine its function. (page i8,l9 Paragraph 4.501)

3. An essential tool is the use o f much better creative thinking.


This mental activity is similar to the fishermen sitting in the boat progressively casting in all different directions in order to avoid pre-decisions which may be based upon faulty information as to the particular direction which will net the best fish. These creative studies identify the areas where more intense value work will be done. (page 27, Paragraph 3)

4.

Blast and then refine.

A most useful technique is to "blast" the product down to one which will not accomplish the total function but which will be extremely simple and, accordingly, have a very low cost; then progressively refine this basic product by adding required increments of function, each with their associated costs. This technique often produces designs which are more functional, more reliable, much more simple, and at very much lower cost. (page 27, Paragraph 4.1)
For example, a spacer stud about the length o f a n eightpenny nail cost 8 cents. I t was mentally "blasted" by comparison with a nail which would cost 0.1 cents, but the naif would not accomplish the function. What must be added? A hex head near one end, another head near the center, and rolled threads on each end. The two heads added 0.4 cents; the thread rolling added 0.3 cents; with the 0.1 cent nail a s a mental base now cost 0.8 cents, l / l ~ t h the original cost.

5. Useavailable functional speciality products and speciality facilities.


Industrial United States is literally filled with successful companies whose success is built upon accomplishing some specialized job extremely well. Usually these companies m n k e frequently needed products in large volume on highly specialized equipment. By their incorporation into the design and the manufacturing o f the product, the functions they provide are often accomplished at a small fraction of the cost which would result from normal design and manufacturing work in connection with a general product. (page 40, Paragraph 4.2.1)

For example, a s m a l l s p e c i a l h r n s s n u t c o s t i n g c e n t s as a s c r e w m a c h i n e p a r t w a s u s e d t o r e c e i v e a n a d j u s t m e n t s c r e w . 13y c h a n g i n g t o a c a s t n y l o n n u t , t h e f u n c t i o n w a s a c c o m p l i s h e d e v e n b e t t e r a t a c o s t o f 0.8 c e n t s , b u t o n l y by the use o f s p e c i a l i t y m i n i a t u r e c a s t i n g f a c i l i t i e s of a s p e c i a l i z e d vendor.

6.
source,

G e t a l l i n f o r m a t i o n from t h e " b e s t " a v a i l a b l e

E x p e r i e n c e shows t h a t a l t h o u g h u s u a l l y t h e " b e s t " s o u r c e can be i d e n t i f i e d , o f t e n answers a r e accepted from o t h e r s . F o r example, U n d e r w r i t e r s a r e t h e b e s t s o u r c e an engineer who has d e a l t on a n I J n d e r w r i t e r s f p r o b l e m with Underwriters f o r years i s not the best source. A s u p p l i e r of' a s p e c i a l i z e d m a t e r i a l i s t h e b e s t s o u r c e on t h e m o d i f i c a t i o n s t o he made t o i t -- a n e n g i n e e r o r b u y e r who h a s w o r k e d w i t h t h e s u p p l i e r a n d b e e n i n h i s p l a n t many t i m e s i s n o t t h e b e s t s o u r c e . ( P a g e 1 3 )

--

7. Obtaining b e t t e r value i s p r i m a r i l y an a c t j v i t y i n human r e l a t i o n s , n o t i n t h e f i e l d s o f m a t e r i a l s a n d processes.


Good v a l u e work w i l l sliow many c h a n g e s . I t w i l l b e o b v i o u s t h a t some of t h e s e c h a n g e s s h o u l d h a v e b e e n made y e a r s s o o n e r . T h i s i s e x t r e m e l y b e l i t t l i n g and e m h a r r a s s i n g t o a l l m e n . T h e r e f o r e , t h e c o r r e c t h a n d l i n g o f human r e l a t i o n s m u s t h a v e t o p a t t e n t i o n , ( P a g e 13)

8.

Obtain meaningful c o s t s .

A s t h e b u t c h e r must have a s c a l e i n o r d e r t o weigh h i s p r o d u c t , t h e v a l u e e n c i n e e r must h a v e m e a n i n g f u l c o s t s . Again, because t h i s i s o f t e n c l i f f i c u l t , i t pays an e x t r a l a r g e b e n e f i t when t h e d i f f i c u l t i e s a r e o v e r c o m e a n d rneanincful e s t i m a t e s and meaningful c o s t s provided f o r e s s e n t i a l c r i t e r i a . (pace 1 7 , 18, P a r a g r a p h 4 . 2 )

9. Use a n e f f e c t i v e V a l u e A n a l y s i s o r V a l u e hngineering plan.


T h i s w i l l i n c l u d e sorne e f f e c t i v e V a l u e E n g i n e e r i n g early i n a l l j o b s , some i m p r o v e d u s e b y a l l e n g i n e e r s o f b e t t e r v a l u e i n f o r n ~ a t i o na n d t e c h n i q u e s a s t h e y go a b o ~ ~ th t e i r r e g u l a r work o f d e s i g n , m a n u f a c t u r i n g p l a n n i n g , o r o t h e r s and s u i t a b l e p r o d u c t e v a l u a t i o n work i n c o n n e c t i o n w i t h e x i s t i n g p r o d u c t s . W e list here t h e f i v e p h a s e s o f t h e Value A n a l y s i s J o b P l a n which p r o m o t e s b e t t e r r e s l i l t s w h e t h e r t h e t a s k a t hand i s a new c l e v e l o p m e n t i n t h e c o n c e p t i ~ a ls t a g e o r t h e v a l u e a p p r a i s a l

of a n existing product. (page 9) &,VALUATION OH INFORMATION PHASE (pages 17-26)

Secure all pertinent facts costs, quantjties, vendors, drawings, specifications, planning cards and manufacturing methods information, Discuss thoroughly with the product engineer, ask questions, listen, develop with him a thorough understanding o f the problem, netermine the amount o f effort that should reasonably be-expended on each item of cost. SPECULATIVE OH CREATION PHASE Generate every possible solution to the problem. Consult others. Systematically explore various materials, machine processes, rearrangement o f parts, etc. Encourage free use of imagination, Record every suggestion that seems even remotely possible, ANALYTICAL OR EVA1,UATION PHASE (pages 33-38) Evaluate each idea carefully. Investigate all for practicality and savings possibilities. Select the most promising idea. Set up a program to pursue each idea vigorously, PLANNING OH INVES'I'IGATION PHASE Break the job down into a procression o f functional areas; i.e., a fastening job, a support job, etc. Select people with top skills pertaining to each product function. S o r t i e will be found in the engineering orpnisatione,others in vendor organizations. Schedule the various product fuctional groups for appropriate reference.

E X E C U T I V E OH INVESTlGATION PHASE ( p a g e s 39-48)

P r o v i d e s u f f i c i e n t f a c t s t o t h e men and o r g a n i z a t i o n s s e l e c t e d i n t h e p l a n n i n g p h a s e s o t h a . t t h e y c a n make u s e f u l suggestions. P e r i o d i c a l l y r e v i e w p r o g r e s s and remove c a u s e s f o r inaction. C o n s t a n t l y p u r s u e t h o r o u g h l y and i n t e n s e l y u n t i l suggestions a r e in.
A s t h e program d e v e l o p s , a l t e r t h e p l a n t o p r o v i d e o t h e r s p e c i a l i s t s now s e e n t o b e n e e d e d .
SUMMARY A N 1 1 CONCLJJSION OR L I E ; C O M M E : N L I A T I O N P H A S E ( P a g e s 49-56)

I s s u e c o n c i s e c o m p l e t e summary o f t h e s t a t u s o f e a c h f u n c t i o n a l g r o u p and component showing t h e a l t e r n a t e s d e v e l o p e d and t h e open c o n s i d e r a t i o n s . Send c o p i e s t o e a c h man who r e q u i r e s i t f o r h i s a c t i o n o r understanding,

IN SUMMARY
1. R e c o g n i z e t h e e x t e n t o f p o t e n t i a l c o n t r i h t ~ t i o n o f e f f e c t i v e Value E n g i n e e r i n g .
2. P r o v i d e u n d e r s t a n d i n g t o management i n s u f f i c i e n t depth t o secure t h e i r b e l i e f and s u p p o r t ,

3.

S e l e c t c o m p e t e n t men.

4.

Make p r o v i s i o n f o r t h e s e men t o s e c u r e s p e c i a l i zed know1 edge and t e c h n i q u e s a p p l j - c a b l e t o t h e Value E n g i n e e r i n g f i e l d .

5. O r g a n i z e them e f f i c i e n t l y and i n t e { y r a t e t h e i r work e f f e c t i v e l y i n t o t h e e x i s t i n g o r g a n i z a k i o n .


6
S e t h i g h s t a n d a r d s and p r o v i d e t h e t y p e o f support t h a t high standards r e q u i r e ,

SECTION I

INTRODUCTION TO VALUE ENGINEERING

TIIE CONCEPTS AND SColJh OF VALUE E,NGINhE;RING

( ~ Overall n Look at the ~ e t h o d o l o ~ ~ ) By: Frederick S. Sherwin

Between the late 1 9 4 0 ~ s and middle 1950's the terms Value Analysis and Value Engineering came into use in Industry and Government. They identify a systematic method of approaching the problem o f unnecessarily high product costs, First developed by General Electric Company under the direction of Mr. L.D, Miles the system has been adopted widely by industry and government. Everyone will agree that any problem can be solved better and faster when a system is employed. So it is with the cost problem, and the Value Analysis system has been proved to be extremely effective by the successful application to all kinds of products. When the system is used by technically qualified personnel concerned with product design or improvement Value Engineering is performed. However, the Value Analysis system can be employed by anyone as a decision making process to help them attain better Value in product or service. With this understanding the one term "Value Engineering" will be used hereafter,

Rroadly defined "Value Engineeringt1is a functionally oriented system which consists o f a "Job Plan" and as many as 30 techniques (see page 11 of Workbook for Chart of Techniques) which are applied to:
1, Clearly and adequately define the function which a user wants from a part, product, system or service. 2, Establish zn.appropriate cost objective for the worth o f this function.

3. Creatively develop, search out and apply the knowledge needed to reliably achieve this function for that ccrst

1x1. @ K E N T O USE VALUE ENGIMEEHXWG: Value Engineering is an important tool to help all people identify unnecessary product costs and develop lower cost alternate solutions, It can be used at all stages of product design, development and production by all decision making functions of the business, jointly ~ n d individually. With shorter design and production cycles and the need to minimize design changes and non-recurring tool.ine costs, it is desirable to apply Value bhgineering a s early a s possible, A VaLue Engineering Program should not be isolated to one functional area o f a business, hut should be a company wide program with all decision making areas participating in an integrated effort,

The minimization of costs associated with producing a product and operating a business is a complex problem * w h i c h cannot be left to chance, part time endeavors, or hi+ or miss approaches. The technsPogica1 explosion, increasing proauct complexity, communication problems, increased national and world competition, inforwation and data retrieval difficulties and many other factors compound the problem.

A low cost, reliable, functional product i s only achieved with the optimum combination of design csnfigurations, materials, products and components, processes and methods a n d procurement sources. As few as half a dozen alternatives in each area can result in thousands of possible solutions. Thus, both a systematic approach and the integrated effort of' m a n y people with specialized knowledge are required to achieve the best Value Product. The concepts and techniques of Value Engineering can help people to do their jobs better and t h t ~ sachieve this objective.

DBE'I.NIff I O N OF TERMS :

Many terms are used which have a special significance to the field of Value Engineering and to the people who are directing or participating in programs employing Value Engineering techniques. A general understanding o f the meaning of these terms is essential to understand the concepts and scope of Va l11e Engineering,

VALUE ENGINEERING STIJDY OH PROJECT :

A systematic, objective appraisal of all the elements o f specifications requirements, designs, production, procurement, installation and maintenance of a part, product, equipment or service aimed at achieving the necessary functional performance reliably for the least total cost. Tl~isstudy should employ the Value Engineering Job Plan and as many of the techniques as necessary to accomplish the desired results or cost objectives.

Value is a measure of the relationship of functional performance to cost. Good value exists when the customer or user obtains the desired function for the least total cost. Value is a relative term determined by the cornparision o f alternate solutions. Theoretically, a best or maximum value would exist at any one instant, but there are so many complex variables that its achievement is nearly impossible. Value Cngineering generally concerns itself with "Use1' or "Functional l1 Value & s contrasted to "esteen" or llprestigelt Value. However, where product appearance, attractiveness and sales features are important, the Value objective would be to obtain these qualities for the least total cost,

Product Cost in the sum of labor, material, overhead and other costs to produce the product or service. Total Cost to a user is the sum of purchase price, installati.on, operation and maintenance costs. Good Value Engineering work should be customer-oriented and result in product designs or services which not only permit the Lowest selling price, but also minimize the user's operational costs. Nhen employed by qualified people the Value hngineering system should lead to a reliable product or service with the lowest total cost. Unnecessary Costs are those costs not necessary for the achievement of the basic functions: theoretically, all costs above the maximum value or, more practically, all costs above the achievable Value level for the functiion.

Unnecessary c o s t s occur i n a l l products t o v a r i o u s d e g r e e s . I n m a s s produced consumer p r o d u c t s up t o 25p, i n i n d u s t r i a l o r c o m m e r c i a l p r o d u c t s , u p t o 5091, a n d i n h i g h l y t e c h n i c a l , advance s t a t e - o f - t h e - a r t , and m i l i t a r y p r o d u c t s , u p t o 75%. T h e r e a r e b a s i c e n v i r o n m e n t a l a n d human f a c t o r s r e a s o n s f o r t h i s w h i c h e x i s t i n a l l i n d u s t r i e s a s a r u l e r a t h e r t h a n a n e x c e p t i o n , Some o f t h e s e c o n d i t i o n s which e x i s t d u r i n g t h e d e c i s i o n making processes are: Failure t o get a l l Incomplete information t h e f a c t s , l a c k o f t i m e and m i s u n d e r s t a n d i n e requirements. Failure t o generate Insufficient Creativity l a r g e number o f p o s s i b l e s o l u t i o n s t o a p r o b l e m l e a v e s a l a r g e number o f u n e x p l o r e d possibilities.
s

Temporary o r t i m e c i r c u m s t a n c e s which f o r c e o r a c c e p t a s o l u t i o n t o meet s h o r t s c h e d u l e s witho u t s e a r c h f o r t h e lowest c o s t s o l u t i o n s . H o n e s t wrong b e l i e f s w h i c h e x i s t i n a l l p e o p l e as a r e s u l t o f o p i n i o n s and e x p e r i e n c e s , r a t h e r than f'acts, H a b i t s and a t t i t u d e s w h i c h p e r p e t u a t e p o o r v a l u e s o l u t i ona. I n s u f f i c i e n t v a l u e m o t i v a t i on r e s u l t i n g f ~ o m t h e l a c k o f c l e a r l y d e f i n e d v a l u e t a r g e t s and measurement o f perf'orrnance r e l a t j v e t o t h e s e objectives. The J o b P l a n a n d T e c h n i q u e s o f V a l u e E n g i n e e r i n g h e l p p e o p l e t o overcome o r improve t h e above s i t u a t i o n , t h u s o b t a i n b e t t e r v a l u e , o f t e n i n l e s s t i m e and w i t h l e s s effort. FUNCTION : Function i s t h a t c a p a b i l i t y o r a t t r i b u t e which make; a p r o d u c t work o r s e l l , "Use" v a l u e s r e q u i r e f u n c t i o n s t h a t cause t h e product t o perform (work). "Esteem" v a l u e s r e q u i r e f u n c t i o n s t h a t c a u s e t h e p r o d u c t to sell,

In Value Engineering it is desirable to define functions by using two words, a verb and a noun. For example, conduct current, insulate voltage, support weight. This approach segregates and clarifies functional objectives as the targets for Value Engineering Studies, and separates basic functions from secondary functions, operational requirements, and features.
B A S I C O H P l ( I M A H Y FUNCTIONS:

The "Basic" function is the prime reason for the existence of a part, product, equipment, system or service. For example, the basic function o f a refrigerator would be to "preserve food", a n automobile "transport weight (passengers)", a resistor "reduce cllrrent", etc.

Secondary functions are those functions performed by a part, product, equipment, system or service which: a. b. c. D o not directly contribute to the basic work or sell function or, Are of lesser importance than the basic function o r , Support the basic function, but are not customer desired.

Secondary functions are often performed by components o f a product or equipment to support the achievement o f a basic function because o f the selected design concept. In this regard s o m e secondary functions are essential for performance, For example, the glass in an electric light blub "excludes air" an essential secondary function. Other secondary functions are non-essential. A refrigerator may "make ice" in aciditinn to preserve foodw. The lights of a car will 'fillurninate the road" but do not contribute to "transporting weight".

.. ...

Tlie objective of a Value Engineering Study is to eliminate all non-essential secondary functions and redl~ce the cost associated with essential secondary functions so that the c o ~ t of achieving the basic function approaches the evaluation of functional worth (maximum or good value).

The F u n c t i o n a l a p p r o a c h c o n c e p t s o f V a l u e h n g i n e e r i n g d i s t i n g u i s h i t from t h e t y p e o f c o s t r e d u c t i o n work t h a t i s e s s e n t i a l l y hardware o r i e n t e d (aimed at minimizing c o s t s o f e x i s t i n g hardware). Both a p p r o a c h e s are important and e s s e n t i a l t o minimize c o s t s . Product d i r e c t e d v a l u e e n g i n e e r i n g s t u d i e s g e n e r a l ly a r e n o t a i m e d a t improving t h e state-of-the-art i n either the technical o r p r o d ~ ~ c t i oa nr e a s , V a l i i e E n g i n e e r i n g c o n c e p t s , h o w e v e r , c a n be a p p l i e d t o improve p r o d u c t 3 o n equipment o r c a p a bi l i t i e s .

The v a l u e e n g i n e e r i n g j o b p l a n and t e c h n i q u e s a r e designed t o c a r r y 0 1 . 1 t t h e t h r e e s t e p f t ~ n tci o n a l a p p r o a c h of:


1,

Defining Functions,

3.

D e v e l o p i n g A 1t e r n a t i v e s .

The f u n d a m e n t a l q u e s t i o n s which must b e answered i n conducting the value engineering study are:
1. What i s t t l e p a r t , o r service under study ?

product,

equipment, system

2.

What d o e s i t c o s t ?

3. What d o e s i t d o ? O r w h a t i s t h e f u n c t i o n a l ' requirement ?

4. 5.
6.

What i s t h e v a l u e o r w o r t h o f t h e f u n c t i o n ? What e l s e w i l l d o t h e j o b ? What w i l l t h a t c o s t ? What i s t h e b e s t a l t e r n a t e s o l u t i o n ?

7.

A n s w e r s t o t h e s e q u e s t i o n s w i l . 1 be f o u n d by u s i n g t h e v a l u e engineerj.ng j o b p l a n and t e c h n i q u e s . The j o b p l a n i s t h e s y s t e m a t i c o r g a n i z e d p l a n o r a p p r o a c h f o r c a r r y i n g o u t a v a l u e e n g j n e e r i n g s t u d y . It c o n s i s t s o f f i v e s t e p s o r phases :

1.

Information Phase Creation Phase Evaluation Phase Inves tigati-on Phase Hecomn~endation or Implementation Phase

2,

3.

4.

5.

Note: The value engineering job plan used by varioi~s companies and organisati-ons may ernploy different words to identify phases of job plan such as: Tnforma tion Speculation Analytical Program PI anning Program Execution Summary Orientation Information Speculative Analysis Decision Execution

(or)

However, fundamentally, the same organized approach and techniques are being used and a value engineering plan is being followed; thus, basically the same decision m a k i n g process, actions and techniques are employed. As in many fields, semantics is a problem, but it is the interpretation of the words, and the resultant actions or behavior patterns which are jmportant.
A.

S E L E C T T U N OF VALUE ENGIN$,EltPNG STUUY PROJECTS

Prior to application of the value engineering job plan, it is necessary to select suitable objects for the study. This selection is done many ways but it is essential that some organized method be used to direct the value engineerinc effort to those areas which will yield the greatest return for the investment in time and money. In a company or division with diversified p r o d ~ ~ c t s , it will be necessary first to select a product or program, then to select specific areas within the product or program. In other companies or divisions it may be necessary to select specific cost centers, or high dollar product or component areas, Generally, market analysis and cost analysis techniques should be used to pinpoint product areas where value engineering concepts should be applied. These analyses should reveal answers to k e y questions, such as :

a.

Are s u f f i c i e n t q u a n t i t i e s g o i n g t o b e produced ? Are s u f f i c i e n t Pounds expended 7 a n t i c i p a t e d t o be

be c.

Is p r i c e an i m p o r t a n t f a c t o r i n s a l e s ? Is competition i n t e n s e ?
Uoes t h e c u s t o m e r r e c l u i r e v a l t l e e n g i n e e r i n g ?

d,
e.
f.

Is t h e r e a p r o f i t i n c e n t i v e f o r v a l u e
engineering ?

On e x i s t i n g p r o d u c t l i n e s c e r t a i n c r i t e r i a s h o u l d be c o n t i n u a l l y reviewed t o a s c e r t a i n i f a v a l u e e n g i n e e r i n g s t u d y should be conducted.

a.
b.

Are p r o f i t s law ?

Is competition great ? Is p r i c e important f o r f u t u r e b u s i n e s s 7

c.

d. Uoes t h e c o n t r a c t u a l s i t u a t i o n o f f e r o p p o r t u n i t i e s f o r value engineering studies ?

When t h e p r o d u c t h a s b c e n s e l e c t e d , i t i s n e c e s s a r y t o iridentify s p e c i f i c f u n c t i o n a l a r e a s w i t h i n t h e p r o d u c t where t h e v a l u e e n g j n e e r i n g e f f o r t s h o u l d be d i r e c t e d . Here a g a i n c o s t a n a l y s i s t e c h n i q u e s ( s e e S e c t i o n 1 X o f t h e p r o j e c t workbook) c a n b e a p p l i e d t o h i g h l i g h t t h e best areas f o r value engineering. Basically, t h i s i n v o l v e s i d e n t i f y i n g h i g h d o l l a r , poor v a l u e a r e a s where t h e t e c h n i c a l o r performance problems have been e s s e n t i a l l y s o l v e d . H o w e v e r , t h e r e m a y b e some a r e a s w h e r e v a l u e e n g i n e e r i n s t e c h n i q u e s may b e u s e d t o s o l v e b o t h t h e p e r f o r m a n c e and c o s t problem s i m u l t a n e o u s l y . Once t h e f u n c t i o n a l a r e a ( v a l u e e n g i n e e r i n g p r o j e c t ) h a s b e e n s e l e c t e d , t h e s t u d y c a n commence a s s u m i n g , o f c o u r s e , t h a t s u i t a b l e t r a i n e d manpower i s a v a i l a b l e . Generally, a value engineering study requires the i n t e g r a t e d e f f o r t o f many p e o p l e w o r k i n g as a t e a m . The design o r product engineer with product r e s p o n s i b i l i t y should d i r e c t and/or p a r t i c i p a t e i n t h e e f f o r t c a l l i n g u p o n o t h e r t e a m members a n d / o r s p e c i a l s u p p o r t i n g functions a s necessary.

I d e a l l y , a l l p a r t i c i p a n t s s h o u l d h a v e had a t l e a s t 40 hours of basic value engineering training. However, a t l e a s t o n e f u l l t i m e member o f t h e t e a m s h o u l d h a v e t r a i n i n g , and a v a l u e e n g i n e e r i n g s p e c i a l i s t should h e a v a i - l a b 1e f o r g u i d a n c e a n d c o n s u 1 t a t i o n , a s r e q u i r e d . With a p r o j e c t s e l e c t e d and a t e a m o r i n d i v i d u a l a s s i g n e d , t h e v a l u e e n g i n e e r i n g j o b p l a n s h o u l d be a p p l i e d i n t e n s e l y and t h o r o u g h l y .

No a t t e m p t h a s b e e n m a d e h e r e t o d i s c u s s i n d e t a i l a l l t h e f a c e t s o f e a c h v a l ~ l ee n g i n ~ e r i r i gt e c h n j q u e , b u t the s i g n i f i c a n t a n d e s s e n t i a l e l e m e n t s i n v o l v e d i n v a l u e e n g i n e e r i n g s t u d i e s have bcen h i g h l i g h t e d . T h e r e a r e o t h e r t e c h n i q u e s s u c h as t h e f o l l o w i n g g e n e r a l t e c h n i q u e s whi.ch s h o u l d be empl o y e d t h r o l ~ g h o u t the job plan: Usin{: g o o d human r e l a t i o n s W o r k i n g on s p e c i f i c s n o t g e n e r a l i t i e s Overcoming r o a d b l o c k s I J s j n g g o o d b ~ r s i n e s sj u d g e m e n t U s i n g treatnwork T l ~ e s oare a1 1 i m p o r t a n t a s ! \ n c t s o f g o o d v a l u e engineering w o r k a n d l a c k o f c o m p e t e n c e o r k n o w l e d e e i n t h e s e a r e a s c a n o f t e n mean t h e d i f f e r e n c e b e t w e e n t h e s u c c ~ s so r f a i l u r e o f t l l e v a l u e e n g i n e e r i n g s t l l d y . T h e V a l u e 1.nt;i n e c r i n g I J r o , j e c t k o r k h o o k i d e n t i f i e s all the techniques. Further information is contained i n t h i s r e f e r e n c e manual and from o t h e r s o u r c e s .

V I I I. MANAGI~CI~IENT ' S PART I N

A VAT U E P G N G I N E E H I N G PROGRAM

Dr. Ih~Bridge,President o f California I n s t i t u t e s i n the application of of T e c h n o l o g y , o n c e s a i d , " I t t knobledge t h a t t h e d i f f i c u l t y c o n e s , n o t i n t h e knowledge itself." This i s appropriate t o the application of the knowledge embodied i n v a l u e e n g i n e e r i n g .
A s f u n d a m e n t a l a n d e f f e c t i v e as t h e y a r e , v a l u e e n g i n e e r i n g t e c h n i q u e s w i 11 n o t b e u s e d e f f e c t i v e l y on a b r o a d b a s e u n l e s s t h e e f f o r t i s d i r e c t e d , o r g a n i z e d and m e a s u r e d b y m a n a g e m e n t . Therefore, i t i s each manager's

a n d s u p e r v i s o r ' s responsibility t o s p o n s o r a n d "promote v a l u e e n g i n e e r i n g s t u d i e s and r e l a t e d a c t i v i t i e s . I n o r d e r f o r t h e s e s t u d i e s to t a k e p l s c e , decision-making p e o p l e s h o u l d be t a u g h t v a l u e e n g i n e e r i n g p r j n c i p l e s and he provided w i t h s p e c i a l i z e d s u p p o r t and g u i d a n c e i n the field. O n l y management c a n m a k e t h e s e things h a p p e n .

( O r i g i n a l l y g i v e n a t t h e ASTME c o n f e r e n c e i n New York C i t y , M ~ r c h3 9 , 1 9 6 3 u n d ~ rt h e t i t l e o f " A D e f i n i t i o n o f V a l u e A n a l y s i s With I t s P h i l o s o p h y , T e c h n i q u e s and O p e r a t i o n " by I,.T). Y i l e s , M a n a g e r V a l u e S e r v i c e , G e n e r a l E l e c t r i c Company, S c h e n e c t a d y , New ~ o r k )

....

I w i l l show t h a t V a l u e A n a l y s i s i s a s y s t e m , a r r a n g e d , composed o f ,

..

specifically

many known p a r t s , a few m o d i f i e d o n e s , and a few new o n e s , a c c o m p l i s h m e n t o f one s o l e p u r p o s e unnecessary c o s t ,

for the the identification of

...

B a s i c t r u t h i s o f t e n b e s t c o m u u n i c a t e d by a l l e g o r y .
A t r u c k b r o u g h t t o my home, f o u r b o x e s , I n t l ~ e r nI f o u n d w i r e , mahogany, c a s t i n g s , s c r e w s , p a i n t and a s s o r t e d f a s t e n i n g s . E a c h i s a n e e d e d e l e m e n t i n i t s own r i g h t . h i r e may d r y c l o t h e s , c a r r y comnunication, hang b r i d g e s , keep t h e hogs o u t o f t h e cabbage patch. Mahogany may s u p p o r t t h e t a b l e , make m o l d i n g p a t t e r n s o r adorn t h e p r e s i d e n t ' s yacht. There i s nothing new a b o u t t h e m .

I,ater, P r e t u r n t o f i n d t h a t t h e s e elements have been p u t t o g e t h e r i n t o o n e s y s t e m . T h i s s y s t e m i s now c a l l e d a piano. I n t h i s s y s t e m , e v e r y e l e m e n t i s a p p r o p r i a t e l y a r r a n g e , in v i e w , a n d r e a d i l y a t h a n d t o make p o s s i b l e s o l e l y o n e p u r p o s e -- t h e p e r f o r m a n c e o f good m u s i c . The new v a l u e c a n e , not f r o m t h e a m o u n t t h a t i s new o r n o t n e w , b u t f r o m t h e f a c t t h a t a l l o f t h e m a t e r i a l s were p r o p e r l y a r r a n g e d , w e r e a t h a n d , c o u l d a n d w o u l d now h e u s e d f o r o n e p u r p o s e a n d w o u l d p r o m o t e accomp1.j e h m e n t a t v e r y h i g h e f f i c i e n c y , S t u d y i n g i t s h i s t o r y , I f o u n d t h a t , when f i r s t c r e a t e d , t h e s y s t e m was s h o r t some t o n e s . S e a r c h f o u n d some l i t t l e known -- b11t v e r y s a t i s f a c t o r y w i r e a n d b r o l i g h t i t i n t o p l a c e , N e e d , t h e n , c a u s e d a f e w new w i r e s t o he d e v e l o p e d , and p u t i n t o p l a c e .

A n o t h e r i n t e r e s t i n g f i n d w a s t h a t , w h i l e some o f t h e w i r e s from t h e f e n c e , t h e c l o t h e s l i n e , e t c . which p e r m a n e n t l y a c c o r n p l i s i ~ e d t h e i r o t h e r f u n c t i o n s we1 1 , when u s e d f o r t h i s purpose, w e r e a l i t t l e o f f tune, quickly l o s t t h e i r tonal a c c u r a c y , r e q u i r e d g r e a t s k i l l t o ~ l s e ,o r r e c r u i r e d s k i l l e d tuners constantly. T h e r e s u l t w a s t h a t some e x i s t i n g w i r e s were modified. how, u s i n g l a r g e l y e x i s t i n g m a t e r i a l s , m o t f i f y i n t . s o m e , a n d a d d i n g a f e w new o n e s , t h e n a r r a n g i n r a l l i n a n e f f i c i e n t s y s t e m f o r a c c o r n p l . i s h i n g o n e s p e c i f i c p u r p o s e , new h o r i z o n s i n m u s i c w e r e w i t h i n r e a c h o f ~ n a n yInore p c ~ p l e . S t i l l , m a j o r p r o b l e m s e x i s t e d , So11.e l i k e d t h e l o w s o u n d s a n d some t h e h i g h . N o t k n o w i n g how t o u s e i t , a n d o f t e n , s e v e r a l u s i n g i t a t o n c e , a u d i b l e mayhem r e s u l t e c l . Slowly, t h e n , t h e r e developed u n d e r s t a n d i n g and s k i l l i n u s i n g j t . I t w a s f o u n d t h a t f o r some m u r , i c , c e r t a i n k e y s w e r e u s e d a n d f o r o t h e r , o t h e r k e y s . From t h i s b ~ g i n n i n ge m e r g e d t r a i n i n g . L a t e r , i t b e c a m e o b v i n l l s t h a t o n l y w i t h much t a l e n t a n d some t r a i n i n g o r much t r a i n i n c a n d some t a l e n t c o u l d t h e n o r m a l c a p a b i l i t i e s o f t h e s y s t e m be u t i l i z e d . Wisdom a n d u n d e r s t a n d i n g g r e w , place i n its culture,
as t h e s y s t e m f'ound

jts

1.
2.

M ~ i s i c c a n b e made b y many m e t h o d s .
A wide r a n z e o f the piano,
v1-1~i

c can he c f f i c i ~ n t l y m a d e on

3.

Tlepth trainjng i n p i a n o a n d i t s list- a r e e s s e n t i a l i f i t s c a p a h i l i t i e s a r e t o be u t i l i z e d . V e r y j r r i t a t i n g s o u n d s o f t e n r e s u l t when t h e u n t r a i n e d a p p l i e s v i g o r t o t h e k e y h o a r d , The n e a r b y e n v i r o n m e n t r e v o l t s against the creation and, i f possible, tosses i t out.

4.

By c o m p a r i s o n

....
---

1,

V a l u e A n a l y s i s o r V a l u e I < , n v i n e c . r i n ~ 1i ;s an arranprqent o f t e c h n i q u e s , some o l d , some m o d i f i e d , e a c h w i t b i t s own s p e c i f i c u s e f u l l n e s ~ , a n d some n e w , f o r t h e acoomplishment o f one s p e c i f i c purpose the e f f ' i c i e n t j d e n t i f i c a t i o n o f u n n e c c ~ s a r yc o s t - - - b e f o r e , during, o r a f t e r the f a c t ,

The s y s t e l n h a s l a r g e c a p a b i l i t y .

Its c a p a b i l i t i e s can be recognized by a l l , but only u t i l i z e d by t h o s e w i t h d e p t h s t r a i n i n g and developed s k i 1 1.


I t i s a n a b o m i n a t i o n when i n a n e n v i . r o n r n e n t w h e r e t h e s y s t e m i s n o t u n d e r s t o o d o r when i t i s u s e d by those untrained o r unskilled.
p a r t s necessary t o accomplish almost any o f its t y p e o f t a s k are i n c l u d e d ; however, o n l y t h e p a r t s needed a r e used t o accomplish a n y one s p e c i f i c t a s k .
A l l

P e r h a p s a f u r t h e r a l l e g o r y w i l l b e h e l p f u l - . A s m a l l box containin[; t h r e e s c o r e o f b u t t o n s , a dozen w i r e s and a h a l f d o z e n s t i c k s was d e l j v ~ r e dt o my d e s k . T h e s e a r e s t a n d a r d m a t e r i a l s , u s e f u l f o r many p u r p o s e s , S o o n , as 1 w a t c h e d , I saw t h e s e b u t t o n s and w i r c s and s t i c k s a r r a n g e d i n t o a n a b a c u s . I t w a s now a s p e c i f i c s y s t e m f o r o n e s p e c i f i c prirpose - - t h a t o f making c o m p u t a t i o n s , I t h e n l e a r n e d t h a t i n c o n t e s t s hetween o u r most up-to-date e l e c t r i c a l equipment w i t h t r a i n e d o p e r a t o r s and t h e a b a c u s w i t h t r a i n e d o p e r a t o r s , i t i s j u s t t o u c h and go t o d e t e r m i n e which i s faster. T h i s s i m p l e system o f b u t t o n s and w i r e and s t i c k s w i l l c a r r y o u t c o m p u t a t i o n s a c c u r a t e w i t h i n one u p t o one hundred m i l l i o n , It i s a specjf'ic arrangement o r system Again, what i s i t ? c o n t a i n i n g e x a c t l y w h a t i s r e q u i r ~ dt o a c c o m p l i s h o n e s p e c i f i c p u r p o s e w i t h o v e r w h e l m i n g e f f i c i e n c y when u s e d b y a t r a i n e d a n d s k i l l e d o p e r a t o r who k n o w s how t o d e v e l o p a l l o f its potential. k e may a s k , "13ut w h a t a r e some o f t h e k e y s o n t h e V a l u e A segment of t h e keyboard c o v e r s e a c h o f Analysis piano ?I1 , t h e f o l l o w i n g and d o l e n s o f o t h e r s

..

i n d u s t r i a l engjn ~ ~ r i n p rg actices, work s i m p l i f i c a t i o n , manufacturing engineering, econorrlic d e s i g n t e c h n i q u e s , d e p t h p r o c e s s knowledge. s u p p l i e r s p e c i a l t y knowledge and t e c h n i q u e , good b u y i n g creativity etc.

Lach o f t h e s e g r o u p s o f k e y s h a s i t s c o n t r i b u t i o n t o make and t h e answer t o t h e problem o f s e c u r i n g a p p r o p r i a t e c o s t i n a n y s p e c i f i c s y s t e m o r d e v i c e may l i e i n a n y o n e o r s e v e r a l o f them.

A complete d e f i n i t i o n of Value A n a l y s i s t h e n i s , "Value A n a l y s i s i s a n arrancement o f t e c h n i q u e s which

...

makes c l e a r p r e c i s e l y t h e f u n c t i o n s t h e customer wants, e s t a b l i s h e s t h e a p p r o p r i a t e c o s t f o r each f u n c t i o n by contparison, c a l ~ s e sr e q u i r e d k n o w l e d g e , c r e a t i v i t y , a n d i n i t i a t i v e t o h e u s e d t o accontp1i.sh e a c h f u n c t i o n for that cost."

...

.,.

...

I t i s seem t h a t some o f t h o t e c h n i q u e s - - t h e k e y s on t h e p i a n o a r e f o r t h e p u r p o s e o f c l a r i f y i n g f u n c t i o n s a n d some a r e f o r e s t a b l i s h i n g a p p r o p r i a t e c o s t s by c o m p a r i s o n . I t w i l l a l s o b e s e e n t h a t some o f t h e t e c h n i q u e s " c a u s e " t h e r e q u i r e d knowledge, c r e a t i v i t y , and i n i t i a t i v e t o be u s e d . It i s i n t h i s a r e a t h a t i t w a s n e c e s s a r y t o d e v e l o p some m o d i f i c a t i o n s , some e x t e n s i o n s , some s p e c i a l i z a t i o n i n t e c h n i q u e s u s e d b y e n g i n e e r i n g , b y m a n u f a c t u r i n g , bu p u r c h a s i n g , b y m a r k e t i n g , a n d o t h e r s , i n o r d e r t o d e v e l o p maximum p o t e n t i a l i n t h e elimination of unnecessary c o s t s , It i s l > r o d u c t i v e t o s t u d y t h e c a u s e s o f u n n e c e s s a r y c o s t . T h e y may w e l l b e d i v i d e d i n t o s e v e n c a t e e o r i e s . The d e c i s i o n s w h i c h a l l o w t o o milch u n n e c e s s a r y c o s t t o r e m a i n may be t h e d e c i s i o n s i n a n y o n e o f t h e s e v e n a r e a s .
l h e a c t i o n of t h e Value E n g i n e e r i n g system i s t o i d e n t i f y wltich o f t h e s e v e n a r e a s h o l d s t h e s o l u t i o n t o e a c h s p e c i f i c i n t e g e r o f u n n e c e s s a r y c o s t . The n e c e s s a r y k n o w l e d g e , c r e a t i v i t y and i n i t i a t i v e c a n b e u s e d e x c l u s i v e l y w h e r e n e e d e d and t o t h e e x t e n t n e e d e d t o end t h e c o s t p r o b l e m . The s e v e n a r e a s a r e :
1.
r
7

Manal;ement

Organization

If the o r g a n i z a t i o n i s n o t b a s t s u i t e d t o t h e t a s k t o be perforuled, i t can only produce p o o r e r performance i n t h e product o r e x t r a c o s t . I f poorer p e r f o r m a n c e r e s u l t s , t e s t s w i l l n o r m a l l y f o l l o w and i t w i l l h e p r o m p t l y c o r r e c t e d . I f , h o w e v e r , higher c o s t s r e s u l t , they o f t e n continue,

2,

P ~ a r l c e t n;: i Concept--cus tower f u n c t i o n a l untlerst a n d i n g ,


The c u s t o m e r p u r r h e s e s a p r o d u c t t o a c c o m p l i s h f u n c t i o n s l ' o r him. T h e s e a r e e x c l u s i v e l y " u s e f f f u n c t i o n s a n d " e s t e e m " f u n c t i o n s . To t h e e x t e n t t h a t t h e c u s t o m e r llas n o t been caused t o c l e a r l y unders t a n d a n d comnrllnicate just t h e f u n c t i o n s h e w a n t s t o b u y a n d p a y f o r arid t o t h e e x t e n t t h a t t h i s i n f o r m a t i o n i.s n o t b a s i c t o t h e e n g i n e e r i n g a n d m a n u f a c t u r i n g p r o c e s s e s , e x t r a c o s t remains i n t h e system o r product o r service.

3.

E n g i n e e r i n g C o n c e p t a n d hpproixch A f t e r t h e f i i n c t i o n s w h i c h a r e t o b e ~ ~ r o v j d etd o t h e customer a r e determined, t h e ef'f'ectiveness used i n e 9 t a b l i s h i n g t h e e n g i n e e r i n g c o n c e p t w h i c h w i l l be d e t a i l e d and implemented i n t r o d i i c e s e i t h e r p o s i t i v e o r n e g a t i v e f a c t o r s i n t h e c o s t a r e a which remain r e g a r d l e s s o f a c t i o n s o f a n y o t h e r s . Much u n necessary c o s t i s o f t e n allowed t o remain because t h e work i n t h e e n g i n e e r i n g c o n c e p t s t a g e w a s n o t o p t i mum.

After t h e concept, t h a t i s , t h e h a s ic arproacll sl hi i n g t h e f u n c t i o n s i s e s t a b l i s h e d , t h i s I'or ~ c c o r r ~ p must be implemented b y c h o i c e o f rnaterjal s , s h a p e s , a s s e m b l i e s , m e t h o d s , f u n c t i o n s , t o l ~ r a n c e s ,e t c , A p i ~ r o p r i a t e c o s t c a n a l s o h e l o s t i-n t h i s w o r k a r e a .

5.

M a n u f a c t u r i n g Concept o r Approach
H o w much o r how l i t t l e a ~ i t o r n a t i o n ? lIow rn11ch t o make ? How much t o b u y ? h'hat machines and f a c t o r y layout ? If t h i s m;inufacturing c o n c ~ p t u a l and p l a n n i n g work i s n o t c o m p e t i t i v e l y d o n e , a p p r o p r i a t e c o s t can be l o s t .

6.

M a n u f a c t u r i n g Opera t i o n T h a t a p p r o p r i a t e c o s t w i l I be l o s t i n a c a r e l e s s l y , loosely, i n e f f i c i e n t l y operated f a c t o r y i s s o obvious t h a t i t needs no e l a b o r a t i o n .

7.

P u r c h a s i n g o r M a t e r i a l s P r o c u r e m e n t k-ork
A s i g n i f i c a n t amount o f c o s t i s n o ~ m a l l y s p e n t by p u r c h a s i n g . To t h e e x t e n t t h a t p u r c h a a i n g recognizes its potential t o contribute t o p r o f i t s , s t a f f s i t s e l f w i t h competent b u y e r s and n e g o t i a t o r s , b u y s f u n c t i o n as n e a r l y as p r a c t i c a b l e , a s s u m e s a major r o l e i n g e t t i n g a wide v a r i e t y of s o l u t i o n s , f o r t h e needs o f t h e e n g i n e e r , from t h e a v a i l a b l e s u p p l i e r m a r k e t , i t i s e l i m i n ~ t i n gt h e p o s s i b i l i t y t h a t s i g n i f i c a n t unnecessary c o s t s a r e l o s t i n t h i s area.

Value A n a l y s i s i s a sy$tem, a complete s e t o f t e c h n i q u e s , p r o p e r l y a r r a n g e d , f o r t h e s o l e p u r p o s e of e f f j c i e n t l y i d e n t i f y i n g unnecessary c o s t , before, durine, o r a f t e r t h e f a c t , Some o f t h e t e c h n i q u e s a r e f a m i l i a r , some m o d i f i e d , some new. T h e e f f e c t i v e n e s s i n u t i l i z i n g t h i s s y s t e m d e p e n d s upon t h e understand in^, t r a i n i n g , and s k i l l o f t h e v a l u e e n g i n e e r s , as w e l l a s t h e u n d e r s t a n d i n g o f a l l h l l s i n e s s p e o p l e i n t h e environment i n which i t o p e r a t e s . Value c o n s i s t s o f a p p r o p r i a t e p e r f o r m a n c e and a p p r o p r i a t e c o s t s . Good e n g i n e e r i n g t e c h n i q u e s , m e a s u r e m e n t s , and t e s t s n o r m a l l y a r e u s e d t h r o u g h o u t t h e p e r f o r m a n c e a r e a . The t e c h n o l o g y o f Value A n a l y s i s o r E n g i n e e r i n g i s growing toward a s i m i l a r d e g r e e o f measurement, o f t e s t , o f d e f i n i t e n e s s i n t h e work o f a c h i e v i n g a p p r o p r i a t e c o s t .

VALUE

ENGINEERING

Former1y Manager-Value A n a l y s i s G e n e r a l F.1 ~ c t rci Cornpany

T r a d i t i o n a l l y , i n A m e r i c a n i n d u s t r y , men o f h i g h e s t a b i l i t i e s have been used i n "performance" e n g i n e e r i n g ; i . e . providing a longer l j f e t o the turhine, b e t t e r efficiency t o t h e r o t o r , m o r e a c c ~ l r a c yt o t h e w e a p o n . V a l u e r e c e i v e d a t t e n t i o n , h u t , very d e f i n i t e l y , secondary.
T h e d e v e l n p m e n t o f t h e body o f k n n w l e d g e a n d t e c h n i q u e s consti t ~ ~ t V -e a l l ~ e A n a l y s i s o r Va711e 1 2 n g i n e e r i n g w a s t h e

wFi i c h

r e s u l t of a n e x p e r i r r e n t t o d e t e r m i n e w h a t t y p e o f v a l u e c o u l d b e a c h i e v e d i f 9 3 m e men o f h i g h e s t a b i l j t y w e r e {:iven t h e a s s i f l ; n m e n t , or? p r o d i ~ c t s h a v i n g s11i t a b l e p e r f o r m a n c e , o f m a i n t a i n i - n g c o m p l e t e l y t h i s e s s e n t i a1 p e r f o r w a n c e , s a f e t y f a c t o r , l i f e , q u a l i t y , e t c , b u t accomplishine: i t a t v e r y milch l o w e r c o s t . N a t u r a l l y , t h e f i r s t s t u d i e s w e r e made on existine vrod~~cts T,h e y showed t h e s t a r t l i n g f a c t s t h a t n o r m a l l y c o s t s c o u l d t)e r e d u c e d f r o m 2 5 t o 50 p e r c e n t . P r o g r e s s i v e l y , t h e n , as knowledee w a s accumulated and t e c h n i q u e s w e r e d e v e l o p e d , t h e V a l u e P r o g r a m h a s grown i n t o the application of c e r t a i n techniques before design, durjng d e s i g n L and a f t e r d e s j - g n ,

J 2 x 1 > e re i n c e showed t h a t t h e e x t r a v a l u e w a s o b t a i n a b l e " a c r o s s t h e hoard" i n a l l f u n c t i o n s of t h e h i ~ s i n e s s( e n g i n e e r i n g , t r a n u f a c t i i r i n g , p u r c h a s i n g , management) and e s p e c i a l l y t t i r o i l g h i n d i v i d u a l p r o j ~ c t sr e q u i r i n g a c t i o n i n more t h a n one o f t h e h u s i n e s s a r e a s , F o r example:


1. F I a n l ~ f a c t u r i n gw a s p r o v i d i n g s m a l l l e n g t h s o f t u b i n g a t 14 c e n t s e a c h . P u r c h a s i n g c o u l d hliy them c o m p l e t e l y l e s s t h a n was d e l i v e r e d from a s p e c i a l i s t a t 1 c e n t e a c h f ' o r x e r l y b e i n g p a i d f o r t h e r a w m a t e r i a l i n 20 f t . l e n g t h s .

2. A s t a i n l e s s blltton w a s produced on s c r e w m a c h i n e s a t 6 c e n t s . I t c o u l d n o t b e made on c o l d h e a d i n g e q u i p m e n t b e c a u s e o f o n e d e t a i l i n i t s s h a p e . When i t w a s shown t h a t t h e hiltton colild h e provided f o r 2 c e n t s w i t h a minor change, i t i - m m e d i a t e l y became a p p a r e n t t h a t t h i s o n e d e t a i l made n o contribution t o t h e p o d u c t ' s p e r f o r m a n c e s o t h a t by t h e e n c i n e ~ r i n gc h a n g e , a n i c q e n t i c a l p r o d u c t was p r o v i d e d f o r o n e third the cost.

3. A p u r c h a s i n t ; a g e n t was h ~ ~ y i n a g c a p a ~ i t o ri n r a t h e r l a r g e q u a n t i t i e s a t w h a t he b e l i e v e d t o h e t h e b e s t p r i c e f o r a r e l i a b l e c a p a c i t o r . O b j e c t i v e s t u d i e s showed t h a t b y c f - i a n ~ i n ; ; t h e t y p e s o f t e ~ n ~ i n a loa n the capacitor, a r e d u c t i o n o f many t h o u s a n d s o f d o l l a r s e a c h y e a r r e s u l t e d i n p ~ l r c h a s ec o s t w j t h f u r t l l e r r e d u c t i o n s thrc11f;h s i r n p l i f i c a t i o n o f assembly t o t h e p r o d ~ l c t .

T h e l q v a l u e l l o f t h i . ; c l o c k i~ n o r m a l l y e s t i m a t e d a t a b o u t $5 t o $6. Why? a s we n o r m a l l y b e l i e v e , " ' I ' h a t ' s a b o u t w h a t i t c o s t s , 1 1 TIowever, t h e i m p o r t a n c e o f f u n c t i o n i s brought i n t o c l ~ a r f o c u s by d e s t r o y i n g t h e c l o c k . Now, i t s c o s t b a s n o t


f i e c r e a s e d , A c t u a l l y a d d i t i o n a l l a b o r has b e e n p e r f o r m e d on i t , A n d , w h a t i s i t 3 va!lle? 1 ) e c r c n s e d f r o m $5 t o 2 5 c e n t s . Why? The f u n c t i o n h a s ch;ln@ed, T h e r e f o r e , a l l a n a l y s i s , study and e ~ g i n e e r i n go f v a l i ~ ef i n d t h e i r common d e n o m i n a t o r i n s t u d y o f f u n c t i o n and t h e development o f a l t e r n a t e means f o r o b t a i n i n g f u n c t i o n , F u n c t i o n m u s t not h e l i m i t e d t o t h e u 3 e becailse, w i t h zany ~ r o d i ~ c t s ap , p e a r a n c e and a t t r a c t i v e n e s s h a v e l a r g e r d r a w i n g p o w e r t h a n t h e t ~ s cf a c t o r s w h i c h a r e F u n c t i o n , t h e n , i n o u r d i 5 p u s s i on m i l s t taken f o r cranted. be c o n s i d e r e d t h o s e q u a l i t i e s o f n p r o d u c t which cause i t t o p e r f o r m i t s ~ l s e f u lw o r k a n d a l s o t h o s e w h i c h c a i ~ s et h e c u s t o m e r t o w a n t t o buy a n d on11 i t .

A g r o u p of s p e c i a l t e c l l n i q u e s h a v e b e c n a s s e m b l e d f r o m variolis d i s c i p l i n e s t o assj s t di r v e c t l y i n m o r e ef'f'i-citnt , m o r e o f t e n , a n d s o o n e r a c h i ~ v j n gb e t t e r v a l ~ r ei n t h c l , r o d l ~ c t . Some o f t h e m o s t i m p o r t a n t of t h e s e Va311e I n a l y s i s o r V a l u e K n g i n e e r i n g t t e c h n i q i l e s a r e i n c 1 ilded

1.

C l e a r l y cleterniine t

h r~c q t l i r c d f l ~ n c to in.

E x a c t l y h t ~ a td o e s t h e p r o d n c t d o ; e x a c t l y w h a t d o e s e a c h a s e e m b l y on i t d o ; e x : a c t l y w h a t i~ the function o f e a c h s u b a s s e m b l y a n d p a r t ? ( p a g e 1 8 , P a r a g r a p h 4. 4 . 1 ) *
2.

E v a l u a t e by c o r n ~ ~ a r i s o n

W h a t d o e s i t now c o s t t o a c c o m p l i s h e a c h o f t h e s e f u n c t i o n s o r s u h f u n c t i o n s ? l3y w h a t a l t e r n a t e w a y s m i g h t t h e y

These a r e page and p a r a g r a p h r e f e r e n c e s i n t h e P r o j e c t Workbook f o r a d d i t i o n a l i n f o r m a t i o n on t h e t e c h n i q u e s .

be accomplished and what would the alternates cost? Compare the costs for accomplishing somewhat similar functions in many diverse fields and by many diverse means. The "valuet1 of the item may then be stated as the lowest cost of reliably accomplishing its function. (page 18,19 Paragraph

4.5.1)
3. An essential tool is the use of much better creative thinking.
This mental activity is similar to the fishermen sitting i n the boat progressively casting in all different directions in order to avoid pre-decisions which may be based upon faulty information as to the particular direction which will net the best fish. These creative studies identify the areas where more intense value work will be done. (page 27, Paragraph 3)

4,

Blast and then refine.

A most useful technique is to "blastv the product down to one which will not accomplish the total function but which will be extremely simple and, accordingly, have a very low cost; then progressively refine this basic product by adding required increments of function, each with their associated costs. This technique often produces designs which are more functional, more reliable, much more simple, and at very much lower cost. (page 27, Paragraph 4.1)
For example, a spacer stud about the length o f a n eightpenny nail cost 8 cents. I t was mentally "blastedR by comparison with a nail which would cost 0.1 cents, but the nail would not accomplish the function, What must be added? A hex head near one end, another head near the center, and rolled threads on each end. The two heads added 0.4 cents; the thread rolling added 0.3 cents; with the 0.1 cent nail a s a mental base now cost 0.8 cents, l / l ~ t h the original cost.

5. Use available functional speciality products and speciality facilities.


Industrial United States is literally filled with successful companies whose success is built upon accomplishing some specialized job extremely well, Usually these companies make frequently needed products in large volume on highly specialized equipment. By their incorporation into the design and the manufacturing o f the product, the functj-ons they provide are often accomplished at a small fraction of the cost which would result from normal design and manufacturing work in connection with a general product. ( Page 40, Paragraph 4.2. 1)

For example, a small s p e c i a l h r a s s n u t c o s t i n g c e n t s as a s c r e w m a c h i n e p a r t w a s u s e d t o r e c e i v e a n 3 y changing t o a c a s t nylon n u t , t h e adjustment screw. 1 f u n c t i o n w a s a c c o m p l i s h e d e v e n b e t t e r a t a c o s t o f 0.8 c e n t s , b u t o n l y by t h e use o f s p e c i a l i t y m i n i a t u r e c a s t i n g f a c i l i t i e s of a specialized vendor,

6.
source.

G e t a l l i n f o r m a t i o n from t h e " b e s t " a v a i l a b l e

E x p e r i e n c e shows t h a t a l t h o u g h u s u a l l y t h e " b e s t " s o u r c e can be i d e n t i f i e d , o f t e n answers a r e accepted f r o m o t h e r s , For e x a m p l e , U n d e r w r i t e r s a r e t h e b e s t s o u r c e an engineer who has d e a l t on a n Tinderwri t e r s l p r o b l e m with Underwriters f o r years i s not the best source. A s u p 1 ) l i e . r o f a s p e c i a l i z e d m a t e r i a l i s t h e b e s t s o u r c e on t h e m o d i f i c a t i o n s t o h e made t o i t -- a n e n g i n e e r o r b u y e r who h a s w o r k e d w i t h t h e s u p p l i e r a n d b e e n i n h i s p l n n t many t i m e s i s n o t t h e b e s t s o u r c e . ( P a g e 13)

--

7. Obtaining b e t t e r value i s p r i m a r i l y an a c t j v i t y i n human r e l a t i o n s , n o t i n t h e f i e l d s o f m a t e r i a l s a n d processes,


Good v a l u e work w i l l show many c h a n g e s . I t w i l l b e o b v i o u s t h a t some o f t h e s e c h a n g e s s h o u l d h a v e b e e n made y e a r s s o o n e r . T h i s i s e x t r e m e l y b e l i t t l i n g a n d embarrassing t o a l l men. T h e r e f o r e , t h e c o r r e c t h a n d l i n g o f human r e l a t i o n s must h a v e t o p a t t e n t i o n . ( P a g e 13)

8.

Obtain meaningful coats.

A s t h e b u t c h e r must have a s c a l e i n o r d e r t o weigh h i s p r o d u c t , t h e v a l u e e n c i n e e r must h a v e m e a n i n g f u l c o s t s . Aeain, because t h i s i s o f t e n d i f f i c u l t , i t pays an e x t r a l a r g e b e n e f i t when t h e d i f f i c 1 . 1 1 t i e s a r e o v e r c o m e and rneanincful e s t i m a t e s and meaningful c o s t s provided f o r e s s e n t i a l c r i t e r i a . (Page 1 7 , 1 8 , P a r a g r a p h 4 . 2 )

9. Use a n e f f e c t i v e V a l u e A n a l y s i s o r V a l u e Engineering plan.


T h i s w i l l i n c l u d e some e f f e c t i v e V a l u e E n e i n e ~ r i n ge a r l y i n a l l j o b s , some i m p r o v e d u s e by a l l e n g i n e e r s o f b e t t e r v a l u e i n f o r m a t i o n and t e c h n i q u e s a s t h e y g o aboil t t h e i r r e g u l a r work o f d e s i g n , m a n u f a c t u r i n g p l a n n i n g , o r o t h e r s and s u i t a b l e p r o d u c t e v a l ~ l a t i o n work i n c o n n e c t i o n w i t h e x i s t i n g p r o d u c t s , W e l i s t h e r e t h e f i v e p h a s e s o f t h e Value A n a l y s i s J o b P l a n which promotes b e t t e r r e s ~ ~ l w t s h e t h e r the t a s k a t hand i s a new d e v s l o p m e n t i n t h e c o n c e p t i ~ a ls t a g e o r t h e v a l u e a p p r a i s a l

of an existing product. (page l!!VALUATION -

9)

OH INFOHNATION PHASE (pages 17-26)

Secure all pertinent facts costs, quantities, vendors, drawings, specifications, planning cards and manufacturing methods information, Discuss thoroughly with the product engineer, ask questions, listen, develop with him a thorough understanding of the problem, Determine the amount of effort that should reasonably be expended on each item of cost. SPECULATIVE OH CREATION PHASE (pages 27-32) Generate every possib1.e solution to the problem. Consult others. Systematically explore various materials, machine processes, rearrangement of parts, etc. Encourage free use of imagination. Record every suggestion that seems even remotely possible. ANALYTICAL OR EVAIJJATION PHASE (pages 33-38) Evaluate each idea careful.ly. Investigate all for practicality and savings possibilities. Select the most promising idea. Set up a program to pursue each idea vigorously. PLANNING OH INVESTIGATION PHASE (pages 39-48) Break the job down into a progression of functional areas; i.e., a fastening job, a support job, etc. Select people with top skills pertaining to each product function. Sortie will be found in the engineering organisatione,others in vendor organizations. Schedule the various product fuctional groups for appropriate reference.

EXECUTIVE OH INVESTIGATION PHASE P r o v i d e s u f f i c i e n t f a c t s t o t h e men a n d o r g a n i z a t i o n s s e l e c t e d i n t h e p l a n n i n g p h a s e s o t h a . t t h e y c a n make u s e f u l suggestions. P e r i o d i c a l l y r e v i e w p r o g r e s s and remove c a u s e s f o r inaction. C o n s t a n t l y pursue thoroughly and i n t e n s e l y u n t i l suggestions a r e in,
A s t h e program d e v e l o p s , a l t e r t h e p l a n t o p r o v i d e o t h e r s p e c i a l i s t s now s e e n t o b e n e e d e d .
SUMMARY AND C O N C L U S I O N OR I-IECOMMENDATION P H A S E ( p a g e s 49-56)

I s s u e c o n c i s e c o m p l e t e summary o f t h e s t a t u s o f e a c h f u n c t i o n a l g r o u p a n d component s h o w i n g t h e a l t e r n a t e s d e v e l o p e d and t h e open c o n s i d e r a t i o n s . Send c o p i e s t o e a c h man who r e q u i r e s i t f o r h i s a c t i o n o r understanding,

1 N SUMMAHY
1. R e c o g n i z e t h e e x t e n t o f p o t e n t i a l c o n t r i b u t i o n of e f f e c t i v e Value E n g i n e e r i n g , 2. P r o v i d e u n d e r s t a n d i n g t o management i n s u f f i c i e n t d e p t h t o s e c u r e t h e i r b e l i e f and s u p p o r t .

3.
4,

S e l e c t c o m p e t e n t men.

Make p r o v i s i o n f o r t h e s e men t o s e c u r e s p e c i a l i zed know1 e d g e a n d t e c h n i q u e s a p p l i c a b l e t o t h e Value Engineering f i e l d .

5. O r g a n i z e them e f f i c i e n t l y and i n t e { y r a t e t h e i r work e f f e c t i v e l y i n t o t h e e x i s t i n g o r g a n i z a k i o n .

6.

Set h i g h s t a n d a r d s and provide t h e type o f support t h a t high standards require.

S E C T l O N I1
VALUE E N G I N E E H I N G J O B PLAN AND

TECHNIQUES

A.

T H E VALUE ENGlNEERING JOB PLAN AND ASSOCIATED TECHNIQUES

The Valuet Engineering Job Plan provides the sequential, organized, systematic approach for the removal of unnecessary costs. I t also provides the framework for all the other specific and general techniques and the implementation of the functional approach. The following description o f the job plan is designed to provide an overall view of the system and show how the specific techniques fit into the plan. Greater depth information on each phase and technique will be given i n other Sections of this Manual and i n the Project Workbook,
VALSUE ENGINEEHING JOB PLAN PHASES DEFINED

1.

Information Phase:

Solving any probl.em requires facts. A value engineering study requires the accumulation of complete information pertaining to the project under study starting with the specifications and requirements, to the technical and developmental history, through the materials, tolerances, engineering requirements, manufacturing methods and processes, procurement sources and purchasing history, to the complete detailed cost breakdown matched to production quantities, Collecting and documenting this data is a vital part of a value engineering study and must employ many search and human relations oriented techniques. (See Section IV of Project borkbook) This phase also embodies the depth identification, definition and evaluation o f functional needs to be used as a bnsisfor subsequent creativity and analysis. Functions should be segregated into basic and secondary, essential and non-essential and defined i n such a way as to stimulate and encourage maximum creativity. Functions should be evaluated to establish the estimated worth as a target for value improvement. The evaluation o f functions is a significant step because it establishes an appropriate value or cost target which provides the motivation for action and creates the recognition that large amounts of unnecessary costs exist. Generally, since value is relative, function is evaluated by a comparison process. That is, the worth o f a function is determined by comparing the relative costs of as many approaches to perform the function as can be conceived. Then by a process o f elimination and selection, the lowest

c o s t s o l i ~ t i o ni s u s e d t o e s t a b l i s h t h e w o r t h ( v a l u e ) o f t h e f u n c t i o n , T h i s s o l u t i o n w o i ~ l d b e good v a l u e a n d c l o s e r t o t h e t h e o r e t i c a l maxitnum v a l u e . W h i l e t h i s a p p r o a c h may n o t a p p e a r t o be t o o s c i e n t i f i c , i t n e v e r t h e l e s s h a s b e e n p r o v e d t o b e a n e f f e c t i v e t ~ c h n i q u et o m o t i v a t e a c t i o n s which l e a d t o r a d i c a l l y improved v a l u e . Comparisons p r e f e r a b l y a r e made e m p l o y i n g s t a n d a r d a n ? common p a s t s o r p r o d u c t s which b y n a t u r e o f p r o d u c t i o n q u a n t i t i e s and r e - e n g i n e e r i n g e f f o r t s have been seduced i n c o s t t o a minimum c o n s i s t e n t w i t h t e c h n o l o g i c a l a n d p r o d u c t i o n capabilities, I n e v a l u a t i n g f u n c t i o n s sf a s s e m b l i e s , p r o d u c t s , e q u i p m e n t s , o r s y s t e m s , i t may b e d e s i r a b l e f i r s t t o d j v i d e t h e p r o d u c t i n t o f ~ l n c t i o n a la r e a s a n d t o make a f u n c t i o n a l t r e e a n a l y s i s t o i d e n t i f y lower l e v e l h a s i c and secondary f u n c t i ons. A s f u n c t i o n a l e v a l l l a t i o n t e c h n i q u e s a r e a p p l i ed t o each f u n c t i o n a l a r e a , h i g h , e x c e s s i v e and un-necessary c o s t s w i l l be r e v e a l e d . Continuing with the v a l ~ ~ en egineering customer o r j ented c o n c e p t , a t tlie p r o d u c t l e v e l , o n l y b a s i c f u n c t i o n s c a n b e a s s u m e d t o h a v e v a l u e . T h e s e a r e t h e work a n d s e l l f u n c t i o n s f o r which t h e c u s t o m e r b u y s t h e p r o d l r c t . The f u n c t i o n s o f components c o n t r i b u t i n g d i r e c t l y t o t h e achievement of t h e b a s i c f u n c t i o n s a r e assigned v a l u e s ; secondary fnnctions a r e not assigned values. This technique i s designed t o h i g h l i g h t non-essential c o s t s , a s s o c i a t e d w i t h s e c o n d a r y f u n c t i o n s , which should be a prime target f o r e l i m i n a t i o n o r r e d u c t i o n .
A more m a t h e i n a t i c a l a n d s c i e n t i f i c t e c h n i q u e f o r t h e e v a l u a t i o n o f b a s i c f u n c t i o n s i s b a s e d on t h e m a t e r i a l (mil 1 produced form) u t i 1 iza t i o n c o n c e p t . T h i s fundamentally considers the c a p a b i l i t y o f the physical p r o p e r t i e s of t h e m a t e r i a l t o perform t h e e s s e n t i a l function. Then t h e w o r t h of t h e b a s i c f u n c t i o n i s e v a l u a t e d on t h e b a s i s o f t h e c o s t o f t h e minimum a m o u n t o f m a t e r i a l w h i c h wo111d p r o v i d e t h e f u n c t i o n a t t h e prescribed quantified l e v e l , For instance, t h e c o s t of a s p e c i f i c l e n g t h o f b a r e w i r e ( c o p p e r , aluminum e t c . ) w h i c h would c o n d u c t a c e r t a i n amount o f c u r r e n t ; t h e c o s t o f s t e e l r o d w h i c h would t r a n s m i t s o many i n c h p o u n d s o f torque e t c ,

A s o t h e r secondary c o n s t r a i n t s o r requirements a r e added, c o s t s w i l l he added. It i s i m p o r t a n t t o i d e n t i f y a l l e s s e n t i a l o p e r a t i n g r e q u i r e m e n t s and e n v i r o n m e n t a l conditions s o t h a t t h e r e s u l t a n t s o l u t i o n meets a l l r e l i a b i l i t y , m a i n t a i n a b i l i t y and o t h e r e s s e n t i a l f a c t o r s .

When u s i n g a n y o f t h e a b o v e f u n c t i o n a l e v a l u a t i o n t e c h n i q u e s , v a l u e i n d i c e s can be developed which a r e useful t o highlight both areas f o r value engineering s t u d i e s and t h e amount o f u n - n e c e s s a r y c o s t s . D e p e n d i n g on t h e t e c h n i q u e u s e d a n d t h e p r o d u c t s e v a l u a t e d , c o s t t o v a l u e ( w o r t h ) i n d i c e s o f from 5 / l t o s e v e r a l h u n d r e d / l may b e e s t a b l i s h e d . A t r e n d o f C/V i n d i c e s f a r d i f f e r e n t f u n c t i o n s i n any s e l e c t e d p r o d u c t l i n e can be a u s e f u l analytical tool, I n gathering information, c e r t a i n value engineering t e c h n i q u e s a n d g u i d e l i n e s a r e f o l l o w ~ ds u c h as:

. rOebltiaai b n information le, accurate

from t h e b e s t (most dependable, and a p p r o p r i a t e ) s o u r c e s .

. Verify facts. . O b t a i n t o o much r a t h e r t h a n t o o l i t t l e . Exhaust sources of information. . Ask s e a r c h i n g , c r e a t i v e q u e s t i o n s .


all

, S e p a r a t e o p i n i o n s from f a c t s ,

information.

. B e a @ood l i s t e n e r . . Get people's i d e a s a s

w e l l as f a c t s ,

, L e t t h e s o u r c e know why you w a n t i n f o r m a t i o n .

. W r i t e down a l l d a t a , . Organize f a c t s .
a. Get a l l t h e f a c t s . b. D e t e r m i n e c o s t s .
c, d.

, Don' t make p r e m a t u r e s u g g e s t i o n s .
and

The k e y t e c h n i q u e s u s e d d u r i n g t h e I n f o r n r a t i o n Phase a r e :

I d e n t i f y , d e f i n e and e v a l u a t e f u n c t i o n s , P u t E on s p e c i f i c a t i o n s a n d r e q i l i r e r n e n t s .

The l a s t t e c h n i q u e l i s t e d i s e x t r e m e l y i m p o r t a n t f o r v a l u e e n g i n e e r i n g a n a l y s i s i n Government o r M i l i t a r y o r i e n t e d b u s i n e s s e s . I > e t e r m i n i . n g how much i t c o s t s t o conform t o a c e r t a i n customer s p e c i f i c a t i o n o r r e q u i r e m e n t can h i g h l i g h t a g r e a t savings o p p o r t u n i t y , Perhaps t h e s p e c i f i c a t i o n w a s w r i t t e n y e a r s ago, p e r h a p s c o n d i t i o n s h a v e c h a n g e d , p o s s i b l y t h e r e q u i r e m e n t i3 n o l o n g e r n e e d e d

o r o t h e r c o n d i t i o n s may e x i s t w h i c h w o u l d p e r m i t e l i m i n a t i n g o r changing t h e requirement. Unless t h e s p e c i f i c a t i o n s p-re c h a l l e n g e d a n d t h e i r c o s t e v a l u a t e d , t h e y may c o n t i n u e t o c a u 8 e l a r g e e x p e n d i t u r e s o f unsign" n e c e s s a r y d o 1 l a r s . Even " p i ~ t t i n gt1:e pound ( a l l o c a t i n g c o s t s ) on k e y t o l e r a n c e s c a n l e a d t o significant reductions i n cost. For example, an a n a l y s i s o f a s m a l l p o t t e d e l e c t r o n i c m o d u l e r e v e a l e d t h e d i m e n s i o n a l t o l e r a n c e s on t h e l a c a t i o n o f s i x c o n n e c t i n g w i r e l e a d s w e r e e x c e s s i v e l y c l o ~ e .M i n o r d i m e n s i o n a l c h a n g e s r e d u c e d t h e c o s t b y 50% a n d h a d n o a f f e c t on a s s e m b l y o r p e r f o r m a n c e . F o r t h e s e r e a s o n s , many G o v e r n m e n t p r o c u r j n g agencies a r e offering increased p r o f i t incentives (cost s a v i n g s s h a r i n g a r r a n g e m e n t s ) t o s u p p l i e r s who s h o w how money c a n b e s a v e d b y c h a c g i n g s p e c i f i c a t i o n s a n d r e q u i r e m e n t s . S i ~ c hr e c o m m e n d a t i o n s a r e s u b m i t t e d v i a v a l u e e n g i n e e r i n g change p r o p o s a l s and, i f a c c e p t e d , t h e c o n t r a c t o r can s h a r e a s u b s t a n t i a l percentage ( u s u a l l y 50$) o f t h e r e s u l t a n t n e t s a v i n g s . S h a r i n g c a n a l s o h e extended t o follow-on procurement q u a n t i t i e s and o p e r a t i n g ( c o l l a t e r a l ) c o s t s . The g r e a t e s t b e n e f i t s f r o m s u c h 4 p r o p o s a l s come t o b o t h s u p p l i e r a n d c u s t o m e r when t h e y a r e s u b m i t t e d e a r l y i n a program s o t h a t changes c a n be made w i t h minimum a f f e c t on t h e c o s t s o f i m p l e m e n t a t i o n , d o c u m e n t a t i o n , l o g i s t i c s , c o n l ' i g u r a t i on c o n t r o l a n d testing. The i n f ' o r m a t i on p f l a s e i s elnployed t o a c c u m u l a t e a l l t h e f a c t s , d e f i n e and e v a l u o t e t l k e h a s j c f u n c t i o n a l r e q u i r e m e n t . Thus, t h e problem i s j d e n t i f ' i e d o r c l a r i f i e d . O f t e n d u r i n g t h e i n f o r m a t i o n p h a s e , a v a l u e improvement may be i d e n t i f i e d h c c a u s e o f some f a c t b r o u g h t t o l i g h t , o r i t may be f o u n d t h a t n o i m p r o v e m e n t i s n e c e s s a r y a n d i t may h e d e t e r m i n e d t h a t t h e p r o j e c t s h o ~ ~ lbd e discontinued , Ifowever, i f a n o n p o r t u n i t y o r n e e d f o r improvement e x i s t s , t h e n t h e v a l u e e n c i n e e r i n g s t t ~ d ys h o u l d c o n t i n l ~ et o t h e next phase,

I .

Creation Phase:

I n t h i s phase p o s i t i v e , c r e a t i v e thinking is applied t o d e v e l o p a l a r g e number o f p o s s i b l e a l t e r n a t e s o l u t i o n s t o meet t h e , f u n c t i o n a l need. J u d i c i a l o r e v a l u a t e t h i n k i n g s h o ~ i l db e c o m p l e t e l y e l i v j n a t a d d u r j . n g t h i s p h a s e a n d e v e r y a p p r ~ p r i a t ec r e n t i v e t e c h n i q i l e s h o u l d b e a p p l i e d t o g e n e r a t e t h e c r e a t e s t nurnher o f c o n ~ b i n a t i o n s o f d e s i g n c o n f i g u r a t i o n , m a t e r j a l s , p r o d u c t s , components, p r o c e s s e s , methods and p r o c u r e m e n t s o u r c e s whj c h w i l l p e r f o r m t h e b a s i c f ~ i n c t i o n ,

A c c n c e p t i d e n t i f i e d by t h e t e r m " b l a s t a n d c r e a t e t f i s employed a n d s i m p l y means t! o t t h e e x i ~ t i n g solution, v e t h o d , o r p a r t s h o u l d b e r e u l o v e d from o n e ' s mind s o t h a t n o p r e c o n c e i v e d ~ o l u t i o ne x i s t s , W i t h i n t h i e f r a m e w o r k , t h e i n d i v i d i ~ a l d r t c a w c r e a t e s new a p p ~ o a c h e st o m e e t t h e I m s i c f u n c t i o n a l n e e d . H y t h i s m e t h o d , i.t h a s o f t e n hepi1 f o ~ ~ re ~ as di c.r t o r e m o v e 504: t o 904 o f t h e c o s t s t h a n t o modif'y t h e e x i s t i n g p a r t o r r e m o v e 107.

t h e l e ELI c !*lore t h a n 2 0 t e c h n i . q u e s t o s t j m u l n t e c r e a t i v i t y a n d many a r e a ; ) p l i c a b I e t o v a l u e th , e o n e s t h a t h a s b e e n foilnd t o b e encivecring st~~rlies p n r t i c u l e r l y u s e f u l i s t h a t o f f ' b r a i n s t o r m j ng." T h j s i s a " d e f e r r e d jutl@t.ment" t e c h n i q l l e w h i c h c a n he d o n e i n c t i v i d ~ i a l y o r b y a g r o u p who s t r i v e s t o g e n e r a t e a n d w r i t e down a l l p o s ~ i b l ei d e a s t h a t c o u l d l e a d t o a b e t t e r a l t e r n a t e a p p r o a c h . No n e g a t i v e t h i n k i n g i s a1 l o w e d . T h e r e should be no attempt h e r e , t o e v a l u a t e , develop o r r e f i n e t h e i d e a as s u c h e f f o r t s t e n d t o r e s t r i c t c r e a t i v i t y a n d minimize t h e chance o f a r r i v i n g a t a n improved s o l u t i o n . The s t i w u l a t i o n , c r o s s f e r t i l i x a t i o n , jdea t r i g g e r i n g , c o i r t p e t i t i v e a n d c r e a t i v e c l i m a t e e x i s t i n g i n a p-olly, h r a i . n s t o r m i n e s e s s i o n i s h i e h l y c o i ~ d u c i v et c g e n e r a t i n g ideas.
blthnu{;h

I n c a r r y i n g o u t t h i s phase, i t i s b e n e f i c i a l t o have g r o u p s o f p e o p l e w i t h d i v e r s i f i e d backgrounds and capabilities particjpate in the creative sessions t o a p p l y new t h i n k i n g , a p p r o T c h e s , c o n c e p t s a n d i d e a s t o t h e p r o b l e m , O f t e n p e o p l e who a r e n o t t o o c l o s e t o a p r o b l e m c a n lnalre i m p o r t a n t c r e a t i v e c o n t r i b u t i o n s w h i c h q l l a l i f i e d p e o p l e can d e v e l o p . 3.n t h j s p h a s e t h e k e y t e c h n i q u e s a r e :

a.
b.

B l a s t and c r e a t e
A p p l y creative t e c h n i q u e s

c.

L e f e r judgement

After a l a r g e number o f i d e a s h a v e b e e n g e n e r a t e d , t h e s t 1 1 d y i s r e a d y t o move i n t o t h e e v a l u a t i o n p h a s e . H o w e v e r , i t s h o u l d be p o i n t e d o u t t h a t t h e s e c r e a t i v e t h i n k i n g c o n c e p t s c a n a n d s h o u l d be a p p l i e d t h r o u g h o u t all p h a s e s , o f t e n a n d r e p e a t e d l y , t o s o l v e s u b - p r o b l e m s t h a t o c c u r and t o c r e a t i v e l y d e v e l o p t h e best i d e a s .

111,

E v a l u a t i o n Phase:

C r e a t i v e e f f o r t , t o h e c o n s t r u c t i v e , must h e f o l l o w e d by j u d i c i a l a n a l y s i s o r e v a l u a t i o n o f t h e conceived i d e a s . I n t h i s phase of t h e job plan a value engineering s t ~ l d y c a r r i e d O I I ~a t h o r o u g h e v a l u a t i o n o f a l l t h e i d e a s t o s e l e c t t h o s e w h i c h show t h e m o a t p r o m i s e o f b e i n g c l e v e l o ~ ~ e d Many a n a l y t i c a l a n d e v a l u a t i o n i n t o a workable s o l u t i o n . t e c h n i q u e s a r e a p p l i e d s u c h as e s t i m a t i n g t h e f u n c t i o n a l c o s t which would r e s u l t i f t h e i d e a w e r e a d o p t e d ; classification of ideas i n t o categories; rating ideas a s t o f e a s i b i l i t y o f a p p l i c a t i o n and l i s t i n g t h e a d v n n t a c e s a n d d i s a d v a n t a g e s o f e a c h i d e a . I C f f o r t s s h o u l d b e made t o c r e a t i v t s l y d e v e l o p and r e f i n e e a c h i d e a , even t h o s e w h i c h may n o t a p p e a r p r a c t i c a b l e . I d e a s s h o i l l d n o t b e group i s p r e m a t l ~ r e l ye l i m i n a t e d n n l e s ? t h e e v a l l ~ a t i n g c o m p l e t e l y s a t i s f i e d i t h a s n o w e r i t . An i m p o r t a n t t ~ c h n i q i i e h e r e i s t o draw i n o t h e r p c o p l e w i t h d i v e r s i f i e d knowledge t o h e l p i n i d e a e v a l u a t i o n . Tdca e v a l u a t i o n i s a c r u c i a l s t e p because i t s e l e c t s t h e road whlch w i l l be t r a v e l l e d i n t h e r e s t of t h e joh plan, Creative i d e a s a r e a l s o u s e f u l i n t h e comparative r e - e v a l u a t i o n o f t h e worth o f h a s i c and secondary f u n c t i o n s

T h e k e y t e c h n i q i ~ e su s e d i n t h i s p h a s e a r e :
1.

P u t a S on e a c h i d e a . Hefine ideas.

2.

, , l h e work done s o f a r a q a c c u m u I a t e ( j f ~ c t s and d e f i n e d t h e p r o b l e m ; e s t a b l i s h e d t h e C O E ~o r v a l l l e p a l s ; i d e n t i f i e d


t h e b e s t t a r g e t s o f o p p o r t u n i t y f o r v a l u e e n g j n e e r i - n g work; g e n e r a t e d p o s s i b l e a l t e r n a t e s o l u t i o n s ; and s e l e c t e d t h o s e i d e a s w h i c h o f f e r t h e b e s t p o t e n t i a l , Now t h e s t i ~ d y moves on t o t h e n e x t p h a s e .

IV.

I n v e s t i g a t i o n Phase:

I n t h i s pase, e n I n t e n s e i n v e s t i g a t o r y p l a n i s d e v e l o p e d a n d c a r r i e d o u t . The i d e a s , w h i c h e v a l u a t i o n i n d i c a t e s o f f e r t h e b e s t o p p o r t c n i t i e s f o r a n improved s o l u t i o n , a r e t h o r o u g h l y reviewed t o d e t e r m i n e what iliforniation and p e o p l e a r e needed t o p r o v e o u t and devel-op each i d e a . A p l a n i s then developed t o b r i n g t h e a p p r o p r i a t e k n o w l e d g e t o b e a r on e a c h f u n c t i o n a l a r e a a n d i d e a . The k i n d s o f knowledge and i n f o r m a t i o n which a r e needed a r e c a r e f u l l y i d e n t i f i e d s o t h a t a s t h i s phase is c a r r i e d out t h e e s s e n t i a l s k i l l s can be a p p l i e d t o t h e problem,

I n implernentinc t h e p l a n , a l l v a l u e e n g i n e e r i n g s e a r r h t e c l ~ n i q u e sa r e d i l i g e n t l y a p p l i e d t o b r i n g i m p o r t a n t n e w i n f o r m a t i o n i n t o e a c h f u n c t i o n ~ la r e a . T h e s e i n v o l v e i n t e n s i v e c o n s u l t a t i o n w i t h t h e most a p p r o p r i a t e v e n d o r s ( s u p p l i e r s o r m a n u f a c t u r e r s ) , as w e l l a s s p e c i a l i s t s w i t h i n o n e ' s own ccmpany a n d f r o m o t h e r a r e a s . T h r o l ~ g hu s e of c a t a l o p , r e f e r e n c e s , m a n u a l s , p o r i o d i c z l s, r p g t s t e r s , d i r e c t o r i e s , vendor l i s t i n g s , d z t a s y s t e v s , yellow pages, t r a d e j o u r . n a l s , b t ~ y j n g~ i i i d e s , t e c h n i c a l p u b l i t a t i o n s , m i c r o f i l m f i l e s , t r a d e show m a t e r i a l , p r o f e s s i o n a l s o c i e t i e s a n d t h e i r publications, l j b r n r y s e r v i c e s a n d o t h e r s o u r c e s ; many a v e n u e s f o r l o c ~ t i n g i n f o r m a t i o n and f u n c t i o n a l p r o d u c t s a r e o b t a i n e d , Then b y p e r s o n a l c o n t a c t s , t e l e p h o n e , w i r e , and l e t t e r , t h e s e a r c h p r o c e e d s . "Chain I n q i ~ i r i e s "u s u a l l y b y p h o n e i s a n e x c e l l e n t s e a r c h t e c h n i q u e t o pinpoint qiiickly t h e b e s t source f o r expert information.
Once s i ~ i t a b l es o l i r c e s h a v e b e e n l o c a t e d , o t h e r t e c h n i q u e s a r e a y p l i e d t o s e l l t h e s o l l r c e on t h e i m p o r t a n c e of a~\plying t h e i r ~ f f o r tt o t h i s p r o b l e m , a n d t h e n h e l p i n g thern t o rmke t h e m o s t e f f ' e c t j v e 11se o f t h e i r s p e c i a l i z e d knowledee T h j s i n v o l v e s s k i 1 1 i n p r e s e n t i n g the p r o h l e m o r o p p o r t u n i t i e s i n s u c h a manner as t o draw o u t t h e k e y i n f o r m a t i o n and t a l e n t o d e v e l o p t h e b e s t a l t e r n a t i v e s o l u t i o n . l i e r e t h e b e s t k n o w l e d g e o n a v a i l a b l e f ~ l n c to jn a l , s t a n d a r d $lnd s p e r i a l t y p r o d l ~ c t s , p r o c e s s e s a n d r n a t e r i ~ l s i n soi~ght.

t i n o w l e d p o f s e a r c h t e c t ~ n i q l ~ eiss v i t a l i n t h i s s t a g e , They a r e h a r d t o t e a c h and d i f f i c u l t t o l e a r n q i ~ i c k l yb e c a u s e rni~ch oI' t h j s s k i 1 1 ccme9 f r o m practice a n d e x r ) e r i e c c e , N e v e r t h e 1 ~ s , ss e a r c h i s f u n d a ~ e n t a lt o d e v e l o p i n g th? h e s t s o l u t i o n s t o a n y p r o b l e m , a n d y e t s e a r c h t e c h n i q u e s a r e not commonly t a n g t i t i n s c h o o l s n o r f o r m a l l y by i n d u s t r y . F o r c e r t a i n f u n d a m e n t a l r e a s o n s , many p e o p l e r e s i s t s e a r c h a n d a t t e m p t t o s o l v e t h e ~ m o h l e t r !b y t b e r n s e l v e s t h i s , o f t e n r e - i n v e v t i n g t h e w h e e l a n d g e n e r a t j n g nlllch u n - n e c e s s a r y c o s t w i t h p o o r s o l u t i o n s w k . : j c b d o not i l t i l i z e l a t e s t technoloci cal and p r o d u c t i o n c a p a b i l i t i e s .
The k e y t e c h n i - q ~ i e si n t h i s p h a s e a r e :

1.

C o n s u l t s ~ l p pil e r s ( v e n d o r s )

3.

S e a r c h f o r i n f o r m a t i o n on s t a n d a r d s .

4. Search f o r information o n n e w p r o d u c t s , p r o c e s s e s , and m a t e r i a l s ,

5.

Compare c o s t s .

W h i l e a p c r s i ~ t e n ta n d i n t e n s i v e s e a r c h i!=b e i n g m ~ d e t o p r o v i d e a l l the d ~ t a needed t o develop t h e b e s t a l t e r n a t i v e . n c a r e f u l r e v i e w s h o u l d h e made t o i n s l i r e t h a t i t m e e t s a l l t h e c o n s t r a i n t s a n d r e q ~ irie m e n t s o f p e r f o r m a n c e , r e l i a b i l i t y , m a i n t e n a n c e , o p e r a t i n g c o n d i t i o n s , human f a c t o r s , e t c . T h e c o n s i d e r a t i o n o f a l l t h e s e i ~ n l - o r t a n tc r i t e r i a i s v i t a l t o t h e s u c c e s s o f t h e s t i ~ d yantl d e p e n d e n t o n t h e p a r t i c i p a t i o n a n d tenwwork e f f o r t o f a l l k n o w l e d r e a b l e and c a p a b l e p e o p l e who h a v e p r c d u c t r e s p o n s i h i 7 i t i e s . One l a s t p h a s e r e m w l n s , most c r i t i c a l . y e t i t may w e l l he the

fcecomro~ntlation (or. I m p lementa t

on) Phase:

I J n l e s s some a c t i o n i s taker; t o i m p l e v l e n t o r use. a n a 1 t e r n ~ l t e~ o l l i t i o n , t h e s t u d y n7ay 1 i ~ x r e b e e n c o n r l u c t e r l f o r n o t h i n g . Often i t i s n e c e s s a r y t o p r e s e n t t11e r e s u l t s o f t h c v a l ~ i ee n c i n e e r i n y ; s t ~ i d yi n s ~ l c ha f o r m a s t o c o n v i n c e t h e a p p r o p r i a t e p e ~ p l et h a t a c t i o n s b o ~ i l db e t a k e n t o implement t h e p r a p o s a l , T ~ I I Sa , ronci se f'acti~alreyor t o r p r o p o s a l s h o l l l d be p r e s e n t e d t o h i - g h l i g h t w h a t i s r e r o p l l m c n d ~ d a n d t h e b e n e f i t s t o b e d e r i v ~ df r ~ n ii t s L I S P . 11 o n e - p a g e v a l u e e n i . ; i n e e r i n g p r o p o s a l w h i c t ~ c o ~ i c i s e l ya n d g r n l ) l ? i c a l l y p r e s e n t s tlle rccomnlended a 1 t e r n a t i ve w i t h t h e j r n p o r t a n t s u p p o r ' t i n g d a t a s h o u l d he i n f i l e f a c t s is d e s i r e d . l~ept't-I a s b a c k u p i n f o r m a t i o n when n e e d e d , h u t t h e o n e - p a g e p r , , p o s a l s l i o l ~ l d be c o n ~ p l e t ec n o l ~ y h t o r s n v i n c e o n e o f t h e d e . ; i r a b i l i t i e s t o e i t h e r i v p l ement t h e proposn 1 o r i n v e s t i y a t e J'ljrtI!~r, It may o f t e n be d e s i r a b l e t o d e v e l o p a s o c o r i c ~ p r o i ) o s t ~ l a? a n a l t e r ' n t l t i v e a p r > r o a c h , h i l t i .f a t h n r o l ~ g hv a l ~ i ce n c i n ~ e r i n g s t ~ ~ d wa ys n a d ~ ,t h i - s h o u l d s e l t f o ~ nh e n e c e s s a r y .
The e x t e n t t o w h i c h e q g i n e e r j n e tttst; and e v a l u a t i o n h a s b e e n c o n l p l ~ t e da t t 1 1 ~ t i r n e o f tile p r o p o ~ a l i s a v a r i a b l e a n d d e p e n d s o n many f a c t o r s . A t I e a q t , j t i s e s s e n t i a l t h a t t h e proposal has a very high probability f o r s l i c c e s s f u l a d o p t i o n h a s e d nn a n e v a l ~ ~ a t i oby n rcmpctent t e c h n i c a 1 a n d m e n l i f a c t u r i n ~ p0opl.e. T f ' t h e r e s p n n s i h l e e n g i n e e r w a s a p a r t o f t h e v a 3 1 i e ~ n y i n e e r i n y ;t e a m or cenducted t h e v a l ~ ~ en e g i n e e r i n g s t u d y h i m s c l . f ' , i t may h e unnecessary t o s e l l t h e p r c p o s a l , Jn a n y rase, i t i s r ~ s a a ly l desisph'l e t o document t h e res111 ts of a value i s i o n aq a c o s t r e d i l c t i on e n g i n e e r i n g p r o p ~ s a l f o r r v f o r s u b ~ r rs

o r a v o i d a n c e a n d t o d i s s e m i n a t ~t h i s i n - f o r t t m t i o n t o o t h e r i n t ~ r e s t e dpersons

.,

'In t h i s p h a s e , t h e k e y t e c h n i q u e i s to:

tJi th s - ~ c h a c t i o n , t h e v a l u e ~ ~ ~ i n s tc u d~ y i rs ~ c o m p l e t ~ ,T h e n r p n i zion s y s t e m s t i r v a l u e e n c i n e e r j n e ; j o b p 1 a ~i 9 R n e x t r e m e l y e f f e c t i v e a p p r s a c h t o r e d l ~ c etinn e c ~ s s a r yc o s t s , I t s u s e b y q u a l i f i e d p e o p l e w i I 1 i n e v i t a b l y get nlltst, =cline rt..;ul ts,

SECTION I11

VALUE ENGINEERING STUDIES

VALUE E N G I N E E R I N G C A S E S T U D I E S
Introduction Many o f t h e c o n c e p t s a n d t e c h n i q u e s o f V a l u e A n a l y s i s / L n g i n e e r i n g were i d e n ' t i f i e d t h r o u g h t h e s t u d y o f e x i s t i n g p r o d u c t s . khen t h e s e a n a l y s e s r e v e a l e d t h a t u n n e c e s s a r y c o s t s e x i s t e d , t h e h i s t o r y of t h e p r o d u c t development and p i ~ o d u c t i o n l i f e would show t h a t c e r t a i n f u n d a m e n t a l t e c l ~ r i i q u e ss h o u l d h a v e been a p p l i e d a t v a r i o u s p h a s e s . C o n s e q u e n t l y , t h e c a s e s t u d y a p p r o a c h was u s e f u l b o t h i n t h e e s t a b l i s h i n g o f a n i d e n t i f i a b l e methodology and i n t h e learning process.
Similarly, t h e r e v i e w o f c a s e s t u d i e s i s u s e f u l t o t h o s e d e c i s i o n m a k e r s t o whom k n o w l e d g e o f v a l u e e n g i n e e r i n g i s i m p o r t a n t . I t n i i g h t a l s o be p o i n t e d o u t t h a t t h e r e i s a n i n h e r e n t danger i n t h e u s e of examples t o b r i n g o u t p o i n t s o r t e c l ~ n i q u e s . Tliis l i e s i n t h e t e n d a n c y t o view t h e e x a t n p l e i n r e l a t i o n s h i p t o o n e t s own e x p e r i e n c e s a n d k n o w l e d g e , r a t l ~ e r ' t h a n tile a v c r ' a c e s i t u a t i o n , T h u s , one m i g h t f e e l t h a t a p ; l r ' t i c u l a r improvement o r t e c h n i q u e w a s n o t h i t i g new a n d , as a r e s u l t , o i i s s tlre f a c t t h a t i t w a s t h e s i t u a t i o n t h a t e x i s t e d a n d t h e means t o t h e s o l u t i o n w h i c h w a s i m p o r t a n t .

C a s e s t u d i e s a r e i m p o r t a n t o n l y i n what t h e y c a n t e a c h u s t o w a r d s tllc w o r e ~ ~ c n e r u as le of fundamental d e c i s i o n ~ t ~ a k i nt c e c h n i q u e s o f V a l u e L n g i n e e r i n g . Tkiey d o n o t a t t e m p t t o s a y t h a t t h e p a r t i c u l a r i n ~ p r o v e m e n t was u n i q u e , b u t o n l y t o i n d i c a t e t h a t poor value e x i s t e d because c e r t a i n techniques w e r e riot a p 1 , l i e d a t a n a p p r o p r i z t e t i m e i n t h e p r o d u c t l i f e . I n t 1 1 : l t l i t ~ h t , e x a m p l e s and c a s e s t u d i e s a r e u s e d t h r o u g h o u t V a l u e I . n c i n e e r ' i n c t e a c h i n ( : , b e c a u s e t h e y make c e r t a i n p o i n t s r n o x e dramatically. The f o l l o w i n g g r o u p o f e x a n l t , l e s rverc c o r n l ~ i l e d by a g r a d u a t e s t u d e n t w h i l e d o i n g a t t i e s i s on V a l u e L n g i n e e r i n g . 111 c o l i n e c t i o n w i t h e a c h c a s e h i s t o r y , h e makes some p o i n t s w h i c l ~h e f e l t t h e e x a m p l e s 1 1 i ~ ~g hh lt ie d .

Ic i s a l s o an e r r o n e o u s ir.; ?s3ion t h a t Value Xzzlysl, is


made n e c e s s a r y only by poor o r i g i ~ ;c L Y g i x e r i n g , There a x mar.y f a c t o r s which r e s u l t i n a d e s i g n .ciLaz x y be improved l a t c 2 , Xzt

t h e leas-; of t h e s e i s t h e f a c t t h z ; a d e j i g n e n g i n e e r i n g d e ; ~ ~ ~ t mant e z n n ~ ; do 100-percent v a l u e c c , g i n e e r i n g at the same t ~ . , i ei;

does d e s i g n e n g f n e e r i n g ,

T h i s i s because t h e d e s i g n group r i o r ~ z l l y The "pick-and0 . :

does not have t h e time t o do b o t h s i m u l t a n e o u s l y ,

shovel1' par; o f Value A n a l y s i s i s performed by a team working

a p a r t i c c l s r product,

N o d e s i g n e n g i n e e r needs t o be as ha me^ tk'; he i s concerned w i t h

Value A n ~ l y s i scan make c o s t improvement:

d e s i g n x d t i n e and t h e y a r e concerned w i t h v a l u e , Ar-other a s p e c t t h a t l e a v e s room f o r d e s i g n i m p r o v e n c ~ t i s t h e p a r t i c ~ l a ~ lhy igh s p e c i a l i z a t i o n i n a l l f i e l d s . For i n s t a n c e ,

t h e e n g f n z e r may r e q u e s t s t a i n l e s s s t e e l and t h e shop foreman may come back and a s k i f w p a c i f i c a t i o n 9 'i s r e q u i r e d , The i n d i v i d u a l

e n g i n e e r cannot p o s s i b l y know e v e r y t h i n g a b o u t e v e r y t h i n g , whereas a team o f v a l u e a n a l y s t s w i l l come very n e a r ,


A i o o k a t t h e f o l l o w i n g c a s e h i s t o r i e s w i l l i l l u s t r a u e mcsh

o f what has been s z i d i n t h e p r e v i o u s p a r a g r a p h s , Case H i s t o r y No, 1 I n t h e a r a f t i n g department o f an e l e c t r i c c l o c k P a c t o r y , t h e word " c r y s t a l t 1 was always used t o d e s i g n a t e c l o c k f a c e s , a s a m a t t e r of h a b i t , They y e r e c a l l e d c l o c k c r y s t a l s , T h i s meant t h a t drawings d e l i n e a t i n g t h e e x a c t shape and dimensions o f c l o c k f a c e s always s p e c i f i e d these as crystals, I n g e n e r a l a u d i t i n g o f freig?;t b i l l s , i t became a c c e p t e d - p r a c t i c e t o expect t h e c r y s t a l s t o r e q u i r e a very h i g h f r e i g h t r a t e , However,

when t h e time came f o r ~ k - r , ; s . s3ecial audit arose, ''xo:~ or f r e i g h t r a t e s , t h e ~ L . L ~ , L ~ : L does a c l o c k f a c t o ~ yu s e s o much c r y s t a l ? " The i n v e s t i g a t i o n which f o l l ~ w e dd i s c l o s e d th;t t h e c l o c k f a c e s were i n d ~ e d window ;;lass, \:armed and sagged, The i n v e s t i g a t i o n a l s o brought f o r t h t h e infor:;.ctloc t h a t t h e t r a n s 9 o r ta~ion of c r y s t a l , a vc-;; expensive g r a c e of g l a s s , I s extremely c o ~ , $ L y ,;qhile window g l a s s , i n any form, t r a v e l s a t a x . ~ c h lower r a t e , Crystal shipped " l e s s c h n carload costs l , 2 5 t i m e s t h e f i r s t - c l ~ s s :?eight r a t e , x h i l e "bent window g l a s s , " -dhich c o r r e c t l y d e s c r i b e d t h e p r o d u c t b e i n g s h i p p e d, t r a v e z t only 0,85 t i m e s t h e X r s t - c l a s s f r e i g h t The r e s u l t was t h a t t h e name was changed on t h e drawings, i n t h e s p e c i f i c a t i o n s , on t h e o r d e r s , and on t h e b i l l s of l a d i n g s o t h a t , i n s t e a d of b e i n g wrongly c a l l e d c r y s t a l , t h e m a t e r i a l was c o r r e c t l y c a l l e d b e n t window g l a s s , The f r e i g h t r a t e was c u t by 32 p e r c e n t W Sp o W 0 From t h i s c a s e we can s e e t h a t t h e l l h i s t o r i c a l , " b u t e r r c n e o c s terminology f o r c l o c k f a c e s appeared on drawings, s p e c i f i c a t i o r x , etc, Eoreover, because o f t h i s , t h e p e o p l e had become feiriy c-nA t f i r s t l o o k some would s a y , "You Lon's

ditioned t o high cost.

need Value A n a l y s i s t o f i n d t h i s t y p e of improvement ," 3:s

is true.

However, i t i s a l s o t r u e t h a t t h e a p p l i c a t i o n o f Value A n a l y s i s v l i l f i n d t h e s e t y p e s o f hidden costs--and f i n d them q u i c k l y ,

, c a s e o f an e l e c t r i c a l c o n t r o l , It worked was t o o h i g h , very w e l l i n d e e d , b u t i t s c o s ~ S a l e s had dropped o f f , ?he makers brought t h e c o n t r o l i n f o r value a m l y s i s with a statement which s a i d , "We g i v e you t h i s with tongue i n cheek; we d o n q t t h i n k a n o t h e r penny can be t a k e n o u t o f t h e c o s t , b u t weqr e d e s p e r a t e , "

..

"he c a v e r i t s e l f c o s t 4 c e ~ t s ,an e x p e n d i t u r e o f .;4s2 300,00 a y e a r , I t s f l - n c t i ~ n was t o k e e p ex, ~ z n z o a s m a t e r i a l o u t of c n e small mechanf sn, n ,he z n t f r e c o n t r o l was m o ~ n t e di n s i d e a n o t h e r enc;osure, Using a p l a i n p i e c e of l a m l n a t e a 9 1 z s t i c r e d u c e d t h e c o s t fxom 4 c e n t s t o 1 , 5 c e n t s e a c h , and o u t went $ 2 5 , 0 0 0 , 0 0 , Many s i x i l a r f i n d i n g s were maze a s t h e a n a l y s i s o f t h e complete device proceeded (33, pp, 1-2),
, -

n.

In,s
2

c a s e i l l u s t r a t e s where s e l e c t i o n o f t h e s u b j e c t was r.. , . L

n e c e s s a r y b e c a u s e t h e makers b r o u g h t t h e p r o d u c t i n f o r s t u L y ,

a d d i t i o n , It s h o u l d b e n o t e d t h a t t h e philosophy o f no f u r t h e r cczz r e d u c t i ~ nbelng p o s s i b l e was h e l d by t h e m a k e r s , Case H i s t o r y NoG 3


c -

3. m a n u f a c t u r e r p r o d u c e d a - p i e c e o f hardware--

t h e p r i m a r y f u n c t i o n of t h i s p i e c e was t o g u l d e b o l t s , It c o s t $ 1 , 6 3 t o c a k e e a c h p i e c e , C c s t r e d u c t i o n methods ( c h a n g i ~ g t h e handling and t o o l i n g m e t h o d s ) r e d u c e d t h ~ s to $0~81, V a l u e c o n t r o l came up w i t h a r e p l a c e m e n t method o f ( 4 ) p l a s t i c hook g u i d e s a t $GOG2 e a c h , o r a t o t a l o f $0,08, and s t i l l p r o v i d e @ t h e e s s e n t i a l f u n c t i o n ( g u i d e b o l t s ) ( 2 1 , p , 6), Case H i s t o ~ yNo, 4

, i n t h e c a r r i e r program, i t was f o u n d t h a t t h e g u a r d r a i l f o r h a t c h e s r e q u i r e d by t h e worki n g p l a n s 'was composed of w i r e r o p e 3/8 i n . d i a m e t e r c u t t o l e n g t h and s p e c l a 1 s t a i n l e s s - s t e e l ' i t t i n g s p u t on e a c h e n d , The w i r e r o p e i s p r e s e r v e d w i t h p a i n t wrapped w i t h m u s l i n and s e r v e d

..

wit:: : i a r ? i n c c o r d , T k LL-T'A f s a,.;ain wr&-.,?ed w i t h m u s l i n anC c?, whcl.; l e r , g t h COT. :red w i t n h m d - s t i t c h e c 2 ~ : :' G , S , Zaph e n c of t h e ,canvas i s s e r T - . ; \.--"h COT^:^ w i r e and s o l d e r e d , One enG 1 ; f a s t ~ ~ ? ~ L t o tke h a t c h c o v e r by mezr. oP 5. s h ~ 2 t lez2;tn of L / 4 i n , c l o s e - : &nk c h a i n , t n c s t k c ? t o t h e deck o r s t ~ x c ~ i o n T , his i s , . l expensive i t e m , T h e r e Ere z p p r o x i m a t e l y 384 ~ a t c h e s p e r c a r r i e r x , 2 t h z guard r a i l o u t l l n e d c o s t $16,438 p e r , a r r i e r , I t s ; u n z ~ f o n ? To g u a r d p e o p l e : ? o r c - i s a p p l i c a t i o n , t h e s u b s t i t u t i o n of 1/4 i n , c h a i n was recommended a t a c o s t o f $1,233 p e r c a r r i e r , The a c c e p t a n c e of t h i s recommend a t i o n s a v e d a p p r o x i m a t e l y $15,000 p e r s h i p ! ( 5 6 , p , 21,
i
A.

This case i l l u s t r a t e s t h e influence of traditior,,

Gftey.tir.?s

a s p e c i f i c e t i o n remains unchallenged a f t e r i n i t i a l approval,

In an

age of d a l l y 3 r e a k t h r o u g h s o f new m a t e r i a l s , methods, t e c h n i q u e s , et~,,~w c e n n o t be s a t i s f i e d u n t i l t h e a p p l i c a b i l i t y o f a l l s p e a i f l c a t f o n s have b e e n t h o r o u g h l y examined, Case Value a n a l y s i s Soa~d bracket, 15 p i e c e s p l u s zeered bracket only $1,91 (7,

Xis-

s t u d y was c m d u c t e d on c i r c u i t Original bracket consisted of r i v e t s , c o s t $ 1 0 , 2 5 , Reengii s prod1;cea as one p i e c e , c o s t s p o 241,


_ _ _ -H i s_ t-._---_. ory Case

NO"^ ._

-4 r e q u i r e m e n t e x i s t e d f o r t a r g e t s f o r r i f l e x a r k s m a n s h i p t r a i n i n g , These t s r g e t s h a d t o possess c e r t a i n shock-trassmitting character~e~ ?ecorded, In istlcs so that a h i t W O U b ~ c c i t i o n ,t h e t a r g e t h a d ; e T;;2tnstand t h e e f f e c t s of weather f o r a s t a t e d period of -:i:ne w h i i e m a i n t a i n i n g r e q u i r e d r D i g i d i t y , A very s u i t a b l e t a r g e t of p l a s tic-impregnated f i b e r g l a s s was d e v e l o p e d - - c o s t i n q u a n t i t y , 32,00 each,

T h i s was a good p r o d u c t , s o u n d l y e n g i n e e r e d , It s e r v e d t h e f u n c t i o n a n d was r e l i a b l e b u t ,

A f u z c a z e n t a l l e s s o n i n t h i s c a s e i s t h e key r o l e t h a t 2 u r -

c h a s i n g c a c p k y i n c o s t r e d u c t i o n anC V a l u e A n a l y s i s .
, A & . r'n . a?1

?rocure::.e~'~,

prop?-ly

uhsd,

i s an i n t e g r a i p k 2 t or' t h e b u s i n e s s o p e r ~ v i o n

azd n o t ze?~;g

a g r o u p of c l e r k s p r o c e s s i n 2 p u r c h a s e r e q u e s t s ,
-

E o ? ~ e v e r , i t r e q u i r e s communication a n d c o o r d i n a t i o n b e t w e e n a l l de2artzencs.

i n t h i s r e s p e c t , Value A n a l y s i s p r o v i d e s t h e i n t e -

g 2 a t i n g f u - z z l o n which c a n u n i f y a cox2any s o p e r a t i o n .

have t h e example w h e r e i n s p e c i a l alurni~lloys were s u b s t i t u t e d f o r t h e more e x p e n s i v e L ~ c y l l L u r ; and t i ' c a n i m s ? ? c i l l z d I n t h e d e s i g n oT c ~ ~ ? l m ni s s i l e c o n p o n e n t s , T k e s e m o d i f i c a t 1 o n ~ ? ? l z r -;o p r o d u c t i o n - 2 r e c l u C z d c o s t s e s t i n a t e d t o 'kc r ? ? ? o x i m a t e i y $ 3 0 8 n i l l l o i ? i o i l z r s o v e r t h e c ~ x - e n c l yp l a n n e d p r o g r a n f o r one m i s s i l e s y s t e m . - .-,= : . , , , - - & , L n t h e q u e s t i o n was =laiscG: What e l s e y,3,,i, 20 t h e j o b a n a what d o e s tha: c o s t ? Such . .-. ,-,,,;oning is t y p i c a l of t h e value-analysis c;?-ezch (i7, p . 594)0
LLIX
C l r . = -

. . . we

p +

c .

Tkis c a s e h i g h l i g h t s t h e f a c t t h a t a small s a v i n g p e r c n l t
--,>-. A -=kl.;s i n s u b s t a n t i a l s a v i n g s when

i a r g e quzntlty of u n i t s a r e

? o r want o f a b e t t e r i d e a , chz b o r e s i g h t f o r + ,,.&e 106-mm,. r i f l e hac b e e n ; s & ~ g n e da s a n ~lx:.lnuin c a s t i n g r e q u i r i n g e x t e n s i v e m a c h i n i n g .


' r

(1) t h e f ~ ~ c z 9 o ~ : a aplp r o a c h b r i n g s a l l s l e r x c t s o f i t e m c o s t x:.de?

s c ~ c t i n y,nL ~ ( 2 ) t h e team a p p r o z c h niakes i t s o s s i b l e t o g e c

e x p e r t i c f ~ x x t i o ne i t h e r from t h e :?a:?
Case --'.

o r t k ~ o u g ht h e t e a ,
Xo, 9

Histo-:!

s~riking example o f t h e s a v i n g s i n h e r e n t

I n s l n 2 l e components o f nlssile s y s c e x s

v;as 2 f u s e h o l d e r u s e d I n g-ound-control v a m , C a r r i e d o v e r i n e s s e n t i a l l y t h e same fa-2 I r o ~ e a r l y ground-coriu20l a y s t e z i s , Cc c o n s i s t e d o f a d r i l l e d s t a l n i e s s - s t e e l 5 ,,cket on which t h i r t y - s e v e n x c h l n e d and t k ~ e a d e db o l t , n u t , and w ~ s h a r~ s s e r n b l i e s ::zre mounted, The s o l e f u n c t i o n o f t h e ~ s s e m b l ywas t o h o l d s p a r e f u s e s ,
-n c

Alt,-iough i t was i m m e d i a t e l y o b v i o u s t o t h e ,?i.~t h a t c o s t was o u t o f pTo?o?tiorl t o t h e .--.?cessary f u n c t i o n , c o n f i r m t i o n was s u p p l i e d C u r i n g t h e i n f o r m a t i o n p h z s e , The c o s t p e r L ~ l i i e rwas f o u n d t o b e $ 1 9 5 , 0 0 , 5 r a L n s t o r m i n g , a common v a l u e - a n a l y s 5 s tec::cique, was employed i n eke s p z c u i a t i v e phase, A stenographer i n t h e vzlue anzlysis o f f i c e a s k e d : Why c a n ' t y o . d r i l l h o l e s i n a n e t a l s h e e t and p u t i n r u b b e r gromxets t o h o l d t h e f u s e s ? A h a n d - b u i l t model was e a s i l y c o n s t ~ u c t e dand f o u n d t o b e s u i t a b l e f o r t h e p u r p o s e , P r o d u c t i o n c o s t was estimated a t l e s s t h a n $1,50-a 99 p e r c e n t r e d u c t i o n (32, p , 1014). This. i s a n o t h e r example o f "'hic5dent1 c o s t s ,
A carry-ov3:-

:?orA some o t h e r a p p l i c a t i o n may becoxe a s t a n d a r d i t e m and r e m a i n x i c h z l l e n g e 6 u n l e s s Value A n a l y s i s i s a p s l i e d , Many, many o t h e z

. - elcctro~Lc , , , . , SL-7: b ;-L . . . -A A n L ~ y 3 (--zd bleed G

11-

eslie~~in of g a c b y h i s wize t a ';he h a i r c l i p b i L E : - (40, p , 2 ) ,


L,?G

C-eacive t h i n k i n g and s u g g e s z l o n s a r e a v a i l a b l e t o ; 1 1 cc~.-.:~cn c a n b e n e f i t g r e a t l y t h r o u g h t h e employee plan,

-.-,owever, t h e s u g g e s t i o n p l a n r e q u i r e s c a r e f u l h a n d l i n g ,
7

--

&:is

t r u e where t h e s u g g e s t i o n s u l t ir. etc,


2

good b u t w i l l

ye-

c o s t s a v i n g s b e c a u s e o f s u c h o t h e r f a c t o r s as r e t i n o 2 ' i t 4

I n a l l c z s e s , t h e employee s h o u l d b e g i v e n a n e a r l y and con-

p l e t e e x p l a n a t i o n and, p e r h a p s , a s u i t 2 b l e commendation o r r e c o g nition for good s u g g e s t i o n ,


1 Case H i s t o r y No, 1

O r t e n i t i s c h e a p e r t o buy a p a r t f ~ o m a specialty s q p l i e r t h a n t o make i t - y o u r s e l f , p a r t i c u l a r l y i f t h e s u p p l i e r ' s p r o d u c t i o n i s a u t o m a t e d , One f i m d i s c o v e r e d t h a t i t c o u l d buy a small b r a c k e t from a s u p p l i e r f o r a d e l i v e r e d c o s t o f $3 p e r t h o u s a n d , The same k i n d o f b r a c k e t had b e e n c o s t i n g t h i s f i x $13 p e r t h o u s a n d when msde i n i t s own s h o p ( 4 0 , p , 2 ) , Many l a r g e companies have a i'Make-or-Buy" cornnittee,
A "fall-

o u t " b e n e f i t from V a l u e A n a l y s i s i s a t e c h n i c a l l i b r a r y on t h e c o s t s o f i t e m s , p r o c e s s e s , m a t e r i a l s , c ~ q o n e n t s ,a n d o t h e r e l e m e n t s o f cost, T h i s i n f o r m a t i o n , p r o v i d e d 3y v a l u e s t u d i e s , may b e c c x > - l e d

by e l e c t r o n i c d a t a p r o c e s s i n g ( E D P ) t o p r o v i d e t h e Make-or-Bay

Go:xiittee s ~ c h g r e a t e r effectiver,e,s,

A s i ! r , ~ l e , throwzwzy c l L 9 vc :&old ? o u r w a s h e r s hcs knocked $3,000 a y e z 0 : L j e t engine

~xuf~cti,irer c~ o s t s , ? a - : s c r i y cercer'ted a s a s c a c k , :he t h r e e washe25 SAE f l a t w a s h e r wtre a e s s y and difficult :or . : - s s o c i a t e d S p r i n g C;:,>, '60 2ssernble and s L .'.LC &;'.red p e r rr,;s;io,r t o r u n a VA sZ;vtCy+ ~.'cl;;;esceci -,he c l i g , a--A c o s t s d r o p p e d o v e r 50$o I n aciLicion, s h z ? c 7 s no c h a n c e of cezL;rAt g e ' c t l n g on t h e wzsher f a c e s (37, p e 1 6 3 ) *
Or.?

s o u l d h a r d l y e x p e c t a c o s t i ~ p r o v e r n e n t o f $3,30C,GO

froz

However, a f t e r experience i n Value A n a l y s i s i t i s four w~s~.trs, ha26 n o t


,GO

f i n d c o s t s a v i n g s h m g i n g from e v e r y t r e e ! Case Hisco-y No, 1 3

Pil i

c a s e or' t h e bui1dlri.g i!ix <;?,valved a nz;nber o f L n t e r e s t i n g a s p e c t s . A s t u d y showed t h e 2 . - - ~-l y- s t s t h a t a l e s s e x p e n s i v e , l e s s h e a v i l y ii?suic~ec o u i l d i n g wire coule pzrPoTa t h e r e q u i r e d fc:.ction and meet a l l s a f z t y r e q u i r e m e n t s i n c ~ ~ t a li on cztions,
r ~

?;mt e n g i n e e m were w i l ; : ~ g enough t o c o n s i c e xhe change b u t s a i d i t wowlk b e more expensive ,icult YG ,J ;ae s l n z e i t would b e .:c;;-e e l f " l : s ; ~ l l t h a n t h e w i r e t h e - i n u s e , The a n e l y s t s .,:LA !:zL~c t o ; m i n t e n a l ; c z -LC zsiie5 il ' ~ h e y c o z l i ::stsll t k e w i r e withou'c - ~ C A i c l o n a ll a b o r c o s t , 1-s a n s w e r w ~ s y e s , a n a c h e n e:-,:neering saw tAz; i t c o u l d b e done--;:.< 2'; L z z z e r i a l s a v i n g o' $15,000--chey r e a d i l y agp??d t o t h e change ( 3 7 , Po 5930
L

T h i s c a s e a l s o i l l u s t r a t e s t h e i r i t e g r a t i o n r o l e s p l a y e d by
-,

e-

It a c t s as a u n i f y i n g e i e a e n t t o b r i n g departme::ts

Case Histo"g

So, 1 4

The m e c h a n i c a l p e n c i l c z s s ai7fers a good example o f how d i f f e r e n t v a l u e t z c h n i q u e s c a n b e a p p l i e d z s a r e l a t i v e l y s i m p l e i c k n t o p r o d u c e uriexg2cted

The team d l d n ' t s t o p t h s r c , h o 7 ~ i e v e r , It analyzed u s a g e o f t h e p e n c l l s c.nG found t h a t I z s c i t u e was i s s u i n g one p e n c i l p e r man i n a given p e ~ l o d w~ h i l e S o ~ z kC h s r i e s t o n was is;uLng n o r e , S y c h a n ~ 2 r . g G G one s t a n d a r d o f i s s u ? , t h e company was a b l e t o s a v e a n o t h e r $3,000, Sij;,-ze-~te and Murray went a l i t t l e f u r t h e r , - - ,- x a s t h e f u n c t i o n o f cne z c v e r t i s i n g i~7~inte on d e a c h p e n c i i ? Eow much d i d i m ? y i r A ~ i nc g o s t ? The answe- was, o f c o u r s e , +I^ - - b U C was s i m p l y adve-tfsicg i t s e l f t o i t s c ; f a t a c o s t of 2 1/2L; a p e n c i l , The n L L > s c e s s a r ya d v e r t i s i n : c x e o f f , and t h e t o t a l s a v i n g on t h e p r o j 2 c t zoomed c l o s e t c $4,000 ( 3 7 , PPo 57-59)o
I,,
v , .
--1

b ~ ~ , u

V s l u e A n a l y s i s may be a p p l i e d t o any e i e x e n t o f c o s t ,
J-

I r .

; . i bAi-s c a s e , r,ke ; ? e r , c i l s a r e n o t a p y o d u c t o

Any d e p a r t m e n t coirLd

zx2lcreG t k i s ,
GVEL

However, t h e f u n c t i o n a l a p p r o z c h o f V a L x the advertising,

challenged t h e Was i t

be s c b j e c t e d t o V a l u e A n a l y s i s ,

.Axe,-icanls d r i v e f o r star,ck-a: z,'.Po:~ I s t h e : A n s l y s t M, E, inxediate responsibility o (;tiel) X z l e t , who r e c e n t l y s z v c 5 $11G ,OGO b y p t d ~ c i i l gt h e tremendous vaFLecy of c lem? s ~ s e d by t h e a i r l i n e , male^, whcse 2 5 y e a r s wlth A x e r i c a n have g i v e n h-x a t L o r c u g 3 k n o v l e d g e of' p a r t f u n c t i o n s , hi gh1ig;l'cs t h e b a s l c n a t u r e o f any s t a n d a r d s ?rogram,
" A l l clamps do t h e same t n i r A g S 1h ' e says, "chsy s q u e e z e , " W e j u s t s t a r t e d asking a few s i m p l e q u e s t i o n s : How . > a n y d i f f e r e n t clamps do we h a v e ? Do we r e a l l y n e e d s o many d i f f e r e n t t y p e s ? Why do rna:&y a ? ? a r e n t l y i a e n c l c a l clamps have s u c h L v a r i e t y o f p a r t numbers and p r i c e s ? How nany c a n we e l i m i n a t e ? How much c a n we s a v e ? "
TO

recruit h e l ~ i n answering t h e s e quesLions, t h e p u r c h a s e a n a l y s i s group g a t h e r e d a sample of' e v e r y clamp c a r r i e d i n s c o c k , S i m i l a r clamps were t h e n d i s p l a y e d on l a r g e p e g b o a r d s i n t h e purchasing area,

"The b o a r d s were t h e r e a s a c h a l l e n g e t o everyone--mechanics, e n g i z e e r s , a n d v e n d o r s , as w e l l a s p u r c h a s i n g p e o p l e - t o suggest where we c o u l d s t a n d a r d i z e and t e l l u s where we c ~ u l d n ~ M t a , l~ e t~ s z y s , "The r e s p o n s e was t r e m e n d o u s , O f c o u r s e t h e proj e c t g o t p l e n t y of u s e f u l f - f o r m a t i o n from EGP, t e c h n i c a l d r a w i n g s , a n a c a t a l o g s , But i t was o n l y t h r o u g h t h e b o a r d s t h a t we c o u l d d e t e r m i n e q u i c k l y w h e t h e r two a 2 p a r e n t l y i d e n t i c a l clamps r e a l l y were t h e same, o r w h e t h e r t h e y d i f f e r e d i n some i m p o r t a n t r e s p e c t , l i k e chemical r e s i s t a n c e , t h a t an e n g i n e e r would s p o t i m m e d i a t e l y , ' 7 (37. p a 44). Over a p e r i o d o f t i m e , a v a r i e t y o f p a r t s w i t h a s i m i l a r f~nction w i l l a c c u m u l a t e i n most c o m p a n i e s , One r e a s o n i s t h a t ,

a s p e r s o n n e l t u r n s o v e r , t h e r e i s a n amalgamation o f employees

,.. ,> --_ l b?A x gie ? l e a c e from d i v e r s e

COK?L:~;LL,

Z G C ~ X Z A 2 s U S Z C ;L -.=" b -

~ & T I

., - .-.c;t10zs,

. Gsnc tSi,?,
s

c o n s i d e r a t l o n s zLL ; : '; z L =

s h ~ wL?

ir, 2 l c
9

s-;,:lf---

Ic rimy c a s e s , speci2ic~*:,c:-.;

z e d?t;-::lr.cd
'che

5 : ~1 ; .- i v - c ~ a l

draftsr;el?.
In;

These i t e m s s l i p b y ,

,23 co-+ound

~ , ~ . G L ~ Ly ?~ x ~c

f i ~ s -

Kay >e * ~ c o busy w i t h t h e

- 1 ~ 2 :e ~s - ~ r r o

r d e ~ st o 2zy c i o z e a t rr '

c e n t i o z c~ Loli:s,

cimps, s c ~ e a ~ m ,C o t h e r mLnor It?;.-,s,

,nis

c a r r i e s aVey i n t o t h e p r o v l ~ i o n i r ~o? g o p e r a t i o n a l s p a r e p a r t s ane naintenx2ce spare p a r t s . t o the c l a q story, Very soon we f i n d a s i t u a t i o n p a r a l l e l

electrical fitt i n z s on t h e Ninuteman s i s s i l c was d e s i g n e d as 2 c h r e a d e d m e t a l f i t t i n g , wich a c h a i n a t t a c h e d , A change t o a p l a s t i c c l i p c z p r e d u c e d c o s t p e r c o v e r from $6 t o two c e c z s , T h i s amounts t o a s a v i n g of $73,000 a year--and t h e i d e a w i l l b e e x t e n d e d t o o t h e r weapons ( 4 2 , p , 3 ) , One c a u s e of h i g h c o s t i n e n g i n e e r i n g d e s i g n , f o r i n s t a n c e , that prices, suggests need, the catalogues vendors not list the

A d u s t cap a p p l i e d t o nui;erous

An e n g i n e e r w i l l r e s e a r c h t h o s e c a t a l o g u e s h i s memory
very o f t e n , s t o p t h e f i r s t i t e m which m e e t s h i s

Ee w i l l l e a v e t h e d e t a i l s of procurement t o t h e p u r c h a s i n g

d e p a r t r ~ e ~ t .A t t h e same t i m e , p u r c h a s i n g f i g u r e s t h e i t e n s s l e c t e d 5y t h e e n g i n e e r i s e x a c t l y what i s r e q u i r e d . r,ake t h e e n g i n e e r s more aware o f p r i c s s , Value Analysis can

Value A n a l y s i s c a n b r i n g

e n g i n e e r i n g and procurement c l o s e r t o g e t h e r , Case F i s t o ~ yN O , 1 8 S t , L o u i s t Emerson E l e c t r i c Co,, i n a l i s t of o t h e r w i s e s o p h i s t i c a t e d V a l u e E n g i n e e r i n g results, tosses i n t h i s neat solution t o a

...

p2aSlem I n t h e c o s ight f i x t ~ r ? , m7.. L i . ~coi;i.pmy ries st ciesi=;z o f i . rzctangular rsPiec f s h e e t rcetai, F i n a l l y , a VE e n g i the reflecSor l o o k e d a .lor; l i k e Emerson g o e s o u t s i d e t o buy a c t u a l c ; ~ ? p a n s , u s i n g them ir, t h ? l i g h t f i x t u r e (47> i 3 " 8 : ) "
3

Case X i s L

-9 K O , 19

r o i l - p r o o f d o o r h o l z ~ ?>rss d e s i g : i e c :sr n ; c a b i n e t on b o s r d sni?, It c o s t e:ectronic < 5 5 , 0 0 , A v a l u e ana1ys;s o f ;Fie pzrt I:.Cicz'ced * - a s t r o n g v e r s i o n of a brace normaliy use0 ox c a r d t a b l e s woula r e i ~ a b l yp e r i o r r h t h e szme ?xction, C o s t o f t h e new p e r t : $ 0 0 5 7 ( 5 2 p ;>,4ju
,
t* L

4-

I;

--

i s q u i t e a l e a p from e l e c t r o n i c c a b i n e t s t o c z r C t a b l e s ,

kss

ter,dezcy

t o r e i n v e n t tk.?

wheel,

A t t h e same tirr,e, h o ~ > ~ z v e r ,

card t a b l e brace

the electronic

. :

::?id26 p a r t c o s t $ l 0 G O 5 9 , It was d e s i g c e d &s f a b ~ i c a t e dp a r t b e c a u s e i n t h e p a s t a s i x i l a r c ~ s ? t art had f a i l e d i n s e r v i c e , A redesigned c,sting o f e q u a l s t r e ~ g t nt o t h e w e l d e d orie i s LOX u s e d , It c o s t s $4,5G ( 5 2 , p o 4 ) 0
2

case

quite

highlighting the

c o s t p e n z l t y o f a f a i l u r e without follow-up t o inp7ove t k s p a r t , p r o v i d e s companies a n d e m p l o y e e s ? I c t u r e o f t h e v a r i o u s p r o c e s s e s erid z z t e r i a i s , 3 n t i l a LolLar

a position

a z o u n t i s s;ved

z f t e r c o s t r e d u c t i o c h a s a l r e a d y b e e n z p p i l e d , 2.;

b e c o c e s eve;; zo?e i m p r e s s i v e .
L

Case H i s t o r y Xo, 2 2

, , , a t t e n d a seminar f o r executives of o i l - w e l l s z r v i c e f i r m s conducted ?ec?ccly by WLllian G , ?i!c;.;urry, V a l u e - C o n t r o l . 4 d . ; i n i s l ; r ~ z o r Tor t h e N i l l t a a y E l e c t r o n i c s D i v i s i o n oi" M o t o r o l a , i n S c o t t s d a l e , A r i z o n a , F o r s t u d y , McMurry i s g r v e n a c i g a r - s h a 2 e d alcmlnurn t u b e w i t h s l o t s i z t h e s i d e , The o i l m e n t e l l him t h a t i t v s czlled a "bull piug,"
4.*ab d o e s i t d o , h e a s k s , It p r o t e c t s d e t o n a t o r s s e n t down o i l w e l l s t a p e ~ f o r a t et h e p i p e a n d l e t in oil,
c

What d o e s i t c o s t ?

Seventy-niLe c e n t s ,

How e l s e c o u l d you p o s s i b l y convey and p r o t e c t a d e t o n a t o r ? V a r i o u s s u g g e s t l o a s L2e made, One s t u d e n t suggests: p l a c e i t i n a paper bag, 3 l a i c u l o u s ? Yet t h a t i s t h e s u g g e s t i o n w h i c h , w i t h a s l i g h t r e f i n e m e n t , was a c t u a l l y a d o > t e d , T e s t s showed t h a t a c y l i x d z r o f h e a v y , i m p r e g n a t e d p a p e r would do t h e j o b j u s t a s w e l l as t h e aluminum t u b e . The p a p e r t u b e c o s t s s e v e n c e n t s , a r e d u c t i o n o f more t h a n 9 0 percent--:;;id i t i s now a s t a n d a r d i t e m i n t h e o i l - w e l l s e r v i c i n g i r i d u s t r y , which

u s e s b u l l p l u g s by t h e c n o i s a n d s ( 4 2 , p . 3 ) .

T h i s b r i n g s t o mind t h e s t o r y o f n o t b e i n g z b i e t o s e e t n e t r e e s for t h e f o r e s t .
go u n c h a l l e n g e d .

A 79-cent

c o s s saened n e c l i g i b l e

enough to

But a n a g g r e s s i v e e t t i t u d e and proper philoccahy

toward c o s t w i l l n o t a c c e p t any c o s t as v a l i d ,

These c a s e h i s t o r i e s i n d i c e t i t t s s industry and g o v e r ~ c ~ ; c i a r e b o t h b e g i n n i n g t o p l a c e emphasi; upor, Value A n a l y s i s .


A brief

l o o k i n t o t h e r e a s o n s f o r t h i s emphasis w i l l b e g i v e n i n t h e nexr. chapter,

B.

VALUE ENGINEERING OF ELECTRONIC COMPONENTS AND CIRCUITS

lIlK A U l r l w ~

I.

I O I ~ ~ , , . . ~ . -

.-

By J. J. SURAN
Manager, Electronic Applications and Devices Laboratory General Electric Company, Syracuse, N e w York

nicol a n d finonciul program p l a n n i n g , prolect organizolion, integration with product deparlments, a n d evaluation of laboratory effec~iveness. Before Ioining G.E, h e h e l d e n g i n e e r i n g positions a1 J. W. M e a k e r Co. a n d Molorola. Between 1959 a n d 1963, h e also served a s a non-resident m e m b e r of t h e M I 1 f a c u l l y . H e is a F e l l o w of t h e IEEE, holds o BSEE d e g r e e f r o m Columbia U n i v e r s i t y a n d did graduate w o r k a1 both Columbio a n d I l T . H e is c o - a u t h o r of t w o books. co.author of 35 popers, a n d t h e h o l d e r of 1 8 p a t e n t s i n t h e f i e l d .

A revolutionary functional design philosophy may soon obsolete discrete components in electronic circuits.
expensive tlriun ;I nlr~clrsimpler looking circuit or whether it will Ile more rclii11)le or less relialh. These arc profound changes in circuit design. But there is another change involving the approncl! to circuit design from n systems point of view. ij'e no longer ask ourselves. " l i h t are the required ch;tracteristics of n specific circuit?" when we try to visualize a hliick box fitting into a system. Instead, we ask, "What are the functional desires of the system's designer with regard .to these black boxes?" In other words, we are taking ;i ftrnctionnl design approacll to circuits rather than a tcrmi~niilspecific;ltion approach as w;~s(lone in the days of "bliss." I know that there are many circuit designers \vho ere still mot doing this, and don't be too srrrprisetl if \vithirr a few years their circuits, unless they change their present design philosophy very soon, will be obsolete.

Capacitors

HE cllanges brought ;ll)out 1))' integrated-circuit technology or n~icrocil.cuitsor, as I prefer to call it, bntcl~ fabrication technolog!:, are so profound ilntl so subtle that the frdl irnpilct of this rre\v and cl~iunging electronic technology has still not bceu re;dized by rn;ill!r people i l l the field. One of the most in)metli;~te;1t1(1 profot111(1~ I I ; I I I ~ ( ' s is the very defir~ite;~lter;~tion i ~ rtr;~tle-offcor~sitlcr;ttio~rs ill ciretlit design. For e x m p l e , in the (lays of "1)liss"-:~rrtl I will tlcfine "bliss" ;IS before l e a r n i ~ ~of g integrated solitl-.c.t;~tc*-tile circuit designer had sever;~lsirl~plt:rules to follow. R I I 1~ w;ls t h ; ~ t t11e nwst espr.nsivc ;incl ;I: tlw S ; I I I I ~t i r ~ l c : unreli;tl)le cornponerlt w;~stlre ;~ctivedevice. T h e f o r c , if you designed ;I circ~lit ;r11(1 \v;t~ttcdi t ~ I I ( ~ ;i rLt ~ ( l rvliirl~l~', you retl~~cetl tire nl~rnI)erof ;icti\,e cleviccs r.c:q~rir.c-tl to ;I minimum. This is rlo longer true. As ;I ~r~:ittcr of fwt, tlre rc:vc.rse is now true. T11is is d11e t o I>:~tchfiihrie;~tionof solid-st;~t(: (!I:vices. The trmsistor is now tlrc: cl~ciipcst; ~ r r t l most rc.li;hlt. ekrner~till tile arsen;rl of irrtc:gr;~tr.tf or tliscrc-tc: c . l t ~ t ~ m i c components. T h e secord rule w ; ~ stl~;tttlw more colrrl)lax ;I cirwlit looked, the more expensive it wits likely to 1)c:; IIIMI the Irrorc: discrete col~rponentsitr it, tIr(: more cxpc.1lsive r ~ ~ r t1c.s~ l I.(.liable it was. This has cll;~ngetltoo. As ;i r11:lttc.r of Fi~c:t.i t is t~~rllilrg out that you really c;tn't prcdic.t hy loolitrg id I I c ~ o r ~ q h x circuit wlretller it is goi~tg to I)(; Irlorc: c.xpc.r~sivc* or h s

The f u ~ ~ c t i o properties ~~al of u c;~pacitor; ~ r c tli;\gr;r~l~nred in Fig. I , ;wd we might ask "ll'hnt does ;I c a p ~ c i t o r do?" It is quite possible t11;it there is ;I pliin~tin our I I ~ ~ V C ~ S C t h t I)o;rsts ;I highly atlv;~~rcetl civiliz;~tio~r - ;HI clcctro~~ic?; civilizi~tior~-wl~cre they have nc\.cv ht*itrcl of c.np;~citors. 1rsi11~ so111t. ~ Y ) I I I Clr;ulcc.s ;we, I~owever,they ;wcS p~.ol);~l)l!. po~rentor sonre fr~wtionalblock to pro\.itlc tlw e.qx~citor ftmctio~i. 13itsici1ll\., ;I cqx~citoris ;I clifftw~rti;itori f it i.; ~lscct;IS ;t series elerlre~ltor ill1 integr;~torif it is 11sc~1 i l l ;\ S ~ I I I I I ? ~noth.. I t provitlcs plliiscl ICiltI Or pll;lsl' h g i l l ~ Y ) I I ~ I Xs\.Stt'~~rs, I~ d.c. t l t * - ( w ~ ~ > l i;111d ~ r g ,StOrilgt' ~ ~ l i l l ' g'1.1tt~sct~. ; I I ~ . ;I c \ . ~ ~ ) ~ ~ c i t t > r ' s f~~trctiolrs. I f wt: co~rltllirttl 01I1t.r \vi~ys of ~ I . o \ itlit~g tlrt~sc~ s;tirl<. frlu+ tio~lsi r ~c.lc*ctro~lic circrlits, thew i t is ol]\.io~~s \vt. \vo~lltl1101 ~rcvtl cqircito~.s.\\'tl rlsc. ~itl>;~<'it~ws for tl~cwbjcd,s I)t~c~;lilsc. I I. I;IIIII~;I<~IIII~~IS c:~pi~cito itrc ~~s i~r(~sp~~ As ~~ long s i v;IS ~~ i~wxpmsi\fc! ; I I I ( ~ rcbli:~l)l(! cqxicitors \vcb \ \ i l l I I I I ~ I o I I I ~ t~t x~f S ~~II~ ~ ~ I ~ I 13111 I I . its so011 ;IS t l l ~ l ' t * is iI I l r ~ s i ~ k t l ~ ~ i.lo r rt]re. ~ s l l,.rt'~)r ~ s1rt.11f ~ :lv;li]. ~ f ; h r i c i ~ t i oi1pp~i1c11 ~~ \v]~ic11 will ~ r r ; i k t * :~l)lc: i ~ lowor t cost, ~ i ~ p ; ~ ~ ~n;~ll~rf;rct~tr~c~rs itor \\.ill I c * c - l tllc*I,illc.ll. No\v 1c.t I I I ( * S I I O ~ V~ O I IIIOIV \VC. ~ * ; I I Ir t ~ l ) l ; l ~ t~ill>ilc~itc~rs ~till cir(~t1its11y 11si11g the f1uit4io11i11 : I ~ ~ ~ J I ~ ~ ~ ~ ~ Vig. 2A is i i V I V Y si~nplvvxmr~l)It*--;~ ~ ~ ~ [lil~-fl,ll> ~ ~ wit11 co~~vc!rrtiolli~l ~i~l>iic.itors eross-c-c~~~\,lil~g Ilolll ct)]lc.cqol. ",\ \ . I ~ , to 1)ilsc. of tllc flip-flop. If \vrS i~skO I I I S ~ + . ~ ~ S ~ > ; I ( ~ ~ O IIISIXI?" Y w(* U ~ O I I I ~ I II~I\,(* t~ ~IIIS\V(-I. tllilt, ~ ~ ; l ~ i c ~ i l ~ ~ y w l ~ i t~ l ll c * tliksigll t~trgillchcor wi~utc~tl !v;~si t c s c s r t ; l i l ~ Illllc~tioll, 'I'llc.

HIGH WSS FILTER COMPONENT 90PHASE LEAD Q C DECOUPLING

L O W PASS FILTER COMPONENT 90. PHASE LAG CHARGE STORAGE

Fig. 1. Functional properties of capacitor.

Fig. 2. HOW capacitors can be replaced by using functional approach. (A) capacitively coupled flip-flop, and 181 a regenerative-boost flip-flop cirtuit.

IN

Fig. 4. Master-slave versus pulse-steered flip-flops.

b
X

Fig. 3. A renter-point triggered flipflop circuit with pulse-starting gate.

function wanted from the capacitors in that flip-flop was to give the regenerative action of the circuit a boost during the transition stage; in other words, when the fip-flop changes states, to short-circuit the resistors in order to get more regenerative gain. As soon as an engineer uses that functional definition for these capacitors, he says, "Well, if all we need is more gain, why not put transistors in the cross-coupling loop?" It wasn't done in the days of "bliss" because transistors were more expensive than capacitors. But in these days of batch fabrication techniques, integrated circuits, and niicroelectronics, the transistor is cheaper than the capacitor. It is, then, quite obvious that we can make such a substitution (Fig. 2B). As a matter of fact, if you examine available integrated flip-flops, you will find that most of them have regenerative boosts being provided by transistors instead of capacitors, in the coupling networks. Let us take another example where we have a much more difficult function to perform because, in this case, the capacitor does more than just provide a differentiating fimction. In Fig. 3 the capacitor also provides a delay. This is the well-known pulse-steering gate. This was the classical work-horse flip-flop in the days of "bliss." It is a very simple circuit and one that worked well over the years. It is to be found in all the textbooks. These capacitors are difficult to replace because they provide three functions w!lich are hard to duplicate by other means-although not impossible. In these davs of inteerated circuits. " , thev . have been replaced by an awkward-lmking circuit-one wllich often turns out to be less expensive than one using capacitors. Let's see just what these capacitors do: first they serve a d.c. isolation function, isolating one part of the circuit from another. Semnd, they supply a differentiating function, that is, they allow energy to pass into the flip-flop only during the leading or trailing edge of the trigger pulse. Finally, they provide the logic delay or storage reqnired to prevent a race condition. The energy-storage ffi~nctionis the one most difficult to replace. Fig. 4 shows one of the classical wnys of doing it, however. Engineers have known this. configr~r;~tion For quite a long time. -.
March, 1966

You use two flip-flops-one, a master flip-flop and the other a slave. This slave flip-flop is basically a storage circuit that provides the logic delay that capacitors could supply. If you try to implement this, you get a pretty complicated circuit. Fig. 5 shows an RTL (resistor transistor logic) realization of that scheme. Looking at this, you might say, "Is someone going to tell me this is a better circuit than the simple pulse steering-gate flip-flop?" In the days of 'Miss," the answer was obviously "no." It w.zr; more expensive and much less reliable. Look at all the interconnections and look at all the components. But in the days of integrated circuits, the answer is "yes." It is a more feasible circuit, it is a more reliable circuit, and it is a more economical circuit because a transistor is much cheaper and much less area-consuming than a capacitor. Resistors Let us now turn our attention to resistors. There are a lot of unnecessary resistors in these circuits. All resistors that Ion feed into the bases of transistors are perfomiing is01ato functions. If transistors are cheaper than resistors, let's replace these resistors with transistors. If you do that you get the DCTL integrated flip-flop, first introduced by Fuircldd, with 18 transistors and 8 resistors instead of tlie '*bliss" circuit which had two transistors, two diodes, eight resistors, and twvo capacitors. An economic 'evaluation nltimately boils down to whether twvo capacitors are worth 14 transistors or whether one capacitor is worth 7 transistors in an integrated structure. With today's economic, integated technology, the answer to that qnestion, unrenso~~nble as it may sound to some, is "yes," nnder many conditions. Many manufacturers are selling these circuits cheaper than we can n~ake tlie clinsic simpler circuit of discrete mmponents. Furthemiore, these circuits are ~ n w h niore reliable Imause their internal interconnections are mwh tilore reliable than the solder connection, the wire-wrap connection, or the welded cwnnection. We can no\v provide circnits of this complexity which ; ~ p p r o ; ~in d ~rcli;~l)ility, , the lifetime of o single transistor.

-34-

arc o n the order of olle nunosecond, wl~iclr is the time it t d c s ligl~tto travel nl~outone foot. Sitch circuits can hiindle 200 million bits of inform;~tionper second. While this is accomplished circuit work, there are some problems in their system use. One of the tl~ingsyou have to do in the high-speed computer is provide a distributed electrical structure. In other words, you have to go to trnnsrnission line connections. This poses the prol~lemof how to put a tr;tnsrnission line on an integrated substrate. This is n vital prol~lemin high-speed computers, because of noise and reflection considerations. circuits In other words, the impedance levels of 11igl1-speed can never really get beyond 100 o111ns. Bill Piel of our L ; b oratory has calculated, for example, that if you wanted a 2000-ohm coaxial cable, the inner contl~tctorwould l ~ e tlle size of an electron and tlre outer s11e;ith wo~lldbe tlie size of the known universe. So, we will prol~ablystick to an i ~ n pedance of about 100 ohms. It is interesting to note that the high-speed computer is one example of equipment which requires the size reduction
_1

Fig. 5. A center-point triggered master-slave flip-flop.

All of the data that I have seen shows that this trend is, in fnct, a real trend; that is, you no longer can say that because Circuit A has 18 transistors and Circuit B has only 2 transistors, Circuit A is less reliable than Circuit B. This is a fundamental and profound change in electronics. It is leading us, at least in the laboratories, to mnke a fundanlental and profound change in the way we design equipment. We no longer count active components. We no longer count components of any kind. As a matter of fact, some of our systems look so fantastically complex, if you consider them from the components level, you would say that we, as researchers, are awfully idiotic to even dream up such systems and they will never work. But, hopefully, we are not idiotic-we are simply being foresighted. The fnct is that batch fabrication techniques-the ability to put down literally I~rlntlredsof thousands of components interconnected in systems or subsystems, is a profound, important, and completely different approach to electronic technology. Incitlentally, it all started with the transistor. There is nothing revolutionary about integrated circuits. It has been one processing step advance after another which has made this possible. And the advmces in materials and processing are by no means slowing down. Consider next the matter of high-value resistors for highspeed computers. We are tlesignilrg computer circuits now capable of operating at 200 hlIIz. The circuit delay times

Fig. 8. Triggered pulse-line drivers. (A) Blocking oscillator, (B) Sehmitt trigger.

TRIGGER 4

TRIGGER

integrated circuits offer because of speed-of-light considerations. However, we are not going to use nanowatt circuits which employ billion ohm or million ohm resistors bec;wse they are incompatible with the high speed that is required. Transformers & Inditctors Before we stop with these ex;~n~ples, let's consider tratr, former and inductor problems. \Ve 1i;rve been charged \ v i ~ l ~ failing to do much about i ~ ~ t l ~ ~ c or t otral~sformers rs beca~~se they can't be made in integmted c i r c ~ ~fio t ~m. Tliis is true. On tlre other hand, we may not 11.1ve to rise f r~ l~ transformers or inductors if we can provide e q ~ i i v a l e ~ t~c.tions by other mealis. One of tlie main functions of the tr;unsformer in the silnplc circuit of Fig. GA is iso1;ltioll. \Ire can provide even more isolation b c t w e e ~inpr~t ~ ; I I I ~ output in the opto-electro~lic circuit sl~own In 1:ig (in. It is true th;rt tlte circ~lit of Fig. G B is :I less efficient \v;ly of pro\itling isol;ttioll 1)ec;ulse ;IS !.ctt we Iraven't le;~rtietlto n1;lke tlle opto-c~Icct~.ot~ic c i r c ~ ~with i t 11igl1cfiiciency. 0 1 1 the otl~cvI~;uttl,active cle\iccls ;we so cl~o;tpt l ~ we t call m;the up fol. 1ossr.s i l l the circlrit c h ~ r n I)!, t introtl~~cing more gilitr in t l ~ eoutp~tt.I?ol. e s ; r n ~ p k \ve , c;ul usr. two transistors, insto;d ol' o ~ t c ~ tlrus , ~n;~hin ltp g ~iuiclrof t l ~ e loss of the optoelectric tr;i~tsf<:r proc(w. '1',..,115 .l'o r ~ ~ i c r ;II-ct s ;tlso ~lsetlfor l)lr;~sein\wsion. Fig. 7 A

Fig. 6. Replacing a transformer in circuit. (Al Standard isolation transformer hookup and (8) opto-electronic isolation. Fig. 7. Push-pull circuits. (A) Transformer-coupled, (8) complementary symmetry transistors, with both xformers omitted.

l---l

-55-

ELECTRONICS WORLD

c l e ~ n c t ~O t IsI the s;ttllc sithstr;~te, wcs C;III itse c.ottti,lc:i~tc*r~t;ir!. s y ~ ~ ~ t t i elt~ ry r i t ~ c i l ~to l e sd o tltc job of t r : i i i s f o r ~ ~ ~ ~ ~ s . Xl;lny r:iclios I)tsittg protl~tcecltocl;ly :ire 11si11g this k i ~ d of o ~ t t p ~to t t spr;ihcrs ittste:itl of tr;u~sfortiicrs. Otl~rr fitnctio~is of tr:u~sforttic~rs ii~cli~clc in~pt~l;ii~ ce III:II(.IIit~g :11tt1 C I K T ~ ! ~ stori~ge.Again, tllest; f ~ t t ~ c t i o :ire i ~ s l~;ir(lto tliiplic;~tc It!. otlicr me;tns. One good rs:lnlple of how this might Iw clotic is t l t w ~ o ~ ~ s t r ; ~ in t eFig. t I 8, if \ve colilparc. tlic Idockit~goscill;i~orof Fig. 8 A wit11 tlir otw sI~o\\win Fig. Sl3. Hoth ;rw c.l:~.;siccircrtits ;uld I,otli clo the s;~tiic* thit~g, bttt o~ic.looks 1i1o1.cc o ~ i ~ ~ ) l i t ~tlian ; l t ~ ttlic I other. I:ig. S:\ is ;I t':ri~.l\. sitr~plr circr~it. -1'lie tr:uisfor~ne~. is 1"'"-

o z

I O ~ H ~ IOOKH~ FREOUENCY

IMHZ-

Fig. 9. Passive and active filters. Butterworth second-order filter response with LC and active RC implementation.

of the tno~lolitlric or i~ltcpr:rtt,tlstrc~ct~irc..

\\'e c;rn :1~>~~1!. tliiswnrc sort of tlesign tecl~niclrwto lilir:rr circiiits ;1lt11011gh \ve 11:1veIrc8:ud tlr:it linear circl~its:we tot \.ic,hling \.el.!- \\-ell to integr;rtc>tlcitwiit tc-ellnolog\.. I I)clie\.e that tlrc reason for tliis is that somv of tllr pro1)ic Iv~nscrrr more tlifFicr~lt ;mtl ;ilso Iwc:rr~se:I)> e c o ~ ~ o t n crosso \ w is !x,t to be rc;rclretl. Litwar circtlits of ;I st:rntlartl t!pcL :ire not pro(lriced in ni;rss qliantities like t1igit;d circuits. Altlroi~ghtlre mass protl~~ction possibilitic~st1011'texist ;IS !.ct. wit11 tcch~iologywe :rrr as soon ;IS tlrc ecorioniics catch r ~ p going to be i~sitlgintcgrntcd circl~itsin analog n p p l i ~ r t i o t ~ s . F i l t e r Design
S o w let 11s cotnidcr how \ve can overcotne some of t l ~ r prol)lcms of filter design I)v using active tcclrnicll~rs.Fig. 9 sl~o\vs;I srcond-order Butterworth filter rrsporlse \vhicli \ v o ~ ~ l~ t lr c ~ ~ - n > be ; ~ lrealized ly by the LC circuit on tlic lrft. Sotice tli;rt \ve need n 1.8-heury coil nntl nli 8000-pF captcitor. cil-crtit irnpleinet~t;rtio~~ of Slrown ;rt tlw right is :111 ;~cti\,e tlic s:umr filter, designed by Gordon 13at1ic-lson o f G-1.:. \vlwrc~in tlie inductor has beet1 vli~ni~r;~tctl. rl'ltt~ filter c;u~ now be ii~tegt-atetl, \vhetlter >.ori clo it oil ; I ~iioiiolitl~ic silicon sril)str;rte or \vlrc.tller yo11 (lo it \\.it11 t l ~ i ~ r fil~ns ;111(1 ~liscretetratlsistor cliips ; I I ~ tlw11 cilll it ;I h\.hrid. h t c h f;~l)ric;ition techniqr~cscan be llsed to m;ike t . \ - r t ~ 111o1.e co~nplic;ttedfilttw SIICII :IS the C:liel~yshev t).pe sho\vti i l l Fig. 10. Here we have a respot~se \vitli tnore critic:rl sprcific,;itio~is. (:o~~rp:~re the iictive RC twt\vork with the pnssi\,v I,C circttit. 1)oes the circuit look more corr~plieatc~cl? YCS. it clocs. It is t n ~ l c lInorc ~ contplic;rtccl, b t ~ t \\-it11 Imtcl~f;ihica1io11 t d ~ ~ i i q ~ tthe r s ,cost ~ii:lv:re111:11ly he l o \ ~ ~ etr~ . o t11igIir1-. sl~oi~ltl rittcl(wt:uid tl~iit1 1 1 s~il)tlcties ~ go e\.etl fi~rtlicr. E:.c*i~ tlie tlesigt~;tl,pro;icl~is clilSc.reict. \\'c 1ro lotigc~ ;~sk our;I filtw. 1)lit "I III\\J do !.ou provitlc :I filtcrsc:h (..; Irow to In~iltl I i L t - fi~twtioti? \\'h;rI is the fi~ttctiot~ of a filter ~ I &is I syst(~i~? Arc tl~c-rc: ot1ic.r- \\.;~!.s of pi-ovitli~ig tl~isf ~ l t i c t i o ~ ~ ? " 1.1.1 I I I C cite j 1 1 7 t olw c:x:ititplc ol tllc: kin11 of tliiirgs we 1t;1\(* IJ(.I:II cooki~tqi l l tltc. I:(l)or:~tories. 1:i~. I I d i : ~ g r : ~ r ;I~t~ r; s~ ~ ~ s f o r ~ ~ t e r ~f~ i l)t~ (* i~ r l)it~ \vhich : ~ t i ois tr ~:i:idc.~ I . O I I I :I sii~<!(* 1)ar cd piwo~:lt:(.trit:tn:iteri:~l-ow of tlicf ; ~ t ~ ~ i *I'his l v . l ~ t l kclwicf! is cloit~gtlits S;IIIII: ht-iimi tit:i~~:itc t l ~ i ~ :is t g t11:1t t ~ ) i ~ ~ l ) i ~ ~ 01 i t tr:it~sistors, tioi~ wsistors, :itt(I cqxicitcm tlr;rt \ \ I . II:~\.(: ; I l ~ ~ s l r : ~i t r tc ~ t~totwlitltic l intc.gr;itcd for111 \dti(.11. ~ I I~ I I I - 1 1 .w:t~ 1111it1g tlic S;UIIC jol) tltat tltc c o r ~ d ) i t ~ ~ i cq;~c.itors. ~ c ~ f o t ~ s , :~rtd rrti011 01 discrvtc c o ~ l t p c t i ~ c ~ ~ i t s - - i ~ t t l ~ sisfor\- \\-;is 011I I 1I ~~ 1g c3) (COIII~~ ~8
\\'(a

I
( r

1 0 KHz

100KHz

___,

FREOUENCY

+ v.
20K 20K

+ v.
20K
ZOK

IN

4 0 K

Fig. 10. ( A ) The frequency response of a Chebyshev fifth-order filter. IBI LC and (CI active RC filter network implementation. Fig. 1 1 . The response characteristics of a double-transverse ceramic transformer. ( A I With o conventional double-transverse ceramic Ironsformer, and (BI using a cross-coupled design.

March, 1966

-56-

c.;tlrsc tltc: transistor is ;horlt I 5 yc:o-s old, vc*t t h r t ~ r b c~ n : l ~ ~ ~ l f ; ~ c i st lstill ~rer ~ I I I)IIS~II~SS. .\l~ ;llls\VC~'\~ollltlhe t h t , in effect, t l ~ v ttrl)c m;~r~rrf;tctrrrer hcis I)ee~lreplaced by tile transistor n ~ : u ~ r ~ f a c t u r e r I~cc;rr~sc i f it I~adn'thcen for tl.;unsistors, the t111)cintlr~~try wor~ltl.n o tlol~l~t, be tcgr;ltctl-intc.g~.;ltt-tl s t r ~ ~ c t ~ t ~lr~e;s~ t very I ~ I I C I II~iggcrthan it is totlay. atli;rce~~t to Also. i f it Ilntln't h e n fol- the tr;lnsis\\'P hnve licartl. too, tliat v;~ri;d,lere- Ii:~ve,in Fact, control circr~its t i~rtrgratedform. tor, sevcral electronic indr~striesthat sistors a ~ l d vnrinhle capacitors are com- tllc po\vcr c l c t n o ~ in rsist totl:~y1vo11lt1 :lever h v e come into ponents which can never be displaced hc'ing. For ex:r~nple, tlre ~ ~ i o t l ccorn~.~i 1 ) integlxtetl ~ civcr~ib.Herc, ;lgain. or~r puter i n d ~ ~ s tis ~ -I,asetl > - on the transistor. thinking is blocked 11)' ~ I I C fnct that heTlris is literall! true. \\'itlio~~t the tranc;tllsc variabie resistors or v;~ri;ihlecatoday. c o ~ i i p ~ siniply ~ t c ~ would sistor, motlc1.11 ~xwitorsI ~ a v e been wet1 for n long time conipr~tcrI)r~siness Since these pwtlictions arc bring not I,c cconomicnlly feasil,le. thtir use is tl~ereforeinviolate. Tlic sp:lce intlrlstry also depends on I think this is a wrong nss~~niption. rn;ttle by an R&D m m , you 1iiig11ttlis~ r them t bccawc wc Itave I~ccnun- the transistor. \Vitlior~tit. o ~ variom \\'e 1111tstask olu.sel\.es, "\\'li;~t is tlle c o ~ ~ n vcnt~~re might s never have gotten f r ~ r ~ c t i oof n these vari:lble clenier~ts?" duly optimistic in the past. I \ \ i l l h;we sp;~cc ofl the ground. Tlieir fl~nctionsmay, for example, be to atl~nitthat in 1951-52 I was one of Perhaps if tubes had been able to keep ;~sslrrned by phase-locked loops; in other those who pretlisted that transistors words, feedl~acksystems or servos that would eliminate tul~csbecause transis- up, technologically, with transistors, tors had infinite life and were failure- they would have been used in computer will d o the tuning ar~tornaticnll~~. t fnct is that The real question is, "\\'l~en do such proof. Tlre tube rnanuf;lcturers are still and space applidation I x ~ the tulle m:mufact~~rcrs have lost virtually subsystems become economically com- in I,usiness! The previous disting~~islied speakers all of this potential market and, as a repetitive with present systems?" (see Editor's Note) liave raised the sult, have ceased to exp:lnd. As bntcli fal)rication e\wl\,es, SIICII As time goes on me will see a still furtechniques will l ~ e c o m e dircctly com- qt~estion, "\\'hy hasn't the discretecomponent manufacturer been ~.eplaced ther decline in the percentage of tube petitive with present s!.stems. when co~npared with the Finally, I ~vouldlike to make passing by the integrated-circuit manufacturer?" manr~fncturers total components industry. \\'e might ripo"e, "\\'liy I~nsn't the reference to high potver. \\Jhile it is true \Ve might ask, therefore, "How far 11een replaced by the that high-power devices appear to be tl111e mn~iufacturer wrong were we in our original predictransistor manufacturer?" ~~!itouclial~ie from qn integrated-circuit A Let's consider this for ;I m o n w n t he- tion?" viewpoint, in the Ial,orato~.ies we ;Ire

Functional Designing
(Co~~lir~rrccl from p(igc7 40)

ents

(S) Pass band ripple-1 db ( 6 ) Insertion loss-6 dl) n1i1s A t tllis stqgc of the clcvt~lopn i c ~ ~ tire t , clcsign cnginccr is not cc>rt:~in t11;it this specification will 1)c ntlr~qi~ntc in the final equipmcnt. Tl~crcfore,h c rcqr~cstshis pt~rcllasing tlqx~rtmcntto obtain fo~.n~:~nc(:; i q cost tlic11 fiscd or g csan va11rc: analysis cffcct s r ~ h l n ~ l - o n c s:~mplc.Thc p ~ ~ r c h a s i ndcz c s manuti,ll s;~?,inqsin t l ~ c l p r o c ~ ~ r c m c n : 1,:l~Ilncntc i r c ~ ~ l ; ~ r i filter cli~otntions and orl~w 1,ci 11s c~snrninc: f i ~ c ~ t ~ lfor of a ~on?~1011vnt? tlcrs on(: filtcr from tllc lcnst costc,nw of ;I,> n sprc.ific p r o l ~ l ( m t, l ~ c ly rcsl~onsil)lo l~iddcr. clcctric \vavc filter. IVlicn ~ n : ~ n r ~ f ; ~ c t ronl? ~ r i ~one ig with tbc procilrc~ncn:, from a Example unit, sr1c11 as a filtcr rcq~liringa 11e\v tlcsign, thc rspcllsc is almost (Tlnccr An c q ~ ~ i p r n c n dcsign t c~i,' crltircly t l t ~ e to thc cnginccring rcql~ires n l~nndpnss filtcr with the time ncccssnry to clcsign thc cornfollo\~.ing clcctricnl spccificntions ~ O I I ~ ; I I II H ~ ~ l)rcpi~rom a n ~ ~ f a c t u r for 1".0tot!'pc dc\'elo~3l11r"llt; in:;: tl~.:~\vi~lgs. If tllc filter mnnu( 1 ) I:;tncljx~ss filtcr-ccntcr frcx r olfcretl thc lcast costf , ~ c t ~ ~Isi c cl~~mc y kc 10 I!, p r o l o t > p , h c is also offering ( 2 ) 3 (111 l);~nd\vidtl~--l kt: min R tlcsign wl~icliwill require him ( 3 , FjO (11) I ~ n n d i l t 1 - 1 kc In l~tilizca minimum of cngineer111;IS i~jg tinx. ( 4 ) I'ms hand itnpcdnnceTllc d c s i p approacli employed 5000 ollii>s, =1:10% i n p ~ and t outwill p r o l ~ n l ~ l1)e y an " i n q e paput rnmcxt::r tlc,sign" because only the sirn~)lcst of computations must b e rn:itlc n ~ r dcstcnsive curves exist How to get Value Analysis Benefits \vllic~l~ intlicntc the pcrformnnce b Have design engineers discuss the application with com\vllicl~can 11c o1)tninccl. Also, rathponent specialists i n a particular field before formalizing cs t11;tnrisk n marginnl design, the specs. Buy function-not random specifications. filtcr cqginccr u s ~ i d l y overdc:jign; b Determine at what quantity the unit cost becomes most sigto i n s ~ ~ r that e his initial design nificant and guide your suppliers accordingly. will ~ n c c t all requirements. Srlch b Be prepared to pay for component engineering in prototype n solution to tlic problem posccl quantities to obtain maximum benefits in large quantity rcsults in :i network configuration procurements. Zc When one vendor presents a design program acceptable to slimvi-I in Fig. 1. engineering and resulting in substantial savings, do not The cost in large quantities of give competitors the benefit of his time and effort in your filters of the type spc~cifcclis apbehalf, at least for one round of procurement. If concepts pmiimntc?ly psol)ortional t o the developed for you are rewarded, there will be no difficulty n u m l ~ c r of inductors employed. in continually using this service. Usiyg $5.00 per inductor as ; 1 B- The equipment manufacturer must maintain excellent inrough guide for estimating the ternal departmental relations or a vendor may fear that filter cost for volume production, making suggestions to one group will alienate hiin with this unit with c1,even inductors, another. F Remember, component suppliers exist by the service they will cost $55.00. 1i, after completcan give their customers. Use, but do not abuse, this help. ing the equipment development, this filter is part of the prototype,

FIG. 1.-Original filtcr designed to specifications requires 11 inductors.

FIG. 2-Modification of requiremcnts reduces numbcr of inductors to eight.

FIG. 3-Applying advanccd network tlicory results in six inductor filter.

in all prolmbility the equipment cnginecr will firm up his specification to be sure all future filters purchased will be duplicates of the original sample. Rarely does he have an opportunity to review his components from a cost standpoint before production begins. Jf the eventual anticipated usage of this part is 10,OO pieces, $550,000.00 will be spent for it.

Value Analysis
On over half ce million dollars, perhaps it pays to backtrack and review what 'has happened, in an attempt to reduce this expenditure. A closer examination of the filter

spccification discloses a possiblc contradiction. Although able to tolcrnte 1-dl) ripplcs in thc pass band, the -'-lo per cent tolerance on the filtcr impedance limits amplitude variations due to reflections to approximately 0.01 d b at each junction. 111 most instances, wl~at is of intcrest is transmission characteristics between a sourcc and a load If this is the case, the filter impedance requirement can be removed if the specification calls for performance between a source and load of 5000 ohms each. This modification permits using an insertion loss d,esign with a configuration shown in Fig. 2.

By analyzing the circuit application to determine if any of tho specifications are superfluous the network has been reduced in complexity from 11 coils to 8 coils with a piece part cost reduction ot $15.00. Applying advanced network tlmwy techniqr~es,the circuit can l x replaced by a simpler network composed of degenerate arms; :urns where one element value lxxomes zero in the design and can be omitted. The computation; involved in this transformation may take two to three engineering man days, but if the event~ial llsage of the filter will 1,c l x g c , at some stage in the e q ~ ~ i p m e n t tlevclopmcnt, this approach mr~st costs l)c atloptccl if mnn~~factriring are being seriously considered. Figurc 3 illustrates this c i r c ~ ~ i l configuration employing onlv six coils with no change in clec:rical ppformance. From n cost standpoint the initial design costing $55.00 in production has hccn rcdr~cedto one costing $30.00 in production with no degradation of performance and a marked improvement with respect to reliability, size and weight. At this stage the filter design engineer has not 'exhausted the cost-redt~cing devices available to him. The element values dictated by the dcsign of Fig. can be varied by replacing the three element arms hy cquiva~cntcircuits having other config~~rations. Coils can 11c tapped to vary the in>p c h n c c within the filter to clrangc elcmcnt values, alignment techniques and eicnwnt tolcrnncc requiremcnts can be studied to tlctcrmine the hcst possiblc com,l~inationof compromises to produce thc 1c:lst costly part \vhich will perform the function required. This 'typical case from actual experience shows the potential savings realizable in purchasing a custom designed and manufact~lredpart. The results show a drop in cost from $55.00 per unit to $30.00 per unit which means a $950,000.00 saving in quantities EEE of 10,000 pieces.
1961

electronic e a u i ~ m e n tenaineerina-OCTOBER

C.

COMPLETED WORKSHEETS

EXAMPLES

I SEMINAR NUMBER -1 VALUE PROJECT NUMBER 2 * ENGINEERING PAGE NUMBER 2 OF 5

CREATION PHASE WORKSHEET


The basic function

DATE

4 December 1965

Provide
Verb
I

Storage
Noun

6.

'.
8. 10. 11. 12. 13. 14. 1516.
"

tube new vendor

35.
36. 37. 38.

s t r i n g o r rope key r i n g

eliminate shelves

canvas bag

39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.
I

eliminate anchoss
coat hangers

hang on
roll

hook

l i s t materials

use end hubs


nylon Fiberglass

18. 1920'
21'

neoprene
catalog box

change cable design


tie
.

50. 53.

??

. -

52.

VALUE ENGINEERING
CREATION PHASE WORKSHEET
The basic function

SEMINAR NUMBER PROJECT NUMBER 2. PAGE NUMBER 2 OF DATE

-1

4 December 1965

Provide
Verb

Storage
Noun

10-0448 (6-66)

-63-

!MINAR NUMBER

. . I
2 .
OF

1.0

BASIC FUNCTION

Provide
Verb

Storage
Noun

$ 2.09
Value

ROJECT NUMBER
9CE NUMBER 3

Constraints:

hfust store anchors. so w n f t be damaged o r l o s t . Anchors must not damage other equipment, must be readily accessible2.
Put a $ on ideas

A m4

December 1965

3.

Evaluate Ideas 3.2 Disadvantages

Note:TocanpHridu&m

v e r s c f d 8 t h b ~ d ~ , ~
arrow to arrow and continue.

Storsao
PROJECT NUMBER PAGE NUMBER DATE

2
OF

1
5

noun

' 9

'
NAME

1.2 1.3

QUANTITIES: CONSTIAINTS:

92 p r . m

Llfo 6 yre; T a p e * -Sfit SPW;

217 futuro M t y , VihCOtiOU, ShOck

StaIW@

ADMESS

m#

REPRESENTATIVE
-8

ut.nr Canvar C s .

Havorhill, Mass

252-7321 13r. J .

8 . 5 0

C~PI PIa8t.i~.

Chicop..,

Haas

M r . C . Kdly

6 4 wk

20.25 350.00

ELEMENTS OF COST COLUMNS

PURCHASED IN!WECTION IND. ENCRC

MODELS

DOCUMENTATION

m : - -c coatad coatJan
~ 8 t

a hat
I p a b r t . ,

I SEMINAR NUMBER 1 VALUE PROJECT NUMBER 2 ENGINEERING PAGE NUMBER^ OF 5


RECOMMENDATION PHASE WORKSHEET
EQUIPMENT

II

DATE

26 February 1966

b W k PAR
(metal)

I
$

ESTIMATED NET SAVINGS* RAMHEON CUSTOMER /Year

DRAWING NO.

UNIT Storage Box


DRAWING NO.

2 000.00
3000.00

$3000.00 $3000.00
I

/Year

101064jl
hear

Qn. 92
SUMMARY:

92

/Contract
I

/Cant.

/Cant.

The proposd derign w i l l r e s u l t in a saving8 of appro'ximrptely $6,000.00 io l i g h t e r i n weight and w i l l perform t h e r e q u i r d function

PRESENT:

PROPOSED:

Metal box 35" x 16" x 3" with six compartments, i n t e r i o r neoprene coated, r i v e t d construction with hinged door.
See drawing #101064.51

Compartmented chloroprme coated Nylon mntainer, double s t i t c h e d and aluminum reinforced at mountin# points. See drawing #RM 012263-1

UNlT COST (PCL) $

89.75

UNlT COST SAVINGS CALCULATIONS:

IMPLEMENTATION COSTS (NON-RECURRING) TOOLING ENGINEERING OTHER Publicationr OTHER OTHER TOTAL TEAM MEMBERS:
$ " m m -

ILVU

$ $ $

. 100.00
20.00

uu

PRESENT UNIT COST PROPOSED UNIT COST SAVINGS/UNIT GROSS SAVINGS $ IMPLEMENTATIOQ $ NET SAVINGS $59890

$ $

89-75
1U.yJ

$ 7

$1320000

R. Crane W. Freer

--

For Further Information, Contact *See Reverse Side for Detail Data

R.R.

RaduZl
-67-

G R.5-5000

x3240

10-0451 :5-66:

CONTRACT DATA: CUSTOMER: CONTRACT NO.

ahIY
A0 14422

TYPE OF CONTRACT: QTY

FFP
/INSTANT

92

217

/FUTURE (EST.)

SCHEDULE:
V.E. CLAUSE:

1965 to 1968

VE Incentive
NET SAVINGS
TOTAL RAYTHEON CUSTOMER

V.E. SHARING: FORMULAS INSTANT

50 1 50
70 1 30 90 1 10
TOTAL

FUTURE
COLLATERAL

5989.40 17240.65

2994. 70 5127.19 8121.89

2994.70 12113.46 1 1 6

.
,

- 13230.03

IMPLEMENTATION DATE: FRINGE BENEFITS:

22 June 1966

I
RELIABILITY MAINTAINABILITY
-

ADVANTAGES

DISADVANTAGES

I
-

PERFORMANCE OPERATION SCHEDULE LOGISTICS INTERCHANGEABILITY WEIGHT OTHER (SPECIFY)

---

lighter

".

RAYTHEON
E Q U I P M E N T

COMPANY
D I V I S I O N

NUMBER
PAGE

PR-1 1 of 1

PROJECT ILLUSTRATIONS

DATE

4 Dec. 1'66

RAYTHEON
E Q U I P M E N T

COMPANY
D I V I S I O N

NUMBER PR-1 PAGE


1 of 1
4 Dec, 1966

PROJECT ILLUSTRATIONS

DATE

SECTION I V

PHASE I OF THE VALUE ENGINEERING JOB PLAN

GET ALL THE FACTS

TECHNIQUE

INI'OH?IA T I O N PHASE GET ALL THE F A C T S 1

The f i r s t t e c h n i q u e i n t h e V a l u e E n g i n e e r i n g J o b P l a n , "Get all. t h e f a c t s , " i s e x t r e m e l y c r i t i c a l b e c a u s e a l l f u t u r e a c t i v i t i e s on a n y p r o j e c t a r e b a s e d on t h e i n f o r m a t i o n g a t h e r e d a t t h i s t i m e . You m u s t become a h i s t o r i a n , a r e c o r d e r , and a n a l y s e r o f p a s t f a c t s and e v e n t s . I n o r d e r t o become t h i s h j - s t o r i a n , y o u f i r s t m u s t g a t h e r s p e c i f i c i n f o r m a t i o n , To u n d e r s t a n d t h i s t e r m i n f o r m a t i o n , i t w o u l d b e h e l p f u l t o s e e how i t i s d e f i n e d i n t h e dictionary. M r . N e b s t e r s a y s t h a t "Knowledge d e r i v e d f r o m r e a d i n g , o b s e r v a t i o n , o r i n s t r u c t i on; e s p e c i a l l y un-organized a n d u n - r e l a t e d f a c t s o r d a t a , " i s i n f o r m a t i o n . The i n t e r e s t i n g p a r t o f t h i s d e f i n i t i o n i s t h a t i t i s u n - o r g a n i z e d a n d unr e l a t e d . I n o r d e r t o d o a good j o b o f g e t t i n g i n f o r m a t i o n , y o u m u s t g e t t h e s e d i v e r s e b i t s o f i n f o r m a t i o n , p u t them t o g e t h e r i n t o a n o r g a n i z e d f a s h i o n s o t h a t you c a n g e t them r e l a t e d p r o p e r l y t o e a c h o t h e r . You m u s t know t h e up-to-date s t a t u s and what h a s evolved i n t h e p a s t . I n t h i s w a y , you w i l l b e a b l e t o t a k e a p p r o p r i a t e a c t i o n . T h e I n f o r m a t i o n Worksheet i s d e s i g n e d t o r e c o r d i-nforrnation i n an organized f a s h i o n .
t i o n m a y be t h e l e a s t glamorous Gathering of infori~la o f a l l t h e Value Engineering phases, b u t i t i s a l s o by f a r A l l t h a t you d o f r o m h e r e on w i l l b e t h e most i m p o r t a n t . h a s e d u p o n t h i s i n f o r m a t i o n p a c k a g e t h a t y o u a r e now b~~ildin ug p . How d o y o u g o a b o u t g e t t i n g t h i s i n f o r m a t i o n ? You m u s t f i r s t d e t e r m i n e w h a t i t i s t h e t you w o u l d l i k e t o f i n d o u t ; what b a s i c d a t a you a r e s e a r c h i n g f o r . I n f o r m a t i o n such a s , what i s t h e f u n c t i o n o f t h e p a r t ; W h a t d o e s i t c o s t ; how many d o we b u i l d a y e a r ; w h a t h a s b e e n t h e h i s t o r y o f t h i s p a r t ; i t s usage; i t s troubles; various things t h a t w e r e t r i e d b e f o r e t h e f i n a l d e s i g n was a r r i v e d a t ; how l o n e h a s t h i s d e s i g n been unchanged; i s t h e r e any t r o u b l e i n t h e f i e l d w i t h t h i s d e s i g n ; a n d many o t h e r s . T h e s e a r e a l l i m p o r t a n t q u e s t i o n s , h a v i n g a g r e a t b e a r i n g on the e f f o r t y o u s h a l l e x p e n d a n d t h e when a n d how o f e x p e n d i n g i t .

T h e r t ~ a t e r i a lp r e s e n t e d h e r e i s e x c e r p t e d f r o m p r e s e n t a t i o n s b y 9 . G I e n n Koodward, V a l u e E n g i n e e r i n g C o n s u l t a n t t o 1961 H a y t h e o n Company, 1 9 5 9

T h e r e f o r e , yo11 m u s t c o n t a c t t h e c n ~nie e s s t h a t h a d o r i f:ina d e s i g n r e s p o n s i hi1 i t y , t h e s a l e s p e o p l e t b a t d e t e r m i n e d w h a t t h e c u s t o m e r ~ . l a n t e d ant3 wh;at h c w a s w i 1 1 i n , - t o p a y f o r t h e p a r t . You m u s t g e t t h e s p c c i f i c a t i o n s f o r r e v i e w t o s e e w h a t w e c o v t r ~ c t e dt o p r o v i d e t o o u r c u s t o m e r s . You m u s t f i n d o71t w h r t i s t h e s a l e s p o t e n t i a l o f t h j s i n t h e f u t u r e , T a l k w l t h m a n u f a c t u r i n g , G e t t h e i r vi ewpoi n t s o n : w b a t a r e t h e t r o u b l e s ; how a r e they n ~ a L - i n gi t ; h o w w o u l d the37 l i k e t o make i t ; w h a t a r e t h e l i m i t a t i o n s o f t h i s p a r t a s f a r a s t h e i r r n a r u f a c t u r i n g , assembly, a n d t e s t p r o c e s s e s a r e c o n c e r n e d , T a l k t o p e o p l e i n yolir c o m p a n y who h a v e r e l a tecf problems. Many t i m e s t h e r e a r e o t h e r area.; where t h e r e i p infos!:iation t h a t w i l l r e l a t e t o , o r h a v e a b e a r i n g o n t h e p a r t i c u l a r p a r t t l l a t yo^^ a r e worlcinl; o n . Yany times t h e c o m p l e t e n e ~ so f in f o r r n a t i o n i s o n l y l i m i t e d b y y o l l r own c ~ l r i o s i t yand i n h o w w e l l y o u a n a l y z e t h e f a c t s a s you a r e p ~ ~ t t i n th ge m t o g e t h e r . how t h a t y o u Ilave . s o n l r a tho11t;hts i n m i n d a s t o t h e k i n d s of i n f ' o r m a t i o n a n d p o t e n t j a 1 l y w h e r e you may g e t i t , y o u m u s t g o s e a r ' c h i n z , T l i i 9 j .s t h e r e a l l e g - w o r k o f t h e job. T h i s i s hhen y o u r a b i l j t y t o comrwnicate yoilr t h o u g h t s a n d t o g e t p e o p l e t o v o l r ~ n t e e ri n f o r m i t i o n i s m o s t i m p o r t a n t . I ~ J -t h i s t i m e , y o u s h o u l d h a v e d e f i n e d r a t h e r c l e a r l y w h a t y o u r p r o b l e m i s ; alld i n d e f i n i n g t h i s p r o b l e m , i n t e r e s t i n f ; t h i n g s can h a p p e n . Slich as: f i n d i n g t h a t w i t h a c l c 8 r d e f i n i t i o n o f t h e p r o b l ~ m ,n o nforrnetion u r o h l e m r e a l l y e x i s t s . . T u s t w i t h e n o ~ ~ gj h b r o u f ; h t o u t f r o m s e v e r a l k e y a r e a s , yo11 may f i n d t h e r e i s n o n e e d t o d i C; f u r t h e r . T h i 9 t h o u g h , i n , n o s t c a s e s , wi J 1 h e a r a r i t y . S o y o u m u s t make a n a p p r o a r h t o many k e y p e o p l e t o g e t t h e i r c c n t r i h t ~ t i o nt o y o u r o v e r a l l i n f o r m a t i o n p a c k a g e . Now, how w i l l yo11 a p p r o a c h t h e s e T h e r e a r e , . ; e v ~ r a l w a y s o f d o i n g this. Uy a 1 l people ? m e a n s , a l w a y s u s e a p o s i t i v e a p p r o a c h . You m u s t a p p r o a c h a man a s a n e x p e r t i n h i s p a r t i c u l a r j o b , r e c o g n i z i n ~ t h a t h e i s a k e y i - n d j v i d u a l . Even t h o u g h y o u may s ~ l - p e r t t h a t a p a r t i c u l a r man i s n o t e n t i r e l y t h i s k i n d o f ct r e d i t h i m w i t h a l l t h e 1lj gh q i - i a l i t i e s p e r s o n , you rn~~s w h i c h h i s j o b d e s e r v e s . T h i s p i ~ t sl i i m a t e a s e a n d c i v e s The m i n u t e t b a t h i m a p o s i t i v e o i ~ t l o o kt o w a r d s Y O U . y o u t e n d t o t a l k t o a man a s i f yo11 a r e a n e x p e r t , t r y i n g t o t e l l h i m how t o l o w e r c o s t o n h i s p r o d u c t , h e w i l l c l o s e u p t i g h t e r t h a n t h e p r o v e r b i a l cl.am. T h i s i s a sure w a y t o f i n d o u t n o t h i n g a n d g e t p e o p l e on t h e i r g t i a r d f o r a n y t h i n g t h a t y o u may p r o p o s e o n t h i s ? a r t i c u l a r part

A Value t n g i n e e r must h e a n e x p e r t I n a s k i n g r i u e s t i o n s , It must be s i m i l a r t o t h i s c a s e o f a boy and h i s f a t h e r , w h e r e t h e b o y s a i d "I g u e s s my f a t h e r m u s t h a v e b e e n a p r e t t y m i s c h i e v o u s b o y , " Why ? I 1 asked a n o t h e r b o y , 'I'hc f i r s t h o y s a i d , " U e c a n s e h e k n o w s e x a c t l y w h a t q u e s t i o n s t o a s k when h e w ~ 3 n t s t o know w h a t T h a v e b e e n d o i n g . " j t i s t l i e a s k i n [ ; o f t h e s e q ~ r c s t i o n st o f i n d o u t w t ~ a t p a r t i c u l a r pony11 e h a v c b n c n d o i n ( : t i t a t i r a 1 1 i m p o r t a n t . You m u s t f i n d o u t what t h e i r t h i n k i n ? ; was and what t h e c o n d i t i o n s w e r e a t t h e t i m e c e r t a i n d e c i s i o n s were made, k h a t w e r e t h e c i r c u ~ w t n n c e sa n d t h e r e q ~ ~ i r e m e n tf so r t h e p a r t i c u l e r d e s j c n ? Who c o n t r - i b t ~ t e dt o t h i s c l c s i p ? V h a t p r o b l e m s d i d t h e y h a v e ? T a l c j n c a p o s i t i v e a p p r o e c h w i l l d o much t o g e t t h e s e p e o p l e t o t a l k a b o i l t t h e i r f a v o i ~ r ti e s v b j e c t : t h e m s e l v e s and t h e i r c o ~ t r i h ~ i t i o n ts o prod~~cth s a t a r e now i n e x i s t e n c e . You m u s t g i v e t h i s man c r e d i t f o r h a v i n g c o s t - i n t e r e s t a t h e a r t t h r o u g h o u t tile e a r l y d e s i g n . A d m i t t i n g , a l t h o u c h y o u nay s u s p e c t h e d o e s n o t r e a l l y t h i n k t h a t way, t h ~ h t ~ -w a s i n t e r e s t e d i n k e e p i n [ ; c o s t s a t t h e rninimiim d u r i n c h i s d e s k e n s . T h e r e f o r e , i t m i l s t h a v e h e e n s o w e c i r c ~ ~ m s t a n cbe eyond h i s c o n t r o l t h a t c a u s e d a p a r t t o be f i n a l l y designed w i tlr high c o s t .

T a k e n o t e o f a n y i d e a s t b a t t h i s man may h a v e o n how t o l o w e r c o s t t h a t h e w a s n e v e r a b l e t o f o l l o w u p h i m s e l f , T h i s is a l w a y s good b e c a u s e t h e n t h e i d e a s t h a t yo11 may b e d e v e l o p i n g l a t e r a r e o n e s t h a t h e f e e l s h e y o u j i l s t d i d t h e l e g work f o r d e t a i l c o n t r i b ~ ~ t earid d development

A t s n w e time w h i l e t a l k i n : ; t o p e o p l e t o g e t i n f o r m a t i o n , i t i s v e r y i m p o r t a n t t h a t you i n f o r m them a s t o w h a t yo11 w a n t t o u s e t h i s i n f ' o r t : i a t i o n f o r , w h a t y o u a r e t r y i n [ ; t o d o , y o ~ l rm i s s i o n s o t h e y w i l 1 know w h a t w i l l h e e x p e c t e d o f t h e m a t a f u t u r e tjrrle and a l s o t h a t t h e y w i 1 l g e t acknow1eclgerr:ent f o r t h e c o n t r i h i l t i o n s t roposals. Tt i s very, t h a t they make t o a n y l o w e r c o ~ p v e r y irnllortant t h a t you stress t o thew t h a t you a r e n o t c o m p e t i n g w i t h t h e m , yo11 a r e n o t t r y i n g t o d o t h e i r j o b , yo11 a r e j u s t t r y i v g t o h e l p t h e m i m p r o v e t h e i r o u t p u t , s h o w i n g w a y s t h a t t h e y c a n d o a F e t t e r j o b ; a n d , 5n d o i n g s o , tFe3- c a n g e t c r e r l i t f o r a n y i r n p r o v c r x e n t s t h ~ t may come r r o m t h e V a l u e E n y i n e e r i n g e f r o r t . F o r a f t e r a l l , a ~ ~ a l u an e a l y s i s i s :list a s e r v i c e t o l i n e o p e r s t j n e p e o p l e t o s h o w a way b y w h i c h t h e y c a n i m p r o v e t h e i r own j o b s , Resronsjble l i n e personnel rtli~sttake the i m p l e r r i ~ n t a t on i action necessary t o r e a l i z e any cost r e d i ~ c to i ns. r h e r e f o r e , re-emphasi z e t h a t t h e y w i l I b e f ; e t t i n g t h e c r c d i t f o r t h i s f ' o l l o w - o n a c t i o n b c s e d on i t h a t b i l 1 he p r e s e n t e d y o t l r p r r i ~ m ia ~tl i o n o f i n f r ~ r r n a ton t o t h e m a t SO~IIP l a t e r t i m e .

--

--

When d e l v i n g i n t o a r e a s f o r b ~ c k e r ~ > ~ d la n tda , r e m e m b e r t h e i m p o r t a n c e o f how yo11 a p p r o a c h t h e s e p e o p l e a n d t h e q u e s t i o n s yo11 a s k . I t w o u l d b c v e r y u n w i s e f o r yo11 t o a s k a d e s i g n e r "Why d i d n ' t yo11 d e s i p i t t h i s He wi. l 1 d a r n s o o n t e 1 1 y o u , He w i 11 g o t h r o u g h way ? a l l h i s r e a s o n s e x a c t l y why h e d i d n ' t d e s i g n i t t h a t way, a l s o s e t t i n g h i s m i n d a g a i n s t e n y p o s s i b l e r e - d e s i g n i d e a s t h a t h e may s e e c o m i n g f r o m y o u l a t e r , S f y o u a s k h i m "l,\lhntts t h e m a t t e r w i t h a p a r ' t j c u l a r n l a t e r i z l f o r u s e i n a p r o d u c t ? " h e ' l l come o u t w i t h a l i s t o f " w h a t ' s t h e m a t t e r " a s l o n e a s y o u r arm. Why w o u l d t h e man d o t h i s ? ? f a j n l y b e c a u s e y o u ' v e p11t h i m o n t h e d c f e n s i v e . You h a v e a s k e d nee;:tive q u e s t i o n s w h i c h g i v e him n o c h o i c e b u t t o cive n e g a t i v e a n s w e r s . A man on t h e d e f e n s i v e w i l l g o t o a n y e x t r e m e t o j u s t i f y h i s p s t cler_'j.sions. I t ~183be t h e s e p a s t d e c i ~ i o n sw h i c h y o u w i s h t o s e e c h a n g e d , You milet a p p r o a c h h i m p o s i t i v e l y s o t h a t t h e o n l y l o [ ; - i c a l a n s w e r s a r e p o s i t i v e ~ n s w e r st h a t h e c a n g i v e s t r a i s h t f r o n l t h e s h o u l d e r w i t h o u t h a v i n g t o def'end any d ~ c s ii o n s strictly t h a t y o u s e e m t o b e c h a l l e u g i n g . Yo11 a r e t h ~ r e a 3 a n e ~ l t r a lt o y e t his t h o u g h t s a n d h i s c o n t r i b t l t i o n s . Ask q u e s t i o n s a b o u t t h e l l f u t u r e , s u c h a s : " w h a t a r e y o u r What h n v e y o u f o ~ ~ nad re i t s plans for t h i s part?" d r a w l e c k s ? " "Eow . t c o ~ i l d y o u I j k ~ t o s e e t h e p a r t rriacle?" J n t h i s w a y y o u g i v e h i n ~a c h a n c e t o s p e a k w i t h o u t p u t t i n c a n y words i n h i s mouth, In n e n y c a s e s , i d e n s w i 1 1 c r?mP t o y o u whj 'Le y o u a r e t-allcin_g t . 2 h i m . T h e s e clay bs i d e s s f o r p o t e n t i a l changes. I t i s v e r y u n w i s e t o bring t h e s e up a t this time. S t o r e t h e s e i n t h e hnclc o f y o l l r r!ind a n d t a k e t i m e t o e v a l u a t e t h e m m o r e t h o r o ? l g h l y . 1)ocrirnent t h e x 3ater. P r r r m . t u r e s u g , _ e s t i o n s a r e u s 1 1 a l l y u n a c c e p t a t l e s u < ; g e s t i o n s . T h e s e a r e t h e o n e s t h a t g o down t h e d r a i n a n d set u p FI h o s t i l e a t t i t i l d e l a t e r . St d o e s n o t a d d a n y t h i n g t o t h e p r o f e s s i o n a l s t a t u r e o f a V a l l ~ e b : n ~ i n e e r i.f t h e y f e e l he i s j u s t & n o t h e r ,n;uy t h a t i s t o s s i n g o f f ' i d e a s ' ' f ~ o w t h e t o p o f h i s h e a d . " ?.!ost e r l g i n c e r i n i : a n d z n r , 1 l f a c t u r i n g d e p ; . r t m c n t s h a v e p e c p l e l i k e t b j 3 around already. T h e y d o n ' t n e e d t o s e t lip a s p e c i n l i s t f o r i t , S o y o u m u s t b e t a k i n g a d i f f e r e n t a p p r o a c h t b a n t h e one they n o r m a l l y see. You a r e , a t t h i s t i m e , a l s o s e t t i r ~ th ~e s t ~ f f ~o e r a l l f u t u r e c o n t a c t s wj t h t h e s e i n d i v i d u a l s . T f i t is n o t o n a p o s i t i v e , b u ~ i n e s s - l i k e r e l a t i o n s h i p , y o u w i l l he w o r k i n g u p h i l l f r o m h e r e o n . W j t h many p c o p l e , t b i s w j 11. b e t h e c o n t a c t t h a t l e t s t h e m know t h a t y o u a r e , i t r o u n d a n d T f they don't l i k e w i l l be l o o k i n g a t t h e i r d e s i g n . w h a t t h e y s e e t h e f i r s t t i m e , t h e y w i l l be s i t t i n y t h e r e with loaded guns f o r your n e x t t r i n e

I d ' i r s t i m p r e s s i o n . : asc c e r t a i n l y l a s t i n g , Sometimes t h e y w i l l I ~ s t f ' o r a s l o n g as you w o r k i r , a p a r t i c u l a r p l a n t hr j o b . Tn t h e f i n a l a n a l y s i s , y o u e r e t r a v e l l i n g a r o i ~ n d t a l k i n g t o people t o ~ f e i t n f o r n l a t i o n , h11t w h a t yo11 r e a l l y w a n t i s i ~ n d e r tsa n d i n g . F r o m u r ? d e r s t a n d i n @ yo11 can a l w a y s p i c k o u t i n f c r e : a t l o r , a n d a d d t o i t a n d e x p a n d on i t l a t e r . , I f y o u h a v e
n o ~ l n d e r s t a n d i n go r m u t u a l g r o u n d t o w o r k o n i n y o u r k e y a r e a s , y n u r i n f o r r n a t i on s o 1 1 r c e . s w i l l s o o n d r y u p . F ' i n ~ ly l, when as!:in@ q i l e s t i o n s a n d t a l k i n g to n e o p l e , y o u m i l s t know when to l e a v e , when t o g i v e u p . When y o u ' v e g o t t e n t o tho p o i n t o f w i l e r e there's n o p o - i t i v e i n f o r m a t i o n conline; f o r t h , d n not w a s t e y o i i r t i m e a n d h i s , C o : : ~ e h r c k l a t e r w h e n y o i ~h a v e .;or?e m o r e s p e c i f i c p o i n t e d q i ~ e s t j o n st o a s k . s p e c i f i c q u ~ s to in s g e t s p e c i f i c a n s w e r s . A f t e r t h e g a t h e r i n , y o f t h e h i t s a u d p i e c e s o f i n f o r m a t i o n frorn rriany a r e a s , y o u c a n cornpi 1.e this i n t o c o h e r e n t h i g t o r y o n t h e lrly T n f ' o r n ~ a t i o n i z o r k s h e c t . Tn t h i s c o r l i p i l i n g , be p a r t i c l ~ a c a r c f u l t o f i n d gaps o r t o p i n p o i n t i n c o n s i s t e n c i e s s o y01.1 r a n e x p l o r e t h i a f l i r t h e r . 5lany t i m e s by t a 1 , i n g ?;out what; p e o p l e h a v e p i l t i.n a s o p i n j o n s and g e t t i n g t h e r e a l t r u c I ' a c t s , yo11 w i l l . h i ~ h 1 i ; ; h t t h c r l i r t c t i o n y o u m l i s t go a n t i w i 1 3 :la t e r i a l l y s ~ j e e d t h e s i ~ c c e s so f any p r o p o s a l f o r 1 owc3rjn:; c o s t a n d i i l : p r c v i n g q u a l i t y a n d v a l i ~ e .

hnowi n e w l l a t i n f o r m a t i on yo11 w a n t a11 a p p r o a c h a s to how t o g e t i t a n d w h e r e t o l o o k f o r i t i s 90% o f t h e b a t t l e i n t h e T n f o r n l a t i o n phase. I t i . i u p o n t h i s i n f o r m a t i o n f ' o ~ ~ tni d ~ w t h a t yo11 ' % u i l d t t yo11r who1 e p r o j e c t on Make i + c o m ~ ~ l c t es ,o u n d a n d w e l l r l o c ~ i v c n t e c l .

B.

DETERMINE COSTS

L)T+,'I'EJ~?lJN 1 . :

COSTS

C o s t i s o n l y a small w o r d , made u p of' f o u r l e t t e r s , a n d y e t t h i s w o r d , c o s t , i s p e r h a p s o n e o f t h e b i g ~ e s tp r o b l e m s i n industry today, l l o r e b u s i n e s s e s f a i l b ~ c a t i s et h e y f a i l t o know c o s t , t h a n f o r a n y o t h e r r e a s o n . S f V a l u e K n g j n e e r i n g i s t o s i l c c e e d o n e o f t h e m o s t i r l i p o r t a n t t h j n g s i s t o know w di t h a 1 1 o f t h e c o s t ; o n e m i l s t become t t . o r o u g h l y a c q u ~ i r ~ t e eler~~ei~ th t? st make u p mnnilfacturing product o r wurks c o s t s . I t i s n o t t h e i n t e ~ l t i o nh ~ r e t o give a course i n cost a c c o t l n t i n g , b e c a u s e t F e V a l u e E n g i n e e r js n o t a s much c o n c e r n e d w i t h t h e mechanics o f c o 5 t a c c o u n t i n g a s he i s w i t h t h e r e l i a b i l i t y , a v a i l a b i J i t y , a n d c o ~ p l c t e n e s so f t h e c o 3 t i nfor:::? t i o n t h a t h e o b t a i n s . H o w e v e r , c c r t a i n t r a i n i n g a n d R wet-kjng knowledge o f c o s t a c c o u n t i n g p r o c e d u r e s i s v e r y h ~ n e f cj i a 1 t o w o r k i n t h e V e l ~ i e f j e l d . We h e a r such as s h o p c o s t s ; o u t - o r - 1 , o c k e t costs; m a t e r i a l costs; tcrif~s l a b o r c o s t s ; overhead c o s t s ; d i r e c t c o s t s ; i n d i r e c t c o s t s ; v a r i a b l e o v e r h e a d ; f i x e d o v e r h e a d ; r n a n ~ ~ f a c t u r i ncgo s t s ; p r o d u c t c o s t s ; w o r k s c o s t s ; ~ n g i n e e r i n rc o s t s ; g e n e r a l a n d C O S ~ S ; a n d many a d m i n i s t r a t i v e c o s t s ; p a ~ k a g i n c ;s h j p p i n ~ o t l i ~ rt e r m s t h a t a r e a p p l i e d i n d i f f e r e n t i n d u s t r i e s . & o w , t o d e f i n e e a c h o n e o f t h e s e a n d t h e i r tlse i n v a r i o u s jn d u t ~r i e s wo111cl c e r t a i n 1 y h e b e y o n d t h e s c o p e o f t h i s t e x t . H o w e v e r , w e w i l l d i s c i ~ s sh e r e e n o u g h t o a c q u a i n t or t works c o s t s . G e n e r a l l y yo11 w j t h w l l a t g o e s i n t o p r o c l ~ ~ c r r ~ ~ t e r j a ll , a k n r , and overhead. there are three coats T h e s e make u p w h a t i s knctrn i s some i n c 3 u s t r i e s a s s h o p c o s t s , w o r k s c o s t s , o r p r o d u c t c o s t s . 'T'o t h i s i s a d d e d e r ~ n ~c > j e ~ i lc l~ o ~ t s ,t o o l i n g , g e l I i n c , p a c k a g i n g a n d admi n j e t r a t i or, c o s t s a n d t h e r . ~ s u tl e z t s l i m is m s n ~ ~ fts~ c~ r i n g c o - t ; o r c o s t n f sales. To t h o s e a r e a d d e d p r o f j t s t o get selling price,

Now w h n t w e a r e r o n c e r n ~ r l w i t h i n T r a l ~ ~fe n E jneering,/ A n a l y s j a work, Kenera1 1 y i s t h e works c o s t o r p r o d ~ ~ c ct ost

1a h o r , a n d c , v e r h c a d . O v ~ r h e a d c o v s i s t i n @ o f b o t h fixed a n d v a r i a b l e o v ~ r h e a d , r ~ v c r h e ~ r il s sorrletimes ct ~ ~ ng r i expense. F o r r e f ' c r r e d t o a s h u r c l e n o r inrci r e c t v a n ~ l f a t h e p l i r p o s e o f o i l r w n r l c F c r e , T\.P w i 11 be r t e a l i r , g w i t h the work-s o r I I L c ? c ' ~ ~ c cto s t . 1 t j 5 g e n c . r a 1 1 y r e c o ~ r r n ~ c ~ r l e trh la t f o r " h e f ' o r e a n d n f ' t e r " c o r n p p r i s r j n u s e a n d f o r qa!,e o r b u y deci . ~ oi n - , t h a t these p r o c l ~ i c t o r w r - r l c ~ cost..; a r P ttlc f i ~ X eTs tc 1 1 ~ c r I . k l ~ n n p . n c ~ 'w t i 71 stab? i s h p o l ic i ~ s regarding 1nake x r s b11y ancj r o * t . ~ a v n,ys i c a 1c i 1 ~ 2 tior9 N o w 11ow d o e s 'n w o r k s C O G t break r l ~ ~ i?

m a d e 111) o f m a t e r i a 1

W e l l , the material going i n t o a prnduct i s t h a t pl~rchased r a w material plrls purchased components. Purchased components may v a r y a l l t h e w a y f r o m n n t s , b o l t s , h a r d w a r e , s t a n d a r d p a r t s up t o c o m p l e x n s s e t n b l j e s o r m e c h a n i s m s . B e c a l i s e i t i a c l a s s i f i e d as m a t e r i a l i n o n e p l ? n t , t h a t i s y o u r p l a n t , ( t h e m a n i l f a c t u r e r l s p l a n t ) d o e s n o t mean t h a t t h e r e i s n o t l a b o r i n v o l v e d i n t h i s m a t e r i a l , b u t t h a t l a b o r j s i.n t h e s u p p l i e r ' s p l a n t . To y o u i t i s a m a t e r i a l c o ~ t .Y o ~ r r l a b o r f i g u r e i s t h a t a r n o ~ ~ n otf wti t h i n y o u r l a b o r t h a t is added t o t h e purchased p r o d ~ ~ c p l a n t t o c o m p l e t e the f i n l s h e d p r o d u c t o r a s s e m b l y . T h i s d i r e c t l a h o r can be t h e 1aSor f o r machining, i n s p ~ c t i o n , t e s t i n e ; , a s s e m b l y o r a n y o t h e r d i r e c t l a b o r applied t o t h e product. Overhead a s s u c h , whether f i x e d o r v a r i a b l e , i s u s u a l l y a p p l i e d as a c e r c e n t a g e o f t a b o r . T h i s p e r c e n t a g e i s a r r i v e d at by t o t a l l i n g a11 i n d i r e c t manufacturing expenses both f i x e d and v a r i a b l e , and d i v i d i n g b y t h e number o f p o u n d s e x p e n d e d on d i r e c t l a b o r . O v e r h e a d i n m o s t h ~ ~ s i n e s s e to s day r u n s a n y w h e r e f r o m 100 u p t o 600 o r m o r e p e r c e v t o f d i r e c t l a b o r ; 200 t o 300 p e r c e n t o v e r h e a d i s , 1 w o u l d s a y , a n a v e r a c e fi g u r e . Kow w h a t d o w e mean b y f i x e d a n d v a ~ i a b l eo v e r h e a d ?

I t i s n ' t n e c e s s a r y h e r e t o Z e t i n t o a d p p t h d i s c u s s i o n on t h i s o t h e r t h a n to s a y t h a t i n f i x e d o v e r h e a d a r e t h e
h u i l d j . n p , t h e h c ~ t ,t h e l i g h t , t h e e x p e n s e s o f t o p e x e c i 1 t i v e s a n d o t h e 1 - f'ixed p o r t i o n o f o v e r h e n d t h a t d o e s n o t ~ h ~ n g wi et h f l r l c t v a t i o n s of prod11ct o ~ l t p i ~ t V .ariable overhead i s t h e s i l m of those s a l a r i e s o f persons n o t d i r e c t l y concerned Thi-s i n r l i l d e s , s t o c k w i t h w o r k i n g on t h e p r o d u c t j t s e l f . ~ ) c o p l e ,p i ~ r c h a s i n gp e o p l e , e x p e r t i t o r s , f I o o r s w e e p e r s , a n d o t h e r v a r i a b l e i terns t h a t w i l l v a r y s o w e w h a t w i t h t h e These, eeneral l y , a r e the things t h a t v o l ~ l r no ~f p r o d u c t i o n . make 11p c o s t s . t o d a y i n t h e i n d l l s t r y , i t i s s t r o n c l y s l ~ g g e s t e dt h a t y o u d i s c u s s t k i s w i t h y o t l r c o s t a c c o u n t i n g p e o p l e t o g e t g r e a t e r d e t a i l s o f t h e p a r t i c i ~ l a rs y s t e m ~ s e d i n y o u r own c o m p a n y , b c c a u o e t h e s e d o v a r y f r o m o n e c o n c e r n t o a n o t l l f ~ r .TTowever, i t i s i m p o r t a n t t b a t yo11 know ~ i s e de n d w h a t c o q t s m e a n when y o u d o w h a t s y s t e r ~ li Q h e i ~ y eet t h e m . Yo11 m u s t know w h a t i s i n c l i ~ d e d i n m a t e r i a l , w11at i s i n c l i i r t c r ! i n l i l b o r , a n d w h a t a n d how much o v e r h e a d i s applied t o m 2 t e r i a l , or t o Intor. Many t i m e s t h e r e : . r e d i f ' F e r e n t .;y=tefns P I I C ~ 8s s t p r l ~ f a r r l c o c t s y , ~ t e r p s , o r s t a n r l n r c l and v n r i ~ n c -s y ~ t e ~ a s c, t u a l c o s t c y s t e r n s , a n d mnny o t b c r m p t h o d s o f a c c n l l r t i n g t o h ~ n d l et h e r e c o r d i n g o f cost^. F i q d yoilr conlpany, F i n d o u t w h a t t h e s e o ~ l t7 . 7 h n t t h e s e PI-e i:~ t h i n y mea;;, ;.nil g e t t o know m o r e a b o u t c o s t s . I t i s e x t r e m e l y i m p o l t a n t , and you c a n n o t d o good V a l u e A n a l y s i s w i t h o u t f ~ n v i r ~pg o d c o s t ; i n f ' o r w n t i o n . You may h a v e t o p i o n e e r

sorl1ewt~at ir t h i s f i e l d and t a k e t h e lead i n g e t t i n g yoiir nin;lagert~cnt t o d e v e l o p v o r e e f f ~ tci v o p r o d u c t o r i e n t e d c o s t systrvs, i f they d o n ' t h a v e thers a t t h e p r e s e n t t i m e .

C.

PUT A ON SPECIFICATIONS AND REQUIREMENTS

The a l l o c a t i o n o f c o s t s t o e a c h S p e c i f i c a t i o n a n d l ~ e q u i ~ ~ e n r eo ri f t a p r o c l u c t , a s s e m b l y o r p a r t u ~ i t i c r~ a l b e A n a l y s i s i s a n i m p o r t a n t t e c h n i q u e i n the 1nfosr:lation I ' h a s s , T h e s e wox.ds, s p e c i f i c a t i o n s arid r c q u i r e r l l e ~ i t s , a r e u s e d t o i n t f e n t i f y a l l c o n s t r a i n t s u n d e r w h i c h t i l e 1,roduc t i s d e s i g n e d a n d p r u ( l u c e d . 'fllcy r ~ u t s d e f i n e botii f u n c t i o n a l peri'orrnance a n d p h y s i c a l s h a p e , some o f t l ~ e na~ r e d e s i g n a t e d by t h e c u s t o u l e rIs r e q u i r e m e n t s a n d some a r e e s t a b l i s h e d b y t h e m a n u f a c t u r e r as p r e f e r r e d , s l ~ e c i a lo r s t a ~ i d a r d , p r n c t i c c . Spccific;t ~i o n s c ? ~ l d r e q u i r c ~ n e n t sc o v e r e l c c t r i c a l , m e c h i i r i i c a l a n d a p p e a r a x i c e a r e a s aiid f a l l i l l t o t h e b r o a d categories o f l ' l i y s i c a l , l ' c r f o r lilance arid ! ~ o r k r n a n s h i p . b p e c i f j c a l l y , t h e y a r e d e s i g n a t e d t o c o v e r ---

---

1, I~la tel,ial 2. Lnvirc)nrnental 3. Life I+ l,ii~iension1 a 5. i \ p ~ > e a r a n c e 6 . P e r f orrnance

L a c h alld e v e r y s p e c i f i c 3 t i o n o r r e q u i r e t t l c n t klas some r a n g e of' t o l e r a n c e w i t h i n hllicki t h e y m u s t be h e l d i f s a t i s f a c t o r y o r d e s i r a b l e r e s u l t s a r e t o be a c h i e v e d . Good d e s i g n p r a c t i c e would i n d i c a t e t h a t t o l e r a n c e s s h o u l d b e b r o a d enough t o f i t econorriical p r o d u c t i o n and n a r r o h enough t o produce d e s i r e d perf'ormance, s i n c e c o s t i n c r e d s e s e x p o n e n t i a l l y as t o l e r a n c e s a1.e r c d u c e d i t i s e s s e n t i a l , f r o m a p r o d u c t v a l u e s t a n d p o i n t t h a t decisions i n t h i s area r e f l e c t t h e b e s t compromise between a s a t i s f a c t o r y l e v e l o f See pages p e r f o r m a n c e a n d t h e c o s t t o p r o d u c e t h e i ) r o d u ct l h and 6 1 o f t l i e l J r ' o j e c t h o r k b o o k f o r a s u i m a r y o f t h i s c o n c e p t . I f t h i s g e n e r a l t o l e r a r i c i n g l a w i s k e p t i n mind d u r i n g p r o d u c t d e s i g n much u n n e c e s s a r y c o s t c a n be a v o i d e d .

encapsulated) F o r example, a s i n a l l p o t t e d e l e c t r o n i c moclule h a d c o n n e c t i n g w i r e s w h i c h w e r e s p e c i f i e d t o b e s p a c e d w i t h i n ,010" o f t r u e p o s i t i o n . T h i s r e c l u i r e d v e r y c l o s e c o r i t r o l ciurirlg manu f'ac t u r i n g a n d w a s c a u s e f o r many r e j e c t s r e s u l t i n g i n e x c e s s i v e c o s t s . A n a l y s i s r e v e a l e d t h a t t h e a s s e m b l y o f t h i s module i n t h e p r o d u c t d i d n o t require close control of w i r e spacing. A relaxation of t h i s t o l e r a n c e r e d u c e d t h e c o s t a b o u t 50$. Such u n n e c e s s a r y c o s t c o u l d c o n t i n u e f o 3 a l o n g p e r i o d i f sorlieonc: h a d n o t i d e n t i f i e d t h e o v e r l y t i g h t t o l e r a n c e as t h e c a u s e .

I n a n o t h e r c a s e a 5r:lall s o l e n o i d c o i l Irad a l e r ~ t ; t l a ~n d c-liaineter t o l e r - . ; i ~ ~ c bliicli e r e q u l l e d t l ~ cu s e o f c l o s e t o l e r a n c e w i r e . 1,ven t l e n s c ~ a j lw a s I l i f l l ! b e c a r ~ s e o f t i l c s e c l o s c c o l ~t sr a i ~ l t s . An i r i v e s t i r , n t i O I I showed tlia t tf!e c l o s e t o l e r a n c e s w e r e e s t a b l isliec! 011 t i l t . 1,c.l i ef' t 1 1 a t tlrey w e r e ~ ' e q u i r e dt o f i t tile c o i l i l l t o a r l i r ? t ; < l c a s e . A d i n i c n s i o n a l a n a l y s i s r e v c n l ~ d t l l a t t l l e r e was ad(3qu::te s1)ace t o o p e n t o l e r a n c e s . T l ~ c s cc i ~ : ~ n ( , e s r e ~ u l - t e t lj n cll.wstic r c , t l u c t i o n s i r i cost. 'l'lle r e a s o n t h e s i t ~ c n t i o r l c x i s t e r ! was t h a t t h e c o i l w a s made i n o n e a r e a a n d t l ~ ea s s e ~ i ~ b lcy arrjetl out i n another, s o t h a t t l ~ cL r ~ j er ~ r o l > l e m anti s c > l l l t i o n was riot o b v i o u s t o a l l J ~ ~ T - S O I I S coricerned.
U n a t r a n s p o r t a b l e coil~~iunicatior si e t t h e s l ) e c i i ' i c a t i o n s c a l l e d f o r tkle c v o l i n g b l o w e r niotnr t o b e 01)erat i o n a l b 5 O C t o b 5 O ~ .' I ' I l i s rcqllil-ctl u s p e c i a l motor w i t h from s p e c i a l 11i~;li c o s t low t e i n p e r a l u r e 1)ear'inil;s. To a c h i e v e t h i s r e q u i r e d ~ 1 6 , 0 0 0 f o r t e s t e q u i p n i e n t a11c1 d o u b l e d t t i c a m o t o r ate c o s t . I n r e a l i t y , t h e c o o l i n t ; m o t o r o n l y h a d t o o p e r--f r o m O*C a n d a stanc!ard m o t o r c o u l d h a v e b e e n t i s e d .

A s p e c i a l c l o s e t o l e r a n c e , g r o u n d a n d Inacllined r r ~ o u n t i n g n). p l a t e was s 1 ) e c i f i e d f o r a microwave t u b e ( l i ~ a ~ n e t ~ o An ir1vestii:ation r e v e a l e d t l ~ t a s t a n d a r d alurninirrm 1 ) l a t e s t o c k c o u l d b e u s e d and g i v e t h e f ' l a t n e s s r e q u i r e d .

How irtany e x c c s s i v c 3 l y c l o s e t o l e r a n c e s , o r s p e c i f i c a t i o r l s arid r e q u i r e m e n t s , a r e g e r l e r a t i n g e x c e s s i v e c o s t s i n y o u r a r e a ? P u t t i n t : t h e 2 s i g n on t l i e S p e c s a n d I < e q u i r e m e n t s may i d e n t i f y l a r g e amounts o f u n n e c e s s a r y c o s t s .

A.

If

Value E n g i n e e r i n g an i n i t i a l d e s i g n

1. Measure t h e a f f e c t o f a l l s p e c s and r e q u i r e m e n t s on b o t h p e r f o r m a n c e and c o s t .

a,

b e s i g n f o r inaximum o r s t a n d a r c ~ t o l e r a n c e . C o n s i d e r ~ L a s s i f i c a t i o no f d e f e c t s ; s p e c i f y i n g maximum o r minimurn; r o u n d i n g o f f ; u s i n g s e l e c t i v e f i t s ; o r making a d j u s t a b l e . Question t h e n e c e s s i t y of each requirement.

b.

2. C o n s u l t w i t11 manuf'ac t u r i n c ; e x p e r t s t o tle t e r n r i n e t f ~ el o w e s t c o s t s o l u t i o n , m o s t 1 ) r a c t i c a l t o l e r a n c e and rnachine capabilities.

a . S t a y w i t h i n machine c a p a b i l i t i e s .

1.

Lieview a l l s p e c i f i c a t i o n s a n d t o l e r a n c e s ,

a.
b.

L e t e r r n i n e h o w rnucll e a c h i n f ' l u e r i c e c o s t s . Q u e s t i o n t h e c o n t r i b u t i o n o f eacll t o l e r a n c e to t h e f u n c t i o n o f ' t h e p a r t . l l e t e r r n i r l e t h e r e a s o n i'or t h e c l o s e tolerance.

c.

2 . 5ucli e x p e r t aclvice i n tltose a r e a s where c l o s e rerillireiiierlts e x i s t .

C.1.

THE PROBLEM OF TOLERANCE

Woerter

The Problem of Tolerance


The requirement for dimensions that are closer than actually needed
not only increases the cost of 7vhining and fabrication but affects

the purchase of materials, assembly procedures, and inspection met?zods


Everett Woerter
Manager o f ftandardt, Amcrtcan hfachinr 6 F e ~ n d r yCompany, Greenwich, Conn.

has taken great strides in perfecting and improving the methods and technique of measurement, and t e day we possess the ability and the equipment to measure an object to within one-millionth of. a n inch. W e are quite proud of ourselves, and we tend to sympathize with primitive man for his lack of knowledge and his extremely crude methods of measurement. In reality, t~owever,his crude methods probably served his needs as well as or hetter than our rather complicated methods serve us today. W e nre now far more conscious of our inndequacirs and shortcomings. O u r eyes cannot see and o u r hands cannot feel the precision that we seek. As a result, we must build various types of optical tleviccs t o assist our vision, and we must make gages and measur~ I I X instruments of the hardest steel in an effort to overcome our weaknesses.
Fig. 1 . Relationship of tolernnce
t o cost.

N recent years American industry

TOLERANCES (inches ~ - t )

RELATIVE

Industry is forever increasing its dcmand for closer tolerances and greater accuracy in measurement. In this neverending struggle, we seldom pause to consider that, in the most complex problems of measurement facing us today, we are doing only what primitive man did before us. W e are simply comparing the size of one object with that of another. T h e only difference is that our master standards are more definitely established and our methods of comparison far more precise. O n e of the greatest problems facing American industry ttday is the lack of consideration of tolcrnnces and measurements in design. L x h year, industry spends many millions of dollars unnecessarily, producing parts that are better than functionally required, because of improper specification of to1 erances by dcsign and engineering departments. In engineering, a dcsign is conceived in terms of pcrfection. Yet, we know that perfection is an alien and impractical goal and cannot be obtained. T h c most highly skilled mechanic using thc most accurate machine5 and tools nvailable cannot achieve perfection. As a result, the end product is always the result of compromise. T h e dcgree of pcrfection required and specified on technical drawings is determined by design obicctives, which rncludc function, safety, reliability, and many other factors. T h c designer's intent is to define his design as close to

perfection as is logical and practical. Dimensional tolerances are engineering concessions to manufacturing. Such tolerances are necessary from a production standpoint because they provide leeway for unavoidable errors arising during production. H u m a n errors, as well as the errors present in every machine and tool, arc always reflcctcd in the work being produced. Although variations in size and form cannot be avoided, they can be tolerated in any dcsign if they are properly restricted. O W E V E R , like any other tools, the full value of tolerances can be realized only when their function i c clearly understood and when these tolerances are judiciously assigned hy the engir~eeringstaff and properly applied by manufacturing personnrl. It is a principle of good engineering -from the combined viewpoints of technicnl effectiveness and economic production-to use the largest manufacturing tolerances cornpatil~le with
Fig. 2. Surface finish governa
coat.

MICROINCHES (23)

REIATIVE COST

Weapons Technology
When the designer assigns r duance to a dimension he is establishing limitations which could have an advene effcct on many departments. T h e indiscriminate application of toleranca g a s far bcyond the additional cost of the machining or fabrication of a part. Tolerances can affect the purchasing of material, the design and fabrication of tools, the preparation of operation sheets, assctnbly procdurcs, fabrication methods, cost analysis, and inspection equipment and methods. T h e cost is incrcased many times beyond the cost of "just machining t o a closer tolerance." The succcss and growth of American industry is bascd on its ability to manufacture products economically whose pans and componcnts are readily intcrchangcable. T h e growth of interchangeability has been accornpanicd by the realization that intcrchangcable parts nccd not be identical parts and that it is sufficient for a1.l practical purpmcs if the significant dimensions controlling their fits lie within identical manufacturing limits.

Fit. 5. Colt-behavior chart on planin;.


parallelism and squarcness, would have savcd this same plant approxiniately $6,000 a year on parts produced for one machinc alone. Another plant was scheduling more than $12 million worth of machining a year. At this plant, manufacturing costs wcrc significantly affcctcd by specifications for machine surface finishes, tolcranccs, and materials. Let us briefly consider each of thcsc factors. T o provide for proper control over machine surface finishes, the roughncss is specified as "arithmetic avcrage." The diffcrcnccs in cost of a fcw of the more commonly used finishes a r t found in Figure 2. Drawings calling for a finish finer than absolutcly r q u i r c d could increase the cost of the machining opcration up to 270 per ccnt.
Fig. 6. Cost behavior in face milling.

Fig. 3. Quality rtandardr v l . cost.

:he function and satisfactory performance of the product. One of the major problems between engineering and manufacturing is to find the correct balance between thc accuracy required by the product and the possibility of maintaining this accuracy in the manufacturing dcpartment. Too often the demands made on shop equipment to maintain specified tolerances are unrealistic In tcrms of functional rcquiremcnts and economical manufacture. It is essential CCOnornically, thercforc, that cnginecring and manufacturing staffs work cooperatively toward their goal in producing parts that function as intended.
Fig. 4. Depth-coat etudy of

limits can be brought closer together, but can ncvcr be made to coincide. At some point, the increase in manufacturing cost mitigato against further reduction in tolcrancc. Every additional step in thc direction of grcatcr accuracy or smaller tolcrance has to be paid for more highly than the prcvious step; conscquently, manufacturing costs incrcax rapidly as tolerances become smaller. T o illustrate this point, I would likc drilled hole#. to discuss the findings of a survey conductcd at American Machine & Foundry Company. Almost all ma. chining opcrations depend upon tolerances. Tcsts conductcd at AMF revealed that the improper specification of tolcranccs can increase the cost of an opcration up to and possibly bcyond 1,600 per ccnt (see Figure I ) . W e checked one of our manufacturing facilities and detcrmincd, by conservative estimates bascd on one error in 200 specifications, that the increaxd cost of manufacturing due to the spccification of improper tolerances amounted to approximately $zq,ooo a year. At the time of this investigation it was found that a standard on limits and fits would have savcd up to $50,000 a ycar at one of our plants. A standard on gcornctric tolcranccs, particularly for

THESE

ORDNANCE

Fig. 7.

LIneven

pattern o f grinding coats.

It was estimated that machined surfaces consumed roughly two-thirds of the total fabrication time required for producing an average part. This meant that approximately $8 million worth of machining time (out of the total of slightly more than $ 1 2 million worth of machining a year) wag dependent upon surface finish specifications. I t was determined that the least mistake in the specification of surface finishes would increase the cost of plant operation by 28 per cent. Were this error to occur only once in every loo specifications, the yearly increase in manufacturing costs would have been $2q400. It also was estimated that
Fig. 8. Machine and operator coot effect.

one of our facilities was spending in excess of $ ~o,oooa year producing better finishes than functionally needed. Throughout this discussion, the importance of designing for function has keen emphasizcd. Although the spccification of material is not normally a dimensional or measurement problem, it is worthy of consideration. T h e specification of material that is superior to its functional requirements would have increased the cost of material anywhere from I o to 600 per ccnt. Assuming that a matcrial is called out once in 25 parts, increasing the cost by 20 per ccnt, the yearly increase in material costs at one of our plants would havc amounted to $14,400. Further, the adoption of the decimal system of dimensioning would Rave helped to eliminate the confusion and misinterpretation arising when decimal tolerances are applied to fractional dimensions, and vice versa. Also, shop personnel no longer would havc to convert fractions to decimals. It was estimatrd that this factor alone might rave $5,000 worth of scrap annually. events just described arc actual caw histories at AMF. I now would like to present the result of a similar study at Warner & Swascy Company, The information gathered a t both companies has k e n adjusted to suit the conditions of the plant or plants under study and is based on data confined to that plant. Therefore, the cost behavior patterns may not wholly or accurately agree with the experience of other plants. Differences in facilities, processing methods, and quality range will affect the character of the cost-behavior pattern. Nevertheless, the idea or principle in general is applicable to any manufacturing organization. In Figure 3, cost is plotted with respect to surface quality standards and is limited to the turning process as pcrformcd on turret lathes. Notice how cost increases rapidly as a finer surface finish is obtained. The information shown in Figure q covers standard drilling facilities. Special oil-hole drills or special trepanning tools would reflect cost patterns at variance with this curve, but from the data presented it is readily apparent that deep holes are expensive. Beyond the depth of three times the diameter, the cost rises more rapidly than square increments of depth.

Fig. 9. Reciprocating grinding costr.

THE

Figure 5 is a cost-behavior chart on planing, demonstrating the effect of two quality variables, one being surface quality, the other dimensional tolerance. Although planing is not used extensively in industry, it was an important process in the plant covered by the data and provided quite comprehensive information. In this case, surface quality was defined by coded numbers supported with visual samples, since arithmetic average values did not express the desired control. Figure 6 is an additional illustration of a cost-behavior chart combining the same two quality variables, but in this instance relating to face milling.
Fig. 10. Feeding methods affect cost.

-89-

Weapons Technology
Figure 7, which shows cylindrical grinding costs, is unusual in that it reveals a nonuniform cost-behavior pattern. As can be seen, the 4omicroinch aa surface quality line shows a minor cost rise k t w e c n the 0.001-inch and the o.ooo5-mch tolerances, followed by an a h p t rise between the o.ooo5-inch and the o.00025-inch tolerances. T h e 25-niicroinch aa surface quality line, on the other hand, reflects a morc normal and common cost behavior relative t o tolerance. tolerances and finer finishu than those required functionally does not necessarily reflect a better quality product. As a n example, I would cite a case history from the files of Rolls-Royce of England. I believe you will agree that this is a reliable firm producing a quality product. In its determination to produce a better product, this company goes so far as to machine the shanks of connecting rods to prevent more oil from clinging t o some rods than t o others, and so affecting engine balance. All engine parts are polished to such fine finishes, and tolerances arc so small, that the engines arc ready for scrvice as soon as they are assembled. T h e balls in the f r o n t t n d joints are ground and polished to near-perfect faces had been too wed f i n i ~ h e d ,and that the oil tension could not build u p inside the box to enable the cycle of As operations t o complete itself. soon as components were made to the standards specified o n the drawingsthose standards functionally required for normal operation-the boxes worked pcrfectlv I

. . ."

8, showing internal grinding costs, also cxposcs some of the hidden elements that affect cost behavior. Although reducing the tolcrancc adds to the cost of grinding, substantial cost increases occur due to additional machine operator time needed for increased gaging and dial readjustment. Figure 9 shows reciprocating grinding costs, and indicates that the dimcnsional tolerance range has greatcr cost effect than the surface quality rangc. It is also apparent that cost rises sharply with tolerances less than o.001-inch. Figure ro is presented to demonstrate further thc possibilities of iocorporating quality features . other than surface roughness or tolerance. T h e design of the part determines the method of grinding to be used. T o gain the benefit of thc low-cost "through-feed" method on thc centerless grinder, the ground diameter must be the largest dimcnsion on the part. Should such a dcsign be impractical, thc engineer is guided toward selection of a generous tolerance for the resulting "in-fced" method in order to minimize cost. F i g r ~ r er I covers rotary surface grinding and demonstrates that cost is not scvcrcly affcctcd, in all 'cases, by quality vnrintion. Here, the full cost increase over the whole tolerance rangc is 1 5 per cent and is by far the smallest of all the illustrations. Yet, even in this narrow r:lnge, more than half the cost increase rlccurs Ixtwecn thc 0.001-inch and o.ooo5-inch tolerances. As we irnprovc our tcchniques and introduce new technology we find thnt wc can perform and produce parts within finer and finer limits. More nccurate mnchinc tools, morc refined m e a s u r i n g techniques, a n d better trnincd and more proficient operators all add to the industrial efficiency and advancement of our national economy. However, producing parts to closer

FIGURE

Fig. 11. Coat of rotary

surface grinding.

spheres; repcatcd tests havc shown wear of only o.001-inch after 150,000 miles of service. Mowevcr, nt least once, the cornpnny's pasrion for refining dctails backfired. Years ago Rolls-Royce decided that it would havc to come around to nn automntic transmission. It decided that General Motors Hydra-Matic was Ixtter than any other (including RollsRoyce's own experimental one) and b n i ~ g h ta license to build it. By RollsRoyce standards, however, the HydraMatic's finish was rough and the tolcranccs sloppy, and so they wcnt to work to refine the gear box. n u t the transmission, when com~leted, proved fractious. As one British motorcar expcrt tells the story in a booklet published by the company: "After wceks of worry, trial, and elimination, it was discovered that the sur-

ORDNANCE

D.

THE FUNCTIONAL APPROACH

Sherwin

THE V, E, FUNCTIONAL APPROACH TECHNIQUES


F r e d e r i c k S, Sherwin Raytheon Company
V, E, embodies in i t s methodology numerous t e c h n i q u e s which guide q u a l i f i e d people i n s e e k i n g o u t and r e d u c i n g v a s t amounts of unnecessary c o s t s a s s o c i a t e d w i t h both product manufacturing and b u s i n e s s o p e r a t i n g expenses, The depth and breadth of a l L of t 9 e s e t e c h n i q u e a r e a s make it d i f f i c u l t f o r many people, l o o k i n g a t V, E, f o r t h e first time, t o g r a s p t h e c o n c e p t s and r e a l i z e t h e magnitude of tn13i.r p o t e n t i a l f o r dynamic achievement i n t h e c o s t p r e v e n t i o n and reducm:ion ( c o s t e f f e c t i v e n e s s ) arears*

THE NEED FOR COMBINED ACTION


The main t h e m of Value Engineering i s t h e f u n c t i o n a l approach, and it i s t h i s f u n c t i o n a l concept which d i s t i n g u i s h e ~ sV, E, from many approaches t o c o s t r e d u c t i o n which c o n c e n t r s t e i n more depth i n t o v a r i o u s elements which c o n t r i b u t e t o product c o s t , V, E, r e a c h e s i n t o a l l t h e s e elements s u f f i c i e n t l y t o e x t r a c t t h e b e s t i n f o r m a t i o n needed t o s o l v e t h e f u n c t i o n a l of t h e a r t i n any of problem, V, E, does n o t g e n e r a l l y advance t h e s t ~ t e t h e s e a r e a s . For i n s t a n c e , a manufacturimg e n n i n e e r may become e x p e r t in many a r e a s such a s mechanization, automation, machine t o o l s , processes, o r methods; developing and accumulatinp: depth knowletl~eon machining, welding o r t o o l i n g , An I n d u s t r i a l Engineer may c o n c e n t r a t e i n developing b e t t e r methods, assembly t e c h n i q u e s , l a b o r s t a n d a r d s , p l a n t l a y o u t , m a t e r i a l h a n d l i n g and f a c t o r y mana~ernent, l e a d i n g t o reducing c o s t s and improving e f f i c i e n c y in a l l t h e s e a r e a s . The Huyer develops sltill i n f i n d i n g t h e most p r o f i c i e n t , l o w e s t c o s t source3 t h e c o s t e s t i m a t o r has t e c h n i q u e s and knowledge which permit him t o t r a n s l a t e s p o c j f i c a t i o n s and e n g i n e e r i n g d r a w i n p i n t o manufacturing cost; and t h e t e c h n i c 2 1 e n g i n e e r i n g s p e c i a l i s t dl1 have depth knowledge of h i s branch of scierlce o r s p e c i a l t y a r e a ,

All of t h e s e people u t i l i z e t h e i r depth knowledge t o improve t h e prod u c t v a l u e by t h e a p p l i c a t i o n of t h e b e s t of t h i s knowledge t o s o l v e each s p e c i f i c problem, However, working i n d e p e d e n t l y without c l o s e communication o r c o o p e r a t i o n , w i t h o u t knowledge of t h e a f f e c t of t h e i r d e c i s i o n on o t h e r a r e a s , and w i t h o u t an i n t e g r a t e d e f f o r t o r a s p e c i f i c v a l u e ( c o s t ) o b j e c t i v e much unnecessary c o s t may be l e f t i n t h e product, F i g u r e #1 i l l u s t r a t e s t h i s p o i n t by showing t h a t two and one-half t i m e s t h e c o s t r e d u c t i o n achievement was pade by a combined e f f o r t of manufacturing, purchasing and e n g i n e e r i n e p e r s o n n e l c o n t r a s t e d t o i n d i v i d u a l a c t i o n by t h e s e groups,
CUSTOII1M' S NLSD CONSIUEHED

T h i s i s one of t h e r e a s o n s t h a t t h e Value Engineering aporoach i s more e f f e c t i v e . It does n o t c o n c e n t r a t e i n depth in one a r e a t o t h e e x c l u s i o n of o t h e r s , It does start with t h e d e f i n i t i o n of t h e customer'e o r u s e r ' s f u n c t i o n a l requirement, and proceeds through an o r g a n i z e d and s y s t e m t i c program t o c r e a t e t h e o p t h u m d e s i q n which p e r m i t s t h e npplicat i o n of t h e b e s t m a t e r i a l , p r o c e s s and manufactr~ring s o u r c e , The proper

---f i 6 ,A

Jecrrc-r

Teamwork accomplishes grcatest cost reductions. TOTAL COST REDUCTIONS

Total Equal to 20% Product Cost Reduction $1 1,272.

-.. Action Achieved Individual Engineering Purchasing Manufacturing

Eng., Mfg., Purchasing

$432

Value Analysis techniques + Value Specialist assistance contributed to the above results.

Functional R equirement -.

Designs

Materials

Processes

Sources ...

Minimum Number of Conbinations

c o m b b a t i o n of d e s i g n , m a t e r i a l , p r o c e s s and s o u r c e w i l l p r o v i d e t h e f u n c t i o n a l need f o r t h e l e a s t t o t a l c o s t t o t h e u s e r c o n s i d e r i n g t h e q u a n t i t y of goods t o be produced and t h e e s s e n t i a l performance c r i t e r i a s u c h . a s r e l i a b i l i t y , m a i n t a i n a b i l i t y , e t c . F i g u r e #2 i n d i c a t e s t h e c o m p l e x i t y of t h e problem of find in^ t h e proper combination of t h e s e f a c t o r s which a f f e c t p r o d u c t value. THE VALUE PROBLEM Assuming t h a t f o r any f u n c t i o n a l requirrtment t h e r e may b e t h r e e s u i t a b l e d e s i g n s , 3 m a t e r i a l s f o r each d e s i p r , 3 p r o c e s s e s t o shape t h e m a t e r i a l s i n t o t h e d e s i r e d d e s i g n c o n f i g v r a t i o n and 3 manufacturing s o u r c e s f o r each p r o c e s s , t h e n 8 1 d i f f e r e n t combinations e x i s t , I n c r e a s i n g t h e 3 ' s t o 6' s would r e s u l t i n 1.296 d i f f e r e n t combinations. Moreover, a n y one product performing an o v e r a l l u s e r d e s i r e d f u n c t i o n may c o n s i s t of numerous s u b - f u n c t i o n s , each of which f i t t h i s same p i c t u r e . Thus, t h e t o t a l problem of f i n d i n g t h e b e s t Value Product i s e x t r a m e l y complex. Anyone a t t e m p t i n g t o t r a v e r s e t h i s maze w i t h o u t :In o r g a n i z e d p l a n and t h e knowledce of e s s e n t i a l techniqueu w i l l not o n l y have a d i f f i c u l t time, b u t a l s o w i l l have many a r e a s of u n n e c e s s a r y c o s t s i n t h e end product. Any i n d i v i d u a l workitll; w i t h i n one of t h e f a c t o r a r e a s ( ~ e s i ~ Manufacturing, n, o r ~ u r c h a s i n c )w i t h o u t i n t o g r a t i n g t h e most sppr o p r i a t e i n f o r m a t i o n from t h e o t h e r a r e a s w i l l a l s o d e v e l o p a product which c o s t s more t h a n it should t o perform t h e r e q u i r e d f u n c t i o n .

FUNCTION

THE BEGINNING

Where t h e n s h o u l d orlo b e g i n t h e p r o c e s s which develops a good v a l u e p r o d u c t ? To answer t h i s l e t ' s look a t t h e r e l a t i o n s h i p of many of t h e Value Engineering t e c h n i q u e s . A s mentj oned e a r l i e r t h e F u n c t i o n a l Appr o a c h i s t h e theme of Valuo lincineeririg and is t h e u n d e r l y i n g f o u n d a t i o n f o r t h e a p p l i c a t i o n of t h e many key and s u p p o r t i n g techniques. Figure #3 shows t h e s e r e l a t i o n s h i p s and t h e c e n e r a l o r d o r of usage. The funct i o n a l approach s t e p s a r e i n t h e l e f t - h a n d column and c o n s t i t u t e t h e b a s i c philosophy f o r implementation of t h e Job P l a n and Techniques. The c o n c e p t of t h e F u n c t i o n a l Apprbach f o r c e s t h e s c a r c h f o r b e t t e r v a l u e t o b e c i n with t h e u s e r ' s needs and t h e b a s i c d e s i g n r e q u i r e m e n t s ; t h e n e s t a b l i s h e s c r e a t i v e and c o s t o b j e c t j v e s t o m o t i v a t e t h e Value Engineer o r Value Team t o s e e k o u t t h o s e i n ~ r e d i e n t uwhich blond i n t o t h e b e s t v a l u e product,
THE FUNCTIONAL APPROACI-I

1. Define F u n c t i o n s
2.

3.

Evaluate Functions Develop A l t e r n a t i v e s

I t i s t h e m o t i v a t i o n a l phases of t h o h n c t i o n o l Approach which a r e embodied i n t h e D e f i n i t i o n and E v a l u a t i o n of Function t h a t w i l l now be d i s c u s s e d . These two phases a r e e s s e n t i a l t o a Value Engineering Study, Without e f f o r t i n t h e s e a r e a s a Value A n a l y s i s would n o t have t a k e n p l a c e , and w i t h o u t t h i s a n a l y s i v any work which followed would be r n i s d i r c c t e d o r

FlG.3

VALUE ENGINEERING TECHNIQUES RELATIONSHIPS Job Plan Information Phase Key Techniques Get all the facts Determine c o s t s Define the function P u t $ on specs. & r e q s .

- CHART

I
Work

Functional Approach 1, Define Functions

!. Evaluate

p p

Functions

Evaluation Phase

3. Develop Alternates
,

h v e stigation

Phase

Supporting Techniques lGet info. f r o m the b e s t sources Work on specifics Use good human relations Overcome roadblocks Divide product into [ functional a r e a s C reative thinking Blast and C r e a t e D e f e r r e d judgment l ~ s teamwork e Evaduate by comparisod Use good business Evaluate b a s i c function judgment yze C o s t s Put $ on each idea valuate i d e a s Refine ideas valuatk f u n c t i o d areas Consult vendors \Overcome roadblocks ,Use co. & industrial evelop i d e a s specialists pply new info. Use co, &industrial on't be a h e r m i t standards ( o t h e r s l i s t e d above) Use specialty products,

V.E.Que sticns Sheet


IWhat is it? W h a t does it d o ? What does it cost?

II

W h a t else w i l l do job?

j W h a t is the value Q the function?

w h a t else w i l l

Dete rmine c o s t s Recommendation Motivate positive Phase action

U s e good human relations Spend company's money a s you w o d d your own Develop & sell o r implement your solution (others Listed above)

f a l l i n t o t h e c a t e g o r y of c o s t r e d u c t i o n r o t h e r t h e n Value Engineering. WNY A FUNCTIONAL APPROACH? W h y i s it n e c e s s a r y and what does it accomplish? It i s n e c e s s a r y i f t h e b e s t v a l u e ( l o w e s t c o s t ) is t o be achfieved in t h e l e a s t t h e and because it h e l p s people t o accomplish g r e a t e l * r e s u l t s ( t o remove t h e maximum amount of u n n e c e s s a r y c o s t s ) .

By:

1 .
2.

3.

f o r c i n g a d i f f e r e n t way of t h i n k i n ? o r approaching a problem C l a r i f y i n g t h e s p e c i f i c problem and F o r c i n g f u n c t i o n a l o r i e n t a t i o n r a t h e r t h a n hardware orientation.

T h i s approach: to o much. 4. Brings a s t r o n g r e a l i z a t i o n t h a t t h i n g s c o s t .. 5. I d e n t i f i e s s p e c i f i c a r e a s of unnecesnary c o s l s a n d Aids i n s e t t i n g c o s t t a r g e t s o r o b j e c t i v e s . 6.


BENEFITS OF THE FUNCTIONAL APPHOACII

The f u n c t i o n a l approach i s n o t d i r e c t e d n t "how t o make t h e p a r t Hardf o r 'less", b u t "how t o a c h i e v e t h o e s s e n t , i a l f u n c t i o n f o r l e s s . " !!are o r i e n t e d c o s t r e d u c t i o n c o u l d d a n g e r o u s l y i m p a i r performance o r r e l i a b i l i t y . F u n c t i o n a l o r i e n t e d Value Improvemer~tp r o p e r l y implemented should never r e d u c e q u a l i t y and o f t e n improves r e l i a b i l i t y . One example of t h i s was a Value Engineered Voltage R e g u l a t o r which was reduced 56% i n c o s t and demonstrated improved r e l i a b i l i t y a s a r e s u l t of 25% fewer components and improved c o o l i n g . R e c u l a t i o n was a l s o improved. Another b e n e f i t from u s j np; t h o V. E. F u n c t i o n a l and Orpanized approach i s t h a t it p r e a t l y h a s t e n s t h e time r e a u i r o d t o make Value improvements. i ! h i l e rmny changes developed by a V. E. s t u d y w i l l look no d i f i ' e r e n t from o t k e r c o s t rzdrrction on product improvement work, t h e tirne and manpower r e q u i r e d t o d e v e l o p t h e change i s an i m p o r t a n t f a c t o r . A V. E. s t u d y sbould b r i n e a b o u t more s i g n i f i c a n t chances f o r l e s s t i m e and e f f o r t t h a n an u n o r g a n i z e d e f f o r t i n which V. l i . techniq~~e as r e n o t usc:d. A jet a i r c r a f t h a s many of t h e s,me b a s i c p a r t s a s a p r o p e l l e r - a i r c r a f t b u t ~t h a s a few new p a r t s and t h e y a r e put t o c e t h e r i n t o a d i f f e r e n t system t o get t h e p l a n e from one p l a c e t o a n o t h e r much f a s t e r . The f u n c t i o n a l approach of V. L. i s a new i n l y e d j e n t whicl~ i s p a r t of t h e complete system which c e t s r e s u l t s f a s t e r .
S I X BASIC QUESTIOIJS

The e n g i n e e r s e e k i n g b e t t e r v a l u e must seok t h e answers t o many questions. Some q u e s t i o n s a r e fundamental t o c a r r y i n g o u t t h e f u n c t i o n a l approach. See f i g . 4 f o r 'ISFx b a s i c V. E, Questions." Q u e s t i o n s 1, 2 and 3 a r e e s s e n t i a l t o t h e d e f i n i t i o n of t h e hardware, c o s t and f u n c t i o n . Question 4 r e l a t e s t o t h e e v a l u a t i o n of t h o worth of t h e f u n c t i o n , and q u c c t i m 5 and 6 t o t h e c r e a t i o n and development of a l t e r ~ ~ a s to elutions.

SIX BASIC QUESTIONS


m

II
DEFINING FUNCTIONS
FUNCTIONS CAN BE DIVIDEI BASIC ~ N D DEGREE

1 , WHAT IS THE P A R T ?

2.
3.
4.

WHAT DOES I T COST? WHAT DOES I T DO? WHAT IS THE FUNCTION WORTH?

5. WHAT ELSE WILL DO THE JOB? 6. WHAT WILL THAT COST?

ESSENTIAL NON-ESSSNTIAL

F i g 4.
DEFINING FUNCTIONS

FI'8.s

I t i s i m p o r t a n t t o spend some t i m e d i s c u s s i n g t h e d e f i n i t i o n o f f u n c t i o n s because t h i s t e c h n i q u e i s v i t a l t o a v a l u e study.


WORK AND SELL FUNCTIONS
There a r e two k i n d s of f u n c t i o n s which occur in most p r o d u c t s t h o s e which make t h e p r o d u c t lIworklt ( ~ e r f o r mi t s i n t e n d e d j o b ) and t h o s e which make it I t s e l l l 1 ( c a u s e people t o buy one p r o d u c t r a t h e r t h a n a n o t h e r ) . Both t y p e s a r e i m p o r t a n t i n a c o m p e t i t i v e markot. I1Sell" f u n c t i o n s may a b s o r b a l a r g e element of c o s t , such a s t h e Amerjcan Automobile. Appearance, convenience, and s t y l e a r e some of t h e a r e a s of s e l l f u n c t i o n s , Those e l e m e n t s of a p r o d u c t o r system which c o n t r i b u t e d i r e c t l y t o t h e prime funct i o n a l purpose of t h e d e v i c e a r e s a i d t o be c o n t r i b u t i n g t 6 work f u n c t i o n . For i n s t a n c e , t h e f u e l i n a c i g a r e t t e l i g h t o r which h a s a b a s i c f u n c t i o n of providing heat. FUNCTIONAL AlIEAS Mechanical, e l e c t r i c a l , p r o t e c t i o n , and appearance i d e n t i f i e s a t l e a s t 4 f u n c t i o n a l a r e a s i n t o y h i c h p r o d u c t s c a n be d i v i d e d . O t h e r s such a s t h e r m a l o r chemical may e x i s t i n some p r o d u c t s . Any p r o d u c t o r assembly being s u b j e c t e d t o Value A n a l y s i s s h o u l d be d i v i d e d i n t o v a r i o u s f u n c t i o n a l a r e a s a t a l l l e v e l s from system t o assembly, t o subassemblies, t o p a r t s . This f u n c t i o n a l t r e e anaJysis i s v e r y u s e f i l i n f i n d i n g a r e a s of n o n - c o n t r i b u t i n g c o s t s a l l o c a t e d t o n o n - e s s e n t i a l secony dary functions.
BASIC A N D SECOND DEGWE FUNCTIONS

F i g u r e 5 h i g h l i g h t s one of t h e most s i g n i f i c a n t a s p e c t s of d e f i n i n g f u n c t i o n - t h e ' s e g r e g a t i o n i n t o l l b a s i c l t and "second degree1*. B a s i c funct i o n s a r e d e f i n e d a s t h o primary, s p e c i f i c purposes t h e d e v i c e was i n t e n d e d t o perform i . e . , t h e main r e a s o n f o r i t s e x i s t e n c e . Second d e g r e e (socond a r y ) f u n c t i o n s a r e t h o s e which do n o t c o n t r i b u t e d i r e c t l y t o - t h e b a s i c f u n c t i o n . S e l l functions would be secondary t o b a s i c work f u n c t i o n s . That is, t h e y Second d e g r e e f u n c t i o n s may be e s s e n t i a l o r n o n - e s s e n t i a l ,

c o u l d be r o q u i r e d t o make t h e d e s i g n c o n c e p t work. For i n s t a n c e , t h e g l a s s b u l b of an i n c a n d e s c e n t lamp does n o t d i r e c t l y c o n t r i b u t e t o producing t h e l i g h t , b u t does p r e v e n t r a p i d o x i d a t i o n of t h e f i l a m e n t by e x c l u d i n g a i r . TNO NORD DEFINITION

these F u n c t i o n s can u s u a l l y and s h o u l d - be d e f i n e d i n two words words a r e v e r b s and nouns which g i v e a c o n c i s e , c l e a r , d e s c r i p t i o n of t h e b a s i c o r secondary f u n c t i o n s . The c h o i c e of t h e p r o p e r words t o d e f i n e f u n c t i o n s i s o f t e n c r i t i c a l t o t h e p r o p e r comprehension of t h e f u n c t i o n , and many t i m e s a s i g n i f i c m t f a c b r i n rnotivntinl: a b e t t e r v a l u e d e s i g n . F i g u r e 6 i n d i c a t e s some of t h e more common v e r b s and nouns used t o d e f i n e f u n c t i o n s . One t h i n g t o n o t e i s t h a t some nouns a r e measurable and some non-measurable. For i n s t a n c e , t h e funct i o n of a l e g c o u l d be d e f i n e d a s s u p p o r t i n q a t a b l e , w h e r e a ~ " w e i g h t ' ~ would be measurable and would i n c l u d e weicht p l a c e d on t h e t a b l e . A c h a s s i s c o u l d b e s a i d t o !'hold ~ a r t s " w h i l e t t w e i g h t t t i s more e x a c t l y measurable. The u s e of measurable nouns i s e s s e n t i a l t o t h e a c c u r a t e q u a n t i t a t i v e d e f i n i t i o n of f u n c t i o n and t o t h e e v a l u a t i o n of f u n c t i o n a t worth ( ~ s t a b l i s h t n o n t of Value).

EVALUATING FUNCTIONS -

- FOUR KINDS OF VALUE ---.-----

>Ian h a s been stxugeliny: f o r c e n t u r i e s \dt h t h e problem of measuri n g v a l u e and it i s n o t i n t e n d e d h e r e t o g e t i n t o a p h i l o s o p h i c a l d i s s e r t n t i o n on t h a t s u b j e c t . From a Value I?'ngineering a s p e c t , however, it i s s i g n i f i c a n t t o n o t e t h a t t h e r e a r e s e v e r a l d i f f e r e n t k i n d s of value a c c o r d i n g t o one w r i t e r , a t l e a s t f o u r k i n d s they a r e use, c o s t , exchanne and esteem. Using a monetary measure, Use Value i s determined b y t h e a v a i l a b i l i t y , market, form and. p h y s i c a l c a p a b i l i t y of a b a s i c m a t e r i a l t o perform a d e o i r e a f u n c t i o n . I t i s t h e measure of t h e worth of t h e s t r e n c t h of s t e e l , t h e c o n d u c t i v i t y of copper and t h e i n s u l a t i o n of ceramic. Use Value i s t h e most h i c h l y o b j e c t i v e , O n t h e o t h e r end of j n f l u e n c e d l e s s by p e r s o n a l e f f o r t and feelir1:s. t h e s c a l e , Esteem Value i s measured by p e r s o n a l d e s i r e and i s h i g h l y s u b j e c t i v e . C o s t Value i s a measuro of t h e l a b o r and m a t e r i a l r e q u i r e d t o c o n v e r t raw m a t e r i a l i n t o u s a b l e f i n i s h e d form and Exchange Value i s a measure of what one i s w i l l i n g t o c i v e t o o b t a i n a product o r f u n c t i o n . Cost Value c o u l d be matched t o manufacturinf: c o s t , &change 'Jalue t o s e l l i n g p r i c e . Cost Value i s v e r y seldom known and Exchange $!slue i s n o t n e c e s s a r i l y r e l a t e d t o Cost Value.

Asking a group t h e v a l u e of something i s v e r y o f t e n l i k e l y t o e l i c i t a l a r g e number of d i f f e r e n t answers because people a r e t h i n k i n g of d i f f o r e n t k i n d a of v a l u e - moreover, many p e o p l e w i l l c o n s i d e r t h e c o s t of t h e consequence of f a i l u r e . Now what c a n be done t o p r o v i d e a more uniforrn measure of v a l u e , and an approach which w i l l m o t i v a t e a c t i o n t o minimize c o s t s .

F \ i .6 .
Work Functione Verb Support Tranemit Hold Enclo ec Collect Conduct Inaulate Protect Prevent Amplity

DEFINE THE BASIC FUNCTION

V e r b e b. Noune

Noun

- meaeurablb

Weight Torque Load Oxidation Light Heat Flow Radiation Current Voltage Noun

Rectify
Change Interrupt Shield Modulate Control Attract Emit Repel Filter Impede Induce Sell Functione Verb Increase Improve Create E etabli eh

non-measurable

p a r t , d e v i c e , component, a r t i c l e , table Damage Circuit Repair

Noun
Beauty Appearance Convenience Style P r e etige Features Form Symmetry Effect Looks

VALUE DEFINED
To t h e Value E n g i n e e r , I1Valus i s t h e l o w e s t c o s t t o r e l i a b l y a c h i e v e f u n c t i o n r t . It 13 a l s o u s e f u l t o c o n s i d e r t h a t o n l y b a s i c f u n c t i o n s have a n d a r e assigned v a l u e s when m k i n g a n a n a l y s i s n,t one f u n c t i o n a l l e v e l w i t h i n a s y s t e m o r p r o d u c t . An e s s e n t i a l s e c o n d a r y f u n c t i o n a t t h e n e x t lower l e v e l c o u l d bo c o n s i d e r e d b a s i c i f t h e f u n c t i o n a l s t u d y was t o be c o n c e n t r n t e d a t t h a t l e v e l . F o r example, a r a d i o would h a v e a b a s i c f u n c t i o n of "produce soundN w h i l e t h e c a b i n e t would h a v e a s e c o n d a r y f u n c t i o n o f " e n c l o s e component^.'^ I f a c a b i n e t was t o be s t u d i c d separately as a f u n c t i o n a l a r e a i t s b a s i c f u n c t i o n would b e " e n c l o s e componentsH.
EVALUATION CnECJ<PTS

O t h e r c o n c e p t s of t h e e v a l u a t i o n p h a s e w e :

1.
2.

The t e c h n i q u e c a n be a p p l i e d t o e i t h e r work o r s e l l f u n c t i m . Valve i s r e l a t i v e and i s e s t a b i i s h e d by comparison a n d Value i s n o t d i r e c t l y r e l a t e d t o t h e c o s t of h a r d w a r e n o r t h e c o n s e q u e n c e o f fn i l u r e .

3,

T h e c o s t of a n y p i e c e of hardware may be many t k n e s p r e a t e r t h a n Tho r a t i o of t h i s c o s t / v a l u o i s an i m p o r t a n t y a r d s t i c k i n determLniny; t h e m o u n t of u n n e c e s x r y c o s t o r w h e t h e r a p r o d u c t i s good v a l u e . The c o n s e q i ~ e n c eof f a i l u r o may have a b e a r i n g on t h e q u a l i t y l e v e l of a p a r t , a n d t h i s in t u r n may have some i n f l u e n c e on c o s t , b u t h i s i s n o t n e c e s s a r i l y s o and u s u a l l y n o t i n a proportional r a t i o .

its f u n c t i o n a l v a l u e .

'1;VAX'AiI'ION

RY CO?lIJAICl SON

I n e v a l u a t i n g by comparison, t h e a n a l y s t c a n u s e s e v e r a l a p p r o a c h e s , any one o f rrillch may be effective i n moLivating more e x t e n s i v e v a l u e e n g i n e e r i n g . iJ!aos nroduced common h o u s e h o l d o r commercial i t e m s , o r S t a n d a r d c a t a l o y : i t e m s a r e o f t e n good p r o d u c t s t o u s e as a b a s i s f o r comparing t h e c o s t of a l t e r n a t e ways ( o 4 A e r d o v i c c s ) which perform t h e f u n c t i o n , Another more e x a c t i n y : t e c h n i c a l a n d c n a t h e m i ~ t i c a la p p r o a c h 1 3 t o consider t h e n ~ o v n tand c o s t o f d i f f e r e n t b a s i c m a t e r i a l forms r e q u i r e d t o a c h i e v e t h e c s s c n 5 la1 f u n c t i o n ,

The ltcommon p u t t t method c o u l d be i l l u s t r a t e d by t h e e v a l u a t i o n


ttle t t c n c l o s e cor?poncntrt f u n c t j o n of an e l e c t r o n i c o r TV c a b i n e t by c o r n p ; ~ r i : ~w g i t h n m e t a l w a s t e paper b a s k e t . The S t a n d a r d p a r t method by t h e eva l v a t i o n of t t h o l d c o v e r t t f l ~ r itci o n by catnlor{ " d o o r h o l d e r s " .

of

The o u t p u t f ' l a n c e ( F i n u r u 7 ) of n ~nnrrnctront u b e r t y u i d e s energy" a n d 1123 cvclluatcd a s worth t h e c o s t of a s e c t i o n of s t a n d n r d t u b i n g . T h i s c v n l u u t i o n l e d t o a r e d u c t i o n from C3.111 t o $0.52. A bracket (Fir;ure 8) w i t h a f u n c t i o n of' " h o l d w e i c h t r r was e v a l u a t e d by compar-

i s o n w i t h a n N a i l n and ended u p w i t h a wire-form c o s t i n g 95% l e s s . A s p e c ' i a l e l e c t r o n t u b e f e r r u l e was used t o " s u p p o r t w i r e u and was e v a l u a t e d by comparing t o a s t a n d a r d shoe e y e l e t , r e s u l t i n g i n a 97% s a v i n g s . The " b a s i c m a t e r i a l N c o n c e p t was u s e d t o e v a l u a t e t h e f u n c t i o n of t h e p l a t e of a n e l e c t r o n t u b e , l t c o l l e c t e l e c t r o n s l l and it was found t h a t $ .001 worth of m e t a l vould perform t h e funct i o n of a p l a t e c o s t i n g 4b.050, T h i s l e d t o a r e d e s i g n of h i g h s e c o n d a r y c o s t a r e a s r c s u l t i n g i n a SO$ r e d u c t i o n . T h i s same c o n c e p t would e v a h a t e t h e f u n c t i o n of I 1 s h i e l d r a d i a i , i o n M by uso of aluminum f o i l ; conduct e l e c t r i c i t y by b a r e w i r e ; s g p p c r t weight by s t e e l pipe; i n s u l a t e v o l t a q e by a s h e e t of p l a s t , i c . I n each c a s e a m a t e r i a l s u i t a b l e t o a c h i e v e t h e b a s i c f u n c t i o n q u a n t i t a t i v e l y and q u a l i t a t i v e l y would be s e l e c t e d .
W
Par1 Name: Mechanlc.1 Pencll Baalc Function: h k e hirrk

E STUDY

Parl Name: l a m p I*llb Bark ~ u n c l l o n :Provlde L l h t fineIlona Verb Noun


.Upporl componanlc l n r u l r l o ~ componrnlc excludee air lr8n.mIl

hold support
1.

load

mschmlam

Lead
Clip

make

3. E r u e r
4.
8.

cr~ae
hold

mark mark
pencll

conducta
hold0

air cursont
fllamenl
Ilght

pmvldee

I. P8lnl
Le8d Holder

Improve hold move

appearance
Isad lemd

ercludea

alr
lamp

rworla conduct.
aupporh #~pports

current I~dwlrea
fllamsnl

I.

Lead Movlng Mechmlam

.-------- - - - - - -- .-----8. Misc. L A a a y .

prevenb

oxlda,~a\

Flu. 9

F i g , 10

F i g u r e 9 and 10 d e m o n s t r a t e how t h e d e f i n i t i o n and e v a l u a t i o n of f u n c t i o n t e c h n i q u e s would be a p p l i e d t o two simple d e v i c e s . I n t h e c a s e of t h e p e n c i l , a common wooden p e n c i l was used a s a b a s i s f o r comparison. The 13asic M a t e r i a l conce!)t would have u s e d t h e c o s t of t h e l e a d . I n t h e c a s e of t h e lamp b u l b t h e c o s t of t h e amount of f i l a m e n t c o n t r i b u t i n g t o prodacing l i g h t was used, Notice how secondary c o s t s Good v a l u e t h i s approach h i g h l i g h t s a r e a v o f h i ~ h d e s i g n aims Lo minimize c o s t s a s s o c i a t e d with second degree f u n c t i o n s (llinimize t h e c o s t t o v a l u e r a t i o ) .

Usine t h e Basic M a t e r i a l c o n c e p t f o r e s t a b l i s h i n g t h e v a l u e l e v e l f o r b a s i c f ' u n c t i o n s t h e q u a n t i t y f a c t o r i s l a r g e l y removed s o t h a t a h o r i z o n t a l value l i n e i s established. (Fig. 1 1 ) A c t u a l c o s t will f o l l o w fin e x p o n e n t i a l ( ~ ~ p o r b o l t iy cp e ) curvo downward toward t h e v a l u e l e v e l a t h i g h e r q u a n t i t i e s . The d i f f e r e n c o between t h e two l i n e s r e p r e s e n t s

F , ~1 , 2 R a d l a t o r a n d thermostat a s s e m b l y

t h o s e c o s t s a s s o c i a t e d with second degree f u n c t i o n s , [noth e 9 s e n t i a l a n d A ~ood v a l u e p r o d u c t w i l l h a v e a minimi~mc o 3 t / v a l u e r a t i o non-essential). a n d t h e c o s t c u r v e w i l l more n e a r l y approach t h e v a l u e l e v e l , ' J i t h r e s e a r c h , a p p r o p r i a t e c o s t / v a l u e l e v o l s c a n be e s t a b l i s h e d f o r d i f f e r e n t p r o d u c t s , and u s e d a s a f.u-l.de f o r d i r e c t l n ~Value Engineeriny: work i n t o t h e most p r o d u c t i v e c h a n n e l s .

The above d i s c u s s i o n on -the F u n c t j o n a L a p p r o a c h of Value E n g i x e e r i n g h i q h l i g h t s some of t h e c o n c e p t s a n d t e c h n i q u e o , which a r e p r i m a r y and f u n d a m e n t a l t o good v a l u e work i n t h e are;is of d e f i n i n g a n d e v a l u a t i n g f u n c t i o n s D T h e r e a r e many v a r i a t i o n s on t h e s e t e c i m i q u e s , Cften d i f f e r e n t words are u s e d t o d e s c r l b e t h e a p p r o a c h , b u t ono s h o u l d l o o k b e n e a t h semantics i n t o what i s a c t d a l l y b e i n g done. I f , i n f a c t , ? u n c t i o n s a r e being p r o p e r l y def i n e d a n d e v a l u a t e d a n d t h e n a ~ p r o p r i a t et e c h n i q u e s a r e b e i n g a p p l i e d t o develop lower c o s t a l t e r n a t e s , s u b s t a n t i a l r e . ; u l t s w i l l b e achieved and a f t e r a l l it i s r e s u l t s t h a t c o u n t . The V. E, f u n c t i o n a l a p p r o a c h dynam i c a l l y m o t i v a t e s p e o p l e t o g e n e r a t e r e s u l t s . L o t ' s l o o k a t some r e s u l t 8 R e s u l t s which which were a c h i e v e d by employing t h e h n c t i o n a . 1 Approach were o b t a i n e d i n t e n t i o n a l l y and q u i c k l y .

F i g u r e 1 2 shows a c r o s s s e c t i o n o f a r a d i a t o r ( i n a t h e r m a l c o n t , r o l , a s s e m b l y ) which d i s s i p a t e d h e a t and s u p p o r t e d components, Secondary The c o s t droppod f a n c t i o n s r e q u i r e d e x t e n s i v e m a c h h i n c > i n one dezi,:n. f r o m <j19.25 t o $8.27 when t h e d e s i q n was m o d i f i e d t o e l i . m i n a t e t h e n e c e s s i t y f o r machinin[;. I n a n o t h e r c a s e EI Poxes S u p p l y Thermal. 8reakc.r c o s t i n g 70# was r e p l a c e d b y a f u s e c o s t i n g 29$, a r d a i ~ l a ~ n e t i Cci r c u i t Drea1,er c o s t i n g $7.23 was r e p l a c e d by a f u s e , s w i t c h a n d resister c o s t j n w $1.34. I n o t h m c a s e s a C o o l a n t t a n k i n a Radar Systom was r e d u c e d &%,and thermal switch i n t h e tank, con troll in^: tempern t ~ l r e " , was r e d u c e d 77%. F i g u r e 1 3 shows how t h e f u n c t i o n s of a Die C i 1 3 t a n d machined s u p p o r t c o s t $3.53 c o u l d be performed by a s h e e t m e t a l s t a m p i n g c o s t i n g 38#, 'tlhile a l l o f t h e above e x a n p l e s and o t h c r t , n o t s!iown h e r e , were conc e r n e d w l t h improvement of e x i s t l n c d e s i g n 3 , it s h o u l d be p o i n t e d o u t t h a t a l l t h e s e t e c h n i q u e s a r e a p i ) l i c a b l e t o c r e a t i v o enylileerlny: d e s i g n work. If c o s t a n d t i m o a r e i m p o r t a n t t o a progrum, i f s m j ~ l e ,f u n c t l o n a l , r e l i a b l e and mainlainable c c s i c n s a r e deuired, it i s fundamental t h a t d e s i g n e n g i n e e r s c o u p b p e r f o r r w n c e and t e c h n i c a l s k i l l s w i t h v a l u e s k i l l s t o f i n d t h e b e s t c o m b i n a t i o n of d c s i p n , m a t o r i a l , p r o c e s s and s o u r c e . I n t o d a y ' s c o m p e t i t i v e market f o r both m i l l t a r y and comnercial products, no concern s h o u l d o v e r l o o k s t e p s t o improve t h e v a l u e s k i l l s of t h e i r key d e c i s i o n makers, and t o i n t e ~ r a t ot h e s e s k i l l s i n t o a c o o r d i n a t e d and o r g a n i z e d prouram t o minimize a l l c o s t s n s s o c l a t c d w i t h b o t h m a n u f a c t u r i n g c o s t s and o t h e r b u s i n g s s o p e r a t m y : c o s t s . These techniques p r o v i d e t h e rnethodoloey f o r i m p r o v i n g t h e c o s t p r e v e n t i o n and r e d u c t i o n s k i l l s of a l l b u s i n e s s p e o p l e whoge d e c i s i o n s a f f e c t c o s t , w h e t h e r it I s j n p r o d u c t d e s i g n o r o t h e r a r e a s such a s procedure:;, methods o r g a n i z a t i o n and manpower, A small i n v e s t m e n t t o l e a r n and d e v e l o p p r o f j c l e n c i e z I n t h e V. I ?. I t ' u n c t i o n a l app r o a c h trill pay s u b s t a n t i a l d i v i d e n d s .

EVALUATE THE FUNCTION

Fountain

"EVALUATE RE FUNCTION"
Roy F o u n t a i n Manager -Value Re s e a r c h General E l e c t r i c Company

O f a l l t h e t e c h n i q u e s i n Value ~ n a l y s i s p r o b a b l y t h e most importa n t and most b a s i c one i s " E v a l u a t e t h e Function."

I t i s a t e c h n i q u e by

means o f which t h e same o r b e t t e r performance c a n be a c h i e v e d f o r must l e s s cost

a t e c h n i q u e i d e a l l y s u i t e d t o t h e e l i n i n n t i o n o f non-working

of non-functioning c o s t without i n p c i r i n g q u a l i t y . Cost b L n a l y s i s o r Value A n a l y s i s Techniques

I t i s r e c o g n i z e d t h a t t o renwve u n e c e s s a r y c o s t i t i s e s s e n t i a l
t h a t one must f e e l t h a t t h e c o s t i s t o o h i g h . Thexe a r e a l a r g e number

of w e l l known c o s t a n a l y s i s t e c h n i q u e s such as c o s t p e r pound, c o s t p e r


y e a r , c o s t p e r u n i t o f volume, a r e a o r l e n g t h . These t e c h n i q u e s a r e v e r y

u s e f u l where t h e y a c c o m p l i s h t h e i r purpose o f i n d i c a t i n g t h a t t h e c o s t i s t o o high. They t e n d t o minimize c o s t b u t s i n c e t h e i r f o c u s i s o n l y on

c o s t , n o t f u n c t i o n , t h e y t e n d t o r e d u c e q u a l i t y and v a l u e i f n o t used very carefully. Geing c o m p l e t e l y c o s t o r i e n t e d t h e y a r e t r u l y c o s t a n a l y s i s t e c h niques.


As such, they a r e " a f t e r t h e f a c t " t e c h n i q u e s , t h n t i s , t h e y a r e

u s e f u l a f t e r t h e d e s i g n h a s been f i n a l i z e d , a f t e r t o o l i n g and s i g n i f i c a n t l y , o n l y a f t e r we have t h e c o s t .


A l l o f t h e f u n c t i o n o r i e n t e d t e c h n i q u e s which t r i l l be d i s c u s s e d

h e r e a r e c a l l e d v c l u e a n a l y s i s t e c h n i q u e s b e c a u s e t h e y c o n s i d e r fclnction a n 3 q u a l i t y , a s ~ r e l las c o s t . These t e c h n i q u e s a r e r e a l l y d i r e c t e d toward

a n a l y z i n g v a l u e , n o t c o s t , and l e a d u s n a t u r a l l y t o o b t a i n i n g b e t t e r value, i.e., t h e same o r b e t t e r p e r f o m a n c c a t lower c o s t .

Definition of Value and Function Before discussing "evaluate the function" let us clarify what we mean by value. The definition of value that we shall use is that "Value (The word

is the lowest cost for reliably providing the total function,"

"reliablyttis used here in a broad sense to include both quality and reliability). "Lowest," in this definition, is of great significance since

it expresses the fundamental fact tlzat all function is determined by conparison.


\,Jc define function as anything that makes the product work or

sell and thus it includes performance, features and attractiveness. Functional Approach An essential element of evaluating function is the functional approach

- an element so significant in itself that it will be singled

out and discussed separately. The functional approach can probably best be denonstrated by illustrating the converse of it first. I l e have d l been present in neetings where people are attempting to reduce the cost of a part and the question is asked, "Bow can this part be nade for less?" This usually brings forth other questions, What is of? How is it made?t'and ;'What does it cost?" These questions it ~ a d e are entirely incorrect and tend to develop a fixation for the part, the matcrial from which it is made and even the process. We are then most

apt to react, "We're lucky to get it made for that cost." The functional approach is illustrated by si~?plyasking in answer to the question, "How can this part be made for less?" "IJhat does it do?" follo~~ed by "'What else will do the job?" and "What will that cost?" Though this latter approach is very sinplc, the difference in results between the two approaches is frequently amazing. As an example, a spacer stud was tooled up on the finest automatic

equipment e s p e c i a l l y m d e f o r the job and c o s t 15-112 c e n t s ,

It was

d i f f i c u l t t o reduce t h e c o s t u n t i l the questio:-,a were asked, "What i s r e a l l y needed?" W h a t does i t do?"


A study of t h e f u n c t i o n revealed

t h a t something l i k e a s t u d was needed, threaded on both ends, w i t h a f l a t o r n u t - l i k e p o r t i o n a t one o f t h e threaded ends so t h a t t h e s t u d could be held by a wrench. I n a d d i t i o n , a spacing f u n c t i o n (approximate-

l y one-inch long) was required.

It turned o u t t h a t a hex head could be

put near one end o f t h e s t u d , and each end could be r o l l e d threaded a l l f o r 1-1/2 c e n t s .

The spacer f u n c t i o n was then provided by a r o l l e d

spacer s l i p p e d over t h e s t u d , f o r another c e n t , making a t o t a l c o s t of 2-112 c e n t s and saving $50,000 a year. Note t h a t i n t h i s c a s e , a s i n m n y o t h e r s , it vas e x t r e a l y d i f Ei.cult t o reduce t h e c o s t of t h e p o r t simply because i t was a l r e a d y made on h i g h l y automatic equipment

t!le b e s t way known.

The f u n c t i o n a l ap-

p r o x h was necessary i n o r d e r t h a t a new method of providing t h e f u n c t i o n could be developed. Functional Approach Applied t o B l u c ~ r i n t s Another very important p o i n t about t h e use of t h e f u n c t i o n a l approach d e a l s w i t h b l u e p r i n t s . Before a p r i n t i s d r a m up someone has t o

decide on t h e n a t u r e of t h e p a r t a screw machine o r a stamping;.

-- t h a t

i s , i s i t going t o be a c a s t i n g ,

Because of t h e c h a r a c t e r i s t i c s of t h e s e

n l ' t made by one of processes, t h e pri.nt t a k e s on t h e appearance of a p


t h e s e processes. function. Thus t h e a t t e n t i o n i s focused on the p r o c e s s , not t h e

The planner, when he r e c e i v e s t h e p r i n t , tends t o plan t h e

o p e r a t i o n on t h e b a s i s of a: c a s t i n g , screw machine o r stanping i n s t e a d of considering t h e b e s t process by which t o o b t a i n t h e function.


Sirni-

l a r l y , t h e buyer checks h i s f i l e s o f c a s t i n g , screw m c h i n c and stamping

suppliers.

The f u n c t i o n i s

lost on

a blueprint,

Typical of t h i s s i t u a t i o n i s a flame d e t e c t o r pin,

It was drawn

a s a screw machine p a r t , a nrethod trlrich allowed t h e minimum removal of metal from rod stock and hence thought t o g i v e t h e lowest c o s t .
A buyer

t r i e d t o g e t cold headers i n t e r e s t e d i n t h i s p a r t b u t was unable t o do so because, a s they pointed o u t , t h e r e was too much metal i n t h e l a r g e polntsd s e c t i o n t o cold head. t h e function?" F i n a l l y , however, someone asked W h a t i s

It appeared t h a t 211 t h a t was r e a l l y needed was a small

p o i n t on one end and a long shank ~ r i t h a hub l o c a t e d approximately i n


th2 uiddle.

This could be c o l d headed very e a s i l y f o r 1/5 t h e c o s t .

It i s imperative t h a t everyone who makes a d e c i s i o n on t h e b a s i s of a p r i n t should determine t h e f u n c t i o n t o be achieved so t h a t he can deteimine t h e value i n h i s a r e a o f performance. t i o n on t h e function r a t h e r than t h e By focusing h i s a t t e n -

Dart

a s drawn and t h e p r o c e s s a s

i n d i c a t e d , many o p p o r t u n i t i e s f o r o b t a i n i n g b e t t e r value w i l l be brought t o l i g h t t h a t would otherwise go unnoticea. Evaluate t h e Function

\Je l o g i c a l l y progress, then, from t h e f u n c t i o n a l approach t o e v a l u a t i n g function, by r e l a t i n g c o s t t o function. The e v a l u a t i o n of func-

t i o n has been formalized and s u m r i z e d i n a s e t o f f i v e questions, namely :


1,

What: i s t h e p a r t ? lilhat does it do?


W h a t doe8 i t c o s t ?

2.
3.

4.
5.

Vhat else w i l l do t h e job? What would that c o s t ?

C l s an i l l u s t r a t i o n , a nut p l a t e (1/2" x 1" : : 2-1/411) was made i n

what was thought t o be t h e lowest c o s t way

-- t a k i n c a p i e c e o f

standard

112" x 1" bar s t o c k , c u t t i n g i t t o l e n g t h , d r i l l i n g and t a p p i n g two holes. T h i s method c o s t 32 c e n t s . When someone e v a l u a t e d t h e f u n c t i o n

of t h i s item, he recognized t h a t t h e f u n c t i o n was something l i k e t h a t acc o q l i s h e d by two n u t s joined t o g e t h e r . Nuts t h i s s i z e c o s t 2 c e n t s a-

p i e c e and t h e means o f a t t a c h i n g t h e n was e s t i u t e d a t a n o t h e r 2 c e n t s . Therefore, a v a l u e of t h e combined f u n c t i o n s was placed a t G c e n t s . Ac-

t u a l l y , when t h i s approach was e x ~ l o r e di t was found t h a t t h e e a s i e s t and lowest c o s t means of a t t a c h i n g two n u t s was t o u s e two v e l d n u t s which c o s t 3 c e n t s each ( i n s t e a d o f 2 c e n t s ) along w i t h a 2-cent a t t a c h i n g menber so t h e t o t a l f u n c t i o n was achieved f o r 8 c e n t s . Another example of e v a l u a t i n g f u n c t i o n i s a grounding switch. Its

purpose was t o provide a p r o t e c t i v e gap a g a i n s t s u r g e s (normal l i n e v o l t a g e 3700 V ) , and t o ground t h e c i r c u i t (maximilm grounding c u r r e n t l e s s t h a n one ampere) when adjustments were b e i n g made,

Its c o s t

- $25.

t team of men s t u d i e d t h e f u n c t i o n , and decided by comparing i t t o


o t h e r f u n c t i o n a l l y s i m i l a r i t e m s , t h a t t h e v a l u e was $5.
i s being made f o r $4.G4.

Now t h e s w i t c h

However, t h e new d e s i g n i n c l u d e s an a d d i t i o n a l

f u n c t i o n and s a f e t y f e a t u r e

a n c c h a n i c a l i n t e r l o c k t o prevent opening of

the panel without grounding.


I t f r e q u e n t l y happens t h a t E ~ n c t i o n sa r e e v a l u a t e d a t 1 / 2 t o 1/10

t h e c o s t of t h e p a r t . Evaluating a P a r t V s a Function

To o b t a i n an even c l e a r e r understanding o f e v a l u a t i n g f u n c t i o n , h e r e i s on i n t e r e s t i n g experiment. ask soneone t o e v a l u a t e a part, F i r s t , without r e v e a l i n g t h e f u n c t i o n ,

Then, d e s c r i b e t h e f u n c t i o n o r f u n c t i o n s T h i s might be i l l u s -

r e q u i r e d and a s k f o r an e v a l u a t i o n o f t h e f u n c t i o n .

t r c l t e d by d e s c r i b i n g a p a r t about two i n c h e s i n d i a n e t e r , w i t h a 13116i n c h h o l e , 1 / 2 inch t h i c k . There a r e two No. 9 d r i l l e d and tapped h o l d s ~sked t o evaluate t h i s

o p p o s i t e one a n o t h e r on t h e o u t s i d e diameter.

part, a group of people c o n s i s t e n t l y p u t t h e c o s t a t between 75 c e n t s


and $2. ( i t s a c t u a l c o s t i s $1.01). However, t h e sane people t r i l l e v a l u a t e t h e f u n c t i o n ( a c t u a l l y a f u r n a c e f l a n g e which goes i n a f u r n a c e w a l l and l o c a t e s a c a l r o d u n i t ) a t from 5 t o 15 c e n t s .
A s a r e s u l t of t h i s simple approach a new p a r t ,

a ~ r c s h e r - l i k e stamping, i s b e i n g nade f o r 11 c e n t s and p r o v i d e s a l l t h e


functions.

W h y i s t h e r e such a d i f f e r e n c e i n r e s u l t s ?

Why, by c o n c e n t r a t i n g

on t h e f u n c t i o n i n s t e a d o f t h e p a r t , would t h e c o s t drop from $1.01 t o

11 c e n t s ?

Simply because t h e f u n c t i o n a l k i n d o f t h i n k i n g encourages Asking what t h e part should

people t o t a k e a d i f f e r e n t p o i n t of view.

c o s t develops a f i x a t i o n and r e s t r i c t s t h e t h i n k i n g t o c o n s i d e r a t i o n of t h e c h a r a c t e r i s t i c s of t h e p a r t

i t s dimensions, i n a t e r i a l s , f i n i s h , e t c .

Focusing t h e a t t e n t i o n on t h e f u n c t i o n of t h e p a r t t r e e s a person t o u s e h i s experience and i n g e n u i t y t o achieve t h e f u n c t i o n i n some o t h e r way.


i s t h e r e l e a s e and d i r e c t i o n of t h i s c r e a t i v e e f f o r t which r e s u l t s i n a

It

g a i n i n value. E v a l u a t i o n of Consequences o f F a i l u r e on Value One o f t h e s e r i o u s m i s t a k e s m d e i n e v a l u a t i n g f u n c t i o n i s t o a l l o w t h e f e e l i n g t o develop t h a t t h e v a l u e i s something t h a t i s determined by t h e consequences of f a i l u r e . Thus we might: f e e l t h a t t h e v a l u e of an over-

speed p r o t e c t i v e d e v i c e on a l a r g e motor h a s t h e same v a l u e a s t h e motor. This i s d e f i n i t e l y not true. F-ttentlon i s a g a i n c a l l e d t o t h e f a c t t h a t

t h e v a l u e o i a f u n c t i o n i s determined by t h e lowest c o s t f o r r e l i a b l y

providing t h a t function, not by t h e consequence of f a i l u r e of t h a t dev i c e to perform nor by t h e consequences i f t h e function were not provided a t a l l . Of course, we recognize t h a t t h e q u a l i t y l e v e l of a

f u n c t i o n a l component should be deternined by t h e consequences

of

failure

and, s i n c e value i s deternined by t h e lowest c o s t f o r r e l i a b l y providing t h e function, consequences of f a i l u r e do have an i n d i r e c t e f f e c t . Thus

we observe t h a t t h e value of a b o l t i n an a i r p l a n e wing m y exceed t h e value of a b o l t i n a c h i l d ' s wagon though they may have e s s e n t i a l l y t h e sane function t o perform but a t c o a p l e t e l y d i f f e r e n t q u a l i t y levels. n e i t h e r value i s determined by t h e value of t h e plane o r wagon l i v e s involved. Divide Cost i n t o Functional Areas Another approach c l o s e l y r e l a t e d t o evaluating function i s t o divide c o s t s i n t o functional areas. Such a d i v i s i o n of c o s t a p p l i e s b e s t t o an But

- and t h e

e x i s t i n g design where c o s t s a r e knmm

-- r a t h e r than t o one i n t h e conA good example of t h e

ceptual s t a g e , where c o s t s a r e not y e t a v a i l a b l e .

divi~ion of c o s t s i n t o functional a r e a s i s a l a r g e , low-volume, job-shop switch, r a t e d a t 600 v o l t s , 10 amperes, which o r i g i n a l l y c o s t $110. By

dividing t h i s c o s t i n t o functional a r e a s , t h e f o l t o r ~ i n gcomparisons were made :

E l e c t r i c a l . . . . . . . . . . . . . . . . . $ 1 3
l l e c h a n i c a l . . . . . . . . . . . . . . . . . Case and cover.,........... Labor and overiiead...,.,... 10
50

45

I n m d i a t e l y we see t h a t t h e c o s t of $50 f o r t h e case and cover i s excessive when compared with a t o t a l of $23 f o r t h e e l e c t r i c a l and mecha n i c a l functions. Having located t h i s "poor value" functional a r e a , t h e

c o s t o f c a s e and cover tms inmediately reduced t o $14.

A s a by-product

of t h e a n a l y s i s , r e d u c t i o n s were mado i n t h e o t h e r f u n c t i o n a l a r e a s a s

well.

A t o t a l o f $53, o r 45 per c e n t o f t h e o r i g i n a l c o s t , was removed,

and t h e switch is now produced f o r $65,

A s t h i s exapple i l l u s t r a t e s , d i v i d i n g t h e c o s t s i n t o f u n c t i o n a l
a r e a s s o l v e s another problem so f r e q u e n t l y encountered i n analyzing exi s t i n g designs

-- namely, where do we s t a r t t o work -- by l o c a t i n g t h e

a r e a s where concentrated value e f f o r t i s needed. Evaluate Functional Areas Evaluating f u n c t i o n a l a r e a s i s s i m i l a r t o d i v i d i n g c o s t s i n t o f u n c t i o n a l a r e a s , and, like e v a l u a t i n g f u n c t i o n , it i s a p p l i c a b l e i n t h e conceptual s t a g e of design a s well a s a f t e r t h e design r e l e a s e .

A s soon a s t h e design i s conceived, w r i t e down t h e various funct i o n a l a r e a s t h a t seem t o be required. pare them w i t h one another. Then e v a l u a t e t h e s e a r e a s . Com-

I f an o v e r a l l c o s t i s known, then values of

f u n c t i o n a l a r e a s can be added t o see i f they f i t w i t h i n t h e limits of the total. These techniques

- t h e f u n c t i o n a l approach,

e v a l u a t e t h e function, t h e important tech-

and e v a l u a t e f u n c t i o n a l a r e a s

-- a r e but t h r e e of

niques used i n t h e determination of value. Evaluate Basic Function Another refinement t o e v a l u a t e f u n c t i o n i s t h e technique of e v a l u a t i n g b a s i c function. Here we f u r t h e r meke a s t i p u l a t i o n t h a t function

s h a l l be described i n two words, o verb and a noun such a s "conduct current" o r "support shaft." nique o r a d i s c i p l i n e . This two-word d e f i n i t i o n i s a f o r c i n g tech-

It has been s a i d i f t h e function can be described

i n two words, then, i n a l l p r o b a b i l i t y , t h e f u n c t i o n i s f a i r l y c l e a r l y

understood.

I f t h e f u n c t i o n cannot be d e s c r i b e d i n two words it i s

g c n e r c l l y n o t well undetscood. Function c a n t h e n be d i v i d e d i n t o two k i n d s , L o s i c and second degree f u n c t i o n . B a s i c f u n c t i o n i s t h a t s p e c i f i c purpose f o r which a Second

product, o r assembly, o r component i s designed o r manufactured.

degree f u n c t i o n s are t h o s e o t h e r f u n c t i o n s , o t h e r t h a n b a s i c , which a r e provided t o supplement t h e b a s i c f u n c t i o n . They t o o can b e g e n e r a l l y

d i v i d e d i n t o two t y p e s , t h a t i s , t h o s e which a r e f o r t h e purpose o f making t h e product s e l l such a s a f e a t u r e o r appearance, and t h o s e funct i o n s which come a s a r e s u l t of consequences of design.

An example of

t h e l a t t e r type i s t h e f u n c t i o n which might occur on a metal p o r t which h a s been p a i n t e d t o prevent c o r r o s i o n .

The p a r t i t s e l f w i l l have a

b a s i c f u n c t i o n and t h e p a i n t provides t h e second degree f u n c t i o n of preventing c o r r o s i o n .


I t has been found very h e l p f u l t o l i s t t h e b a s i c

f u n c t i o n o r f u n c t i o n s of a p a r t , conponent o r a s s e n b l y and then t o l i s t t h e second degree f u n c t i o n s . Then e v a l u a t e t h e b a s i c and second degree

f u n c t i o n s s e p a r a t e l y and n o t e tile c l a s s i f i c a t i o n i n t o which each of t h e second degree f u n c t i o n s f a l l . Again t h e b e n e f i t 02 t h i s approach i s

t h a t i t i s a f o r c i n g technique o r d i s c i p l i n e t o more c l e a r l y s e e t h e
p r o b l e m and t o more a c c u r a t e l y d e t c m i n e t h e b e s t value.

Value and Q u a l i t y
It has been s t a t e d and i t w i l l be re-emphasized t h a t Value Analysis

tecllniques focus on the function and q u a l i t y by d e f i n i t i o n and t h e approach i s t o provide t h e t o t a l f u n c t i o n i n c l u d i n g t h e n e c e s s a r y q u a l i t y a t t h e lowest c o s t . Thus, Value A n a l y s i s techniques c o r r e c t l y used do

n o t i n any way impair t h e e s s e n t i a l q u a l i t y whereas, a s p r e v i o u s l y pointed o u t , c o s t a n a l y s i s techniques do tend t o f o r c e t h e u s e r t o u s e

a t h i n n e r m a t e r i a l , less m a t e r i a l o r a lower c o s t m t e r i a l . Conclusion

I n t r y i n g t o achieve b e t t e r value it i s important t o have f u l l


confidence t h a t i t can be done. The techniques j u s t m n t i o n e d a r e soae

of t h e b e s t t o o l s by which b e t t e r value can be achievea N o m a t t e r what kind of product i s involved c o m e r c i a l o r defense, heavy o r l i g h t i n d u s t r y

-- high o r low volume,


function

-- e v a l u a t i o n o f

i s one of t h e b e s t t o o l s t o improve value from conception of design t o


d e l i v e r y t o t h e customer.

SECTION V

PHASE I1 OF THE VALUE ENGINEERING J O B PLAN

A.

THE CREATIVE PHASE TECHNIQUES

Creativity i s t h e F o r o m t i o n o f
h e w h c lationships
o f K~lown I d e a s a n d F a c t s

T H E C R E A T I V E PROBLEM S O L V I N G PROCESS

A s s e n i b l i n ~ ; and a n a l y z i n g y o u r i ' n c t s , e l i m i riat i n g o p i n i o n s a n d i i t l p r e s s i o n s 1;ef'illing y o u r b a s i c problem.

B r e a k i n g down t h e r e l e v a n t m a t e r i a l . F i l i l i ~ ;u p a l t e r n a t i v e s b y w a y o f ideas. Lettin(; up,

Incubation bynthesis

t o invite illumination.

p u t t i ~ ~ it : he pieces togetht~r. J u d g i n g thc r e s u l t a n t i d e a s . P l a n n i n g t h o irrlplernen t a t i o n of those ideas.

Lva 1l l a i t j 011
Lieve I o ~ m e n t

2.

KEYS TO CREATIVITY

1.

Sensitivity

The a b i l i t y t o i d e n t i f y w i t h p e o p l e and p r o b l C ~ ~ I S .
The a b i l i t y t o t a k e c o n t i n u o u s advan taire o f a d e v e l o p i n g situation. Tkle a b i l i t y t o a d j u s t q u i c k l y t o new dcve1ol:ment.s a n d c h a n g e d situations

2.

Fluency

3.

Flexibility

Tlie a b i l i t y t o f o r m new

r e l a t i o n s h i p s of known i d e a s and f a c t s ,

5.
6.

S k i l l of Heclefinition

Tile a b i l i t y t o r e a r r a n p ? i d e a s ,

concept, Ability t o Abstract

1 ) e o p l e and t h i n g s .

S k i l l a t b r e a k i n g a problern d o w n i r l t o i t s component p a r t s .

7.

Ability t o Synthesize

T h e a b i l i t y t o corr~thir~e several e l e r r l e n t s i n a c r e a t i v e way t o form a new w h o l e .


The a b i l i t y t o organize a project,

8.

Coherence of 0r~;anization

BARRIERS

TO

CREATIVITY

Ilabi t T r a n s f e r Functional Fixedness

Using only proved methods, I n a b i l i t y t o s e e an o b j e c t as p a r t o f a number o f r e l a t i o n ships.

Concrete o r P r a c t i c a l Piindness Overspecialization I n c o r r e c t I'roblem Statement Perceptual barriers b i s t r u s t o f intuitive l'rocess

Unaware o f b a s i c work i n o t h e r fields.


V i t a l t o s t a t e r e a l problem clearly.

Uet~.are o f t h e o b v i o u s .

Don't u n d e r r a t e i n t u i t i o n .

L e p e n d e n c e on h u t h o r i t y - R e c o g n i z e d a u t i i o r i t i e s d o n o t have a l l t h e answers. F a i l u r e t o Get t h e 1acts

C a n n o t f o r m new r e l a t i o n s h i p s w i t h o u t known f a c t s . Give i d e a s ti~riet o i n c u b a t e .

11. I n f l e x i b l e b!ork Schedule 12. Overmotivation

Choose y o u r b e s t t i m e t o i d e a t e .
Keep prob1el:is abilities.

w i t h i n your

13. S t a g n a t i o n
11+. Fear o f C r i t i c i s m

There a r e no r o u t i n e s o l . u t i o n s t o c r e a t i v e problems, U e l i e v e i n y o u r work.

4.

ROADBLOCKS

T h i s document i s a l i s t i n g o f r o a d b l o c k p h r a s e s which c h l o r o f o r m i d e a s a n d p u t a n i n d i v i d u a l ' s mind t o s l e e p ,


A r o a d b l o c k i s c o n s i d e r e d t o be t i n y t l i i n g t l i a t i m p e d e s p r o g r e s s o r p r o g r e s s i v e t h i n k i n g . I t commonly e v o l v e s from n e g a t i v e t h i n k i n g , f e a r ( p a r t i c u l a r l y of p e r s o n a l l o s s ) , ignorance, laziness, selfdefense, o r undesirable h a b i t s , These p h r a s e s a r e u s u a l l y t h e f i r s t h i n t o f roadb l o c k d a n g e r , Wllen y o u r p r o g r e s s i s i m p e d e d , c l e a r l y d e f i n e the obstacle t h e r o a d b l o c k , T h i s t h e n beconles t h e problem. A vague, i l l - d e f i n e d r o a d b l o c k i s irisurmlountable. Once i t i s c l e a r l y d e f i n e d , a s o l u t i o n may b e s e a r c h e d f o r effectively.

--

tried that before, Our p l a c e i s d i f f e r e n t . I t c o s t s t o o much. T h a t ' s beyond o u r r e s p o n s i b i l i t y . That's not m y job, L r e t r e a l l t o o b u s y t o do t h a t . It1 s t o o r a d i c a l a change. kre don ' t h a v e t l i e t i m e . N o t enough h e l p , T h a t w i l l make o t h e r e q u i p m e n t o b s o l e t e . re t search t e s t of i t first. L e t t s make a ~ n a r l ~ e h e ' r e t o o slriall f o r i t . lUot p r a c t i c a l f o r o p e r e a t i n &p e o p l e . The men w i l l n e v e r b u y i t . Tile u n i o n w i l l s c r e a m . h'e've n e v e r d o n e i t b e f o r e . S t ' s a g a i l i s t corr~pany p o l i c y . K L I I ~ Sup o u r o v e r h e a d . \ve t l o n t t h a v e t l ~ ea u t h o r i t y . TI!z t ' s t o o i v o r y t o ~ ~ e r , I . c t t s g e t back t o r e a l i t y . T l ~ a'ts n o t o u r p r o b l e m . hhy c l l a n g e i t ? I t ' s s t i l l worhin;; o . k . The E x e c u t i v e Currlrriittee b i l l n e v e r go f o r i t . I t i l l a t rlo t h e y d o i n o u r c o r r i p e t i t o r ' s p l a n t ? I don't l i k e the idea. We're n o t r e a d y f o r t h a t . It i s n ' t i n t h e budget. C a l i ' t t e a c l ~a n o l d d o g new t r i c k s , Good thougltt but impractical,
We

L e t ' s llold i t i n abeyance. I,e t ' s g i v e i t more t h o u g h t . 'Pop mana;;emcnt b o u l d n e v e r g o f o r i t , Let's put i n i l l writing. W e ' l l b e the l a u g h i n g s t o c k . Not t ? ~ a ta g a i n . We'd l o s e Iiloney i n t h e l o n g r u n . h h e r e ' d you d i g t h a t one up ? he (lid a l l r i g h t w i t h o u t i t . T l l a t ' s w k i i ~ t w e c a n e x p e c t from s t a f f . I t ' s never been t r i e d before. L e t ' s s h e l v e i t f o r the t i m e being. I . e t ' s fo r n ~a C O X ~ I It: t ~e ~e H a s a n y o n e e l s e e v e r tried i t ? I \ ' l ~ a'ts t h e u s e ? C u s t o n ~ e r sw o n ' t l i k e i t . Too ?lard t o s e l l . I don't see the connoction. 1 t won ' t work i n o u r i n t l u s t r y . , What y o u a r e r e a l l y s a y i n g i s > l a y b e t h a t w i l l work i n y o u r c l e p a r t r n e n t , b u t n o t i n

..

mine.
D o n ' t y o u t l t i n k t,-e s h o u l d l o o k i n t o i.t f u r t h c r b e f o r e we a c t ? L e t ' s a l l s l e e p on i t . Y o u ' l - e 1 - i g l i t -- b u t Y o u ' r e t w o y e a r s a l ~ e a do f y o u r t i m e . h e d o n t h a v e t?le ~ ~ o r i u ye, q u i ~ m e n t room, p e r s o n n e l , Not i n v e n t e d h e r e ,

.. ..

'

5.

IDEA NEEDLERS

Tkle f o l l o w i n g i s a l i s t i n ? ; o f i d e a s p u r r i n g q u e s t i o n s t o a i d i n a n s w e r i n g t h e c r e a t i o n p l ~ a s eq u e s t i o n , " \ + h a t e l s e w i l l ~ ~ e r f o r tm he basic function ?"

How rrluch o f t h i s i s t h e r e s u l t o f c u s t o m ,
Iv'hy d o e s i t h a v e t h i s s h a ~ ) e ?

traditiuri o r opinions?

How would 1 d e s i g n i t i f I had t o b u i l d i t i n m y home i ~ o r k s h o p ? h h a t i f ' t h i s b ~ e r e t u r n e d i n s i d e o u t ? l i c v e r s e d ? U p s i d e down? b h a t i f t h i s w e r e l a r g e r ? Hi{;her? T,onger? N i d e r ? T h i c k e r ? Lower ? k h a t e l s e c a n i t b e made t o d o ? ! < h e r e e l s e c a n t l ~ i sb e d o n e ?
b'iiat

i f the

3 . e )a

t e d e l e m e n t s were chax~ged?

Suppose t h i s were l e f t o u t ? TIoh c a n i t lie d o n e p i e c e m e a l ? Can t h i s b e m u l t i p l i e d ? V l ~ a t i f t h i s w e r e blown u p ? iihat i f t h i s were c a r r i e d t o e x t r e r i ~ e s ? iiow c a n t h i s b e made more c o m p a c t ? Would t h i s b e b e t t e r s y m m e t r i c a l o r a s y w r ~ c t rc ial? I n what form c o u l d t h i s be? L i q u i d , powder,
ftod,

cast or solid? cube o r s p h e r e ?

tube,

triangle,

Can m o t i o n b e atl(let3 t o i t ?
W i l l
b e be b e t t e r s t r i n d i n { ; s t i l l ?

\;hat

o t l l e r l a y o u t rnigllt b e b e t t e r ? e f f e c t be r e v e r s e d ? I s one p o s s i b i l i t y t h e

C a n c a u s e ::nc!

other?
S l l u u l d i t be p u t on t h e o t l t e r end o r i n t h e m i d d l e ?

U e r n o r i s t r a t e o r d e s c r i b e by w h a t i t i s n ' t . Could a v e n d o r s u p p l y t h i s f o r l e s s ?

How c o u l d t h i s be c h a n g e d f o r q u i c k e r a s s e m b l y ? \ . h a t o t h e r m a t e r i a l s would d o t h i s j o b ?

Should i t s l i d e i n s t e a d o f r o t a t e ?
What i s s i m i l a r t o t h i s , b u t c o s t s l e s s ? W l ~ a t i f i t w e r e made l i g h t e r o r f a s t e r ? C h a t m o t i o n o r power i s w a s t e d ? Could t h e package be u s e d f o r sori~etk~ine a;f t e r w a r d s ?
khy?

If a l l specifics t i o r l s c o u l d be f o r g o t t e n , how e l s e c o u l d t h e b a s i c f u r i c t i o n be a c c o m p l i s h e d ?
C o u l d t h e s e be irtacle t o m e e t s p t . c i f i c a t i o n s ?
IIow do n o n c o n l p e t i t o r s s o l v e p r o b l e m s s i m i l a r t o t h i s ?

Can a n o t h e r p a r t p e r f o r m t h e f u n c t i o n ? Can t h i s p a r t o r f u n c t i o n b e corkittined w i t h a n o t h e r ? h h a t if t h e p r e s e n t d e s i g n o r method w e r e p r o h i b i t e d ? IIow c a n s e c o n d a r y o p e r a t i o n s be a v o i d e d ? Can i t b e s t r a i g h t i n s t e a d o f c u r v e d ? How c a n i t be a d a p t e d t o a h i g h s p e e d m e t h o d ?


l i o w c o u l d t h i s b e made e a s i e r t o u s e ?

Can i t b e ~rlade s a f e r ?

6.

V A R I O U S TECHNIQUES T O S T I M U L A T E CREATIVE THINKING

There a r e n u m e r o u s t e c h n i q u e s d e s i g n e d t o s t i r r l u l a t e c 1 , e a t i v e t h o t i g h t and i;uide one t o d e v e l o p i n g n e w e r , lower c o s t a l t e r n a t i v e methuds o f p e r f o r m i n g t h e d e s i r e d f u n c t i o n . A b r i e f s u n m a t i o n o f sotne o f t l l e s e t e c h n i q u e s t h a t h a v e b e e n f o u n d u s e f u l i n V a l u e b n g i n e e r i n g work follows:


Forced Relationships:

1.

Check L i s t s :

(a)

Answer a l l t h e q u e s t i o n s o u t l i n e d on a p r e p a r e d c h e c k l i s t , sucll a s :

PUT T O OTlUiI{ LSES? Kew w a y s t o u s e a s i s ? o t h e r u s e s i f ~nodif'ied? AUAPT? What e l s e i s l i k e t h i s ? k h a t o t h e r i d e a s 'does t h i s s u g g e s t ?

NOIIIFY?

Change n ~ c a n i n , y , c o l o r , lilotion, s o u n d , o d o r , t a s t e , form, sllape? o t l i e r c l ~ a n g e s ?

> l A G h I F Y ? What t o a d d ? G r e a t e r f r e q u e n c y ? S t r o n g e r ? Larger? Plus ingredient? F,ultiply?

FIlh'IFY?

k'hnt t o s u b s t r a c t ? E l i m i n a t e ? S m a l l e r ? L i g l t t e r ? S l o w e r ? Sl,l i t u p ? L e s s f r e q u e n t ?

SUBSTITUTE? W11o e l s e i n s t e a d ? \ i l l a t e 1 s e i n s t e a d ?
O t h e r p l a c e ? O t l ~ e rt i m e ?
E i h G E ?

O t h e r layout?

O t l l e r s e q u e n c e ? C h a n g e pace?

lkVLl;SE?

O l ~ p o s i t e s ' ?T u r n i t backward? clown? T u r n i t i n s i d e o u t ?

T u ~ ni t u p s i d e
/

'

How a b o u t a b l e n d , a n a s s o r t m e n t ? Combine p u r p o s e s ? Combine i d e a s ?

(b) A n o t h e r c h e c k l i s t c o u l d b e t h e a l p h a b e t where one l i s t s a l l p o s s i b l e s o l u t i o n s s t a r t i n g w i t h each l e t t e r .


(c) Natcrials, products, p r o c e s s e s a n d tnethod

lists are a l s o useful.

b>

I , i s t a l l niajor c11;:r ; ~ c t c >srtii c s - a t t r i b u t e s l'r otduct , ( l bj e c t , I c i c s .


C o n s i d e r c e c h i n t u r n - arid c11an;:ed c o n c e i v a b l e ways.

of

(d

i n all

(4

Ircf'ine a l l t h e intir~pentlerltv a r i a b l e s b r o a d l y a n d corripl e t e l y .


Lse o n e a x i s on N o r p h o l o g i c a l Chart f o r e a c h variable.

04
(4

txpress c a c l l i n d e p e n d e n t v a r i a b l e i n a number of w a y s .

ijouk of

t h e ;iontl>

C r u i s e o f t l i e Year l i e s e r t o f t h e iieek

Se1 e c t a n i r r e l e v a n t o b j e c t ; d c t c ? r t ~ i i n e its attributes; a n d a s c e r t a i n i f t h o s e a t t r i l i u t e s rniglit b e made a p p l i c a b l e t o the o b j e c t under considex a t i o n .

Lac11 p a r t i c i p a n t w r ' i t e s t i t r w n h i s i d e a s on t l i e s u b j e c t over a period o f several days. A l l i d e a s are then c o n s i d e r e d f o r combiriaticln a n d i ~ r ~ p r o v e r n e, n t' r h i s i s i n d i v i d u a l b~ a i n s t o r ~ n i n g .

7.

Focused o b j e c t t e c h n i q u e

( a ) S e l e c t t h e f i x e d ele~ire~lt;.
( b ) Focus a t t e n t i o n t o
sorile

other items.

( c ) F o r c e r e l a t i o n s l j i . i , s of' a t t r i b u t e s o f s e c t ~ n d i t e m on t h e f i r s t .

8.

Input-(:utput

techniques

( a ) L s t a b l i s h d e s i r e d o i ~ t p u to r end r e s u l t .
( b ) L i s t v a r i o u s S o r i i ~ so f e n e r g y t o p r o v i d e i n i t i a l stin~ulus. ( c ) Keep i n mind s p e c i f i c a t i o n s o r c o n d i t i o n s (may be t o o r e s t r i c t i v e ) ( i n h i b i t i n g eff'ect)

F o r c e Uia;:rarlis

(a) L i s t arid w e i g h e a c h r e a s o n why.


( b ) L i s t and w e i c h e a c h r e a s o n w h y n o t .

( c ) C o m p a r e t o t a l weighted wliy and why n o t s .

(d)

Rork t o i n c r e a s e w h y ' s and d e c r e a s e wlly n o t s .

: I;'xarn&)le

I want a S a i l b o a t

For Sport

liIIY

WHY N O T
Lack o f Funds No P l a c e t o S t o r e L i v e Away f r o m h a t e r ljon ' t know how t o Sail

Fur P l e a s u r e

For Iiealth
F o r Fanlily

10.

Back t o N a t u r e . Cumpare l , r e s c ? r l t p r o t ~ l e r n t o s i n ~ i l a rp r o b l e m i n n a t u r e ,

11.

Inversion. l i e v e r s e prol!lern

T r y n o t t o (lo i t .

( a ) C r o u p s i z e a n d wake-up
backgrounds.

--

6 t o 12 1,eoplc w i t h v a r i e d

( b ) C r i t i c i s m i s r u l e d o u t ; judgerrient i s s u s p e ~ ~ d eudn t i l a l a t e r s c r e e n i n g o r evaluation s e s s i o n , Allowing y o u r s e l f t o be c r i t i c a l a t t i l t ? s a m e t i m e you are b e i n g c r e a t i v e i s l i k e t r y i n g t o g e t h o t and c o l d w a t e r f r o m o n e f a u c e t a t t h e same t i m e , I d e a s i~ s n ' t c o l d enough. a r e n l t h o t enough; c r i t i c i s ~ s Results arc tepid.

k ree-wheeling

i s w e l c o m e d ; t l ~ ew i l t i e r t h e b e t t e r . 1,veri o f f b e a t , i ~ i i ~ c ~ t r ic c a may t r i fyger i n o t h e r croup m e m b e r s J'S: sug~,estions which might n o t o t h e r w i s e

the it3cns, l su[;gesti ons c L i ca I o c c u r t o them.

~Juantity i s w a n t e d ; t h e g r e a t e r t l i e numbex o f i d e a s , t h e l r r e o t e r l i k e l i h o o d o f w i n n e r s . _I t i s e a s i e r t o p a r e down a l o n g l i s t o f i d e a s t h a n t o p u f f up a s h o r t l i s t , Cot~\t~inatio an nd improvement a r e s o u g h t . I n a d d i t i o n o11p r r ~ c r r ~ b e r s t o c o n t r i b u t i n g i d e a s o f t h e i r own, { r ; ~ s h o u l d s u g g e s t 11ow r e c o r t ~ m e n d a t i o n s b y o t h e r s c a n b e t u r n e d j n t o b e t t e r i d e a s o r how two o r m o r e i d e a s c a n be c o t n b i n e t l i n t o a s t i l l b e t t e r i d e a . T h i s i s known a s h i t c h h i k i n g o r c r o s s - f e r t i l i z i n g .

2.

Gordon T e c h n i q u e S c l e c t a p r o b l e m a s s o c i o t e d w i t 1 1 the p r o b l e m t o which a s o l u t i o n js d e s i r e d . F o r example, c u t t i n g grass may b e a s s o c i a t e d h i t h s e p a r c t t i n t . ; i t e r n s ; p a r k i n g c a r s miy b e a s s o c i a t e d wit11 a s t o r a g e problerri. O n l y t h e l e a d e r o r t e a c h e r knows t h e t r u e n a t u r e o f t h e problem. The11 t i i s c u s s etc. t h e problem,
e . ~ ; . how

t o separate,

P a r t i c i p a n t s s l i o u l d l ~ a v ed i f f e r e n t b a c k f : r o u n d s . S e s s i o n s h o u l d be long. Variations.

1.

Sonie p e o l ) l e know tlie t r u e p r o b l e m .

2.

Tape t l i e f i r s t s e s s i o n ; l ~ a v ea s e c o n d s e s s i o n i n w h i c l ~t h e p r o b l e m i s r e v e a l e d .
G s e two {y;roups one doesnl t

3.

o n e knows tlie p r o b l e m a n d

7.

BIBLIOGRAPHY

F o r t l ~ o s ei , i s h i r ~ gt o r l e l v e f u r t h e r i n t o t h e f i e l d o f C r e a t i v i t y , t h e f o l l o w j n g r e f e r e n c e s a r e I r>convnended reading:
1.

Applied Imagination by A l e x 1 ' . Osborn Cllarles S c r i b n e r ' s Sons, N.Y. N . Y . , U.S.A. C r e a t i v e T.11:;irieering h e s i g n b y H a r o l d I t . 13~111 T h e I o w a S t a t e U n i v e r s i t y l ' r e s s , Ames, I o w a , U . S . A .
T l ~ eT e c t ~ n i q u e s o f

2.

3.
4.

Creative Thinking by R o b e r t P . F r a s e r P u b l i s t l i n g Co. L e l l s , V t . U . S . A .

Crawford

A S u u r c e Book f o r C r e a t i v e ' l ' f l i n k i l ~ g b y P a r n c s I: I l a r d i n g N.Y., U.S.A. C h a r l e s S c r i b n e r t s S o n s , N.Y. C r e a t i v e 'i'hinking by Charles S. tihitine i l ~ e j ~ r ~ l ~i o' l f l i s h i r l g Corp, S . Y . h . Y . utb b .S.A.

.,

SECTION V I

PHASE 111 O F THE VALUE E N G I N E E R I N G J O B PLAN

A.

THE EVALUATION -PHASE

A.

EVALUATION P H A S E O F T H E VALUE E N G I N E E R I N G J O B PLAN

I d p a s c a n be c o n b j n ~ d t o make o t h e r p ) o d i d e a s . T h e y c a n s u t ; p s t better w a y s , or t l l e y r a n be 11sed w i t h rnorli f i cn t i on s . 'i'iis, t o rqo t l l o s c r n ~ n i ~ l c i ;yst~ma t i c a l l y t h e f'i r s t s c r e e n j n g o r c v a l l ~t ai o n p r o c e s q rl:mes i i n d e r t h e h e a d i n g n f "=fj_nr~ 7- d ~- a s " . Tn t h i = t e r h n i q t i ~ , w o a t t e m p t t o a r r a n p a l l i d e a s -i n t o scrne o r d e r . O n e s u c h a r r a n r e m ~ t i t c o u l d b e by m a t e r i a l o r p r o c e s s o r p r o d u c t s o r v e n r ' o r s n r aom@ s11ch c o m b i n a t i o n and a r r n l i g ~ m ~ n ot f t l ~ ei C ~ P R S i n t o s i m i 1 ;lr g r o l ~ p i n g s . The n e w t s t e p i c to atte:;:!)t l n c o r n k i n e i d e a s t o d e v e l o p n e w e r i c l r - a s or h e t t e r i d e a s b y t l i e c o m ~ ~ j n a t j no nf d j f f e r e n t i d e a s t h a t hg t h e m s e l v e s may n o t t ) e u s a b l e . F o r i n s t n n c e , i t ' we w j s h e t l t o d e v e l o p a n l e t h o d t o s t o r e r o r r o q i v e l i q u i d , o n e i d e a m i g h t 1)e t o u s e s t ~ n d a r d_5_5 e e l l o n d r u m s . A n o t h e r i d e a m i g h t h e to lise p l n s t i c bags. Now p e r h a p s e a c h of' t h e s e i d e a s i s n o t u s a t l e i.n j t s e l f , b y p u t t i n g p l ~ a s t i chnf.9 i n t o t h e s t e e l dr11lns w e m a y h a v e R s a t i s f a c t o r y sollltion. T h e n e x t s t e p ~ i n d e rt h e t e c h n i q ~ l eo f " l t e f i n e ' i d e a s t ' and development p r o c e s s . H e r e involves a nnc?ific~tion e a c h i d e a i s l o o k e d a t frov t h e c o n c e p t o f "How c o u l d we m o d i f y o r c h a n g e t h i s i d e a t o make i t u s a b l e " ? For i n s t a n c e , i f ' w e h a d t h e f ' l l n c t i o n n f s u p p o r t w e i c h t we mi(;ht h a v e o n e s u g g e s t i n n t h a t woliltl be t o " h a n g i t w i t h s t r i n g " . h e l l , t h e w e j g h t may h e o f s u c h a n amollnt t h a t h a n g i n g i t wj t h s t r i n g wo1il.d b e a n v n s a t i s f a c t o r y i d e a . However, s t ~ i n may e s u g G e s t w i r e a n d by t h e p r o p e r g a p o f w i r e w e may h a v e a p o s s i b l e s o l u t i o n t o t h e f u n c t i o n a l p r o b l e m s . O r p o s s i b l y a w i r e form p r o d v c t w o ~ i l d b e d e v e l n p e d t o do t h e job.
A f t e r t h e s e technjqiies hove been a p p l i e d and each a n d e v e r y i d e a has b e e n l o o k e d a t , w e t h e n p r o c e s s t h e material through t h e first f i l t e r o r s c r e e n t o shake o ~ i t t h o s e i d e a s t h a t a r e u n ~ ~ s a b l eTo . do t h i s we go t h r o u g h a n d r a t e e a c h i d e a o r c o m b i n a t i o n o f i d e a s as c o o d , f a i r o r poor. R y t h i s k i n d o f r a t i n g w e c a n t h e n get a n approximation o f which i d e a s o f f e r t h e b e s t p o t e n t i a l , N o t e , t h a t we h a v e n o t d i s c a r d e d a n y i d e a s , b u t m e r e l y r a t e d them as t o f e a s i b i l i t y o f d e v e l o p m e n t s .

Once t l l e i d e a s h a v e p a s s e d t h r o u g h t h e f i r s t f i n e f i l t e r we are ready t o t a k e those t h a t o f f e r t h e b e s t p o t e n t i a l s u c h as t h o s e r a t e d good o r f a i r a n d s u b j e c t them This technique is i d e n t i f i e d t o t h e second technjque a r e a . RS t t P ~ a t pound ~ i g n on e a c h i d e a . " Conajderable e f f o r t s h o u l d g o i n t o t h i s t e c h n i q u e t o p r o p e r l y a s s i g n pound v a l u e t o i d e a s . H e r e a l s o one must s e e k olit e x p e r t know1etle;e i n e a c h o f t h e s e a r e a s t o a s s i s t i n t h e a d e q u a t e e m u s t remetnhcr t o o t h a t o u r o b j e c t i v e i s t o evaluation, W d e v e l o p ollr i d e a s n o t t o c r o s s them o u t o r e l i m i n a t e them.

D o n t t b e l i k e o n e d e p ~ m t m e n tI h e a r d o f w h e r e a f t e r a c r e a t i v e s e s s i o n where t h e y had developed a b o u t s i x i d e a s as t o how t o d o s o l n e t h i n g , t h e y e l i m i n a t e d a l l b u t f i v e of them a n d t h e n d e c i d e d t h e y would c a l l i n a n e n g i n e e r t o h a v e him t e l l them w h a t w a s w r o n g w i t h t h e s i x t h . C e r t a i n l y t h e l a c k sf wisdom i n t h i s t e c h n i q u e i s a p p a r e n t . There i s a s t r o n g tendency a l s o t o road block t h e development o f i d e a s because o f i n t e r c h a n g e a b i l i t y , s p e c i f i c a t i o n s , lack of r e l i a b i l i t y , appearance, p r a c t i c a l c o n s i d e r a t i o n s a n d many o t h e r r e a s o n s . D o n ' t l e t t h e s e t h i n g s s t o p you i n t h e d e v e l o p i n g o f o n e o f y o u r i d e a s . F o r i n s t a n c e , i f i t i s n o t i n t e r c h a r ~ g e a b l ed e v e l o p t h e i d e a , b r i n g i t t o a c o n c l u s i o n a n d f i n d o u t how much i t c o s t s . T h e n c o m p a r e t h e new c o s t t o t h e p r e s e n t o n e . It may b e w o r t h t h e d i f f e r e n c e t o make t h e c h a n g e . T r y t o a c c o m p l i s h t h e f u l l c t i o n f ' i r s t i n a s a t i s f a c t o r y way, a n d o n c e t h e f u n c t i o n i s a c c o m p l i s h e d t h e n c o m p a r e . If i t d o e s n ' t m e e t existing specifications there's a possibility that the s p e c i f i c a t i o n s a r e wrong o r s h o u l d be changed. I n t h i s s e c o n d f i l t e r i n g p r o c e s s , we a r e t a k i n g t h e b e s t i d e a s a n d attempting t o estimate their unit cost. s o w , t h i s e s t i m a t i o n c a n b e clone u s i n g a t e a m w i t h peo1)J.e with v a r i e d b a c k g r o u n d s o r t h e c o n s u l t a t i o n w i t h s p e c i a l i s t s i n a number o f a r e a s as r e q u i r e d . U s u a l l y a t t h i s s t a g e o f s c r e e n i n g a 20% a c c u r a c y on c o s t i s a d e q u a t e . A t t l i e sartre t i m e , i m p l e m e n t a t i o n c o s t s ( t h o s e c o s t s a s s o c i a t e d w i t h a c t u a l l y a p p l y i n g t h e i d e a ) s h o u l d be e s t i m a t e d , s o t h a t t h e t o t a l c o s t t o p u t t h e i d e a i n t o e f f ' e c t and t o produce i t f o r a c e r t a i n q u a n t i t y s h o u l d be e s t i m a t e d . Tliis t o t a l c o s t t h e n , i s t h e second f i l t e r and t h e i d e a s a r e t h e n compared o r r a t e d b a s e d on t k ~ e i re s t i n r a t e d t o t a l c o s t . Those w i t h t h e l o w e s t t o t a l c o s t a r e r a t e d one, etc.
A t t h i s s t a g e i n t h e j o b p l a n when we a r e f i r s t making comparison o f t h e c o s t u f a l t e r n a t e p r o c e s s e s o r a i 3 p r o a c h e s i t may b e w e l l t o d i s c u s s c h a r t i n g o f c o s t s a n d e s t a b l i s h i n g of break even p o i n t s . T h i s s u b j e c t i s d i s c u s s e d b r i e f l y on P a g e 41, paragraph 4 . 3 . 2 o f t h e V a l u e E n g i n e e r i n g P r o j e c t I i o r k b o o k . In a d d i t i o n t o t h e f o r m u l a s d i s c u s s e d t h e r e i t i s sometimes s d v i s a b l e t o o b t a i n a p l o t f o r a g r a p h i c a l p r e s e n t a t i o n o f r e l a t i v e c o s t o f d i f f e r e n t or a l t e r n a t i v e m e t h o d s . O n e s u c h trre tfiod c h a r t i n g i s shown i n F i g u r e 1 which i s a p l o t o f t h e t o t a l c o s t v s q u a n t i t y .

New ( l o w , medium o r h i g h v o l u m e ) p r o c e s s e s c a n be compared w i t h t h e p r e s e n t m e t h o d . The p o i n t s a t w h i c h t h e s e c u r v e s c r o s s i n d i c a t e when o n e method becomes more a d v a n t a g e o u s c o s t wise than another. A f t e r a s c r e e n i n g o f i d e a s on t h e b a s i s o f t h e i r c o s t a d v a n t a c , e s we a r e r e a d y f o r t h e n e x t s c r e e n i n g o r f i l t e r i n g process under t h e heading "Evaluate Ideas". I n t h i s t e c h n i q u e we t r y t o l i s t a l l t h e a d v a l l t a p s and disadvantages of each idea considering a l l such a r e a s of c o t n p a r i s o n as a p p e a r a n c e , r e l i a b i l i t y , q u a l i t y , t e s t assembly, s i z e , weight, m a i n t a i n a b i l i t y , e t c . Figure 2 i n d i c a t e s a c h a r t w i t h a r e a s t o compare i d e n t i f y i n g a number c o n s t r a i n t a r e a s t h a t rniglit b e c o n s i d e r e d . One good method u s e d i n t h i s a n a l y s i s t e c h n i q u e i s t o make n o t e o f a l l t l l e r e a s o n s why i d e a s won_lt work a n d t h e n systematically eliminate those reasons or t r y t o correct o r change t h o s e r e a s o n s one a t a time. It i s s o m e t i m e s f o u n d t h a t a good i d e a i s p r e m a t u r e l y r e j e c t e d b e c a u s e i t h a s o n e o r two d i s a d v a n t a g e s , w h e r e a t t h e same t i m e t h a t i d e a may h a v e f o u r , f i v e o r s i x a d v a n t a g e s . Nhen t i i e r e a r e more a d v a n t a g e s t o an i d e a t h a n d i s a d v a n t a g e s we h a v e a n i n d i c a t i o n t h a t t h i s may be a n i d e a w o r t h d e v e l o p i n g . Nany t i m e s you h a v e h e a r d p e o p l e make t h e s t a t e m e n t " I t w o n ' t w o r k " u s u a l l y t h e p e r s o n who knows t h e l e a s t about i t a l s o speaks w i t l i the g r e a t e s t authority. k h e n you h e a r s u c h a s t a t e l l l e n t i t m i g h t v e r y o f t e n be t r u e , I t p r o b a b l y won1 t work t h e way t h e i n d i v i d u a l h a p p e n s t o be t h i n k i n g a b o u t i t , b u t w i t h some m o d i f i c a t i o n s i t m i g h t b e made t o work. So a f t e r t h e c r e a t i v e s e s s i o n a s s i g n a pound v a l u e t o e a c h i d e a . Then t r y t o d e v e l o p a l l i d e a s p l a c i n i : mure em1)hasis on t h o s e i d e a s w i t h t h e m o s t p o t e n t i a l s a v i n @ s . L)orilt e l i m i n a t e i d c a s , b u t t r y t o d e v e l o p them a l l . E l i m i n a t e i d e a s o n l y a f t e r a n d by d e v e l o p i n g much more s u p e r i o r j d e a s .
" " -

"--+

Now i s t h e e v a l u a t i o n o f i t l e a s t e c h n i q u e a r e a a f t e r l i s t i n g t h e .tclvantages nnd d i s a d v a n t a g e s arid g o i n g t h r o u g h t h e a n a l y t i c a l a n d d e v e l o p i n g p r o c e s s e s l i s t e d we a r e r e a d y t o s h a k e t l i e s e i d e a s t h r o u g h t h e f i l t e r . It a l s o may be d e s i r a b l e t o a s s i g n c o s t / v a l u e r a t i o s t o i d e a s a t t h i s s t a g e so t h a t those ideas with t h e lowest cost/value r a t i o a r e i d e n t i f i e d a i d can b e a s s i g n e d t h e g r e a t e s t effort. Finally, a f t e r applying these three f i l i e r s i n the L v a l u a z i o n P h a s e o f t h e v a l u e e n l , i n e e r i n g j o b p l a n , we s h o u l d h a v e i d e n t i f i e d a t l e a s t t h r e e o r more v e r y good i d e a s . I t e n ~ e m b e r , t o e v a l u c l t e i d e a s un f a c t s , n o t f i c t i o n o r opinion, t o use the experts or s p e c i a l i s t s t o get the b e s t k n o w l e d g e a p l t l i e d i n t h e e v a l u a t i o n and t o u s e a s

a c c u r a t e c o s t o r c o s t e s t i r i i a t e s as c a n be o b t a i n e d . F i n a l l y , p u r c t l a s i r r g , t c s t , f i e l d o p e r a t i o n , rnntex i a l s proGlerus , rrranui', c t u r ink, 1 ' 1 o b l ems, c t c , , a n d i n each case r e c o r d tile i r ~ f o r l m t i o n t 1 1 a t i s o t l t u i ~ l e d ;jnd w h a t i ' u x . t h e r c l a t a o r facts a l c needed t o a e v e l o p the idea, b e c a u s e i t i s a t t h i s stit;:e t h a t w e a r e r e a d y t o p r o g r e s s i n t o t h e f o u r t h pilase of tlie v a l u e e n , , i n e e r i n g j o b p l a n , t h a t i s , t h e l r l v e s t i e a t i o n P l i a s e . I n t h a t 1)liase each of' t h e s e i d e a s t 1 1 ~ 1 lmve t been s c r e c n e c l arid s h o w n t o o f f e r t h e & : r e a t e s t p o t e n t i a l arc p u r s u e d t o be c l c v e l o p e d f u l l y i n t o w o r k i n g s o l u t i o n s to t h e v a l u e problem.
~tmlcc~ s u r e t h a t y o u r e s e a r c h all a r e a s w h i c h may b e p o t e n t i a l l y a f f e c t e d b y a ctlange Lo t h i s new i d e a . Sucf~ a s , t o o l i n g ,

cO

FIG. 2

QULIANTITY

t r ~ 1,

BE?

a N\\Rc = a Kc.

SECTION V I I

PHASE I V OF THE VALUE E N G I N E E R I N G JOB PLAN

T11e I n v e s t i g a t i o n P h a s e

A.

Introduction

The investigation P h a s e i s o f t e n c a l l e d by d i f f e r e n t names s u c h as : Progrnrnrrie P l a n n i n ( : a n d E x e c u t i o n P h a s e , Development P h a s e , E x e c u t i o n P h a s e , e t c , I n a l l c a s e s , r e g a r d l e s s o f name, i t i n v o l v e s a d e p t h i n v e s t i g a t i o n o r s e a r c h f o r i n f o r t n a t i o n which w i l l h e l p t o d e v e l o p t h e b e s t i d e a s , e v o l v e d from t h e C r e a t i o n and 1Cvaluation P h a s e s , i n t o p r a c t i c a l , a c c e p t a b l e s o l u t i o n s f o r improving Value. I n t h e c o u r s e o f t h i s i n v e s t i g a t i o n o f t e n new i d e a s o r m o d i f i c a t i o n s of ideas a r e generated. d e p e n d on t h e S u c c e s s f u l work i n t h i s p h a s e \ $ i l l d e l ; r e c o f p e n e t r a t i o n o n e c a n make, w i t h i n t h e l i m i t a t i o n s of t i m e , i n t o t h e v a r i o u s f i e l d s o f knowledge t h a t e x i s t and a r e a p p l i c a b l e t o t h e f u n c t i o n a l p r o b l e m . I t f i r s t becomes n c c e 3 s a r y t o i n d e n t i f y tlte t y p e o f knowledge needed t o develop each idea. Generally t h i s knobledge w i l l f a l l i n t o a f e w b r o a d c a t e g o r i e s s u c h as : U e s i g n Conf'igura t i o n , M a t e r i a l s , M a n u i ' a c t u r i n g M e t h o d s arid P r o c e s s e s , S c i e n t i f i c a n d T e c h n i c a l , and S t a n d a r d a n d s p e c i a l t y P r o d u c t s . O f c o u r s e e a c h o f t h e s e a r e a s c a n be s u b - d i v i d e d i n t o h u n d r e d s o f s p e c i f i c , d i f f e r e n t a r e a s . The k n o w l e d g e t h a t e x i s t s i n e a c h a r e a i s a v a i l a b l e i n w r i t t e n form and i n t h e minds o f s p e c i a l i s t s . Moreover, i t i s n o t a s t a t i c e n t i t y b u t a f l u i d one which i s c o n t i n u a l l y c1lant;ing anti i n c r e a s i n g . l d e a Development Thus, t h e problem o f i d e a development i n v o l v e s b o t h k n o w l e d g e i d e r i t i f i c a t i o n a n d s e a r c h . I t i s compounded b y t h e f a c t t h a t t h e informa t i o n sought i s both e x t e n s i v e and expanding a t a n e x p o n e n t i a l r a t e , T h i s f a c t h a s been t h e f o r c e which created the specialist, since there a r e limitations regarding t h e s c o p e o f k n o w l e d g e w h i c h t h e human b r a i n , a t i t s c u r r e n t s t a t e o f d e v e l o p m e n t , c a n comprehend and r e t a i n . It i s t h e s p e c i a l i s t t l i e n who i s t h e l i n k t o t h e k n o w l e d g e r e q u i r e d f o r i d e a development. Thus i f one i s t o s u c c e s s f u l l y g e n e r a t e a n d d e v e l o p new d e s i g n a l t e r n a t i v e s , h e m u s t f i n d t h e k e y t o tilis s p e c i a l i s t knowledge. T h e s e k e y s a r e " S e a r c h T e c h n i q u e s " .

B.

SEARCH TECHNIQUES

SEARCH TECHNIQUES

S e a r c h T e c h n i q u e s a r e m e t h o d s by w h i c h o n e s e e k s o u t t h e s p e c i a l i z e d knowledge t h a t i s e s s e n t i a l t o f i n d t h e b e s t v a l u e p r o d u c t . A good v a l u e p r o d u c t c o n s i s t s o f n u m e r o u s good v a l u e c o m p o n e n t s a r r a n g e d i n s u c h a s o r d e r t h a t they accomplish t h e t o t a l d e s i r e d f u n c t i o n o r f u n c t i o n s . S i n c e e a c h o f t l i e s e f u n c t i o n a l components a r e a complex combitlation o f c o n f i g u r a t i o n , m a t e r i a l , p r o c e s s , p r o d u c t and s o u r c e one can r e a d i l y s e e t h a t a v a s t s u p p l y o f b a s i c i n f o r m a t i o n i s n e e d e d i n d e v e l o p i n g t h e t o t a l " b e s t way t o do t h e job". Whether p r o d u c t d e s i g n e r , p r o d u c t i o n e n g i n e e r , o r p u r c h a s i n ~man o n e i s d e p e n d e n t on a g r e a t s u p p l y o f s p e c i a l i z e d k n o w l e d g e . Somewhere t h e r e i . s a specialist o r documented s o u r c e f o r t h i s irkfortnation. These s p e c i a l i s t s g e n e r a l l y work f o r a n i n d u s t r i a l a c t i v i t y w h i c h i s p r o d u c i n g a p r o d u c t o r s e r v i c e w h i c h d e p e n d s on t h e e x c e l l e n c e o f t h e i r k n o w l e d g e , o r t h e y may work f o r a n e d u c a t i o n a l i n s t i t u t i o n o r g o v e r n m e n t a l ap,ency. U s e f u l w r i t t e n i n f o r m a t i o n niay e x i s t i n b o o k s , t r a d e l i t e r a t u r e , t e c h n i c a l , s c i e n t i f i c o r indus t r i a 1 publications, The p r o d u c t d e s i g n e r , o r a n y o n e c o n c e r n e d w i t h p r o d u c t d e s i g n o r ir;iprovement, m u s t b e on a c o n t i n u a l s e a r c h f o r i n f o r m a t i o n . The i n t e n s i t y o f t h i s s e a r c h w i l l v a r y w i t h t h e n e e d . Two l e v e l s o f s e a r c h a r e s u g l y e s t e d . The f i r s t i r ~ v o l v e sa b r a a d s e a r c h f o r b a c k g r o u n d i n f o r t r r a t i o n i n t h e a r e a o f p r o d u c t s , p r o c e s s e s , ~ j ~ a t e r i a las nd s o u r c e s . T h i s i s a continual process of scanning l i t e r a t u r e of a l l types t o s e e g e n e r a l l y w h a t i s b e i n g d o n e a n d who i s d o i n g i t . It a l s o involves consultations with specialized manufacturers r e p r e s e n t a t i v e s t o keep a b r e a s t of t h e s t a t e of the a r t . This i n f o r m a t i o n , s o g a i n e d , s h o u l d b e c a t a l o g e d b y some c o n v e n i e n t s y s t e m w h e r e b y i t c a n b e retrieved a s t h e n e e d d e v e l o p s . One s y s t e m would b e t o g r o u p i n t o b r o a d c l a s s e s o f d a t a s u c h as B a s i c M a t e r i a l s , M a t e r i a l Forms, P r o c e s s e s , e t c . and t h e n l i s t sub-headings a l p h a b e t i c a l l y by key words, This storeh o u s e o f d a t a s h o u l d p r o v i d e t h e g a t e w a y t o more d e p t h s e a r c h . From a v a l u e v i e w p o i n t i t i s d e s i r a b l e t o a t t a c h some r e l a t i v e c o s t i n f o r m a t i o n a n d a r e f e r e n c e t o e a c h p i e c e of k n o w l e d g e . T h i s w i l l p r o v i d e b o t h a q u i c k s c r e e n i n g t o d e t e r m i n e t h e most a p p l i c a b l e d a t a and a d e p t h s e a r c h t h r o u g h c o n s u l t a t i o n w i t h k n o w l e d g e a b l e s p e c i a l i s t s . Tn a d d i t i o n , t h e broad s e a r c h should provide a l i s t of ready r e f e r e n c e s w h i c h c a n a l s o p r o v i d e t h e p a s s a g e t o d e p t h s i n f o r a l a t i o n . To be s u c c e s s f u l from a Value a s p e c t t h i s broad s e a r c h must d e v e l o p a s t o r e h o u s e o f b a s i c d a t a . It must be:

1. C o n t i n u a l 2.

Value d a t a i s c o n s t a n t l y changing.

Broad

It m u s t c o v e r tile s p e c t r u m o f Materials, Products, Processes, Sources.

and

3 . bocumented

R e c o r d e d i n some s y s t e m w h i c h c a n b e retrieved.

4.

Useful

I t must i n c l u d e c o s t and r e f e r e n c e infortna t i o n t o p i n p o i n t t h e v a l u e p o t e n t i a l and t h e s o u r c e o f d e p t h data.

If t h i s s e a r c h i s c o n t i n u a l l y p u r s u e d , w i t h t i m e , i t w i l l d e v e l o p a w e a l t h o f u s e f u l d a t a . Each s o u r c e , o r r e f e r e n c e , should be t e s t e d t o i d e n t i f y t h o s e t h a t a r e r e l i a b l e a n d lnos t i n f o r t n a t i v e , The b r o a d s e a r c h s h o u l d l e a d t o i n d u s t r i a l s p e c i a l i s t s whose k n o w l e d g e i s e s s e n t i a l t o v a l u e e n g i n e e r i n g and t h e d e p t h s e a r c h . It i s p r o b a b l y u s e f u l t o anyone concerned w i t h e n g i n e e r i n g management o r p r o d u c t d e s i g n t o u n d e r s t a n d some of t h e i n d u s t r i a l c l i m a t e that has a n irii'l.uence on s e a r c h , O n t h i s of es Value A n a l y s i s s u b j e c t M r . M i l e s i n h i s book ( ~ e c l ~ n i ~ u and L n g i n e e r i n g , h c ~ r a w - l l i l ) l b r i n g s o u t some p e r t i n e n t p o i n t s 0x1 t h e u s e o f I n d u s t r i a l S p e c i a l i s t s , he s a y s :

" The c o n c e p t o f d r a w i n g on i n d u s t r i a l s p e c i a l i s t s t o e x t e n d t h e u s e o f s p e c i a l i z e d k n o w l e d g e i s s o simple a n d s t r a i g h t f o r w a r d t h a t i t o u g h t t o b e one t h a t i s f o l l o w e d a s a r u l e r a t h e r t h a n as a n e x c e p t i o n . 'l'tlat, h o w e v e r , i s c o n t r a r y t o t h e f a c t s . There a r e s e v e r a l r e a s o n s why t h i s i s so.


1. U n f o r t u n a t e l y f o r t h e c a u s e o f v a l u e , c o n t r i b u t o r s commonly h a v e p r i d e i n w h a t t h e y d o . L a c h i n d i v i d u a l , when h e r e c e i v e s a n a s s i g n m e n t , becorr~es i n t e r e s t e d i n i t , i n t r i g u e d by i t , and c h a l l e n g e d b y i t . H e p u t s h i s body, h i s mind, and h i s e m o t i o n s i n t o i t , and o f t e n he d e v e l o p s s e v e r a l a n s w e r s . When t e s t s show t h a t t h e y , o r a t l e a s t o n e o f them, w i l l work, he d e v e l o p s u p r i d e o f a u t h o r s h i p . " He may h a v e a t t a i l l e d n e i t h e r e x c e l l e n t h o r a good d e g r e e o f v a l u e , b u t p h y s i c a l t e s t s d o n o t show t h a t u p , T h e r e f o r e , he proudly supports any r e l a t e d p r o j e c t s of engineering, m a n u f a c t u r i n g , p u r c h a s i n g o r management, a n d t h e p r o d u c t i s born.

2. I n t h e p a s t , when a good d e g r e e o f ~ j e r f o r n l a n c e w a s r e q u i r e d b u t t h e r e w a s l i t t l e e m p h a s i s on a good o r e x c e l l e n t d e g r e e o f v a l u e , i t may o r may n o t h a v e b e e n n e c e s s a r y t o c a l l i n h e l p . J u s t t h e s a m e , i t h a s become a q u i t e w e l l accepted p r a c t i c e , i f performance problems c o n t i n u e , t o c a l l i n ir:dustrial s 1 ) e c i a l i s t s t o h e l p s o l v e t h e performance ~ ) r o b l e m s . 111 c o n t r a s t , r e l a t i v e l y Sew p e o p l e a s y e t h a v e b e c o ~ t ~u es e d t o d r a ~ k i n gon t h e t e c h n o l o g y o f s u c h s p e c i a l i s t s i n o r d e r t o g e t b e t t e r answers which w i l l improve r e l i a b i l i t y , p r o v i d e s i m p l i c i t y , and r e s u l t i n lower c o s t . H a b i t s and a t t i t u d e s of t l ~ er ) a s t work a g a i n s t t h i s s i m p l e e x p e d i e n t .

3 . S u p e r v i s o r s and m a n a g e r s , l a c k i n g s u f f i c i e n t l y b r o a d v i s i o n , may i n t c r p r e t t h e a c t i o n o f d r a w i n g on s p e c i a l i z e d k n o w l e d g e a s a sign o f w e a k n e s s . isven t o d a y , s u p e r i o r s w i l l o c c a s i o n a l l y m e a s u r e t h e i r p e o p l e by t l ~ e i ri n d i v i d u a l a b i l i t y t o s o l v e t h e problems t h e y meet u p w i t h w i t h o u t c a l l i n g i n e x t r a h e l p . Such an a t t i t u d e rrmy ltave b e e n e x c u s a b l e j n t h e p a s t when t h e r e was s o much l e s s d e p t h o f k n o w l e d g e i n t t ~ ev a r i o u s t e ~ h n o l o ~ y i eand s whcn t h e p r i m a r y e f f o r t w a s p e r f o r m a n c e o r i e n t e d . The f a c t r e m a i n s t h a t i t h a s l e d t o s t a g g e r i n g , and soii-retimc~s b a h k r u p t i n g , amounts of unnecessary c o s t i n products.
l n d i v i d u a l s s o m e t i m e s l a c k r e c o g r ~tii o n o f t h e e x i s t e n c e o f more k n o w l e d g e p e r t i n e n t t o t t t e i r work t h a n what t h e y have a t hand.
j, l ' e o p l e o f t e n do n o t know w h e r e t o go t o g e t more k n o w l e d g e p e r t i n e n t t o t h e i r w o r k , a l t l l o u g h t h e y niay f e e l t h a t i t probably e x i s t s .

4.

T h e a d d i t i o n a l k n o w l e d g e c o s t s money. Khen a man b u y s a n a u t o m o b i l e , 11e s e e s , t e s t s , a n d e v a l u a t e s t h e a u t o m o b i l e , t h e n p a y s h i s n~oriey f o r i t . lie k ~ ~ o w s i ,n g e n e r a l , w h a t h e w i l l g e t b e f o r e ile makes t h e d e c i s i o n . The e x a c t o p p o s i t e i s true i r ~ t h e case of a c q u i r i n g t h e h e l p of t e c h n i c a l i n d u s t r i a l s 1 ) e c i a l i s t s . If t h e a c c o n ~ p l i s l - i m t . n t st h e y c a n p r o v i d e w e r e hnown t ~ e f o r e h a n d , t l i e i r s e r v i c e s would be u n n e c e s s a r y . But t l ~ ef a c t t11at t h e i r s e r v i c e s m u s t t ~ cs o l i c i t e d a n d w i l l c o s t money I ~ e f o r e t l l e i r c o r i t r i b u t i o n s c a n b e known i s a s t r o n g deterrent to t h e i r use.

6.

7.

S c c u r i n f ; more know-how

ma!-

mean d e l a y ,

especially i f it

i s c a l l e d i n b e l a t e d l y at q u i t e a l a t e stage of product
c l e v e l o p r n e ~ ~ tI . t seerrls much e a s i e r t o i;o a h e a d w i t h p l a n s as t l l e y a r e . The p r o d u c t i s known t o h a v e p e r f o r r r i a n c e , a t t r a c t i v e n e s s , a n d s u i t a b l e f e a t u r e s , and o f t e n i t i s assumed t h a t t h e v a l u e i s g o o d . T l t a t i s p a r t i c u l a r l y s o when some i n t ; e n i o u s m o n e y s a v i n g i d e a s may h a v e b e e n d e v e l o p e d i n t h e c o u r s e o f t11e v a l u e w o r k . "

R e g a r d i n g t h e s e a r c h f o r and u s e o f a v a i l a b l e Functional Products he says: " A v a i l a b l e f u n c t i o n a l p r o d u c t s commonly liave low c o s t s because the s p e c i a l t y s u p p l i e r has a s u f f i c i e n t lead i n h i s p a r t i c u l a r t e c h n o l o g y and s u f f i c i e n t m a n u f a c t u r i n g volume t o p r o d u c e r e l i a b l e components most e c o n o m i c a l l y . but : This a l l sounds s o simple P r a c t i c a l c i r c u m s t a n c e s and i n t e r f e r i n g f a c t o r s combine t o cause f a r too l i t t l e use of a v a i l a b l e s p e c i a l t y f u n c t i o n a l l ) r o d u c t s . Sorne of' t h e s e c i r c u r r t s t a n c e s a n d f a c t o r s follow.

1. l n d i v i d u a l s m a k i n g a s s i g n m e n t s may n o t know o r s u s p e c t t h a t a s u i t a b l e p r o d u c t e x i s t s , s o t h e y proceed t o have t h e d e s i g n a n d d e v e l o p m e n t work d o n e .


2. Men g i v e n t l l e a s s i g n r r ~ e n t smay n o t r e a l i z e o r s u s p e c t t h a t a p p l i c a b l e p r o d u c t s e x i s t . Hence t h e y c a r r y o u t t h e d e t a i l d e v e l o p m e n t a n d d e s i g n o f t h e f u r ~ c t i o n a lp r o d u c t a s s i g n e d t o them. "Do-it-ourselves" f o r c e s a r e s t r o n g i n rriost e v e r y p h a s e of' human a c t i v i t y . T h e o v e r p o w e r i n g f e e l i n g i s t h a t "we c a n d o i t : " T h i s i s f o l l o w e d by c o s t l y a n d d e t a i l e d r e d e s i g n i n g o f f u n c t i o n a l p r o d u c t s which a l r e a d y e x i s t .

3.

4. he b o s s a s s i g n e d t h e work t o me, He e x p e c t s me t o d o i t " Men a r e v e r y h e s i t a n t a b o u t s p e n d i n g t i r ~ i eo r t~loney i n a n y d i r z c t i o n o t h e r that1 t h e d i r e c t l i n e o f t h e i r s u p e r i o r s * i n s t r u c t i o n s , a s t l ~ e yi n t e r p r e t them. Slow s u c c e s s o r f a i l u r e i n d i r e c t harmony w i t h b o s s e s 1 d i r e c t i o n s i s n o t a s d a m a g i n g , t o a man as s l o w s u c c e s s o r f a i l u r e by a f a c t o r o f t e n followinf: a d i f f e r e n t approach,

5 . O f t e n t h e r e e x i s t s a b e l i e f t h a t u s i n g t l ~ ef u n c t i o n a l gr w e a k n e s s p r o d u c t s o f o t h e r s i s e v i d e n c e u f a s l ~ o r t c o r i ~ i no and t h a t i t i s p a r t f o r t h e c o u r s e t o be s e l f - c a p a b l e and s e l f i n t e g r a t e d . T h i s i s t h e same a s c o r i t c n d i n g t h a t o n l y t h e man who d o e s n o t know how t o s w i m g e t s a b o a t .


0. A rrorrnal human c h a r a c t e r i s t i c i s t h e t e n d e n c y t o p l a c e t o o much c o n f i d e n c e i n w h a t "we" d o and t o o l i t t l e c o n f i d e n c e i n w h a t i s d o n e by o t h e r s . Much e x c e s s i v e t J d o - i t - u u r s e l v e s r e d e v e l o p i n g of' t h e w h e e l " i s b a c k e d by a n e r r o n e o u s f e e l i n g t l ~ a tb e t t e r q u a l i t y w i l l t h e r e b y b e a s s u r e d .

'j. .J\ s e l f - i n j u r l n ; ; l , t . l l r l ' i .- t 1 i ; i t t o i , r u t c c t " p r o p r i c t a r y I\rlohletic;e" h l i i ~ l 11 1 0 0 1 7 ~ ' ( ' J s @ h a s , i t 1s e s b e l l t i a l t o ciesi{:n a n d d r t v e l o l ) a l l a s y ~ t l c t so f a f u n c t i o n a l ~ ) r o c t u c t ,t h o u t : h - i t o f t e n ~ z c !11il:h c o s t . c a u s e s ci<.layt:d r l e s i ( , l ~ , u n c e r t a i n p e r f o r i l l ~ r l c c UccC~sion la l y , o f ' c o u r s c , suc11 a s i t u : : t i o n lnay e x i s t f'or s h o r t p e r i o d s o f titlie a n d w j 1 1 l ) i - i ~t~ em ep o s z i r y b e n e f i t s t o o f f s e t t l ~ ei r i e f ' i i c i c l ~ t " d o - i t - o u ~ s c J v c s " ~ ~ h i l o s o p h yI.n s u c h i n s t a n c e s , v e r y c r i t i c a l r e v i e w s s h o u l d f r e q ~ r e n t l yb e ii~acle t o s e c r e t s havtl c c ; . s e t l t o kle tlctrl7i~~j~ rcl~eri i c 5 tile j > ~ o p x i e t a r y secrets.

i , c c a u s e tile r e s u l t s tiiat a htsach f'ol I'urictiorlal s p e c i a l t y l ) r o c - l u c t s may t ~ s i n ga r e n o t known b e f ' o l e t h c s e a r c h h a s b e e n m a d e , t h e t n n t a l i z i r i ~f~ e a r e x i s t s t l ~ : t , a f t e r t i m e a n d money h a v e b e e n s p e n t s e a r c h i n g , rlo s u i t a b l e 1 ) r o d u c t w i l l b e f'ound a n d t i r a t i t h i l l b e ~ i e c e s s a r ya f t c r a l l t o d e v e l o p a n d d e s i g n
o.

it.
" b o - i t - o u r s e l v e s " w o r k c a n be p l a n n e d . T h e o b j e c t i v e , t h e r e s o u r c e s , t h e e f f ' o r t , t11e e x p e c t e d r e s u l t s i n p e r f ' o r m a n c e , c o s t a n d t i m e c a n a l l be ~ ~ e a s o n a b lsy cheduled. I n c o n t r a s t , s e a r c h is m o r e u n s u r e , h e n c e p l a n s t o s e a r c h b r i n g [Treater i n s e c u r i t y , and t h e f e e l i n g o f i n s e c u r i t y i n a job, a c t i v i t y , o r p r o j e c t i s a topmost r e a s o n f o r s h u ~ i n i n gt h e s e a r c l i a 1 ) l ) r o a c h . 'l'tie t a s k o f l o c a t i n g s o r t l e t f l i n g w l ~ oknows \ ~ l t c r e- t l l a t may o r may n o t e x i s t , c o ~ n ~ ) o u n d s insecurity,
1 0 . G r o u p s o f p e o p l e o f ' t c n h a v e t h e b e l i e f t l ~ a tt h e a c c e p t e d arid p r o p e r s y s t e m i s t o " d o i t o u r s e l v e s . " 'i'o d o o t h e r w i s e means t o d e v i a t e from e s t a b l i s h e d p r o c e d u r e . C r e a t i v e s e a r c h f o r c o n ~ b i r i a t i o r io f a v a i l a b l e f u n c t i o r l a l p r o d u c t s t o a c c o r n p l i s h t h e needed I'unction i s f o r e i g n t o t h e i r b a s i c b e l i e f s .

11. Men d o n ' t know how t o e f f i c i e n t l y a n d e f ' f ' e c t i v e l y s t a r t t h e c h a i n f r o m n o i n i ' o r ~ n n t i o no n a p a r t i c u l a r i ' u n c t i o n a l pr*oduct and q u i c k l y p e n e t r a t e haze t o b u i l d u p a v a l u a b l e fund of' i r ~ f o r r t i f i t i o n o n s p e c i a l t y - j > r o c i u c t a v a i l a b i l i t y , p e r f o r m a n c e and c o s t .
1 2 . O f t e n t h e bcl i e f e x i s t s t l t a t , i n Folne w a y , v a r i o u s i n t a n { ; i b l e , u n i c l e n t i i ' i a b l e L ) c n e f i t s c(1il1e frorn d e s i g n i n g b i t b y b i t ancl, h e n c e , t h a t triuch s p e c i a l l ~ a r t l w a r ' e o u ( ; h t t o b e rnade i n i n - p l a n t r n a n u f ' a c t u r i n ~ ; s p a c e . 'l'tie f ' e e l i n g i s t h a t w i 11 i n c r c a s e r e s u l t a n t increasin{r; a c t i v i t y i n tllc p r o f i t s , business s t ~ ~ b i l i t y c, o n t r o l o f n~arkt es , a n d u t i l i z a t i o n o f r e s o u r c e s . I n c o n s e q u e n c e , a s e a r c h f'or a v a i l a b l e f u n c t i o n a l p r o d u c t s i s r e g a r d e d as a s e a r c h f o r soi~~cthin ig njurious t o the business.

l'hc f o ~ e p ; o i nl ~ ' a c t o r s h i l l oill)ose e f i e c t i v e s e a r c h e s f o r 3 ~ e c i a l t yf u n c t i o n a l p r o d u c t s t l l w t q u i t e c o ~ ~ , i n o n a ly id in y ccis t s . " eliriiina t i s u b s t a ~ i t i a lu n n c X c e s s a l

I ~ a t aa c c u r t ~ u l a t e d b y t l ~ eb r o a d s e a l cli call l e a d q u i c k l y t o a d e p t h s e a r c h . T h i s l a t t c ~i s a i m e d a t a d e e p e r p e n e t r a t i o n i r i t o t h e k n o v l e d g e a r e a . ~ 3 yu s e of' r e r e r e n c e s , d i r e c t o r i e s a n d v a r i o u s l i s t i n g s o n e m u s t f i n d t h e l ~ c s ts o u l c e a n d t f ~ e r ~ in tf o r r i : a t i o n . T h e t e l e ] ) l l o n e , corltact him t o o b t a i n t h e ~ ~ e r t i n e n m a i l a n d persona 1 c o n t a c t a p l t r o c ~ c h e s s h o u l d ite u s e d . C h a i n Lorkbook p l ' g e s 39 a n d l i i i k i n g on t i l e t e l e p l ~ o n e ( s e e t h e V.1,. ! + o )i s p r o b a b l y o i ~ eo f t h e f a s t e s t w a y s t o C;et i n f o r m a t i o n , Orice t l l e b e s t s o i l r c e i s f o u n d , t h e n a p p r o p r i ~ t t ec o r ~ s u tl a t i o n i s t l e s i r c c i . 'l'he t c c l ~ n i q u e s ol' s e a r c l ~: ~ r l t l c o n s u l t a t i o n a r e t l e s c l - i L ~ e t lf ' a i r l y t h o r o u g h l y on p n p ; e s 1 1 0 ant3 4 1 o f t h e V a l u e Engineering h o r k b o o k .

SIMPLICIFICATION TECHNIQUES

h e n e a t e s t method I know o f t o s i m p l i f y a p a r t i s t o e l i -

minate it i f p o s s i b l e .

Study i t s f u n c t i o n and make s u r e b e f o r e you

continue t o give t h e p a r t a n a l y t i c a l consideration t h a t it is required, Perhaps a n o t h e r p a r t can t a k e o v e r i t s f u n c t i o n . Now i f t h e p a r t under s t u d y i s s t i l l i n t h e p i c t u r e make a s t u d y t o s e e t h a t a l l a c c e s s o r y items and f e a t u r e s a r e s t i l l r e q u i r e d . Don't f o r g e t t h a t any d e s i g n i s f i x e d i n time and a new s e t o f c o n d i t i o n s ban now p r e v a i l . F i n a l l y we have c u l l e d t h e d e s i g n down t o t h e n e c e s s a r y p a r t s l c t ' s simplify what's l e f t : Are we surveying each of o u r p a r t s o r p r o d u c t s o f t e n enough, keeping i n mind q u e s t i o n s s i m i l a r t o t h o s e which follow?
( a ) Have we i t e m s purchased a s s t a n d a r d p a r t s b u t modified o f t e n a t a c o s t exceeding t h e o r i g i n a l purchase p r i c e , which c o u l d , by r e - e v a l u a t i o n and s l i g h t changes i n o t h e r p a r t s , be used a s purchased?

( b ) Can we e l i m i n a t e t h e p a r t o r f e a t u r e by combining w i t h other parts? ( c ) Have we r e c e n t l y checked t h e a c c e s s o r y items o r f e a t u r e s t o s e e i f t h e y a r e f u n c t i o n a l a s used today? ( d ) Are we u s i n g a screw machine made s t o p which could be r e p l a c e d f u n c t i o n a l l y by a f l a t p r o j e c t i o n o r e a r ? ( e ) Have we any p a r t s made o f c a s t i n g s r e q u i r i n g machining, which could be made a s stamping? ( f ) Could we, by mounting some p a r t from t h e o p p o s i t e s i d e o r end on a convenient s u p p o r t , g r e a t l y s i m p l i f y and lower t h e c o s t of a t h i r d p a r t ?

( g ) W i l l a s l i g h t m o d i f i c a t i o n of some o f our p a r t s a l l o w b e t t e r n e s t i n g and saving of raw m a t e r i a l ?

( h ) Are we u s i n g s t e e l o r aluminum o r b r a s s d i s c s p a c e r s f o r a job t h a t could be accomplished by f i b e r o r a tough p l a s t i c ? ( i ) Does e v e r y bend i n o u r material a c t u a l l y a s used today perform a f u n c t i o n ? How many t h o u g h t s such a s t h e f o l l o w i n g w i l l h e l p u s t o e l i minate n o n f u n c t i o n a l c o s t s from our products? p u t a l l o f t h e tapped h o l e s i n one ( a ) Simplify the p a r t s p a r t and e l i m i n a t e them from o t h e r s . (b) entirely. Use a v a i l a b l e f a s t e n i n g d e v i c e s and e l i m i n a t e t a p p i n g

( c ) Stamp t h e n u t impressions i n t o t h e p a r t , e l i m i n a t i n g fastening devices, ( d ) Consider t h e a v a i l a b l e s p e c i a l l i g h t s e c t i o n n u t s t o e l i m i n a t e n u t s on washers where a p p l i c a b l e . ( e ) Challenge secondary punch p r e s s , screw machine o r o t h e r o p e r a t i o n s . They f r e q u e n t l y double t h e c o s t .

( f ) When b l i n d h o l e s a r e needed, show t h e minimum depth w i t h t h e n o t a t i o n " d o n ' t d r i l l through'' r a t h e r t h a n s p e c i f y i n g depth limits.
( g ) I n s t e a d of two tapped h o l e s f o r s e t screws a t 90 degrees, p u t s e t screws one on top of t h e o t h e r i n t h e same hole. (h) stampings, Use m i n i a t u r e c a s t i n g s i n l i e u of s e v e r a l small assembled
It

( i ) Use square i n s t e a d of rounded c o r n e r s on stampings. a l l o w s lower d i e c o s t and l e s s o p e r a t i o n s .


(j)

Question c l o s e t o l e r a n c e s which appear nonfunctional.

( k ) Make t h e p a r t s s t r a i g h t i n s t e a d of curved f i t t i n g s c o s t l e s s t h a n elbows. (1) (m) spring.

straight

Don't p l a t e copper p a r t s which a r e l a t e r p a i n t e d . Use squared ends

ground ends double t h e c o s t of t h e

( n ) Avoid undercuts on molded p l a s t i c s t o e l i m i n a t e mold c y c l e s and slower machine cycle.

(0)

Question chrome p l a t i n g o r p o l i s h i n g on screw heads.

(p) Question unusual machined s u r f a c e s . secondary o p e r a t i o n s t o o b t a i n them.

It may r e q u i r e

(q)
(r)

~ o n ' tbend it. Use r o l l p i n s t o e l i m i n a t e reaming.

Should we promote more changes which w i l l a l l o w t h e p a r t s t o be made on high-speed machines u s i n g high-epeed methods? a r e some examples o f v a l u e improvement by t h i s method. ( a ) With o n l y s l i g h t d e s i g n changes, many p a r t s can be t r a n s f e r r e d from screw machines t o headere,
(b) machines.

The f o l l o w i n g

Make t e r m i n a l s of round o r f l a t wire on wire forming


A small f l a t

( c ) Besign small p a r t s f o r d i e - c a s t t h r e a d s . on t h e p a r t i n g l i n e e l i m i n a t e s f l a s h d i f f i c u l t i e s .

( d ) Are we c a s t i n g o r o t h e r w i s e f a b r i c a t i n g p a r t s which could r e a d i l y be c u t o r blanked from an e x t r u d e d p i e c e ? ( e ) Should some of o u r p a r t s be made from r o l l e d forms i n s t e a d of extrusions? ( f ) Should we d r i l l and t a p small p a r t s i n t h e s t r i p s b e f o r e c u t t i n g them a p a r t ? (g) When c r o s s d r i l l e d screws o r b o l t s a r e needed, d e s i g n s o t h a t random d r i l l i n g i s p e r m i s s i b l e . ( h ) Make t h i c k I r r e g u l a r shaped p a r t s of assembled l a m i n a t i o n s t o avoid c o s t l y machining jobs.
( i ) Mold g e a r s from powdered i r o n t o save c o s t o f machining. If e x t r a s t r e n g t h i s needed, impregnate t h e i r o n with copper,

(j)

Mold g e a r s and b e a r i n g s o f nylon.

(k) Use permanent mold i r o n c a s t i n g s f o r lower c o s t and b e t t e r quality.


1 ) On f i n i s h i n g o p e r a t i o n s , save time and p a i n t by e l e c t r o s t a t i c o r hot spraying. (m) Design f o r b a r r e l p l a t i n g i n s t e a d o f c o s t l y hook p l a t i n g ,

(n)

S t r i k e t h e s l o t i n t h e screw i n s t e a d o f sawing it.

(0) E l i m i n a t e i n s u l a t i n g s h e e t s , s t r i p s , punchinge, and welding o p e r a t i o n s by making a compoeite molded p a r t s f o r e l e c t r i c a l applications. etc.,


( p ) I n s t e a d of l o n g screw-machine p a r t s f o r f i l t e r h o u s i n g s , use f l a r e d copper t u b i n g and a small i n t e r n a l f l a r e nut.

(q) Use p r o j e c t i o n s and r e s i s t a n c e weld i n one o p e r a t i o n r a t h e r t h a n spot-weld one s p o t a t a time.

i t machines t w i c e a s f a s t a s aluminurn ( r ) Consider magnesium and f i v e t i m e s a s f a s t a s s t e e l .


(6) On t h i n g e a r s

a l t e r f o r punching i n a t e a d o f broaching,

Determine where t h e d e s i g n might r e a s o n a b l y be a l t e r e d f o r a u t o m a t i c assembly.

(a) Don't use a complicated t e r m i n a l when simple f l a t t e n e d wire a p p l i e d by a n a u t o m a t i c s t a p l e r would do a s w e l l .


(b) parts.
( c ) Don't assemble concealed p a r t s between p l a t e s . Make up some sub-assemblies which a r c made openly and snapped t o g e t h e r .

Don't have s p r i n g e p r e s s i n g a g a i n s t a l l o f t h e assembly

KEEP MATERIAL COSTS DOWN

The f i r s t s t e p i n keeping m a t e r i a l c o s t s down we covered e a r l i e r i n t h i s s e r i e s under t h e t i t l e o f " S i m p l i f i c a t i o n . " The s t e p s now under c o n s i d e r a t i o n a r e s t a n d a r d i z a t i o n , use of lower c o s t p r o c e s s e s and use of a lower c o s t m a t e r i a l . On t h i s l a t t e r

p o i n t however sometimes t h e use o f a h i g h e r c o s t m a t e r i a l which by i t s n a t u r e and p r o p e r t i e s w i l l a f f o r d a s i m p l i f i e d d e s i g n and f a c i l i t a t e lower c o s t assembly i s i n o r d e r , Such a n example would l i e i n t h e

use of b e t t e r i n s u l a t i n g m a t e r i a l s on e l e c t r i c motors.
Although t h e r e a r e on t h e market thousands of s t a n d a r d i t e m s n a i l s , r i v e t s , e y e l e t s , washere, s p a c e r s , b o l t s , screws, e t c . designs frequently c a l l f o r specials. ( a ) W i l l a study i n d e t a i l o f t h e p a r t s o f t h e product r e v e a l t h a t some of t h e i n d u s t r y s t a n d a r d s can be used?
( b ) Have we l o c a t e d t h e s t a n d a r d items and r e l a t e d them t o s i m i l a r s p e c i a l items and r e f e r r e d them t o t h e d e s i g n e r s f o r r e evaluation?
(c) Are we making up s p e c i a l switch s p a c e r s , c o n t a c t s and b l a d e s when we could buy a v a i l a b l e s t a n d a r d s f o r a f r a c t i o n of t h e c o s t t o do t h e same job?

(d) Are we u s i n g some s p e c i a l knobs which could be r e p l a c e d a t a f r a c t i o n of t h e c o s t w i t h s t a n d a r d metal o r p l a s t i c knobs? ( e ) Have we somewhat s i m i l a r items i n our p r o d u c t s which a r e made from d i f f e r e n t raw m a t e r i a l , but which could a s w e l l be s t a n d a r d ized?
( f ) Design around s t a n d a r d n a i l s , r i v e t s , e y e l e t s , washers, spacers, etc.

( g ) S p e c i a l t y vendors provide s t a n d a r d m a t e r i a l s i n many c l a s s e s . For example, use s t a n d a r d t e r m i n a l boards, s t a n d a r d s w i t c h c o n t a c t b l a d e e , s t a n d a r d c o n t a c t blade s p a c e r s , e t c .

( h ) Design f o r s t a n d a r d bushings t o c u t them o f f ,

d o n ' t make it n e c e s s a r y

( 1 ) I n s t e a d of f a b r i c a t i n g t e r m i n a l s , buy t h e m f r m a e p e c i a l i s t i n p a r t s made from tubing, metal.


(j)

Try "Johnson" weld n u t s f o r r e s i s t a n c e welding t o s h e e t They c o s t l e s s t h a n h a l f t h e p r i c e o f most o t h e r s . Use stamped "weld" n u t s f o r even lower c o s t . Use s t a n d a r d s i z e s f o r raw m a t e r i a l t o a v o i d " e x t r a s "

(k)

(1) i n cost.

Use Lower Cost Processes. ( a ) Do t h e o p e r a t i o n i n a tumbling b a r r e l . I f t h e p a r t s a r e mount them on f i x t u r e s i n t h e b a r r e l and t o o heavy and t o o p r e c i s e l e t t h e a b r a s i v e mixture flow through them.

(b)
(c)

Use automatic d i a l tapping machines. Dip i n p a i n t r a t h e r than spray.

( d ) Design p a r t s f o r b a r r e l p l a t i n g r a t h e r than hooking i n s t i l l tank, (e) (f) Use M u l t i - s l i d e machines t o e l i m i n a t e secondary o p e r a t i o n s , Stamp p a r t s i n punch p r e s s r a t h e r than hand stamp.

( g ) Use t u b u l a r r i v e t s r a t h e r t h a n s o l i d r i v e t s which have t o be peened over slowly i n a high speed haanner.


(h)

Lithograph o r p r i n t r a t h e r t h a n e t c h . Permanent mold r a t h e r than sand c a c t ,

(i)

( j ) When d e s i r e d a c t u a l l y reduce t h e s i z e of t h e shank on a screw by a s p e c i a l t h r e a d r o l l e r arrangement.

Often e q u i v a l e n t performance i s provided by a lower c o s t material. For example:

( a ) Use s p r i n g s t e e l i n s t e a d of music wire e x c e p t i n g when e x c e s s i v e l o a d i n g demands a d d i t i o n a l p r o p e r t i e s and j u s t i f i e s a d d i t i o n a l c o s t of music wire. (b) There a r e many tempers of copper and many t y p e s of bronze. Remember t h a t g e n e r a l l y h a l f t h e weight of copper w i l l c a r r y t h e same c u r r e n t a s e q u i v a l e n t bronze,

( c ) Remember a l s o t h a t 1 / 2 t o 1 / 4 t h e weight o f s p r i n g S t a s s ~ r a s s may r o c a r r i e s e q u i v a l e n t c u r r e n t t o phosphor bronze. 4 0 b S u i t a b l e b r a s s c a n be aged t o provide p l a c e 6 5 phosphor ~ bronze. comparable s p r i n g q u a l i t i e s . ( d ) Use T e r r a t e x o r Q u i n t e r r a i n s t e a d of mica f o r h i g h t e m p e r a t u r e , low v o l t a g e a p p l i c a t i o n s . (e) block, Use more magnesium e x t r u s i o n s , hundred d o l l a r s f o r small e x t r u s i o n s . Buy a n aluminum o r o t h e r d i s c i n t e a d of s h e e t o r s t r i p Dies c o s t o n l y a few

(f)

( g ) Check t u b i n g c o s t s . I n s m a l l e r s i z e s , copper is lower c o s t than steel-aluminum and magnesium s t i l l lower-magnesium i s t h e lowest.


(h)

Don't use d r i l l rod i f e t e e l rod w i l l do t h e job. Use Zn-Cu-Be i n s t e a d of b r a s s . Save 20%.

(i)

( j ) Use graphite-impregnated phenolic compound f o r a lowf r i c t i o n , low-cost b e a r i n g , t h r u s t d i s c o r s e a l nose,

( k ) For l a r g e d i e c a s t p a r t s , check aluminum, l e s s than zinc.

It may c o s t

I n some c a s e s , by i t s n a t u r e and p r o p e r t i e s , h i g h e r c o s t m a t e r i a l w i l l a s s i s t toward a s i m p l i f i e d d e s i g n , b e t t e r performance and lower c o s t assembly. Have we, on our p r o d u c t s , p a r t s whose v a l u e

can be improved by t h e following a c t i o n s ? ( a ) Consider f i x t u r e h e a t - t r e a t e d b e r y l l i u m copper t o e l i minate c o s t l y a d j u s t i n g l a b o r . ( b ) Make t h e whole c o n t a c t t i p and support of s i l v e r on c e r t a i n s i z e s of small c o n t a c t s because t h e c o s t i s l e s s t h a n t h e composite b r a s s s i l v e r t i p . ( c ) Use N i c a l o i i n f l u x p a t h s , of t e n save laminat ions. (d) Use S i l i c o n e e The high p e r m e a b i l i t y w i l l

f o r innumerable b e n e f i t s and savings.

n very emell parte with i n t r i c a t e forming use s t a i n l e s s (e) O t o eliminate plating coet.

( f ) For high temperatures and high d i e l e c t r i c strength use Teflon t o produce varioue savinge,
parts,
C08t.

(g)

Use brass instead o f s t e e l on very small screw machine The eaving i n labor more than o f f s e t s the increased material

FINDING SO7:JTIOh9

FOR LOWER COSTS

--

The basic V . E . philosphy is that "There Is .a lover cost w a ) ! t_o_ 8 e t equivalent qi14'1j.t~ m 1 a~ ~ 3 ha" "Of: h e m th$ug,lit of,"

-- - -- --

If progress towards lcwsr costs seems stalled, scme of the following or similar actions must be taken.
1,

Tdcc protlem to the value engineers,

2.

ScLcct a well-qualified vendor put the problem up to him and press him to produce. Get new infornatian and a new i & ? a from him.
Brc3.k the problem down into two or three specific but smaller problems and assign each to a qualified s2ecialized vendor for s c l ~i tcn.

--

3.

4.

Taik it over with the project engineer again. Jointly agree tbat a hypotheticSal 20 per cent of the cost must be rmoved and study with him how to start. Deternine how similar jobs are being done in other branches of the Conpany.

5.

6, Deternine how ccmpetitors are doing it.


9.

Talk about it to a man in one of the laboratories get some ideas from him. the problem

--

-- tell him

8 .
'

Discuss it with the standards, manufacturing or buying specialists. Frequently they have assisting information. Mentally review all of the new processes and products reviewed in trada magazines for their applicability. Mske a quick list of a dozen or o hundred suggestions no matter then study th2 list. how impractical some of them seem imgine that you are forbidden to use As the part is studied it, How then would the job be done? challenge further endeavor. Don't accept just first efforts Value work often pays off after the first answer is " n o . "

9 .
10. 1. 12.

--

--

--

APPROACHES TO LOCATING UNNECESSARY COSTS

A. Eliminate

Change another part (process or form) to perform its function. Check accessory items and features--possibly the need for them no longer exists. 3 . Put all the tapped holes into one part--eliminate them from others. 4 . Use available fastening devices and eliminate tapping entirely, 5. Challenge secondary punch press operations or secondary screw machine operations or other secondary operations, 6 . Stamp the nut impressions into the part--eliminate fastening devices. 7. Use roll pins to eliminate reaming.
1.

2.

B.

Simplify Make the parts straight instead of curved--straight fittings cost less than elbows. Don't plate copper parts which are later painted. When blind hopes are needed, show minimum depth with notation. "Don't Drill Through," rather than specifying depth limits. Use square ends--ground ends double the cost of the spring. Instead of two tapped holes for set of screws at 9ooput set screws one on top of the other in the same hole. Avoid undercuts on molded plastics to eliminate mold cycles and slower machine cycle. Qaestion chrome plating or polishing on screw heads. Question unusual machined surfaces. It may require secondary operations to obtain them. Consider pal-nuts to eliminate nuts and lockwashes on light parts. Don't bend it. Use a miniature casting in lieu of several small assembled stampings. Use square instead of rounded corners on stampings.

C.

Alter so that a high speed method can be used. With a slight change, perhaps it can go on a header or upsetter. Make it of round or flatterned wire on a wire forming machine rather than a complicated terminal. Strike the slot in the screw instead of sawing it. Design parts for die cast threads. A small flat in the parting line eliminated flash difficulty. Drill and tap small parts in the strip before cutting apart. When cross drilled screws or bolts are needed, design so that random drilling is permissible. Make irregularly shaped parts of assembled laminations thin enough for stamping to avoid costly machining jobs. Eliminate insulating sheets, strips, punchings and welding operations by making a composite molded part for electrical appiications.

9.

10. 11. 12. 13. 14.

Instead of long screw-machine parts for filter housings, etc., use flared copper tubing and samll internal flare nut. Mold gears from powdered iron to save cost of maching the teeth. If extra strength is needed, impregnate the iron with copper. Use permanent mold iron castings for lower cost and better quality. Use projections and resistance weld in one operation rather than spot-weld one spot at a time. Consider magnesium --it machines twice as fast as aluminum and five times as fast as steel. On thin gears--alter for punching instead of broaching.

D .

Alter so that standard parts or materials may be used,


1.

Design aroiind standard nails, rivets, eyelets, washers, spacers,


etc.

Specialty vendors provide standard materials in many classes. For example, use standard terminal boards, standard switch contact blades, standard contact blade spaces, etc. 3. Design $or standard bushings don't make it necessary to cut them off. 4 . Instead of fabricating terminals, buy them from a specialist in parts made from tubing. 5 . Try "JohnsonN weld nuts for resistance welding to sheet metal. They cost less than half the price of most others. 6. Use stamped "weld'( nuts for even lower cost. 7. Use standard sizes for raw materials to avoid "extrasM in cost.

2 .

--

E.
1.

Deternine where the design might reasonably be altered for ,automatic assembly. Don't use a complicated terminal when simple flattened wire applied by an automatic stapler whould do as well. Don't have springs pressing against all of the assembly parts. Don't assemble concealed parts between plates. Make up some subassemblies which are made openly and snapped together.

2.
3.

F.

Use lower cost materials Use spring steel instead of music wire excepting when excessive loading demands additional properties and justifies additional cost of nusic wire. 2. There are many tempers of copper and many types of bronze. Remember that generally half the weight of copper will carry the same current as equivalent bronze. 3. Remember also that 4 to & the weight of spring brass carries equivalent current to phosphor bronze. Forty cent brass may replace 65-cent phosphor bronze. Suitable brass can be aged to provide comparable spring qualities. 4. Use Terratex or Quinterra instead of mica for high-temperature, 1ow.voltage applications. 5. Buy a n aluminum or other disc instead of sheet or strip stock. 6. Use more magnesium extrusions. Dies cost only a few hundred dollars for small extrusions.
1.

7. Check tubing costs.


8. 9. 1 0 .
11.

In smaller sizes, copper is lower cost than steel-aluminum and magnesium still lower-magnesium is the lowest. Don't use drill rod if steel rod will do the job. Use Zn-Cu-Be instead of brass. Save 20 per cent. Use graphite-impregnated phenolic compound for a low-friction, low-cost bearing, thrust disc or seal nose. For large die cast parts, check aluminum. It may cost less than zinc.

G.

Use Lower Cost Processes Do the operation in a tumbling barrel. If the parts are too heavy and too precise--mount them on fixtures in the barrel and let the abrasive mixrure flow through them. Use automatic dial tapping machines. Dip in paint rather than spray. Design parts for barrel plating rather than hooking in still tank, Use Multi-slide machines to eliminate secondary operation. Stamp parts in punch press rather than hand stamp, Use tubular rivets rather than solid rivets which have to be peened over slowly in a high speed hammer. Lithograph or print rather than etch. Permanent mold rather than sand cast. When desired actually reduce the size of the shank on a screw by a special thread roller arrangement.

H.

U J higher cost materials, which, by its nature and properties will afford a simplified design and facilitate lower cost assembly. Consider fixture heat-treated beryllium copper, when phosphor bronze won't quite do the job. Eliminate adjusting labor. 2 . Use Silicones--for innumerable benefits and savings. 3 . Make the whole tip and support from silver rather than silver tip and brass support. Eliminating welding may offset the cost of additional silver. 4 . Use Micaloi In flux paths. High permeability may save many laminations. On very small parts with intricate forming use stainless to 5. eljminate plating cost. 6. For high temperatures and high dielectric strength use Teflon to produce various savings. 7. Use brass instead of steel on very small screw machine parts. The saving in labor more than offsets the increased material cost. 1 .

I . Miscellaneous Lower Costs


Use a good s&npling method iastead of 1 0 0 per cent inspection. 1. 2. Make an entire subassembly smaller, reducing material accordingly. 3. When buying adjacent parts from a vendor, have them pre-assembled if practicable.

4 . Don't spend money for sizing if supplementary operations are necessary anyhow. 5. Make as many parts as practicable on a particular job of identical raw material. 6 . Design part and tools to hold scrap in machining to a minimum. 7. Hopper feed parts in assembly. 8. Provide proper tooling to eliminate need of expensive labor. 9. Conveyorize to facilitate material handling. 1 0 . Avoid complicated equipment that requires continuous scrutiny and maintenance.

J.

Check it against other methods of fabrication.


1.

2. 3, 4. 5. 6.

Fabricate it. Die cast it. Extrude it. Permanent mold cast it. Roll and weld it. Roll form it.

K.

Check it against unique, less well-known methods of fabrication.


1.

2. 3. 4. 5. 6. 7. 8,

L~st wax casting. Kiniature casting. Miniature casting on wire, cord, tape or rod. Miniature casting automatically with inserts. Electro-forming. Low cost, low quality stampings. Fabrication from copper or brass tubing. Power metallurgy.

L.

Check unusual but available forms of raw materials for use on the job. For example, Steel. Preplated Steel Prepainted Steel Steelclad with aluminum. 4 . Fibreclad Steel 5. Rubberclad Steel 6. Embossed Metal 7. Expanded Metal
1.

2. 3.

Stainless, monel, etc.

Or Miscellaneous
1.

2. 3.

Silicones Nylons Micalex, etc,

M.

Survey the purchasing with the buyer.


1.

Are the available highly specialized low cost suppliers being used?

2 . 'Have the suppliers' engineers been given sufficient facts and pressed for suggestions whch would produce equivalent performance at lower cost? 3 . Has the buyer taken advantage of the know how of other purchasing units using larger quantities of similar materials? 4 . Should some minor changes suggested by the supplier which afford lower cost materials, be considered further? 5. Has the buyer found the basic source, the manufacturer who may be in a position to extend minimum prices? 6. Are parts obtained in best economical lot sizes?
March 1966

D.

MANUFACTURING PROCESSES

MANUFACTURING PROCESSES 1. CASTINGS most economical c a s t i n g method b u t a c c u r a c y i s n o t t h e Tolerances of f 1/32" up t o 12" p o s s i b l e , b u t because of s u r f a c e i m p e r f e c t i o n s and i n c l u s i o n s , c r i t i c a l s u r f a c e s must i n c l u d e e x t r a m a t e r i a l t o a s s u r e c l e a n up t o f i n a l dimension.

best.

Sand

Permanent Mold - a s s u r e s accuracy and p r e c i s i o n i n r e l a t i v e l y complex c a s t i n g s . Molten m e t a l is poured by hand i n t o p e r manent m e t a l mold t o form c a s t i n g . Good s u r f a c e q u a l i t y .002 p o s s i b l e . Tolerances k 1/44" f o r first i n c h w i t h a d d i t i o n a l f o r each l i n e a r i n c h . Minimum d r a f t 2' p e r i n c h per side.

'

- Very c l o s e t o l e r a n c e , smooth f i n i s h and a c c u r a t e r e p r o d u c t i o n o f complicated d e t a i l . Two major methods used, i n t h e f i r s t a i r i n j e c t i o n f o r c e s t h e m e t a l i n t o t h e mold under p r e s s u r e and i n t h e second vacuum i s a p p l i e d t o t h e mold and m e t a l i s flowed i n .
Die C a s t i n q
.001 f o r each a d d i t i o n a l Tolerances f .002 f o r first i n c h and l i n e a r i n c h . Dimensions a f f e c t e d by d i e p a r t i n g l i n e +.010 -.000 and minimum d r a f t . O I O O p e r i n c h . Wall t h i c k n e s s o f .050 p o s s i b l e w i t h t h i s process. S h e l l molding - i s recommended f o r l a r g e volume production. This p r o c e s s g i v e s p e r f e c t p a t t e r n d u p l i c a t i o n , improved d e t a i l , smoother s u r f a c e f i n i s h and l i t t l e waste m e t a l . Tolerances .010 f i r s t i n c h .002 each a d d i t i o n a l i n c h , p a r t i n g l i n e -015 and d r a f t ,5O p e r inch.

'

'

-.

C e n t r i f u g a l C a s t i n g - I n t h i s p r o c e s s t h e mold i s spun and c e n t r i f u g a l f o r c e is u t i l i z e d t o c a r r y metal t o a l l points i n t h e mold. This p r o c e s s i s used p a r t i c u l a r l y f o r c a s t i n g r o t o r s f o r s m a l l motors. Lost Wax - E x c e l l e n t r e p r o d u c t i o n and c l o s e t o l e r a n c e s p o s s i b l e . Wax i s i n j e c t e d i n t o a d i e under p r e s s u r e t o form e x a c t r e p r o d u c t i o n o f p a r t . A f t e r removal many p i e c e s a r e a t t a c h e d t o a c e n t r a l runner o r t r e e . This t r e e i s t h e n i n v e s t e d i n a p l a s t e r f l a s k . A f t e r p l a s t e r has cured, f l a s k s a r e f i r e d a t high temp e r a t u r e t o remove wax which m e l t s o u t and molten m e t a l i s t h e n poured i n t o c a v i t y formed by wax.

G.

Frozen Mercury P r o c e s s V a r i a t i o n o f above p r o c e s s . Nercury i s f r o z e n i n molds t o a c t as wax d i d above f o r m i n g e x a c t r e p r o d u c t i o n o f p a r t . T h i s f r o z e n mandrel i s d i p p e d i n t o a c e r a m i c s l u r r y s e v e r a l t i m e s u n t i l a c o a t i n g a p p r o x . 1/16" t h i c k i s formed t h e n mercury i s a l l o w e d t o m e l t and m e t a l i s poured i n t o t h e mold t o r e p r o d u c e t h e e x a c t p a r t . T h i s p r o c e s s is used e x t e n s i v e l y i n p r o d u c i n g complex waveguide s h a p e s .

H.

- T h i s c a s t i n g p r o c e s s was d e v e l o p e d by F a i r c h i l d and c o n s i s t s o f bonding t u b e s o r b o s s e s of d i s s i m i l a r m e t a l s i n t o aluminum c a s t i n g s . The p r i n c i p a l u s e f o r t h i s p r o c e s s i s f o r h i g h p r e s s u r e h y d r a u l i c p a r t s and where it would be a n adv a n t a g e t o have a m a t e r i a l w i t h e i t h e r g r e a t e r s t r e n g t h o r g r e a t e r wear r e s i s t a n c e w i t h o u t s a c r i f i c i n g t h e w e i g h t s a v i n g o f aluminum.
A 1 Fin Process

2.

FORGINGS
A.

Closed Die F o r g i n g - F o r g i n g m a t e r i a l is h e a t e d and formed u n d e r a d r o p hammer t o t h e rough s h a p e o f t h e d i e , t h e n t h i s b i l l e t i s i n s e r t e d i n t o d i e and h i t u n t i l d i e c l o s e s . Excess m a t e r i a l i s l e f t around t h e p a r t and a s e c o n d a r y o p e r a t i o n o f trimming t h i s f l a s h i s n e c e s s a r y . T o l e r a n c e s a r e q u i t e l o o s e e s p e c i a l l y t h o s e a f f e c t e d by t h e d i e p a r t i n g l i n e . S t r e n g t h o f f o r g e d m a t e r i a l s i s u s u a l l y much h i g h e r t h a n c a s t .

B.

HERF -

High e n e r g y r a t e forming. The f o r g i n g p r e s s i n t h i s p r o c e s s i s powered e i t h e r by h i g h p r e s s u r e h y d r a u l i c s o r h i g h p r e s s u r e g a s . The ram i s d e l i v e r e d a t tremendous v e l o c i t y and a s i n g l e impact forms t h e p a r t . T h i s p r o c e s s g i v e s e x c e l l e n t d e t a i l and e x t r e m e l y h i g h t e n s i l e s t r e n g t h i n t h e finished piece.

C.

Cold Heading - I n t h i s p r o c e s s p a r t s a r e formed from b a r s t o c k , by u p s e t t i n g t h e r o d i n t o a c l o s e d d i e . P r o c e s s used e x t e n s i v e l y m a n u f a c t u r i n g b o l t s and screws. Rotory S w a ~ i n - ~A number o f shaped punches a r e a c t u a t e d by a cam c a u s i n g a s e r i e s o f hammer blows i n r a p i d s u c c e s s i o n . Used t o r e d u c e t u b i n g d i a m e t e r s u c h a s choke i n s h o t g u n b a r r e l and f o r a s s y . s u c h a s f a s t e n i n g a m e t a l h a n d l e t o a t o o l .

D.

POWDERED METALS Metal powder i s compressed i n a mold under h i g h p r e s s u r e t o form p a r t . A secondary s i n t e r i n g a t h i g h t e m p e r a t u r e i s n e c e s s a r y t o bond powder t o g e t h e r and i n c r e a s e s t r e n g t h . T h i s material makes an e x c e l l e n t b e a r i n g s u r f a c e and new technology h a s i n c r e a s e d t e n s i l e s t r e n g t h t o make t h i s p r o c e s s a s e r i o u s c o n t e n d e r f o r p a r t s previously c a s t .

4.

EXTRUSIONS
A.

Die E x t r u s i o n - This p r o c e s s g i v e s you b a r s t o c k a l r e a d y formed t o p a r t c o n f i g u r a t i o n on O.D. s u r f a c e s . Die c o s t r e l a t i v e l y low. E l i m i n a t e s much c h i p removal by s u p p l y i n g m a t e r i a l t o f i n i s h shapes. Impact E x t r u s i o n - Used f o r t u b u l a r s h a p e s i n aluminum. P r e s s u r e e x e r t e d by a ram f o r c e s m a t e r i a l t o f l o w upward between punch and d i e . E x c e l l e n t f o r c l o s e d end t u b e s , s p e c i a l s h a p e s , i . e . f l a s h l i g h t body, e t c . s e r r a t e d O.D.,

B.

5.

METAL FORMING
A.

Hydroform - Deep drawing o f s h e e t metal. Male d i e o n l y i s used and r u b b e r diaphragm backed by h y d r a u l i c p r e s s u r e forms p a r t s around punch. Good d e t a i l and c l o s e t o l e r a n c e s p o s s i b l e . Explosive Forming Two d i f f e r e n t p r o c e s s e s now i n u s e , f i r s t u s e s e x p l o s i v e power o f dynamite t o form p a r t s i n t o female d i e . Second p r o c e s s u s e s c a p a c i t o r d i s c h a r g e under w a t e r f o r explosive force. Manneforrn This p r o c e s s u s e s t h e power o f a magnetic f i e l d c o l l a p s i n g around t h e p a r t t o form o r p i e r c e l i g h t m e t a l s . Forces of around 50,000 PSI a r e p o s s i b l e . Metal Spinninn & Hydro S ~ i n F l o Turn These a r e a l l v a r i a t i o n s o f t h e same p r o c e s s u s i n g power assist t o move m e t a l . S u i t e d t o l a r g e p a r a b a l i c r e f l e c t o r s , exhaust n o z z l e s f o r j e t engine, etc. Hobbing, o r Coining - Hydraulic p r e s s u r e i s used t o f o r c e male punch i n t o bloak t o produce e x a c t s i z e and d e t a i l . This p r o c e s s bsed i n t h e manufactbre o f magnetron t u b e bodies.

B.

C.

D.

E.

6.

METAL J O I N I N G
A. Laser Weldinn and S o l d e r i n g Laser beam has s u f f i c i e n t h e a t f o r welding l i g h t gages and can be u t i l i z e d f o r d r i l l i n g t i n y holes. I n d u c t i o n S o l d e r i n n & Brazing - P a r t i s h e a t e d i n an e l e c t r i c a l f i e l d . Very c l o s e c o n t r o l o f h e a t and d u r a t i o n o f h e a t c y c l e . F r i c t i o n Welding P a r t s are r o t a t e d a g a i n s t each o t h e r u n t i l welding t e m p e r a t u r e i s reached a t i n t e r f a c e of p a r t s . E l e c t r o n Beam Welding Performed i n a h i g h vacuum. Welds d i s similar metals and welds are s t r o n g e r t h a n p a r e n t metal. Used f o r pressure vessels, etc.

B.
C.

D.

E. F.

Ultra Sonic Weldinn & S o l d e r i n g - Allows s o l d e r i n g w i t h o u t f l u x r e s u l t i n g i n l e s s contamination o f f i n i s h e d p a r t .


P r e s s u r e Welding - ( D i r t y S h e e t Method) This p r o c e s s i s used f o r bonding two s h e e t s o f aluminum t o g e t h e r . An i n h i b i t o r i s sprayed i n - t h o s e a r e a s we do n o t want-welded and p r e s s u r e i s a p p l i e d welding s h e e t s t o g e t h e r . Then h y d r a u l i c p r e s s u r e i s i n t r o d u c e d a t t h e edge t o c r e a t e t u b i n g e f f e c t . A good example o f t h i s t e c h n i q u e is t h e f r e e z e r p l a t e i n your r e f r i g e r a t o r

7.

METAL REMOVAL

A.

Chemical M i l l i n g - P a r t s a r e masked and t h e n immersed i n a c i d which m i l l s away p a r e n t metal. Examples a r e Wing Panels X15 a i r c r a f t and c i r c u i t boards.
ECM E l e e t r o Chemical M i l l i n g - High e l e c t r i c c u r r e n t passed through s a l t s o l u t i o n flowing o v e r t h e p a r t a c t u a l l y d e p l a t e s material.

B.

C.
D.

EDM E l e c t r o Discharge Machining C a p a c i t o r d i s c h a r g e causes d i s integration of metal i n f r o n t of t o o l .

U l t r a s o n i c Impact Grinder Ultrasonic force drives abrasive i n t o metal ahead o f t o o l and g r i n d s u n t i l t h e s t r e s s c r e a t e d by t h e a b r a s i v e i s g r e a t e r t h a n t h e f o r c e s whibh hold t h e m a t e r i a l together. S u r f a c e Broaching - P i e c e i s s e c u r e d t o t a b l e w h i l e broach i s dragged a c r o s s f a c e o f p a r t . Very good f o r g e n e r a t i n g contoured s u r f a c e s . This p r o c e s s i s used e x t e n s i v e l y i n gun manufacture.

E.

8.

WIREFORMING

This p r o c e s s a l l o w s t h e s u b s t i t u t i o n o f s i m p l e wire forms welded t o g e t h e r as a l t e r n a t e f o r c a s t i n g s , deep drawn h o u s i n g s and complex a s s y s . Low c o s t h i g h d e p e n d a b i l i t y p r o c e s s .

9.

METAL FINISHING
A.

Ultrasonic F l a t i n g - Better adhesion cleaning operations.

f i n e r g r a i n and l e s s

B.
C.

V i b r a t o r y Deburrinq - V i b r a t i n g p a r t s w i t h a b r a s i v e media t o g e n e r a t e r a d i i and remove b u r r s . Electrostatic Painting An e l e c t r o s t a t i c f i e l d is c r e a t e d around p a r t being p a i n t e d and p a i n t coverage is e q u a l f r o n t and r e a r o f p a r t w i t h o u t r o t a t i n g work. C h l o r i n e Deburring P a r t s h e a t e d by r a d i a n t h e a t s o u r c e i n a c h l o r i n e atmosphere. S i n c e b u r r s a r e s o small, t h e y h e a t f a s t e r t h a n t h e mass o f t h e p a r t , and combine w i t h t h e c h l o r i n e and d i s a p p e a r as a gas. Shot Peening Glass Bead B l a u t i n ~ Removes b u r r s and work hardens s u r f a c e a r e a . E l e c t r o ~ o l i s h i n g P a r t s are immersed i n p l a t i n g s o l u t i o n and p o l a r i t y switched r e s u l t i n g i n p l a t e and d e p l a t e c y c l e s which remove a l l h i g h s p o t s and p l i s h i n g p a r t s . E l e c t r o f o r m i n q - P l a t i n g a p p l i e d o v e r mandrels t o g e n e r a t e complex i n t e r i o r c o n f i g u r a t i o n s . Used f o r waveguides, e t c .

D.

E.

F.

G.

COB& Design and Production Factors in Selecting Fabricated Materials and Parts
Permanent Mold Castings Plaster Mold Castings Die Castings

/
I

~nvestment castings

Low to d i u m , depending Medium-nonferrow alloys Medium-nonferrous alloy Medium-mostly zinc, alu-1 High-proupon metal. uned primarily. only.

Loco aa compared to dies Modcmtthigher


urd molds.
Wide mnga from a few piecea to 10,OoQ.

than other caatmg methods except die casting. Large-requirements in thownda k t .

Medium-between permapent mold and nand caat ~ 3 h to O2,000 beat range.

beat miter to special, costly alloys uminum and magnesium. High, more than for other. Loco to W m l c dependin1 upon a model being casting methods--$200 available. to $5000 or more. Lurge, 1,000 to hundreds Wide, 'although beat for l e a n than 1.000 piema. of thousands.
&oco 00 d i m .

H i g h e n n d e d to mold Medium mdt, clean, mag, etc.

t h u n d csst~hining ing. Loco--moat scrap can be r e d . Choice of mater i . t


Widtnosferro~u alloys and g a y i m a

Imo to modemfc-lean ma- LocrP--Little machining


needed. Lao-most in foundty wrap which can be reNarrou~-liaBiMto brass, bronze and aluminum. Grd-mold destroyed after casting. Modcnnbt-up to 15 Ib in most materials. Smcrll+own to %,-in. sections poes~ble. Fair Good--M.OfO in. None

II

High-many skilled operatom neceamy.

H i g h - m a n j h d opentions q m r e d .

d.

-little if any machining, only a simple trim. Lore-- tes spruee, etc. can remelted. Narruw-zinc, aluminum, magneaium and braaa.

-machining

not generally necessary.

-moat serap e m be remelted.

ConsGiedIe- holm, b- Limitad-mold cannot be ses, locating prds, comhighly complex.


Hfp2p& or larger t&n any other method. Modtmtc-W Ib is practical limit in alummum.

J$ in. ia the nmallest prac- Small-1 oz sections as thinasO.1 in. often csst; t i d aection thckneas. some smaller. Fair to high, depending upon t b m a t e d . in. per in. of eaeting except for shell moldixqg. Good b e d q Etrllcture. Fair-good in centrifugal castings. In a l y u m , brass Centrifugal castings have high strength and denaity.
III

( f i ~ & l i m i t d only by (ficd-111018 destroyed after d o g-. die, which can be comphx. Mo+?mlcabout35 lb for Modcmfc-large sizes pot3 zmc, leaa for light sible, but under 2 Ib metals. beet. T i n p f r o m fractions of S d - a e c b i o n s down 0.030 in an ounce down to 0.012in. sections. Fair to good.

Lao to p4~k+.e-fj4~ in.

ger lo: etter

to M . 0 0 5 @gh-M.001 to M.003 G d - t o M . 0 0 5in. per ~ n common. . in. general.

lGood

Inserts of other metab Sone


can be cast in.

Poor

+ , often obviate8 finirh-

Fair

Good, often
Good

hshing.

obviates

EmW
Ezecllcn(

Getting into Prodrretlon

Modcmts--3 to 6 da for pattern to be m a 2

Modsmb--eeveral days to aeverd we&.

Modsmk--several days to r few weeks.

P.te of Oatput

25 to 600 or more pieces pel M&-uptolWprhr ~i h u . t o I000 p r hr hour b uning modern way, often more. I ng upon maem msthd. Most snnd crstinge require Fall between sand caetings Over-all costs less than for some machining. and die castings as far esnd castin@. as most production fsctom are concerned.

1 8-d:

Mmlcmle to rho-from a week to several weeks.

I, Faat---80metimea in a few houm:


Slow-up

High-usual range from 100 to 1,000 per hr, up

to 100 per hr.

Among the most economi-, Ueed beat on parta too cal metal forms. complicated for other casting methods or , wheremachiningisdif; ficult.

to 3,500.

--0

a ,, 4 I
r.

d c ( o

.:

1
0

fa

dS

peg

I ii! 8 j
0

j I s

m ;

m j

-mi! 4 1 1 a 1 iI !g
k

8 is
a
&

B
cn

d a 383
V1

A* %

PI

Cut Extruded Shapes

Powder Metal Parts


--

Spun Shapes
low f a moderate4( to

Screw Machine Parts

RAW Materids
Cost

bodarafe-usually zinc, lead and aluminum. beditma---some dies less than

Yigh-usually per Ib.

Tool and
Costs

Die

m.

Medium to hi h ders cost 20/tLi:.& ' per lb. Low-cuttin done with Medium-range from I $150 to $2,500. simple too%. over 206

'

606 per Ib. ;ou+forma cost from $25 to $200. Lowquantities under
1,000.

/, Lao d i u r n - aldom on high alloys.


lo
I

Kedium-from $50 t o $200 common. >arge--the lnrger the better, over 1,000. b w - o n e operator can handle mveral machina. hw-cleaning and deburring. High-large quantities of chipa generated. W i d t a l t h o u g h high1 machinable materiaL best, including plsstim. Limifcd t o rotational shapes. Medium-most machines use stock up to 2%-in dia. and 6 in. long. Small--often under in. din. and weighing fractions of an ounce. High High-f O.OO5 t o 0.001 in. po.seible; fO.OO1 tc 0.003 in. common. None

0 timum Sired Eotr


DIrect Labor Co8ta

V a range-from thouaanda t o millions


M t t l e skilled labor

needed.
mt

F~~

Costa

; w b l y no finishImcP--moet loss in blank


ing .trap.

Scrap Loss

Vide range-uaeful for , Large lots best ( 1 0 , 9 ) , large and small lots. i but small runs rmght be necessary. Cowskilled labor not / Moderafe-eome skilled required. ! labor needed for cer/ tain sto Lo-tumbling or deLO--!king eeldom burr in^ mieht be i needed. needex +waste removed a t / Low-practically no ,1 scrap. extruding mills. h-arrovcopper and Narrow-iron braee and light metals, but steel combinations; plaatic~ processes being develcombinations. oped; plastics. 1 Limited-can be cam lexi Limited-powders flow in cross section onyy. ; poorly and do not 1 transmit pressuree. Medium-& or 10-in. diLi.1 Low-parts below 4-in. is usual maximum. sq. are beet; laraer I are made. Small-4.050-in. sections Small- arts smaller possible in nluminunr ' than Pis-in. dia. can and magnesium. be made. Good--light metals can Fair to good-impact be heat treated; strong1 values low, wear recopper alloys used. I sistance high. 0 . 5 in. to 0 OM High-f0.0005 in. Fair-&O 0 ~ n common . through sizing; fO.OO to 0.005 in. common. Grain flow improves i Many possible etrucproperties somewhat turea; controlled porosity, complex materisle. Good Fair-depends upon - DOI roaity.Only an part of contour. j Fair-eorne detail on I certain surfaces. Fast-when stock.
I

Yigh--skilled carftam~n needed. Cow-cleaning and trimming. Mo&raie--comes in cutting blanka. W i d t m a n y sheet metals are spinnable. Limited-cylindrical or concentnc shapes. L a r g e c a n be several feet in diameter; max. gages % to % in. .\loderate-%-in. in dia. in gages leea than 0.040 in. are made. Good Fair-fO.015 to 0.060 in. common; f 0.005 in. can be had. Grain flow and cold work improve properties. Good-often better than other methods. S a n e posrrible.

Von'd1o--beet on soft ms*, 1 - 4 . copper, alummum, cmc.

t i d e d t o shell-like ehapes usually.


Medium-+in. dia. by 12-in.length.

MInImurn Size

3 d - f r a c t i o n s of an ounce;walls ae thin aa 0.003 in. AigA-Metals worked. cold

xs-

Mech.niul Prop
ertlea Preddon md Toleraucea s p w Strtubn Clurncterldca

A' &tolerances closer &n 0.001 in. are com-

mpn. 3rrun flow improveb


propertim somewhat.

Surface Smoothneu Surface D e t g

gOga, if required.
Fair-diee can be had in a few days.

Rate of Output

High--%mall arts can be producex a t rates

M::ik?E

%$~sed on mechanical parts M well as containere.

shapes are ini Medium--&a must be! I Fast-fom can be carefully designed an made quickly. made. High-1,000 small parts High-1,800 per hr is I Slou-12 to 30 per hr per hr; possible on not uncommon; can ' common. automatic saws. be higher. Sometimes used as Can use materiala not , Over-all costs on large blanks for forging formable by other pieces less than by methods. other methods.

dl

Moderakly foal-tooling and net-up may take several days. High-3,000 t o 4,000 per hr on small parta. When ehapea and materials agree, process is fastest, cheapest and most accurate.

Blectrofowed Puts

Welded md Brazed Parts Iigh-20j more. per lb or


sw to moderate.
m o b modcraltjigs

Raw M aoerids
Cost ~ o o l and Costs Die

no to high-iron

to

chromium. igh-mold Iseta, but must be perfect. nall-best when few pieces are needed. 'edium to high-both skilled and unskilled labor needed. -no mbeequent finishing. -little scrap. if any

m o - c u t t i n done with simple t m L Vide r a n g e g o o d for small and large quantities. hm-akilled labor not required.

often used. imall, but brazing can handle large-lots. fedium b high--skilled labor required. tedium-joints be cleaned. muat no

Kcdium lo high-on a er lb b ~ i 15j a to 1.50 per lb. Medium b high-from $100 up usually.

Moderate to high. Medium-moet dies and molds of simple shape. W i d t f r o m low to high. Special properlties are guide. I foderote-proceaem not automatic. h - e x c e p t where low t o l e ~ c e a m involved. b m & scrap re&. Yarrow-ceramia. rubbea, carbon, graphib. timiled by dies and molds.
Small bert-including

0 tlaaum Shed

L t a

Large-over

5,000 beat.

Direct Labor
Costa

b m m t operations automatic. h e f i n s and flash removed by tumbling. Uedium b lowthermopl&ice are reusable. Wide range of lastics with many cgaracteristics. Limited byedie! but some conng is possible. Moderate-under 2 Ib best in some mnteriais; larger poesible. Small-%z in. thick is common mlnlmunl.
I

FidohIng Costs
s a p Lo= Choice of mate-

Low--practically no scrap. W i d t a l l ductile metals and plastics. Limited by sectional shapes of available tubing. Usually 4 to 6 in. O.D.. some materials up to 2 2 in. in welded tube. Yoderate->i O.D. in. most, although specialty tubing as small as 0.012 in. Good-cold working adds lo properties. Good-small sizea t o f 0.002 in.; larger to fO . O O 4 t o 0.025 in. Grain flow improves properties. Good Kone Fast--aha ee often a v a i l a b i from stock. High-automatic machines often uaed. Coats can be reduced considerably througt lower scrap loaaea.

ho-practically scrap.

rirlr

r a v ~ i r o ncopper, , nickel, chromium. +eat--extreme complexity possible. imited-by plating equipment, aectious up t o in. possible. ;mall--0.005 in. or less possible. pait-lower than wrought forma. figh-f0.002 to 0.0002 in. met regularly.

Videdissimilar metals can be joined. 70inplez and intricate forms can be produced. [Inlimited Uoderale-usually not emall-thin and thick sections can be joined. Depende upon componenta. Ycdium-joints seldom closer than f 0.070 in. Special property parts can be combined. Depends upon components. None in joining procew..

Complexity of

Puts

Maximum Size Minimum Size

cylindea u p to 6 in.

Fairly mall, depend. upon material baing formed.

I.D.

Mech.nlul Prop.
d e e P r e d d o n and Tolerances

Lou, as compared t o
metals. High-f 0 . W in. common; can be closer. I v r t a can be molded in.

Low as compared t o

m0t.L.
M d a r d b c l o w dimensiom obtained by extra opentioonr. None

S p e d d S t r o c t u r ~ Cxtremely dense structures; laminated Chuacterl.tics metals possible. Surface Smoothneu Surface D W ErceEIent, high finish attained. Tzcclknl-minute detail and intricate patterns reproduced. Slow-master or die might take several weeks to prepare. S l o w t i m e usually fig: wed in houra or days. Best when parts are I complex and surface accuracy IS ~ m p o r tant.

Good

Fair, depends upon matenal. Fair b poor. Fair-dies and mold fairly simple. S e p a r t a req-uin balun or cunng after forming. All materials have special characteristics which dictate their choice.
I

Getting Into Production

Rate of Output

Fait-when component: Sbur-molda require have been dec~ded considerable time. upon. Variebbrazing can he Moderate-#) to 300 fast as can reeistancc shots per hr. welding. Often the only way to Cnn serve M alternates meet deaign requirefor metal parts a t ments. ' lower cost:

E.

WORKING W I T H SUPPLIERS T O C U T C O S T S

WORKING WITH SUPPLIER8 TO CUT COSTS

Lack of proper rupplier-curtomer confidence is costing induetry millione of dollare a year, Utilfte fully the knowledge and experience of suppliers to cut thie lore. Thie is the l e r r o n Oarin B. Werntz, executive 'eecretary 9f the National Screw Machina Products Aesociation, ie continuing to preach to Buyers of induetrial components, Hie euggertione a r e applicable to p a r t s other than thoee turned out by screw machine s h o p , and worth reviewing. Specifically, Werntrt rugge et e: When poeeible, guarantee a total production run, even if thie total quantity ie not completed in any eingle run, eo the supplier can abeorb extra tooling coete and thue deliver the p a r t r a t a lower price. Explain inspection requirements thoroughly. This tends to emooth delivery schedule e and can often eliminate unnecer eary costs. Don't over-rpecify dimeneione which add unneceeearily to the fitral cost of the part. Conedt with the eupplier to see if tolerances, concentricitiee, and surface finiekee can be expanded in certain key a r e a s , thus reducing coste of both machinJag and inspection. Give sufficient lead time 13et~p8,
80

the supplier can eliminate the need for multiple

Determine longer range requirements for a given part eo the supplier can take advantage of lees expensive mill shipments of raw material. Aek the eupplier if a piece can be completed on a screw machine without need for co etly eecondary operatione. Aek if subetitute material@can fit part requirementr. Many times hie knowledge of the machinability of metale, for example, can lead to eavinge.

F.

TWO WAYS VALUE A N A L Y S I S


CAN A I D PURCHASING MAN

Two Waye Value AnJyeir C a n Aid The P u r c h a s i n g Man by F r e d e r i c k 8. Sherwin, Manager Value E n g r g . & Analysie S e r v i c e s Raytheon Company

How many people today a r e in the m a r k e t f o r $100 p a i r of s h o e s ? Even if I w e r e to guarantee that they w e r e top quality, w e r e hand stitched with gold t h r e a d , w e r e the m o e t comfortable you had e v e r worn, and that they would outwear your p r e s e n t ishoes ten t i m e r ; I doubt t h i t I would find m a n y c u s t o m e r s . Why? The p r i c e is obviously Q L of ~ l i n e , Everybody h o w s f r o m experience that you c a n buy a satirsfactory p a i r 9 , ' nhoes f o r f r o m one-tenth to one-fifth t h i s cost.
Z .:ring this up to m a k e the point that i n m o e t A m e r i c a n Industry today we a r c buying

$100 p a i r s of shoes. While i t m a j not be a s obvious, neverthelees, we a r e paying m o r e than we should to obtain the d e s i r e d function. F o r instance, a n a i r c r a f t engine x a n u f a c t u r e r w a s buying hundreds of thousands of t h e s e s m a l l s t a i n l e s s etecl wa8he r e . T h e y w e r e s c r e w machined out of solid b a r stock, chamfered, d e b u r r c d , tumbled, and coet 15 c e n t s e a c h . It wae found that a w a s h e r stamped out of sheet stock would do the job just a s well for a c o s t of 2 c e n t s , a y e a r l y raving of $80,800. A caee of the $100 shoes. This was a common, s m a l l bulkhead etandard in e v e r y s e n s e except i t w a s not 90". Now everyone aluminum elbow knows that you can't buy an 8ti0 elbow eo t h i s had t o be machined out of solid aluminum stock a t a coet of $3. 50. Sometime l a t e r when someone thought to question t h i s coet, it w a s found that a manufacturer who m a d s etandard fittings would m a k e this special for 52 c e n t s .
O r , how about the c a s e of the 850 elbow?

--

What about t h i s c h a r t which bolts to the front of a piece of electronic g e a r ? Would you pay $36. 50 for t h i s s m a l l piece of paper and p l a s t i c ? Industry is. A c a r e f u l analysis of c o s t s revealed opportunities f o r reducing the calibration c u r v e d r a f t i n g t l r n e , elimination of a photo reduction p r o c e s s , and the substitution of p l a s t i c laminating for vacuum bag molding with a final cost of about $5.00. $100 ehoce? T h e s e things m a y look p r e t t y simple a f t e r the fact, but the fact is, they didn't look r ~diculous a t one t i m e . They w e r e accepted. How m a n y things which r e p r e s e n t p - o r value a r e accepted in e v e r y b u e i n e s s ? O d y c a r e f u l analyrim of cornto will a.rewer t h i s queetiorr.
Ar one of the key people in any business, the P u r c h a s i n g Agent i e in a g r e a t position to highlight opportunities for b e t t e r value. In many busineesee a s much a s 5070-60% and even 7570 of the money spent funnels through purchasing. It is the b u y e r ' s job to s e e that t h i s money doesn't funnel down the drain. T h i s is no e a s y t a r k . Today's buyer h a s to be something of a n e x p e r t in many f i e l d s . T o be m o r e than juat a p a p e r

work purher, he has to be able to understand the technical aspects of the product; he h a s to know methods, materials, processes, hundreds of good suppliers, their ability and capabilities to meet h i s needs, and many other things Because of the complexity of the business world today, the buyer neede help from many a r e a s to be able to do an affective job.

One of the new programs that har been developed in recent y e a r s to help the buyer
is Value Analysie. Briefly, Value Analysis i s a rystematic approach to finding lower c o r t r by the use of certain basic techniques, Rather than stumbling into ways to buy more for less, Value Analysis uses an organized approach to show up a r e a s of excerriva c o r t r , and points the way to better value.

There a r e two wayr pureharing can make the best ure of Value Analyris, The first i s : Every purchasing man rhould gain a working knowledge of Value Analysis
techniques and methode so that he can apply them in his everyday work. There a r e some twenty of these techniques, but I will only touch on five of the m o r e important ones h e r e . They are:
1. The JobPlan. This i s the planned approach to finding unnecessary costs and developing new ways to obtain the same function for l e s s , Every job i s done better when tackled with plan in mind.

FunctionalEvaluation. Here i s a powerful technique designed to tell you when things cost too much and help you set cost objectives, A good example of functional evaluation would be the analyrie of a cigarette lighter, Itr main function i s to provide heat. What else will provide heat? Obviouely, a book of m,atches a t a much reduced coet. Someone must make the decision whether to pay the extra cost f o r the lighter to perform this function, Good purchasing considers the function it i s buying.
2.

3, Evaluate by Comparison. All value i s determined by cornpariaon. A case the lighter and its cost compared to the matches and f h e i r cost. in point

....

4. Creative Thinking. The generating of many possible solutions to a problem before evaluation. There a r e hundreds of poseible way8 to do every job. The more you have to select from, the greater the chance of selecting the right lowest cost one.

5. Blast Then Refine. Get out of the habit r.ut.

--

Search for the entirely new way to do the job,

Value Analysis i s generally a questioning process. F o r example, the analyst a s k s What does it cost? What himself five questions: What ia the part? What does it d ~ ?

e l s e will do the job? Wkat WlI that cart? Lett# toke s look at t h i r wavemetar used in communicationr equipment and re. how the p r O C e B # w o r k r , Wkat is i t ? .A wave m e t e r , What doelr it do? It m e a r u r s a the frequency of t h e R. F. rignal. Soe how simple i t is? Now you know all about t h i r complex, highly technical device, What doer it c o s t ? $75, What e l r e will do the job? Mow we come t o one of tho m o r e difficult part8 s f the job, and to r n r w e r t h i r quertion it ir n a c e r r a r y to b r e a k the device down into componentr, reudy each jntsntly in the ram8 m a n o r , finding dl the f a c t s and a n r w e r i q t k a r r quertionr on each p a r t and fuaactionrl a r e a , For r x ample, it w a r found that t h i r rpeciol Co-ax Tee war costing $24 while s standard c o m m e r c i r l l y avrilablle Toe which would p e r f o r m the s a m e function would core onby $1.25 that t h i r opecially hardened and plated lrtainlesr r t r r l shaft could be r e placed by a 303 SS rhaft a t a saving8 of $2.50 and so forth down through a l l the cornpanents until we have r wavemeter coating $40 instead of $75. Another c a r e of the $100 p a i r of ehoes, but who could tell at f i r r t g l m c e .

. ..

Now the buyer can do a c e r t a i n amount of this by developing h i s value-ability skills. t L e ,an l e a r n to pick out c a s e after c a s e of poor value. He can find b e t t e r vendors.

However, this eort of complete analysis r e q u i r e s time, and when puclhed to get o r d e r s out, a buyer, even though he would like to, many t i m e s just doernlt have time to s e a r c h for the better value. It conrietrs 6f having a team of value specialists who can devote their full time and energy with no buying responsibilitie 6, to point the way to opportunities f o r better value. With the p r o p e r support of management, such a specialist group within the purchasing a r e a e e r v e e a v e r y essential function: the analyzing of each dollar spent to make c e r t a i n it buys Value. The r e s u l t s of these value studies a r e directed to management in the f o r m of a suggestion for action by p e r s o n s responsible f o r product demrign, manufact u r e o r procurement. Value Specialists do not implement, they apend f u l l time @potlighting opportunities for lower cost. Most progressive companies a r e e e t a b l i ~ h i n g p r o g r a m s of this type to better help them m e e t competition. It ie absolutely essential trlat American industry devote m o r e energy to reducing costs i f they a r e to m e e t the increasing challenge f r o m foreign goods. With p r o p e r use of Value Analysis by competent people, it h a s been shown time and time again that f r o m 2570 to 7570 of cost8 c a n be removed. High o r low volume business, these techniques a r e equally effective. F o r instance, a t Raytheon Company a recent four-man, five-week value analyais team study in the Receiving TLbe Division resulted in 66 proposals f o r better value with $685,000 a year potential savings. $210,000 a y e a r savings w e r e achieved; a b e t t e r than 20 to 1 r e t u r n for the e f f o r t . In Raytheon's Governmeni Equipment Division, a four-week Value Analysis Task F o r c e effort showed opportunities f o r a 30% reduction in product cost.
So we come to the eecond way Value Analysis can help purchasing.

To be most effective, Value Analysis m u s t operate a s a teamwork effort in all a r e a e of business, purchasing, engineering and manufacturing. Wherever you turn, t h e r e a r e opportunities for better value if you look f o r them. Value Analyris and Standarditation can help cut down those $100 shoe bille. Talk given by F. S, Sherwin a t New England Purchasing Confspen~c, Providence, Rhode Island, on October 22, 1958.

G.

VALUE ENGINEERING USE OF STANDARDS

V A L U S I;;NGINLLHING USE O F STANLjAIIDS

Les F i s h e r
O n e c a n n o t d e a l v e r y l o n g w i t h t h e c o n c e p t s and t e c h n i q u e s o f Value A n a l y s i s w i t h o u t s o o n r e a l i z i n g t h a t " s t a n d a r d s " and s t a n d a r d i z a t i o n " a r e very d e f i n i t e l y involved w i t h Value Cn{;irteering.

What a r e s t a n d a r d s ? k h a t do t h e y have t o do w i t h Value Engineering? One d e f i n i t i o n of " S t a n d a r d s " i s : " O r g a n i s e d s o l u t i o n s t o r e c u r r i n g problems". A n o t h e r d e f i n i t i o n i s : "A s i m p l i f i e d a n d p r o v e n n ~ e t h o d of accomplishing r e p e t i t i v e functions at t h e lowest c o s t " , The b . 5 . as f o l l o w s : 1)epartrnent o f b e f e n s e d e f i n e s " s t a n d a r d i z a t i o n " t i m e , p r o d u c t i o n f a c i l i t i e s and

"'ro c o n s e r v e money, manpower, n a t u r a l resources".

htty i s t h e u s e of s t a n d a r d s s o i m p o r t a r i t Primarily f o r these reasons :


1. 2.

t o Value Engineering?

Standard itews usually c o s t l e s s . S t a n d a r d i t e ~ i i sa r e more g e n e r a l l y a v a i l a b l e . Stanclard i t e m s c o n t r i b u t e t o s i m p l i c i t y i n d e s i g n , S t a l t d a r d itctrxs s i m l j l i f y m a i n t e n a n c e . S t a n d a r d i t e m s improve r c l i a b i l i t y .

3.

4.
5

T l ~ e r ea r e many s o u r c e s o f s t a r l d a r c l s s u c h a s M i l i t a r y c tia an ld a r d s , P r o f e s s i o n a l S t a r ~ d a r d s , l n d u s t r i a l o r C o ~ ~ ~ n ~ e rS S o c i e t y b t a n d a r d s s u c h as 1i.L.I.'. , U . I > . I . , B.l'.C). , A . S . A . , b1.O.S. ( a n d m;.iriy o t h e r s ) a l l o f izhicli p l a y a n i m p o r t a n t p a r t i n r r c l u c i n g c o s t s t o a ii~inimurn, m a i n t a i n i n g a h i g h d e g r e e o f r e l i a b i l i t y a n d p r o v i d i n g t h e u l t i r i ~ a t ei n e a s e o f p r o c u r e r r t e n t .


h o n e o f t l ~ er e c o g n i s e d s t a n d a r d s w h i c h e x i s t t o d a y i s t t i e r e s u l t o f a h a p h a z a r d , c a s u a l a p , ~ r o a c h . Eactl s t a n d a r d i s t h e p r o d u c t o f thorou{;h, p a i n s t a k i n g , r e s e a r c h and t e s t i n g e f f o r t o v e r a l o n g p e r i o d o f y e a r s by c o m p e t e n t people.

It i s f o r t h i s r e a s o n t h a t e s t a b l i s h e d s t a n d a r d s h a v e e a r n e d t h e r e s p e c t and h i g h volume u s a g e t h r o u g h o u t I n d u s t r y and i t i s f o r t h i s r e a s o n t h a t o u r customers e n c o u r a g e $ h e u s e o f S t a n d a r d s wherever i t i s p o s s i b l e t o do s o w i t h o u t a d v e r s e l y


a f f e c t i n g the function of the product. I n a d d i t i o n t o t h e s t a n d a r d s p r e v i o u s l y m e n t i o n e d , we, a t Y l e s s e y , h a v e d e v e l o p e d o u r own s t a n d a r d s w h i c h we c a l l l' ENGIXbLI<lru'G STAhL;XIWS" , T h e s e s t a n d a r d s p r e s e n t l y comprise o n e Volume w h i c h i s c o n s i d e r e d m a n d a t o r y (I3.S. S ' s ) a n d two ( 2 ) volumes which a r e d e s i g n a t e d vCodes o f P r a c t i c e " and 2000 s e r i e s s p e c i f i c a t i o n s a n d w h i c h a r e u s e d p r i m a r i l y by Procluc t E r l & n e e r s , L c s i g n e r s a n d b r a f tsrnen. h l l a t would rte d o t o d a y ~ ~ i t h o u "S t tandards" ? Oul d a i l y p a t t e r n o f l i v i n g i s t i e d u p i n many v.ays w i t h s t a n d a r d s . T h e r e a r e s t a ~ i d a r d sf o r w e i g h t s arld m e a s u r e s , s t a n d a r d s f o r t e s t i n g w a t e r i a l s , s t a n d a r d s f o r a u t o i i ~ o b i l et y r e s , s t a n d a r d s f o r c a r t o n s , packages, cans, e t c , , s t a n d a r d s f o r s i z e s of s u i t s , h a t s , s h o e s and c o u n t l e s s o t h e r p r o d u c t s , Kc, t h e c o n s u m e r s , p r o f i t by m a s s p r o d u c t i o n o f s t a n d a r d i z e d p r o d u c t s a n d p r a c t i c e s t o a d e q e e t h a t would n e v e r h a v e b e e n p o s s i b l e i f a s t a n d a r d s proc;rarnrne h a d n e v e r t a k e n place.

The same p h i l o s o p h y a p p l i e s t o P l e s s e y p r o d u c t s ! U t i l i z a t i o n of' s t a n d a r d p a r t s , p r a c t i c e s a n d p r o c e d u r e s , w i t h out s a c r i f i c i n g functional requirements o r r e l i a b i l i t y , w i l l pay l a r g e dividends. I n a v o i d i n g t h e use o f s p e c i a l p a r t s w h e r e v e r p o s s i b l e and f e a s i b l e , i n v e n t o r i e s a r e r e d u c e d , s p a r e p a r t s s t o c k s a r e s i m p l i f i e d and u s u a l l y b e t t e r r e l i a b i l i t y i s a s s u r e d . E a c h t i m e a new p i e c e o f i n v e n t o r y i s s p e c i f i e d , when a n e x i s t i n g s t a n d a r d p a r t c o u l d j u s t a s we1 1 h a v e b e e n a p p l i e d t o t h e d e s i g n , t i l e L?ntr;ineers i n t r o d u c e u n j u s t i f i e d o p e r a t i o n a l arid i n v e n t o r y l l a n d l i n g c o s t s w h i c h w i l l r e c u r a s l o n g a s t h e product requirements last.
L n g i n e c r s and d e s i g n e r s c a n n o t and s h o u l d n o t " st a n d a r d i e e f o r s t a n d a r d s sake1' a l o n e . hngineerin{; i n i t i a t i v e should n e v e r b e b l i n d l y s a c r i f i c e d on t h e a l t a r o f s t a n d a r d i z a t i o n p e r s e , b u t ! ! a n E n g i n e e r and b e s i f y n e r s l i o u l d be f u l l y axiare t h a t t h e p a p e r r e l e a s e d b y t h e En{yinzeririg Ljepgrtrrrent d e t e r m i n e s o r i n f l u e n c e s tllc c o s t o f p r o c u r e m e n t , p r o d u c t i o n , w a r e h o u s i n g and s e r v i c i n g o f h i s " G R A l N CIISLL)". He knows a l s o that t h e c l e r i c a l 'work a n d r e s e a r c h i n v o l v e d i n f i n a l l y o b t a i n i n g r e l i a b l e s o u r c e s o f n o n - s t a n d a r d i t e m s , a11d i n q u a l i f y i n g t h e s e s o u r c e s , i s a n expensive o p e r a t i o n . Ijesign e n g i n e e r i n g could w e l l be t h e b r e e d i n g p l a c e f o r r e c u r r e n t hidden c o s t s i f standards a r e not careful l y considered.

It i s t h e r e f o r e e v i d e n t t h a t r r ~ g i n e e r s ,as w e l l as t h e p r o d u c t i o n , p u r c h a s i n g and i n v e n t o r y c o n t r o l p e o p l e , a r e actually "cost controllers". Furtllermore t o ruake s u c h a programme t r u l y e f f e c t i v e , t h c i r c o n t r o l tnust b e v o l u n t a r y t o avoid o v e r s t a ~ i d a r d i z i n g and p l a c i r j i ; d e s i g n i n i t i a t i v e i n j e o p a r d y . I n o t h e r w o r d s , t h e a w a r e n e s s a n d use of Value Lnil;int.ering a n d S t ; , n d a r d s s h o u l d b e a n a u t o m a t i c , b u i l t - i n f e a t u r e u s e d by a l l p e r s o n n e l who may h a v e a n i n f l u e n c e on the f i n a l c o s t of the product.

S t a ~ l d a r d i z a t i o ns h o u l d n e v e r b e 11sed t o r e t a r d p r o g r e s s b u t c a n b e a v a l u a b l e a i d , i f p r o p e r l y e v a l u a t e d , The L e s i g n Lnt;ineer i s n o t p r o h i b i t e d from c h o o s i n g a non-standard component as a p a r t o f h i s d e s i g n b u t h e s h o u l d f i r s t j u s t i f y i t s s u p e r i o r i t y o v e r a s t a n d a r d cot,iponent b e f o r e cornmi t t i n g i t t o a f i r m d e s i g n T-equirenlent.

I n t11e p r e l i m i n a r y d e s i g n r e v i e w s t a g e , should be a s k e d :
1.

these questions

Can s t a n d a r d p a r t s ant1 ~ t l a t e r i a l s be u s e d ?

2.

Can t h e d e s i g n be m o d i f i e d t o u t i l i z e stc;i~ti:lrd f a s t e n e r s , w a s h e r s , t e r m i n a l s or' o t h e r hartlwar'e?


Can s t a n d a r d s i z e s o f r a w 1 1 1 a t e r i a l . s b e u s e d ?
C a n s t a n d a r d t l i a n u f a c t u r i n g p r o c e s s e s be employed?

3 4.
5.

Is the specified decree of surface q u a l i t y r e a l l y n e c e s s a r y f o r tile r e l i a b l e f u n c t l o r l i n g o f t h i s p a r t ?


Ubcs t h i s p a r t r e q u i r e s u c l i a t i g h t t o l e r a n c e o r c o u l d i t b e r c l a x e d and s t i l l L e a c c e p t a b l e ? b o e s t h i s d e s i g n n e c e s s i t a t e new t o o l i n g ? If s o , w c ~ u l d a ~ ~ i u t i i f i ed d e s i ~ y i( w h i c h u t i l i z e s e x i stint o r s t a n d ; l r d t o o l i n { ; ) b e p o s s i b l e and a c c e p t a b l - e ?

6.

7.

I t i s i n t l i c s e a r e a s that t11e m o s t e f f e c t i v e u s e o f s t a n d a r d s c a n o c c u r a n d w h e r e t h e I i ~ r g et s nioney s a v i n g o ~ ) l ) o ~ . t u n i t ie ex sist.

1 h a v e d w e l t rnore on t h e E n ~ i n e e r i n gC r o u p b e c a u s e E n g i n e e r i n g n s e t s t h e s t a g e " f o r a l l p r o d u c t i o n c o s t s . Once a d e s i g n i s f i n a l i z e d and r e l e a s e d f o r p r o d u c t i o n , i t can be d i f f i c u l t a n d e x p e n s i v e t o make c h a n g e s . The m o s t i m p o r t a n t c o n s i d e r a t i o n of' s t a n d a r d s t h e r e f o r e i s i n t h e p r e l i m i n a r y d e s i g n s t a g e w h e r e a c e r t a i n amourlt o f f l e x i b i l i t y i s p o s s i b l e . T h i s i s n o t meant t o imply t h a t t h e s t a n d a r d s programme i s c o n f i n e d b y allymeans t o t h e E n g i n e e r i n g D e s i g n G r o u p . The u s e o f s t a n d a r d s i s b a s e d on t h e c o - o p e r a t i v e e f f o r t s o f many d e p a r t m e n t s ; d e s i g n , d r a f t i n g , v a l u e e n g i n e e r i n g , i n d u s t r i a l e n g i n e e r i n g , rrranufacturing, p u r c h a s i n g , r e l i a b i l i t y and q u a l i t y c o n t r o l a l l have a p a r t t o p l a y i n t l l i s prograinme. Sorue o f you 11ave a l r e a d y p a r t i c i p a t e d i n t h e s t a n d a r d s progranme h e r e a t I l f o r d , b u t f o r t h e b e n e f i t o f t h o s e who may n o t b e f a m i l i a r w i t h o u r s e t - u p l e t m e g i v e you a b r i e f o u t l i n e .
L n g i n e e r i n g S t a n d a r d s N a n u a l s a r e d i s t r i b u t e d t o vari o b s d e p a r t m e n t s t h r o u g l ~ o u t t h e Company. T h e s e s t a n d a r d s h a v e been developed l a r g e l y through t h e co-ordinated e f f o r t s o f t h e v a r i o u s d e p a r t m e n t r e p r e s e n t a t i v e s who a t t e n d t h e s t a n d a r d s c o m m i t t e e m e e t i n g s a n d who a g r e e on t h e s p e c i f i c a t i o n s before t h e y a r e a c c e p t e d a s s t a n d a r d s . I w a n t t o e m p h a s i z e t h a t s t a n d a r d s a r e riot c o n f i n e d t o " p a r t s " b u t e x t e n d a l s o t o p r a c t i c e s , p r o c e d u r e s , methods, p r o c e s s e s , e t c , I n t t i e P I - u d u c t L n g i n e e r i n g and b r a f t i n g a r e a s , \ % ea l s o h a v e a rauinber o f s t a n d r * r d s c o v e r i n g e n g i n e e r i n g d a t a s u c h a s p r a c t i c e s , d r a f t i n g p r a c t i c e s , s t a n d a r d coniponents, s t a n d a r d p a r t s , standard hardware, ~ ~ i a t e r i a l s f, i n i s h e s and p r o c e s s e s . W e a r e c o n s t a n t l y co-ordinatink; w i t h Groups i n u p - d a t i n g and il ll these e x p a n d i n g t h e s c o p e o f inf'orlnntiotl c o n t a i n < ~ < 111anua1s. W e have compiled a s e l e c t e d group o f s t a n d a r d A cox]t i n u i n c e x c h a l r g e o f s t a r l d a r d s be t w e e n liardware i t e m s . Groups and U i v i s i o n s a l l o w s e a c h l o c a t i o n t o t a k e a d v a n t a g e o f s t a r l d a r d s d e v e l o p e d e l s e w h e r e a n d e l i m i n a t e s tnucl~ d u p l i c a t i o n o f e f f o r t . i i o p e f u l l y , d e t a i l d i f f e r e n c e s i n many e x i s t i n g G r o u p s t a n d a r d s w i l l e v e t i t u a l l y be r e s o l v e d i n t o "cotnmon" s t a n d a r d s h'hictl c a n b e "Coinpany-wide If i n s c o p e . Tllis a c t i v i t y i s r e a l l y a " s t a n d a r d i z a t i o n of stanc\ards". Many o f o u r s t a n d a r d s h a v e b e e n i n i t i a t e d b e c a u s e r e c u r r i n g prolalen~se n c o u n t e r e d i n vari,ous shop a r e a s where r e J e c t s m a y be a b n o r m a l l y h i g h o r where c o n t r o l s a r e s u b j e c t t o various interpretations frequently resulting i n needlessly high costs. The r e s u l t a n t s t a n d a r d r e p r e s e n t s a d o c u m e n t e d s o l u t i o n t o t h e s e problems and u s u a l l y e f f e c t s a c o s t s a v i n g .
*

Cine o f t h e b e s t g u i d e - p o s t s t o u s e when c o n s i d e r i n g t h e p o s s i b l e n e e d L'ok a s t a n d a r d i s t o p i n - p o i n t t h a t o p e r a t i o n o r a r e a where c o s t s a r e r u n n i n g abnormally h i g h . T h e r e may b e e l e m e n t s i n t h i s s i t u a t i o n w h i c h m i g h t b e r e s o l v e d by a " s t a n d a r d " p a r t i c u l a r l y i f t h e h i g h c o s t s a r e clue t o d i f f e r ' e n c e s i n i n t e r p r e t a t i o n s , l a c k o f c l a r i f i c a t i o n o r l a c k of uniformity i n t h e concerned a r e a s .

F u r e x a n l p l e , t h e r e w e r e v a r y i n g i n t e r p r e t a t i o n s as t o w h a t c o n s t i t u t e d a n a c c e p t a b l e s o l d e r j o i n t when component l e a d s were s o l d e r e d t o t e r m i n a l s . R e j e c t i o n s were r u n n i n g a b n o r m a l l y h i g h m o s t l y b e c a u s e o f s o l c i e r f a u l t s , A Code o f l i l - a c t i c e w a s d e v e l o p e d wllich c l a r i f i e d t h e r a n g e o f acceptability.


A standard w a s recently released covering a s e a l i n g compour~d w h i c h h a s b e e n a p p r o v e d b y t h e h i l i t a r y . A f e w d r o p s of' t l ~ i sl i q u i d l o c k s t h r e a d e d f a s t e n e r s p e r m a n e n t l y . l i e r e i s a n o p p o r t u n i t y f o r V a l u e L i ~ g i n e e r i n gand S t a n d a r d s p e r s o n n e l t o j o i n h a n d s i n a s t u d y t o d e t e r m i n e how many s p e c i a l l o c k - n u t s , lock-wasllers and l o c k i n g t y p e s o f f a s t e n e r s m i g h t be r e p l a c e d b y t h i s s e a l a n t . T h i s c o u l d n o t o n l y r e s u l t i n a s u b s t a n t i a l money s a v i n g , b u t s h o u l d a l s o c o n t r i b u t e t o weight reduction.

I t would be e;Asy t o q u o t e e x a m p l e s o f how s t a n d a r d s c a n be u t i l i z e d t o s a v e money. O u r c o m p e t i t o r s a r e f u l l y aware of t h i s a l s o , t h e r e f o r e i t behooves u s t o t a k e a t l v a r ~ t a g e of' e v e r y p o s s i b l e a n f c l e w h i c h c a n r e d u c e t h e c o s t of o u r p r o d u c t s t h e r e b y p l a c i n g P l e s s e y i n t h e most favourable competitive position. After a l l , t h i s i s simply j o b s e c u r i t y anyway ! I f P l e s s e y l o s e s b u s i n e s s b e c a u s e we f a i l t o k e e p c o s t s down, t h e n we l o s e t o o . So i f ' you h a v e a n y p r o b l e m s i n y o u r a r e a f o r w h i c h you t h i n k a s t a n d a r d m i g h t b e t h e s o l u t i o n , p l e a s e c o n t a c t me. I t h i n k t h a t you w i l l a g r e e t h a t S t a n d a r d s a n d V a l u e E n g i n e e r i n c ; go hand-in-hand Both a r e basi c a l l y economy p r o g r a n m e s a n d j u d i c i o u s u s e o f t h e s e t o o l s c a n p x o d u c e t r e m e n d o u s s a v i n g s ; s o l e t u s make i t a h a b i t t o a p p r o a c h o u r d a i l y p r o b l e m s f r o m a V a l u e E n ~ i n e e r i n ga n d ----idends ! S t a n d a r d i z a t i o n s t a n d p o i n t . It w i l l pay b i g d i v

...........

SECTION V I I I

P H A S E V OF T H E VALUE E N G I N E E R I N G J O B PLAN

A,

GUIDELINES ON PRESENTING, SELLING AND DOCUMENTING VALUE IDEAS

The Value Engineering Recommendation Phase Value ~ n a l ~ s i s / ~ n g i n e e r iwork n g may be done a t d i f f e r e n t stages of product l i f e . I n some instances it may be necessary f o r those (individuals or teams) making the Value Engineering study t o present the rasults t o Yanagexent o r t h e dectsion maker f o r t h e i r consideration and action. I n any case, everyone occasionally has t o s e l l and document his ideas. The following guide lines w i l l be helpful i n these situations. and fm~legentationof value ideas are the overall objectives of the f i n a l phase of t h e job plan. A 1 1 the manhours of e f f o r t spent i n developing one or more value ideas could be wasted i f t h e s y s t e m t i c approach were not properly concluded. Like the fo1l.a~-through i n a g o l f swing, t h e recamendation phase must be conscientiously accomplished t o best e f f e c t t h e inplementation of ideas. What a c t u a l l y i s the desired output of t h e recommendation phase? A d e f i n i t i o n would be helpful:
"A timely, well docmaentecl, and f a c t u a l ~ r e s e n t a t i o .---- n k )which will motivate posita c t i o n by those i n d i d d u a l s responsible f o r

Presentation -----

-----

''

Yhile this d e f i n i t i o n seems t o make something simple more complex, each element i n t h e d e f i n i t i o n i d e n t i f i e s an e s s e n t i a l consideration i n t h e organized approach of t h i s f i n a l phase which terminates the Value Engineering Job Plan. TIMELINESS Unnecessary delay i n summarizing and presenting t h e Value Engineering recommendation can r e s u l t i n added implementation costs, wasted m p l t a l or tooling expenditures, or even r e j e c t i o n of the recommendation. Figure 1 shows t h e e f f e c t delay can have upon implementation costs. m c h day of delay costs more money. When implementation costs o f f s e t savings and schedule, t h e recommendation i s useless f o r t h a t project.

The presentation, whether o r a l o r written, m u s t be t a i l o r e d t o f i t t h e subject and t h e audience. There are, of course, a minimum of elements necessary f o r any value engineering presentation. Foremost i s t h e before and a f t e r comparison. The saying "a picture i s worth a thousand wordsH i s t r u e i n value engineering; drawings or sketches must be included t o give a clear picture of the recommendation. I f the project was "softwarelt, a flow chart or tabulation would be appropriate. The cost improvement must a l s o be presented. The object of the study was savings, and these must be shown. Savings may be i n money, manpower, or time, depending upon the project. The presentation must a l s o contain an i d e n t i f i c a t i o n and functional requirement of the project. Proposals viewed i n this l i g h t w i l l t i e the solution t o the problem. Information such a s team members, team leader, approaches taken, key vendors, information sources, etc, should a l s o be included.

Anticipating t h e questions and needs of t h e audience and then supplying the answers makes f o r a complete and smooth flowing report. A form such a s t h a t shown i n Figure 2 may prove helpful i n preparing t h e presentation. The presentation, t o be complete, must specify the s p e c i f i c s t e p s necessary t o implement the recommendation. To simply s t a t e , e.g. ItReplace the gravity feed device v i t h a spring load hatch" does not supply s u f f i c i e n t detail. I n addition t o detailfng the recommendation, t h e report must include the implementation tasks necessary, t h e appropriate departmental responsibility, when each s t e p must be accomplished f o r tlmely implementation, how t o do it (processes, procedures, etc.) and why each e f f o r t i s proposed. Note t h a t the complete presentation answers t h e questions: what? who? when? how? and why? Divlde the recommendation i n t o s p e c i f i c tasks and include a form similar t o t h a t shown i n Figure 3. This provides a c m p l e t e timetable f o r action. It shows t h e s t a r t i n g point and time of completion f o r each required task.

Figure 2

7.

Recommendation:

S p e c i f i c a c t i o n required:

B y whom :
I
b

Advantages of accepting t h e idea:

How t o make this advantage obvious:

Possible objections t o t h e idea:

How t o overcome t h e s e objections:

DOCUMENTATION

An idea t h a t & w save money i s a l o t b e t t e r than one t h a t ma2 save money. Unless t h e source f o r a l l figures i s c l e a r l y shown, the recommendation i s open t o criticism and skepticism. A l l present costs should be j u s t i f i e d by reference t o existing documents and/or calculations. A l l proposed costs should be documented with quotes, estimates, catalog prices, or h i s t o r i c a l costs, Implementation costs, while not expected t o be exact, should be based on estimates by knowledgeable persons,
Documentation r e f e r s t o e f f o r t as well as costs the procedure used, the ideas considered and t h e i r disposition, the help received, and t h e roadblocks met and overcome must a l l be recorded t o save time f o r f u t u r e investigations a s well a s t o support the recommendations made, The worksheets used i n carrying out the Value Engineering Job Plan provide a roadmap of the e f f o r t applied. They a r e a concise, clear, and y e t detailed description of the overall study. all worksheets must be included i n t h e report. Other documentation requirements involve the s p e c i f i c f a c t s needed a s discussed below.
FACTUAL

Decisions need t o be made on f a c t s i Costs, t e s t data, contractual and f r i n g e e f f e c t s must be included f o r a complete f a c t u a l presentation. The nature of the value engineering study may be such t h a t t e s t s a r e e i t h e r not necessary or a part of t h e recommendation. If the l a t t e r , specify t h e appropriate t e s t s which should be made. Contractual e f f e c t s involve i n s t a n t contract sharing, follow-on sllaring, or even retentton of 100% of savings, Fringe e f f e c t s involve the impact of the recommendation on r e l i a b i l i t y , l o g i s t i c s , weight, maintainability, producibillty, human f a c t o r s , quality, p a r t s a v a i l a b i l i t y , production lead time, performance, packing, morale, s a f e t y and space, Definitions of , these f r i n g e e f f e c t areas a r e given i n t a b l e 1

Table 1 DEFIMITIONS O F FRINGE EFFECTS

Ability t o meet performance requirereenta Reliability f o r a determined number of times. Maintainabilfty F'roducibility Human Factors

- Relative ease of

r e p a i r or replacement.

- Relative ease of repeatable manufacture.


- Acceptability of change related t o necessary education or dexterity. - manufacturing Relative ease i n obtaining or simplified or
standard parts.

Parts Availability

Production Lead Time

- Elimination, standardization or s i n p l i f i c a t i o n of operations


or materials. p a r t s t o conform t o a l l

Quality Weight

- Characteristics of
specifications,

- Change i n weight.

Logistics

- fQuantity and complexfty of p a r t s needed o r f i e l d support of end item,

Perfomance - A b i l i t y t o carry out t h e intended function. Packing Morale Safety Space

- Relative ease of protecting parts until ready f o r use.


- Change i n personnel s e l f motivation.

- Effect on human l i f e or physical welfare. - Relative area requfred.

PRESENTATION

The techniques of good communication, whether o r a l o r w r i t t e n , a r e more than adequately covered i n t h e l i t e r a t u r e , The purpose of t h i s s e c t i o n i s t o i n d i c a t e how t h e s e general techniques apply t o value engineering. Both w r i t t e n and o r a l presentations should follow t h e following formula: 1 . Attention g e t t h e audience/reader's wake them up.
2. Point t ems.

attention, concise

- t e l l them t h e s o l u t i o n i n b r i e f ,
- bid f o r action!

3. ~ i s c u s s i o n / ~ x a m p l e - present t h e l o g i c a l sequence

of e f f o r t showing t h e f u n c t i o n a l problem and t h e d e t a i l e d solution, use before and a f t e r comparisons.

4. Conclusion
WRITTEN :

It i s suggested t h a t t h e value engineering w r i t t e n r e p o r t be organized as follows:


1 , T i t l e page 2. Summary 3.

- date,

p r o j e c t , program.

- recommendation phase one page worksheet. Discussion - a write-up of t h e approaches taken, roadblocks encountered, a l t e r n a t e
i d e a s investigated, a l t e r n a t e recommendations f o r f u r t h e r study o r selection.

- should supplement t h e worksheets.


4, Bef ore-sf t e r sketches and/or photos.

5. Remaining worksheets. 6, Calculations showing derivation of figures.


7. Back-up m a t e r i a l quotes, copies of catalogue pages, technical data, e t c " .

ORAL :

The o r a l presentation can be e i t h e r a n in-depth r e p o r t covering a l l agpects of t h e study as l i s t e d under t h e m i t t e n r e p o r t above; o r , , a s used i n value engineering, a b r i e f summary, concise and c l e a r t o be given i n f i v e minutes. It should be presented i n such a manner a s t o motivate p o s i t i v e action. Charts f o r t h e o r a l presentation should include:

1 , Team numSer and project.


2. Names of t e r n members and leader,

3. P r o j e c t d e s c r i p t i o n o r sketch (use physical


sample i f p o s s i b l e i n s t e a d of she-L),

4. Function studies. 5. Evaluation of function, cos t-to-value r a t i o ,


high-cost items,

7. Cost savings data, including percentages.

The presentation should follow t h e "job -plan." Contmt should be s u f f i c i e n t l y technical. y e t not exceed t h e understanding of t h e audience. Some p o i n t e r s on good chart makir.g: 1 . L e t t e r i n g should be l a r g e enough t o be read i n t h e r e a r of t h e roon.

2 . Chart should be b r i e f y e t stand on i t s own

3. Unless highlighting various component p a r t s ,

use a maximum of two colors per chart. The second color can be used t o s t r e s s a f i g u r e ( s ) o r word(s).

MOTIVATE POSITIVE ACTION Motivating a c t i o n has both p o s i t i v e and n w a t i v e implications. A good value engineering r e p o r t , as described above, w i l l possess t h e q u a l i t i e s necessary t o motivate p o s i t i v e action. A t t h e same t i n e , it should not motivate neclative action, Most valve engineering proposals involve changes, changes involve people, and people r e s i s t change. It is imporb.nt t o use good human r e l a t i o n s . Remember, t h e o b j e c t i v e i s t o mot.ivate t h e change ( p o s i t i v e ) a s opposed t o motSvating defenses a g a i n s t t h e change (negative). Existing designs o r procedures they may have been sho~l6 not be c r i t i c i z e d developed t o meet requirements and/or s i t u a t i o n s t h a t no longer e x i s t . Openly recognise those who have contributed assiste.ncc and information t o t h e team, including t h e o r i g i n a l designer.

DECISION IfrAKrn

It i s perhaps elementaqy t o s t a t e that t h e r e s u l t s m u s t be brought. t o t,he a t t e n t i o n of the proper people. But experience has shown t h a t unlass tho d a b is properly presented t o those who can decide upon it, good v a l c e ideas can be l a s t , There i e l t d t h any p r o j e c t , one man who has a u t h o r i t y t o accept a
recommendation. A s p a r t of t h e reconmendation phase it i s necessary t o determine who t h i s person i s and i n s u r e t h a t h e i s made aware of t h e recomrwndation(s ). The r e p o r t m u s t be made a v a i l z b l e t o anyone who may be consulted by t h e decision maker. Management personnel tend t o shun a lengthy report. To conserve t h e i r time, t h e value engineering one-page recommendatton worksheet should be used, This form presents a c l e a r and concise p i c t u r e of t h e team e f f o r t and gives management a simple y e t complete p i c t u r e of t h e proposal.

Often it i s d e s i r a b l e t o i m p i r e , a f t e r a reasonable period of time, i n t o t h e d i s p o s i t i o n of t h e recommendation. People change jobs, responsibil j t i e s a r e s h i f t e d , papers become l o s t , o r a c t i o n i s postponed f o r lack of a d d i t i o n a l information, many reasons may exist, a s i d e from t h e t e c h n i c a l ones, why a

recomendation was not adopted, The time i n t e r v a l between submission and follow-up w i l l vary with the project, but conscientious recomendation phase planning i n d u d e s the scheduling of a foll-ow-up investigation,

Remember t h a t nothing has y e t been saved, This i s a proposaL f o r savings. The choice of words i s very important. Don't prematurely claim savings, This should be done by t h e decision maker when he implements the proposal. A t the reconmendation stage they a r e only estimated p o t e n t i a l savings. The thoroughness of t h e value engineering project work and t h e manner i n which it i s presented w i l l determine whether t h e savings a r e a c t u a l l y realized. To review t h e desired Recommendation Phase output again: timely, complete, well documented, and factual presentation(s ) which w i l l motivate a c t i o n by those individuals responsible f o r making decisions. The systematic and organized approach, applied here a s throughout t h e value engineering job plan, w i l l create t h e best climate f o r t h e hplementation of value ideas.

C0NTE;NTS O F SEMIKAR PROJIJCT REPORT

Each seminar team i s required t o w r i t e a f i n a l r s p o r i t o document i t s work. This r e p o r t w i l l form t h e b a s i s f o r evaluating t h e reconmendation f o r implementation. For uniformity, each r e p o r t should include information order: g i n the f ol3.o~~in
INTROPUC TION

1.1, I d e n t i f i c a t i o n s
( a ) Team members and p l a n t locations. ( b ) The name of t h e team leader. ( c ) The name of t h e team p r o j e c t part o r assembly and t h e o v e r a l l system of which it i s a part. ( d ) A b r i e f functional description. 1.2. General apmwach taken ( a ) Show breakdown of team p r o j e c t i n t o subprojects, ( b ) I d e n t i f i c a t i o n of unnecessary costs, ( c ) New i d e a s explored and evalc-ated. ( d ) Techniques used t o i n v e s t i g a t e t h e ideas. ( e ) Rwdblocks encountered and how they were overcome. 2. RECO&Q.zE:NDATIGNS (Worksheet) 2.1,
2.2.

Include a s e t of worksheets f o r each recommenda.t.i.on worksheet, Include a d d i t i o n a l sketches, drawi.ngs, o r p h o t o g r ~ p h s i f required f o r c l a r i t y ,

Summarize t h e team accomplishments and the genernl r e a c t i o n of t h e team members t o t h e t r a i n i n g program. NOTES :
A. The s t a f f will. provide team members wi.th copies of team r e p o r t s a t a l a t e r date.

B. Back-up data i s t o be turned over t o team leaders.

SECTION IX

REFERENCE MATERIAL

DEVELOPING AND MANAGING VALUE ENGINEERING PROGRAMMES

A.

VALUE ENGINEERING

WHAT IT IS

AND ITS CONTRIBUTION TO BUSINESS

VALUE ENGINEERING What It i s And I t s C o n t r i b u t i o n t o B u s i n e s s

I.

V a l u e E n g i n e e r i n g - What It I s

Value E n g i n e e r i n g and Value A n a l y s i s a r e t e r m s used to designate a s e a r c h - o r i e n t e d t e c h n o l o g ) - w h i c h l n c l u d e s a s ) f s t e m a t i c , creative, o r g a n i z e d a p p r o a c h to r e d u c e u n n e c e s s a r y p r o d u c t c o s t s t o a m i n i m u m . T h i s a p p r o a c h c o n s i s t s of a job p l a n a n d s p e c i f i c t e c h n i q u e s w h i c h a r e u s e d i n t h e d e c i s i o n - m a k l n g p r o c e s s . It m a y be a p p l i e d a t a n y s t a g e i n the p r o d u c t l i f e c y c l e to p r e v e n t o r r e m o v e c o s t s w h l c h d o not c o n t r i b u t e to the r e l i a b l e a c h i e v e ~ n e n tof the e s s e n t i a l , c u s t o m e r required, f u n c t i o n . T h e t e c h n i q u e s m a y ;also b e u s e d In m a n a g e m e n t d e c i s i o n s w h i c h a f f e c t other costs associated 7~1th the conduct of t h e b u s ~ n e s s . A V a l u e E n g i n e e r 1s s o m e o n e p r o f i c i e n t i n t h e u s e of t h e s e t e c h n i q u e s C o n t r a s t e d to p a s t 4 p p r o a t h e s to c o s t reduction Value E n g l n e e r l n g I S p r o d u c t functlon d l r e c t e d and o f f e r s i m e t h o d of a s j l g n l n g m o n e t a r y v a l u e s i r a l u e 1s a c h l e v e d w h e n a n y to b a s i c f u n c t ~ o n s w h l c h o c c u r In a l l p r o d n c t s f u n c t i o n 1s accomplished f u r t h t ~! e a s t t o t a l c o s t

11.

V a l u e E n g l n e e r i n g - What it C lr, Contrlb,.te

product producing b u s i n e s s in Value E n g i n e e r ~ n gc a n contribute to -in\, several ways


1.

Staff Specialist s mrho h z v c no 1:ne r e s p o n s i b i l l t l e s but a r e Int V ~ l u e E n g i n e e r l n g tec h n ~ c j u e s can extreme1y p r o f ~ i l ~ n a s s l s t l l n e o r d e c l s l o n - r n ? k l n g p e r s o n n e l b ) providing l n f o r m i t l o n a n d recommendations w h l c h w i l l l e d d t o r e d u c t l o n In produc t o r o p e r z t l n g co5t s Value E n g l n e e r l n g technlyues m a k i n g p e r s o n n e l s o thnt t h e \ ab~llty to r e d u c c c.ost5.
i
(

2.

in be t a u g h t to d e c l s l o n a n vast1 y 1rnproL.e ? h e ~ r

3.

Value E n g ~ n e c r i n g t d s k g r o u p s i an bt. tssignec! to p r o d u c t d e s i g n , development o r improvement p r o g r a m s to r e m o v e l a r g e a m o u n t s of u n n e c e s s a r y c o s t s . T h e s e e f f o r t s wlll b r l n g p r o d u c t c o s t s down to A m l n i m u m , I m p r o v e the c o m p e t l t l v e p o s l t l o n a n d i n c r e a s e c o m p a n y prof~ts.

4.

NOTE o r replscement for any other Value E n g l n e e r i n g i s not ,3 s u b s t i t u t ~ cffec-t~vc a p p r o a c h to c.ost r e d u c . ~ i o nsuc.h a s w o r k s l r n p l l f l c a t l o n . l v o r l o n t l m e m e t h o d s , m ~ n u f d c -u tr~ng f e n s l b l l l t \ . st tidlr,s, c t c . . R a t h e r . l t I S a s u p p l e m e n t a n d s r i p p o r t ~ n gf o r c e wh1c.h f i l l s 3. g a p and x.111 g r e , + t l \ . s t r c n g t h e r , ( , o . i t prc,vcnt Ion a n d reduction a c t l v i t 1c.s

111. V a l u e E n g i n e e r i n g

How t o S t a r t I t

'To b e g i n a V a l u e E n g i n e e r i n g p r o g r a m , m a n a g e m e n t m u s t o b t a i n t h e s e r v i c e s of a p e r s o n w h o h a s k n o w l e d g e a n d e x p e r i e n c e i n t h e f i e l d . S u c h a p e r s o n who i s c a p a b l e of d i r e c t i n g a V a l u e E n g i n e e r i n g p r o g r a m will have a b r o a d background in industry with about twenty y e a r s ' e x p e r ience a n d c e r t a i n p e r s o n a l i t y c h a r a c t e r i s t i c s which would qualify h i m a s a s e n i o r consultant i n Value Engineering. T h i s V a l u e S p e c i a l i s t c o u l d b e h i r e d o r c o u l d b e s e l e c t e d f r o m r a n k s of p r e s e n t e m p l o y e e s and given Value Engineering training. T h e C o m p a n y Offlce of V a l u e E n g i n e e r i n g S e r v i c e s c a n s u p p l y t h i s t r a i n i n g In v a r i o u s w a y s , a l s o o u t s i d e c o n s u l t a n t s a r e a v a i l a b l e . I V . V a l u e Engineering

Its Function and Organizational Placement

V a l u e E n g i n e e r i n g 1s a s t a f f f u n c t l o n w h i c h c r o s s e s o t h e r f u n c t i o n a l l l n e s a n d r e a c h e s i n t o E n g l n e e r l n g , P u r c h q s l n g , Manufacturing, M a r k e t i n g , Financial, e t c . L e a d e r s h i p f o r t h e i c t i v i t y c.in c o m e f r o m 3. g e n e r a l m a n a g e m e n t staff p o s ~ t l o no r f r o m w l t h i n o n e of t h e a b o v e m e n t l c n e d a r e a s . In t h e l a t t e r c a s e s , h o w e v e r , t h e s u p e r w s l n g m a n a g e r m u s t h a v e a good g r a s p of the r e s p o n s l b i l l t y of the V3lue E n g l n e e r l n g f u n c t i o n s o t h a t ~ t wlll S t r o n g top m a n a g e m e n t s u p p o r t c a r r y out t h e f d l s c o p e of t h e a c t l v l t y i s a n essential I n g r e d i e n t f o r a s u c c e s s f u l Vdlue p r o g r a m , T h e V a l u e Engineering f u n c t l o n 1s l a r g e l y e d u c 3 t l o n a l a n d m o t l v a t i o n a i i n c o n t e n t . T h e e d u c a t i o n a l p a r t s h o u l d c o n s l s t of b o t h f o r m a l nnd I n f o r m a l t r a i n m g of a l l k e y , l i n e p e r s o n n e l In the t e c h r l l q u e s of V a l u e E n g l n e e r ~ n g t h r o u g h w o r k s h o p type s e m i n a r s of 3bout 5 @ h o u r s d u r a t i o n 3nd d ~ s c u s s ~ o n s c a r r i e d o u t d u r l n g d a l l y cont,ict c f the Value S p e c ~ z l i s t dnd l i n e p e r s o n n e l . The motivatlonal part t ~ k e s several f o r m s The V d u e Englneer 13 a c a t a l y s t w h o s e f u n c t l o n it i s to b r l n g a . b o ~ t h e i m p r o v e d p e r f o r m i n c e o f people r e s p o n s ~ b l e f o r p r o d u c t d e sign ~ n p dr o d u c t i o n . O n e r u c h m o t i v a t l o n a l f r o m a p r o d u c t evaluation f o r m I S t h e v a l u e recommendation w h i c h r c s ~ l t s s t u d y m a d e b y t h e V a l u e Specialist .ind s u b m l t , e d t o t h e p e r s o n responsible for ~mplementlng t h e c h a n g e . A n o t h e r f o r m 1s consultation In w h l c h the V a l u e E n g i n e e r g a t h e r s , d e v e l o p s ,ind p r e s e n t s ~ n f o r m d t i o n needed for v a l u e decisions. S i n c e p r o d u c t v a l u e [ c o s t ) 1s t h e p a r t r e s p o n s ~ b i l i t yof a n u m b e r of g r o u p s , Value E n g i n e e r i n g i n t e g r a t e s t h e s e p e o p l e i n t o m o r e e f f e c t i v e t e a m s , h e l p l n g to b r i n g t o g e t h e r s k l l l s f r o m e a c h a r e a a s n e e d e d to g e t the b e s t v a l r ~ ep r o d u c t . No competitive b u s i n e s s s h o u l d o v e r l o o k the p o t e n t i a l c o n t r i b u t i o n of V a l u e E n g i n e e r i n g .

May 3 1 , 1 9 6 2

F S . Sherwln, Dlrector V a l u e E n g r g . Services

B.

ESSENTIAL INGREDIENTS FOR A SUCCESSFUL VALUE ENGINEERING PROGRAMME

"ESSENTIAL INGREDIENTS F O R A SUCCESSFUL V. E. PROGRAM" F. S. S h e r w i n D i r e c t o r , Value E n g i n e e r i n g S e r v i c e s Raytheon C o m p a n y

INTRODUCTION

A w o r k of a r t i s u s u a l l y the r e s u l t of the s y s t e m a t i c a p p l i c a t i o n of m u c h knowledge and m a n y s k i l l s . T h e tangible o b j e c t p r o d u c e d by t h e w o r k p r o b a b l y will have v a r y i n g d e g r e e s of both a e s t h e t i c and functional q u a l i t i e s . A painting i s p r o d u c e d e n t i r e l y f o i i t s a p p e a r a n c e c h a r a c t e r i s t i c s and a m a c h i n e tool component n e a r l y 100% f o r i t s functional u s e f u l n e s s . O t h e r p r o d u c t s h a v e c o m b i n a t i o n s of q u a l i t i e s which m a k e t h e i r p o s s e s s i o n d e s i r a b l e . I n a n y c a s e , the d e s i g n a n d p r o d u c t i o n of the p r o d u c t , w h a t e v e r i t m a y b e , r e q u i r e s a v a s t c o m b i n a t i o n of s c i e n t i f i c , t e c h n i c a l and m a n u f a c t u r i n g knowledge. I t a l s o r e q u i r e s t h e c o o r d i n a t e d e f f o r t s of the m a n y h u m a n b e i n g s who p o s s e s s v a r i o u s e l e m e n t s of t h i s knowledge.
KEY E L E M E N T S O F PRODUCT D E V E L O P M E N T F r o m t h i s philosophy, with which I ' m s u r e e v e r y o n e a g r e e s , w e c a n s e e that the d e s i g n and p r o d u c t i o n of a p r o d u c t which i s valuable to t h e o w n e r i n v o l v e s m a n y c o m p l e x i n g r e d i e n t s . L e t ' s identify s o m e of t h e s e m o r e significant e l e m e n t s a s :

1.
2.

Knowledge Creativity Teamwork

Scientific, Technical, Production. I m a g i n a t i o n , Ingenuity, F o r m a t i o n of New R e l a t i o n s h i p s . C o o r d i n a t i o n of H u m a n E f f o r t s to Apply Knowledge and C r e a t i v i t y . G o a l s , T a r g e t s , P r o j e c t Definition.

3.

4.

Objectives Plan

5.

- Methods,

T e c h n i q u e s , S y s t e m a t i c and O r g a n i z e d A p p r o a c h , Defined P l a n .

While the c h e m i s t r y o r m o l e c u l a r s t r u c t u r e of e a c h of t h e s e e l e m e n t s m a y b e c o m p l e x , n e v e r t h e l e s s , t h e s e i n g r e d i e n t s a r e b a s i c t o t h e f o r m u l a . If a n y one i s o m i t t e d a n i n f e r i o r p r o d u c t will r e s u l t . I t i s the blending of t h e s e e l e m e n t s i n p r o p e r p r o p o r t i o n s which r e s u l t s i n the g r e a t e s t value end p r o d u c t . Knowledge alone i s b a s i c and e s s e n t i a l but i s nothing without skillful a p p l i c a t i o n to m e e t e s t a b l i s h e d o b j e c t i v e s . How m a n y m e n h a v e you known who w e r e highly knowledgeable i n t h e i r field but l a c k e d t h e c a p a b i l i t y t o apply t h i s i n f o r m a t i o n t o the solution of p r a c t i c a l p r o b l e m s o r n e e d s . D r . L e e D u B r i d g e , P r e s i d e n t of C a l i f o r n i a T e c h . r e c e n t l y s u m m e d up t h i s s i t u a t i o n with t h e s t a t e m e n t , " I t ' s i n the a p p l i c a t i o n of knowledge t h a t the difficulty c o m e s , not i n the knowledge i t s e l f . "

VALUE With t h a t m u c h of a n i n t r o d u c t i o n t o t h e p r o b l e m s a n d n e e d s of p r o d u c t d e v e l o p m e n t , l e t ' s s e e w h e r e v a l u e e n g i n e e r i n g f i t s into t h e p l c t u r e . O n c e o r t w i c e e a r l i e r m o s t of u s h a v e s o m e "value" w a s m e n t i o n e d i n c o n n e c t i o n w i t h t h e p r o d u c t . W h ~ l e i d e a s of t h e m e a n i n g of t h i s w o r d i n t h a t a p r o d u c t of "value" h a s s o m e m e a s u r e o f w o r t h t o t h e o w n e r o r u s e r . Value t h u s i s a w o r d w h ~ c h lndlcates the aesthetic o r f u n c t i o n a l w o r t h of a p r o d u c t a s m e a s u r e d m o n e t a r i l y . S o m e o n e who g e t s h i s " m o n e y ' s worth" f e e l s h e h a s o b t a i n e d good v a l u e f o r what h e h a s e x p e n d e d . VALUE ANALYSIS

It w a s w i t h t h l s c o n c e p t i n m i n d t h a t Value A n a l y s l s w a s f l r s t conceived n e a r l y 2 0 y e a r s ago. F o r t h e f i r s t t l m e , a n a t t e m p t w a s m a d e to systematically and o b J e c t i v e l y a n a l y s e t h e v a l u e of p r o d u c t s and c o m p o n e n t s w l t h t h e o b j e c t of i m p r o v ~ n g the value. What r e s u l t e d a f t e r s e v e r a l y e a r s o f r e s e a r c h i n g t h e fleld w a s a m e t h o d o l o g y , o r q y s t e m o f t e c h n i q u e s , specifically d e s i g n e d t o i d e n t i f y and r e m o v e u n n e c e s s a r y p r o d u c t c o s t . A S the a p p l i c a t i o n of v a l u e a n a l y s i s t e c h n i q u e s m o v e d m o r e u n d e r t h e e n g l n e e r m g s p h e r e of r e s p o n s i b i l i t y , t h e t e r m V a l u e E n g i n e e r i n g w a s adopted to ldentlfy t h e f ~ e ~ d . G e n e r a l l y , t h e two t e r m s a r e s y n o n o m o u s a s f a r a s ldentlfying t h e s a m e ;et of technique: When e n g i n e e r i n g s k i l l s a r e u s e d In t h e a p p l i c a t i o n of t h e t e c h n i q u e s to p r o d u c t d e s ~ g n o r r e d e s i g n , t h e w o r d " e n g i n e e r i n g " i s m o r e c o m m o n l y a s s o c i a t e d wlth " v a l u e " w o r k . VALUE ENGINEERING S i n c e t h i s t e r m i s c o m m o n l y u s e d t o d a y t h r o u g h o u t G o v e r n m e n t and i n d u s t r y to i d e n t i f y both t h e p a c k a g e of t e c h n i q u e s and 4 b u s i n e s s function o r a c t l v l t y , we n e e d to s e g r e g a t e t h e two i n o u r thinking. V . E . tixchniques h a v e b e e n b r o a d l y taught i n t h e U.S. s i n c e 1 9 5 2 when G e n e r a l E l e c t r i c C o m p a n y f i r s t c o n d u c t e d a f o u r w e e k w o r k s h o p s e m i n a r f o r about 70 p e o p l e f r o m d i f f e r e n t p l a n t s and b a c k g r o u n d s . T o d a y , m o s t l a r g e c o m p a n i e s , m a n y c o n s u l t a n t s , a n d G o v e r n m e n t a g e n c i e s a r e c o n d u c t i n g V.E , c o a r s e s , v a r y i n g i n t i m e f r o m a two h o u r o r i e n t a t i o n to 8 0 h o u r w o r k s h o p s e m l n a r s a n d a d v a r c e d training.

While i t is not w i t h i n t h e s c o p e of t h i s p a p e r to d i s c u s s V . E . t e c h n l q l ~ e sIn d e t a i l , a few c o m m e n t s m l g h t b e a p p r o p r i a t e t o h e l p o r l e n t t h o s e who h a v e not h a d s o m e t r a i n i n g . Although v a l u e e n g i n e e r i n g w o r k 1s a l m e d at c o s t reductlor? o r a ~ o i d a n c e a c h i e v e m e n t s , ~ t i s not c o s t r e d u c t i o n In t h e t r a d l t l o n a l s e n s e . T t I n v o l v e s t h e by5te-na t i c , o r g a n i z e d a p p l i c a t i o n of s p e c i f i c t e c h n i q u e s w h l c h c l a r l f y t h e functional r e q u i r e m e n t s of t h e o b j e c t u n d e r s t u d y , e s t a b l i s h a n o b ~ e c t l v e m e a s u r e of t h e w o r t h of t h e f u n c t i o n , a n d t h e n a p p l y t h e n e c e s s a r y knowledge and c r e a t ~ v l t y to a c h l e v e t h e functions a t a c o s t c l o s e t o t h e i r w o r t h . When t h e t o t a l c o s t to t h e u s e r a p p r o a c h e s t h e e s t a b l l s h e c w o r t h t h e n a good value p r o d u c t h a s b e e n p r o d u c e d . One m u s t thils look f o r c e r t a i n c r i t e r l a In judging w h e t h e r valile e n g ~ n e e r l n g studies a r e being p e r f o r m e d . They a r e :

1.

2. 3. 4. 5.

An o r g a n i z e d a p p r o a c h o r job p l a n . T h e c l a r i f i c a t i o n , definition and a n a l y s i s of f u n c t i o n s . The e v a l u a t i o n of t h e w o r t h of functions. The u s e of c r e a t i v e and s e a r c h t e c h n i q u e s . Teamwork t h e joint e f f o r t s of p e o p l e .

V A L U E ENGINEERING PROGRAM
A V. E. p r o g r a m c a n be d e f i n e d a s a p l a n to b r i n g about the p r o f i c i e n t application of V. E . t e c h n i q u e s b y k e y d e c i s i o n m a k i n g and s u p p o r t p e r s o n n e l a t a l l a p p r o p r i a t e s t a g e s of the p r o d u c t life c y c l e and to a l l c o s t c e n t e r s of the b u s i n e s s a s a p p l i c a b l e . Value e n g i n e e r i n g t e c h n i q u e s should be c o n s i d e r e d a m a n a g e m e n t tool to a s s i s t i n the efficient o p e r a t i o n of the b u s i n e s s j u s t a s w o r k m e a s u r e m e n t , w o r k s i m p l i f i c a t i o n and o t h e r m e t h o d s . A s you w e l l know, t h e r e i s a v a s t d i f f e r e n c e b e t w e e n knowing a technique and the e f f e c t i v e a p p l i c a t i o n of t h a t technique. So i t i s with value e n g i n e e r i n g . H e r e 1s w h e r e the r e a l p r o b l e m s a r i s e . How d o e s one i n s u r e a s u c c e s s f u l value e n g i n e e r i n g p r o g r a m ? What should be done to m a k e t h e p r o g r a m s u c c e s s f u l ? What a r e the pitfalls'?
Since a c l e a r definition of a p r o b l e m often l e a d s t o the solution, l e t ' s s t a r t by c l a r i f y i n g what i s m e a n t by a " s u c c e s s f u l V. E . P r o g r a m . " I n o t h e r w o r d s , what i s o u r objective?

KEY E L E M E N T S O F A VALUE ENGINEERING PROGRAM


Keeping i n m i n d t h a t we a r e t a l k i n g about a p r o g r a m to i n s u r e the w i d e s p r e a d u s e of V . E . t e c h n i q u e s , the g e n e r a l e x p e r i e n c e of i n d u s t r y h a s shown the following e l e m e n t s to be e s s e n t i a l : 1. T h e V. E. o r i e n t a t i o n of top and m i d d l e m a n a g e m e n t : la) to obtain t h e i r s u p p o r t s o t h a t the a p p r o p r i a t e i n v e s t m e n t will be m a d e to develop V. E. p r o f i c i e n c y . to enable t h e m to s e t g o a l s , d i r e c t e f f o r t s , and m e a s u r e the r e s u l t s of V. E . e f f o r t s .

lb)

T h e depth V. E . e d u c a t i o n of a l l k e y d e c i s i o n m a k i n g o r c o n t r i b u t i n g personnel: 2a) 2b) to e n a b l e t h e m to p a r t i c i p a t e i n V. E . e f f o r t s . to equip t h e m to m e e t c o s t t a r g e t s and c o s t r e d u c t i o n g o a l s .

A V. E. staff o r Support Function; 3a) to conduct the o r i e n t a t i o n and t r a i n i n g a c t i v i t i e s .

3b)

to p r o v i d e d e p t h s u p p o r t f o r l i n e p e r s o n n e l In c o s t t a r g e t and r e d u c t i o n a c t i v i t i e S.

3 ~ ) to d e v e l o p v a l u e d a t a a n d t e c h n i q u e s , v a l u e r e s e a r c h , s t a n d a r d s . 3d) 3e) 4. to l e a d o r c o n d u c t v a l u e s t u d i e s . to stimulate c r e a t i v i t y and t e a m w o r k .

A Cost Target Program:


4a) to p r o v i d e m o t i v a t i o n f o r l i n e p e r s o n n e l to m e e t d e s i r a b l e c o s t objectives. to p r o v i d e a m e a s u r e f o r e f f e c t i v e n e s s i n c o s t work., t o f o r c e t h e p r o f i c i e n t a p p l i c a t i o n of V.

4b) 4c)

E. t e c h n i q u e s .

RELATIONSHIP O F P R O D U C T D E V E L O P M E N T AND V. E. L o o k i n g b a c k now to t h e " K e y E l e m e n t s of P r o d u c t D e v e l o p m e n t i ' one c a n s e e a v e r y c l o s e s i m i l a r i t y and r e l a t i o n s h i p to t h e " K e y E l e m e n t s and O b j e c t i v e s of a V. E. P r o g r a m . " T h e l a t t e r i s d e s i g n e d i d e a l l y to h e l p s t r e n g t h e n t h e f o r m e r , particularly, w h e n i t c o m e s t o d e v e l o p i n g a v a l u e p r o d u c t ( o n e t h a t m e e t s both p e r f o r m a n c e and c o s t objectives). Element Knowledge What V. E . D o e s

D e v e l o p s knowledge of t e c h n i q u e s which a r e f u n d a m e n t a l to p r o d u c t d e v e l o p m e n t ; functional d e s i g n , c o s t a n a l y s ~ S, s e a r c h t e c h n i q u e s , m a t e r i a l s , p r o d u c t s , and p r o c e s s e s , shortens learning time. T e a c h e s a p p l i e d c r e a t i v i t y to d e v e l o p new and s i m p l ~ f i e d solutions to problems. S t r e n g t h e n s i n t e g r a t e d a c t i o n of a l l b u s i n e s s functions t o w a r d desirable c o s t o b j e c t i v e s . T e a c h e s and s p o n s o r s teamwork. P r o v i d e s s c i e n t i f i c and s y s t e m a t i c m e t h o d s to e s t a b l i s h c o s t and f u n c t i o n a l d e s i g n o b j e c t i v e s . Identlfie s u n n e c e s s a r y a c o s t s and p i n p o i n t s t a r g e t s of o p p o r t u n i t y . P r o v ~ d e s m e a s u r e for cost effectiveness. A t t a c k s t h e c o s t p r o b l e m methodically and ~ n t e n t l o n a l l y . P r o v i d e s a s y s t e m a t i c p l a n f o r p r o b l e m s o l v l n g and p r o f i t i m p r o v e m e n t . Reduces wasted t i m e , d l r e c t s effort a toward m o s t productive a r e a s .

Creativity

Teamwork

Objectives

Plan

F r o m t h e s e k e y e l e m e n t s and t h e i r r e l a t i o n s h i p s one c a n g e t a f a i r i d e a of t h e s potential i m p a c t of a V. E. p r o g r a m . H o w e v e r , a s h a s been i n d i c a t e d b e f o r e , t h e r e Y a giant s t e p between knowledge a n d i m p l e m e n t a t i o n , and t h e r e a r e m a n y o b s t a c l e s in t h e path. P R O B L E M S ESTABLISHING A V. E. PROGRAM I. INVESTMENT P R O B L E M

V e r y s e l d o m d o e s anyone r e c e i v e a n y s u b s t a n t i a l g a i n o r i m p r o v e m e n t with no i n v e s t m e n t . T h i s i s a l s o t r u e i n r e g a r d t o the b e n e f i t s of a V. E . p r o g r a m and the c o s t to a c h i e v e t h e s e r e s u l t s . T h u s , one of the f i r s t o b s t a c l e s i s t h a t m a n a g e m e n t m u s t be s o convinced of the b e n e f i t s t h a t t h e y a r e willing to m a k e the n e c e s s a r y i n v e s t m e n t . Secondly, t h e y m u s t have a n i n c e n t i v e t o want the b e n e f i t s . M a n a g e m e n t h a s h e a r d p r o m i s e s of " p i e - i n - t h e - s k y " often enough to g e t a l i t t l e h a r d hedded when s o m e one o f f e r s a m i l l i o n d o l l a r s r e t u r n if t h e y will only spend $100, 000. E v e n ~f t h e i n v e s t m e n t i s relatively s m a l l and s p r e a d o v e r s o m e t i m e t h e r e i s a n i n h e r e n t r e l u c t a n c e to spend m o n e y , i n c r e a s e o v e r h e a d and c o s t s . R e g a r d i n g t h e i n c e n t i v e , a m a n a g e r w h o s e p l a n t s a r e v e r y b u s y h a s a l l t h e b u s i n e s s h e w a n t s , and h a s b e e n m a k i n g a n i c e s t e a d y p r o f i t of 2% m a y be p e r f e c t l y happy. "Why r o c k t h e boat to t r y to m a k e 50Jo? W h a t ' s w r o n g with 2709 T h a t ' s what m a n y of m y c o m p e t i t i o n a r e m a k i n g . B e s l d e s 1 m a y do s o m e t h i n g that will a d v e r s e l y affect the p r e s e n t s i t u a t i o n . " and Incentive f o r actlon. So h e r e i s a couple of p r i m e p r o b l e m s - I n v e s t m e n t Many value p r o g r a m s don't get o f f the ground b e c a u s e m a n a g e m e n t d o e s not have the i n c e n t i v e o r d e s i r e to spend the m o n e y and e f f o r t to s t a r t and conduct a s u c c e s s f u l V. E . p r o g r a m . S o m e t i m e s a p r o g r a m will d r i f t along f o r y e a r s being only p a r t i a l l y effective b e c a u s e only a token i n v e s t m e n t h a s b e e n m a d e . Now t h i s l e a d s to a n o t h e r p r o b l e m t i t l e d "Which C o m e s F i r s t The C h i c k e n o r T h e E g g ? " If one looks a t t h e k e y e l e m e n t s of a V. E . p r o g r a m , i t b e c o m e s obvious that t h e r e a r e s e v e r a l w a y s m a n a g e m e n t could spend m o n e y to i n i t i a t e it. A V. E . staff could be h i r e d to m a k e product. s t u d i e s and suggest cost reduction changes. A V. E . staff could be h i r e d to conduct t r a i n i n g p r o g r a m s . C o n s u l t a n t s could b e h i r e d to r u n c o u r s e s . A c o s t r e d u c t i o n o r c o s t t a r g e t i n g p r o g r a m could be e s t a b l i s h e d with a d m i n i s t r a t o r s to f o r c e V. E . w o r k with people self taught. Key people could be s e n t to school f o r t r a i n i n g and t h e n given r e s p o n s i b i l i t y f o r the p r o g r a m . E x i s t i n g people i n v a r i o u s functions could b e given p a r t t i m e r e s p o n s i b i l i t y f o r the p r o g r a m .

T h e d i l e m m a f o r m a n a g e m e n t t h e n i s w h e r e and how m u c h i n v e s t m e n t should be m a d e . Which c o m e s f i r s t , V. E . t r a i n i n g o r t h e V. E . s t a f l ? V . E . t r a i n i n g o r V. E. p r o j e c t w o r k ? Another p r o b l e m c l o s e l y r e l a t e d to t h e " c h l c k e n o r eggC q u e s t i o n i s t h a t m a n a g e m e n t i s r e l u c t a n t t o spend m o n e y o r m a n p o w e r to do V. E . vrctil t h e y a r e convinced of r e s u l t s , but how c a n r e s u l t s be obtained without q u d l f i e d V. E . people 3 T h i s i s t h e p a r a d o x i c a l s i t u a t i o n i n which m a n y l o w e r l e v e l m a n a g e m e n t o r lndlviduals have found t h e m s e l v e s when t h e y want t o s t a r t a V , E . p r o g r a m but have no one on b o a r d to do i t . T h e y c a n ' t s e l l m a n a g e m e n t o n V. E b e c a u s e t h e y have no e x a m p l e s o r r e s u l t s a n d t h e y c a n ' t get r e s u l t s b e c a u s e no one i s doing i t .

ONE ANSWER T O THE INVESTMENT P R O B L E M Of c o u r s e , the solution t o t h e i n v e s t m e n t p r o b l e m l i e s i n convlnclng m a n d g e m e n t t h a t r e a l incentives a n d r e w a r d s e x i s t . U n l e s s one h a s a good d e a l o+ ammunition, e x p e r i e n c e and s a l e s m a n s h i p s k i l l , t h i s i s often a v e r y difficult t a s k . One approacl; 1s t o invite qualified c o n s u l t a n t s o r a v a l u e e n g i n e e r f r o m a n o t h e r c o m p a p y to co-ne ? n and t a l k with your m a n a g e m e n t . C a r e should be t a k e n to s e l e c t c o m p e t e n t people wlth a good reputation i n the f i e l d and who u n d e r s t a n d the n a t u r e of your b u s l n e . 5 ~ . T h ~ s m a y get you o v e r the f i r s t h u r d l e . M a n a g e m e n t i s now r e a d y to experiment w t h V . E . enough to m a k e a n m v e s t m e n t . But w a t c h o u t , t h e r e a r e plenty of p l t f a l l s a h e a d .

11.

PERSONNEL P R O B L E M

S o m e of the m o s t difficult p r o b l e m s i n s e t t i n g up a V . E . p r o g r a m a r e with people. G e n e r a l l y , t h e y do not r e a c t to c h a n g e e a s i l y ; n o r do t h e y adopt qew a p p r o a c h e s r e a d i l y ; n o r a r e t h e y q u i c k to g r a s p new c o n c e p t s ; n o r do t h e y llke anyth:ng th3t s h a k e s t h e i r e n v i r o n m e n t . C o n s e q u e n t l y , t h e i n j e c t i o n of V. E . c o n c e p t s d o e s not c o m e e a s , l y , It t a k e s a r e a l s k i l l f u l o p e r a t o r to b r i n g about t h e t r a n s f o r m a t i o n to convLnce people t h e r e i s a b e t t e r w a y to do a b e t t e r job; t o t e a c h a new concept; to b r ~ n g aboclt a c h ~ r ~ g i n the way a job i s a p p r o a c h e d and a w a y of thinking. Many V. E. p r o g r a m s have f a l t e r e d o r e v e n failed b e c a x s e c f * h e n 8 d n a n r e l a t i o n s p r o b l e m . T h e value e n g i n e e r h a s m a d e p r e m a t u r e p r o p o s d s , p o o r propc i a l o r h a s rubbed people the w r o n g way. O r possibly, a change w a s m a d e u n d e r a :'. E , b a n n e r , and failed. V. E . b e c o m e s a s c a p e g o a t f o r p o o r w o r k on s o m e o n e ' s p a r t . -n_ w a s n P r :t.e fault of the technique but the p z r s o n using i t . H o w e v e r , s l n c e i t 1s new dnd ncit well e s t a b l i s h e d , the field ( V . E . ) g e t s t h e b l a m e and b e c o m e s a d i r t y w o r d , f o r e v e r b a n i s h e d . Sounds f a r f e t c h e d but i t s happened m a n y t l m e s . ONE ANSWER TO PERSONNEL P R O B L E M P r o p e r communications, education and good h u m a n relations a r e the a n s w e r to t h l s one. T h u s , a good t r a l n l n g and o r i e n t a t i o n p r o g r a m 1s essential to s t a r t a s u c c e s s f u l V . E . p r o g r a m , B y t h i s m e a n s , people a r e p r o p e r l y to the

s u b j e c t . T h e y u n d e r s t a n d t h e p u r p o s e of t h e p r o g r a m and get to know t h e techniques. A c o m m o n u n d e r s t a n d i n g , v a l u e consciousness and t e a m s p i r i t 1s d e v e l o p e d whlch c r e a t e s a c l i m a t e t h a t i s r e c e p t i v e t o v a l u e w o r k . T r a l n l n g a n d o r r e n t a t l c n 1s d ~ f f l c r ~ l t to c a r r y off w e l l , h o w e v e r , a n d n e e d s to be h a n d l e d b y professionals wlth experience and s k i l l s i n t h i s a r e a . O t h e r w i s e you m a y h a v e a n o t h e r proble-m - t h e t r a l n L n gm a y h a v e c o n v i n c e d p e o p l e t h e y w a n t nothing to do wlth V. E .
111.

INCENTIVE P R O B L E M

O t h e r t h a n t h e i n c e n t l v e f o r I n v e s t m e n t p r o b l e m previously d ~ s c u s s e d ,t h e r e i s a seriocls o b s t a c l e to t h e b r o a d u s a g e of V. E. t e c h n i q u e s . T h i s o c c u r s when the k e y d e c l s l o n m a k e r s h a v e l i t t l e o r no i n c e n t l v e to a c h i e v e e x c e l l e n c e in c o s t type d e c i s i o n s . T h l s s l t u a t i o n i s m o r e p r o n o u n c e d i n a r e a s w h e r e " c o s t p 1 . l ~f i x e d f e e " mo;t of t h e p e o p l e , t y p e of b u s l n e s s h a s p r e v a i l e d f o r s o m e t l m e . Under t h i s c o n d i t ~ o n w h o s e d e c i s i o n s a f f e c t p r o d u c t c o s t s , a r e c o m p l e t e l y p e r f o r m a q c e o r i e n t e d and c o s t s h a v e v e r y l i t t l e , i f . a n y , s l g n l i l c a n c e . T h u s , s i n c e t h e y a r e not m e a s u r e d on cobt effectiveness t h e y h a v e no l n c e n t l v e t o d e s i g n and p r o d u c e low c o s t p r o d u c t 5 . F ~ l r t h e r m o r e , u n d e r t h i s s l t u a t i o n , p e o p l e d e v e l o p no v a l a e e n g i n e e r i n g t y p e s k i l l s n o r - a l ~ e c o n s c i o u s n e s s , and c o n s e q u e n t l y o f t e n l a c k m u c h of t h e b a s l c knowledge n e e d e d t o do effective v a l u e e n g i n e e r i n g w o r k . T h e education p r o g r a m u n d e r s u c h c o n d l t l o n s ~ e e d s to be e v e n m o r e e x t e n s i v e . F r o m t h l s e x t r e m e , t h e r e a r e a l l l e v e l s of c o s t c o n s c i o u s n e s s and r e s p o n s i b l l l t y e x l s t i n g I n different i n d u n t r i e s . E v e n i n a m o d e r a t e l y competitive i n d u s t r y w h e r e p e o p l e a r e m o t i v a t e d to m a k e c o s t t y p e d e c l s i o n s , t h e i n c e n t i v e t o excel1 m a y be s l i g h t b e c a u s e a good s t a n d a r d of m e a s u r e m e n t 1s l a c k l n g . If c o s t t a r g e t s o r v a l ~ e s t a n d a r d s a r e not s c i e n t i f i c a l l y and objectively e s t a b l i ~ h e d ,a m e d l o c r e l e v e l o f c o m p e t e n c e i n d e s l g n l n g and producing f o r low c o s t m a y p r e v a l l . Under a n y of t h e s e c l i m a t e s , t h e i n c e n t i v e t o do good value e n g l r ; e e r l n g o r v a l u e a n a l y s i s w o r k i s m i s s l n g . U n l e s s t h i s environment I S c h a n g e d , t-a1 ~ e e n g i n e e r l n g t r a i n i n g m a y be wa.;ted and r e c e p t i v i t y to value l m p r o v e r n e n t t y p e c h a n g e s w d l be or m i n i m u m . T h e r e w l l l be no m o t i v a t i o n to t a k e the r i s k of c h a n g e , n o r t h e f ~ n d s manpower allocated to Implement the change. ONE ANSWER T O T H E INCENTIVE P R O B L E M Without a s s l g n e d responsibility and m e a s u r e m e n t p l u s a d e f l n e d ob e c t ~ v e h a r d l y a n y p r o j e c t g e t s d o n e . T h l s i s a l s o t r u e In the valcle e n g i n e e r l n g a r e a . TI-&nse b u s l n e s s f u n c t i o n s w h e r e d e c l s i o n s w h l c h a f f e c t c o s t s a r e m a d e m u s t b e a w a r e of t h e l r m cost r e s p o n s i b i l ~ t ~ e s , u s t h a v e w e l l deflned c o s t o b j e c t i v e s , and m u s t be m e a s ; r e d a g a i n s t t h e s e t a r g e t s . T h e s e , i n b r i e f , a r e t h e e s s e n t i a l e l e m e n t s of a c o s t t a r g e t p r o g r a m w h i c h shoulci be a n a n s w e r to t h e incentive p r o b l e m . M o r e o v e r , s u c h a p r o g r a m ~f p r o p e r l y d t s l g n e d , should e s t a b l i s h i n t e g r a t e d a c t r o n by t h e v a r i o u s functions w h i c h influence p r o d u c t c o s t . Thr,s, c o s t t a r g e t p r o g r a m s p r o v l d e I n c e n t i v e s f o r t e a m w o r k a c t l o n whlch 1s a l s o s p o n s o r e d by a r d e s s + n t : a l t o valde e n g i n e e r l n g .

SUMMARY
I n s u m m a r y , i t i s f a i r l y e v i d e n t f r o m t h e g r o w t h of v a l u e e n g i n e e r i n g i n t h e i n d u s t r i a l a n d G o v e r n m e n t c o m m u n i t i e s , t h a t i t i s a n effective m a n a g e m e n t t o o l f o r i n c r e a s i n g p r o f i t s a n d i m p r o v i n g c o m p e t i t i v e p o s i t l o n t h r o u g h t h e reduction of u n n e c e s s a r y c o s t s . H o w e v e r , n o t a l l a t t e m p t s t o m a k e u s e of V. E. techniqcles a r e s u c c e s s f u l b e c a u s e of t h e i n t e n s e p r o b l e m s of integrating a n e w m e t h o d o l o g y w i t h t r a d i t i o n a l b u s i n e s s functions and m e t h o d s . T h e s e p r o b l e m s c a n be o v e r c o m e and the k e y e l e m e n t s of a V. E . p r o g r a m c a n b e i m p l e m e n t e d s u c c e s s f u l l y i f c e r t a i n essential i n g r e d i e n t s e x i s t . Any c o m p a n y not willing t o i n v e s t i n t h e s e i n g r e d i e n t s should be p r e p a r e d f o r p o o r r e s u l t s o r , a t l e a s t , only p a r t i a l effectiveness. In m a n y c a s e s , value e n g i n e e r i n g h a s b e e n o v e r s o l d a s a gc!-rich-q:llck s c h e m e w i t h i n s u f f i c i e n t e m p h a s i s o n t h e t y p e a n d e x t e n t of t h e i n v e s t m e n t n e c e s s a r y to m a k e o p t i m u m u s e of t h e t e c h n i q u e s . T h e r e f o r e , if you d o n ' t h a v e a V. E. p r o g r a m a t p r e s e n t o r l f you h a v e o n e w h i c h i s not s u b s t a n t i a l l y c o n t r i b u t i n g t o c o m p a n y p r o f i t s , t h e n i t 1s t l m e for a d e p t h a p p r a i s a l of w h a t you a r e m i s s i n g . H e r e ' s a q u i c k c h e c k l i s t to h e l p determine ~f yo^ have the right i n g r e d i e n t s i n the f o r m u l a f o r s u c c e s s : 1,

P m a n a g e m e n t who i s w i l l i n g to i n v e s t i n a n d m a n a g e a V, E .
program. a, A r e they sold on, luke w a r m , o r cold to value englneerlng methods?

2.

A h i g h l e v e l , q u a l i f i e d V . E . s t a f f who c a n c a r r y out a V , E p r o g r a m by: a. b. c. d. Conducting orientation and t r a i n i n g . P r o v i d i n g line s u p p o r t ; value d a t a and i n f o r m a t i o n . Leading and conducting value studies. R e s e a r c h i n g In t h e v a l u e f i e l d .

3.

to provide incentilres f o r value w o r k a n d m o t i v a t i o n f o r t e a m w o r k e f f o r t s to a t t a i n d e s i r a b l e cost objectives.

P cost target p r o g r a m

a.

P p l a n f o r m e a s u r e m e n t of e f f e c t i v e n e s s i n m e e t i n g c o s t o b j e c t i v e s a n d i m p r o v i n g V. E. e f f i c i e n c y .

If t h e s e t h r e e ingredients e x l s t , it f o l l o w s that a s u c c e s s f u l V. E p r o g r a m w ~ l l e m s t . a n d V . E . techniques w l l l be w l d e l y u s e d . When t h l s h a p p e n s p r o d u c t a n d


operating c o s t s w i l l be s u b ~ t a n t ~ a l r le yd u c e d d n d p r o d u c t s c a n be t o m p e t l t r v e l y p r ~ c e d wrth m a x l m u m p r o f l t r n ~ ~ r g l n s If . y o u r c o m p a n y d o e s not h a v e s s ~ c h a p r o g r a m , watch

o u t , b e c a u s e y o u r competition m a y b e b u l l d l n g t h e l r v a l u e e n g l n e e r l n g s k l l l s . P a p e r P r e p a r e d for:

P I I E REGlON I CONFERENCE - November 1 7 , 1966 HARTFORD, CONNECTICUT

C.

S E T T I N G U P AND MANAGING A VALUE A N A L Y S I S ( E N G I N E E R I N G ) PROGRAMME

S E T T I N G U P AND MANAGING A V A L U E ANALYSIS P R O G R A M F. S. S h e r w i n , D i r e c t o r Value E n g i n e e r i n g S e r v i c e s Raytheon Company

INTRODUCTION SO far we have talked about Value Analysis as a methodology for decision making; as a group of techniques used in an organized job plan to identify and remove unnecessary product costs. Now we should discuss how business management can make profitatle use of this Value Analysis system. Just as any industrial tool is useless until it is put to work so knowledge of Value Analysis is meaningless until it is producing results.

The plan to make Value Analysis produce results is called a Value Analysis Program. It includes a number of kev ingredients which have been found to be essential for a successful program. Althou2h the quantity of each in3redient nav varv with the size of the busi-ness nevertheless it is difficult to make optimum use of Value Analysis without these elements:

KEY ELEMENTS OF A VALUE AhTALYSIS P R O G W


1. Basic orientation in the concepts, objectives, techniaues and organizational plan of Value Analysis for all top and middle management. a. to obtain their understanding, support and endorsement of the pro7ram and to authorize the essential investment. to enable them to manage the program, set goals, direct efforts and measure results.

b.

2. Depth training in Value Analysis techniques for all key decision making or contributing personnel.
a.
b.

to enable them to contribute to Value Analysis efforts. to equip them to meet cost targets and cost reduction goals.

3.

A Value Analyst or Value Analysis Staff. a.


b.

to conduct the orientation and training activities. to provide depth support for line personnel in cost target and reduction activities. tc develop value data and techniques, value research and value standards. to lead, guide and conduct value analysis studies. to stimulate creativitv and teamwork,

c. d. e.

S e t t i n g U p and M a n a g i n g a Value A n a l y s i s P r o g r a m

~t

A C o s t T a r g e t Program.
a. t o p r o v i d e m o t i v a t i o n f o r l i n e p e r s o n n e l t o meet desirable cost objectives. t o p r o v i d e a m e a s u r e f o r e f f e c t i v e n e s s i n c o s t work. t o force the p r o f i c i e n t application of value a n a l y s i s techniques.

b. c.

A company d o i n g more t h a t $2 m i l l i o n a n n u a l b u s i n e s s c a n a f f o r d t o h a v e a I n l a r g e r c o m p a n i e s , a s t a f f o f V.A. s p e c i a l i s t s n a y V a l u e A n a l y s t on i t s p a y r o l l . be worthwhile. I n any c a s e , i f a p r o d u c t o r s e r v i c e i s b e i n g s o l d o n a c o m p e t i t i v e m a r k e t and i f i n c r e a s e d p r o f i t s and r e d u c e d c o s t s a r e d e s i r e d , you w i l l b e n e f i t from a V.A. Program.

T h e r e a r e s e v e r a l ways t o g e t a V.A. Program g o i n g j.n a company, b u t e s s e n t i a l l y o n e n u s t h i r e some v a l u e a n a l y s i s knowledge. T h i s p r o f e s s i o n a l s k i l l i s needed t o c a r r y o u t t h e above p r o g r a m e l e m e n t s . Wnile t h e u s e o f v a l u e a n a i y s i s t e c h n i q u e s b y l i n e p e r s c n n e l i s i m p o r t a n t and o n e o f t h e o b j e c t i v e s o f t h e p r o g r a m , n e v e r t h e l e s s , i t h a s b e e n p r o v e n t h a t i t w i l l n o t happen e f f e c t i v e l y w i t h o u t t h e c a t a l y t i c a c t i o n o f a Value A n a l y s t . T h u s , w h e t h e r t h e i n i t i a l o r i e n t a t i o n and t r a i n i n g i s c o n d u c t e d by o u t s i d e c o n s u l t a n t s o r i n e d u c a t i o n a l f a c i l i t i e s , t h e ocher f u n c t i o n s of a v a l u e s p e c i a l i s t a r e e s s e n t i a l t o p r o g r a n s u c c e s s . The t y p e o f man a s s i g n e d t o t h e V . A . j o b i s c r i t i c a l t o t h e program. He s h o u l d b e a m o t i v a t o r , h i g h i n c r e a t i v e , a n a l y t i c a l and huaan re1,;ions skills. He s h o u l d comprehend t h e t e c h n i c a l p r o b l e m s o f t h e p r o d u c t and have a b r o a d knowle d g e o f m a t e r i a l s , p r o d u c t , p r o c e s s e s , v e n d o r s and t h e v a r i o u s b u s i n e s s f u n c t i o n s .
H i s o r g a n i z a t i o n a l p l a c e m e n t s h o u l d be s u c h t h a t h e can s e r v i c e a l l t h e f u n c t i o n a l a r e a s o f t h e b u s i n e s s and c a n a s s i s t g e n e r a l n a n a g e x e n t i n managing I n a way, h e i s a program manager w i t h t h e a u t h o r i t v t o h e l p t h e ';slue Program. managerxnt b r i n g a b o u t t h o s e a c t i o n s which r e s u l t i n v a l u e improvement o f t h e products.

The p r i o r i t i e s f o r i n i t i a l a c t i o n s i n managing a Value A n a l y s i s Program might b e something as f o l l o w s :

S e t t i n g U p and M a n a g i n g a V a l u e A n a l y s i s P r o g r a m

1. Orientation and training of all key middle management and decision makers. This is essential both as an introduction to the program arLd as an educational device to strengthen efficiency in the use of the techniques. It creates an understanding of the program objectives, value language and valuc consciousness so that harmonious, cooperative actioa toward cost targets will tzke place. PIany value programs fail or lag with only partial effectiveness because ths proper climate has not been established. This is a crucial part of the progras and needs to be done and done well. In plant training using company products as case studies is most effective and it is worth the investment to hire skilled professionals to do it. The training should pay for itself from savings on workshop projects.

2.

B Cost Target Program.

This program is Ln essential adjunct to a Value Analysis Program because it establishes and assigns goals both for product c o s ~ of new designs a;,d for cost reduction of existing products. Without an awareness of cost responsibilities and measurement, line personnel have little motivation to develop value analysis proficiency nor to seek the support of value specialists. Since targets are established objectively and agreed to by all contributing functions, this prograc does rmch to motivate integrated teamwork action. Specific Value Studies. Using either task forces, teams or individual value specialists products and high cost areas should be designc~ed for intense value analysis studies. S.,;ch efforts are essential to project products ahead of competition and to insure adequate profit margins. Value program management should know how to initiate and guide such studies to remove large amounts of unnecessary costs.

3.

4 . Value Data, Standards, and Research.


Line personnel often do not have time to investigate, and accumulate value type data relating costs to various functional requirements of the products. Hence, to keep abreast of the latest information o n material, products, processes, mechines, methods and techniques and cost related data, it is i q o r c ~ n tto have a value specialist divroced from daily line responsibilities doing research in this area. The results of this work is disseminated in u s e f ~ iform to decision makers who have cost responsibility. A manual of value data and standards should be developed to minimize search time and insure that reliable low cost approaches are used. With a rapidly expanding amount of technical and production knowledge which affects cost, it is a full time job to accumulate and segregate that which is applicable to one company.

Thus, managiag a Value Analysis Progrnn means seeing to it that these things happen continually and effectively. B periodic measurement of return on investment should be made to ascertain that the program is producing real, tangible results. A goal of 10'11, savings/program cost, ratio should be expected and actual achieved with proficiency.

Setting Up and Managing a Value A n a l y s i s P r o g r a m

It is hoped that this presentation has provided you with an insight of Value Analysis. When the above program elements exist and Value Analysis techniques are widely used, product and operating costs should be substantially reduced and products can be competitively priced with maximum profit margins. If your company does not havs such a program, watch out; your competition may be building their value analysis skills.

n.

SOME TIPS or\: I-IOIJ TO GET A


V A L U E E N G I N E E R I N G PROGRAMME G O I N G

S o m e t i p e o n how t o g e t a Value E n g i n e e r i n g P r o g r a m going P r e p a r e d By: F r e d e r i c k S. S h e r w i n , M a n a g e r Value E n g i n e e r i n g & A n a l y s i e S e r v i c e s Raytheon Company

I.

After the one-day orientation s e m i n a r

--

what n o w ?

M a n y of you h a v e c o m e t o t h e e c o n e - d a y Value E n g i n e e r i n g S e m i n a r s b e c a u s e you h a v e a e i n c e r e i n t e r e s t i n l e a r n i n g m o r e a b o u t t h i s n e w t e c h n i q u e f o r r e d u c i n g c o s t , c a l l e d V a l u e E n g i n e e r i n g o r Value A n a l y s i s . You p r o b a b l y d o l e a r n m o r e a b o u t i t , but w h a t b e c o m e s of t h i s k n o w l e d g e 3 S o m e of you p r o b a b l y want t o a p p l y t h e s e t e c h n i q u e s to y o u r own job t o h e l p you f e r r e t o u t s o m e o f t h e e x c e s s p r o d u c t c o s t s . S o m e of you a r e h e r e t o t a k e t h e m e s s a g e b a c k t o y o u r m a n a g e m e n t to s t i r t h e i r i n t e r e s t . P o ~ s i b l y e v e n s o m e of you a r e h e r e b e c a u s e you want t o go b a c k to y o u r plant and s t a r t a f u l l - t i m e V a l u e E n g i n e e r i n g p r o g r a m . In a n y c a s e what do you do a f t e r t o d a y ? How d o you m a k e t h e b e e t use o f t h i s t h i n g c a l l e d Value E n g i n e e r i n g ? If a n y o f you a r e h e r e to scoff a t t h e a p p r o a c h , o r if you f e e l t h a t you a l r e a d y know a l l t h e r e i s t o know a b o u t A n a l y s i n g V a l u e , t h e n you m i g h t a s well s t o p r i g h t h e r e b e c a u s e you p r o b a b l y won't g e t a thing o u t of t h i s p r o g r a r h . If, o n t h e o t h e r h a n d , you h a v e a s i n c e r e d e s i r e t o m a k e s o m e t h i n g o u t of t h e s e t e c h n i q u e s and to s t a r t a n e f f e c t i v e Value p r o g r a m in your plant, then h e r e a r e some t i p s that might help you. L a t e r o n in the p r o g r a m we will be t a l k i n g about t h e w o r k s c o p e of t h e p r o f e s s i o r i a l Value S p e c i a l i s t . But f o r now, l e t ' s j u s t c o n s i d e r one a s p e c t of h i s job, t h a t i s in t h e p r o d u c t e v a l u a t i o n f i e l d . How c a n we u s e t h e s e t e c h n i q u e s to m a t e r i a l l y h e l p t a k e d o l l a r s o u t of t h e c o s t t o m a n u f a c t u r e a p r o d u c t ? F i r s t : R e a l l y get to know t h e t e c h n i q u e s . It i s n ' t enough t o l i a t e n to a n e x p e r t l i k e L a m y M i l e s . You m u s t s t u d y and p r a c t i c e e a c h t e c h n i q u e . In t h e m o r e e x t e n s i v e t r a i n i n g p r o g r a m s d e s i g n e d to m a k e f u l l - t i m e V a l u e S p e c i a l i s t s o u t o f t h e s t u d e n t s , a c t u a l w o r k s h o p s e s s i o n s a r e c o n d u c t e d Value A n a l y s i n g p r o d u c t s . M o r e will be s a i d about t r a i n i n g l a t e r . H o w e v e r , you d o n ' t l e a r n t o r e a d by l i s t e n i n g to s o m e o n e e l s e r e a d . You l e a r n by doing it y o u r s e l f , o v e r and o v e r , by s t u d y i n g and l e a r n i n g t h e e s s e n t i a l e l e m e n t s . T h e s a m e i s t r u e of Value E n g i n e e r i n g if you w i s h to b e c o m e p r o f i c i e n t a t i t . S o m e of t h e V E t e c h n i q u e s not o n l y r e q u i r e a good knowledge of t h e t e c h n i q u e and what i t m e a n s , but a l s o r e q u i r e a n e x t e n s i v e b a c k g r o u n d knowledge i n o r d e r to p r o p e r l y i m p l e m e n t t h e t e c h n i q u e s . F o r i n s t a n c e , t a k e ?he t e c h n i q u e of " U s e S p e c i a l t y V e n d o r s " . T h e a n a l y s t m u s t c o n t i n u a l l y h a v e t h e t e c h n i q u e i n m i n d and know w h e n to u s e i t . F u r t h e r m o r e , w h e n it c o m e s t i m e to u s e t h e t e c h n i q u e , h e m u s t h a v e c o n s i d e r a b l e b a c k g r o u n d knowledge of h u n d r e d s of S p e c i a l t y V e n d o r e who c a n s e r v e a n d h e l p h i m i n t h e p a r t i c u l a r p r o b l e m a t h a n d . A l s o h e m u s t know how t o go about finding a n d s e l e c t i n g o t h e r v e n d o r s t h a t h e m a y h a v e m p r i o r knowledge o f . H e r e ' s w h e r e a l o t of a s p i r i n g a n a l y s t s f a l l down. . i n not h a v i n g a d e q u a t e b a c k g r o u n d knowledge

t o do the job o r c a f r y out t h e technique m o s t efficiently. If, in studying t h e t e c h n i q u e s , a n d i n g e t t i n g t o k n o w h o w t h e y s h o u l d b e u s e d , you find y o u r s e l f l a c k i n g eufficient s u p p o r t i n g knowledge, then s t e p s m u s t ' b e t a k e n t o fill t h i s v o i d . I n t h e c a s e of v e n d o r s , a l l t h e known r e f e r e n c e s s h o u l d b e s t u d i e d , diecueeione with p u r c h a s i n g e x p e r t s h e l d , p e riodicale ecanned, induetrial show8 v i e i t e d , e e l e c t e d v e n d o r s i n v i t e d i n f o r p r e s e n t a t i o n s of t h e i r s p e c i a l t y , a n d p l a n t v i e i t a t i o n s u n d e r t a k e n . A l l t h i e i e n e c e s s a r y t o b u i l d up t h e b a c k g r o u n d i n f o r m a t i o n needed to succeesfully c a r r y out t h i s one technique. T h e e a m e i s t r u e of a l l t h e o t h e r V a l u e E n g i n e e r i n g t e c h n i q u e s . G e t t o k n o w t h e m t h o r o u g h l y and develop the background know-how to i m p l e m e n t t h e m . Second: P u t t h e t e c h n i q u e s into p r a c t i c e . Many people have w r i t t e n m e , following p r e s e n t a t i o n s o n V a l u e E n g i n e e r i n g , s t a t i n g t h a t t h e y h a v e a r e a l i n t e r e s t i n getting into Value w o r k o r that t h e y want to s t a r t s o m e t h i n g in t h e i r p l a n t . T h e o n l y t r o u b l e i s t h a t t h e y d o n ' t h a v e a n y e x a m p l e s to how t h e i r m a n a g e m e n t , t o a r o u s e i n t e r e s t o r g a t h e r s u p p o r t . So t h e y Ray i n e s s e n c e . . . if o n l y w e h a d s o m e c a s e h i s t o r i e s w e c o u l d g e t a V a l u e p r o g r a m r o l l i n g . U n f o r t u n a t e l y it i s n ' t t h a t e a s y . I t ' s t r u e t h a t a good s u p p l y of c a s e h i s t o r i e s c a n b e v e r y b e n e f i c i a l in m a k i n g p r e s e n t a t i o n s t o s e l l o r t e a c h V a l u e E n g i n e e r i n g . B u t to a m a n s t a r t i n g in t o do Value E n g i n e e r i n g , I r e c o m m e n d that the b e s t way to get c a s e h i s t o r i e s i s t o d e v e l o p t h e m h i m s e l f . M a k e y o u r own p r o j e c t s . C r e a t e y o u r o w n s o l u t i o n e a n d s e l l t h e m to t h e p e o p l e who a r e going t o p ( ~ tth e m into e f f e c t . T h i s m e t h o d not o n l y d e v e l o p s y o u r a b i l i t y a s a n a n a l y s t , allds to y o u r b a c k g r o u n d , m a k e s y o u m o r e f a m i l i a r with t h e c a s e h i s t o r y b e c a u ce you h a v e b e e n a p a r t of i t ; but a l e o w i l l s a v e m o n e y f o r y o u r o w n c o m p a n y anti go a l o t f u r t h e r in advancing t h e c a u s e f o r t h e V a l u e E n g i n e e r i n g a p p r o a c h tllan if vou w e r e h a n d e d e x a m p l e s o r c a s e h i s t o r i e s of V a l u e W o r k . T h e r e f o r e , 1 nke a good l o o k a t s o m e of t h e e x a m p l e s , b e f o r e a n d a f t . e r , t h a t a r e s h o w n you h e r e In t h i s a n d o t h e r p r o g r a m s , m a k e n o t e s of w h a t w a s d e v e l o p e d , a n d w h a t t e c h n i q u e s w e r e u s e d , how t h e y c a m e a b o u t , a n d s e e if you c a n ' t a p p l y t h i s s a m e a p p r o a c h t o y o u r o w n p r o d u c t . S t a r t o u t s l o w , p i c k o n e p r o d u c t , g e t f a m i l i a r w i t h a l l the c o m p o n e n t p a r t s t h a t m a k e up t h e p r o d u c t , find out w h a t t h e y c o s t , p i c k o n e t h a t l o o k s l i k e i t h a s s o m e e x t r a c o s t i n i t , a n d s t a r t to w o r k o n i t . You m a y not h a l v e a u t h o r i t y t o w o r k o n p r o d u c t evaluations f u l l - t i m e , so it m a y be a p a r t - t i m e e f f o r t to s t a r t . E v e n u n d e r t h i s c o n d i t i o n , a f e w good c a s e h i s t o r i e s o r V a l u e r e c o m m e n d a t i o n s c a n usually be developed, at l e a s t , to sell m a n a g e m e n t on allowing a f u l l - t i m e e f f o r t . I f you f o l l o w t h i s p r o c e s s , i n s i x m o n t h s you s h o u l d h a v e d e v e l o p e d a l l t h e c a s e h i s t o r i e s t h a t you w a n t , m o r e o v e r , i n d o i n g s o y o u w i l l p r o b a b l y h a v e s a v e d y o u r c o m p a n y 10 t i m e s y o u r s a l a r y . At t h e s a m e t i m e y o u w i l l p r o b a b l y a r o u s e a g r e a t d e a l of i n t e r e s t i n V a l u e E n g i n e e r i n g a n d you t h e n h a v e a p r o g r a m u n d e r way.

T h i r d : Show s u b s t a n t i a l p r o d u c t c o s t r e d u c t i o n s . I t ' e a l l w e l l a n d f i n e t o g e n e r a t e a l o t o f b e f o r e a n d a f t e r Value c a s e h i s t o r i e s . Undoubtedly t h e s e s a v e m o n e y , but what about i m p r o v i n g p r o d u c t profitability, m a k i n g p r o d u c t s m o r e c o m p e t i t i v e , i n c r e a s i n g s a l e s , p r o f i t m a r g i n s , e t c . If you h a v e a n e x t e n s i v e p r o d u c t l i n e o r l a r g e c o m p l e x p r o d u c t s , then you could pick a w a y by y o u r a e l f f o r e e v e r a l y e a r s a n d m a y b e not m a k e a b i g d e n t i n t h e c o e t s h e l l . T h i e i s g o i n g t o t a k e a m u c h ' a o r e e x t e n s i v e e f f o r t a n d t h e c o n t r i b u t i o n of m a n y m o r e p e o p l e , O n e w a y t o d o t h i s i s t o d e v e l o p w h a t c o u l d b e known a s a V a l u e E n g i n e e r i n g T e a m w o r k o r T a s k F o r c e e f f o r t . Well, a f t e r you h a v e shown what c a n b e done b y t h e V a l u e a p p r o a c h , y o u ahould b e a b l e t o s e l l s o m e o n e i n y o u r c o m p a n y t h a t g r e a t e r a c c o m p l i s h m e n t s c o u l d be m a d e if m o r e p e o p l e got into t h e a c t , o n a p a r t o r full-time b a s i s . Also they probably have some product around that needs t o h a v e s o m e c o s t s r e m o v e d . M a k e t h i s t h e o b j e c t of t h i s T e a m w o r k s t u d y . Now h o w d o you get. t h i s g o i n g ? F i r s t , d o n ' t s t a r t t o o b i g . T a k e a p r o d u c t i n t h e 100 t o 1, 000 d o l l a r p r o d u c t c o s t r a n g e , o r i f o n e i s u n a v a i l a b l e , t a k e a p o r t i o n of a l a r g e r p r o d u c t , p r e f e r a b l y one c o m p l e t e functional a s s e m b l y . Develop a n u n d e r s t a n d i n g a m o n g a l l t h e p r i n c i p a l m a n a g e r s c o n c e r n e d with t h e p r o d u c t a s t o w h a t a Value E n g i n e e r i n g T a s k F o r c e cffort i n v o l v e s . Well. . . what d o e s it i n v o l v e ?
Tg a s k F o r c e Effort 11. How t o c o n d u c t a V a l u e E n e ~ n e ~ r l n

L e t m e r e m l n d you t h a t I arn o n l y t a l k i n g a b o u t o n e t l e r n r n t of t h e F u l l - t l m e T h a t of c o n d u c t i n g p r o d u c t e v a l u a t i o n s . He c a n d o t h l s V a l u e E n g i n e e r ' s job One w a v i s b y h i r n s e l f 3 o a n l n d i v t d u a l e f f o r t . p a r t of h ~ job s In m a n y w a y s Anoth~r w a y i s b y t e a m o r t e a m s of F u l l - t i m e T h i s w a y w a s discussed a b o v e V a l u e E n g i n e e r s , w h e r e a n o p e r a t i a . 1 I S b i g e n o u g h to s u p p o r t s u c h a n o r g a n i z a A n o t h e r w a y 1s b y l e a d i n g a n d gui:ii:%g t e a m s m a d e up of o t h e r p e o p l e In tion d~fferent l i n e p o s i t i o n s who a r e a s s l g n e d to a pa r t l c u l a r p r o g r a m d e s i g n e d t o T h e s e p e o p l e m a y o r m a y not h a v e h e l p r e m o v e c o e t f r o m a fielccted p r o d u c t t rg i i l r l ~ n gprior t o :n+;r p - i r t l c , , ) a t l n n .r. t h i s T a s k F o r c e had Value E n g ~ n e e r ~ n program H o w e v c r , thtay 9170111d b e f i c n i o : p e o ~ t l c M ho a r e c x p e r l c n c e d in t h e i r n tt-ti~, t v p t ' of prop;l.arn, it 1s m o s t d e s i r a b l e o w n f l e l d . F o r t h e b e s t r c s c ~ l ti ~ r e n t f u n c t ~ o n a la r e a s of t h e t o h a v e p e o p l e o f v a r y i n g b ~ c k g q;i i i l r i s : r 0 1 ~ 1r l ~ f i e r)f>~lgn e n g i n e e r i n g , P r o d u c t i o n engineering, bueiness F o r i n ~ t a n c e ,P u r c h a t . i : l j ; Marketing, I n d u s t r i a l e r L ; . l n e t r ~ r T g' L I e t h o d s , C o s t o r o t h e r a r e a s This accomp l i e h e e e e v e r a l purpCapR It b r i n g s t o g ~ t h e r p r o p i e f r a m al! a r c a e w h o h a v e p r o d u c t c o s t r e e p o n albilities. 2 . It g e n e r a t e s a u t r o n g e r t e a r n w o r k ~ f f o r :t3 f t h e s e p ~ o p l ef,a l l o w i n g t h e program
1.

3.
4.

It d e v e l o p s a n u n d e r s t a n d i n g of t h e o t h e r f e l l o w 1 s p r o b l e m e . It b r i n g s a b r o a d e r knowledge t o b e a r o n t h e p r o b l e m o f r e d u c i n g c o e t e .

E x p e r i e n c e h a s shown that the g r e a t e s t r e s u l t s in the coat reduction a r e a a r e o b t a i n e d b y a c o m b i n e d e f f o r t of p e o p l e i n two o r m o r e of t h e a b o v e d e p a r t m e n t 8 o f t h e b u s i n e s a . Now. . . how m a n y p e o p l e should b e i n v o l v e d . T h i s i e d e p e n d e n t o n s e v e r a l t h i n g s of c o u r s e , s u c h a s t h e a i z e of t h e p r o d u c t , a n d t h e t i m e of t h e p r o g r a m . . . w h e t h e r i t i s a full o r p a r t - t i m e o p e r a t i o n , e t c . In t h e p r o d u c t s i z e d l s c u s e e d (100 t o 1, 000 d o l l a r s ) p r o b a b l y a t h r e e t o s i x - m a n t e a m would b e s a t i e f a c t o r y . If a e i x - m a n g r o u p i s u s e d , it would be d e s i r a b l e t o s p l i t t h e m into two t h r e e - m a n w o r k i n g t e a m s , and d i v i d e t h e p r o d u c t into two s e c t i o n s a s e i g n i n g o n e t o e a c h g r o u p . T h e t i m e f o r t h e p r o g r a m m i g h t be f r o m two t o s i x w e e k s . It i s d e s i r a b l e f o r t h i s t y p e of a p r o g r a m to h a v e a s e p a r a t e w o r k i n g a r e a w h e r e the t e a m s can be away f r o m their normal office, free f r o m interruptions and d i s t u r b i n g i n f l u e n c e s . All t h e n e c e s s a r y m a t e r i a l a n d f a c i l i t i e s f o r good V a l u e E n g i n e e r i n g w o r k s h o u l d be m a d e a v a i l a b l e . Such t h i n g s a s t h e p a r t e , c o s t s , s p e c i f i c a t i o n s , m e t h o d s s h e e t s , v e n d o r s l i s t i n g and o t h e r i n f o r m a t i o n r e l a t i v e t o t h e p r o d u c t u n d e r s t u d y should b e o b t a i n e d o r g a t h e r e d by t h e t e a m s a s p a r t of t h e f a c t finding p h a s e of t h e s t u d y . D e s k s , t e l e p h o n e s , s t e n o g r a p h i c s e r v i c e , c o n f e r e n c e r o o m e , & r e f e r e n c e a a r e s o m e of t h e f a c i l i t i e s n e e d e d . T h e r i g h t c l i m a t e should be e s t a b l i s h e d f o r t h i s type of p r o g r a m to m a k e s u r e e a c h t e a m m e m b e r knows how t h e p r o g r a m will be c o n d u c t e d , and what i s e x p e c t e d of h i m . U s u a l l y it i s a d v i s a b l e t o have a key e n g i n e e r and m a n u f a c t u r i n g m a n b r i e f t h e g r o u p o n t h e b r o a d b a c k g r o u n d i n f o r m a t i o n in e a c h of t h e i r a r e a s a s g e n e r a l i n f o r m a t i o n . A l s o t h e s e s a m e m e n m a y be d e s i g n a t e d a s t h e p r i m a r y c o n t a c t f o r a d d i t i o n a l d e t a i l e d i n f o r m a t i o n a s it m a y be r e q u i r e d . If good h u m a n r e l a t i o n s a r e u s e d i n d e a l i n g with a l l t h e p e o p l e connected with t h i s p r o g r a m , a v e r y good s p i r i t c a n b e d e v e l o p e d and the r e s u l t s will he g r e a t e r t h a n e x p e c t e d . It i s not u n c o m m o n f o r t h i s t y p e of t a s k f o r c e Value E n g i n e e r i n g e f f o r t to g e n e r a t e s u g g e s t i o n s t h a t c o u l d r e d u c e t h e p r o d u c t c o s t 30% o r m o r e . T h e s e t e a m s w o r k in t h e s a m e w a y t h a t a n individual t a c k l e s a p r o j e c t . . . e m p l o y i n g a l l t h e V a l u e E n g i n e e r i n g t e c h n i q u e s . T h e t e a m m e m b e r s , who h a v e not b e e n e x p o s e d to VE p r e v i o u s l y , a r e taught t h e a p p r o a c h a s the p r o g r a m d e v e l o p s ; a n d 80 t h e y l e a r n by d o i n g . C o n s e q u e n t l y , t h i s t y p e of T a s k F o r c e h a s e t h e d u a l b e n e f i t of a c c o m p l i s h i n g r e s u l t s while d e v e l o p i n g Value c a p a b i l i t i e s . F u r t h e r m o r e , t h e f u l l - t i m e Value E n g i n e e r h a s t h e o p p o r t u n i t y t o c r e a t e a good u n d e r s t a n d i n g of h i e w o r k , and t h u s p r o m o t e a c l i m a t e t h a t i s r e c e p t i v e t o value w o r k , It i s v e r y d e s i r a b l e in s u c h a p r o g r a m to m a k e t h e p e o p l e who h a v e p r o d u c t

reeponsibility a p a r t of the p r o g r a m b y inviting t h e i r a s s i s t a n c e and seeking t h e i r advice o n the Value p o s s i b i l i t i e s that a r e being developed. T h u s , when the r e c o m m e n d a t i o n s a r e m a d e at the conclusion of the p r o g r a m , they will have t h e feeling that they t h e m s e l v e e w e r e a p a r t of the c r e a t i o n of the new d e s i g n , method o r v e n d o r . T h e c o r r e c t follow-up i s v e r y e s s e n t i a l to the s u c c e s s of t h i s type of t a s k f o r c e p r o g r a m . A planned p r o g r a m f o r follow-up and implementation of e a c h r e c o m m e n d a t i o n should be conceived, with c r e d i t going to those who finally e f f e c t the change a e well a s t h o s e who p a r t i c i p a t e d in the etudy d i r e c t l y . Conducting evaluation s t u d i e s in t h i s m a n n e r c a n be v e r y profitable i n m a n y w a y e . F i r ~ t , in m a k i n g substantial r e d u c t i o n s i n product c o s t s and second, i n developing g r e a t e r Value Consciouenese among a l l the company p e r s o n n e l ; t h u s i n s u r i n g continued e f f o r t s to p r e v e n t , a s well a s r e d u c e , e x c e e e product c o s t s . F u r t h e r m o r e , i t i e a v e r y good s t e p in the plan to get a full Value p r o g r a m going in your c o m p a n y . T r y i t out.

MANAGEMENT C O N S I D E R A T I O N S F O R A VALUE E N G I N E E R I N G PROGRAMME

MANAGEMENT CONSIDERATIONS F O R A VALUE ENGINEERING PROGRAM F r e d e r i c k S. S h e r w i n D i r e c t 0 r , Value E n g i n e e r i n g S e r v i c e s Raytheon C o m p a n y W h e t h e r busine s s m a n a g e m e n t should be i n t e r e s t e d i n value e n g i n e e r i n g o r not d e p e n d s o n a n u m b e r of s i g n i f i c a n t f a c t o r s . T h e p u r p o s e of t h i s c h a p t e r i s to e x p l o r e t h e s e v a r i a b l e s , r e l a t e d to a b u s i n e s s and i t s e n v i r o n m e n t , to which m a n a g e m e n t should give c o n s i d e r a t i o n when d e t e r m i n i n g the n e e d f o r and p o t e n t i a l of a value engineering program. One of the f i r s t c o n s i d e r a t i o n s i s t h e type of b u s i n e s s and t h e c l i m a t e s u r rounding the b u s i n e s s . If t h e following q u e s t i o n s a r e a n s w e r e d i n the a f f i r m a t i v e , m-anagement should look d e e p e r into v a l u e e n g i n e e r i n g .
1. 2. 3.

I s t h e c o m p a n y p r o d u c i n g s a l a b l e goods o r p r o v i d i n g a s e r v i c e ? I S t h e r e a c o m p e t i t i v e m a r k e t f o r t h e s e goods o r s e r v i c e ? I S t h e r e a n e e d o r d e s i r e to m a k e a p r o f i t i n t h e conduct of t h e business.

Since i t i s a s s u m e d t h a t the v a s t m a j o r i t y of A m e r i c a n b u s i n e s s m e n would a n s w e r "yes" t o t h e s e q u e s t i o n s one m u s t m o v e into a d e e p e r a n a l y s i s of conditions e x i s t i n g i n and s u r r o u n d i n g the b u s i n e s s to d e t e r m i n e the e x t e n t one should engage i n a value e n g i n e e r i n g p r o g r a m . H o w e v e r , i t should be obvious a t t h i s point t h a t i n g e n e r a l the p r i n c i p l e s of value a n a l y s i s o r value e n g i n e e r i n g a r e a p p l i c a b l e to m o s t b u s i n e s s e s . To what e x t e n t and with what r e s u l t s w i l l depend o n o t h e r f a c t o r s which will be d i s c u s s e d . I n r e g a r d to t h e key q u e s t i o n which a b u s i n e s s m a n a g e r will a s k , - - "Why should I be i n t e r e s t e d i n value e n g i n e e r i n g ? " , t h e r e i s a v e r y s i m p l e a n s w e r . T h a t i s - t h a t the application of value e n g i n e e r i n g t e c h n i q u e s g e t s r e s u l t s . H e r e i s a p r o v e n a p p r o a c h to r e d u c e c o s t s which anyone p r o d u c i n g and s e l l i n g goods and s e r v i c e s cannot afford to o v e r l o o k , p a r t i c u l a r l y if c o m p e t i t i o n e x i s t s and p r o f i t s a r e i m p o r t a n t . T h e r e a r e l a r g e n u m b e r s of c a s e h i s t o r i e s to p r o v e the point t h a t V. E . g e t s r e s u l t s . While i t i s not t h e intent h e r e to p r o v e the c a s e f o r value e n g i n e e r i n g , i t m i g h t be well to i n d i c a t e the l e v e l of r e s u l t s which should be a n t i c i p a t e d f r o m a n effective value e n g i n e e r i n g p r o g r a m . Again t h e y will v a r y , but i f a s e r i o u s a t t e m p t i s m a d e to b e c o m e p r o f i c i e n t i n the w i d e s p r e a d a p p l i c a t i o n of value e n g i n e e r i n g p r i n c i p l e s a m e a s u r a b l e i m p r o v e m e n t i n p r o d u c t c o s t r e d u c t i o n s will be a c h i e v e d .

One of t h e v a r i a b l e s affecting the m a g n i t u d e of r e s u l t s i s the e x t e n t to which n o r m a l c o s t r e d u c t i o n e f f o r t s have b e e n a p a r t of the r o u t i n e a c t i v i t i e s of the k e y functions of the b u s i n e s s . I n o t h e r w o r d s , h a s p r o d u c t c o s t b e e n a significant e l e m e n t of the functjonal r e s p o n s i b i l i t i e s of e n g i n e e r i n g , m a n u f a c t u r i n g , and p r o c u r e m e n t p e r s o n n e l ? If s o , t h e n a r e l a t i v e l y high d e g r e e of p r o f i c i e n c y i n m i n i m i z i n g c o s t s m a y i n h e r e n t l y e x i s t i n the c o m p a n y . Some m a n a g e r s have m i s t a k e n l y i n t e r p r e t e d t h i s s i t u a t i o n to i n d i c a t e t h a t t h e r e i s no benefit t o be gained by

the addition of a value e n g i n e e r i n g p r o g r a m . Such i s not g e n e r a l l y t h e c a s e . I n the f i r s t p l a c e no c o m p a n y h a s yet r e a c h e d 1000/o e f f i c i e n c y i n r e m o v i n g u n n e c e s s a r y c o s t s . It h a s b e e n r e p e a t e d l y shown t h a t non-value e n g i n e e r e d p r o d u c t s c o s t f r o m 25 - 75% m o r e t h a n n e c e s s a r y to a c h i e v e a l l the e s s e n t i a l f u n c t i o n s . T o a c c e p t t h i s f a c t m a n a g e m e n t m u s t d e l v e into t h e r e a s o n s u n n e c e s s a r y c o s t s e x i s t i n i n d u s t r y and p r o d u c t s . T h e s e r e a s o n s a r e a p a r t of t h e v a l u e p r o b l e m which i s i n t e n s e b e c a u s e of the l a r g e n u m b e r of v a r i a b l e s involved. An e x a m p l e of t h e c o m p l e x i t y of t h e s e a r c h f o r a b e s t value p r o d u c t i s b e s t i l l u s t r a t e d by looking a t e a c h b a s i c a r e a i n which d e c i s i o n s a r e m a d e t h a t a f f e c t p r o d u c t c o s t . P r o d u c t c o s t i s d e t e r m i n e d by the p a r t i c u l a r c o m b i n a t i o n of d e s i g n s , m a t e r i a l s , m e t h o d s and m a n u f a c t u r i n g s o u r c e s which a r e selected. If one a s s u m e s t h a t f o r any one p a r t t h r e e d i f f e r e n t d e s i g n s , m a t e r i a l s , m e t h o d s and s o u r c e s would be a v a i l a b l e , t h e n t h e r e a r e 81 c o m b i n a t i o n s a v a i l a b l e t o p r o d u c e t h e end p i e c e . A s s u m i n g t h e r e , m o r e r e a s o n a b l y , would be s i x of e a c h would l e a d to 1296 p o s s i b l e c o m b i n a t i o n s ; and s i n c e t h e r e a c t u a l l y m a y be m a n y m o r e t h a n s i x d i f f e r e n t a p p r o a c h e s i n a n y one of the f o u r c a t e g o r i e s p l u s a l a r g e n u m b e r of p a r t s i n a n y one p r o d u c t , t h e n the p o s s i b i l i t i e s f o r v a r i a t i o n s i n c o s t : c l i m b to a n e x t r e m e l y high n u m b e r . M o s t m a n u f a c t u r i n g f i r m s i n v e s t i g a t e and p r i c e out a r e l a t i v e l y s m a l l n u m b e r of t h e p o s s i b l e d i f f e r e n t a p p r o a c h e s . T h i s f a c t alone i s i n d i c a t i v e of t h e l a r g e n u m b e r of p o t e n t i a l value i m p r o v e m e n t s . Any c o n c e r n which d o e s not h a v e a n o r g a n i z e d p l a n and a s y s t e m f o r the d e v e l o p m e n t and i n v e s t i gation of a g r e a t n u m b e r of value o p p o r t u n i t i e s should c o n s i d e r value e n g i n e e r i n g , which p r o v i d e s the p l a n and t o o l s t o h e l p a c h i e v e b e t t e r value. T h e r e i s m o r e to the value p r o b l e m which will h e l p m a n a g e m e n t t o d e t e r m i n e t h e i r need f o r value engineering. T h e value p r o b l e m c o n c e r n s the d i f f i c u l t i e s involved with the a c h i e v e m e n t of value i n p r o d u c t s , p r o c e d u r e s , o r g a n i z a t i o n s , and s e r v i c e s . It i s a p r o b l e m i n the e l i m i n a t i o n of a l l w a s t e and u n n e c e s s a r y c o s t s a s s o c i a t e d with the p r o d u c t i o n of goods and s e r v i c e s . I t i s l a r g e l y a h u m a n i t y p r o b l e m r a t h e r t h a n a t e c h n i c a l p r o b l e m , although the l a t t e r m a y l i m i t the p o t e n t i a l value l e v e l a t a n y p a r t i c u l a r t i m e . T h i s s t a t e m e n t w i l l r e q u i r e s o m e e x p l a n a t i o n both f r o m the h u m a n c h a r a c t e r i s t i c and t e c h n i c a l standpoints. T h e r e a r e a n u m b e r of b a s i c r e a s o n s f o r the value p r o b l e m being c o n c e r n e d with the q u a l i t i e s and a t t r i b u t e s of h u m a n b e i n g s . T h o s e r e a s o n s a r e of p a r t i c u l a r significance to the student of value e n g i n e e r i n g and e v e n to t h o s e a c t i v e i n the field. F a i l u r e to r e c o g n i z e t h i s f a c t c a n m e a n r e p e a t e d f r u s t r a t i o n s and unattained o b j e c t i v e s f o r t h o s e w o r k i n g i n v a l u e e n g i n e e r i n g . Knowledge of t h e s e r e a s o n s c a n h e l p to guide value e n g i n e e r i n g e f f o r t s . F i r s t , swift and efficient c o m m u n i c a t i o n s a r e e s s e n t i a l to value a c h i e v e m e n t . As o t h e r c h a p t e r s d e l v e i n depth into the t e c h n i q u e s of v a l u e e n g i n e e r i n g , t h i s f a c t will b e c o m e i n c r e a s i n g l y obvious. C o n s e q u e n t l y , s i n c e c o m m u n i c a t i o n s i s a h u m a n p r o b l e m and a n e c e s s a r y i n g r e d i e n t of value w o r k , i t l o o m s high a m o n g t h e p r o b l e m s to be solved i f high value p r o d u c t s a r e to be developed. Second, p e o p l e ' s n a t u r a l r e s i s t a n c e to change i s a h u m a n q u a l i t y which continually i s r e s t r i c t i v e to i m p r o v e m e n t s , innovations and j u s t p l a i n doing s o m e t h i n g

d i f f e r e n t l y . T h e r e a r e a n u m b e r of b l o c k s to innovation which e x i s t i n a l l people w h o s e d e c i s i o n s influence p r o d u c t c o s t s . S o m e of t h e s e b l o c k s h a v e b e e n spawned and n u r t u r e d by the m o d e r n i n d u s t r i a l e n v i r o n m e n t . Some a r e f u n d a m e n t a l t o h u m a n n a t u r e . I l l u s t r a t i v e of t h e f o r m e r c a s e i s the d i s p e r s i o n of a u t h o r i t y which h a s t a k e n p l a c e i n t o d a y ' s l a r g e r c o m p a n i e s . No l o n g e r i s one m a n r e s p o n i b l e f o r the p r o d u c t f r o m c r a d l e t o g r a v e . Today, the p r o d u c t m a y b e c o n c e i v e d i n r e s e a r c h , d e s i g n e d by one o r m o r e e n g i n e e r i n g g r o u p s , p r o d u c t i o n i z e d by a n o t h e r e n g i n e e r i n g g r o u p , e l e m e n t s p r o c u r e d by p u r c h a s i n g , a s s e m b l e d and p r o d u c e d b y m a n u f a c t u r i n g , sold by m a r k e t i n g , s e r v i c e d by a f i e l d e n g i n e e r i n g g r o u p , p r i c e d b y accounting and f i n a l l y discontinued a s i t w a s i n i t i a t e d - - b y m a n a g e m e n t . Who h a s r e s p o n s i b i l i t y f o r p r o d u c t c o s t ? H u n d r e d s of people who m a y not e v e n know one a n o t h e r and u s u a l l y do not know o r c a r e about c o s t s , and yet e a c h , i n p a r t , c o n t r i b u t e s t o the c o s t . T h o s e who do know what it c o s t s , a c c o u n t a n t s , d o n ' t know why i t c o s t s , what i t d o e s o r what c o n t r i b u t e s to t h e c o s t , n o r do t h e y know what t h e p a r t s of t h e p r o d u c t do n o r what t h e y look l i k e . F u r t h e r m o r e , t h i s d i v e r g e n c e of p r o d u c t r e s p o n s i b i l i t y h a s s o r e m o v e d t h e d e c i s i o n m a k e r f r o m c o s t , o r p r o f i t and l o s s , a c c o u n t a b i l i t y , that v e r y l i t t l e i n c e n t i v e e x i s t s t o develop p r o f i c i e n c y i n m i n i m i z i n g c o s t s . I n t h e r e a l m of h u m a n n a t u r e b l o c k s a r e a l l t h o s e e m o t i o n a l , c u l t u r a l and p e r c e p t u a l e l e m e n t s that e x i s t i n a l l people. One of t h e s e which h a s g r e a t b e a r i n g o n t h e value p r o b l e m i s the s t r o n g h u m a n d e s i r e f o r p e r s o n a l p r e s t i g e o r t h e f e a r of p e r s o n a l 10s s . T h i s e m o t i o n e x e r t s g r e a t influence o v e r c o m m u n i c a t i o n , the unwillingness to t r y a n u n p r o v e n m e t h o d , a d e s i r e to do t h i n g s the w a y the b o s s w a n t s t h e m d o n e , t h e d r i v e f o r a d v a n c e m e n t , c o n f o r m i t y and p e r p e t u a t i o n of inefficiency a n d high c o s t s . P s y c h o l o g i c a l s t u d i e s a r e delving into t h e s e a r e a s . I t w i l l p r o b a b l y suffice h e r e to identify t h e s e h u m a n r e a c t i o n s a s e l e m e n t s c o n t r i b u t i n g to t h e value p r o b l e m . T h e h u m a n r e l a t i o n s e l e m e n t s of value e n g i n e e r i n g d e a l with t h i s p r o b l e m . I t i s not s u g g e s t e d that the solution to t h e value p r o b l e m l i e s i n changing h u m a n n a t u r e . If i t did, the p r o b l e m would be m u c h m o r e i n s o l u b l e t h a n i t i s . H o w e v e r , r e c o g n i z i n g the p a r t h u m a n blocks p l a y i n the field of v a l u e , t e c h n i q u e s c a n be p r o v i d e d which e n a b l e people to c o p e with the p r o b l e m s u n d e r n o r m a l e n v i r o n m e n t a l conditions of both the b u s i n e s s s y s t e m and h u m a n n a t u r e f a c t o r s . T h e t e c h n i c a l a s p e c t s of the value p r o b l e m involve t h e p r o b l e m s a s s o c i a t e d with identifying and r e m o v i n g u n n e c e s s a r y p r o d u c t c o s t s . I t could be s a i d t h a t if t h e r e w e r e no u n n e c e s s a r y c o s t s i n a p r o d u c t w e would h a v e t h e g r e a t e s t value p r o d u c t . While e v e r y o n e would b e i n offhand a g r e e m e n t with t h i s s t a t e m e n t , the v a r i a t i o n s i n u n d e r s t a n d i n g of the m e a n i n g of t h e w o r d " u n n e c e s s a r y " would c r e a t e i n n u m e r a b l e d i f f e r e n c e s of opinion r e g a r d i n g a t what point i n c o s t we h a d a r r i v e d a t t h i s a s y m p t o t e of value p e r f e c t i o n . Consequently, we should a t t e m p t to define " u n n e c e s s a r y " c o s t s to c l a r i f y the s i t u a t i o n . At t h i s point s o m e s t a t e m e n t that " u n n e c e s s a r y c o s t s a r e t h o s e not e s s e n t i a l f o r the r e l i a b l e a c h i e v e m e n t of function" m i g h t h a v e l i t t l e s i g n i f i c a n c e . An yet t h i s i s a r a t h e r p r e c i s e definition. L e t ' s look a t i t a l i t t l e c l o s e r . At any one i n s t a n c e i n t i m e when we could c o n s i d e r a l l t e c h n o l o g i c a l and p r o d u c t i o n c a p a b i l i t i e s a s fixed, t h e r e a r e n u m e r o u s m e t h o d s to a c c o m p l i s h any t a s k . S i m i l a r l y , t h e r e a r e a n u m e r o u s ( i f not i n f i n i t e ) n u m b e r of w a y s which a n y p r o d u c t o r e l e m e n t of a p r o d u c t c a n be d e s i g n e d and p r o d u c e d . T h e c o m b i n a t i o n s of c o n f i g u r a t i o n s and m a t e r i a l s a r e e n d l e s s i n s c o p e . C o m p a r i n g

any two a p p r o a c h e s , one m a y be lower i n c o s t than another and yet have a l l the r e q u i r e d p e r f o r m a n c e and appealance f e a t u r e s . The difference i n t h e s e c o s t s could be s a i d to be p a r t of the bundle of " u n n e c e s s a r y c o s t . " Now p r o g r e s s i n g through m o r e c o m p a r i s o n s r e v e a l s m o r e and m o r e c o s t s a s u n n e c e s s a r y a s lower c o s t . solutions a r e found. It b e c o m e s obvious f r o m t h i s reasoning that u n n e c e s s a r y o r nonfunctioning c o s t s m u s t e x i s t in a l l p r o d u c t s . The question then a r i s e s a s to how much and when d o e s one r e a c h a point of diminishing r e t u r n s , o r when does one approach the value asymptote w h e r e the amount of u n n e c e s s a r y c o s t i s m i n i m u m ? T h e s e questions a r e uncovered and a n s w e r e d by the study of value engineering and a r e p a r t of the value p r o b l e m . Like any p r o b l e m i t m u s t be f i r s t identified and defined b e f o r e i t can be solved. T h e r e f o r e , one p r o c e d e s f r o m the g e n e r a l i t i e s of the value p r o b l e m to the specific r e a s o n s that varying amounts of u n n e c e s s a r y c o s t s e x i s t i n a l l p r o d u c t s . It should be recognized even a t t h i s point that b e c a u s e of the infinite v a r i a b l e s of the i n d u s t r i a l and psychological environment, t h e r e will be l a r g e variation i n the amounts of u n n e c e s s a r y c o s t s . Some situations compound to m a x i m i z e o r to minimize these c o s t s . Consequently, since value engineering i s d i r e c t e d toward the elimination of u n n e c e s s a r y c o s t s , a vital p r e r e q u i s i t e to the field for manageinent is a b a s i c understanding of the r e a s o n s f o r u n n e c e s s a r y product c o s t s . T h e r e a r e always v a r i o u s ways to e x p r e s s the s a m e thought; and while s o m e of t h e s e ways m a y be redundant, n e v e r t h e l e s s , often expansion and redefinition h e l p s to define the p r o b l e m m o r e c l e a r l y . F o r i n s t a n c e , i n the p r e v i o u s discussion, the value p r o b l e m w a s designated a s l a r g e l y a human r e l a t i o n s problem brought about by environmental and psychological f a c t o r s . F u r t h e r m o r e , the value p r o b l e m was shown a s being one of identifying and removing u n n e c e s s a r y c o s t s a s s o c i a t e d with producing a product which would p e r f o r m a d e s i r e d function. It could then be conclude( that the elimination of u n n e c e s s a r y c o s t s i s a human r e l a t i o n s problem. However, because t h i s definition i s so broad and such a high l e v e l of a b s t r a c t i o n , i t s solution i s r e m o t e i f not impossible. It, t h e r e f o r e , b e c o m e s n e c e s s a r y to subdivide, o r reduce the p r o b l e m to lower l e v e l s of a b s t r a c t i o n , to define the p r o b l e m i n m o r e specific t e r m s which a r e m o r e e a s i l y understood and m o r e d i r e c t l y solvable. This t h e s i s is fundamental to p r o b l e m solving and to value engineering. Now what a r e some of the specific r e a s o n s f o r u n n e c e s s a r y c o s t s which make up the next level of p r o b l e m definition? F i r s t is: The l a c k of specific information in the f o r m i t i s needed and at the t i m e s it i s needed f o r decision-making. Now, while t h i s needs some definition o r subdivision, i t i s getting into an a r e a where one c a n begin to d i r e c t actions toward a solution. Next, such q u e s t i o n s a s what types of information i s needed and why i s i t lacking should be answered. And of c o u r s e , one c a n s e e that t h i s situation i s the r e s u l t of both a communications o r human relations p r o b l e m , and a technical problem concerned with information s t o r a g e and r e t r i e v a l . F u r t h e r m o r e , it will be recognized that under the existing environmental situation and information explosion, it i s a l m o s t impossible f o r a n individual to have all Ehe information he needs to make the b e s t value decision. Consequently, i t i s axiomatic that u n n e c e s s a r y c o s t s a r e left i n all products for t h i s one r e a s o n , lack of information. Now a s to why anyone would make a decision with insufficient facts t h e r e a r e s e v e r a l r e a s o n s such as:

--

1.

2. 3.

L a c k of knowledge that the information existed. L a c k of knowledge a s to how to go about getting the information. L a c k of the m e a n s to accumulate, s o r t and s e l e c t the specific information needed within the t i m e allowable.

Analysis of n u m e r o u s c a s e h i s t o r i e s where value w a s improved h a s shown t h a t often the technical m e a n s w a s available to get the information; but t h e r e was no attempt to go a f t e r i t , probably f o r the above f i r s t two r e a s o n s . The type of information needed i s infinite in scope, but generally f a l l s into one of the following c a t e g o r i e s : m a t e r i a l s , p r o c e s s e s , m e t h o d s , products ( s t a n d a r d , catalog, special), vendors, and c o s t s . The identification of t h i s r e a s o n f o r unn e c e s s a r y c o s t s should initiate a n effort to improve information gathering techniques. Second is: The l a c k of specific i d e a s which c o n c e r n s the c r e a t i v e a r r a n g e ment of information to construct the lowest c o s t configuration which m e e t s functional r e q u i r e m e n t s . But f o r the l a c k of a n idea, e n g i n e e r s could have done things twentyfive o r m o r e y e a r s e a r l i e r . Consequently, v a s t amounts of u n n e c e s s a r y c o s t s a r e left i n today's products simply because of the l a c k of i d e a s . This r e a s o n f o r u n n e c e s s a r y c o s t s l a r g e l y r e l a t e s to human capabilities to use inherent c r e a t i v e p o w e r s to develop new methods and designs. It i s , however, a n a r e a w h e r e c e r t a i n s t e p s c a n be taken to a l t e r human behavior and consequently, by t h i s knowledge management c a n begin to solve the p r o b l e m . T h i r d is: The lack of value objectives which h a s h i s t o r i c a l l y failed to provide the incentive to develop proficiency i n the minimizing of u n n e c e s s a r y c o s t s . Man h a s become capable in many fields because t h e s e h a s been incentives which have d r i v e n h i m toward specific d e s i r e d objectives. These could be the n e c e s s i t y f o r the e s s e n t i a l s of life - - food, housing, health, w a r m t h - - o r the d r i v e to conquer the unknown, o r the d e s i r e f o r l u x u r i e s of life - - t r a v e l , a r t s , m u s i c , entertainment o r the l u s t f o r power, o r the need f o r self-protection. With a few exceptions including the g e n e r a l competitive motivation, t h e r e h a s never been an intense inducement to eliminate the m a j o r i t y of u n n e c e s s a r y c o s t s . M o r e o v e r , because no value objective was established, t h e r e w a s no m e a s u r e to accomplishment o r proficiency i n this a r e a except by how one product c o s t r e l a t e d to another.
A look a t the subject m a t t e r i n technical o r engineering education, o r the product specifications, o r the operational and environmental t e s t r e q u i r e m e n t s , will indicate a t a glance that the m a j o r i t y of i n t e r e s t and m e a s u r e m e n t s a r e i n the a r e a of product p e r f o r m a n c e . P r o d u c t s a r e designed and t e s t e d f o r functional p e r f o r m ance, but what t e s t s a r e t h e r e f o r value - - t e s t s which have the s a m e objectivity a s function? The establishment of value l e v e l s on a m o r e scientific b a s i s i s one of the a i m s of value engineering.

The remaining r e a s o n s for u n n e c e s s a r y c o s t s involve a number of f a c t o r s which affect decision making and c a n be divided and subdivided into many p r o b l e m a r e a s . Some of t h e m a r e :

T e m p o r a r y c i r c u m s t a n c e s which c a u s e o r f o r c e a d e c i s i o n f o r 1. e x p e d i e n c y with insufficient f a c t s o r i n f o r m a t i o n s e a r c h . Such d e c i s i o n s r e s u l t i n high c o s t s o l u t i o n s w h i c h have a way of continuing i n e x i s t e n c e l o n g a f t e r the c i r c u m s t a n c e which f o r c e d t h e o r i g i n a l d e c i s i o n c e a s e s to e x i s t . I n a b r o a d s e n s e , t h i s i s the t i m e f a c t o r of d e c i s i o n - m a k i n g . I n a n o t h e r light i t c o n c e r n s t h e h u m a n b e h a v i o r p a t t e r n which u s e s l a c k of t i m e as t h e e x c u s e which p e r p e t u a t e s known a p p r o a c h e s t o a r r i v e a t t h e s o l u t i o n of p r o b l e m s , a s c o n t r a s t e d t o i m p r o v e d m e t h o d s which b o r d e r t h e unknown and a r e m o r e difficult a n d t i m e c o n s u m i n g t o g e n e r a t e . H o n e s t w r o n g b e l i e f s which r e s t r i c t people f r o m s e a r c h i n g into 2. regi0n.s with which t h e y a r e f a m i l i a r , but h a v e l i t t l e e x a c t knowledge. T h i s s m a l l a m o u n t of knowledge being i n c o m p l e t e o r e r r o n e o u s l e a d s t h e m t o the w r o n g c o n c l u s i o n . H a b i t s w h i c h l e a d p e o p l e to do t h i n g s e x a c t l y the s a m e way t h e y did it yesterdayland
3.

4.

A t t i t u d e s which p e r p e t u a t e bad h a b i t s .

T h e r e c o g n i t i o n of t h e s e r e a s o n s f o r u n n e c e s s a r y p r o d u c t c o s t s i s i m p o r t a n t f r o m s e v e r a l a s p e c t s . T h e y s e r v e t o convince one f i r s t t h a t u n n e c e s s a r y c o s t s a r e not due t o unusual c i r c u m s t a n c e s o r stupidity, but to n o r m a l e n v i r o n m e n t a l , p s y c h o l o g i c a l a n d e d u c a t i o n a l f a c t o r s which c a n be i m p r o v e d ; and t h i r d , t h a t the value p r o b l e m i s s o l v a b l e . Value e n g i n e e r i n g c o n s i s t s of a b r a n c h of knowledge which i s d i r e c t e d a t solving t h i s p r o b l e m b y helping p e o p l e to a c h i e v e value p r o d u c t s t h r o u g h s t r e n g t h e n e d p r o f i c i e n c y i n t e c h n i q u e s which o v e r c o m e the r e a s o n s f o r u n n e c e s s a r y p r o d u c t c o s t s by: 1. 2. 3. 4. I m p r o v e d i n f o r m a t i o n technology. Strengthened creative behavior. E s t a b l i s h e d value o b j e c t i v e s . Reduced t i m e f a c t o r s . Corrected misconceptions. Changed h a b i t s and a t t i t u d e s .

5. 6.

An i n t e n s e study and p r a c t i c e i n t h e methodology of value e n g i n e e r i n g will divulge the t e c h n i q u e s which guide one t o w a r d the a c h i e v e m e n t of p r o d u c t value. B y t h i s p r o v e n a p p r o a c h , m a n a g e m e n t c a n b e s t m e e t the c h a l l e n g e of the f u t u r e , the e l i m i n a t i o n of u n n e c e s s a r y c o s t s and the efficient u t i l i z a t i o n of m a n p o w e r a n d resources. Going back to the q u e s t i o n of the a m o u n t of benefit to be gained by a value e n g i n e e r i n g p r o g r a m , one c a n s e e t h a t the d e g r e e of p r o f i c i e n c y which e x i s t s i n the above a r e a s d e t e r m i n e s i n p a r t , the a m o u n t of value i m p r o v e m e n t p o s s i b l e . If a value e n g i n e e r i n g p r o g r a m i s d i r e c t e d to fill a r e a s w h e r e voids of e f f o r t e x i s t e d o r to i m p r o v e i n a r e a s w h e r e s o m e w o r k w a s being c a r r i e d o n t h e n b e n e f i t s would be gained. he r e s u l t s of m e a s u r e m e n t s t a k e n o n the c o n t r i b u t i o n of v a l u e p r o g r a m s i n d i c a t e s r e t u r n on i n v e s t m e n t s v a r y i n g f o r 2 / 1 to m o r e t h a n 2 0 / 1 . These ratios a r e determined

by comparing the net c o s t savings to the total c o s t f o r the value engineering a c t i v i t i e s r e q u i r e d to g e n e r a t e the savings. O t h e r , l e s s tangible benefits f r o m a value p r o g r a m a r e difficult to m e a s u r e but, n e v e r t h e l e s s , i m p o r t a n t to the evaluation of the p r o g r a m . T h e s e a r e such things a s the value skill improvement of key decision m a k e r s r e s u l t i n g f r o m the t r a i n i n g and consultation e l e m e n t s of the p r o g r a m . While a d i s c u s s i o n of the value p r o b l e m provides management with a g r e a t e r understanding of i n d u s t r i a l needs f o r improvement in e f f o r t s to m i n i m i z e c o s t s , it probably l e a v e s some doubts concerning "Should I have a V. E. p r o g r a m i n m y company?, What o t h e r and m o r e specific guidelines should be c o n s i d e r e d ? "

Concerning product v s s e r v i c e value engineering techniques w e r e originally and have h i s t o r i c a l l y been l a r g e l y developed f o r and applied to mechanical, e l e c t r i c a l , e l e c t r o n i c , o r combination type products. Consequently, the techniques a r e p e r h a p s m o s t effective when applied to products a s c o n t r a s t e d to s e r v i c e s . The statement i s qualified however, since in r e c e n t y e a r s i t h a s been found that value engineering concepts have been successfully applied to s u c h diversified a r e a s a s softgoods, p r o c e s s e s , p r o c e d u r e s , organizations, and manpower, c h e m i c a l o r flow-type i n d u s t r i e s . Additional applications have been found i n Government, education, and t r a n s p o r t a t i o n a r e a s . In fact, the organization and s y s t e m of value engineering concepts h a s been found to lend itself to the broad field of decision making and a l l m a n a g e r i a l p r o b l e m solving. Consequently, t h e r e i s no h a r d and f a s t r u l e that value engineering will only work h e r e , but not t h e r e . If one i s a m a n a g e r of a specialty type b u s i n e s s i t m a y be well to look into value a n a l y s i s concepts. They m a y help to solve your cost o r management p r o b l e m s . The other variation in p r o d u c t s such a s s i z e , quantity produced, p u r p o s e , use, c u s t o m e r , quality level, p r i c e range, have l i t t l e affect on the question of whether the product lends itself to value engineering. All products c a n be subjected to value engineering studies. The yield of implementable c o s t reduction changes will v a r y depending on f a c t o r s previously d i s c u s s e d which place the product into a c a t e g o r y with l a r g e o r s m a l l amounts of u n n e c e s s a r y c o s t s . F o r example, i f products which have not been value engineered a r e considered, those m a s s produced c o n s u m e r type p r o d u c t s where c o s t h a s been a m a j o r f a c t o r of design and manufacture will have approximately 2570 u n n e c e s s a r y c o s t to be removed. On the o t h e r hand, heavy i n d u s t r i a l o r m i l i t a r y products where cost h a s not received a s much attention will have up to 757'0 u n n e c e s s a r y c o s t s which could be eliminated. Concerning production quantities - - - value p r o g r a m s a r e being successfully applied to b u s i n e s s and products which v a r y f r o m m a s s production type i t e m s produced by highly mechanized o r automated methods to c u s t o m type b u s i n e s s producing one of a kind. While quantity i s a definite factor in product cost i t does not d i r e c t l y affect the application of value engineering techniques. Some v a r i a t i o n s m a y be made in the approach due to quantity and t i m e f a c t o r s , but the r e s u l t s to be gained a r e significant a t both ends of the quantity s c a l e . Again o t h e r f a c t o r s , p r e v i o u s l y d i s c u s s e d , come into play. Concerning advanced s t a t e - o f - t h e - a r t o r highly technical type products - - technical complexity h a s a definite bearing on the application of value engineering.

-231-

I n t h o s e a r e a s w h e r e t h e p e r f o r m a n c e e n g i n e e r i n g p r o b l e m h a s not b e e n p r e v i o u s l y s o l v e d , t h e a p p l i c a t i o n of v a l u e e n g i n e e r i n g m a y be p r e m a t u r e . Again the s t a t e m e n t i s q u a l i f i e d b e c a u s e t h e r e a r e a n u m b e r of c a s e s o n r e c o r d w h e r e t h e v a l u e e n g i n e e r i r a p p r o a c h h a s s o l v e d the t e c h n i c a l p e r f o r m a n c e p r o b l e m and a t t h e s a m e t i m e m e t c o s t objectives. Nevertheless, in c a s e s requiring a p u r e scientific breakthrough o r delvin into a r e a s of t h e t e c h n i c a l unknown, value a n a l y s i s m a y be u n t i m e l y . One e l e m e n t f o r c o n s i d e r a t i o n i n t h e c a s e of new p r o d u c t s , h o w e v e r , i s t h a t r a r e l y d o e s a l a r g e p e r c e n t a g e of t h e p r o d u c t f a l l into t h i s c a t e g o r y . M o r e t h a n l i k e l y , 90% o r m o r e of t h e p r o d u c t i s m a d e up of i n g r e d i e n t s which h a v e b e e n t e c h n i c a l l y and p e r f o r m a n c e proven. Consequently, in these a r e a s value analysis i s c e r t a i n l y appropriate. C l o s e l y a l l i e d to t h i s p r o b l e m i s the q u e s t i o n r e g a r d i n g a p p l i c a t i o n of v a l u e e n g i n e e r i n g t o t h e r e s e a r c h , d e s i g n and d e v e l o p m e n t of a p r o d u c t v s the p r o d u c t i m p r o v e m e n t type of a c t i v i t y . I t i s g e n e r a l l y a g r e e d a m o n g v a l u e e n g i n e e r i n g p r o f e s s i o n a l s t h a t the t e c h n i q u e s a r e a p p l i c a b l e both b e f o r e and a f t e r the f a c t of p r o d u c t d e s i g n r e l e a s e ; and t h a t both t y p e s of v a l u e e n g i n e e r i n g w o r k a r e n e c e s s a r y if c o s t s a r e to b e m i n i m i z e d . T h e t h e m e i s s t i l l s o m e w h a t c o n t r o v e r s i a l , h o w e v e r , a s t o when, w h e r e , and how value e n g i n e e r i n g should be a p p l i e d d u r i n g b a s i c d e s i g n . Again, t h e v a r i a t i o n s of o t h e r f a c t o r s e n t e r into t h e d e c i s i o n , s u c h a s t h e c o m p e t i t i v e s i t u a t i o n , t i m e , t e c h n i c a l c o m p l e x i t y , t e s t r e q u i r e m e n t and v a r i o u s unknown and unproven v a r i a b l e s . I t i s g e n e r a l l y a n a c c e p t e d t h e s i s t h a t v a l u e e n g i n e e r i n g is m o s t b e n e f i c i a l when applied a t a n e a r l y s t a g e i n a p r o d u c t l i f e . M o r e o v e r , e x p e r i e n c e i s b e i n g gained o n a b r o a d b a s e of d i f f e r e n t p r o d u c t s t o p r o v e t h e b e n e f i t s of e a r l y a p p l i c a t i o n of value. e n g i n e e r i n g . E x a c t l y a t what t i m e i n t h e c y c l e and to what e x t e n t a r e s u b j e c t t o v a r i a t i o n s l i s t e d above p l u s the a n t i c i p a t e d p r o d u c t i o n s c h e d u l e . S o m e v a l u e e n g i n e e r i n g could be done d u r i n g e a r l y d e s i g n a n d t h e n a m o r e i n t e n s e e f f o r t s c h e d u l e d b e t w e e n p r o t o t y p e and p r o d u c t i o n . I t h a s b e e n shown t h a t t i m e c o n s u m e d f o r t h i s value e n g i n e e r i n g e f f o r t w i l l be m o r e t h a n m a d e up f o r d u r i n g p r o c u r e m e n t and m a n u f a c t u r e s o t h a t the o v e r a l l t i m e c y c l e w i l l be s h o r t e n e d . A high c o s t p r o d u c t r e q u i r e s m o r e t i m e and r e s o u r c e s to p r o d u c e .

C o n c e r n i n g the d e g r e e to which a c o m p a n y m a n u f a c t u r e s o r buys i t s p r o d u c t p a r t s - - - w h e t h e r o r not a c o m p a n y m a k e s o r b u y s i t s c o m p o n e n t p a r t s w i l l not i n i t s e l f d e t e r m i n e t h e a p p l i c a b i l i t y of value e n g i n e e r i n g . F a c t o r s s u c h a s t h e c o n t r o l of d e s i g n , t o t a l l a b o r content, m a t e r i a l c o s t s , a s s e m b l y c o s t s , type of c o m p o n e n t s ( w h e t h e r s t a n d a r d o r s p e c i a l ) w i l l p r o b a b l y be of g r e a t e r influence o n t h e n e e d f o r o r e f f e c t i v e n e s s of value e n g i n e e r i n g . A c o m p a n y which i s only a buying and s e l l i n g a g e n t who p u t s v e r y l i t t l e l a b o r into the p r o d u c t will h a v e l e s s n e e d f o r value e n g i n e e r t h a n a c o m p a n y which d e s i g n s a n d buys component p a r t s and a s s e m b l e s t h e s e p a r t s into a f i n i s h e d p r o d u c t . E v e n i f a c o m p a n y w e r e to buy 90% of i t s component p a r t s a value e n g i n e e r i n g p r o g r a m could be v e r y effective if t h e y h a d c o n t r o l of t h e d e s i g n and h a d t h e r e s p o n s i b i l i t y f o r a s s e m b l y , packaging, t e s t , i n s p e c t i o n , shipping, m a r k e t i n g and o t h e r e l e m e n t s of c o s t . F u r t h e r m o r e , if a c o m p a n y did not c o n t r o l t h e d e s i g n of p u r c h a s e d c o m p o n e n t s , value e n g i n e e r i n g m i g h t s t i l l influence c o s t s t h r o u g h c l o s e w o r k with s u p p l i e r s to a s s i s t and e n c o u r a g e t h e m to v a l u e e n g i n e e r t h e i ~ p r o d u c t s . I n what m i g h t be c o n s i d e r e d a n o r m a l s i t u a t i o n w h e r e m a k e and buy w a s s p l i t 50-50 o r w h e r e a c o m p a n y m a d e the m a j o r i t y of i t s c o m p o n e n t s value engineering would, of c o u r s e , be e x t r e m e l y a p p l i c a b l e . C o n c e r n i n g c o m p a n y s i z e - - - s o m e g e n e r a l g u i d e l i n e s would i n d i c a t e that v a l u e e n g i n e e r i n g p r i n c i p l e s a r e m o r e highly needed and a p p l i c a b l e i n the l a r g e r

m o r e c o m p l e x c o m p a n i e s w h e r e the l i n e s of c o m m u n i c a t i o n a r e lengthened and r e s p o n s i b i l i t i e s f r a g m e n t e d . In s u c h c o m p a n i e s a l l the r e a s o n s f o r u n n e c e s s a r y c o s t s d i s c u s s e d p r e v i o u s l y b e c o m e a m p l i f i e d . T h u s , m o r e f o r m a l value e n g i n e e r i n g p r o g r a m s with f u l l t i m e value e n g i n e e r i n g s t a f f s and s p e c i a l i s t s a r e j u s t i f i e d and e v e n e s s e n t i a l to i m p l e m e n t a c o m p l e t e p r o g r a m i n c l u d i n g f o r m a l w o r k s h o p type t r a i n i n g s e m i n a r s , and to h a n d l e the i n t e g r a t i o n a n d c o n s u l t a t i o n r e q u i r e m e n t s . I n s m a l l c o m p a n i e s down to 100 people and $ 2 , 0 0 0 , OOO/year b u s i n e s t h e knowledge and u s e of value e n g i n e e r i n g c o n c e p t s m a y be a v e r y s i g n i f i c a n t f a c t o r i n t h e i r p r o f i t a b i l i t y and c o m p e t i t i v e position. H o w e v e r , t h i s s i z e c o m p a n y i s p r o b a b l y o n the f r i n g e of s i z e r e q u i r i n g a m a n e m p l o y e d to do v a l u e e n g i n e e r i n g w o r k e x c l u s i v e l y and f u l l t i m e . N e v e r t h e l e s s , t h e i r e n g i n e e r i n g , m a n u f a c t u r i n g , p r o c u r e m e n t , and g e n e r a l m a n a g e m e n t p e r s o n n e l should b e knowledgeable i n value e n g i n e e r i n g and, a t l e a s t , k e y people should h a v e h a d depth t r a i n i n g and be e m p l o y i n g t h e t e c h n i q u e s . T h i s will p r o b a b l y b e c o m e m o r e and m o r e e s s e n t i a l f o r s m a l l b u s i n e s s e s . P r o c e e d i n g up t h e s c a l e i n s i z e a c o n c e r n m a y m a k e v e r y p r o f i t a b l e u s e of a f u l l t i m e value e n g i n e e r i n g s p e c i a l i s t . The n u m b e r r e q u i r e d will be d e t e r m i n e d by m a n y f a c t o r s s u c h a s n u m b e r of e n g i n e e r s , p r o d u c t c o m p l e x i t y , c o m p e t i t i v e s i t u a t i o n and o t h e r e l e m e n t s p r e v i o u s l y d i s c u s s e d . Any m a n a g e r of a c o m p a n y , s m a l l o r l a r g e , which h a s a c o s t p r o b l e m , a n d m o s t d o , should c o n s u l t i n depth with a q u a l i f i e d value e n g i n e e r i n g p r o f e s s i o n a l to d e t e r m i n e to what extent a value e n g i n e e r i n g p r o g r a m would s t r e n g t h e n h i s b u s i n e s s . An a n a l y s i s of a l l the v a r i a b l e f a c t o r s involved would i n d i c a t e the potential f o r a value e n g i n e e r i n g p r o g r a m . C o n c e r n i n g the G o v e r n m e n t ' s i n t e r e s t i n value e n g i n e e r i n g - - - beginning i n 1954 with t h e Navy" B u r e a u of S h i p s , v a r i o u s m i l i t a r y and G o v e r n m e n t a g e n c i e s h a v e t a k e n a n i n t e r e s t i n value e n g i n e e r i n g a s a d e v i c e to h e l p t h e m and t h e i r c o n t r a c t o r s t o r e d u c e c o s t s s o that m o r e goods could be p r o c u r e d f o r budgets a v a i l a b l e . I n r e c e n t y e a r s , t h i s i n t e r e s t h a s b e e n c o o r d i n a t e d i n the D e p a r t m e n t of D e f e n s e , Office of the S e c r e t a r y of D e f e n s e , w h e r e e f f o r t s have b e e n d i r e c t e d which have put m o r e m o m e n t u m and u n i f o r m i t y i n t h e G o v e r m e n t ' s value e n g i n e e r i n g p r o g r a m . DOD d i r e c t i v e s and a d d i t i o n s t o p a r t s of t h e A r m e d S e r v i c e s P r o c u r e m e n t Regulation (ASPR) h a v e p r o v i d e d f o r the i n c l u s i o n of v a l u e e n g i n e e r i n g c l a u s e s i n G o v e r n m e n t c o n t r a c t s . T h e s e value e n g i n e e r i n g c l a u s e s , which m u s t be a p a r t of a l l c o n t r a c t s w h e r e p r o c u r e m e n t s o v e r a c e r t a i n d o l l a r value e x i s t , s p o n s o r funded o r i n c e n t i v e type value e n g i n e e r i n g p r o g r a m s a s p a r t of the c o n t r a c t o r s r e s p o n s i b i l i t y . T h e p u r p o s e of t h e s e c l a u s e s i s to m o t i v a t e m a n u f a c t u r e r s to devote a m o r e i n t e n s e and f o r m a l e f f o r t to c o s t r e d u c t i o n i n the f o r m of a value e n g i n e e r i n g p r o g r a m . T h e u n d e r l y i n g p r o b l e m which n e c e s s i t a t e d t h e s e c l a u s e s w a s t h a t m u c h G o v e r n m e n t o r m i l i t a r y b u s i n e s s w a s done f o r m a n y y e a r s on a c o s t p l u s f e e type of a r r a n g e m e n t w h e r e p r o d u c t p e r f o r m a n c e , s c h e d u l e and d e l i v e r y w e r e given h i g h e s t c o n s i d e r a t i o n , and c o s t w a s not a n i m p o r t a n t f a c t o r . In o t h e r w o r d s , the c u s t o m e r would buy a t a n y p r i c e . A s long a s t h i s condition and a m a r k e t e x i s t e d t h e r e w a s not m o t i v a t i o n t o b e c o m e efficient i n t h e c o s t a r e a . T o d a y t h i s s i t u a t i o n h a s changed and c o m p a n i e s doing b u s i n e s s with G o v e r n m e n t a g e n c i e s a r e now f o r c e d to c o m p e t e o n a p r i c e b a s i s a s well a s p e r f o r m a n c e . N a t u r a l l y , t h i s h a s a f f e c t e d m a n y of the l a r g e p r i m e c o n t r a c t o r s and c a u s e d t h e m t o i n s t i t u t e f o r m a l value e n g i n e e r i n g p r o g r a m s to improve cost effectiveness. Furthermore, since these large companies a r e forced t o c o m p e t e , t h i s s a m e e n v i r o n m e n t i s r e f l e c t e d down to s u b c o n t r a c t o r s and a l l small suppliers. Thus, a cost conscious atmosphere surrounds all businesses

w h i c h h a v e d i r e c t l y o r i n d i r e c t l y s u p p l i e d m i l i t a r y g o o d s . R e q u i r e m e n t s f o r value e n g i n e e r i n g e f f o r t s m a y soon be i n c o r p o r a t e d i n p r i m e t o s u b c o n t r a c t o r relations o n a b r o a d e r b a s e than a t p r e s e n t . Consequently, DOD's i n t e r e s t in value engineering h a s c r e a t e d v e r y w i d e s p r e a d i n t e r e s t i n t h i s a p p r o a c h to c o s t r e d u c t i o n a m o n g a b r o a d s p e c t r u m of b u s i n e s s e s . M o r e o v e r , t h i s i n t e r e s t is spilling o v e r into nonm i l i t a r y o r i e n t e d o r c o m m e r c i a l c o m p a n i e s . I n m a n y r e s p e c t s t h i s i s due t o t h e influence a n d e f f o r t s of p r o f e s s i o n a l v a l u e e n g i n e e r s w h o s e n u m b e r s h a v e i n c r e a s e d g r e a t l y s i n c e , 1960. I n s u m m a r y , t h e G o v e r n m e n t s p o n s o r s h i p of v a l u e e n g i n e e r i n g h a s h a d a s i g n i f i c a n t b e a r i n g o n t h e g r o w t h and s t a t u r e of v a l u e e n g i n e e r i n g . F r o m a b u s i n e s s management a s p e c t the Government value engineering p r o g r a m m a k e s it a l m o s t m a n d a t o r y t h a t any c o m p a n y s e e k i n g G o v e r n m e n t b u s i n e s s h a s t h e c a p a b i l i t y to c a r r y out a val ue e n g i n e e r i n g a c t i v i t y . B u s i n e s s m a n a g e m e n t should c e r t a i n l y a c q u a i n t t h e m s e l v e s with t h e c o n t r a c t u a l r e q u i r e m e n t s and o p p o r t u n i t i e s f o r p r o f i t improvement resulting f r o m value engineering incentives. SUMMARY With the b u s i n e s s c l i m a t e c h a n g e s of r e c e n t y e a r s ; with i n c r e a s e d c o m p e t i t i o n 1 a r e a s ; w i t h the c o s t / ~ r i c es q u e e z e ; w i t h s h r i n k i n g p r o f i t s ; with h i g h l a b o r c o s t s ; the exponential i n c r e a s e i n m a t e r i a l , t e c h n i c a l and m a n u f a c t u r i n g p r o c e s s knowledge; and with t h e n e e d to do t h i n g s b e t t e r and f a s t e r , no m a n a g e m e n t t o d a y c a n a f f o r d to o v e r l o o k o r g a n i z e d and i m p r o v e d a p p r o a c h e s to m i n i m i z e t h e c o s t o f doing b u s i n e s s . In t h e p a s t , h i t o r m i s s , u n c o o r d i n a t e d , h a r d w a r e o r i e n t e d , s e g r e g a t e d m e t h o d s of c o s t r e d u c t i o n w e r e a d e q u a t e and could p r o d u c e products which could be sold a t a p r i c e which would p r o v i d e a s u b s t a n t i a l p r o f i t . T h i s i s no l o n g e r t r u e , and old, i n t e r n a l a n d negative o r i e n t e d c o s t r e d u c t i o n a p p r o a c h e s a r e no l o n g e r s u i t a b l e i n t h i s a g e . B u s i n e s s m u s t r e o r g a n i z e to a p p r o a c h the c o s t p r o b l e m i n a m o r e o r g a n i z e d w a y which i s g e a r e d to t o d a y ' s n e e d s . C o s t c a n no l o n g e r be l e f t only to the m a n i p u l a t i o n and c o n t r o l of t h e a u d i t o r o r f i n a n c i a l c l e r k . T o d a y , c o s t s m u s t b e c o m e t h e f u l l t i m e c o n c e r n of a m a n a g e m e n t a c t i v i t y which c a n d i r e c t a c o o r d i n a t e d e f f o r t of t h o s e functions ( p e r s o n s ) w h o s e d e c i s i o n s e x e r t the g r e a t e s t influence on produc c o s t s , e n g i n e e r i n g , m a n u f a c t u r i n g , p r o c u r e m e n t , and m a r k e t i n g . M a n a g e r s who r e c o g n i z e t h i s n e e d and who d e l e g a t e t h e i r p r o d u c t value r e s p o n s i b i l i t y to value e n g i n e e r i n g o r i e n t e d and t r a i n e d m a n a g e r s w i l l build the e s s e n t i a l c a p a b i l i t i e s to m e e t the c o s t e f f e c t i v e n e s s ( c o s t p r e v e n t i o n and c o s t r e d u c t i o n ) c h a l l e n g e s of t o d a y and the f u t u r e .

VALUE E X G I N E E K I N G VS COST REDUCTION

and
C O S T R E D U C T I O N PROGRAMME CIiECIZ L I S T

V A L U E ENGINEERING V S . COST REDUCTION

F. S. Sherwin

C o s t r e d u c t i o n a c t i v i t i e s ir, one f o r m o r a n o t h e r h a v e b e e n a r o u n d i n d u s t r y f o r m a n y y e a r s . M o s t b u s i n e s s e s which h a v e b e e n s e l l i n g goods i n a c o m p e t i t i v e m a r k e t have shown s o m e i n t e r e s t i n v a r i o u s a p p r o a c h e s to c o s t r e d u c t i o n . T h i s i n t e r e s t c r o s s e s the s p e c t r u m f r o m a l l out e f f o r t s to r e d u c e c o s t s to a n o c c a s s i o n a l d r i v e when the c o m p e t i t i v e p r e s s u r e b e c o m e s too g r e a t . Some f i r m s t r e a t it like p a t r i o t i s m , they believe in i t , but do v e r y l i t t l e about i t . Traditionally, i n r e c e n t y e a r s , it h a s been the manufacturing o r i e n t e d p e r s o n who h a s l e d t h e d r i v e to r e d u c e c o s t s . P u r c h a s i n g h a s a l s o b e e n highly c o s t m o t i v a t e d b e c a u s e t h e y a r e t h e g r o u p which d a i l y s p e n d s m e a s u r a b l e a m o u n t s of m o n e y . G e n e r a l l y , both t h e s e g r o u p s h a v e b e e n h a r d w a r e and m e t h o d s o r i e n t e d i n t h e i r a p p r o a c h f o r c i n g i m p r o v e m e n t s i n m a c h i n e s and p r o c e s s e s to m i n i m i z e t i m e , l a b o r a n d m a t e r i a l c o s t s . Such e f f o r t s o v e r t h e p a s t few y e a r s h a v e done m u c h to i m p r o v e p r o d u c t i v i t y by m e c h a n i z a t i o n a n d a u t o m a t i o n , b e t t e r t o o l s , m a c h i n e s and p r o c e s s e s . T h i s h a s b e e n and s t i l l i s a n e s s e n t i a l and v e r y i m p o r t a n t a c t i v i t y . I t p r o v i d e s the foundation of u l t i m a t e c o s t e f f e c t i v e n e s s by i m p r o v i n g the e f f i c i e n c y of c o n v e r t i n g r a w m a t e r i a l f r o m i t s n a t u r a l f o r m to finished goods.

P A R T VS FUNCTION
However, since cost reduction activities c e n t e r e d around manuf a c t u r i n g and p u r c h a s i n g t h e r e w a s a t e n d e n c y t o n e g l e c t t h e functional r e q u i r e m e n t s , d e s i g n c o n f i g u r a t i o n a n d c u s t o m e r n e e d s a s p e c t of r e ducing c o s t s . Many c o m p a n i e s t h u s h a d big v o i d s i n t h e i r e f f o r t s t o reduce costs because their p r o g r a m s were mostly part o r hardware r a t h e r t h a n functionally o r i e n t e d . Value E n g i n e e r i n g f i l l s t h i s void b e c a u s e i t s t a r t s with u s e r d e s i r e d function a n d p r o g r e s s e s t h r o u g h d e s i g n c o n f i g u r a t i o n and s p e c i f i c a t i o n s to c o n c e i v e the b e s t c o m bination of a l l f a c t o r s to m a k e o p t i m u m u s e of the l a t e s t m a t e r i a l s , p r o d u c t s , m e t h o d s , m a c h i n e s and p r o c e s s e s . M o r e o v e r , Value E n g i n e e r i n g shoulc! be a p p l i e d a t a n e a r l y s t a g e i n t h e p r o d u c t d e s i g n and d e v e l o p m e n t to m i n i m i z e the n e c e s s i t y to c o s t r e d u c e a f t e r r e l e a s e to p r o d u c t i o n . T h u s , Value E n g i n e e r i n g T e c h n i q u e s f i l l the gap i n t h e c o s t avoida,nce a r e a and p r o v i d e a n a v e n u e f o r m a n u f a c t u r i n g a n d p u r c h a s i n g s k i l l s to be a p p l i e d b e f o r e the d e s i g n i s s o l i d i f i e d , m a t e r i a l pur'chased, a n d tooling m o n e y s p e n t .

RANDOM VS CONTINUOUS
P e o p l e who h a v e b e e n a s s o c i a t e d with t r a d i t i o n a l c o s t r e d u c t i o n e f f o r t s which w e r e p a r t o r i e n t e d o f t e n f e e l t h e r e i s s o m e s o r t of c o n f l i c t b e t w e e n t h o s e e f f o r t s and Value E n g i n e e r i n g . Such i s not t h e c a s e b e c a u s e V . E . d o e s not r e p l a c e m e t h o d s a n d p r o c e s s i m p r o v e m e n t . I n f a c t , i t d e p e n d s o n i t to t h e s a m e d e g r e e t h a t i t d e p e n d s o n new m a t e r i a l s and new p r o d u c t i o n s k i l l s , but V. E . p r o v i d e s a n a p p r o a c h t o m a k e b e t t e r u t i l i z a t i o n of t h e s e s k i l l s o n a c o n t i n u a l not a r a n d o m b a s i s . V. E . p r o v i d e s t h e t o o l s a n d t e c h n i q u e s f o r people whose d e c i s i o n s influence c o s t to constantly a p p r a i s e t h e v a l u e o r c o s t i m p r o v e m e n t p o t e n t i a l . No l o n g e r d o e s m a n a g e m e n t h a v e t o w a i t until s o m e i n s p i r e d a n d h i g h l y m o t i v a t e d i n d i v i d u a l with e x p e r i e n c e and j u d g e m e n t c o m e s a l o n g t o d e v e l o p a n i m p r o v e m e n t . NO l o n g e r do t h e y h a v e t o w a i t until t h e y a r e i n a l o s s o r p o o r p r o f i t situation before they do c o s t reduction w o r k . V. E . i s planned i n i t i a t i o n , c o n t i n u o u s a p p r a i s a l and s y s t e m a t i c a l l y c o n d u c t e d to d i r e c t e f f o r t s into the m o s t productive c o s t i m p r o v e m e n t a r e a s . COMMITTEE

VS TEAMWORK

C o s t r e d u c t i o n w o r k h a s o f t e n b e e n c o m m i t t e e type a c t i o n , s o m e of w h i c h h a s b e e n good and s o m e b a d . R e s u l t s a r e s e l d o m a c h i e v e d b y c o m m i t t e e s but by i n d i v i d u a l e f f o r t s . O r g a n i z e d i n d i v i d u a l a c t i o n t o w a r d a c o m m o n g o a l , known a s t e a m w o r k , i s m u c h m o r e d e s i r a b l e a n d p r o d u c t i v e . V. E . t e c h n i q u e s d e m a n d t e a m w o r k and f o r c e r a p i d and substantial a c h i e v e m e n t s . DOLLAR VS VALUE GOALS Hardware o r p a r t oriented cost reduction aimed at achieving d o l l a r s of c o s t r e d u c t i o n o f t e n l e a v e m u c h t o be d e s i r e d . P r o b a b l y t h e m o s t s e r i o u s p r o b l e m i s tllat the$$)approach m a y n e g l e c t t h e u s e r o r c u s t o m e r . A s a result product performance, life, reliability, o p e r a t i n g c o s t s a n d m a i n t e n a n c e m a y s u f f e r . On the o t h e r h a n d , Value E n g i n e e r i n g b y b e i n g u s e r - f u n c t i o n o r i e n t e d i s a i m e d a t i m p r o v i n g t h e p r o d u c t v a l u e , w h i c h we know i s the m o s t f u n c t i o n f o r l e a s t t o t a l c o s t . T h u s , t h e h a z a r d of c o s t r e d u c t i o n a t t h e d e t r i m e n t of s o m e p e r f o r m a n c e c r i t e r i a i s a l m o s t c o m p l e t e l y a v o i d e d , and o f t e n t h e p e r f o r m a n c e i s i m p r o v e d while c o s t s a r e r e d u c e d .

SUMMARY
T h u s Value E n g i n e e r i n g , while a i m i n g a t c o s t avoidance and r e d u c t i o n , i s not a r e p l a c e m e n t f o r t r a d i t i o n a l c o s t r e d u c t i o n a p p r o a c h e s , i t i s a s u p p l e m e n t which f i l l s a void that h a s e x i s t e d and g i v e s a new d i m e n s i o n to a n effort t h a t i s e s s e n t i a l if b u s i n e s s i s to c o m p e t e i n a f r e e m a r k e t and fill the n e e d s of expanding population. T h e c o m p l e t e c o s t r e d u c t i o n p r o g r a m m u s t include Value E n g i n e e r i n g if the g r e a t e s t a m o u n t of u n n e c e s s a r y c o s t i s to be r e m o v e d . The' following c h e c k l i s t p r o v i d e s a guide to the e s s e n t i a l e l e m e n t s of a c o m p l e t e p r o g r a m .

COST REDUCTION PROGRAM-CHECK LIST

I. ADMINISTRATION I s e v e r y cost reduction c h a i r m a n and coordinator well a c q u a i n t e d w i t h C o m p a n y P o l i c y 1 0 - 4 0 0 1 - 110 J u l y 1, 1 9 6 6 ? Does management at all levels direct cost reduction activities and hold monthly m e e t i n g s to review r e s u l t s ? Does e a c h b u s i n e s s function p a r t i c i p a t e actively and produce results in the p r o g r a m ? A r e p r o p e r r e p o r t i n g p r o c e d u r e s followed a c c u r a t e l y and timely? D o e s e a c h m a n a g e r a n d i n d i v i d u a l c o n t r i b u t o r know h i s responsibilities to the p r o g r a m ? Do a l l k e y e m p l o y e e s w h o c a n c o n t r i b u t e t o t h e p r o g r a m have a copy of "Raytheon C o s t Reduction P r o g r a m " b r o c h u r e a n d h a s it b e e n reviewed with t h e m a t staff m e e t i n g s ? Have difficult g o a l s b e e n s e t and equitably a l l o c a t e d to all k e y techniques and e a c h b u s i n e s s functior ? Does e a c h k e y employee have a p e r s o n a l goal and d o e s h i s supervisor m e a s u r e his achievements in this a r e a ? I s a p r o p e r balance maintained between cost reductions and cost avoidance s ? I s t h e r e a n a t t e m p t to i n s u r e t h a t a l l c o s t r e d u c t i o n e f f o r t s a r e documented? A r e a l l c o s t c e n t e r s t h e o b j e c t of c o s t r e d u c t i o n e f f o r t ? A r e c o s t reduction p r o j e c t s p u r p o s e l y and s y s t e m a t i c a l l y selected, and t a r g e t s and t i m e t a b l e s s e t ? Are cost reductions properly validated? A r e periodlc p r o g r e s s r e p o r t s on cost reduction projects r e q u i r e d a t staff m e e t i n g s ? A r e all the sub p r o g r a m s given the a p p r o p r i a t e attention and d i r e c t i o n ?

16.

A r e s u f f i c i e n t p e o p l e and t i m e a l l o c a t e d to a d m i n i s t e r a n effective p r o g r a m i n all a r e a s ? A r e s u g g e s t i o n s a n s w e r e d p r o m p t l y and i s follow-up and implementation expedited?

17.

11. MOTIVATION 1.
I s e a c h e m p l o y e e e n c o u r a g e d by m a n a g e m e n t to c o n t r i b u t e r e g u l a r l y to t h e p r o g r a m ? I s s u i t a b l e r e c o g n i t i o n , r e w a r d s and c o m p e n s a t i o n p r o v i d e d to e a c h c o n t r i b u t i n g e m p l o y e e ? A r e p o s t e r s , a r t i c l e s , n e w s s h e e t s and o t h e r p r o m o t i o n a l m e t h o d s u s e d to k e e p t h e p r o g r a m d y n a m i c s and p r o v i d e c o n t i n u a l individual m o t i v a t i o n ? D o e s e a c h e m p l o y e e u n d e r s t a n d h i s r e s p o n s i b i l i t i e s to c o n t r i b u t e r e g u l a r l y to t h e c o s t r e d u c t i o n p r o g r a m ? Is t h e c o s t r e d u c t i o n e f f e c t i v e n e s s of e a c h b u s i n e s s function and lndlvidual m e a s u r e d and a r e t h e y i n f o r m e d of t h i s measurement?

2,

3.

4.

5,

111. TECHNIQUES
A r e a l l k e y d e c i s l o n m a k e r s t r a i n e d i n value a n a l y s i s t e c h n l q u e s .? A r e a l l a n a l y t i c a l t e c h n i q u e s a p p l i e d to a p p r o p r i a t e c o s t centers? I S c r e a t i v i t y e n c o u r a g e d and d o e s a c r e a t i o n a t m o s p h e r e exist ? Are creatlve technlques broadly employed in problem solving? I s t e a m w o r k p r c v a l e n t i n decision m a k i n g and c o s t reduction project work? A r e cost targeting o r product cost control concepts employed ?

A r e new m a t e r i a l s , p r o d u c t s , p r o c e s s e s , s o u r c e s , techniques e t c . given w i d e p u b l i c i t y ? A r e information s e m i n a r s held? Are special t a s k f o r c e s conducted? A r e a l l c o s t c e n t e r s t h e o b j e c t of c o s t r e d u c t i o n e f f o r t s such as: procedures paperwork, publications scrap traffic filing s y s t e m s s h i p p i n g and p a c k a g i n g telephone l i g h t i n g and s e r v i c e s maintenance inventories warehousing capital equipment h e a t i n g , a i r conditioning food s e r v i c e s t e s t and c a l i b r a t i o n inspection engineering drawings I s e v e r y e f f o r t m a d e to c a p i t a l i z e o n t h e p r o f i t m a k i n g a s p e c t s of v a l u e e n g i n e e r i n g and c o s t i n c e n t i v e c o n t r a c t u a l clauses ? I s c o s t i n f o r m a t i o n w e l l o r g a n i z e d and q u i c k l y a v a i l a b l e for analysis ? I s c o s t e s t i m a t i n g done r a p i d l y and e f f i c i e n t l y ? A r e w o r k m e a s u r e m e n t and s i m p l i f i c a t i o n t e c h n i q u e s widely u s e d ? T h e r e a r e m a n y m o r e c h e c k l i s t q u e s t i o n s t h a t could be a s k e d but a n y c o m p a n y which c a n a n s w e r y e s t o a l l t h e above w i l l h a v e a n e x c e l l e n t cost reduction program. FSS: np 1 2 S e p t e m b e r 66

----

. " . ,

--

G,

VALUE E N G I N E E R I N G I N C O S T T A R G E T PROGICAE4MES

and

A C O S T T A R G E T PROGRAMME POLICY AND

PROCEDURE

VALUE ENGINEERING IN COST TARGET PROGRAMS


Typical Problems Facing Value Engineers The greatest single problem mostvalue engineers claim they have to cope with i s the problem of human relations. Most value engineers claim that a much greater percentage of their efforts is expended In overcoming resistance to value engineering than in finding areas of poor value. One of the most troublesome human relations problems exlsts in dealing with deelgn engineers. It is difficult to get engineers to consider value an Important element of design, and equally difficult to motivate them to consult with value engineers who feel they have a valuable contribution to make. For these and other reasons, value engineers have trsdltionally,had difficulty in carrying out an effective value assurance* program. Another problem of slgnificance i s the problem of measuring the effectlveness of value assurance, since no "before and afterw conditions exist to be compared. A great opportunity exists to overcome these problems by an integrated value assurance cost target proThls is a program which controls the cost of the product during the design phase, and uses the value engineering techniques to put cost targets on a rational basis for the first tlme. Cost Target Program Objectives The basic objective of a cost target program i s to oontrol product costs durlng original design by:
1. achieving essential functions for minlmurn cost 2. providing designers with coat information 3, integrating the efforts of Engineering, Manufactur~ng.andMaterial Departments 4, motivatlng designers to ooneider oost a s a design parameter 6, motivatlngdeslgners to oonsult value engineere 6. measuring the performanoe of desigaers with respeot to oort

1
[
7. E. D. HELLER Manager, Value Control ~ e n e ~ hynamics/ Astronautics San Diego, California identifying unnecessary costs before it is too late to take corrective action 8. identifying and recording unnecessary costa for later implementatlon In those cases where program schedules and/or budget8 will not allow immediate implementation.

Few papers have beeh so well written which adequately describe practical cost controls for Value Engineering. The author's proven experience in this important field is informntlve and of great value.

The resultof all of the above, of course, will be an improvement in the competitive position of the organization and improved profits. Pronram Oraanization It must be recognized that a program which i s to

be successful in carrying out the above objectives


must be a company-wide program. It cannot be carried out by the Engineering Department alone, but must have active participation by manufacturing, materials, tind finance, as well a s other major departments. How this i s accomplished may be understood by a review of the organizational functione involved, nnd a description of their participation. Flve important functions may be identified.

= .

1 . Cost target team. value engineer (chairman) deslgn engineer project engineer manufacturing representative material representative other departments as required
2. Cost analysis function:

cost estimators from manufacturing o r finance (not engineering)


3. De8; gn

Pnctto; es gn en near performing his normal function, but considering cost a s a design parameter

V a l u e assurance-the applioation of value engtneerlng teohniques In original design, resulting in cost preventlone, rather than oost reductions.

4. Value engineering term. constitution similar b coat W e t teom. but an ad hoc group,

. .

6, Accounting function:

IndutoWol l b m t l t t l ~ ~

Conducting the Program The work whlch must be carried out by the above organizational functions i s a s follows:
1. Cost target team establishes targets and moni-

In the Information Phase all existing data i s gathered, analyzed, and organized in a systematic manner. All relevant data la extraated and used. The data necesr a t y mllst Include cebt 6Stimhtes b?s& on whatever derlgn eoneepts ma exisl at L h l ~ phase e l che Dregram, even though rhey may a s yet be lncomplftely defined. Based upon the data available in the form of specificatlons, performance requirements, system block diagrams and preliminary designs, essential functions are defined, both primary and secondary. These must be defined in a number of different ways, and at different levels of abstraction. In the Creative Phase the above functional definitions a r e used a s problem statements. These problems are then attaoked using creative thinking techniques judgment i s suspended and as many alternate ways of performing these functions aa possible a r e developed. Both individual and group creatlve thinking a r e applied. As many alternates a s possible a r e developed in three principal areas:

tors designers' performance against these t a r gets: reports periodically to management on thestatus of the cost target program: later In the program, after feedback of actual cost data, compares actual costs with targets to assess and improve Its own performance. How the team establishes the targets isdescribed below.

2. Cost anal 61s provides the cost target team cost data (as available) and estimates of production costs based on existing concepts: estimates production cobts of alternates developed by cost target team: provides service to designers in form of estimates of production costs of design alternates: later in program, after feedback of actual cost data, compares actual costs with targets to assess and improve its own performance.

&

engineering concepts (design) material applications manufactuGng processes In the Evaluation Phase the ideas from the Creative Phase are reviewed, and possibly developed a little further. This is the time when the previously suspended judgment must be applied. The ideas a r e listed in order of their apparent value. The value referredto here is in terms of probability of a successful design, in other words technical feasibility, reliability, performance and economy. Of course ideas from the three areas engineering concepts, mateare rial applications, and manufacturing processen assembled in various combinations. Ideas whlch show deficiencies are revised to make them sound, where possible, and the creative process i s repeated where necessary o r seeming deairable. Ideas a r e rejected with reluctance.

" &=??

applies value engineering technique8 to ac ieve economical designs compatible with cost targets: consults value engineering to assist in meeting targets: consults cost analysis to price design alternates.

--

--

4. Value engineering teams set up in special oases where large discrepancies exist between design and cost target, to help designers to meet targets.
5. Accountin

Industrial accounting accumulates 4 s and feeds back information to cost target team and oost analysts,

Establishing the Targets One of the unique features of the General Dynamios Cost Target Program ie the use of the value engineering technlquee, both for establiehlng the t a r g e b and to help meet the targets. Three phwes of the value engineering job plan are used for establishing the target:
1 , ~nformatlon Phase 2. Creative Phase 3. Evaluatioa Phaae

When the list of usable ideas is complete, a small number of the best appearing ideas a r e chosen and turned over to the cost analysis function for estimating. Cost estimates in dotlare are prepared. The number of approaches to be estimated depends on practical considerations time available and cost to estimate but should be at least several. The idea selected by the cost target team a s having the best combination of potential for successful performance and low cost i s used for the cost target. One of the important ground rules Is that all tnembera of the team must agree on the target before it i s considered acceptable.

Although the designer does not necessarily use the idea chosen by the oost target team, he must develop a design meeting the target, He must be aware of the basis far the target. All the Information generated by the team and evaluated by the team must be made available lo the designer.

Tooline Considerations Sincc we a r e concerned with total cost, not Just with the cost of fabricntlon and procurement, Itre mast I* onroful nor to mlnla\ius tabrlsntlon ooats at the expcnse of unreasonable tooling. In order to avoid the trap of spcnding more than i s justified for the tooling, (in light of the manufacturing quantities anticipated) a tooling figure i s provided with every cost target for which one is appropriate. The objective then becomes to minimize the total of factory sabor plus tooling. Such a tooling figure, once established, can Immediately become a preliminary cost target for the Tooling Department. A cost target team can be s e t up to work on this flgure to reduce it to the lowest practicable cost anticipated for the tooling in a mnnner similar to that used in the product cost target program: that is, applying the value engineering tectnnlqucs of functional definition, creative thinking, and functional evaluation within the first three steps of tho job plan a s described above. Now these targets may be given to the t m l designer a s a design parameter, and his performance monitored and corrective action taken a s in the case of tho product designer. Here also, actual c o s u a r e accumulated (for tool fabrication) by Industrial Accounting, and fed back for comparison with the targets and estimates. Cost of Prarrram The program described i s extensive, involving a number of people from a number of organizational units. The question naturally a r i s e s can we afford s o elaborate a program? Preliminary experience seems to indlcate that cost reductions of the order of 15 to 30% below the normal product cost can be achieved. This will give an excellent indication as to how much can be spent on a cost target program: It will depend, of course, on the total dollar e ~ e n d i t u r e a anticipated i n the production program.

making similar estimntes, but a t n somewhat dilferent time in the overall program. Two rcsulln lrrp the availability of the cstimatcs for the cost lnrge; ro ram, nnd nvnllabll\~ynl thtl YAR1B ~ ~ t l f 3 I l t t lab! fJ~ fhd&n, r 1)ulSposes. The very manner in which thc cost target program is carried out enables the company 'lo make more valid and lower bids with greater con[idence that the cost goals a r e attainable, and thcrc foreputsthe company in a better competitive position. The above i s not intended lo Indicate that the cost target program can be accomplished f r e e , but substantially speaking the principal cost to the program Le that involved in supporting the efforts of a small number of value engineers. The number, of course, will vary with the size of the program, but a very substantial program can be supported by a s few as 2 b 4 senior value engineers. Use of P ~ r t / ~ i m Information e
A s mentlonw-l under Cost Target Program Objectives there a r e c ~ r c u m s t a n c e when s unnecessary costs may be identified but cannot be eliminated due to schedule problems. However, a review of tight schedules on an overall program can be very misleading andcan result in g~neralizationssuch a s 'We have no time on this program. The fichedule i s too tight". This s o r t of roadblock can be evaluated objectively by reviewing specific element8 of the program to determine In which casos P e r t indicates there i s time available and which fall on the prilicel path. In those c a s e s where the item ia noL on the critical path, P e r t will show how much slack time !R available for wpllcation of the value engineering technique8 to eliminate unnecessary costa from that Item.

--

Conclusion It is thus seen that a rational cost target can be established by using the value engineering techniques and job plan, that this target can be used to motivate the designor to achieve value In the original design, that his performance can be monitored and corrective action taken before design release. Such a cost target program not only develops a much closer working relationship between the designer and the value engineer, but s e r v e s to promote a much closer and better team effort by all departments in the organization, but especially among engineering, manufacturing and procurement. It has been found that those people working on an effective coat target program such a s desortbed develop an eeprit de oorpa not othemlea attainable.

There i s a much more important consideration, however. This is that during any deveiopment program it i s usual, if not universal, that repeated estimates of product costs a r e being prepared for bids to the customer for the production phase 01 the program. It has been the experience at General Dynaof materials a r e repeatedly being mics that ~ o s t s estimated by the Material Department (with the help of Engineering) and costs of labor a r e repeatedly being estimated by the Manufacturing Department. It turns out that the sama people a s make these estimates can paxzticipabe in the ooet target program,

GENERAL POLICIES AND PROCEDURES


R E V I S E S ISSUE DATED

F I L E CODE
EFFECTIVE DATE

SUBJECT : PRODUCT COST TARGETING

V.P. - Engineering & R e s e a r c h


Engineering and R e s e a r c h

1.

. PURPOSE - Product cost targeting is needed a s a management tool during product design to establish b e t t e r control of product c o s t s , improve cost effectiveness, i n c r e a s e cost avoidance and a s s u r e product profitability.

2.

POLICY 2 . 1 Product cost targeting i s applied t o a l l new product design where management has a need to control manufacturing c o s t s t o meet competition and a s s u r e adequate profit m a r g i n s . Generally, management should select those programs which have ample scheduled design time and anticipated production on fixed price o r incentive type contracts where control of c o s t s i s m o s t important to profitability. 2.2 Product cost targeting is a technique by which objectives f o r product manufacturing c o s t s a r e established and m e a s u r e d d u r i n g design. It does not replace normal budgeting procedures, but i s an additional management tool t o help m e a s u r e and control segments of the budgets that a r e related t o product manufacturing costs. Cost targeting techniques can be applied t o control c o s t s of low volume-high dollar programs o r engineering prototypes a s well a s higher production p r o g r a m s .

3.

APPLICABILITY - This policy i s applicable t o all Raytheon Divisions and s e p a r a t e Operations, foreign subsidiary Companies, and independent subsidiary companies except Amana Refrigeration Inc

4.

RESPONSIBILITIES 4.1 General Managers of Divisions and s e p a r a t e Operations, and Presidents of applicable subsidiary Companies a r e responsible f o r initiating, conducting, and measuring cost targeting p r o g r a m s in each division, operation, plant, laboratory o r company where decisions that effect product c o s t s a r e made. The Office of the Vice President, Engineering and R e s e a r c h i s responsible for providing functional direction and guidance f o r cost targeting programs, and f o r coordinating interdivisional activities in this a r e a .

4.2

5.

PROCEDURE - Detailed procedures to be followed a r e filed in the Engineering and R e s e a r c h Policies and P r o c e d u r e s Manual ( F i l e Code No. 43 1002 210),

ENGINEERING POLICIES
SUBJECT :

AND

RESEARCH

PAGE

T I L E CODE

AND

PROCEDURES

Or

43 1002 210

REVISES ISSUE DATED

I Jan.

EFFECTIVE DATE

17, 1967

PRODUCT COST TARGETING STANDARD PRACTICE AND PROCEDURE

A U T H O R I Z E D I*

b i c e ~ r e s Engineering & Resea

.-

1.

PURPOSE - Product cost targeting concepts, practices and procedures a r e needed to encourage uniform application throughout the company, establish better control of product costs, improve cost effectiveness, increase cost avoidance and a s s u r e product profitability. POLICY

2.

The use of cost targeting techniques in Raytheon is p ~ e s c r i b e d within the following

m inimurn parameters:
Cost targeting shall be applied to all new product design where one o r m o r e of the following conditions exist:
2.1.1 2.l.2 2.1.3 2.1.4 2.1.5

Fixed price o r incentive type contract. Ample o r d u c t i o n quantity (anticipated). Technical and performance problems largely solved. Ample scheduled design time. Cost, competition and profit problems.

Cost targeting shall be used in each division, operation, plant and laboratory where decisions that effect product c o s t s a r e made. Cost targeting shall be used a s a measure of cost effectiveness work during product design. Cost targeting shall be employed in conjunction with and in support of the Value Engineering and Design Review programs - (Policies 43-0001-010, 43-0001-210, 45-1001-210).
3. 4.

APPLICABILITY

This policy i s mandatory and applies to all activities of the company.

RESPONSIBILITIES
4.1
4.2

Division General Managers a r e responsible for initiating, conducting and measuri c o s t targeting programs in all applicable a r e a s . All functional managers both corporate and divisional a r e responsible for supporting cost targeting efforts. The Office of the Vice President, Engineering and Research i s responsible for providing functional direction and guidance for cost targeting programs, and for coordinating interdivisional activities i n this a r e a .

4.3

DEFINITIONS
5.1

Cost targeting is a procedure by which objectives for product manufacturing costs a r e established and measured during design. It also includes methods to concentrate the necessary knowledge on cost a r e a s which exceed targets and thus control product costs to meet objectives. Cost targeting concepts a r e sometimes identified by other names such a s "Unit Product Cost Control, " and a r e described in more dctail in the procedure section. Cost targeting does not replace normal budgeting proceduros, but i s a management tool to help measure and control segments of the budgets which a r e related to product manufacturing costs.

5.2

E N G I N E E R I N G AND RESEARCH P O L I C I E S AND P R O C E D U R E S

PAGE

F I L E CODE

PliODUCT COST T A I C E'rING S T A N D A I i D PIZACTICE A N D T'l<OC EDU IrE


5.

2
REVISES

OF

43 1002 210
EFFECTIVE DATE

155'IF D A r E D

Jan. 17, 1967

(Continued)
5.3

Product cost is the sum of the m a t e r i a l . labor and overhead c o s t s to manufacture a product. Cost t a r g e t s should hex wtcnded Irom product cost of a unit t o total product c o s t (including tooling) tor :I qu:mtitv of units. :und possibly to other procurement, operating and s e r v i c e c o s t s in c a s v s whcrc c u s t o m e r s may specify total life cycle cost objcctivcs o r thcsc c o s t s sul~st:rntially:lllcct the price of thc equipment.

6.

PROCEDURE
6. 1

Product Selection. Spvcific products. equipmonts o r s y s t c m s sh:lll be designated :IS suit:tble for the :tpplication of cost targeting proccclurcs during thc product design and development phases. G e w r a l l y those products that offer production and profit potential a r e selected, although low volume - high dollar p r o g r a m s o r even engineering prototypes m:ly be cost targeted.

6.2

Specific P r o g r a m Elements.
6.2.1

Establish anticipated p r o d w t c o s t s Imscd on cstimating production manufacturing cost for each end item of the eqiaipmvnt from known data such as: a. Specifications : ~ n d requircmr~nts. h. Systems block dingr:trns. c . P r e l i m i n a r y o r past deslgns. d . \i70rk s t a t e m e n t s o r task c l c ~ ~ c r i p t i o n s .

6.2.2
G. 2.3

Establish cost t a r g e t s b y adjusting thc anticipated c o s t s to meet m a r k e t o r contract pricc ol)jcctivcs. h l e a s u r e design p r o g r e s s in meeting t a r g e t s by making periodic c o s t e s t i m a t e s a s product design develops. Adjust effort, as n e c e s s a r y , to mc>ct cost t a r g e t s , i . e . . modify o r change design concepts to mect cost targt.ts. Do1:ument r e s u l t s by comparing the final product cost estimate nvjth 'Lq-get and anticipattd costs. General management should designate s y s t e m s , equipment o r products for the application of cost targeting procedures. They m a y a l s o wish t o review and approve c o s t t a r g e t s on c e r t a i n m a j o r p r o g r a m s . Generally, c o s t targeting concepts a r e initiated a f t e r the design concept o r system approach i s e s t a l ~ l i s h e d . However. in certain progr'ams the concepts m a y be applied and cost t a r g e t s established during the contract definition o r proposal phase. P r o g r a m o r project management should be responsible f o r directing the application of cost targeting concepts, monitoring p r o g r e s s and measuring r e s u l t s . They m a y designate a specific individual, group o r team a s responsible f o r the cost targeting program administration. Other line and staff personnel should participate in a i l the program elements a s follows: (See Chart I).

6.2.4
6.2.5

6.3

P r o w d u r a ! Implementation.
6.3.1

6.3.2

6.3.3

ENGINEERING AND R E S E A R C H P O L I C I E S AND P R O C E D U R E S

P ~ G E

( F I L E CODE OF

PRODUCT COST TARGETING STANDARD PRACTICE AND PROC EDURE

43 1002 210
E F F E C T I V E DATE

REVISES ISSUE DATE0

6 . 3 (Continued)

a.

Est:tblish anticipated p s ~ l u c c t o s t s . T h i s s t e p i s performed generally by a cost estimating function based on inputs from design engineering, manufacturing, and purchnsing. Cost accounting may produce and distribute the anticipated c o s t model. Est,ahlish cost t a r g c t s . T h i s i s a tciamwork effort hy a number of line and staff personnel. With anticipated c o s t s and m a r k e t price objectives a s :l guideline, cost t a r g e t s for each end item should be established and agrecd t o by clcsign cngincering, manufacturing, and purchasing. Cost cstimating, value cnginecring and othcr functions rnay contribute information which is uscful in establishing the cost t a r g e t s . A cost target model should be produccd and clistrihutcd to all contributing and rcsponsihlc personnel. M e a s u r c design progress. As the detail design p r o g r e s s e s continual o r periodic cost cstrrnatcs artx m:tdc by qualified personnc 1. P r o g r e s s is mcasurcd by compnring thcse e s t i m a t e s with established cost targets. Cost dcsign reviews o r informal reviews on requcst may be held to to a s s i s t dcsign engineering i n nicasuring p r o g r e s s and meeting t a r g e t s . Value engineering a n d othcr support specialists should play an important part i n thesc reviews, a s well a s manufacturing, purchasing, cost estimating and t e s t personnel. Adjust effort to meet cost t a r g e t s . If measurement indicates that cost t a r g e t s a r e not going to bc met then t ~ v o things should happen: Cost target should I)(. rceviewed to clcterminc i f t h e r e a r e any new inputs which would justify rcvising the target. Additional assistnncch should be provided to the responsible dcsign engineer to help him mcct the target.
A numl~e of~ different specialists may contribute :issistance such a s value engineering. components, rc1i:lhility. manufacturing, purchasing, and design. It may cvcn 1)e d e s i r a h l c to establish a specific ctcsign task team to work on the problem with the dcsign engineer. Assistance would take the f o r m of creative design. information on c o s t s , m a t e r i a l s , products, p r o c e s s e s , s o u r c e s . tooling, test, reliability, and the u s e of value engineering techniques.

b.

c.

d.

e.

Document r e s u l t s . At the completion of the design. cost e s t i m a t e s should be made ;uid a final cost modcl developed. This and other cost target program documentation should be completed for program m c a s u r c m e n t and marketing purposes. Supnlemental :und support taslcs should be c a r r i e d out in each program element lo apply value engineering techniques and develop cost models. (See Ch:irt 11)

f.

6.4

Cost Txrget P r o g r a m Mc:isuremcnt. Gener:11 and program m:magement should m e a s u r e the effectiveness of the cost t a r g e t progrxm a s applied t o any product by the following indices:

it

E N G I N E E R I N G AND RESEARCH P O L I C I E S AND P R O C E D U R E S

PAGE

F I L E CODE

OF

43 1002 210
E F F E C T I V E DATE

PRODUCT COST TARGETING STANDARD PRACTICE AND

R E V I S E S ISSUE DATED

Jan. 17, 196'

6.4 (Continued)
6.4.1

Total cost improvement

Total anticipated costs-total final actual cost X 100 Total anticipated costs
6.4.2 6.4.3
6.5

Cost cffectivencss

Total target costs X 100 Total final actual costs

Return on investment = Total cost improvement ($) Extra cost of C. T. Program

Cost Target Progr:rm Reporting.


6 . 5 .1

Cost avoidance which result from the cost target program should be reported into the company cost reduction program. Value engineering change proposals which result from the cost target program should be processed according to prescribed procedures.

6.5.2

ENGINEERING AND RESEARCH POLICIES AND PROCEDURES

P AOC

l l L C COOL

o*

43-1002-210
CClCCTlVC DATE

REVISE9 ISSUE OATLO

Jan. 17, 1967

CHART I
COST T A R G E T PROGRAM
Elcmcnte and Contributing P e r e o n n e l P r o g r a m Element Cost Models Contributing Pereonnel Cost Estimating Design Engineering Manufacturing Purchasing Accounting D e s i f < nE n g i n e e r i n g Man~lfacturing Purchasing Value E n g i n e e r i n g Cost Estimating P r o g r a m , Project, Marketing, Contracts Value E n g i n e e r i n g Design Manufacturing Parchasing Program Reliability, Components, Other Specialists Cost Estimating Design Value E n g i n e e r i n g Manufacturing Purchasing Support Specialists Cost Estimating Cost Estimating C o s t P ccounting P r o g r a m , Project, Contracts, hdarketing Design

IE s t a b l i s h 1
Costs Anticipated C o s t Model

M e a s u r e Against Anticipated And Target C o s t M o d e l s

ENGINEERING AND RESEARCH P O L I C I E S AND P R O C E D U R E S

COST TARGET PROGRAM S u p p l e m e n t a l and S u p p o r t T a s k s

P r o g r a m Element

--Value E n g i n e e r i n g
C h a l l e n g e s p e c s and r e q m t s . Analyse system. Apply c o s t a n a l y s i s t e c h n i q u e s . F u n c t i o n a l definition.

Cost Models

Identify h i g h cost areas.

Costs

Targets

Functional t r e e analysis. Functional evaluation. Cost /value indices. Identify 2 n d d e g r e e and unnecessary costs. S e l e c t V. E. P r o j e c t s . Establish priority, schedule and P E R T .

Provide cost visibility.

D e v e l o p V. E . C . P. ' s . S e a r c h for new m a t e r i a l s , p r o d u c t s , p r o c e s s e s and vendors. 1dent.ify p r o b l e m a r e a s .

Estimate costs. Develop breakeven points for alternates. Review t a r g e t s . E s t i m a t e tooling c o s t s .

4. E f f o r t

j*dlurl

Depth s t u d y , p r o b l e m a r e a s . Develop V . E . C . P . ' s Assist designers. E s t a b l i s h V. E. t e a m s .

Finalize predicted cost model. Modify u n r e a l i s t i c targets.

Develop functional c o s t m a n u a l . I d e n t i f y a r e a s f o r f u t u r e V. E. Disseminate cost data. S u b m i t V . E . C . P . ' s and C . S . 101's.

C o m p a r e final predicted c o s t s to a n t i c i p a t e d c o s t s and target costs.

VALUE E N G I N E E R I N G I N GOVERNMENT

VALUE ENGINEERING IN GOVERNMENT

BACKGROUND P e o p l e i n b u s i n e s s e s w h i c h supply goods a n d s e r v i c e s t o v a r i o u s G o v e r n m e n t a l a n d M i l i t a r y a g e n c i e s will be i n t e r e s t e d i n t h e a t t i t u d e s of t h e s e c u s t o m e r s c o n c e r n i n g c o s t r e d u c t i o n and value e n g i n e e r i n g . In times

of n a t i o n a l e m e r g e n c y , s u c h a s World W a r 11,cost h a s h i s t o r i c a l l y t a k e n a back s e a t c o m p a r e d to delivery, schedule and p e r f o r m a n c e f a c t o r s . However,

s i n c e t h e m i d d l e 1 9 5 0 ' s t h e r e h a s b e e n a g r o w i n g i n t e r e s t o n the p a r t of government a d m i n i s t r a t o r s i n economy. Continually f a c e d with a l i m i t e d

supply of f u n d s , g o v e r m e n t a g e n c i e s h a v e begun to r e a l i z e that t h e y n e e d t o t a k e s t e p s to r e d u c e the c o s t of p r o c u r i n g e s s e n t i a l g o o d s . Thus, by in-

s t i t u t i n g e c o m o n i e s t h e y could s t r e t c h t h e i r b u d g e t s to o b t a i n m o r e of t h e n e c e s s a r y goods a n d s e r v i c e s . HISTORY One of the a p p r o a c h e s t h e y have t a k e n to r e d u c e c o s t s i s t h r o u g h t h e a p p l i c a t i o n of Value E n g i n e e r i n g T e c h n i q u e s

T h i s methodology h a s been

a p p l i e d i n two w a y s ; f i r s t , w i t h i n a r e a s d i r e c t l y u n d e r thes r c o n t r o l a n d , s e c o n d within the c o n t r a c t o r s J p l a n t s , I n 1954 t h e Navy b e c a m e i n t e r e s t e d i n

G e n e r a l E l e c t r i c ' s Value A n a l y s i s P r o g r a m and s e n t p e o p l e to be t r a i n e d i n these techniques. A s a r e s u l t , t h e B u r e a u of Ships e s t a b l i s h e d a Value

E n g i n e e r i n g B r a n c h , the function of which w a s t o a s s i s t Navy s h i p y a r d s t o r e d u c e c o s t s t h r o u g h . t h e a p p l i c a t i o n of V . E . t e c h n i q u e s d u r i n g d e s i g n and c o n s t r u c t i o n of s h i p s . G r a d u a l l y t h i s p r o g r a m e x t e n d e d beyond Navy s h i p y a r d s

to Navy c o n t r a c t o r s .

In t h e l a t e 1 9 5 0 ' s t h e Navy b e g a n to e n c o u r a g e

c o n t r a c t o r s t o a p p l y V. E. by o f f e r i n g c o s t s a v i n g s s h a r i n g i n c e n t i v e s . About t h i s s a m e t i m e the A r m y and A i r F o r c e b e c a m e i n t e r e s t e d i n Value E n g i n e e r i n g a s a m e a n s of r e d u c i n g c o s t s . T h e y followed the Navy

p a t t e r n of e s t a b l i s h i n g both i n - h o u s e and i n - c o n t r a c t o r V . E . p r o g r a m s . M i l i t a r y s p e c i f i c a t i o n s w e r e w r i t t e n t o c o v e r V. E . w o r k and t h e A r m e d S e r v i c e s P r o c u r e m e n t R e g u l a t i o n ( A S P R ) w a s r e v i s e d to s p e c i f y t h a t V . E . i n c e n t i v e o r p r o g r a m c l a u s e s could be a d d e d t o c o n t r a c t s , About 1960, the D e p a r t m e n t of D e f e n s e , took a n i n t e r e s t i n Value E n g i n e e r i n g and a s s i g n e d r e s p o n s i b i l i t y f o r expanding t h e p r o g r a m t o t h e A s s i s t a n t S e c r e t a r y of D e f e n s e

I n s t a l l a t i o n and L o g i s t i c s .

They established

&,tc' ? a Value E n g i n e e r i n g s e r v i c e s a i m e d a t p r o v i d i n g a s s i s t a n c e t o a l l G o v e r n m e n t

Agencies.

A D i r e c t o r of Value E n g i n e e r i n g w a s appointed and s t e p s t a k e n t o

s t a n d a r d i z e o n V . E . a p p r o a c h e s and p r o c e d u r e s i n a l l m i l i t a r y b r a n c h e s and D e f e n s e Supply A g e n c y . E a r l y i n 1963, t h e A. S. P. R . w a s r e v i s e d to m a k e

the i n c l u s i o n of V. E . c l a u s e s m a n d a t o r y i n a l l c o n t r a c t s o v e r c e r t a i n d o l l a r value. A Handbook H111 o n Value E n g i n e e r i n g w a s p u b l i s h e d a n d t h e Mil.

Specs and

1 n ~ t r u c t l c m w e r es t a n d a r d i z e d ,

In 1964, D e f e n s e P r o c u r e m e n t

C i r c u l a r #11 w a s i s s u e d to extend t h e s c o p e of V. E . s h a r i n g i n c e n t i v e s ; and i n 1967 the ASPR w a s r e v i s e d to i n c o r p o r a t e t h e s e s a m e f e a t u r e s . Within t h e

1966-1967 p e r i o d the G o v e r n m e n t i n i t i a t e d a p r o g r a m to add 265 f u l l t i m e Value E n g i n e e r i n g s p e c i a l i s t s i n a l l b r a n c h e s to expand i t s i n - h o u s e p r o g r a m and a t the s a m e t i m e i n c r e a s e i t s t r a i n i n g a c t i v i t i e s .

A.S.P.R.

V. E . PROVISIONS

The A r m e d S e r v i c e s P r o c u r e m e n t Regulation is the p r i m a r y document which today e s t a b l i s h e s G o v e r n m e n t p o l i c i e s r e l a t e d t o Value E n g i n e e r i n g . M a r k e t i n g , C o n t r a c t i n g , P r o g r a m and E n g i n e e r i n g M a n a g e r s doing b u s i n e s s with the G o v e r n m e n t should be f a m i l i a r with the p r o v i s i o n of ASPR P a r t 17, R e v i s i o n 23 i s s u e d J u n e 1 , 1967. I n 31 p a g e s the G o v e r n m e n t d e s c r i b e s i t s While i t

p o l i c i e s with r e s p e c t to Value E n g i n e e r i n g c o n t r a c t u a l p r o v i s i o n s .

i s beyond the s c o p e of t h i s a r t i c l e t o c o v e r V. E . c o n t r a c t c l a u s e s i n d e p t h , a s u m m a r y m a y be helpful. T h e G o v e r n m e n t ' s p o l i c y i s t o e n c o u r a g e o r r e q u i r e the a p p l i c a t i o n of Value E n g i n e e r i n g t e c h n i q u e s to a l l c o n t r a c t s of s u i t a b l e s i z e and d u r a t i o n . Two t y p e s of V. E . P r o v i s i o n s a r e specified: I n c e n t i v e s and P r o g r a m Requirement. of $100, 000. Incentive c l a u s e s s h a l l be included i n a l l c o n t r a c t s i n e x c e s s P r o g r a m R e q u i r e m e n t c l a u s e s s h a l l be included i n c e r t a i n c o s t -

p l u s type c o n t r a c t s i n e x c e s s of $1, 0 0 0 , 0 0 0 . T h e i n c e n t i v e c l a u s e s r e w a r d t h e c o n t r a c t o r f o r s u b m i s s i o n of Value E n g i n e e r i n g Change P r o p o s a l s (V. E. C . P. )

which r e s u l t i n c o s t s a v i n g s by T h e V. E . C . P. m u s t involve

p e r m i t t i n g h i m to s h a r e i n the c o s t r e d u c t i o n s .

s o m e change t o t h e c o n t r a c t s p e c i f i c a t i o n s , p u r c h a s e d e s c r i p t i o n o r w o r k statement. T h e s h a r i n g i s s u b s t a n t i a l ( n o r m a l l y 50%) and i n c l u d e s the s a v i n g s

o n the i n s t a n t c o n t r a c t , f u t u r e a c q u i s i t i o n s and c o l l a t e r a l ( o p e r a t i o n , m a i n t e n a n c e etc).

T h e P r o g r a m R e q u i r e m e n t C l a u s e o b l i g a t e s the c o n t r a c t o r to e n g a g e i n Value E n g i n e e r i n g a s a n e l e m e n t of w o r k i n t h e c o n t r a c t s c h e d u l e . incentive f e a t u r e s a r e a l s o included. T h e R e g u l a t i o n a l s o e n c o u r a g e s the c o n t r a c t o r to extend t h e i n c e n t i v e f e a t u r e to s u b - c o n t r a c t o r s . T o the p r o f i t - o r i e n t e d b u s i n e s s m a n a g e r , t h i s p o l i c y p r o v i d e s a s u b s t a n t i a l o p p o r t u n i t y t o i m p r o v e h i s e a r n i n g s on G o v e r n m e n t b u s i n e s s . The Some

m o n e y s h a r e d a s a r e s u l t of a V. E . C . P. being i m p l e m e n t e d i s not c o n s i d e r e d p r o f i t , a n d t h u s , i s not l i m i t e d i n a m o u n t . SUMMARY T h e G o v e r n m e n t 1s new p o l i c i e s o n C o s t R e d u c t i o n and Value E n g i n e e r i n g p l a c e ~ e m p h a s i son i m p r o v e d c o s t e f f e c t i v e n e s s b y c o n t r a c t o r s vying f o r t h i s business. T h i s n e c e s s i t a t e s p r o f i c i e n c y in the a p p l i c a t i o n of a l l p r o c e d u r e s Of p a r t i c u l a r

and t e c h n i q u e s a i m e d a t the r e d u c t i o n of u n n e c e s s a r y c o s t s .

s i g n i f i c a n c e i s Value E n g i n e e r i n g b e c a u s e of the s u b s t a n t i a l p r o f i t i m p r o v e ment potential of incentive c o n t r a c t s . REFERENCES A r m e d S e r v i c e s P r o c u r e m e n t Regulation ( A S P R ) P a r t 17, R e v i s i o n 23, P a g e s 1 9 8 . 2 9 t h r o u g h 198. 50d.

D. 0. D. Handbook H l 1 1

Value E n g i n e e r i n g

MIL-V-38352 V. E . P r o g r a m R e q u i r e m e n t s

D . 0. D . I n s t r u c t i o n #7720. 10

CREEP

From THE JOURNAL

OF ACCOUNTANCY
CREEP

July 1953

by Robert L. Dixon, Ph.D., CPA Professor of Accounting University of Michigan

Creep occurs when a business moves, slowly or speedily, into areas not fully explored. When this happens, a lot of problems arise. Do you want the enterprise to creep away from its original purpose or size? Have you set up your organization, control facilities, records, to enable you to deal with the spontaneous new creature your company can come to be? Creep is almost always found in successful companies, though it is sometimes the cause of failure. The accountant is the best often the only, person able to detect creep. He may be the person to deal with the problems created.

A BUSINESS ENTERPRISE, typically is established for a limited purpose, such as the production of a single product or product group, the production of services, or the marketing of certain products. Usually this newlyestablished enterprise is simple in form, with specialized objectives. The profit motive leads to its creation, and it is expected that profit will be realized through pursuit of this specialized activity.
The case histories of some of the larger corporations, on the other hand, would undoubtedly show that a considerable proliferation of activities accompanies the aging process. The addition of new activities to the one of' initial specialization appears in various ways. Commonly it will appear in the form of integration through taking on the production of component parts formerly delegated to outsiders, or through extending back to the production of raw materials for use in the plant. The sales organization may be expanded to include wholesaling activities and may even be extended forward to include ownership and operation of retail outlets. This process may at the same time be accompanied by a horizontal expansion of activities in which an array of new products is added to the original specialty. In fact, the expansion, diversification, and proliferation may reach the stage where the original objective, thr'ough the multiplication of side activities, has become an obscure element in the total activity of the corporation. Going along with this expansion process one is likely to find another, less spectacular but none the less significant, factor leading to the variegation of enterprise activity. This is the piecemeal attachment of relatively minor activities of service and supply. Examples of this are the establishment of a department for the production of tools; a department for the maintenance of machinery and electrical equipment; a department to service company-owned trucks and automobiles; an engineering department; a legal department; a carpentry and upholstering shop; a printing shop, and so on.

In many instances these accouterments are not added full grown as the result of a formal analysis and decision, but rather they edge into the picture, starting with the incidental, part-time activity of one or more employees, but ending up later as full-fledged departments of the plant. In other instances these added activities are undertaken because they seem to offer cost-saving opportunities. The reasoning is somewhat as follows: because we have an established plant 'and organization an important portion of our costs is pretty well fixed; these costs will go on at approximately the same level whether our plant is fully or only partially used; it follows then that we can add odd jobs here and there, call them sideline or self-service activities, without causing increases in these fixed costs. In fact, in order to determine whether we should provide our own services and supplies in a particular case, we need consider only the variable costs or our existing organization, the variable costs of the added activity and, in cases where new equipment and new permanent personnel are required, certain added fixed costs. - ~ u the t bulk of the fixkd costs can be ignored since they will not be affected by the attachment of the additional operation. In many cases when the addition of a new activity is being considered, the management may go so far as to exclude overhead costs altogether in the computation of the costs to be added. They reason that addition of new activity should not relieve the old activities of any overhead costs . Under the circumstances of this kind of cost calculation few vendor bids may hope to be successful, since by the self-service activity not only are the middlemen's profits and the distribution costs eliminated, but also the outside producer's profits, and even, in a sense, the producer's fixed costs. In fact, the situation practically offers a bonanza for the manufacturer. Tile added activities appear to be real bargains. We are all aware of the advertising slozan, Direct from the factory to you, but here we are able to go one step farther, in effect bringing the factory right into the home. In some cases the opportunity for cost saving is so obvious that the self-service activity is allowed to develop, or is taken over in toto, without any preliminary, formal cost studies. But in other cases the margin of saving may not be so obvious, and the cost accountant may prepare detailed cost studies. In these, if he follows the more orthodox theory, his report will be based on the estimated incremental costs, rather than the total costs: of the added activity. Creep Factors It was noted above that minor side activities tend in some cases to edge into the operations of a business firm where no special thought has been given to their short-run or long-run effects upon costs and efficiency It is also true, however, that such activities are frequently added by positive action on the basis of cost studies. Attention is directed to the proposed e:rclusion of fixed costs in the decision-making process. Certain observations with respect to this exclusion appear to be in order.

First, if the company is in a position to make permanent additions to its side activities without adding to its fixed costs, something must be out of order. Fixed costs reflect capacity to operate, and they appear throughout the entire business organization. Evidently if the fixed costs can be ignored in such a calculation, the company is overequipped and overstaffed for its regular work. Second, although it is probably impossible to have a condition of absolute balance of staff and equipment throughout the organization, the situation would be rare in which the added activity can be imposed upon of the company without in any way impinging on the below-capacity~e~ments the fully active segments. Third, equipment to some extent, and human beings to a considerable extent, are capable of being pressed beyond capacity limits for periods of time, but beyond these time limits something must be done to relieve them. Finally, if idle capacity does temporarily exist throughout the company, the addition of extracurricular activLties may so pre-empt that available time that it will be difficult to re-establish full-time regular operations when business conditions come bacl; to normal. All of this means that the fixed costs simply cannot be ignored in making the produce-or-purchase decision, unless one is to be satisfied X t h a very short sighted analysis. Fixed costs commensurate with the added activity will inevitably "creep" into the total cost picture, because even though there may be no immediate addition to the fixed costs, the added activity will encroach upon the available capacity. and sooner or later this will lead to an actual, though unanticipated and perhaps unrecognized, increase in fixed costs. The creep effect upon fixed costs can de.:elop in three general ways. First, if the added activity is allowed to get out of hand in its srowth it is otvious that more building space, more equipment, and more salaried personnel must eventually be added. This will be true even though the regular activity of the enterprise is maint~~ined at a fairly fixed level. The question then is, would we have added this activity had we anticipated the fixed cost addition? Second, even if the added activity is kept at a moderate level, when . the main activity is increased fixed-cost increases will again be encountered. Thus, suppose a dozen men and some equipment are added in order that the company can repair its own transportation equipment. This may lead to no immediate addition of employees in the personnel department, the accountin2 department, or in the other administrative sezments of the company; however, the later addition of one person to regular activities can bring into operation a chain of reactions in the form of salaried employee increases, salary increases, and fixed asset additions. The probabilities are that no one will recognize that the factor which really caused the fixed cost increases was the apparentlb. bargain-price addition of the repair operations sometime earlier.

Finally, if the added activity is either kept level, or increased, it will be all the more difficult to cut down on fixed costs should subsequent reductions of the regular operations be necessary. The Effects of Creep The principal aim in the section just concluded was to point out that the Cgclusion of fixed costs in the contemplation of a produce-versus-purchase _decision constitutes a dangerously shortsighted treatment of the problem; that a full quote of fixed costs will almost inevitably creep into the picture regardless of the subsequent activity trends of the regular and added operations . What might be called a side effect of creep, although it is actually a direct-evidence of creep, is a tendency for the company to compensate unconsciously for overloads resulting from piecemeal additions of "bargain" activities. If, for example, an officer is hired to perform an administrative task under a particular set of conditions, and if then one by one a number of minor, peripheral activities are taken on by the company, the accumulation of these activities may more and more i n f r i n ~ eupon the officer's time until through sheer necessity he is forced drastically to neglect his primary responsibilities. Although no poll of managements has been taken on this point, it is suspected that they are not immune from creep, and one may well wonder if business efficiency and competitive vigor is not often impaired through the accumulation of these barnacles which appear to be bargain activities; in other words, activities which apparently do not add to the fixed costs. Arguments Against Bargain Activities A - this point it may be well, again, to make clear just what sort of activity is being examined. This article does not pretend to weigh the wisdom of a decision to produce rather' than purchase where the decision rests primarily (1) upon a question of public relations, or (2) on the basLs of guaranteeing adequate supply when needed, or (3) on safeguarding quality, or ( 4 ) even decisions to produce rather than purchase during periods of depressed business conditions where tlle aim is to keep the working-force intact and to minimize idle capacity losses. Also it is recognized that new lines of production may properly be undertaken, and old ones dropped, in order to keep pace with changing market conditions. Rather, this is an appraisal of the wisdom of adding an activity, formerly provided by an . . outsider, on the basis of cost studies which^ appear to justify the-added activity on the ground that fixed costs can be ignored. The theme of this article is that a major danger in the addition of bargain activities is the creep danger. And this danger is likely to be overlooked in the case of any added activity, whether or not cost saving is the prime motide. In fact it is all the more likely to be overlooked where factors other than cost savings guide the decision. Another type of danger lies in the fact that the company is not a specialist in the added activity, and that after it has become tied to it, with added personnel and equipment, the discontinued vendor may through research develop cost a n d ~ n l c spricp reductions i~hichmake the decision to

produce completely untenable when looked upon with hindsight. Then it may be too late. Reversion to the purchase status is then blocked by prospective sacrifices in the disposal of equipment and the need for discharging personnel. Public relations may constitute an argument on each side of the question. For instance, an entirely unsupportable contention may be made, particularly in the smaller community, that the local manu'facturer should make himself as nearly autonomous as possible, since this means that he will thereby provide more jobs for local labor. Needless to say this is pure bunk. It is a form of disguised charity without the slightest scientific justification. From the opposite point of view, it is evident that the maintenance of good public relations may actually dictate the avoidance of certain productive activities simply because the good will of the community compels the patronizing of small business firm suppliers. From the economist's point of view, and unfortunately this argument is not likely to be very compelling with individual businessmen, it may be argued quite oonclusively that a decision to produce, when based on a partial cost compilation (that is, with fixed costs excluded), is contrary to the public economic interest. In short, it constitutes mismanagement of economic resources. Just realize that the vendor's price, against which is being matched only a partial sumnation of costs, is high enough for him to cover not only his variable costs, but also fixed costs: and a profit margin on top of it all. If the vendor's offer. under this assumption, comes within gunshot of meeting the purchaser's variable cost computation, we are doing serious injury to our economic system if we malie a decision to produce rather than buy from that vendor. Another observation is this: activities are usually annexed, with cost saving as the reason, only when they are more or less intimately related to the primary functions of the company. Actually, however, it might be more reasonable, from the standpoint of impact on total profits, to take on completely extraneous operations - - again with the assumption that the fixedcost factor need not be a matter of concern. Thus, the automobile company might just as reasonably open a public restaurant, a dance hall, or a bowling alley, confident that the present executives can soak up such minor administrative burdens as would be involved, and that thereby.they have an edge over existing recreational establishments which require a full complement of personnel. Creep Avoidance As has been mentioned, earlier, some activities are added with clear recognition that no cost saving is attainable, simply because certain noncost factors are of pressinz importance. Others, the ones under consideration here, are annexed because, with fixed costs ignored, bargain rates appear to be achieved. Both kinds cause fixed cost pressures, and lead to unanticipated cost increases - - although they may not be recognized in some cases until years later. The important question is then, having brought the nature of creep into the open, what can be done to avoid it?

'

Among a number of defensive measures undoubtedly existing, four will be suggested here.

First, in the company's organization chart make notations of the number of individuals in each department or other subdivision of the company. From b h &\i ~ a these notations calculate a series of ratios which may be called responsihrt~t bility indexes. Thus, calculate the ratio of productive and non-productive a employees to foremen in each of the productive and service departments of + + W W ? 4 the plant; then, the ratio of foremen to plant manager or other personnel %~cm*rc %the level above foremen. Similarly compute such ratios of responsibility IYlh~hb through to top management, in each case usin2 as the numerator of the ratio the number of persons who report, or for whom the person reported to is responsible.

Since the number of reporting persons will fluctuate, particularly at the lower levels of the organization, as productive activity fluctuates some judgement must be exercised in establishing certain of the ratios. Whether to use average ratios or ratios to reflect capacity might be debated; however, for present purposes it would seem that the ratios should be computed on a capacity basis. If, for example, the planned description of a given supervisory job is that it shall involve responsibility for receiving and analyzing reports from five persons, or responsibility for supervising the productive activities of twenty-five persons, any contemplation of additional activities should include recognition of probably immediate as well as long-run effects on the responsibility ratios. So far as possible this c h a n ~ eshould be taken into consideration in arriving at a decision.

A second safeguard in the insurance against creep consists of the exercise of caution that the comparative statement of costs is complete and correct. The costs of purchased supplies, services, etc., are likely to be compiled fairly completely, including an allowance for freight, handling, purchasing, and other incidents of the purchase. Certainly there is no justification for excludinz; or overlooking, similar costs which will be incurred if the decision goes in favor of production rather than purchase. Interest on the additional investment should not be overlooked. If the question is one of production of component parts, the acquisition of raw materials is likely to cause a set of costs similar to those incurred in the purchasing of finished parts. A real risk is the likelihood of underestimating even the immediate costs of production.

A third factor to be considered in determining the advisability of adding a new activity is the relative merit of that particular activity as compared with alternatives. It would obviously be illogical to devote available equipment and energies to an operation which would provide a cost saving of a few hundred dollars when the same facilities, otherwise used, could accomplish savings of thousands. Even more foolish would be the variety which might interaddition of an activity of the minor cost-sa~~in;; fere with, or preclude, the later expansion of the company's main operations at a profit in excess of the expected cost-saving. Mistaken decisions of this sort constitute a principal creep danger, leading to a condition of overcrowded facilities and neglected responsibilities.
Creep, as has been emphasized, is not a short-run problem. It consists of the morf or less gradual, unrecognized, cluttering up of business activity, accompanied by a parallel deterioration of company efficiency, a building up

of fixed costs and the undermining of p r o f i ~potential. A fourth factor in the protection against creep is that of flexibility New activities which are clearly temporary, which can be added and discarded on short notice without significant disruption, are much less likely to cause future trouble than are those which are less flexible. It is pret,.y'well agreed that it is more.dif5icult to dislodge an activita,than it is to add one. For the classic object lesson on this point, consider the bureau of our federal and state governments. But, if an addition is to be made, at least as between two alternative activities which are otherwise equally attractive, the one which can later be abandoned the more easily is certainly the one to be chosen. It is therefore suggested that, among other consideration be given to the degree of permanance of any things, serious new plant, equipment, and especially, personnel, which may be required in ' undertaking an added activity. If careful analysis indicates that the proposed activity meets the test of flexibility - - that is, if it can be dropped on short notice without serious sacrifice of personnel or of investment in inventories and fixed assets - - and if the contemplated addition is purely and unquestionably for a short-run period, then a "partial costs'' schedule is appropriate. In other words, under these circumstances it is proper to prepare a schedule which is limited to the incremental costs, the costs which would be added, and to ignore prorations of existing fixed overhead items. Because of the importance of situations of this class, the point will be considered further under the next section heading.

If, on the other hand, it is contemplated that the new acti\rity may be more or less permanently attached, as where the company will take on its own full-scale printing operations, its own engineering, or toolmaking, or component parts supply, a partial costs schedule is entirely inappropriate. In fact this point is the crux of the whole situation. For purposes of makin2 the decision to add an activity which may be fairly permanent, the schedule of estimated costs of uroduction should include not onlv an exhaustive list 6f the probablc added c o s t ~ b u t aiso a compiete assignment of al_l of the --overhead charges, even including administrative overhead, which through regular cost a c c o u n ~ n i q u e are s properly prorated Sgainst any regular segment of the enterprise Add Allowance for Profit But this is not all. In addition to the full charge for prorated and added costs, an allowance should be added for profit. That is, in order to 'justify the addition of a permanent new activity on the grounds of cost savings, the best available supplier's price must be shown not only to exceed the estimated full cost of production, with no apportionable costs omitted, but it should be higher by an amount at least equal to the rate of profit which the company is able to make through its principal operation. The reasons for this fairly extreme view have been expressed earlier in this article, an?. it shduld be repeated that the requirement that full costs p111.s profht b o included is, in fact, no more than a minimum protection') against creeu., Clearly the relationship between today's costs and today's purchase prices may be only a temporary one, and it is altogether too probable that the nonspecialist producer will lag behind the specialist supplier whom he has discarded in the hope of achievinc production economies. Thus, the decision can easily turn sour in spite of all of the measures which have been suggested by way of protection

Justifiable Bargain Activities It was stated above that where the added activity is clearly intended to be temporary it is proper to base the decision on a partial list of costs. The point here is that the nonpermanence of the activity tends to insure against the creeping up of fixed costs and managerial overloads. However, the resolutions are too often forgotten, and unless positive plans are made in advance for the early abandonment of the activity, it will turn out to be a "sticky", if not permanent, activity, and the fixed costs will flow in to fill up the gaps in the cost analysis. One form of added activcty which, for example, may well be justifiable is that which can be started and stopped repeatedly to serve as fill-in work during periods of temporary lull in the principal activity of the company. Such fill-in work may even extend as long as the depression period of a business cycle, provided it can be stopped conveniently at the time of resumption of normal operations. Under such circumstances the presumption is that the regular working-force should be maintained and, from the cost point of view, t ! : e recovery of any portion of costs in excess of variable costs is preferable to their nonrecovery. One may also justify the addition of activities on a partial cost, or bargain basis, when it is evident that substantial cost reductions will be achieved after a period of experience. In fact, costs during the initial period may be so unrepresentative of the future that they may in effect be disregarded. Also, where a company is chronically operating below capacity, and has found itself absolutely unable to expand its market, there is justification for taking over certain activities of its suppliers, provided that an already unfavorable position is not further weakenedj and provided that existing fixed costs cannot be cut down to a level commensurate with existing activity. Again, however, it should be emphasized that the company should not take over "Just any old activity" in which its varFable costs will be less than the best outside price. A very careful survey of all opportunities for cost saving should be made before any is chosen. . Elimination of Creep Assuming that one has already suffered a good case of creep, what steps can be taken to cure the situation? Can we apply the same tests in deciding upon the elimination of activities that we use when consideration is being given to the addition of such activities? Are the same tests applicable in reverse? Obv;.ously a fringe activity should not be eliminated if the potential cost of acquiring the supplies, services, etc., from outsiders is so far in excess of the costs of self-service that over-all profits would thereby be diminished. But, in exploring this possibility, what costs of production should be included? It was pointed out above that perhaps the most potent defense against creep is a requirement that outside suppliers be used, in the case of any relatively permanent program, unless it can be proved that their offering prices are higher than the buyer's total costs plus a margin of profit. Does

t h i s mean t h a t a n e x i s t i n g a c t i v i t y s h o u l d b e dropped i n f a v o r o f o u t s i d e s u p p l y i f i t i s found t h a t t h e e x i s t i n g a c t i v i t y when c h a r g e d w i t h f u l l c o s t s would n o t show p r o f i t i f i t w e r e g i v e n c r e d i t f o r i t s o u t p u t a t r e g u l a r market p r i c e s ? I n g e n e r a l t h e answer would a p p e a r t o be yes, a l t h o u g h s u b j e c t t o one e x c e p t i o n . The r u l e may be e x p r e s s e d somewhat a s f o l l o w s : A company s h o u l d d i v e s t i t s e l f of any a c t i v i t y which h a s been u n d e r t a k e n b e c a u s e of i t s c o s t - s a v i n g p o t e n t i a l i f s u c h a c t i v i t y would n o t be added u n d e r t h e s u g g e s t e d I f sper u l e s f o r t h e p r e v e n t i o n of c r e e p . The o n l y e x c e p t i o n i s t h i s : c i a l i z e d machinery equipment, housing, o r o t h e r s p e c i a l i z e d f i x e d a s s e t s h a v e b e e n p u r c h a s e d , and a r e of s u c h n a t u r e t h a t t h e y h a v e no a l t e r n a t i v e f u l l u s e , t h e d e p r e c i a t i o n and o t h e r n o n - s e p a r a b l e c o s t s of s u c h a s s e t s c a n be e l i m i n a t e d from t h e c a l c u l a t i o n e x c e p t t o t h e e x t e n t t h a t t h e a s s e t s h a v e a s i g n i f i c a n t p r e s e n t m a r k e t v a l u e . I n o t h e r w o r d s , t h e c o s t of s u c h a s s e t s i s "sunk" t o t h e e x t e n t t h a t s u c h c o s t c a n n o t be r e t r i e v e d by s a l e o r t h r o u g h o t h e r employment i n t h e b u s i n e s s , t h e c o s t may be s a i d a l r e a d y y t o be i n v e s t e d i n f u t u r e p r o d u c t i o n of t h e r e l a t e d p r o d u c t , and t h e s a c r i f i c e c a n n o t , t h e r e f o r e , be a v o i d e d by t h e d i s c o n t i n u a n c e of t h e a c t i v i t y . I f , w i t h d e p r e c i a t i o n of s p e c i a l i z e d a s s e t s m o d i f i e d o r e l i m i n a t e d , i t i s found t h a t a g i v e n a c t i v i t y , when c h a r g e d w i t h a l l c o s t s u s u a l l y p r o r a t e d t o a r o u t i n e o p e r a t i o n and " l o a d e d " w i t h a p r o f i t m a r g i n , i s n o t a b l e t o . compete w i t h t h e p r i c e of comparable s e r v i c e a s o f f e r e d by o u t s i d e s u p p l i e r s , t h e a c t i v i t v s h o u l d be abandoned. The t e r m " a c t i v i t y a u d i t " might b e a d o p t e d t o d e s c r i b e a more o r l e s s c o n t i n u o u s s t u d y of t h e a n c i l l a r y a c t i v i t i e s o f t h e b u s i n e s s f i r m f o r p u r poses o f d e t e c t i n g e x i s t i n g o r p o t e n t i a l c r e e p . Summary

A b u s i n e s s f i r m , a s i t m a t u r e s , i s l i k e l y t o a c c u m u l a t e a n a r r a y of p r o d u c t i v e a c t i v i t i e s which were n e v e r c o n t e m p l a t e d when t h e company was f o u n d e d . Many o f t h e s e a c t i v i t i e s a r e added on a s e l f - s e r v i c e b a s i s a s a m a t t e r of c o n v e n i e n c e , o r t h e y a r e added d u r i n g p e r i o d s of s h o r t s u p p l y , o r t o a s s u r e r e l i a b l e q u a l i t y , and f o r o t h e r r e a s o n s ; s u c h a c t i v i t i e s may w e l l be c o n t i n u e d p r o v i d e d t h a t t h e i r f u l l c o s t s a r e a d e q u a t e l y r e c o g n i z e d and p r o v i d e d t h a t management r e a l i z e s what c o s t s a c r i f i c e s a r e b e i n g made t o a c h i e v e s u c h c o n v e n i e n c e , e t c . Many o t h e r a c t i v i t i e s , however, may h a v e been t a k e n on s o l e l y b e c a u s e of a p p a r e n t c o s t s a v i n g s , and a d d i t i o n a l a c t i v i t i e s may from t i m e t o t i m e be c o n t e m p l a t e d . A l l s u c h a c t i v i t i e s s h o u l d be s u b f r e q u e n t a c t i v i t y a u d i t s t o determine whether o r not r e a l c o s t jected t o , advantages e x i s t . Unless t h e s e a c t i v i t i e s a r e purely temporary, i d l e - t i m e #fillers, t h e i r c o n t i n u a n c e o r a d d i t i o n c a n n o t be j u s t i f i e d on t h e grounds t h a t t h e y need be c h a r g e d w i t h o n l y a p a r t of t h e l i s t of c o s t s n o r m a l l y charged t o r e g u l a r , p r i n c i p a l o p e r a t i o n s . This i s t r u e because f i x e d c o s t s commensurate w i t h t h e a c t i v i t y w i l l i n e v i t a b l y c r e e p i n t o t h e o p e r a t i n g costs structure.
E q u a l l y i m p o r t a n t , though n o t examined i n d e t a i l i n t h i s a r t i c l e , a r e t h e a d d i t i o n s of new l i n e s o f p r o d u c t s which can be d e m o n s t r a t e d t o show a p r o f i t o n l y b e c a u s e t h e y a r e c h a r g e d w i t h c o s t s on a p a r t i a l , o r i n c r e m e n t a l , b a s i s . I n c o u r s e o f t i m e t h e y t o o wi.11 c a u s e c r e e p . Added a c t i v i t i e s , , r a n z i n g a l l t h e way from minor s e k v i c e i t e m s t o t h e p r o d u c t i o n and s a l e of new p r o d u c t , l i n e s , n o t o n l y c r e a t e f i x e d c o s t s b u t a l s o t e n d t o d i s t r a c t o p e r a t i n g management from i t s p r i n c i p a l o b j e c t i v e s , and i t may be no e x a g g e r a t i o n t o s t a t e t h a t many b u s i n e s s f i r m s owe t o c r e e p no: o n l y t h e d e c l i n e i n t h e i r p r s f i t r a t e s b u t a l s o t h e i r u l t i m a t e f a i l u r e .

J.

SOME THOUGHTS ON HUMAN RELATIONS, COMMUNICATION AND ATTITUDES IN VALUE ENGINEERING ACTIVITIES.

After the analytical techniques of value engineering have identified unnecessary costs and generated value alternatives, good human relations become all important in putting the value alternatives into effect. The reason for this dependency on human relations is simple: value engineering relies on people. The matter of implementing even quite significant cost reductions becomes a human problem because, for various reasons, nearly everyone is satisfied with the status quo and most are not at all eager to change. In fact, persons who are the most able to use value engineering and introduce its benefits into specific products are often the most relucant to do so. These people normally operate according to plans and schedules based on established thinking and practice. This means that they must be won over to accept different thoughts, different types of ideas, and different technologies - all of which may at first seem to conflict with their endeavour to maintain established reputations of success in their fields. In addition, many of these people may have had prior experience with poorly conceived and incompletely developed attempts to control costs, and thus may The fact remains, be wary of future efforts in that area. however, that it is upon these people that value engineering depends. Therefore, if value engineering fails at human relations, it fails altogether. 2.6.1. Human Relations Aspects in Value Engineering. The very nature of value engineering lends itself to two distinct problem areas in human relations. First, the identification of function and selection of alternatives usually requires information from other people. Here, some common roadblocks such as negative thinking are encountered. If people do not believe that cost control measures can be readily instituted, they are not likely to provide a free exchange of information. On the other hand, nearly everyone likes to participate in a project if their contributions to a significant new development are properly encouraged. What other people think, then, is of prime importance to the success of value engineering. The second problem area in human relations is that when substantial savings are effected, the people who helped with the ;3roblem and supplied the information are sometimes "put on the spot" because they didn't initiate similar economy measures on previous projects. Conversely, if these people are the ones who receive credit for subsequent cost prevention measures, then

they are seldom hesitant to contribute to value engineering endeavours. Principles of good human relations must be understood and utilised before value engineering can be fullv effective. Some fundamental principles which can contribute to effective human relations are described below, Empathy: This is the ability of one person to put himself in another person's place; to understand the problems and pressures which burden someone else. When empathy is applied to contacts with other people, there is less chance of criticism or misunderstanding. Sincerity: If the advice of another person is sought, it is usually to obtain some special information which is needed. It does no harm to admit a little ignorance of a subject when seeking the advice of an expert. Individuality: Approach people as individuals, not as stereotypes. For example, engineers are no more completely organised and logical than are pharmacists, lawyers, or any other group. Preconceived notions of behaviour patterns is a common obstacle to communications. Flexibility: Don't be immovable. Practice the simple human skills of courtesy, patience, and understanding. These attributes can produce results that are otherwise unattainable. Everyone is an individual and everyone approaches a problem in an individual manner. Each person has his own sensitivities, based on personal capabilities and past experiences. An awareness of basic human motiviations is a particularly important and delicate phase of value engineering. 2.6.2. The Positive Approach to Human Relations. When individual personalities interact and no friction occurs. or no conflict is forthcoming from the interaction, it is usually because of good human relations. However, when the interaction results in conflict, jealousy, or a crippling form of competition, poor human relations is usually the problem. Good human relations is sought whenever people meet, regardless of purpose. Good human relations results in co-operation rather than conflict, and in harmony rather than antagonism; these are

obviously the ways in which individuals desire to intereact. Why, then, is this basic desire of man so very often thwarted? Why does poor human relations occur so frequently within industry, within commerce, or within a programme such as value engineering? To answer these questions adequately, it is necessary to briefly review some of the history and terminology of the study of human relations. The earliest known human relations policy might be expressed as, "Obey or die." Slaves performed for their masters, or they suffered punishment or death. Even the slave masters, however, recognised that the basic physical needs must be satisfied if slaves were to continue to produce. The need for food, drink, and rest, for example, could not be completely ignored or the slaves would perish. There was little essential difference in human relations between early employers of free men and that of the slave owners. While the "bosses" no longer had the power to inflict death, their policy toward employees might be expressed as, "Obey or sacrifice the wages which are your sole means of existence.t t With the advent of the Industrial Revolution, careful attention was devoted to the perfection of the machine. But attempts to develop employees were rare, "Handsttwere employed with little recognition of the fact that men, with all their individual ideas, desires, and personal feelings, were employed along with the hands. In the late 19th Century, an American engineer named Frederick W. Taylor took the first definite step toward recognition of the human element in the work situation. He pioneered a movement which spread throughout the world under the name of Scientific Management. One of ~aylor's basic assumptions was that no system or scheme of management should be considered which does not, in the long run, give satisfaction to both employers and employees; which does not make it apparent that their interests are mutual; and which does not bring about such thorough and hearty co-operation that they can pull together instead of apart. This was all well and good, but Taylor also assumed that what employees wanted from employers, above anything else, was high wages; and what employers wanted from employees was low labour costs. It is generally agreed today that this does not tell the whole story.

Managers before World War I used face-to-face techniques of human relations in the industrial organisation. Some of these techniques were good and some were bad, but, in any case, the intimacy of the organisation made it possible for the results of the manager's actions to be fed back to him reasonably soon, enabling him to modify his practices with some hope of improvement. Today, human relations practices have such far-reaching implications that by the time their effects are felt, they are too diverse to be identified precisely. Industrial managers are now confronted with the fact that a large percentage of their duties are concerned with human relations activities; that a large proportion of their job success is based on human relations. Yet, if as little were known about the power requirements, output potential, lubrication, and environmental needs of machines as is known about the operators of these machines, there would be widespread, drastic breakdowns. Operators are expected to bend and adjust to the machine and, fortunately, they usually do. In the study of human relations, words have been redefined and new words have been created to simplify the concepts which were formerly both complex and vague. In a discussion of human relations, it is necessary to understand the new terms which are used. Some of these terms are as follows: Term Human relations Definition This term includes all relationships between two or more individuals. In value engineering, it is particularly concerned with the personal relationships between a person and his associates. This broad definition encompasses such acts as teaching, directing, informing, counseling, sympathising, commending, disciplining, and all other acts of contact with associates. This means a state or feeling of want; a lack of some mental, physical, or emotional element required by the individual. This is a word with which we are all familiar, but one which has a special significance in the study of human relations. All behaviour is directed by the attempt to satisy needs, and all life is a stru gle to satisfy the needs that everyone

Need

ass.

-272-

Motivation

This is a term that is closely related to the concept of "need". Motivation is something within a person which arouses, directs, and controls actions to seek satisfaction of a need. Since all action and behaviour are attempts to satisfy needs, the direction of an individual's actions is determined by the multiple pressures of the many needs which act on him at any one time. Motivation is the total of these needs prevalent within an individual at any one time. This term implies the prevention of the satisfaction of a need. Frustration can arise from a conflict of needs, in cases where the satisfaction of one need interferes with or prohibits the satisfaction of another. Frustration can also arise when an individual is physically or mentally incapable of obtaining the means of need satisfaction. This term includes any characteristics by which one individual differs from another. The differences may be in attitude, education, age, sax, religion, interests, or in other aspects. Perhaps the most important thing is to recognise that each person varies in some degree from another person. No two individuals are exactly alike. One person may be industrious, practical, cautious, ambitious, intelligent, determined, and cool, and a second person may be industrious, practical, cautious, ambitious, intelligent, determined, and warm. These two people sound very different, yet only one descriptive word is changed.

Frustration

Individual difference

Morale

This is a group spirit of co-operation in the common effort. The key phrase here is "common effort". If morale meant simply the enjoyment of a work situation, there would be no necessary relationship to production. For example, there are offices where groups of people have a good time together and still do not get much work done. Morale is a more useful concept when it is thought of as being related to the production effort. High morale is a result of a high level of need satisfaction from the work situation.

Some of the basic physical needs have already been mentioned. These are the needs that must be satisfied if the body is to remain alive, and they are sometimes called the primary needs. There are, however, other needs which are also basic and which are equally important to the development of a co-operative, productive effort. These are social needs, and egotistical or self needs. Needs are experienced as mental, emotional, and physical feelings of discomfort. When these feelings reach sufficient intensity, they become the motivation for actions to relieve the discomfort. The need to belong, for eixample, is definitely a social need, and men are social in character. They all want to be part of one or more groups, to have the affection and friendship of others. Two ways by which people may seek to satisfy their need to belong are as follows : Acceptance by associates and management Attachment to "informal groups" of associates, such as lunch groups, riding pools, or athletic teams The need for recognition is the need to achieve importance or status within the group. Some think of this as a social need of a higher order than the need to belong. It is probably better expressed as an egotistical need. Some of the things sought by people to satisfy their need for recognition are: The opportunity to do a good job The opportunity for further career development and training The opportunity to use their best abilities, consistent with requirements

When people are unable to satisfy their needs, feelings of tension prevail, As these feelings of tension mount, the individuals may be motivated to take actions not properly suited to need satisfaction. These actions usually assume the forms of excessive aggression or withdrawal; the usual manifestation is frustration. The basic needs are common to everyobe, but they are not present to the same degree in each individual. People differ in several ways; mentally, emotionally, physically, and socially, to mention but a few. It is important to recognise individual differences because they account, to a large extent, for the actions of people. It is generally agreed that people are complex and difficult to understand. Yet, they must be understood if they are to be developed into a satisfied, co-operative, and productive work force. All behaviour - all actions of people - reflects the desire to satisfy needs. There are basic needs common to all people; thus, people are alike. Conversely, since people differ physically, mentally, emotionally, and socially, no two people are exactly alike. Despite the apparent contradictions of the last two statements, both are true, depending on the way they are seen. If it is accepted that people are alike in that they have common basic needs, then it can be seen that it is possible to develop certain techniques to deal with individuals, techniques which apply to people in general. Some proven techniques of good human relations are as follows: Exercise control Listen Explain Express appreciation Stress positives Criticise gently Consider the man as a person These human relatlons techniques are described below. a. Control requires an intimate knowledge of one's own self and the acceptance of one's self as it is. Accentuation of good or bad points is not desirable. This requires un-learning of the habit of "seeing things not as they are but as we are."

Objectivity is the most important aspect of control. The rational steps to control, or the means to eliminate bias, are as follows: (1) knowledge of existing facts, (2) recognition of facts, and (3) acceptance of the facts. The principle of "deliberate delay," or looking before leaping, is a very important aspect of control. Be hesitant to give snap judgments. The person who practices deliberate delay makes fewer mistakes than the person who makes snap judgments.

b.

Listen twice as hard and talk half as much. There are two types of listening, 11passive" listening, (i,e. when someone looks like he is listening but really is not), and "active" listening (i.e. when someone looks like he is listening and actually is listening). Passive listening is a formed habit. It is s u p ~ s e d l ya politeness or courtesy. However, better communications will result if people are honest and indicate when they are not listening. If someone wants other people to like him, he learns to listen well. Explain the problem to the other person, and make sure the explanation is clear, Preplanning and explanation go hand in hand. Express appreciation for the contribution of an associate. This is one of the most powerful tools that is available to anyone. The essence of appreciation lies in the willingness to see things through the eyes of the other fellow. The question, "HOW am I doing?" is in the minds of all people. There are no rewards quite like: (I) recognition, (2) encouragement, and (3) praise, when people have earned them. Most people will respond to such positive treatment. Stress positives to obtain needed co-operation. Positives can be very successful in getting people to do willingly what they are required to do. The three basic ego needs in all human beings should be known: (1) need for achievement, (2) need for acceptance, and (3) need for recognition. Every man wants to say: "This I have done, this I will do, this I am. 1 t Criticise gently; blunt and personal criticism undermines and destroys the vital force of incentive. Gentle and constructive criticism helps to build and bolster this force. It is power with people that counts, not power over them.

c.

d.

e.

f.

Public criticism fosters rejection; private criticism fosters growth. The purposes of criticism are: (1) to prevent a recurrence of poor behaviour, (2) to help people learn "better ways", and (3) to increase efficiency. Criticism, if used gently and constructively, can be a most effective tool to guide human behaviour. g. Consider the man as a person to enlarge his own feeling of self-worth. If a man is treated as an individual, with the assumption that he wants to do a good job, all the ingenuity which he possesses may be tapped; if he is treated as anything less, he will volunteer little assistance. Everyone thinks of himself as an individual and, indeed, he has the right to be treated as such.

These human relation skills offer only an increased probability of success in inspiring people to get the job done. A certain degree of sheer faith in human nature is also necessary to increase the probability of achievement. Since man is a rational being, he has the ability to think in a creative way, and, beyond this, to communicate his thoughts, ideas, and attitudes to others. If it were merely a question of rationality, or of intellect, there would probably be little difficulty in human relations. However, man's instincts, passions, and emotions make it difficult for him to always establish working relationships with others. All people are products not only of heredity, but also of environment. At birth, everyone is given the intellectual capacity by which he learns to adapt himself to his environment. There are, as mentioned previously, vast individual differences, Some people have extremely high I.Q1s, while others have average intellectual capabilities. However, the differences that result from these intellectual variations are not nearly as significant as those that result from differences in emotional characteristics. Nearly everyone has been raised in a highly competitive environment, one which has emphasised individual attainment. During the early and formative years people are taught that they must not be satisfied with being second best. One must always strive to become 11number one", whether it is in terms of scholastic achievement or social accomplishment. However, when people mature they find that many endeavours, particularly in work situations, involve not individual attainment or accomplishment, but a certain degree of blending or merging of interests with those of associates. In other words, people must

co-operate in order to attain many of the goals they have set for themselves. In co-operating with others, people find they must sacrifice a certain amount of their own pride, individualism, and other feelings which are apt to be offensive in attitude and manner. However, a person is not so likely to co-operate if his defences are raised in fear that he may be criticised or made to look foolish. Subconsciously, everyone is constantly on guard, lest those with whom he interacts try to deprive him of the ideals and self-concepts he has about his abilities, potential, or worth. The phenomenon of man's emotions rising to the fore, to defend the centre of his personality against threat, is a primary reason ior the existence of poor human relations. For example, when one person comes up with a good idea, another person might think, "NOW, why didn't I have that particular idea?". This thought reaction poses a threat, and it may be compounded by the What is the further thought, "He may be smarter than I am. " next step? In many cases, the original idea is scoffed at in an attempt to undermine it with such things as, "Oh well, that's nothing original ," or, "It will never work," or "That may be all right from a theoretical point of view, but it certainly isn't practical. " When this happens, people are merely protecting their own self-concept of how intelligent they are. If, through self-insight, people could make realistic appraisals of themselves, they would find that their subconscious defences are not as necessary as they thought. Soul searching can indeed be painful, and it takes a mature person to admit to himself that there are other people who are more intelligent; that he, as an individual, has certain weaknesses, whether they be in the intellectual or the emotional counterpart of his personality; that he as an individual is quite capable of becoming envious, and even hostile toward others. It is even more difficult for people to admit to themselves that they are not perfect; that to err is human and that there are others who may have much more to offer in many fields. If people can honestly accept such thinking, if they can look within themselves to determine who they are, what their goals are, and how realistic their self-concepts are, they will soon find that the ideas and attitudes of others will be much less annoying than they were before. Such ability to interact with others so as not to produce conflict, involves maturity in the fullest sense of the term,

What, then, is the role of human relations in value engineering? Value engineering fosters and encourages creative thinking to successfully solve engineering problems. One of its major elements is a series of techniques used to stimulate new ideas and to question the validity of old ones. These techniques are dependent upon free expression of any thought or any idea in a group situation. The ideas advanced by each member of the group stimulate all other group members. In short, it is a chain reaction which involves a free association of thoughts and ideas. Unfortunately, it is a natural reaction for people to be fearful that the ideas they offer may be criticised, and that they may be made to feel foolish in the eyes of others. It is because of this natural fear that there is an absolute necessity to introduce good human relations into value engineering.
2.6.3. Resistance to Change. Even those suggestions which include obvious improvements are often met with intense resistance. Research shows that any change may be resented unless intelligent planning is done in advance to help people understand their own feelings. In order to derive the benefit from value engineering proposals, some-one must plan a programme of action to apply them, When one begins to implement, he must change the established system in some way. This cange can cause the development of resistance by those whose "security" the change threatens. Such resistance results in behaviour which is intended to protect individuals from the real or imagined effects of change. If people believe a change has been made, or if they fear a potential change, it makes no difference whether or not it is true in fact. They will act as though there has been a change.

Unfortunately, there is no list of typical behaviour to describe the symptoms of resistance, which, if present, indicate that a person is dealing with this phenomenon. It is the protective function of behaviour to determine whether or not a person should resist, yet all behavioli7: whtch opposes change is not necessarily resistance. Some opposition to change may be perfectly logical and well supported by reason. Behaviour must be an attempt to protect the person against the consequences of the change in order for it to be called resistance. In value engineering work, attempts to bring about changas and to institute substantial savings may create many unintentional threats to people or groups which are affected, and resistance

may take many forms. For example, it may take the form of hostility, either openly or implied. Such hostility may be directed against the change itself, against other people, against an organisation, or against the company. Some of the most common examples of conditions which create resistance to change are as follows : a. Resistance may be encountered if the nature of a change is not made clear to the people who are affected by the change. People react negatively to incomplete information. It is usually more comfortable to know exactly where one stands. Resistance may be expected if people are "pushed" into making changes. All people like to have the opportunity to develop their own motivation instead of making changes only on the basis of orders. When it is remembered that people are able to develop their own understandings of the needs for change, and can make their own decisions about how to do it, resistance is reduced most effectively. Resistance may be expected if a change is made on personal rather than impersonal grounds; hence, requests for changes should be made in the light of departmental objectives, the rules, the present state of affairs, or some other impersonal requirement.

b.

c.

Resistance may be less likely to occur if groups participate in making decisions about how changes should be implemented, what the.changes should be like, or how people might perform in changed situations. Experiments have shown that people who participate in group decisions about the ways in which changes should be made develop much less resistance than do those who are simply called together and told about the changes. The important thing here is that when people have a chance to discuss the major factors involved in a change they have a chance to circumvent their natural fear of changes. Resistance to change is a problem which must be faced and overcome by anyone engaged in value engineering activities. It must be remembered that even though resistance results in unusual behaviour, there are basic, human reasons for such behaviour. When the exercise of good human relations is included among the value engineering techniques, and a concerted effort is made to understand why people resist change, the effects of such resistance will be greatly reduced.

2.6.4 Effective Listening. The sum total of all man's knowledge is dependent on a single factor: his ability to communicate. Keeping in mind the inevitable differences between any two human beings, the extreme importance of communications becomes very clear.
In the field of human relations, communication is of particular importance, because the practice of human relations is based on understanding, and, without communication of thoughts and ideas, there can be no real understanding. Thus, oral communication is a major factor in our lives. A person speaks; others hear him speak. But communication has occurred only if those who hear the spoken word have listened effectively. Throughout the history of mankind, listening has been the most-used medium of learning. Reading, for instance, has served as a primary tool of learning only in the last few hundred years. Yet, even during this period, more has been learned through oral communication than through any other means. The written word is slow compared with the spoken word, and this fact makes listening more and more important in this age of speed. When matters must be settled quickly in today's business world, the slow procedures of paperwork are often dropped and people reach for telephones. Yet, in our modern educational systems, major formal attention is given to teaching, reading, and writing; some attention is given to speaking, and almost none is given to listening. Research shows that, on the average, people listen at approximately a 25 per cent level of efficiency. This is a very low percentage for a society in which oral presentation carries so large a proportion of the total burden of communication. Listening is a skill. It can be improved through training and practice, just as can reading, writing, and speaking. Many colleges and some high schools offer listening instruction, and this type of instruction is increasing dail-y. Recently, a business executive decided to find out how much he was being paid for listening. In this survey a record was kept of the amount of time he spent on the telephone. He found that 70 per cent of his time was spent on the telephone and that about half of this time was spent listening. In other words, this particular executive received about 35 per cent of his salary for listening on the telephone, not to mention listening in other situations.

The University of Minnesota recently tested the listening ability of several thousand students, businessmhn, and professional people enrolled in adult education courses. The people who were tested listened to short talks by various faculty members, and were then given a carefully constructed, standard test which was designed to measure comprehension and retention of orally received material. The general conclusion reached was that the average adult-education student, immediately after having listened to someone talk, remembered about half of what he heard, regardless of how carefully he thought he had listened. One of the many benefits of good listening is the concept of learning from listening. Learning by listening is t I inside" action on the part of the listener, since the speaker, obviously, cannot learn for the listener. Learning is essentially an expansion and refinement of an individual's total thoughts, feelings, emotions, experiences, facts, and ideas which have been accumulated from experience. Learning takes ?lace when this assorted mass of information is altered, modified, rearranged, refined, or expanded. The speaker can supply some of the materials for learning, but action taken on the materials must occur inside the listener. This is why good Listening is so important to good learning. dhen a speaker knows that he has a good listener to talk to, he shares his thoughts more fully. These thoughts, in turn, make it easier for both parties to arrive at a solution when the discussion is about a problem or subject of mutual interest. Good listening is most clearly described as "non-directive" I istening, i.e. when the listener makes an effort to understand wllat is said, but refrains from giving any directions. Six points which help form the proper attitudes for good, non-directive listening are as follows: Take time to listen Re attentive Employ three kinds of short verbal reactions like a9 iimrnm", " ~ h - h u h , " or "Oh, I see." Probe for additional facts only when the talker is finished Save evaluation until later Allow the talker to fully release his ideas

Six bad listening habits which research has found are as follows:

Faking attention: This is simulated attention while listening. Often a person feels that if he looks like a listener, he satisfied all the requirements that the speaker expects of him. "~et-the-facts" listening: This is an attempt to memorise all the facts during the listening phase. This method usually produces nothing. The good-listener concentrates on his ability to grasp ideas while listening. This grasp of ideas helps the listener to remember supporting facts, and it is much more effective than attempts to remember all the facts. Avoidance of listening: This is a habit to which all people are subject. If the speaker presents something that isn't fully understood, people just don't listen. To avoid this habit, people should purposely listen to discussions of subjects that require mental effort to understand. Most people, however, simply avoid listening to subjects that require such mental effort. Premature dismissal of subjects as uninteresting: This bad habit develops when people rationalise that they do not want to listen because the subject matter is of no interest. G.K.Chesterton once said that there is no such thing as an uninteresting subject; there are only uninterested people. A planned effort to listen to all kinds of subjects is one way a person can break this habit. Criticism of delivery and physical appearance: This bad habit develops when people think that anyone who "looks like this" and "talks this way" cannot have much to say, The content of the speaker's message is always far more important than is his form of delivery. A belief should not be developed that people who wear the wrong clothes to work are not worth listening to.

Yielding easily to distractions: Noises and other distractions occur frequently, and it is easy for the listener to say to himself that the speaker is "too hard to hear." The listener then turns his thoughts to pleasant subjects oi his own. A good listener does not tolerate distractions. He either removes the distration (like shutting a window) or, if this is impossible, he mentally shuts out the distraction and turns his full attention to the speaker. One of the most important products of improved listening in business might be what is called "economy of communication." If everything was put on paper, the paperwork would pile higher and higher, and it would merely contribute to a tangle of "red tape. " This is also true in value engineering work, Value engineering requires the free oral exchange of ideas and, therefore, particular heed must be given to listening habits. Creative endeavours also involve the exchange of ideas which, in turn, require good listening. Effective listening demands the ability to see a subject the way the speaker sees it. This does not require sympathy for the speaker, but empathy, which is experiencing -with him. Listening requires active participation and imagination to see other viewpoints and to understand unfamiliar frames of reference. To ensure the most progress in value engineering, positive efforts must be made to increase listening ability. There is room in this area for improvement by all people. This effort not only pays off with many immediate benefits, but increases the stature of those individuals who strive for improvement. Good listening is one of the important factors which provide greater economy in learning, accelerated personal growth, and better human relations.

2.6.5 Dynamics of - Attitudes. Most people behave as they do because of reactions to various situations. These reactions often vary considerably, since people have different interpretations of different situations. All people react to any situation as it is seen, and they are influenced by their own attitudes and points of view. Since attitudes have an important effect on behaviour, it is well to know something about them. The ability to understand enables one person to know why others act as they do.

Attitudes are characteristics of personal reactions to particular persons or situations. Sometimes individuals have preconceived ideas which affect the ways they see a situation. Examples of such preconceptions are seen daily, Some men give unfavourable interpretations to the actions of persons they do not like. Most attitudes are affected by environment, such as the people which one associates with, and the manner in which one spends hi.s recreation time. Attitudes vary from mild opinions to strong convictions which sometimes become prejudices. Attitudes influence everything that people do. Many people consider facts from their own points of view and interpret them accordingly. What people see may depend on their attitudes as well as on the facts themselves. The most difficult situations occur when people try to see facts from the viewpoints of others. An example might be the man who is late for work. His foreman judges that late-comer from the viewpoint of a supervisor's job responsibilities. No doubt the late-comer's viewpoint is entirely different. Attitudes guide all men in the things they look for. Who wants to seek an opinion that is not consistent with his own? It just is not natural. It is more pleasant to consult with people who hold similar opinions. But this leads to the problem that some people may tend to isolate themselves from viewpoints that differ from their own. Strong attitudes may develop into mental hazards. For instance, an employee who thinks favourably of his supervisor as a person, but who dislikes the way he does his job, may look unfavourably upon all the supervisor's actions. Behaviour is usually influenced by attitude, and very often one can understand or predict behaviour when a person's attitude is known. It naturally follows that, if the attitude changes, opinions and behaviour may also change. These attitudes sometimes interfere with logical thinking. Why do some men act on the spur of the moment? It is because of attitude. The reaction in most of these cases has become a habit that gives an automatic response. For example, one may clearly reason what to do, but have trouble with how to do it. A supervisor may decide to delegate certain authority, but a.fter looking around at his men, he may not want to carry out his plan.

Men often appear to be illogical in the way they act. People who try new things and fail may be criticised because they did not follow the rules. IIowever, other people may try and succeed, and be praised for their initiative. They There are also people who talk one way and act another. ave one seL of attitudes for their own actions and another set for the actions of others. The only way to interpret this behaviour is to recognise that this attitude expressed is not the person's true attitude. In some cases, the ego predominates, and a person may act indifferently in spite of his attitude. He may avoid certain topics, certain things, or even seeing certain people. At such times he usually tries to convince himself that his action is right. Some people "lead over backwards" to allow for corrections ot unfavourable attitudes. In an attempt to overcome personal prejudices people might overlook the actions of others that normally woxld not be overlooked. Past experiences help to form the attitudes of all people. However, it is diificult to say just what e:;perience is formed by attitude. Often, attitudes tend to pe consistent with those motives which are highly influenced by experience. Past e'iperiences, some which are good and others which are indifferent, may frequently explain the varied attitudes oi people. Emotional experiences may also cause favourable or unfavourable attitudes toward a person's company, as well as toward fellow workers. For example, the members of a group that work together to get a production line back into operation when all odds are against it, might have a high regard Lor each other. '!owever, frustrating experiences result from attitudes which lead to fault finding and nonco-operation. Very often, attitudes are obtained "ready-made. I t They may come -ram someone who the individual respects, such as a group leader or a sunervisor. This is one reason why a supervisor's attitude toward his company and his work is so important. His inlluence creates attitudes. Of course, this influence may come from another direction, in which case an individual might assume the attitude 01 his group. This attitude may result from group pressure or from the need for good supervision. A person's mood or the circumstances he encounters may influence the development of an attitude toward an associate who makes a mistake.

First impressions always produce a deeper and more lasting effect on attitudes than do subsequent impressions. If the first impression of an individual is good, his actions tend to be interpreted favourably. Some attitudes are easy to change, and others are not. It must be remembered that for a long time attitudes have been strengthened by experience. New attitudes are easier to influence. An attitude associated with some strong emotional factor, such as religion or politics, is very hard to change. A person who deals with attitudes must recognise the basic sources of attitudes. Some of these sources are as follows: Attitudes are caused, and causes may be influenced. Attitudes are based on experience; new experience may bring changes. Attitudes are contagious. Everyone should try to make the job conditions of his area favourable. His actions ought to provide participation rather than resentment. Since attitude is contagious, it should be favourable toward his associates and the company, and it should be concerned with causes, new experiences, and satisfaction of motives. Most attitudes are based on emotions. Often, appeal can be made to the emotions by such acts as small favours, kindness, recognition of performance, or some other indication of friendliness. Most people react unfavourably to things they don't understand. They need a little more information and understanding of a particular situation. Often, however, people may want to justify their attitudes rather than give the real reasons for their actions. Information which is given to justify attitudes may change the reason but not the attitudes. A change in a situation may change an attitude. A person may recall his first days on the job, and remember how responsibility changed his outlook. Often, when other methods fail to change an attitude, a transfer of the individual to another job may effect a change in attitude. New job conditions may provide new experiences and satisfy motives. Discussion of a problem miqht remove misunderstandings and change an attitude. If a man gets a complaint "off his chest", he may reveal the cause of his attitude. When problems are discussed

with another person, it might be helpful to review the following items: Encourage open, friendly discussions. Always respect the confidence and sincerity behind the attitudes of others. Avoid saying, "You have the wrong attitude. t I Encourage an attitude to be understood by giving the individual an opportunity to talk about it. Inject appropriate facts and other information tactfully. Try to lead the person to the point where he will see how a different attitude would better satisfy his needs. Zveryone must decide for himself whether he can better accomplish his purpose by working on the group attitude or on individual attitudes. It may be easier to influence the attitude of the individual, since this attitude is not as strong as it might be if others were present. The decision of a group to change an attitude might be so strong that individuals would support one another in making the change. To have individual discussions with one or two of the natural leaders, before the group is approached, might reveal the "pulse" of the group. Favourable work attitudes always increase the co-operation of production efforts and reduce dissatisfaction among the participants. For these reasons it is important to know how attitudes develop and some of the ways in which they can be influenced. Experiences form attitudes, and just as with habits, newly acquired attitudes are easier to change than are ones developed over long periods of time. Persuasion, which comes either from a person of importance or a group, may be able to afford the most assistance to change an attitude. To change attitudes, it must be remembered that they are caused. Causes may be worked on if a person tries to provide new experiences and makes an effort to satisfy job motives. In addition, since most attitudes are influenced by emotions, a person can appeal to the emotions of others by using his own rriendly attitude and by encouraging discussions about the reasons for their attitudes.

TESTS

FOR

VALUE

VALUE ANALYSIS CHECK SHEET

TESTS

FOR

VALUE

The Tests for Value. In value engineering, the word "value" means the lowest cost for which a required function can be reliably performed.' As was discussed in the preceding sections, value is determined by identifying the functions to be performed, then evaluating the functions by comparison. Value Engineering has developed some additional broad guidelines by which value can, to some extent, be determined. These guidelines are called "The Tests for Value," and they are described below. a. Can it be eliminated? If the answer to this question is "Yes," then the next question is obviously, "Why don't we?" And, if we can eliminate it completely, then the problem has been solved with regard to that item, and we don't need the other tests. For example, on a study made on a naval vessel, one value engineering suggestion was submitted to eliminate vinyl tile on the deck in troop spaces, The answer to the question, "Can we do without it?" was, "Yes, but we are required to have it in the passage ways, and we may as well put it all over, That will save on maintenance, and so forth." Since the savings claimed on maintenance are somewhat intangible, that project lost out and the tile was eliminated. Does it do more than is required? Ask this question of almost any equipment item and the answer will be invariably, "Yes. If the answer is "Yes," then it costs more than it should. Most people have a bad habit of piling - on all kinds of nonessential requirements that often cost more to perform than does the function that the item was designed to perform. A brief example of this is an entertainment radio receiver on which a value engineering study was made. The receiver specification had an additional requirement for CW (continuous wave) reception, i.e. Morse code could be received. This was an additional requirement and, when it was eliminated, $31 per receiver was saved. Even more important, with the CW requirement gone, there were 300 receivers in stock that could be used, which saved a full year's purchase at $500 each, or approximately $150,000.

c.

Does it cost more than it is worth? This is a matter of personal judgment, but with the proper training and attitude towards value, there is an instinctive feeling when something costs considerably more than it is worth. Is there something better to do the job? What is meant by "better"? To some engineers, it means the finest material available. If carbon steel will do the job, use CRES. Or if the equipment has an estimated life of 5 years, try to use something with an estimated life of 10 or 20 years. This is not "better" in the value engineering sense. To the value engineer, something better-to do the job is that which just performs the required function, for the required life, at minimum cost. Many designs are too complex and too engineered for the simple function required. One good example of something better to do the job is the air-blow ballast system recommended for the Navy LPD-1. As specified, the LPD-1 must have the ability to ballast and deballast from a 21-foot draft to a 32-foot draft, so that landing craft can be taken on baord and later disembarked. The ballasting system as designed is a water pump system having four 12,500-gallon centrifugal pumps, steam-driven turbines with two sets of condensors, and other equipment. Water would be pumped through pipes from 6 to 24 inches in diameter to fill and empty the ballast tanks. Ballasting down required about 40 minutes by this method. The new system, as proposed, uses air pressure for deballasting, similar to a submarine system. The new system is simpler, lighter in weight by about 182 tons, faster (ballasts down in 14 minutes instead of 4 0 ) , takes less space, and is estimated to save $600,000 per ship. This is a good example of something better to do the job.

d.

e.

Can it be made by a less costly method? Frequently, the way a part is produced is not so much the most economical way, but the way it was originally specified. For example, it is cheaper to punch some small machine parts now because of the development of low-cost kirksite dies. Originally the economical way to produce them was to machine the parts from stock. In other cases, parts that originally had to be made from a series of dies can now be made with one punch from steel rule dies.

f.

Can a standard item be used? Too often in aerospace equipment, special knobs, screws, handles, and so forth, are designed and specified along with the equipment. This is done quite frequently in a development model and then frozen into the production model. Considerable cost is added to the equipment in this way when a standard commercial item could be used that would do a better job, be more easily obtained, and have less cost. For example, some time ago a valve handwheel was analysed from a value engineering standpoint. It was a small, smoothly machined handwheel for an oil-feed pump, and was found to cost $17.45. A standard, commercial die-cast handwheel was available at 55 cents. The commercial model was better because it had fluted spokes, which were easier to turn with an oily glove than the machined item, and this model was less expensive by $16.90 per unit.

g.

Considering the quantities used, could a less costly tooling method be used? Quite frequently, small quantities of items are required to be hand-made because tools cannot be amortized. There are many small-lot stamping companies now in business, and their charge for tooling is surprisingly The point is that it is not always necessary to have low. large quantities to prorate the cost of tooling. Does it cost more than the total of reasonable labour, overhead. material. and ~ r o f i t ? There can be considerable - -- - ~-~ discussion as to what constitutes reasonable labour, overhead, material, and profit. If it can be approximated just what is considered reasonable labour, overhead, material, and profit - and the cost of the item exceeds this figure good value is probably not being obtained.
.
-

h.

-.-

i.

Can someone else provide it at less cost, without affecting reliability? This question suggests an alternate or a new source of supply. For example, if an item is being made internally, can it be purchased from an outside firm at lower cost? If it were your money, would you refuse to buy the item because it costs too much? The proper use of this test would save more money than all the other tests together.

j.

The same caution and restraint should be used to commit the company's money as when personal money is spent. The proper and continuing use of this-test for value will guide the engineer into areas where company money is not buying good value.

Does i t s use contribute Value?

Is i t s c o d proportionate t o i t s usefulness?

Does it need all of it6 features?

Is there anythmg better for the intended use?

VALUE ANALYSIS

TESTS FOR VALUE ... .


GUIDE

..
I s anyone buying it for l e s s ?

FOR S A V I N G S . . and .SUG6ESTIONS.. .


RAYTHEON COMPANY

Courtesy of Value Engineering Services

Can a usable part be made by a


lower cost method?

Will another dependable supplier provide it for less?

Do material, reasonable labor, overhead and profit total i t s cost?

Is it made on proper toolingconsidering quantities used?

Can a standard product be found which will be usable?

VALUE ANALYGIS CHECK $HEET


"CHALLENGE THE FUNCTION" What Ia The Function? Does It Coet More Than It i e Worth? Ie %e Function Really Neceeeary? -- Ie The Coet ~ r a r ~ n r t i o n To a l The Ueefulr
.

GPECIFICATIONS Are epecificatione unrealietie 7 Doee it do m o r e than epecificatione require? Do epecificatione contain unneceeeary requirements?

DESIGN
Are requiremente justified? Doee it exceed the functional requirements? A r e all featuree neceeeary? I e there a better way to perform the function? Are tolerances unreaeonable o r too coetly to maintain? X e there something elee available that can do the job better and/or at lower coet? MATERIAL Can a leee costly material be used? I s there a better material for the job 7 MANUFACTURING METHODS AND PROCESSES Can parte o r operatione be combined, eimplified, o r eliminated? A r e any nonfunctional o r appearance only iteme required (surface finiehee. machining operations, etc, ) 7 Can any part be made by a leee coetly method (cast, forge, weld, form; etc. ) ? Will changee to finieh requiremente reduce coet? I s proper tooling being ueed (considering quantity to be made)? RELIABILITY, QUALITY, PERFORMANCE, MAINTAINABILITY Can it be made e*pier to improve reliability, quality, o r maintainability? Are quality and/or reliability higher than neceeeary to meet functional requiremente? Does it meet o r exceed performance o r environmental requiremente? A r e all inepection, teet, o r qualifying requiremente neceeeary? Can maintainability be improved? Can a change in material o r deeign reduce weight? PURCHASED ITEM Can available standard parte o r catalogued vendor parte be ueed o r adapbd at lower Can a epecialty rupplier product o r proceee elo the job better o r at leee coet? DOCUMENTATION, OTHER Do epecificafione, teat proceduree and requirements include more than i e neceeeary to meet functional requiremente? A r e procedures clear, conciee and implemented with minimum time and effort? A r e packaging and/or handling requirement r too high? Can operation o r inatallation be improved? F.S. Sherwin - h g . 28, A962 -296-

0.t