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Description
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Remark
History of value engineering Value and value analysis Value analysis job plan Application of value analysis Organization for value analysis Value engineering Conclusion Case Study Reference
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INTRODUCTION
Value Engineering is an organized/systematic approach directed at analyzing the function of systems, equipment, facilities, services, and supplies for the purpose of achieving their essential functions at the lowest life-cycle cost consistent with required performance, reliability, quality, and safety. Society of Japanese Value Engineering defines VE as: A systematic approach to analyzing functional requirements of products or services for the purposes of achieving the essential functions at the lowest total cost. Value Engineering is an effective problem solving technique. Value engineering is essentially a process which uses function analysis, team- work and creativity to improve value. Value Engineering is not just "good engineering." It is not a suggestion program and it is not routine project or plan review. It is not typical cost reduction in that it doesn't "cheapen" the product or service, nor does it "cut corners." Value Engineering simply answers the question "what else will accomplish the purpose of the product, service, or process we are studying?". VE technique is applicable to all type of sectors. Initially, VE technique was introduced in manufacturing industries. This technique is then expanded to all type of business or economic sector, which includes construction, service, government, agriculture, education and healthcare.
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This means that if you feel that you have your moneys worth, then you have received 100 per cent value. Which indicates that Value has a subjective aspect, for what is good value for one person need not necessarily be so far another. In general, if for any function or a product or a service, you feel you are paying too much, or it costs you more than you think it should, there is scope for improving its value into it. This leads us on to another useful way of looking at value. Value is the least cost that can accomplish reliably a function or a service. This implies that in achieving reduced cost, the quality and performance of the item are maintained. It follows, therefore, that value analysis is a technique which builds Value into an item. Value can also be defined as that combination of quality, efficiency price, and service which ensures the ultimate economy and satisfaction of the purchaser. Value Analysis can be understood as a technique which helps everyone to determine this combination. It can be seen, therefore, that several components make up Value. There is value arising from the function or end use of an item, and from its ability to perform a useful function reliable. There is the subjective aspect of value in terms of esteem or prestige value or artistic value; for example, the extra chrome and styling used to sell automobiles, or the neck-tie or diamond ring you may wear. Again, there is the cost value made up of the material and labour costs, overheads and any other costs incurred in producing the item. However, in the popular mind, this is closely associated with esteem value, as there is a mistaken belief that because something costs more it is worth more. Finally, there is the resale or exchange value which may be taken as the ability to part with money for possessing a particular product. In addition we have place value with regard to the usefulness of a product at a particular place.
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1) SELECTION & ORIENTATION - to select those problems areas where a potential for net higher Savings is expected - use the common paretos ABC analysis - general scope, restrictions and aims of the study is defined 2) ANALYSIS - to examine the data at a coordinated syndicate meeting - to appoint a secretary to record the minutes - to apply the Tests for Value - to propose further actions
3) RECORDING IDEAS
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- the secretary writes clearly the minutes of the analysis meeting and circulates them to syndicate members - it includes the agenda for the next meeting 4) SPECULATION - to hold additional syndicate meetings in order to discuss the ideas analysed and any new information obtained. - to speculate upon practical measures for reducing costs and increasing value. 5) INVESTIGATION - to investigate suggestions for reducing costs and to make them practical and acceptable - to obtain definite prices and costs in order to estimate savings accurately.
6) RECOMMENDATION - recommended practical savings to management for implementing - to present the recommendations as a comprehensive report - to appoint a member to act as an implementation consultant. 7) IMPLEMENTATION - to decide on future plans for the company for which the authority of the management is needed - to implement the recommendations acceptable to the management.
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1. Capital goods plant, equipment, machinery, tools and appliances; 2. Raw and semi-processed material, including fuel; 3. Sub-contracted parts, components, sub-assemblies, etc; 4. Purchased parts, components, sub-assemblies, etc., 5. Maintenance, repairs, and operational items; 6. Finishing items such as paints, oils, varnishes, etc. 7. Packing materials and packaging; 8. Printing and Stationery items; 9. Miscellaneous items of regular consumptions; 10. Power, water supply, compressed air, steam and other utilities (services) 11. Materials handling and transportation costs. As mentioned earlier, items where the saving can be substantial should obviously be taken up first. Also, items which are imported, or difficult to obtain, and monopoly items, should receive high priority. However, even if no economy can be effected immediately by Value Analysis on any particular item, then usefulness of the technique should not be forgotten altogether. The item should be taken up again for value analysis after six months or a year, the period being dictated by the findings of the investigation. New ideas may come to your mind at some other time. Also, it should be noted that the conditions in the market keep on changing fast, and new
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materials, new suppliers, and new processes come into existence rapidly as a result of phenomenal technological progress taking place at present. A frequent and systematic review of the items already value analyzed, with advantage, may result in further economies.
VALUE ENGINEERING
Value engineering is the term applied to value analysis done the design and prototype stage of a product. The potentials of saving are a more in case value analysis is done at design stage. Other advantages is that any changes at this stage are less costly than to effect the same at a latter stage, when the production is in full swing. There are a few limitations however on value engineering work. At the design and proto-type stage, the time is rather
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short since a company wants to put a new product in the market before any of its competitors can set in and value engineering will have a very short time to apply their techniques. Evaluation of the value at this stage becomes difficult in absence of any customer reaction and opinion.
CONCLUSION
Value analysis is a technique with immense possibilities, and systematically employed, it can achieve great economies and increased efficiency. Although good results have been obtained in several individual cases in some industries, only a large scale and systematic application of this technique in all industries, and in defence production, can result in substantial economies on a national scale. This valuable technique, if systematically employed, promises rich dividends, and, among other things, enables greater use of indigenous raw materials and equipment by import substitution. It is, therefore, of special significance to a developing country like India which has adopted a programme of rapid industrialization in the face of paucity of foreign exchange and other handicaps.
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CASE STUDY
In this paper we have considered a medical instrument manufacturing company, Aadarsh Instruments, located in Ambala, for analysis which runs export business of medical microscope. This firm is producing different types of microscopes which they export to various countries around the globe. All of the products manufactured here are conforming to the international standards. It is an ISO certified company. One of their model SL250 have a component named Focus Adjustment Knob for Slit Lamp in microscope. This microscope has found application in the field of eye inspection. Value Engineering is applied to the Focus Adjustment Knob. The steps used for this purpose are as follows:1. Product selection plan 2. Gather information of product 3. Functional analysis 4. Creativity Worksheet 5. Evaluation sheet 6. Cost analysis 7. Result Steps followed during the analysis are given below: 1. Plan for Product Selection Product selected is Focus Adjustment Knob for Slit Lamp in microscope which is used to adjust the focus of lens for magnification purpose. The present specifications of this part and its material used are costlier than the average industry cost. Value of this product can be increased by maintaining its functions and reducing its cost or keeping the cost constant and increasing the functionality of the product.
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2. Obtain Product Information Product specifications are: i. Material Aluminum Bronze Alloy ii. Diameter of base plate 30 mm iii. Thickness of plate--3 mm iv. Cost of the scrap is Rs 293/Kg v. Pieces Produced annually 8000 vi. Process used C.N.C. indexing milling vii. Cycle time2.5 min viii. Anodizing2/min ix. Material cost65 gm x. Total Present cost Rs 29.99/piece 3. Functional Analysis of Present Functions TABLE I : FUNCTIONAL ANALYSIS Name Basic Basic Secondary Secondary Function Function Function Function Verb Noun Verb Noun Focus Index Lens Fix Gear tooth Adjustment Knob 4. Develop Alternate Design Or Methods During brainstorming these ideas were listed:i. Change design ii. Change material iii. Use plastic iv. Make it lighter v. Change the production process vi. Use nylon indexing unit 5. Evaluation Phase For judging the ideas, the following designs were considered: A. Function B. Cost C. Maintainability
Prin. L. N. Welingkar Institute of Management Development & Research (MMM VI Sem)
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D. Quality E. Space Each of these design criteria was given a weight age factor. This was carried out as follows: each of the above criteria was compared with others, and depending on their relative importance, three categories were formed, viz. major, medium, and minor. A score of 3, 2 and 1 respectively was assigned to each of the levels. The details are as given in the Table II: TABLE II : WEIGHTAGE ANALYSIS Weight age analysis Points Major difference 3 Medium difference 2 Minor differences 1 TABLE III : PAIRED COMPARISON C D A2 A1 B2 B1 C C2 D
B B2 B
E A3 B3 D2 D3 E
SCORE 6 8 2 5 0
From the above paired comparison we get the following result TABLE IV : ATTRIBUTES Symbol Attribute Score A Function 6 B Cost 8 C Maintainability 2 D Quality 5 E Space 0 The above ideas were discussed and the best feasible ideas were separated which were:a. Change the material to steel b. Use Nylon unit c. Use existing material
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IDEAS a b c
TABLE V : FEASIBILITY RANKING B C D E 8 2 5 1 2/16 1/2 1/5 3/3 2/16 2/4 2/10 1/1 2/16 2/4 1/5 2/2
SCORE 32 49 33
RANK III I II
6. Cost Analysis Item Anodizing Focus Adjustment Knob Nylon index unit Part Eliminated Difference /part TABLE VI : COST EVALUATION Material Machining cost (`) cost (`) cost (`) Total 19.04 7.30 3.65 11.60 9.44 6.80 12.72 6 cost/Pc (`) 29.99 18.40 11.59
7. Result
The total savings after the implementation of value engineering are given below: Cost before analysis ` 29.99/Total Cost of nylon knob ` 18.40/Saving per product ` 11.59/Percentage saving per product 38.64 % Annual Demand of the product 8000 Total Annual Saving ` 92,720/Value Improvement - 62.98 %
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CONCLUSION
Value engineering methodology is a powerful tool for resolving system failures and designing improvements in performance of any process, product, service or organization. Its application results in significant improvements to quality and reliability by focusing the teams attention on the functions that are contributing most to the problems, and the most likely causes of these problems. Then, the team develops ways to improve these root causes of the problems, and ways to fix the problems that have occurred along with means to prevent their reoccurrence. In the Case Study discussed above we have used the concept of Value Engineering to analysis the focus adjustment knob of microscope and with the critical evaluation of it we were able to increase the value of the product by substituting another material in place of the one that is currently in use. The various advantages have been observed in terms of cost reduction, increase in overall production, reduction in manpower, and reduction in scrap. In future we can alter the design of the product and integrate this technique with various other prevailing industrial engineering tools which will bring down the cost by substantial margin and thereby increasing the value of the product.
REFERENCES 1) Industrial Engineering & Production Management Martand Telsang 2) iaeng.org/publication/WCECS2012/WCECS2012_pp1330-1333 3) SAVE International 4) Value Engineering Manual, January 1, 2004
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