Value Analysis: Examples

The Quality Toolbook > Value Analysis > Examples

When to use it | How to understand it | Example | How to use it | Practical vari
ations
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When to use it | How to understand it | Example | How to do it | Practical varia
tions
<-- Previous | Next -->
When to use it
â ¢ Use it when analyzing a product or process, to determine the real value
of each component.
â ¢ Use it when looking for cost savings, to determine components that may b
e optimized.
â ¢ Use it only when the item to be analyzed can be broken down into sub-com
ponents and realistic costs and values allocated to these.

Fig. 1. Using Value Analysis in problem solving

How to understand it
All commercial activities are performed with the objective of providing value of
some kind, where the value is a combination of the benefits gained from the act
ivity and the cost of achieving these benefits. In many situations, both the ben
efits and the real costs are not understood, for example where they are measured
at such a gross level that individual activities cannot be accurately determine
d. This can cause problems for projects that are aimed at improving these activi
ties, as the real value cannot be found.
Value Analysis is an approach to improving the value of an item or process by fi
rst understanding the functions of the item and their value, then by identifying
its constituent components and their associated costs. It then seeks to find im
provements to the components by either reducing their cost or increasing the val
ue of their functions.

Fig. 1. The structure of value

Functions may be broken down into a hierarchy, starting with a basic function, f
or which the customer believes they are paying, and then followed by secondary f
unctions, which support that basic function.
The purpose of functions may be aesthetic or use, and basic functions may be eit
her or both of these. For example, a coat may have a use function of 'making you
warm' and an aesthetic function of 'looking attractive'. Aesthetic and use func
tions tend to be separate, and either may be of higher value.
The product or process may be broken down into components, which can be associat
ed with the functions they support. The value of the product or process may then
be increased by improving or replacing individual components. This also applies
at the whole item being analyzed, which may be completely replaced with a more
functional or lower cost solution.
Although this is a simple-sounding technique, it can be quite difficult in pract
ice, as it requires both deep analysis of the product or process to be improved,
and also an innovative approach to finding alternatives.

Fig. 2. Asking Why and How

Example
A product manager at a company that produced nails had received several requests
from customers for a nail that could not work loose. Identifying this 'improved
nail' as a possible new product line, he decided to do a Value Analysis to help
identify costs and values.
Working with a major customer in the building industry, he first identified the
basic function and measure of an ideal nail as holding two 1cm battens together,
such that when the battens were twisted, the wood would break before the nails
moved.
With an engineering team, this was broken down into secondary functions, which w
ere evaluated and related to components and costs as below . During this process
, the concept of how the nail gripped the wood was discussed. They brainstormed
alternative ways of gripping wood, and an engineer, who was also an amateur fish
erman, came up with the idea of putting barbs on the nails.
The initial prototype was partially successful, but did become a little loose af
ter a period. Spiral barbs helped, and straight barbs on the top of the nail res
ulted in the nail being locked in place by the final hammer blow.
The solution was produced as a specialist nail, and sold well at twice the price
of a normal nail, more than covering the increased production costs.

Fig. 1. Example Value Analysis

Other examples
â ¢ An engineer in a motor manufacturer does a Value Analysis on the motor c
asing and the process used to build it. He finds three different sizes of nuts a
nd bolts used, with significant time taken to insert and tighten them. A redesig
n of the casing changes this to use one size of bolt with threaded bolt holes, w
hich removes the need for nuts. The result is a savings in both material costs a
nd assembly time.
â ¢ A marketing manager for a washing-up liquid analyzed the liquid bottle a
nd its use. She discovered that the bottle became slippery when liquid dribbled
down the side of the bottle. The shape of the bottle and the spout were both cha
nged to improve grip and reduce dribble. Without any additional advertising, sal
es of the product subsequently went up by 2%.
â ¢ A receptionist, aiming to improve the process of welcoming guests, first
determines the basic functions of relaxing guests and finding the objective of
their visit. She then identifies her process for achieving these and brainstorms
possible improvements. By experimenting with several approaches over two months
, she finds the manner and questioning technique that best achieves her objectiv
e.
The Quality Toolbook > Value Analysis > How to do it
When to use it | How to understand it | Example | How to do it | Practical varia
tions
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How to do it
1. Identify what is to be analyzed. This will typically be one of:
o A manufactured item. This can be anything from a screw to an engine, alt
hough a more complex item is likely to result in a more complex and time-consumi
ng analysis.
o A process or service. Again, all levels can be analyzed, from a hand ass
embly process to a complete customer service organization.
2. Identify and prioritize the customers of the item from step 1. This may
include external customers, such as 'auto suppliers' and internal customers, suc
h as 'finance manager'.

Note that external customers are usually more important than internal customers,
and that seniority does not necessarily equate with priority. Ask, 'What do the
y do with it?', 'What would they do without it?'. Thus a customer's preference f
or a product feature should be more important than the opinion of a senior desig
ner.
3. Identify the basic functions of the item or process from step 1. Basic f
unctions are those things for which the customer believes they are paying. There
are usually only one or two basic functions per product or service.
The best way of finding basic functions is usually to ask the customer. Another
possible approach is to observe them in action. Consulting specifications may be
appropriate, but is based on the possibly false assumption that these are corre
ct.
Find the real basic functions by repeatedly asking 'Why?' the item is required u
ntil answers can no longer be found. For example, the function of a teenager's d
ress might be 'to look good'. Asking 'Why?' results in the more basic function o
f 'attract attention of opposite sex'.
Differentiate between aesthetic functions and use functions. Aesthetic functions
are associated with feelings, but serve no other practical purpose, for example
'elegant shape' or 'pleasant service manner'. Use functions describe how the it
em is used, for example 'cutting paper' or 'smoothing wood'. Basic functions may
be aesthetic or use functions.
Describe functions with verb-noun combinations, such as 'cut' and 'wire' in a cl
ear phrase or sentence. Where possible include information that will enable it t
o be measured, as this will allow improvements to be identified. For example, 'h
and-cut mild steel wire of at least 4mm diameter'.
4. Identify the secondary functions of the item by finding other functions
that support the basic functions from step 2.
This may be helped by asking 'How?'. For example, where the basic function of a
bottle is to 'contain liquid', a secondary function may be to 'be strong', as th
is will contribute towards the bottle continuing to contain the liquid, even if
it is dropped.
5. Determine the importance, or 'value' of each function to the customers i
dentified in step 1. This will help to prioritize improvements. Assigning a numb
er to this will enable the relative value of different functions to be highlight
ed. Alternatively a simple rating scale may be used, such as from 'Very Low' to
'Very High'.
This is not always easy and a degree of estimation is often required. The task c
an be eased by comparing functions with one another or with value figures that h
ave been used in the past. If possible, use actual customer preferences.
6. Break down the item into its constituent components, for example by usin
g a Tree Diagram for a manufactured item or a Flowchart for a process.
A manufactured item may benefit from analysis of both materials and process, as
this will make costing in step 7 easier, and may also help with determining wher
e value is and is not being added.
For complex systems, limit the depth to which it is broken down in order to keep
the overall analysis to a manageable level. If necessary, separate Value Analys
es may be performed on individual sub-components.
7. Measure the cost of each component, as accurately as possible. This may
include direct material costs, time costs, labor costs and other resource costs.
If they can be measured, additional costs may be included, such as the cost of
inspection, testing, scrap, lighting, heating, etc.
Costs and components may be matched by using a table, such as below.
Fig. 1. Components and Costs
8. Compare the components with the functions, determining which component c
ontributes to which functions. This is often a one-to-one relationship but may a
lso be one-to-many or many-to-many, for example where a book entertains as well
as educates.
Matching functions and components may be done with a table, as in Fig. 2.

Fig. 2. Function and Value

9. Identify components that may be improved either to give the same functio
nality at lower cost or to increase the contribution towards functions. Approach
es include:
o Look for redundant components that do not contribute to any function and
which may be eliminated.
o Look for unsatisfied functions that have no components satisfying them.
o Identify high cost components, especially those that satisfy low value f
unctions.
o Identify high value functions and identify components that contribute to
wards them.
10. Use Brainstorming to create a list of possible improvements to the compo
nents identified in step 9.
Also look for different ways of satisfying the basic functions, even if it means
rejecting the current approach and starting again with a clean drawing board. T
his requires the product or process to be 'mentally destroyed' and then rebuilt
anew.
It may also be worthwhile to investigate new technologies that can be used to in
crease the value of functions or reduce the cost of components.
11. Evaluate the ideas from step 10 to determine their cost and select those
that can be practically implemented. This may include work to develop and refin
e promising ideas into practical and optimum solutions.

12. Implement selected ideas and measure the costs and values to identify th
e real benefits gained.