Value Management Delivers Increased Value and
Profits
for Business and Industry
Enhancing Value in
Business and Industry
The value
methodology originated in the U.S. industrial community in the 1940s
as a way to identify alternatives to materials that were in short
supply due to the rationing during World War II. Though the value
methodology was introduced by one man working for one company, in
the late 20th century the methodology has grown so that it is now
used worldwide and is currently applied to all kinds of intellectual
and physical efforts in business and industry. VM has consistently
yielded a large return on investment while maintaining necessary
quality and performance requirements of the product, process or
facility studied. Billions of dollars have been saved with VM.
VM
is embraced by a wide spectrum of businesses and industries, from
retail merchandising to banking, from electric utility companies to
automobile manufacturers, from aircraft companies to electronics
firms, from appliance manufacturers to pharmaceutical companies.
Benefits realized by companies who use VM far exceed the cost of
implementing VM programs; savings in time and cost contribute to
improving competitive position in the marketplace and to increase
profitability for stockholders. Most companies find that savings of
$20 for each $1 invested are common.
VM
has been traditionally applied as a problem-solving tool to reduce
unnecessary costs while improving performance. VM also can be used
to set goals and performance plans at the start of a new project.
Rather than wait for problems to develop in poorly defined projects,
VM is used to identify the owner’s true functional requirements so
the project begins with a clarity of purpose. VM is used in
conjunction with target costing strategies.
The
value methodology has proven to be a creative, systematic,
function-oriented approach that enhances decision making, improves
products, processes and facilities, and increases customer
satisfaction.
Initiation
of your VM program requires drafting and approving a VM policy that
includes statements of objectives, leadership, staffing, training
and -- most importantly -- management support. KIRK Associates, LLC
can provide you with the resources to establish and maintain a VM
program in your organization.
The
Value Methodology
The
value methodology (also called value engineering, value analysis and
value management) is a powerful tool for solving problems and
improving value in terms of cost, quality and performance for any
item or activity in business and industry.
-
Systematic
-
Function oriented
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Multidiscipline team analysis
-
Customer priority driven
-
Analyzes prevailing solutions
-
Explores alternatives
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Cost-effective innovations
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Savings range from 5% – 100%
-
20-to-1 average return on investment
Value
methodology techniques can be effectively applied to any project,
process, procedure or service for improved competitive position and
profitability.
Benefits of the Value Methodology
Value in
Business and Industry will:
-
Clearly
define project scope and budget
-
Increase
income and profit
-
Use
resources more effectively
-
Reduce
product development costs and lead-time
-
Reduce
project construction costs
-
Reduce
operation and maintenance costs
-
Simplify
procedures and reduce paperwork
-
Streamline
processes
-
Develop
innovative solutions
-
Reduce waste
-
Increase
collaboration among stockholders
-
Increase
procurement efficiency
-
Improve
quality
-
Reduce mass
-
Implement
lean initiatives
Analysis
of Functions
The VM job
plan organizes the value study into six phases:
-
Information:
understand the project
-
Function
Analysis: define functional requirements
-
Creative:
search for new ways to meet needs
-
Evaluative:
rank ideas against specific criteria
-
Development:
expand ideas into alternatives
-
Presentation:
report findings of team to owner
Each phase
is designed to prepare the VM team to be creative with ideas and to
develop those ideas into viable alternatives for consideration by
the owner and customer. The implementation phase must follow the VM
study to assure that the best alternatives are used and cost impacts
are recorded.
While
every business and industry must use VM to meet that industry’s
unique requirements, the basic goal is to improve value, as defined
by the simple expression:
VALUE = FUNCTION/COST
The
importance of this definition is that value can be improved in three
ways:
VM
practitioners, such as KIRK Associates, strive to always maintain or
increase functionality; reducing functionality while reducing cost
is not acceptable. Profitability can be improved by all three ways
of improving value, but the intended use of the value methodology is
to improve the performance of the product, process, facility, system
or service at lower cost, thus helping companies realize a higher
profit.
Value Methodology
Training
The
educational requirements leading to certification by SAVE
International consist of two training courses. The first is Module I
(40 hours) -- the basic workshop. It provides the primary value
technology training and practice of the individual skills, using
live projects. The second is Module II (24 hours) -- the advanced
seminar. It continues the technical education beyond the basic
workshop and presents new material concerning the value methodology.
Learn More About the
Value Methodology
SAVE
International is a professional society dedicated to the advancement
of the value methodology through education. Its goal is to generate
understanding of the principles, methods and concepts of the value
methodology technology.
SAVE
International offers:
-
International membership from 35 countries
-
Chapter membership
-
Value methodology training
-
SAVE International bookstore (publications, videos)
-
Value
World journal
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Interactions monthly newsletter
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Annual conference
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Certification of value practitioners
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SAVE International consultants
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Web site value methodology forum
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Local chapter meetings and seminars
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Society Web site: http://www.value-eng.com
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"Lean manufacturing is an important foundation for
waste elimination, but
there are other levels of lean manufacturing where you
can uncover huge cost savings. Value analysis/value engineering is one
example."
--Joseph C. Day; president and CEO; Freudenberg-NOK, from
the book Becoming Lean: Inside
Stories of U.S. Manufacturers;
edited by Jeffrey K. Linker; Productivity Press, 1997
"FNGP uses the value methodology to provide superior
value to our
customers. We use VA for current products as part of our
continuous improvement process (GROWTTH®) and VE on new products as
part of our product
development process (APQP). Since 1995, we have conducted
over 50 formal workshops yielding savings opportunities averaging 14%
while improving
product performance."
--Drew
Algase,CVS; Manager, corporate value engineering,
Freudenberg-NOK
"DuPont's senior management is committed to VE, and
so we've formally used VE on over 330 projects for improving our new
and existing chemical processes. VE has saved between 10% - 12% of
the investment for all these projects combined, and has elevated us
to best-in-class for project cost as measured in industry
benchmarking analyses."
-- Michael
Cook, Ph.D., CVS; leader of value engineering, the DuPont Co.
"The first documented use of the value methodology
in General Motors was in
1963. It is obvious that this technique has stood the
test of time, but why not? One cannot argue that providing customer value and
saving hundreds of millions of dollars at the same time is extremely
worthwhile."
--Jim Rains, CVS; senior manufacturing and value
engineer, General Motors Corp.
“The institution of value engineering methodology at
TRW VSSI has resulted in
a significant competitive advantage. We have a dedicated
and focused VE group that is responsible for all phases of the job plan
-- from idea generation to product implementation.”
--Dave
Schleicher; global VE manager for seat belt
systems, TRW Automotive
"Value methodology allows Applied Materials to offer
high performance and cost-effective technology in the total solution
commitment to our worldwide customers in semiconductor
industries."
--Deepak
Burman, VE manager, Applied Materials
"Based
on results of our automotive best practice forum, which is a survey
of leading automotive suppliers and vehicle manufacturers (OEMs),
both suppliers and OEMs predict that VE used during product
development will be the most cost-effective effort during the next
five years. Arthur Andersen definitely sees that the use of VE as
part of an overall target-costing process will be critical to
suppliers to remain profitable under the pricing pressure and
year-to-year cost reduction required by the OEMs. If suppliers wait
until production to begin cost reduction, they will not be able to
achieve the required cost targets."
--Eoin M. Comerford; manager, automotive
team; Arthur Andersen LLP
"The
value analysis process has been integrated into our
time-to-market-process, Xerox's product delivery process. VA
enables Xerox product programs to meet or beat their customer
requirements at the lowest total life cycle cost, and optimizes
organizational/process productivity and effectiveness."
--Harry Rosenfeld; Manager of Value Analysis;
Xerox Corp.
"VM offers great potential for the
manufacturing industry through this powerful function oriented team problem solving/ decision making
approach"
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