6 Important Steps to develop a well defined Procedure of Value Analysis

Lowrence D Miles of General Electric Company, who is known as the Father Of Value Analysis & Engineering has developed a well defined procedure of value analysis. It involves the following steps (Fig.17.1).

STEP-I — Specify the work:

Very often people at the top in an organisation are likely to say “this is the only method to make this item. We have tried other method but failed. The best way to taking such a situation is to be very specific and not to make a vague statement.

People at the top will be influenced by the specific proposal and it is possible that the right manufacturing process may be developed after careful examination. Hence, generalities are to be avoided because they serve only to prevent changes and protect the status quo.

STEP-II— Seek information from the most authentic source:

Information on any aspect of cost, method of manufacture, finishing, packing etc. should be obtained from the most reliable source. To get the correct information, a questionnaire should be developed. While collecting the information about the particular question, the value analyst has to ask the following questions:

(a) Does the design of product contribute to value? Is it not possible to eliminate a part or a component without reducing its use value or esteem value?

(b) Is the cost proportionate to the use value or esteem value?

(c) Are all features of the product essential?

(d) Is any better substitute available?

(e) Is it possible to reduce cost of material?

(f) Are all the labour operations necessary?

(g) Is standardisation and simplification of product possible?

(h) Is it possible that a number of products use common standard part?

STEP-III— Obtain all available costs:

Information about all available cost should be obtained. It is possible that specific method may slightly increase cost in one department but may lead to substantial reduction in cost in other departments, resulting in overall reduction of cost.

Value analysis is mainly concerned with comparing costs. Therefore, relevant costs for each function, as may be required for the analysis, should be obtained; and if costs are not readily available, these should be developed as accurately as possible.

STEP-TV— Evaluate function by comparison:

After identifying the function of an item the natural question to ask are — “How do other concerns perform the same function? What is their cost? Will the value of function be reduced by eliminating unnecessary costs?” This probe will lead to a number of alternatives which can be examined to see if any of them is likely to result in cheaper but reliable alternatives.

STEP-V— Use real creativity:

Value analysis involves a creative approach for finding out necessary costs. The human mind is capable of developing new ideas which lead to cost reduction and performance improvement. Creative thinking can be helpful in cost reduction by simplifying the existing part of item to do the same function.

STEP-VI—Discuss the specialists and take advantage of their expertise & knowledge:

Nowadays technology is advancing so rapidly that it is very difficult for engineers and other working in an organisation to keep abreast of the latest developments. It, therefore, pays to be in touch with a specialist suitable for the specific problem and get his specialised knowledge. Without such expertise knowledge, status quo will be continued and opportunity of improving value and reducing cost will be lost.