Value Analysis/ Value Engineering 1. What is value? Value is what the product/ service is worth to the customer or user.

A customer pays the assigned price for the product/ service because he considers the expected level of satisfaction derived from its use/possession worth that price. Value may be in terms of (i) functional or utility (ii) prestige in possession & (iii) exchange transactions. 2. Distinction between Cost and Value: In the manufacturing/distribution chain of industrial/consumer products, a set of costs is incurred to create a set of Values. Costs & Values bear input/output relationship. Value is dependent on what the product does, while the cost is dependent on what the product is. Cost is a measure of scarce resources used in the manufacturing process. The price of a product in the market is a measure of its perceived value in the assessment of a customer. 3. Value analysis is a systematic analysis of all factors which contribute to the cost of product or part thereof with the object of seeking possible cost reduction without compromising quality, reliability, performance, safety or any other attributes relevant to customer/user. It aims at identifying the sources of hidden unnecessary cost for the purpose of elimination/reduction. The objective is to optimize the cost/benefit ratio. 4. Value analysis VS Value Engineering: The techniques applied to explore cost reduction methods in current products is termed as Value analysis. The principles of cost reduction used at a pre-design stage is Value Engineering. 5. Value analysis techniques (MISS): a) Modification of the production process, tools, design etc. b) Improvement in productivity c) Standardization i.e. rationalization & variety reduction for reducing inventory carrying cost. d) Substitution : Better material specification to reduce consumption rate weight/unit etc. 6. Implementation : A list of items is selectively prepared corresponding to potential cost saving. It is implemented through teamwork. Normally members representing design, purchase, production and quality control departments carry out the exercise much like a project management. The different phases are : (i) Analytical/critical examination, (ii) Brain storming session (iii) Evaluation of various alternative suggestions. (iv) Selection of the Best-Fit & (v) Follow up. Brainstorming session adopts various questions as stated below satisfactory answers in quest for cost reduction. a) Can any part/component be eliminated? b) Can any standard part be used? c) Can two/more parts be combined? d) Can specification be simplified? e) Can any better method/tool be used? f) Can risk of error be reduced? g) Can rejects be reduced? Examples a) Cable support (b) use of nylock nut to substitute lock nut & split pun etc. Use of synthetic materials instead of traditional materials in packaging, laminated papers etc.