Value analysis is a set of techniques, knowledge, and skills used to improve the value of a product by eliminating unnecessary costs or improving its functions without compromising its quality, reliability, and performance. It involves understanding the components of a product and related costs.
In this article, we’ll review the benefits of value analysis, compare value analysis and value engineering, unveil several techniques, explore the steps of value analysis, and see an example.
Why is value analysis important?
The technique is valuable for businesses since it helps reduce costs and improve the quality of products. Besides, it enables a company to increase business efficiency and effectiveness of all processes involved. The approach implies breaking down operational processes into smaller components and improving or removing them to ensure the increased value of a product in the future.
Since analysis allows firms to break down their product or service into smaller components, they can evaluate their importance and performance. As a result, businesses obtain a clear picture of the components that are unnecessary and can eliminate them to save costs.
Value analysis brings several benefits for your business, so let’s review them.
Benefits of Value Analysis
As we’ve mentioned before, value analysis is crucial since it identifies possible problems and suggests improvements that should be made in your company. This process helps:
- reduce costs;
- maintain high quality;
- provide an opportunity to use new technologies;
- eliminate waste;
- encourage new ideas;
- improve brand image;
- improve design.
Now that you know some fundamentals, let’s explore this topic in more detail and make the difference between value analysis and value engineering clear.
Value analysis vs. value engineering
It’s essential to understand the difference between these two processes since they play a great role in your business. To start, let’s review value analysis.
Value analysis implies analyzing existing products and evaluating them to improve their functioning or reduce cost. A step-by-step plan helps assess different aspects of a product, such as functions, alternative components, design, and costs. Value analysis includes function analysis, during which a product is broken down into components that are reviewed later.
Value engineering appears during the development of new goods. A company uses teamwork to analyze and evaluate the product to improve its functions and reduce costs. This process is conducted before any investments in tooling, equipment, or plant are made.
Now when you know the difference, it’s time to proceed to the techniques.
Three value analysis techniques
Value analysis involves many various techniques that simplify the process. We’ve prepared the main three for you to consider.
- Be specific. Companies often try different methods and then report that none of them works. You should be specific and not make vague statements to prevent this situation. A careful manufacturing process requires accurate examination before it starts.
- Obtain data from authentic sources. Different types of data should be received from reliable sources. You can use a questionnaire to obtain accurate information on costs, methods of manufacturing, and packing. Prepare accurate and relevant questions on topics you find relevant.
- Use creativity. If you aim to find the unnecessary costs, you need to develop new ideas. By doing this, you can eliminate the previous problems and implement some valuable improvements. Besides, it enables you to discover how to simplify the existing component of a product and reduce costs.
Now it’s time to explore the steps of this process.
Five steps of value analysis
We can distinguish the five main steps of value analysis. So let’s jump in.
- Gather information. During this step, the main aim of your team is to understand the purpose of a project. Team members collect project data and concepts and try to understand the project scope. They analyze budget, risks, costs, and other issues, visit sites, and study various project documents.
- Determine and analyze the function of a project. First of all, your team identifies the primary and secondary functions of the project. Next, team members should determine value-mismatched functions to improve them.
- Generate new ideas for improvement. This step is for team members to create and develop improvement ideas. They should find alternatives so that the project could perform the same functions.
- Evaluate these ideas and develop them. Team members discuss each idea in detail and identify the costs. They review all the possible risks and choose the most relevant and suitable ideas. Once ideas that make sense are identified, it’s time to work with them. Your value engineering team develops the options and passes them back to the project team. These ideas should be thoroughly explained so that project owners and stakeholders can understand them.
- Present improvements. At this stage, the ideas are presented to stakeholders. The best salesperson is responsible for the presentation.
To understand how value analysis works, we need to proceed to an example.
Value analysis example
Let’s imagine that there’s a motor manufacturer that asks an engineer to conduct a value analysis on the motor casing and all that is required to build it.
During this analysis, an engineer discovers that there should be three different sizes of nuts and bolts and that it takes time to insert them. The specialist finds out that after a redesign of the casing, it’s necessary to use only one size of the bolt with threaded bolt holes, and nuts aren’t needed. As a result, the manufacturer can see clear savings in time and costs.
By doing a value analysis, companies can receive information about the out-of-date practices businesses use and replace them with new approaches that will bring visible results. That’s why many companies use this technique.
- This article covers the definition, phases, advantages, and disadvantages of value analysis.
- This article explains the six steps of value analysis.
- In this article, readers can find information about twelve techniques of value analysis.
Last Updated: 20.10.2021