Chapter 6: Value Engineering

Transcription

1 Chapter 6: Value Engineering Assistant Prof. Abed Schokry Work Design and Industrial Ergonomics Second Semester Value Engineering Value Engineering is a systematic evaluation of all aspects of the value chain, with the objective of reducing costs while improving quality and satisfying customer needs Managers must distinguish value-added activities and costs from non-value-added activities and costs Value engineering is a systematic study of every element of cost 1

2 Value Engineering (cont.) Ensure that every element of cost fulfills a necessary function and at the lowest possible total cost Focused on the design stage Can be applied to procedures (software) and also to products (hardware) The aim is to reduce the excess cost of the design. Value Engineering Terminology: What is Value? Value can be defined as the lowest end cost at which the function can be accomplished Performance related to cost Value cannot be determined exclusively by an examination of the item/service/process being evaluated Minimum cost of the other alternatives that will perform the same function V 2

3 Value Engineering Terminology (cont.) Value-Added Costs a cost that, if eliminated, would reduce the actual or perceived value or utility (usefulness) customers obtain from using the product or service Non-Value-Added Costs a cost that, if eliminated, would not reduce the actual or perceived value or utility customers obtain from using the product or service. It is a cost the customer is unwilling to pay for Value Engineering Terminology (cont.) Cost Incurrence describes when a resource is consumed (or benefit forgone) to meet a specific objective Locked-in Costs (Designed-in Costs) are costs that have not yet been incurred but, based on decisions that have already been made, will be incurred in the future Are a key to managing costs well 3

4 Value Analysis Focuses on design improvement during production Seeks improvements leading either to a better product or a product which can be more economically produced. Value Engineering steps (Mudge, 1971) Select the problem Get information Define and evaluate functions Create solutions Evaluate solutions Recommend a solution. 4

5 Manufacturability and Value Engineering Benefits: reduced complexity of products additional standardization of products improved functional aspects of product improved job design and job safety improved maintainability of the product robust design The Development Phase Design Analysis The Value Engineering Checklist Viability Qualification testing After technological objectives have been Value engineer Design changes Yes Financial review Yes No Cancel or Redesign To production phase 5

6 Cost Reduction of a Bracket via Value Engineering Generalized Procedure for VA/VE What is it? What does it do? What does it cost? Is the change better? How much better? Why? Audit effectiveness Use experience Provide feedback Information Phase Speculation Phase Analysis Phase Decision Phase Evaluation Phase How else can the job be done? At what cost? Review with depts and suppliers Select best alternative Get approval Prepare specifications 6

7 Analysis of Each Component Can any part be eliminated without impairing the operation of the complete unit? Can the design of the part be simplified to reduce its basic cost? Can the design of the part be changed to permit the use of simplified or less costly production methods? Can less expensive but equally satisfactory materials be used in the part? Design simplifications frequently are more apparent than is possible under the original design The Value Engineering Checklist 1. Can the item be eliminated? 2. If the item is not standard, can a standard item be used? 3. If it is a standard item, does it completely fit the application, or is it a misfit? 4. Does the item have greater capacity than required? 5. Can the weight be reduced? 6. Is there a similar item in inventory that could be substituted? 7. Are closer tolerances specified than are necessary? 7

8 The Value Engineering Checklist (cont.) 8. Can you make the item less expensively in your plant? If you are making it now, can you buy it for less? 9. Can cost of packaging be reduced? 10. Are suppliers contributing suggestions to reduce cost? Concluding Remarks The design stage provides the greatest opportunity to reduce costs. 8