11 Common Value Analysis Techniques by Lawrence D. Miles

Lawrence D. Miles of the General Electric Company, who is known as the father of value analysis, had developed a number of techniques after considerable work in this field.

The skillful application of these techniques is helpful in the identification of unnecessary costs and exploring channels of improved performance. These techniques are as follows:

1. Work in Specifics:

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 methods but failed.” The best way of tackling 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, avoid generalities because they serve only to prevent changes and protect the status quo.

2. 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 information, the particular questions that the value analyst is to ask are:

(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) It is 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 product use common standard parts?

3. 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.

4. Evaluate Function by Comparison:

After identifying the function of an item, the natural questions 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 to lead a number of alternatives which can be examined to see if any of them is likely to result in a cheaper but reliable alternative.

5. 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.

6. Discussion with Specialists and take Advantage of their Expertise & Knowledge:

Nowadays technology is advancing so rapidly that it is almost not possible for, engineers and others working in an organisation to keep abreast of the latest developments. It, therefore, pays to be in touch with specialists 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.

7. Consult Your Supplier for New Ideas:

As your suppliers are dealing with many others who are in the same line of business, their ideas and suggestions will be of great help to you.

8. The value analyst should always ask him this question, “would he spend his money in this way”? Such an approach will be helpful in thinking of alternatives that are less costly.

9. Identifying and overcome all road blocks:

Road blocks are the difficulties created by one’s colleagues and others who resist change and feel secure in the existing ways. The resistance to change to new methods and techniques is principally from ignorance and it can be overcome with patience, tactfully and carefully explaining the proposed method or technique to the individual concerned who is opposed to change.

10. Get the maximum cooperation from your colleagues in other departments with whom you have to deal. The value analyst should be polite and friendly with every one so that he may get the fullest cooperation.

11. Refine ideas till only one acceptable alternative remains.

Submitted by : Dr. Gita, Category : Knowledge