MP482

PRODUCT DEVELOPMENT AND

DESIGN

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 MODULE IV
• Value Engineering / Value Analysis. :
Definition. Methodology, Case studies.
• Economic analysis: Qualitative &
Quantitative.

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 Value
• Value, as defined, is the ratio of function
to cost.
• Value is the lowest price you must pay to
provide a reliable function or service
• Value can therefore be manipulated by either
improving the function or reducing the cost.
• It is the cost proportionate to the function.

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 Function
• Value engineering Defines function as that
which makes a product work or sell
• It is the end result or action desired by
customer.
• Customer wants a function to be achieved
reliably ,efficiently and effectively by product
or service.

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 Cost
• Amount incurred to manufacture the product
so that it performs the intended function.

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 Types of Values
• Cost Value
– It is the cost of manufacturing a product
• Use Value
– Also called functional value
– Considers the work done, functions performed or services
rendered by the component or product
• Esteem Value
– Involves the qualities and appearance of a product which
attracts person and create a desire to possess the product.
• Exchange Value
– Product is said to have exchange value if the same product
can be exchanged for something else.

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 Types of Function
• Function specifies the purpose of the product or
what the product does, what is its utility,etc.
• Types of Functions are
– Primary Function
• Basic function that product must exhibit
• Cannot be changed
– Secondary Function
• Supporting Functions
• Can be modified or eliminated
– Tertiary Function
• Additional benefits that a product gets
• Can be modified or eliminated

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 Types of Function Example
• Eg: Painting a merchant navy ship
• Primary Function:
– Save the ship against corrosion and deterioration
• Secondary Function:
– To make it recognizable
• Tertiary Function :
– To make brilliant appearance

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 Value Analysis
• Value Engineering (VE, or Value Analysis) is a
management technique that seeks the best
functional balance between cost , reliability and
performance of a product, project, process or
service.
• A process of systematic review that is applied to
existing product designs in order to compare the
function of the product required by a customer to
meet their requirements at the lowest cost
consistent with the specified performance and
reliability needed.

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Value Engineering and Value Analysis

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Value Engineering and Value Analysis

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 Objectives of Value Analysis
• To provide better value to a product/service.
• To improve the company‘s competitive position.
• To ensure that every element of Cost ( Labour
Materials Suppliers and service ) contribute
equally to the Function of the product.
• To Eliminate unnecessary Cost.
• To use efficient process
• Faster cost reduction technique

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 Application of Value Analysis
• Capital goods – plant, equipment, machinery, tools, etc.
• Raw and semi-processed material, including fuel.
• Materials handling and transportation costs.
• Purchased parts, components, sub-assemblies, etc.
• Maintenance, repairs, and operational items.
• Finishing items such as paints, oils, varnishes, etc.
• Packing materials and packaging.
• Printing and Stationery items.
• Miscellaneous items of regular consumptions.
• Power, water supply, air, steam & other utilities
(services).

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 Application of Value Analysis
• Military Equipment
• Import substitutes
• Automobile Industries
• Material Handling equipment
• Machine Tool industry

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 Advantage of Value Analysis
• It leads to improvements in product design so that, most appropriate
products are produced .
• High quality (value) is maintained.
• All-round efficiency is achieved by eliminating waste of various types.
• Cost savings provide a measure for judging managerial effectiveness.
• New ideas are generated and incorporated.
• Teams spirit and morale are improved.
• Areas requiring attention and improvement are pin pointed.
• Improves the company‘s competitive position.
• Each element of Cost contribute equally to the Function of the product.
• Uses efficient process
• Faster cost reduction technique

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 Value Analysis Job Plan/Value
Analysis Methodology
• Orientation Phase
• Information Phase
• Functional Phase
• Creative Phase
• Evaluation Phase
• Development Phase
• Presentation Phase
• Implementation and Follow-up Phase

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 Orientation Phase
• Identify issues
• Prioritize Issues
• Drafts scopes and objective
• Establish evaluation factors
• Determine Study Team
• Collect Data
• Prepare for value study

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 Information Phase
• Further familiarization of the project by the team; all team members
participate in determine the true needs of the project.
• Areas of high cost or low worth are identified.
• In this first phase, the team attempts to understand why the project
exists and who or what it is to produce.
• They obtain project data, present the original design or product
concepts, and understand the project scope.
• Schedule, costs, budget, risk, and other non-monetary issues are
studied until the team is comfortable with the concept of the project,
what it is to produce, and who its end users are.
• This step also includes things like site visits and meetings with the
project team, if required.
• Project documents like plans, drawings, specifications, and reports
are obtained and the value engineering team becomes familiar with
them.

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 Functional Phase
• Functional analysis outlines the basic function of a
product using a verb and a noun such as ‗boil water‘ as
in the case of our kettle.
• The team attempts to determine the functions the
project serves. Functions come in two forms:
• Primary functions are those that represent the reason
for the project‘s existence,
• Secondary functions are those that the project serves
without being core to the project.
• The functions are described in verb/noun pairs, such as
―supply water to all suites,‖ or ―Maintain
view of adjacent park.‖

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 Creative Phase
• This step requires a certain amount of creative
thinking by the team.
• A technique that is useful for this type of
analysis is brainstorming.
• This stage is concerned with developing
alternative.

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 Evaluation Phase
• In this phase of the workshop, the VA team
judges the ideas developed during the creative
phase.
• The VA team ranks the ideas.
• Ideas found to be irrelevant or not worthy of
additional study are disregarded.
• Those ideas that represent the greatest
potential for cost savings and improvements
are selected for development.

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 Development Phase
• The team develops the selected ideas into
alternatives (or proposals) with a sufficient
level of documentation to allow decision
makers to determine if the alternative should
be implemented.

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 Presentation Phase
• The presentation phase is actually presenting
the best alternative (or alternatives) to those
who have the authority to implement the
proposed solutions that are acceptable.

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 Implementation And Follow Up
• Develop an implementation plan
• Execute the plan
• Monitor the plan to completion Objective:

During the implementation and follow-up phase,

management must assure that approved
recommendations are converted into actions.

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 Case Study
• Focus Adjustment Knob for Slit Lamp in
microscope

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 Phases
• Product selection plan
• Gather information of product
• Functional analysis
• Creativity Worksheet
• Evaluation sheet
• Cost analysis
• Result

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 Plan For Product Selection

• This Product is used to adjust the focus of lens for

magnification purpose.
• The present specifications of this part and its
material used are costlier than the average
industry cost.
• Value of this product can be increased by
maintaining its functions and reducing its cost or
keeping the cost constant and increasing the
functionality of the product.

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 Obtain Product Information
• i. Material – Aluminum Bronze Alloy
• ii. Diameter of base plate –30 mm
• iii. Thickness of plate--3 mm
• iv. Cost of the scrap is – 293 rupee/Kg
• v. Pieces Produced annually – 8000
• vi. Process used – C.N.C. indexing milling
• vii. Cycle time—2.5 min
• viii. Anodizing—2/min
• ix. Material cost—65 gm
• x. Total Present cost – 29.99 rupee /piece

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3.Functional Analysis

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 4. Develop Alternate Design Or
Methods
• During brainstorming these ideas were listed:
i. Change design ii. Change material iii. Use
plastic iv. Make it lighter v. Change the
production process vi. Use nylon indexing unit

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 5. Evaluation Phase
• For judging the ideas, the following designs
were considered:
• A. Function
• B. Cost
• C. Maintainability
• D. Quality
• E. Space

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 6.Cost Analysis

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 7. Result
• The total savings after the implementation of
value engineering are given below:
• Cost before analysis – 29.99 rupee
• Total Cost of nylon knob – 18.40 rupee
• Saving per product – 11.59 rupee
• Percentage saving per product – 38.64 %
• Annual Demand of the product – 8000
• Total Annual Saving – 92,720 rupee
• Value Improvement - 62.98 %

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Value Engineering and Value Analysis

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Value Engineering and Value Analysis

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