Value engineering
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Value engineering is an approach to problem solving used to identify ways to increase value in a product or service while decreasing costs. It is a systematic method to improve the “value” of goods or services by using an examination of function. It is an analytical technique used to improve the value of goods and services by examining the functions of a product or service and focusing on how to provide the same functions at a lesser cost. Value engineering is based on the premise that the cost of a product or service should be equal to its value.
Example of Value engineering
To illustrate value engineering, let's take the example of a company that manufactures computer chairs. The company is looking to reduce costs while still meeting customer expectations. To do this, they decide to go through the five steps of value engineering.
- Identifying the function of the product or service that is to be improved: The company needs to identify the function of the computer chair that needs to be improved. In this case, the main function is comfort and support.
- Analyzing the function: The company then needs to analyze the function of the computer chair. They look at the different ways the chair can be used and the different requirements for it to be used successfully.
- Developing alternatives: After the function of the computer chair has been identified and analyzed, the team should then develop alternative solutions that could improve the function or reduce the cost. Some ideas that could be considered would be using a cheaper material for the chair, reducing the size of the chair, or changing the design of the chair to make it more comfortable.
- Evaluating the alternatives: The next step is to evaluate the different alternatives that have been proposed. This should include considering the cost, risk, and other factors.
- Implementing the best alternative: The final step is to implement the best alternative that has been identified. This should be done with consideration of the cost, risk, and other factors.
In this example, the company was able to reduce costs while still meeting customer expectations by going through the five steps of value engineering. By examining the function of the computer chair and developing alternative solutions, they were able to identify ways to reduce costs while still providing a quality product.
When to use Value engineering
Value engineering should be used when the cost of a product or service is greater than its value. In addition, it should be used when there is a need to identify ways to reduce costs and increase the value of a product or service. Value engineering can also be used to identify ways to improve the function of a product or service. Value engineering should be used any time there is a need to identify ways to increase the value of a product or service while reducing costs.
Types of Value engineering
- Cost Reduction: Cost reduction is the most common type of value engineering. This involves looking at different ways of providing the same function at a lower cost. This could include using different materials, changing the design of the product, or introducing more efficient production methods.
- Quality Improvement: Quality improvement is another type of value engineering. This involves looking at ways to increase the quality of the product or service while keeping the cost the same. This could include introducing better materials, improving the design, or introducing better production methods.
- Performance Improvement: Performance improvement is the third type of value engineering. This involves looking at ways to increase the performance of the product or service while keeping the cost the same. This could include introducing better materials, improving the design, or introducing more efficient production methods.
Value engineering is a systematic approach to problem solving that can be used to reduce costs and increase value. By going through the five steps of value engineering, it is possible to identify alternative solutions that could improve the function of a product or service while reducing the cost. There are three main types of value engineering: cost reduction, quality improvement, and performance improvement. Each of these types focuses on different ways of providing the same function at a lower cost.
Steps of Value engineering
Value engineering involves five steps:
- Identifying the function of the product or service that is to be improved: The first step of value engineering is to identify the function of the product or service that needs to be improved. During this step, all features and characteristics of the product or service should be considered and discussed.
- Analyzing the function: The next step is to analyze the function of the product or service. This involves looking at the different ways the product or service can be used and the different requirements for it to be used successfully.
- Developing alternatives: After the function of the product or service has been identified and analyzed, the team should then develop alternative solutions that could improve the function or reduce the cost.
- Evaluating the alternatives: The next step is to evaluate the different alternatives that have been proposed. This should include considering the cost, risk, and other factors.
- Implementing the best alternative: The final step is to implement the best alternative that has been identified. This should be done with consideration of the cost, risk, and other factors.
Value engineering is a systematic approach to problem-solving used to increase value in a product or service while decreasing costs. It involves five steps: Identifying the function of the product or service, analyzing the function, developing alternatives, evaluating the alternatives, and implementing the best alternative. By following these steps, it is possible to identify ways to reduce costs while maintaining quality and providing the same functions.
Advantages of Value engineering
- Reduced cost: One of the main advantages of value engineering is reduced cost. By examining the functions of a product or service and focusing on how to provide the same functions at a lesser cost, it is possible to reduce the overall cost of the product or service.
- Improved product or service quality: Another advantage of value engineering is improved product or service quality. By identifying and evaluating different alternatives, it is possible to identify solutions that could improve the quality of the product or service.
- Increased efficiency: Another advantage of value engineering is increased efficiency. By focusing on how to provide the same functions at a lesser cost, it is possible to increase the efficiency of the product or service.
Limitations of Value engineering
- Limited expertise or resources: Value engineering may be limited by the expertise or resources available to the team. This can lead to limited alternatives being considered or developed.
- Time constraints: Value engineering can be time consuming, which may not be feasible in certain situations.
- Risk: Value engineering can involve taking risks, and there is always the possibility of making a mistake or not achieving the desired outcome.
In addition to value engineering, there are other approaches related to improving the value of a product or service. These include value analysis, value improvement, and value management.
- Value analysis is a process of analyzing a product or service to determine how to improve its performance, reduce its cost, or both. It involves looking at the different components of a product or service and evaluating them based on their cost and performance.
- Value improvement is a process of making changes to a product or service to increase its value while reducing its cost. This includes looking at the different components of a product or service and determining how to improve them to increase their value.
- Value management is a process of managing the value of a product or service. This includes looking at the different components of a product or service and determining how to optimize them to maximize the value.
These approaches are all related to value engineering and can be used to improve the value of a product or service while reducing costs. By using these approaches, it is possible to identify ways to increase the value of a product or service while reducing its cost. Value engineering, value analysis, value improvement, and value management are all effective approaches to problem solving that can be used to improve the value of a product or service while reducing costs.
Suggested literature
- Ibusuki, U., & Kaminski, P. C. (2007). Product development process with focus on value engineering and target-costing: A case study in an automotive company. International Journal of production economics, 105(2), 459-474.
