How to Effectively Undertake Value Analysis to Reduce Product Development Costs

Value engineering is essentially a process of implementing optimal product development strategy to produce products that offer better value to the customers at simultaneously reduced costs. It requires redesigning the entire development process right from concept development to final product dispatch, by figuring out the possible areas in the process requiring improvement.

To successfully undertake value analysis, it is important for manufacturers to ask important questions such as:

  • Is there any possibility to develop alternative design or material which can help in reducing the cost without affecting quality?
  • Is it possible to improve the manufacturing process or hire special resources to develop innovative products? If so, what would be the return on investment?
  • Should the raw material or components be borrowed from vendors in bulk to reduce cost and allow longer production runs?
  • Does the product fulfill the purpose and expected value of customers who buy it?
  • Can the life of the product be increased to improve its exchange value?

Reducing product cost cannot be imagined with an instant change in the production process. It requires careful planning and a systematic approach, which can be often implemented by assigning a special team in-house or through external consultants.

An ideal approach to execute value analysis effectively shall include:

Identification of Product or Service to Study

Since the prime objective of value analysis is to reduce cost, it is better to select product or service that is already costly. Bringing down its cost can significantly help in placing the product or service in the market effectively. It is also important to select the product that is newer, as reducing the cost of products nearing to the end of their lifecycle will bring no significant benefit.

Gathering Information

Once the product is identified for value analysis, the next step is to gather all necessary information related to the product should be gathered. Questions such as possible alternatives, its success rate and cost should be included in the information gathering process.

Evaluating the Product or Service

The next step is to evaluate each and every aspect of the product to figure out possible ways to reduce the cost and add value. The process shall include elimination of parts that are not required, figuring out ways to get parts of the product at lower cost, standardizing parts if possible and ensuring that the value of the product does not get lost while reducing its cost.

Identifying Alternatives

Performing the above three steps will make possible to identify and evaluate alternatives of the product or service by incorporating new ideas, eliminating unnecessary parts or mixing new and old parts together to build better product with reduction in cost.

Selecting the Best Alternative

Once the alternatives are identified, the immediate step should be selecting the best alternative. Since the prime purpose of value analysis is to reduce cost, alternatives that are cost-effective shall be selected. However, it is also important not to compromise with quality of the product.

Implementation and Follow-up

With the selection of alternative, the value analysis proposal shall be provided to the decision makers and planning and co-ordination should be established to implement the change. Upon implementation, the value engineering team should regularly take follow-ups and suggest necessary change in the process wherever required.

About Author:

Gaurang Trivedi is engineering consultant. He has applied his engineering expertise across several highly complex and big scale projects, consequently managing to flawlessly deliver as per the client requirements.

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