Value analysis and value engineering
Reviewing a product part by part to remove cost that does not add function: value analysis on existing products, value engineering on new ones.
Also called: VA/VE, Value analysis, Value engineering, Cost reduction workshop
The idea goes back to General Electric in the 1940s, when material shortages forced engineers to ask what each part actually had to do. It turned out a lot of parts were made of the wrong thing for no reason except habit.
The method has not changed much. Take a product, list each part’s function (“holds the shaft”, “seals the housing”), put a cost next to each function, and look for the ones where the cost is out of proportion. Then ask whether a cheaper material, a looser tolerance, a standard part or a different process would do the same job.
Value analysis applies this to products already in production. Value engineering does it on a design before it is released. The second is cheaper, for the same reasons as design-to-cost.
What it finds
Typical results from a VA/VE review of an industrial product:
- tolerances tighter than the function needs (an H7 bore on a part that only locates a cover)
- surface treatments specified everywhere, needed in two places
- a custom part where a catalogue part fits
- a material grade one step higher than the load requires
Each one is small. On a product with 300 parts, they add up to 5 to 15% of the material cost.
The usual problem
VA/VE workshops are expensive: a cross-functional team for two or three days per product, plus the work to cost every idea. Most companies run a handful a year on their biggest products, and the rest of the catalogue never gets reviewed.