Chapter 12: Value AnalysisEngineering

INTRODUCTION TO VALUE CONTROL ” THE ENVIRONMENT

Among the major problems faced by industry today, two are the cost profit squeeze and ineffective communications. Rising wages and materials costs are squeezing profit against a price ceiling, and our communications systems do not seem to be able to help effect a solution to the problem. We cannot buy labor or material for less than the market cost nor can we sell for more than the consumer is willing to pay. What then is the solution?

It is necessary to apply every known effective technique to learn how to thoroughly analyze the elements of a product or service so that we can identify and isolate the unknown, unnecessary costs. In short, it is necessary to make a direct attack on the high cost of business.

Value control has been proven to be an effective management tool to seek out and eliminate this hidden cost wherever it may be. It can aid in solving both profit and communications problems, and it can have an effect on operations that will be limited only by your understanding of the techniques and management's willingness to apply them.

Many people are highly skilled at cost analysis and problem solving and think that value control is something we do all of the time. There are many who think that value control is part of every engineer's job. Some also think that it is something we have done for 20 or 30 years , but we did not call it value control. A primary objective of this chapter is to demonstrate that value control is not only different but is a more powerful technique than any used in the past.

Value control is not new, in that it has been around for about 25 years, but it has only been within the past five to ten years that it has been widely accepted. It is a broad scope management tool that considers all of the factors involved in a decision. It goes to the heart of the problem, determines the function to be performed, and applies creative problem solving and business operations such as time and motion study, work simplification, feasibility reviews, systems analysis, etc. But, it follows a systematic organized approach that, in addition, applies unique techniques that identify value control as a special approach to profit improvement.

Why, after all these years of scientific and specialized management techniques, is it necessary to develop another technique that does what many of the others were supposed to do? Why is value control necessary?

It is still possible for one person to know all that is required to operate a small company or design a simple product. However, our increasingly complex society and increasingly complex technology have tended to make most of our managers and technical people specialists in a limited area of activity. They have tended to compartmentalize our operations and, to a large degree, our thinking. The more complex the organization, the more the operation becomes fragmented into autonomous units that deal in a small part of the operation and have an effect on only a small part of the profit.

In 1927, one of the greatest technological milestones in the history of human development occurred as the result of the knowledge of two men. Charles A. Lindbergh sat on the Coronado Beach in San Diego with Donald Hall, chief engineer of Ryan Airlines, and established the basic criteria for the Spirit of St. Louis. Two people knew all that was needed to develop an advanced product that even today clearly shows their creative thinking.

Lindbergh established the requirements, Hall provided the technical knowledge, and the 13 Ryan supervisors and employees provided the understanding, know-how, and enthusiasm to develop a product that was designed, was built, was tested , and won everlasting glory for Mr. Lindbergh, all within 13 weeks.

The product was designed to perform a specific function for a specific cost target. There was no communication problem, there was no cost problem since $15,000 was all they had for the entire project, and there was no timing problem ” any delay was unthinkable.

Consider the design of an advanced aircraft today. The cost in people and materials is almost beyond comprehension . Hundreds of thousands of people in dozens of industries in several states work in vast industrial complexes for years before the product takes to the air.

A product such as the automobile has created a similar situation to the degree that it is a basic national industry and affects people in every corner of the country and in many cases abroad.

Is it any wonder that value control is developing on the management scene? It is the only technique that is specifically designed to consider all of the factors involved in decision making ” product performance, project schedules, and total cost.

Value control is a program of involvement. It makes use of experience from engineering, manufacturing, purchasing, marketing, finance ” any area and every area that contributes to the development of a product. It can be used to keep cost out of a product and it can be used to get cost out of a product. It can do this because cost is everywhere and everyone in the organization contributes to it.

Cost is the result of marketing concepts, management philosophies, standards and specifications, outdated practices or equipment, lack of time, and incomplete, unobtainable, or inaccurate information, along with dozens of other contributing factors. Every company has at least some of these problems, and it often requires completely new ideas to change them.

To prevent and eliminate unnecessary cost we must know how to identify cost. We must be able to identify a problem and be willing to improve the situation. This means change ” change in habits, change in ideas, change in philosophies. We know we must change to keep up with the world. Value control enables us to take a good look at all of the factors that must go into making a successful change that will be for our benefit.

Value control requires special skills. It is not cost analysis, design reviews, or something we do as part of our job. It is different because the basic philosophy is different. It is not concerned with trying to reduce the cost of an item or service; it is concerned with function and methods to provide the function at the lowest overall cost.

Value control concerns people and their habits and attitudes. It is to a large degree a state of mind. It accepts changes as a way of life and makes every effort to determine how change can be made to provide the most benefit.

It is a function-oriented system that makes use of creative problem solving and team action. The team is designed to provide an experienced , balanced, and broad scope look at a subject without being constrained by past experience. It requires trained people who understand the system and its application.