HISTORY OF VALUE CONTROL

Value control was originated at the General Electric Company. In 1947, Harry Erlicher, vice president of purchases, noted that during the war years it had frequently been necessary to make substitutions for critical materials that quite adequately satisfied the required function and often resulted in an improved product. He reasoned that if it was possible to do this in wartime it might be possible to develop a system that could be applied as a standard procedure to normal operations to increase the company's efficiency and profit.

L.D. Miles was assigned to study the possibility, and the result was a systematic approach to problem solving based on function that he called value analysis.

The program was so successful that shortly thereafter the U.S. Navy started to use the system to help get more hardware in the face of a rapidly shrinking budget. The Navy called the program value engineering.

Value analysis, value engineering, value management, value assurance, and value control are all the same in that they make use of the same set of techniques developed by Miles in 1947. In many cases, however, the title tends to describe how the system is being applied. Value analysis is generally considered to apply to removing cost from a product. Value engineering and value assurance are applied during the program development phase to keep cost out of a product (our focus in design for six sigma [DFSS]). Value management and value control are overall programs that recognize that value techniques can be applied at any stage of a program. They strive to apply value techniques to control value in all areas of operations.

The Navy program developed so successfully that it was picked up by the Department of Defense and is now considered to be the key element in the government's cost reduction program. In addition, value techniques are now being used in industry and government throughout the free world. They are being applied to aircraft, engines, automobiles, washing machines, dryers, TV sets, and all sorts of consumer and industrial products as well as construction projects and management planning. In addition, several states are applying value techniques to increase efficiency of operations.