VALUE ANALYSIS

What is Value Analysis?

• Value Analysis is an orderly and creative
method to increase the value of an item.
• Value analysis is an approach to
improving the value of a product
• Process of understanding its constituent
components and their associated costs.

Value of an item = performance of its function / cost

Example: (Value Analysis)

> Marketing manager for a washing-up liquid analyzed
the liquid bottle and its use.

> She discovered that the bottle became slippery when
liquid dribbled down the side of the bottle.

> The shape of the bottle and the spout were both
changed to improve grip and reduce dribble.

> Without any additional advertising, sales of the product
subsequently went up by 2%.
 The Value Analysis Process
• Gather information
– What is being done now?
– Who is doing it?
– What could it do?
– What must it not do?

• Analyze/Generate
– What must be done?
– What does it cost?
– What else will do the job?
 The Value Analysis Process
• Evaluation/Recommendation
– Which Ideas are the best?
– Develop and expand ideas
– What are the impacts?
– What is the cost?
– What is the performance?
 The Value Analysis Process
• Implementation
– Present ideas
– Sell alternatives
 Outcomes of Value Analysis
• A high customer orientation, focusing on those
aspects of the product/service that better satisfy
customer needs.
• Cost reduction by eliminating functions that do not
supply specific advantages to satisfy customer
requirements/needs.
• New ideas that arise from the creativity/innovation
phase and may add radical changes and therefore
competitive advantages that will be regarded by the
market.
• A new systematic mentality to be taken into
account for next designs of new products or to
systematically improve the existing ones.
 Case Study:
• A product manager at a company that produced nails had received
several requests from customers for a nail that could not work loose.
Identifying this 'improved nail' as a possible new product line, he
decided to do a Value Analysis to help identify costs and values.
• Working with a major customer in the building industry, he first
identified the basic function and measure of an ideal nail as holding
two 1cm battens together, such that when the battens were twisted,
the wood would break before the nails moved.
• With an engineering team, this was broken down into secondary
functions, which were evaluated and related to components and
costs as below . During this process, the concept of how the nail
gripped the wood was discussed. They brainstormed alternative
ways of gripping wood, and an engineer, who was also an amateur
fisherman, came up with the idea of putting barbs on the nails.
 Case Study:
• The initial prototype was partially successful, but did become a little
loose after a period. Spiral barbs helped, and straight barbs on the top
of the nail resulted in the nail being locked in place by the final
hammer blow.
• The solution was produced as a specialist nail, and sold well at twice
the price of a normal nail, more than covering the increased
production costs.