Main Features Of Value And Functional Analysis Information Technology Essay

The English dictionary has various meanings of the word value, like worth, a fair equivalent, relative wroth, that which renders something useful. In the field of purchasing, value can be defined as the lowest cost for reliably performing an essential function.

Value Analysis (VA) was established by Lawrence D. Miles of General Electric in America. The basic fundamental of value analysis can be implemented in any product to optimize its value. In more details, value analysis is actually a process of systematic review that is applied to existing product designs in order to compare the function of the product required by a customer to meet their requirements at the lowest cost by eliminating unnecessary costs that consistent with the specified performance and reliability needed. First of all, value analysis (and value engineering) is a formal and organized process of analysis and evaluation which required management activities including planning, control and coordination. These analysis concerns the function of a product such as utility, guarantee, or safety performance to meet the demands needed or required by a customer. Thus, to meet this functional requirement the review process must include an understanding of the purpose to which the product is used. This implies that specifications can be established to assess the level of fit between the product and the value derived by the customer or consumer. Furthermore, the formal management process must meet these functional specification and performance criteria consistently in order to give value to the customer which indirectly will lead the organization to be success. Finally, in order to yield a benefit to the organization, the formal review process must result in a process of design improvements that serve to lower the production costs of that particular product whilst maintaining some level of value through function (M.A. & S.P., 2012).

Several other techniques closely resembling value analysis are also used in the industry with the different names, and these are mentioned in the following. The application of the value analysis ideas during design and engineering stage of product before its manufacture is known as value engineering. Here are some of the related techniques using the same logic which is PROFIT, FIRST, FAST, FACTS, and VM/VI. PTOFIT is stands for Product return opportunities by function investigation techniques, FIRST is stand for Functional idea system techniques, FAST is stand for Functional analysis system techniques, FACTS is stand for Functional analysis of components of total system, VM/VI is stand for Value management and value improvement. But value analysis is the generic name for all the above techniques and the differences, if any, are negligible.

On the other hand, the determinants of value require some combinations. Firstly, functional or use value which is based on those properties of the product which enable it to accomplishing or perform a task or service such as nail. This may be divided into primary secondary and tertiary. Secondly, esteem value which is based on those properties of the product, which contribute to pride of ownership and possession such as gold watch. Thirdly, exchange value which is based on those properties which make a product valuable for exchange such as the barter value such as antique furniture. Then following by the cost value which is based on the minimum cost of achieving a useful function and it’s also depends upon the commercial value of the cost of production such as bus fare. Finally, scrap value which means the money that can be recovered when the items is no longer needed. However, the concept of value is dynamic and it changes with time. An item which has functional value today will have esteem value after some time and finally as time passes; the item will have only scrap value.

Items for Value Analysis

Conception, development, growth, maturity and decay are the five phases of the product-life-cycle (PLC) and it’s comes in handy for identifying the product for value analysis. The life-cycle time for each phase varies from one type of product to another. When the product reaches the stage of maturity or also known as stability position, then it will lead to the competitors to enter the market with an improved version of the product and this will force the organization to effect modifications in the product for survival. Then these efforts for cost reduction starts right from the design stage and is continued in the production system through process modification, tool changes, materials substitution, and etc. Thus, the product with decreasing return on investment, particularly in the maturity stage is considered ideal for value analysis. In addition, products which suffer from maximum overdesign can also be chosen for value analysis. For example, Apple was a first-mover to launch their iPhone then only Samsung came out its “me too” product, Galaxy.

Organization for Value Analysis

Ideally, value analysis requires interdisciplinary approach and is carry out by a team effect that consists of not more than five individuals who are selected from all key departments such as design, marketing, research, purchasing, cost accounting, quality and etc. The methodology of value analysis is exposed to the members by an expert in a workshop for a period of three or four days. After that, each team selects and works on a specific project and finally prepares a report. Besides that, the value engineering study also may require the aid and advice of specialists in various areas as consultants. However, some organization feel, the inclusion of representatives of consumers and suppliers in the team would add a further dimension to value improvement.

Value Analysis Application

Value analysis also applied by some organizations like private, public, large or small sectors which making sizeable savings every year. It uses a confidence building and creative process that results in the generation of valuable ideas by tapping the creative human ability and power. This able to makes employees to promote team work and become cost conscious. Furthermore, value analysis studies also emphasize on total system concepts by keeping the interests of employees, consumers, procedures and industries. For example, in India, the value analysis team in one steel plant found that many of the rigid material and process specifications in some of the intermediate stages were not required, for the tasks which the steel products are ultimately expected to perform. This has allowed the organization to reduce some of their cost. Besides that, value analysis has also been applied in one engineering firm’s design stage of the machines and it was found that a spring loaded stripper arm can do the same function by remaining stationary. This resulted in considerable reduction in maintenance cost. Other than that, value analysis has been practiced by many firms as a policy for import substitution. On the other hand, in the packaging of consumer goods such as body shampoo, biscuits, and many others, have been profitably used to bring about economy in packing. Thus, value analysis not only helps the country to maximize the conversation of scarce material resources but also helps to achieve cost reduction in a more effective way.

The Mechanism of the Value & Functional Analysis

Techniques for Value Analysis

The following are the sequential steps involved in carrying out a value analysis.

Product selection.

Information gathering.

Definition of function of the product.

Identification of function.

Speculation of alternatives.

Evaluation of alternatives.

Reporting about recommendations.

Implementation and follow up.

In Sanskrit, Darsiri method means “to consider” and also follows similar steps. Here, Darsiri method stands for data collection, analysis, record ideas, speculate, investigate, recommend and implement. Other techniques include MISS, which is modify, improve, subdivide, substitute, and EXCHANGE. EXCHANGE is stands for eliminate, keep, change. On the other hand, simplification, diversification and standardization can also contribute to the cost reduction and must be used in conjunction with value analysis but have to make sure that the teams are familiar with the context of the chosen items.

Further, the Value Engineering (VE) approach is actually referred to the function of the product or the item considered for value analysis. For example, the function of a “cigarette lighter” can be defined as to “provide ignition”. After the definition the functions are categorize as primary and secondary functions. For any product or even part, there can be only one primary function but any number of secondary functions. The primary function of a shirt is to cover the body, while the secondary functions can be to appear neat or elegant. Sometimes the functions are also classified based on different disciplines such as structural function, electrical function, mechanical function, etc. However, generally the utility is usually classified as primary and secondary in value analysis. After defining the functions for the main assembly, sub-assemblies, parts and components, and a few of the functions are selected by the team for speculation of alternatives. Either the entire product or a few of the parts are selected for speculation of alternative. Here, speculations of alternatives emphasize creativity. Creativity means looking at problems from unconventional angels. There are three stages in creativity, including imitation, innovation, and invention. As we know that, creativity emphasizes the principles of blast, create and refine the ideas.

Brain Storming

Next, in order to help in creativity and speculation of alternatives, we need brain storming method. This inhibits the groups of six or seven people with different backgrounds drawn from different departments of the organization coming out as many creative ideas as possible. Then the alternatives suggested by different members of the group are listed on this step for evaluation in the subsequent step. Here is some questions aid in creative thinking and in the speculation of alternatives to help reduce the cost of organization. For example, “what is the item and can we do without the item?” “Why does it need to be so thin?” and etc.

Steps for Value Analysis

Here are the eight sequential steps need to be considered for the questions like “What is the function of the product, process or service?” “Then how to enhance the quality or value with lowest cost?” Firstly, the information phase, in this phase all relevant facts or data about a particular troublesome product or part are gathered, organized and analyzed while building cohesion among team members.

Following by the functional phase which identify the most beneficial areas for study and the functions that must be performed by the product are inspected, analyzed and classified.

Thirdly, the creative phase, which develop a large number of ideas for alternative ways to perform and solve each function selected for further study.

Fourth, the judicial analysis phase which means the ideas generated in the creative phase are now refine, select and evaluated the best ideas for development into specific value-improvement recommendations. In other word means that make it to become a practical, pragmatic and analytical mode. Each idea are selected and ranked according to their level of importance.

Fifth, it’s the turn for development phase which determine the “best” alternatives for presentation to the decision-maker. The cost factor is added here and applied to reality. This is a consolidation of what the team thinks.

Then after that, the presentation is the following step. By obtain a commitment to follow a course of action for initiating an alternative. In other words, the proposed changes are put in final form to be presented to the management decision makers. This proposal describes two or three ideas for performing the function of the original, basic and very expensive item with a workable alternative of better value.

Next, is the turn of implementation phase. After the ideas have been accepted by the management, the changes are implemented, monitored and followed through proper periodical reviews. While developing an idea is important, selling it to top management is equally important. It has been noted that a sizeable percentage of the proposals does not see the light of the days. Only about 50 per cent of the valuable ideas generated in the team workshop are accepted for practical implementation.

Obtain final approval of the proposal and facilitate its implementation.

Finally, the master phases emerge. In terms of salesmanship and communications, take one new idea from the list of ideas that have been initially turned down by management, and with additional sophisticated fine-tuning analysis and description, and present it better in such a way that management can understand and implement.