Q 666. Value Engineering started off during World War II to cater to the high demands of war machines. However, over time it has come to be associated with inferior product quality. What are the safeguards that can be used to ensure good quality products with Value Engineering?

 

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Value Engineering   aims at optimizing the value of a product, system, or process by achieving the desired functions at the lowest possible cost without sacrificing quality, performance, reliability, or safety.

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Inferior quality associated with Value Engineering is due to   more focus on cost reduction, lack of planning and poor implementation, short-term perspective like prioritizing short-term cost savings over long-term quality considerations, inadequate Stakeholder involvement, poor Supplier selection, insufficient testing and validation etc.

We can ensure Value Engineering by implementing following safeguards

Quality Assurance Standards- Implement and adhere to recognized QMS standards such as ISO 9001. These standards provide guidelines for establishing and maintaining quality management systems, ensuring consistency and reliability in product quality.

1. Design Reviews by applying six sigma- Regular design reviews involving cross-functional teams to evaluate proposed value engineering changes from various perspectives, including engineering, manufacturing, quality assurance, and end-user requirements   helps in identify potential quality concerns early in the design process.
2. Prototyping and Testing- Develop prototypes and testing including performance testing, reliability testing, and stress testing to ensure that the products meet quality standards and specifications.
3. Supplier Risk assessment by establishing criteria for selecting and qualifying suppliers based on their ability to meet quality requirements.
4.  Audits/assessments/checks - Conduct audits and assessments to evaluate suppliers' quality management systems, manufacturing processes, and product quality control measures.
5. Document Control, Best practices, Knowlege hub and training   – by adopting and following SOPS strictly, continuous review, Updating, training and implementing best practices.
6. Change Management Procedures: Change management procedures to govern the implementation of value engineering changes. Changes should be carefully evaluated, documented, approved, and communicated to all relevant stakeholders to ensure that they do not adversely affect product quality.
7. Customer Feedback Mechanisms- for customer voice.
8. Training and Skill Development-This helps ensure that they have the knowledge and expertise necessary to identify and address quality concerns effectively.

Over and above this is achieved by Identifying and defining the essential functions or purposes that the product fulfils, creative thinking to generate that can achieve the desired outcomes more efficiently or cost-effectively, applying analytical techniques such as cost-benefit analysis, risk assessment, and lifecycle costing by assessing the potential impact of each alternative and by continuous improvement. Apple, General Engineering, Procter &Gamble have successfully implemented Value Engineering.

 

 

History / Background:

Value engineering is referred to in 1940 when General Electric Co. experienced a shortage of raw materials, parts, and skilled labor. To maintain continuity in the production process, Lawrence Miles, Harry Erlicher, Jerry Leftow, and other engineers sourced acceptable substitutes that would reduce the production costs without compromising the functionality of the products.

This technique was eventually named “value analysis” and enables companies to reduce production costs, improve products, and improve performance. Combining the two concepts formed what is now called VA/VE

Following steps to be followed to ensure a good quality product is developed using value engineering.

1.      Planning and documentation: All stages of the product life cycle are to be planned / adequate documentation is to be prepared throughout the product life cycle and all minor activities and work breakdown structures are to be planned  to ensure robust project management

2.      Data / Information collection: This is a very crucial step where all relevant information/data about the product is to be collected:

·       Expected product specification

·       Material used

·       Material Vendors available in the market

·       Material durability

·       Functionality expected

·       Product design

·       Manufacturing Process Options

·       Cost associated

·       Expert opinion ( Involving customers, vendors, and cross-functional stakeholders during product and process designs)

·       Project Timeline Expectations

 

3.      Supplier selection and management: Robust procurement process, supplier qualification, supplier selection criteria, Master service agreement, and Statement of work, service level agreements, reverse SLAs  to be properly defined and documented

4.       Manufacturing processes: manufacturing processes, assembly, location of manufacturing, machinery and production equipment, skilled labor, waste management, and sustainability aspects to be adequately defined and executed

5.      Testing and production trials: Rigorous testing and validation are very critical – stress testing, HVPT (High volume production trial), temperature variation testing, and  product changeover testing to be adequately planned and executed

6.      Risk Management: Performing Risk analysis ( E.g. FMEA Failure Mode Effect Analysis / other methodology) to understand the risks associated/capturing environmental risks / capturing risks on the go ( Risks found during production trials and initial sustenance period). Planning risk elimination/mitigation plan to ensure risks remain within acceptable levels

7.      Continuous improvement framework: During the complete product life cycle, structured analysis for improvement to be conducted and all opportunities of product optimization to be adequately captured and implemented

8.      Government Authorities regulations and Safety measures: Government Authorities norms to be  properly evaluated and additionally mandatory/optional best-in-class safety measures to be implemented ( e.g. OHSAS 18001)

9.      Life cycle management: Product life cycle from the time the product idea has come to mind till the time the product dies from the market. All stages to be adequately studied and precautionary measures are to be taken to ensure optimum profitability and enhanced customer experience

 

 References

• Various articles and write-ups on the web on VE
• Miles, L. D. (1972). Techniques of Value Analysis and Engineering. McGraw-Hill.
• Kelly, F. P., & Maleyeff, J. (2004). Value Planning: The New Approach to Building Value Every Day. Productivity Press.
• Hansen, R. C., & Mowen, M. M. (2000). Cost Management: Accounting and Control. South-Western College Pub.

Edited May 4, 20242 yr by Amol Ingole
Some case study used from internet but post discussion with Mr. Wishva, that has been removed

Value engineering is a concept developed in the later stages of the 2nd industrial revolution accelerated by the urgency to meet requirements of defense industry at a time when both materials and quality manpower were being consumed by the World War. It attempts to maximizing value of the particular product or service through achieving the highest quality and functionality by using the least inputs including but not limited to cost, material, manpower, energy and time. It has been considered a very good methodology which has been adopted by reputed organizations such as Toyota, Ford, NASA, GE, ISRO amongst a whole myriad of others to "maximize the bang for the buck".

However, in recent years many cases have emerged which give Value engineering a bad reputation associated with reducing quality in order to reduce costs. The most prominent example for such an example of bad apple is of the high failure rates in a major airplane which though was designed using a lot of new technologies but digressed from the basic risk assessment and quality control SOPs in order to meet short term cost and delivery targets. There have been various such cases which on proper analysis usually leads to non-adherence to preset necessary safeguards or a gap in the laid safeguards.

 

There are multiple ways to safeguard Quality when Value Engineering of a product or service is done. They are: -

1. Quality and Performance Parameters to be defined.

Define the quality and performance standards at the outset which are non-negotiable. Any redesigning of the system should not affect these well-defined standards.

2. Ensure involvement of all key stakeholders

Whenever Value engineering exercises are carried out it is of utmost importance that all key stakeholders from within (Functional departments) and outside (partners, vendors, regulatory organizations, customer representation groups, etc.) the organization is involved in the exercise in order to cover all aspects of risks.

3. Rigorous FMEA for Holistic Evaluation

Whenever alternative materials, designs, processes etc are being evaluated it is important to not just look at the cost but also the impact it can have on performance, reliability, safety, environment, customer satisfaction and experience etc.

4. Create systems for continuous risk assessments

Create a procedure for risk assessment of every change involving above mentioned stakeholders. Many people may consider this to be practice in red tapism slowing down innovation, but having such systems protect the organization, customers, investors, environment and the community from far greater risks.

5. Create mechanism for testing and validation of changes

In most cases in the past, value engineering failed due to insufficient testing and validation of the changes in order to meet cost cutting targets. Always having a mandatory robust and thorough quality testing and validation of changes is the only way to ensure the proposed changes do not negatively affect the quality.

6. Learning and Development (Statutory and Regulations, Technical, Behavioral)

People should be regularly given refresher training on the quality parameters of their particular work function and be given clear guidelines of what are their non-negotiables and the statutory and regulatory requirements are. Investment in both technical and behavioral trainings would ensure that Value Engineering is not misused to meet short term targets.

Jack Welch, CEO of GE in its heyday was a great proponent of Six Sigma principles and had mandatory trainings for all employees and had influenced GE’s vendors to also impart training and adopt Six Sigma.

7. Invest in Value Systems and Leadership

It is important to invest in value systems and leadership in order to safeguard good quality products with Value engineering to ensure that unreasonable goals and pressures are not created for employees and partners.

Edward Deming’s 14 principles of TQM is good example. Many organizations of repute adhere to this or similar value systems in order to ensure business continuity over short term show of results.

8. Have a dedicated team of Business Excellence

Having a dedicated team of cross functional and multi domain professionals such as MBB, BB, GB certified employees focusing and driving the continuous improvement in the organization who can leverage the workforce and processes in order to drive value engineering.

 

 

Yes as mentioned in the question, Value engineering (VE) got its start in World War II as a cost-effective way to produce high-quality goods. But in the recent times VE has occasionally been connected to decreasing product quality over time, this happens at the initial design stage or post product implementation through it's life cycle VE activity is taken up by several teams within the organization during cost reduction programs, but we will have to take certain precautions with Value Engineering to guarantee high-quality products:

1) Clearly Stated Goals: Mention or state the goals for the Value Engineering process, stressing that cutting costs shouldn't come at the cost of performance or product quality.
2) Cross-functional Teams: CFT should comprise of designers, engineers, quality control specialists, and other relevant parties. This ensures a all aspect approach to VE, taking into account every angel of the product.
3) Strong Analysis: To determine potential effects on quality, thorough analysis including the proposed modifications needs to be performed, to forecast results, methods like simulation, failure mode and effects analysis (FMEA), and risk assessment can be applied.
4) Customer first approach: Throughout the VE process, needs and expectations of the consumer should be in the forefront, we should ensure that no modification should impact the user experience or value proposition of the product.
5) Benchmarking: To ensure quality standards are maintained, we can compare proposed modifications to industry norms, rival products, and customer input.
6) Testing and Validation: We can use simulation, in-person testing, and prototyping to thoroughly test and validate suggested modifications on the product, this helps in the early detection of any quality problems.
Establishment of a culture of continuous improvement by using the VE process's input to further optimize and enhance products without impacting their quality.
7) Documentation and Traceability: We should keep a track of all modifications made during the VE process and ensure that they can be traced back to the initial design specifications. This helps in mapping responsibility and locating the source of any potential problems with quality.
8) Supplier Management: We should  ensure vendors and suppliers that are a part of the manufacturing process follow the requirements and standards for quality, effective communication and quality control procedures should be made between supplier and producer ex: OEM.
9) Management Oversight: To make sure that attempts to cut costs do not come at the expense of quality, provide management oversight and evaluation of the VE process. Senior management should participate actively in making decisions about suggested modifications and also review the VE step by step to ensure team is not violating  company norms or customer focus.

 

By putting these safeguards in place, businesses can make sure that Value Engineering projects concentrate on cost optimization without sacrificing product quality, providing value to the business and its clients.
 

Value Engineering is the process by which we try to alter thevalue being added to a product/service/process.

Altering the value being added can be achieved by: Using alternative method or use of alternative material.

By using these alternatives, we reduce the value being added but tha main part is to ensure to keep the quality or performance intact.

Initially, value engineering was done to enhance the process and quality of products being delivered but in present day, to compete in the market, it has become a practice to cut down the cost of material and method to a level where the basic deliverables are not achieved, resulting in inferor quality product reaching to the end customer.

As of now, if we discuss a value engineering project to be taken up, first impression on the management is that we will be tempering with the quality of the product. But if we follow the process of Value engineering in a structured manner, we may end up with a better process, less processing time giving a value delivering product at a competitive price. that is all a customer demands.

Value engineering is a systematic approach that improves the value of a project at the most economical cost. Value engineering is a well structured approch having stages which are pretty clear that the objective is to improve the process and its capability, analysing the value-adding and nonvalue-adding steps, eliminating any sort of wastages, using creativity for solution finding, evaluating and implementing. The stages are mentioned below:

1. Measure / Gather Information : In this stage we gather information and study them to define and refine the goals and areas to be prioritized that needs improvement.

2. Function Analysis : In this phase we analyse existing functions of the process for any improvement and also the functions that needs to be added. These functions need to be as non specific as possible so that we may have multiple options for executing a function. Each function is assigned a value to it.  

3. Creative : In this stage, creativity is used for performing various function define in above stage. This helps team to inculcate idea through brainstorming and find alternative to present existing system. Listing of all the creative solutions is done.

4. Evaluation : In this phase evaluation of all the solution from creative phase is done for the advantages and disadvantages to the system from the solution. The team performs a weighted matrix analysis to group and rank all the solutions and the best solutions are selected for execution/implementation. 

5. Development : This phase involves conducting deep analysis of the solutions selected to determine how it can be implemented and what is the cost involved. Technical analyses is also done in this phase. Team then defines the implementation plan.

6. Presentation : Team meets the management for presenting the plan and solution finalized along with the value being delivered. Any correction suggested by the management is made in the plan accordingly. 

7. Implementation : Once the management and the stake holders approve the team recommendations, implementation begins. 

 

If this structured approch is followed, value engineering will definitely regain its true purpose of enhancing the value delivered (Quality required) with minimum cost.

While all published answers are good and a must read, the best answer has been provided by Amol. Well done!