Value Analysis: An Applied Concept for Manufacturing and Service Industry


All organizations strive to create value for their customers. This value creates mind space for product and services. Value analysis, therefore, is a scientific method to increase this value.

Value is a perception hence every customer will have their own perceptions on how they define value. However, overall at the highest level, value is quality, performance, style, design relative to product cost.

Increasing value necessarily does not mean decrease in all-inclusive cost of production but providing something extra for which a premium can be charged.

The objective and benefits of value analysis can be summarized as below:

  • Value analysis aims to simplify products and process. There by increasing efficiency in managing projects, resolve problems, encourage innovation and improve communication across organization.

  • Value analysis enables people to contribute in the value addition process by continuous focus on product design and services.

  • Value analysis provides a structure through cost saving initiatives, risk reduction and continuous improvement.

Activities for Value Analysis

Activities for value analysis are separated into following activities:

  1. Product/Service: The 1st step is to identify the product or service which is based on usage/demand, complexity in development and future potential.

  2. Cost Analysis: The next step understands in detail cost structure in developing and manufacturing the product.

  3. Define product and function: The next step is to define all the primary function of the product and service through satisfying the basic need and then taking next step in delighting the customer. For this better understanding of product components and characteristics is required.

  4. Evaluation of alternatives: Through brainstorming possible alternatives can short listed which can provide value to the primary function of the product. Cost evaluation at high level needs to be done for all the alternatives, and the cheapest alternative is short listed.

  5. Secondary Function evaluation: Secondary functions of the product and services are studied and evaluated.

  6. Recommendation: Value Analysis done has to communicate to the various level of the management team as to get acceptance.

Value Analysis Team

The process of value analysis is carried out by value analysis team. So it becomes paramount that team selection for value analysis also follows a structured process. Value analysis team consists of trained and qualified team members who have background and knowledge about the project. Team leader is selected by the project manager. Team size for value analysis is 5 to 8.

Value Analysis Process

Value analysis process can be divided into three phases of mainly - pre-analysis, analysis and post analysis.

  1. Pre-analysis contains activities of project selection and team selection.
  2. Analysis phase as the name suggests consists of activities like investigation, speculation, evaluation, development and presentation of the report.
  3. Post analysis consists of activities’ implementation of the report and regular audit.

Functional Analysis part of Value Analysis

Function analysis is required to transform the project elements from design of product towards function of product. The main categories are Basic, Secondary, Required Secondary Aesthetic, Unwanted, Higher Order and Assumed.

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