- Bic Bost jit often yalue and cost are used as synonyms. This is not true. Cost is whal one EY Says for possessing an item of good or services. Hence, cost is tangible. Valu¢ is “SHEE teasure of satisfaction one gets from ‘acquisition of the item or service. This is “Hise tanglble as well as intangible. Perceived value is based on its functions such as "> performance, quality, appearance or combination of the above. Use value: The monetary measure of the properties and functions of an Ken OF ‘service which contribute its usage and hence salabilty. é : -gicBe’ Esteem value: This is the monetary measure of the properties an thc One of bughlyof an item or service, which contribute to its esteem demand and salability. In other * Feet rofers to tho special fealures, which makes one want to possess the item of service, : rapes Cost value: This is the monetary measure of input efforts such as material, : labour, ovethead, required to produce an item or service which contribute to its ” cost and salability. Exchange value: This is the monstary measure of the plopetlivs aiat lineal # Which contribute to its exchange ability for something else. Normally, he sum of use Value and esteem value is equal to or greater than the exchange value, viz, = Use valuet Esteem value= exchange value.” ‘Tirhe value: it is determined predominantly by the time of availability of the item or service, Computers are capable of computing fast and lence are capable of iving their services (solutions to problems) without any ime delay. This is time place value: Value of an Item or service depends upon its availabilty at 9 Pisce roa ML ie required, Water provided to @ traveler in a desert and life-saving , Wisieine made available to a dying patiznl ul the twsintal mor 1 atone irate to a manufacturer at his factory are examples of place value of pr or zervice. The traveler in the desert is prepared to pay a higher pice = compared to one in the plains to get 2 bottle of water because he attaches higher =" walue to satisty his thirst at the desert. Geet - have as ite price + wheb athing ost Value things abil, te sve m pivpete on sigmape ee is ee aca OF either monelBrig fies Iho Homey cn lac alent: Sorrel Che: Bate pt Mirage eee etalIndustrial Eng. Vali Eng. & Sukjecluencs Hinttinisie, Chelemging 15 6 peceers i things Goadse meline. Fotus on manufacture of product Alrovidiuis : Manufacturing of product taken for ranted. : erat Examines the best process. Concern with producer. Extrinsic bye Cae Focus on use of product Questions the necessity of manufacturing the product Examine the design, utility, value leading to meke or buy decision Concern with constuner Reduce cost per unit value.VALUE ENGINEERING eenstibnn: Sag i duction, The following arc the other benefits. © Jtis mainly used for Cost Re Quality Improvement Higher Productivity / Technology Upgradation Export Promotion Tnventory Reduction etc. Firstly, analyze and establish functional requirements of an item and try Cost without sacrificing the Quality & Raliability. In providing this at lowest this process, a host ‘of unnecessary features which invariability exist in our designs and operations are eliminated. Another important aspect is Teaia Building as person’s fééin various departments are involved. Cost Reduction — Design and Specs. Cost Improvement — Process, Operation: Eg: Dash Boards of polymers Pet bottles in place of Glass i > steel rings -> Stickers s, Overhead expenses ete. Inventory Reduction. Substitution by cheaper materials. Reductions in lead time & better avaliability. Standardization. VALUE ANALYSIS Lawrence D. Miles 1947 American Engineer with General Electric, stated as + Define the function - Evaluate the function ~ Find alternate way of performing function +” Successfully developed means DEFINATION ‘The constant and accelerating flow of new ideas, «products and new materials can, when properly apj ‘desired customer values at a lower cost. new processes, new plied, aid in establishingThis functional orientation relating product value to product cost was christened as VA. Some definitions and refinements y An Organized Creative Approach An Impressive Cost Reduction Technology An analytical Technology Problem Solving System. ‘A Prodding Methodology _ A Potent Economic Too! An Enlightened Management philosophy An:Attitude of Mind implem= Definition given by Electronic Industries Assot | It is the systematic application of recognized (dentifies the function of a product or service. x Qijstablishes a value for that function and 3:fEndeavors to provide that function at the lowest total cost without = Th degradation. Also knownas ‘More Popular Names Less well known Names ‘Value Analysis ‘Value Administration/Value. Control ‘Value Engineering VAMP Value Analysis of ‘Management practices/Value Improvement Value Management [ Value Assurance/Value sensexstv | ‘Value Analysis is Cost Correction. While Value Engineering is Cost Avoidance (Prevention). This distinction is made as to whether the technique is applied to products already in production OR before they reach production stage. VAMP - paper work & Organization _ Value ‘Administration — Overheads 2. Yalue Management — Total Operations YWA’s new features with old recognized techniques ‘A customer oriented outlook, which analyses the “Use-Value” and “Tstcem _ ‘Yalue” of the product to him.to the components. f ‘A functional Approach identifying the use’Value by the technical functions = of the Product (what makes the Product work reliability?) and esteem value - by marketing functions (what makes product sell?). Evaluating the function & comparing the respective costs with the values. YA recognizes the value to the customer is really related to the functions of © the’components of a product, while cost to the manufacturer is related only Reduction or elimination of “Hidden” costs found disproportionate to functional value. Increased costs for improvement of product value: Systematic organized teamwork for exploring alternate ways of performing a needed function with better effectiveness of communication and pa implementation. VA starts with a formal information phase with which better analysis and results are possible, Cast Pay Cost of idle resources ete Production control Work added by inefficient method of | Method Study infg. Work added by unwanted Spec & features VA Zone Minimum Amt. to make product VA ZONE OMeads. 25 TERIAL i,VA Methodology and VA job Plan I sLiy Whatis the item/service ? :2,):What does it cost ? 3, What does it do ? 4, Who would do the job a 3, 5, .What would the alternative cost be? eam identifies components of the product, the function (basict secondary), which they perform & evaluate the various basic functions. Tube lget \\ Baeie Function bac ‘Ttem Verb [Noun Shaft ‘Transmits Torque Transformer rcaiies 7 uo aenieru Moles er ae Paint “| Prevents Corrosion or Gasket Creates Seal Perfume Provides == Odour Refrigerator | Preserves Esteem Youd Pencil Makes Mark Wire Conducis Current oo fe Teor Evaluation of function is sibjectve if tackled by judgement or experience. (Not desirable) Objective — One function is compared with each of the other functions one at a time and more important with other functions are noted. Total weightage and % value worked out A B A A3 jA3 A3 B B-1 B-1 fe C-l ea one D = ‘Numerical Evaluation | =Minor diff. In Importance + 2=Medium diff. In Importance 3 = Major diff. In Importance.d every manager responsible of the product at any stage b/w nitial concept design, ‘purchase, and sale should himself contribute to the "jmprovement of the product value. Following criterions are challenged. 1;, Does it contribute to value? E.g. Accessories on cycle, two wheelers seat cover .Is its cost proportionate to its usefulness? . Does it need all its features? 4, Are these anything better for intended use? 5. Can ausable part be made by a lower cost, method? 6. Will another dependable supplier provide it for less? 7, Is anyone buying it for less — Competition e.g. controls on compressious? 8 9. 1 “Do materials reasonable labor overheads & profit total its cost? |. Js it made of proper too lings — considering qualities used? 0.Can a standard part be found which will be usable? E.g. fasteners c’shaft/e’wt ‘Multidisoiplined VA team is pressed into service on VA job plan 6, Follow hase. 5. = Implement- a) ation phase 4. Analytical -_| phase a ee Information phase g 1, Product selection phase. Higher potential saving envisaged. Product Life Cycle Y9. Information Phase. Taformation phase is also known a5 preparation phase or phase and Investigation Phase. The top ‘management selects 2 / Communicate objectives of VA effort. ‘Commitment. ‘Team members prepare detailed information on their respective formation, Flow cl ‘Technical and Marketing areas, Competitors in ate vendors, cost of production, Purchase Analysis ‘and list of altern: Implementation ‘200d team. areas like hart for jndividual components ete. 4. fui valuation Summary [FUNCTIONS ~~] WEIGHTAGE POINTS | VALUL % @) Establish 9 4 Connection ‘pp induce F 2 5 Al mines Sacre . Bresent method is in use for 15 years ~ why change? 3, Output will drop — we may loose incentive. “4, Why change when you are getting the O/P &. If they're saving in cost, what do we get? Gradual Change over Operators trained -> induction ‘More Operators Sales/field staff Conclusions 1, Material cost saving. 2, Output goes up when less pi 3, More incentives to workmen. arts to handle.VALUE ENGINEERING Assiqmout BRIEF DESCRIPTION ABOUT THE COMPANY: Shaily Engineering Plastics Ltd is an integrated advanced plastics injection moulding company having leadership in injection moulding ,plastics finishing mould making vacuum metalising ,pad printing ultrasonic welding. and’ hot stamping . Its product range includes high precision injection moulded plastics components and sub assemblies supplied to multinational companies like GE Appliances (USA),Hindustan Leaver, Procter and Gamble ,and ABB .The company specializes “, in processing diverse, difficult and exotic Plastics for OEM requirements like. . Electronics ,Electrical ,,Automotive, Telecommunication, Power Tools , Railways” ~ ‘Submersible pumps , packing, house hold products etc. The company has three facilities having a total employee strength of 350.Jt is an ISO 9002 certified” company by TUV Barron, VALUE ANALYSIS In order to be successful in the international market, any product must excel in three areas; Price Quality and Technology. In general Indian products are not competitive in global markets because of price factor, hence to bring down costs is the most important aspect for Indian industries. By cutting down cost of production _ we will be able to provide highest value for money to the customer. The value consciousness is the underlying principle of value management. Value is the measure of satisfaction one gets from acquisition of items or service. Perceived value is based on its functions such as performance, quality, appearance * or combination of the above. : The basic objectives of value engineering activities are: 1.Reduce cost without reducing quality 2.Increase value without increasing cost 3 Increase value for given cost. PRODUCT SELECTION ‘The company’s monthly sales comes to about three crores per month. Out of these, three products contribute about 80 % of the total sales. The products, which was selected for carrying out the value analysis exercise, has numerous operations andmore contribution in terms monthly sales ‘Che product is a Lipstick assembly, which is supplied to one of our customer who in turns only fills the cake and“ markets them under a MNC brand name (Actual name withheld). z ‘The main aim was to reduce cost without reducing quality. The product consists of the followings Sr.No Item Function Primary _ Secondary 1. BASE For holding the # ; mechanism body and to form the outer for the Lipstick bottom: Z. TOP For covering the cake # and forms the top cover of the Lipstick Assy. 3 SPRIL Helps in movement of | # oo the salve cup(moving of the cake up and 2.auit 2 down) i 4 SALVE CUP |Holds the cake,and = | # moves up and down 5. MECHANISM | Helps in movement of || # BODY the salve cup. 6. FERRUL For Holding the cake, # and bears the brand name 7. ALLUMINUM | For out side aesthetics # SLEEVE 8 METAL. Gives dead weight to # SLUG the assy & : FUNCTIONAL ANALYSIS On a 5-point scale following Characteristics of the product requirement are rated.DESCRIPTION RATING RELATIVE. RANKING WEIGHTAGE Smooth movement of 5 36 I cake Attractive looks 4 29. 2 Good fitment of top and | 3 21 3 bottom. ‘Wear and tear resistance |2 14 4 during use. Total 14 The sequence of important is ranked as above. ‘A brainstorming season was organized with the technical service team and the production team to find out different alternatives. All the parts are studied in detail and suggested alternatives are listed considering the rank of the product characteristics (low rank first). 4 r a ) PS > Palyestapiene PP. fol rylene ALTERNATIVES: Sanath a Biss + acdylonitwile 1 Change material from ABS to cheaper material like SAN,PS,PP. 2.Change design to reduce assembly time of metal slug on the base. 3 Reduce wall thickness of the base to save on material. ‘ ‘Yop: 1.Change material from ABS to cheaper material like SAN,PS,PP . 2. Reduce wall thickness of the base to save on material. Spiral: Higblpact 1 Change material from ABS to cheaper material like PS and HIPS. fides 2.Change the design of the spiral so as to reduce the height of the alluminium sleeve . 3.Inorease dimension to reduce cycle and increase production. Sleeve: Fae 1. Try indigenous sleeves to replace imported ones. , i SeFerrule: 1Do plating instead of metalising, 2.To use PS instead of ABS. 3.Do not metalise the hidden areas. Mechanism body: I Change design to accommodate press fit for the metalslug Salye cup Holder: No suggestion Packing : 1.Change from interlocker packing to shrink film packing. 2.No individual packing for each assy. From all the above suggestion listed above the following things were selected to be changed and implemented. 1.Changed design to avoid gluing of metal slug with Mechanism body. Cost of glue saved comes to be Rs. 0.15 PCP Pat ne- 2.Change of material from ABS to fer. Saving per assy comesto. © POEs Rs.0.18(Rs.30 is the diff per kgs.total material used is 6.4 gms perassy). ...¢ 3.Change of design of spiral to reduce the cost of sleeve. Cost saving was Rs.0.25 per assy. 4. vigorous vendor development was perused and was able to localized the availability of Alluminium sleeves. Cost saved Rs.0.50 Per assy 5.In ferrule metalising was restricted to only the visible areas. Cost, saved; Rs.0.15 per assy. i 6.in packing the interlockers were avoided and shrinkpacking was’ done. Total cost saving was Rs.0.10Cost Break Up expect higher benefit. Component BASE AND TOP. V7 = FERRULE 12 0.15 SPRIAL 54 0 SALVE CUP 80 0 MECHANISMBODY _|.68 0 SLEEVE 2.25 0.75 ASSEMBLY 0.85 0.20 PACKING 0.25 0.10 TOTAL COST 8.27 138 Total cost saving from this exercise was Rs.1.38 per assembly. Considering that we sale about 600000 nos of Lipstick assembly per month the net saving is Rs.828000. We had taken approval from the customer for carrying about all the change in the material and the design and the saving was split 50/50. We as a company has saved about Rs.400000 per month from this exercise. We are presently doing similar studies on a meter assembly, from which we