Value engineering techniques are crucial tools in strategic cost management. They help companies optimize product value while minimizing costs. This topic explores methods like function analysis, FAST diagrams, and the value index to identify improvement opportunities.

The chapter also covers cost management tools and creative problem-solving techniques. Life cycle costing, cost-function matrices, and brainstorming methods enable teams to generate innovative solutions for reducing costs without sacrificing quality or performance.

Value Analysis Techniques

Understanding Value Analysis and Function Analysis

• Value analysis systematically examines product components to identify cost reduction opportunities without sacrificing quality or performance
• Function analysis identifies and classifies product functions as basic or secondary
  • Basic functions fulfill essential product purposes (provide light in a lamp)
  • Secondary functions enhance product appeal or usability (adjustable brightness settings)
• Value analysis process involves:
  • Identifying product components and their functions
  • Evaluating component costs relative to their importance
  • Exploring alternative materials or designs to reduce costs
  • Implementing changes that maintain or improve product value
• Function analysis techniques include:
  • Verb-noun method defines functions using action verbs and measurable nouns (conduct electricity, support weight)
  • Random function identification lists all possible functions without initial categorization
  • Function tree organizes functions hierarchically, showing relationships between primary and secondary functions

Visualizing Functions with FAST Diagrams

• Function Analysis System Technique (FAST) diagram visually represents functional relationships
• FAST diagram construction steps:
  • Identify the highest-level function (critical function)
  • Determine supporting functions by asking "How?" for each function
  • Arrange functions from left to right, showing logical dependencies
  • Add parallel functions that occur simultaneously
  • Include "Why?" logic to validate function relationships
• FAST diagram benefits:
  • Clarifies functional hierarchies and interdependencies
  • Highlights opportunities for function consolidation or elimination
  • Facilitates team communication and problem-solving
• FAST diagram types:
  • Technical FAST focuses on product functions and their relationships
  • Customer FAST emphasizes functions from the user's perspective

Evaluating Function Importance with Value Index

• Value index quantifies the relationship between function importance and cost
• Value index calculation: $\text{Value Index} = \frac{\text{Function Worth}}{\text{Function Cost}}$
• Function worth determined through customer surveys or expert assessments
• Value index interpretation:
  • Value index > 1 indicates function provides more value than its cost
  • Value index < 1 suggests function may be overpriced or unnecessary
  • Value index = 1 represents balanced value and cost
• Value index applications:
  • Prioritizing improvement efforts for low-value functions
  • Justifying design changes or material substitutions
  • Comparing alternative designs or suppliers

Cost Management Tools

Life Cycle Costing for Long-Term Cost Analysis

• Life cycle costing considers all costs associated with a product throughout its entire lifespan
• Life cycle stages include:
  • Research and development (concept design, prototyping)
  • Production (manufacturing, assembly)
  • Operation and maintenance (user costs, repairs)
  • Disposal or recycling (environmental impact, decommissioning)
• Life cycle costing benefits:
  • Reveals hidden costs not apparent in initial pricing
  • Supports informed decision-making for long-term investments
  • Identifies cost-saving opportunities across product lifecycle
• Life cycle costing process:
  • Define product lifecycle and timeframe
  • Identify all relevant costs for each stage
  • Estimate future costs and apply appropriate discount rates
  • Calculate net present value of total lifecycle costs
  • Compare alternatives based on total lifecycle cost

Cost-Function Matrix for Function-Based Cost Analysis

• Cost-function matrix maps product functions to their associated costs
• Matrix construction steps:
  • List all product functions in rows
  • List all cost categories or components in columns
  • Allocate costs to functions based on their contribution
  • Calculate total cost for each function and component
• Cost-function matrix applications:
  • Identifying high-cost functions for targeted improvement
  • Revealing disproportionate costs relative to function importance
  • Facilitating cost comparisons between design alternatives
• Cost-function matrix analysis techniques:
  • Pareto analysis identifies the vital few functions driving majority of costs
  • Trend analysis compares cost-function relationships across product generations
  • Benchmarking compares cost-function allocations with competitors or industry standards

Creative Problem Solving

Brainstorming Techniques for Idea Generation

• Brainstorming generates multiple ideas or solutions through collaborative thinking
• Brainstorming principles:
  • Defer judgment to encourage free-flowing ideas
  • Aim for quantity over quality initially
  • Build on others' ideas
  • Encourage wild or unconventional ideas
• Brainstorming techniques:
  • Classical brainstorming involves group discussion and idea sharing
  • Brainwriting participants write ideas individually before sharing
  • Reverse brainstorming identifies ways to cause or worsen a problem
  • SCAMPER method prompts idea generation through specific actions:
    • Substitute: Replace components or materials
    • Combine: Merge ideas or functions
    • Adapt: Modify for new contexts
    • Modify: Change size, shape, or attributes
    • Put to another use: Find new applications
    • Eliminate: Remove unnecessary elements
    • Reverse/Rearrange: Change order or perspective
• Brainstorming session structure:
  • Define problem or objective clearly
  • Set time limit and group size (typically 5-10 participants)
  • Appoint facilitator to guide discussion and record ideas
  • Review and categorize ideas for further evaluation

Exploring Design Alternatives for Cost Reduction

• Design alternatives explore different approaches to meet product requirements
• Design alternative generation methods:
  • Functional decomposition breaks down product into basic functions
  • Morphological analysis combines different solutions for each function
  • Analogical thinking applies solutions from unrelated fields
  • Biomimicry draws inspiration from nature (Velcro inspired by burrs)
• Design alternative evaluation criteria:
  • Cost effectiveness
  • Performance improvement
  • Manufacturing feasibility
  • Market appeal
  • Environmental impact
• Design for X (DFX) methodologies optimize designs for specific objectives:
  • Design for Manufacturing (DFM) simplifies production processes
  • Design for Assembly (DFA) reduces assembly time and complexity
  • Design for Environment (DFE) minimizes ecological impact
  • Design for Maintainability (DFM) improves serviceability and repair
• Value engineering workshops:
  • Bring together cross-functional teams (engineering, manufacturing, marketing)
  • Use structured approach to generate and evaluate design alternatives
  • Employ decision matrices to objectively compare options
  • Develop action plans for implementing selected improvements