Value Analysis


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Value Analysis and Value Engineering : 

Value Analysis and Value Engineering 1

What is Value : 

What is Value The value is what customers are demanding – the right combination of product quality, fair price for goods and services Value is ultimately defined by the customer Value is dynamic Traits: speed, cost, quality and flexibility 2

What is Value : 

What is Value Value=performance / cost Performance=quality + speed + flexibility Offer products that perform Give more than the customer expects Give guarantees Avoid unreasonable pricing Give the customer the facts Build relationship 3

Value analysis : 

Value analysis DEFINITIONS: A task to find more economical way of making or buying a product A systematic approach to lower the cost keeping same level of performance A study of the relationship of design, function and cost of product, material or service with the objective to reduce cost Investigation of performance with respect to function and unit price to develop most effective spec at lowest cost 4

Objectives of Value analysis : 

Objectives of Value analysis To provide better value to product/service To improve the company’s competitive position To ensure that every element of cost contributes proportionally to the function of the product To achieve continuous performance/ cost/quality improvement 5

Value Engineering : 

Value Engineering Value Analysis is applied to existing products which are in the market for continuous improvement of its value Value Engineering is the application of Value analysis techniques during new product design and development 6

Application of value Analysis : 

Application of value Analysis This attacks two aspects of the product The use function or the ability of the product to perform according to spec The aesthetic function, appearance or style of the product Analysis: 1. The purpose of the product 2. Basic/ Primary Function 3. Secondary Function 7

Checklist – Value Analysis : 

Checklist – Value Analysis Select an item of high annual rupee volume ( annual consumption value) Identify the function Is the item necessary, does it add value or it can be eliminated Can spec be made less stringent to save cost Can packaging be made cheaper 8

Steps for Value Analysis : 

Steps for Value Analysis Establish the objective (cost reduction) Appoint team of people from different connected functions Analyze the mfg process Analyze the use Decompose and analyze characteristics Hold a brainstorming session Sort the ideas Select the best and develop a plan of implementation 9

Benefits of Value Analysis : 

Benefits of Value Analysis Better purchasing techniques Better suppliers Design modification Lower operating costs Standardization/substitution Better packaging Better material handling Lower cost of maintenance 10

Material Requirement Plan (MRP) : 

Material Requirement Plan (MRP) This is one of the inventory control methods for Input material requirement This is a computer based information system designed to handle ordering and scheduling of inventories The input for this control is the “Master Production Schedule” This determines when to order and how much to order 11

Process of MRP : 

Process of MRP Master Production Schedule is analyzed which is based on customer commitments The requirement of all input materials is calculated based on production schedule Input materials are ordered on suppliers based on lead time and quantity of each input material is firmed up Delivery schedule is given to suppliers based on MRP output 12

Objectives of MRP : 

Objectives of MRP To improve customer satisfaction/service by meeting and improving on delivery schedules promised to the customers ( Analysis of on-time delivery) To reduce inventory costs by reducing inventory levels To improve plant operating efficiency To utilize plant capacity fully by highlighting spare capacities 13

Benefits of MRP : 

Benefits of MRP Accurate planning of input materials requirement Accurate ordering on suppliers based on computation of MRP software Accurate Capacity planning Highlights spare capacity and overloading of machines Alteration of delivery commitments if required Accurate inventory control 14

MRP System Output : 

MRP System Output Order schedule plan for input materials Changes in planned orders Exception items to draw attention System performance report Stock out reports Delivery promises kept Inventory forecasts 15


KANBAN What is Kanban? Kan means visual and ban means a card (signboard) This is one of the techniques to control inventory This is generally used for sub-components which are required for main assembly of the component Kanban means a “signboard” or “billboard”and is a concept related to JIT system This signboard indicates a requirement and is known as “pull” system of requirement (MRP) A communication tool in JIT production and control system Designates a pull production means of communicating need for product or service 16

Kanban : 

Kanban It is a system of continuous supply of components, parts and supplies, such that workers have what they need, where they need it, when they need it Kanban is directly associated with JIT delivery However, Kanban is not another name for JIT delivery It is a part of larger JIT system There is more to managing a JIT system than just Kanban and there is more to Kanban than just inventory management 17

Kanban : 

Kanban Let us take an example of a car assembly line where 100 cars are manufactured everyday Hence 100 carburetors are required everyday These 100 carburetors come on a pallet from mfg line There are two boxes or bins , each can take 100 carburetors , bin A and bin B When the empty bin A comes back to mfg line means the assembly line needs the filled box While the empty bin A is being filled by mfg 100 new carburetors, the assembly line is using the carburetors from the bin B in the meantime When the bin B gets empty , it is sent to mfg line for a refill, This keeps repeating and assembly line gets the filled bin as and when they need ( JIT ) 18

Pull / Kanban Systems : 

Pull / Kanban Systems Pull / Kanban is a method of controlling the flow of production through the factory based on a customer’s demand. Pull Systems control the flow of resources in a production process by replacing only what has been consumed. They are customer order-driven production schedules based on actual demand and consumption rather than forecasting. Implementing Pull Systems can help you eliminate waste in handling, storing, and getting your product to the customer. Pull Systems are an excellent tool to use in the areas where cellular or flow manufacturing can not be achieved. 19

Benefits of Kanban system : 

Benefits of Kanban system It reduces inventory in the system by mfg the exact quantity that is required and the quantity is not based on demand forecast It eliminates product obsolescence as the mfg is done only to the extent of the quantity that is required to execute the orders on hand It ensures implementation of JIT system It helps to implement Kaizen system Reduces waste and scrap It provides flexibility to respond rapidly to changing demand Reduces total cost by preventing overproduction 20


KAIZEN It is a system of continuous improvement in quality technology processes company culture productivity safety leadership 21


KAIZEN Kaizen is focused on making small improvements on a continuous basis and finding creative solutions instead of capital expenditures KAI………to change or modify ZEN…… improve =modify to improve 22

What is Kaizen : 

What is Kaizen Kaizen is a system in which every employee is encouraged to come up with small improvement suggestions in their area of work on a regular basis This is a continuous exercise 60/70 suggestions per employee per year are written down, shared and implemented 23

Process of Kaizen : 

Process of Kaizen Ideas are not for major changes Ideas are little changes on a regular basis always improving productivity, safety and effectiveness and reducing waste To support the higher standards, Kaizen also involves providing the training, materials and supervision needed for employees to achieve higher standards 24

Elements of Kaizen : 

Elements of Kaizen Quality Circles Improved Morale Teamwork Personal discipline Suggestions for Improvement Happy employee is a Productive Employee 25

FIVE “S” Program : 

FIVE “S” Program Sort (clean up) Systematize (organize) Sweep (regular cleaning) Standardize (simplify) Self Discipline 26

Kaizen Problem Solving Tools : 

Kaizen Problem Solving Tools Pick a project (Pareto Principle) Gather data (Histogram and control chart) Find cause (Process flow diagram and fish bone diagram), Brainstorm Pick likely causes, seven deadly wastages Try solution (PDCA),” plan do check act” Implement solution Monitor results Standardize on new process 27

Kaizen v/s Innovation : 

Kaizen v/s Innovation Small improvements Fair knowledge Personal involvement Many people Improve the process Even in slow economy Major improvements Technology or equipment Money investment A few champions Improve results Mainly in good economy 28

Steps to Implement Kaizen : 

Steps to Implement Kaizen Discard conventional fixed ideas Think how to do it, not why it can’t be done Start by questioning current practices Do it right way, if you make a mistake, correct it Do not spend money for Kaizen, use your wisdom Find root cause of the problem Seek wisdom of 10 people Kaizen ideas are infinite 29

Benefits of Kaizen : 

Benefits of Kaizen Involves every employee in making a change Focuses on identifying problems at their source and addresses seven deadly wastages Continual small changes add up to major immediate benefits Results: Improved productivity, quality, safety, faster delivery, lower costs and greater customer satisfaction 30


JUST IN TIME (JIT) JIT means just in time hence no wastages INPUT……Process……output Process has wastages like scrap , waiting Process is a summation of activities such as operation, inspection, delays, storage, transport and everything else that happens between the beginning and end of the process Operation does not include inspection and other delays 31


OPERATION There are two types of operations: 1. DO 2. Make ready Warming up an iron till it reaches desired temp is ‘Make Ready’ operation Ironing is a ‘Do’ operation 32


SEVEN DEADLY WASTAGES Waste arising from - Over producing waiting Transporting and unnecessary motion Processing; Cpk Unnecessary stock on hand Producing defective goods Time spent in changeover of setup 33

Management Orientation : 

Management Orientation Process Oriented v/s Result Oriented Process oriented mgmt: keep doing things right first time – result good automatically Concentrate on causes , ensure that the causes operate as per design Concentrate on perfecting the causes in the process Result oriented: get good profit , I don’t care How 34

Value Added Activities : 

Value Added Activities VA activities add value to the product Do operations are VA items, the rest are non VA activities Amount of time spent on NVA exceeds the time on VA activities Result oriented mgmt attacks VA activities to make them more efficient in the belief that VA activities matter most. This way they lose more than what was gained, due to NVA 35

NVA Activities : 

NVA Activities NVA activities should be eliminated or made efficient in terms of time Many companies have increased production and simultaneously increased inventories Wastage deals with time, loss of time, increases throughput time , i.e. time between getting an order to realization of money 36

TQM : 

TQM TQM is a combination of JIT, TQC ,TPM, Kaizen, Pokayoke Today many Japanese companies work with zero breakdowns, zero defects, zero accidents and zero speed loss Faster information flow brings down the lead time and lesser need to maintain high inventory 37

Pokayoke : 

Pokayoke To avoid inadvertent errors Systematic technique to avoid errors at work Briefcase – upside down Autoriksha – Rod on the right side Sockets – 5 amp and 15 amp Connectors of computers Interlocking – limit switch microwave – if you open the door the micro will stop 38

SQC and SPC : 

SQC and SPC Statistical Quality Control Statistical Process Control Product Quality has two aspects a) Controlling b) Verifying Old Method: Inspection only sorts out OK and REJECTED products This can neither improve Quality of the product nor prevent the Rejection from recurring hence Inspection is not QUALITY CONTROL 39

Controlling : 

Controlling ACT>>>>PLAN>>>>DO>>>>>CHECK>>>>ACT This is called PDCA Cycle Every function of the co contributes to achieve required product quality at economic cost Checking of quality is assigned to the workers who make the product Returning inspection to its origin 40

Verifying : 

Verifying Means verifying the variations which need to be controlled Higher the variability inferior is the quality Statistical Techniques help to measure the variability Inputs…..controllable/uncontrollable….. process…..measurement, evaluation, controls….output The sources of variation: MEN, MACHINE MATERIAL, METHOD and MEASUREMENT 41

Types of Variations : 

Types of Variations Chance causes (natural causes or uncontrollable causes) Assignable causes ( unnatural causes or controllable causes) When variation is due to chance causes the process is under control or stable When the variation is due to assignable causes the process is out of control 42

Principles of SPC : 

Principles of SPC No two things are exactly alike Variation can be measured Things vary according to a definite pattern Large no of measurement cluster around middle It is possible to determine the shape of distribution curve Variation due to assignable causes distort the normal distribution curve 43

Normal Distribution curve : 

Normal Distribution curve When we measure each piece from a machine or an operation and make a Tally of measurements, we shall have a curve which is called a normal distribution curve If we do not measure each piece, but collect some pieces and measure, then chances are: = 68% (34+34) + or minus 1sigma =28% (14+14) + or minus 2 sigma = 4% (2+2) + or minus 3 sigma Most measurements tend to cluster around the middle of this bell shaped curve 44

Problem Solving TechniquesQuality Tools : 

Problem Solving TechniquesQuality Tools Flow Diagram….. process flow Brainstorming….. involve many people Data collection…..actual data for statistical analysis Graphs………. to get the trend Stratification ……segregate the data Cause and effect Diagram……to find root cause Pareto charts……… to differentiate vital few Scatter Diagrams… .to find relationship between variables Histogram………. to study process capability Control Charts…… for online QC 45

Six Sigma : 

Six Sigma Six Sigma- (The statistical Representation) is a process of Quality measurement, which helps the organization in the improvement of their Quality Six Sigma is a systematical process which helps the organization to eleminate the defects which prevent it from reaching perfection Six Sigma ensures the QC, TQM and Zero Defect When a process attains six sigma level it means that there is no room for the product to fail Six sigma is professionalizing of the Quality Management functions

Total Quality Management (TQM) is a structured system for meeting and exceeding customer needs and expectations by creating organization-wide participation in the planning and implementation of improvement (continuous and breakthrough) processes What is TQM ?

Total Quality Management : 

Total Quality Management Total: Involve all functions to have customer focus and give reliable delivery of product+service in line with customer’s expectations at lowest cost Quality: Design and manufacture the product+service to achieve zero defect and 100% customer satisfaction Management: Lead to achieve quality for customers by communicating the vision, mission and values to all employees and creating continuous improvement culture

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