Real-World Examples of Value Analysis and Value Engineering
October 17, 2022
Value analysis (VA) and value engineering (VE) are powerful tools to improve profitability and sustainability that maintain VA/VE cornerstones of function and quality while reducing cost. The concepts are distinct, but even seasoned engineers often use the terms “VA” and “VE” interchangeably. While the phrases are similar and often used together to describe the philosophy, VA and VE have differences that attack different points in a product’s lifecycle. This article explores these differences and provides value analysis and value engineering examples.
What is the difference between value analysis (VA) and value engineering (VE)?
The primary difference between VA and VE is the product lifecycle phase during which the engineering team performs the assessment. For example, value engineering applies to the initial design phase, where a component model may contain features the designer used to illustrate to function crudely. Conversely, value analysis refers to an existing product with at least one complete design and production cycle for insights into potential value improvement opportunities.
Both approaches have their place:
- VE can improve the profitability of an initial launch that can carry sunk non-recurring engineering (NRE) costs and non-depreciated capital
- VA considers real-world feedback as to which product features the market cares about, which ones complicate manufacturing, and which reduce operating efficiency.
But to understand the difference between VA and VE, it is helpful to leverage examples of each during the product lifecycle.
Value analysis example
Value analysis improves the value ratio (function/cost) by [objectively] analyzing all components of the product cost through a Pareto chart. This analysis includes the manufacturing process cost and proposes ways to increase value or function at the existing cost or remove cost while preserving function and quality.
Optimizing a plastic bottle closure design is an is an example of VA. A commercially-available bottle may have a delivery nozzle that threads onto the bottle and a separate sealing cap that attaches to the nozzle, protecting it from the air that could evaporate the product’s fluid. The cost Pareto may show that the sealing cap is significant to the overall product cost, leading the engineering team to design an integrated sealing cap-nozzle that provides both functions in one component.
This solution would likely require additional tooling for the new shape. Still, it would reduce a significant amount of material by removing a component (also a sustainability win) and the assembly time to place and install the cap. In addition, this design change would reduce manufacturing tolerance stack-ups that could reduce scrap rate or introduce an additional leak path.
Value engineering example
In contrast to the VA approach, which looks at the existing product cost structure, VE targets areas in the initial design that may carry excessive costs into a product launch. The term “cost-avoidance” (instead of cost reduction) refers to the applying a value-based approach at this phase.
Assembling two mature piece parts is an example of VE. A customer may ask the manufacturer to construct the joint between two system components. The initial design may amount to a bolt-on solution accomplished by extending mating flanges to the existing components to attach the parts.
Engineers could run this step through a VE analysis before launch to consider redesigning a more integrated joint, using less material, and potentially recommending a different manufacturing technique to incorporate joints into a single component.
Value analysis and value engineering case study
JCI’s Applied HVAC Equipment division previously used organization-based tools like Sharepoint and emailed static files for VA/VE projects, taking weeks to deliver the ideas. This process is similar to many companies and industries conducting these analyses routinely. As an industry leader, JCI wanted to step up its collaboration by implementing CoLab.
The initial implementation enrolled eight users in a single location; this access has since extended to more than 180 in 4 countries. JCI uses CoLab to cover VE processes like drawing reviews to achieve cost avoidance, and it employs the software for manufacturing process steps and existing products for VA. In addition, they now use CoLab for virtual real-time VA/VE events, pacing the market for efficient collaboration in value engineering and analysis.
VA/VE is not just about cost reduction. Engineers can improve a product’s function or quality profile or enhance profitability to uncover funding for capital or other investment projects. Whether the team is analyzing an initial design to optimize the year-one profitability or collaborating on a production part, it is essential to engage the team efficiently to empower them to generate high-quality ideas quickly.
Applying the principles of VA/VE within CoLab, a platform that smoothly facilitated virtual participation (quadrupling engagement and doubling actionable ideas all tracked within the 3D model), enabled JCI to deliver 8-figure targets in consecutive years.