VA/VE for Mechanical Engineering Teams: How to Upgrade Your Approach in 2023

Value Analysis and Value Engineering (VA/VE) are tried-and-true techniques for engineering-led cost reduction, but many teams lack a structured, repeatable framework for running VA/VE effectively. Find out how you can develop a stronger VA/VE strategy that keeps your idea pipeline flowing.

What is VA/VE in mechanical engineering?

Value analysis (VA) and value engineering (VE) are distinct but related concepts within product development. In the simplest terms, VA/VE refers to a methodology for optimizing product value. This can be done by reducing costs while preserving functionality, and/or by enhancing functionality without increasing costs.

VA/VE involves systematically looking for opportunities to improve a product. This typically means analyzing a product’s overall design, its individual components and functions, and/or its manufacturing and production processes. The goal is to optimize the value a product delivers by maximizing its benefits while minimizing its costs.

Rather than a single, specific framework for VA/VE, there are many ways to execute value methodology. What differentiates VA/VE from other problem-solving approaches is its focus on function analysis via structured process. No matter what a VA/VE process looks like, it will involve 1) assessing a product, 2) understanding its functionality and customer priorities, and 3) identifying alternate ways to meet or exceed the relevant requirements.

For some companies, VA/VE is just one piece of a broader cost reduction plan. Yet, although finance-led and procurement-led cost reduction tactics are still common, more and more businesses are identifying engineering-led cost reduction efforts (such as VA/VE) as a strategic priority — particularly in response to the current global economic climate. Pressures like inflation and supply chain disruption are reducing the effectiveness of traditional go-to methods for achieving cost reduction goals, which is causing more engineering businesses to step up their investment in dedicated VA/VE programs and job roles.

Purpose of VA/VE

The basic purpose of VA/VE is not difficult to grasp: it’s all about improving value. That happens either by eliminating unnecessary costs, or by making the product better without increasing costs. (Of course, the holy grail is to consistently generate an idea pipeline full of ways to do both at once!)

In other words, the goal of VA/VE is to ask: Can we spend less while delivering the same end value? Or, can we spend the same amount but deliver greater value?

VA is also intended to recover costs from earlier phases of the product lifecycle. During new product development (NPD), the benefits of getting to market faster tend to outweigh the potential benefits of optimizing initial product costs. That means speed and quality typically take priority over cost. However, once a new product is introduced, it’s crucial to use VA techniques to uncover potential cost-saving opportunities.

Ultimately, the true purpose of VA/VE boils down to having a positive impact on the business. When an effective VA/VE process is executed consistently, it produces tangible business results like lower expenses, higher customer satisfaction, and increased market share.

The difference between value analysis and value engineering

Although value analysis and value engineering share the same ultimate goal, they are deployed at different points in a product’s lifecycle. While the concepts are distinct, even seasoned engineers may use the terms “VA” and “VE” almost interchangeably. Yet part of building an effective VA/VE process is considering when, where, and how to use each method.

The difference between value analysis (VA) and value engineering (VE) is:

  • Value engineering focuses on finding cost savings during the initial design phase
  • Value analysis focuses on finding cost savings for existing products

In other words: value engineering involves optimizing value from the outset of the design process, before launching a product to market. Conversely, value analysis applies to existing products with at least one complete design and production cycle.

To illustrate this difference with examples of value engineering and value analysis, consider a simple plastic bottle. Imagine the closure design consists of a delivery nozzle that threads onto the bottle and a separate sealing cap that attaches to the nozzle. 

Through VA, you may uncover an opportunity for significant cost savings by redesigning the closure into an integrated sealing cap-nozzle that provides both functions in one component. On the other hand, VE is more about cost avoidance than cost reduction. So with a VE approach, the bottle’s closure redesign would happen before the initial product launch, as part of NPD.

How to separate function vs. feature

Understanding a product’s function is at the core of value analysis and value engineering. 

In this context, function refers to the product’s essential purpose: a car’s function is transportation, whereas a chair’s function is to provide seating. A feature, on the other hand, is a specific aspect or characteristic of a product — like the leather interior of a luxury car, or the material used to upholster an armchair.

When performing VA/VE, it’s important to distinguish between functions and features. This can be done using techniques such as functional decomposition (breaking the product down into its component parts and identifying the function of each) or functional analysis (describing a product in terms of its functions and how they’re performed).

Identifying the functions of a product and separating them from the features is part of the systematic and analytical approach of VA/VE. Before you can generate cost-saving ideas or redesign the product, you need to have a strong understanding of where it already stands. By getting a clear picture of what the product needs to achieve and how it currently achieves it, you’ll have the information you need to find and assess potential savings opportunities.

Why do you need VA/VE?

Engineering companies that neglect to develop a robust VA/VE strategy in the coming years will have a harder time competing for customers, talent, and market share. On the other hand, creating a strong VA/VE culture is a smart strategic move that can have big ROI when done well.

When it comes to new products, an effective VA/VE process is a necessary counterbalance to the demands of typical NPD. The iron triangle of Good, Fast, and Cheap — of which only two are achievable at a time — deprioritizes cost when leaders want high-quality solutions in a hurry. Despite the importance of profitability, the choice must be Good and Fast to keep up with the rapid pace of business. That’s why companies rely on techniques like value analysis to recover cost in later product phases.

From a broader business perspective, VA/VE is a fundamental tool for engineering-led cost reduction initiatives. Traditional finance-led or procurement-led cost reduction efforts aren’t being abandoned. But they’re no longer going to be sufficient, either. 

To continue meeting targets, large engineering enterprises will need to grow their investment in engineering-led cost reduction programs including VA/VE. This is due to factors such as:

  • Overall macroeconomic climate (recession, market conditions)
  • Added external pressures like supply chain disruptions and global affairs
  • Accelerated product development cycles with lofty time-to-market goals
  • Rising product complexity that requires multidisciplinary expertise and collaboration

Rather than negotiating with suppliers for incremental cost improvements, VA/VE is a way for engineering teams to design cost out. By focusing upstream, on a product’s design and design processes, engineering-led cost reduction can generate substantial cost savings opportunities — in a way that other cost reduction methods simply cannot.

VA/VE methodology

The value of a product can be expressed as the ratio of its benefits to its costs. This value ratio can be calculated using the following formula: Value = Function / Costs

VA/VE methodology seeks to increase the value ratio of a component or process by increasing function, decreasing cost, or both. There are different approaches to VA/VE, but the main concept involves breaking the product down into its component parts and evaluating each one — all in a structured, systematic way.

7 steps of an effective VA/VE process

From selecting the best product for analysis to assessing and prioritizing ideas to implement, the VA/VE process can be long and complex. While no framework is perfect, it helps to have a rough idea of all the steps involved from start to finish.

Here are 7 steps for a quality-driven VA/VE process:

  1. Product selection
  2. Cost Pareto
  3. Marketing and voice-of-consumer interviews
  4. Manufacturing process go-and-see
  5. Review of prior work and design review and ideation with product SMEs
  6. Ideation with engineering and design from external team members
  7. Idea summaries scored and presented

Tips for your next VA/VE initiative

Of course, there’s no one-size-fits-all template that can tell you exactly how to improve your VA/VE approach. That’s going to depend entirely on your role, your team, business needs, strategic priorities, resource constraints, organizational culture, and a whole host of other factors. However, there are some general principles that anyone can apply to boost the impact of engineering-led cost reduction initiatives.

Here are 3 tips for a stronger VA/VE program:

  1. Lower the participation barriers: Even if your team has already incorporated or switched to virtual workaround methods to some degree, the right digital processes should enable more people to give input, more often. Are there ways you can facilitate smoother cross-functional collaboration? Is there work that could be done asynchronously? Define the entry barriers to your cost reduction process, and figure out how you might lower as many as you can. Because when it’s easier for more people to participate, you end up with stronger ideas (and more of them).

  2. Shift from discrete VA to continuous VA: Is your approach to cost reduction and/or value analysis largely event-based or meeting-based? Now is the time to opt for a structure that supports ongoing, continuous VA and cost reduction efforts. When it was necessary to physically get everyone in the same place, at the same time, that inherently meant that your cost reduction work would be largely discrete. But as norms shift toward virtual and hybrid methods, your cost reduction approach should also shift toward a more continuous framework.

  3. Develop a repeatable, consistent structure: It shouldn’t feel like you’re starting from scratch every time you need to organize cost reduction work or plan a VA event. With a repeatable framework, your team can work more effectively and your efforts become scalable. On top of that, following a consistent format each time means you’ll be able to accurately compare data from your VAVE and cost reduction activities. Which means you’ll have the information you need to know what’s working or not, and to make better decisions.

VA/VE examples

Since VA/VE can be applied in a broad range of industries, there are many different examples of VA/VE and how it works. Depending on the product being evaluated and the goals of the VA/VE process, the specific techniques and tools used in VA/VE will vary from team to team.

Value analysis example

Optimizing a plastic bottle closure design 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

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.

VA/VE in supply chain

VA/VE should be less a lever to pull when you need to improve profitability and more a strategic mindset shift in the approach to extracting the most value from a product's total cost of ownership (TCO). Given that emphasis, VA/VE principles are ideal tools to unlock profit while optimizing the supply chain.

The VA/VE project team can extend their assessment to add the total cost of ownership (TCO) across the entire supply chain to the manufacturing process and product design analyses to find areas to remove waste. These factors are additive to the cost savings potential, but team members must consider potential interdependencies or conflicts between procurement, manufacturing, and design before proposing a cost savings idea.

A critical component of a VA/VE project is the manufacturing process go-and-see, where the project team observes the manufacturing process. But before diving into the process, the team should analyze setup and changeover time in addition to the capital situation. Setup and changeover are non-value-add steps, so organizing multiple component runs on the same asset to reduce setup and minimize changes can increase daily throughput.

Another opportunity for VA/VE in the supply chain is capital expenditure, often a considerable investment. The team can look at depreciation schedules and expected replacement timing to tie product design changes to the new equipment. Considering capital during VA/VE improves the ROI of a VA/VE idea substantially and helps the business know when to execute the change.

Finally, observing the manufacturing process itself may uncover opportunities. Any operator movement outside of the direct task at a station is waste. The process should flow smoothly from the intake of one step to its output with minimal wasted movements.

VA/VE in automotive

Let’s consider a specific example of how VA/VE can be used in the automotive industry.

Lightweight materials reduce the total weight of a vehicle, thus improving its fuel efficiency and its value to customers. The VA/VE process can help you determine whether or not it’s worth changing a vehicle’s design to incorporate lighter materials.

First, you might conduct a function analysis to identify the key components and systems of a vehicle that contribute to its weight — such as the body, chassis, and engine. From there, you can build a cost-benefit analysis to evaluate the possibility of using  lightweight materials like aluminum or composite materials. This might involve redesigning the body, chassis, and engine, as well as evaluating the potential impact on the manufacturing process and supply chain.

If the VA/VE team discovers that using lightweight materials would provide significant value and cost savings, these changes can be implemented to the vehicle design to improve fuel efficiency and performance.

VA/VE case study: How JCI hits ambitious cost reduction targets with virtual VA/VE in CoLab

For global technology and industrial leader Johnson Controls (JCI), VA/VE is a big priority. Historically, JCI’s VA/VE program revolved around in-person events that happened once or twice a year. The events required flying team members from around the world to a factory location for 2-3 jam-packed days of walking the factory floor and trying to come up with as many ideas as possible.

When the Covid-19 pandemic disrupted international travel in 2020, Johnson Controls quickly pivoted their VA/VE approach and began running virtual events in CoLab instead. Since adopting CoLab for VA/VE events, the JCI team realized there were downsides to the old approach of doing everything in person:

  • Travel expenses and logistics limited who could participate, which meant fewer participants overall as well as fewer opportunities for cross-functional input
  • Trying to fit the entire event into 2-3 days wasn’t giving people the chance to do their best cognitive work, at their own pace
  • Walking the factory floor didn’t give visibility to the internal workings of products (and those without CAD/PLM access had no way to interrogate the 3D models themselves)

With CoLab, those barriers disappeared — and idea generation doubled

“We’ve been using this for over a year now for VA/VE events,” says Brian Stauffer, Global Product Design Manager at Johnson Controls.. “And what we’ve actually seen is: we get a better benefit out of doing it virtually than we would have typically on the factory floor.”

Get the full scoop on how JCI leveled up their cost reduction results in this VA/VE case study.

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