Value Analysis/Engineering on a Product

A

Aaron Lupo

#1
Has anyone ever done a Value Analysis/Engineering on a product that involved the following:

List the components and function
Perform an Importance comparison and cost appraisal for each component
Determine if any components could be combined or subassemblies could be outsourced

If so I would really like to see how you went about it.
 
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Wes Bucey

Quite Involved in Discussions
#2
Re: Value Analysis/Engineering

Has anyone ever done a Value Analysis/Engineering on a product that involved the following:

List the components and function
Perform an Importance comparison and cost appraisal for each component
Determine if any components could be combined or subassemblies could be outsourced

If so I would really like to see how you went about it.
I don't mean to be flip, but this is pretty much the basic system every OEM follows in evaluating new and existing products.
Essentially, the task is to estimate the cost to build everything in-house and do ALL assembly or to outsource any or all of the product, and in the case of total outsourcing, merely slap a label on the finished product (think private label foods at grocery chains.)

There still exist companies which do almost everything in-house or with "captive subsidiaries" from mining ore to milling metal to machining or otherwise processing metal into components and assembling components into retail products for sale to consumers, delivered by company-owned vehicles. Most companies outsource some part of the supply chain to independent suppliers, operating under the theory that their "core business" gives the greatest return on invested capital and therefore they concentrate their capital investment (facilities, production machinery, and personnel) in those core businesses. One of the original "stated" reasons Ford and GM divested their autoparts businesses was to concentrate efforts in design and final assembly.
 
A

Aaron Lupo

#3
Re: Value Analysis/Engineering

I don't mean to be flip, but this is pretty much the basic system every OEM follows in evaluating new and existing products.
Essentially, the task is to estimate the cost to build everything in-house and do ALL assembly or to outsource any or all of the product, and in the case of total outsourcing, merely slap a label on the finished product (think private label foods at grocery chains.)

There still exist companies which do almost everything in-house or with "captive subsidiaries" from mining ore to milling metal to machining or otherwise processing metal into components and assembling components into retail products for sale to consumers, delivered by company-owned vehicles. Most companies outsource some part of the supply chain to independent suppliers, operating under the theory that their "core business" gives the greatest return on invested capital and therefore they concentrate their capital investment (facilities, production machinery, and personnel) in those core businesses. One of the original "stated" reasons Ford and GM divested their autoparts businesses was to concentrate efforts in design and final assembly.

Wes-

As always thank you for your valuable input. I understand the concept. What I was looking for was an example of a completed VA as I have never done one before.
 

Wes Bucey

Quite Involved in Discussions
#4
Re: Value Analysis/Engineering

Wes-

As always thank you for your valuable input. I understand the concept. What I was looking for was an example of a completed VA as I have never done one before.
All the analysis sheets I have seen were "product-specific" for a class of products.

For example, a stainless steel sensor housing (essentially a stainless steel cup with a tiny hole at the bottom for wires to exit, machined inside and out with grooves or threads to hold sensor in place and hold housing into a larger assembly):

I knew of two companies making essentially identical sensors (the differences were patentable, but immaterial for the discussion) -
  • one company was vertically integrated and had its own machine shop for the housing and a separate electrical component line making the sensor to go into the housing and two assembly lines - one to insert the sensor into the housing and the second to install the sensor in a subassembly for a braking system sold to a luxury automotive OEM.
  • The second company outsourced the housing AND the sensor, keeping the design and final assembly in-house.
Each company priced the stainless steel bar stock and estimated the machine time to make the housing on modern CNC equipment. Each priced the time and cost to make the circuit boards which were the main part of the sensor. Each company priced the assembly, warehousing, inventory holding cost, lead time delays, etc. and came to different conclusions about which route to final manufacture worked best for them.

As I see it, the really pertinent part of the process of deciding whether to outsource or keep in-house is less dependent on whether the company starts with a comprehensive checklist of the bill of materials and the processing cost (in- or out-source) to add each step in production to finished product than on the basic information it has about its own capabilities, and the lead time requirements of its upstream customers in the supply chain.

I've even seen some producers make value decisions to make their own components which are readily available off-the-shelf (like nuts and bolts) simply because they had excess capacity and didn't want to idle machines or personnel, reasoning that the extra cost to make such items in-house was offset by avoiding the disruption of mothballing personnel and machines and then trying to bring them back on line in the future, including the morale problems inherent with the layoffs.

As we often preach, it is not merely enough to consider the raw acquisition cost, but to consider all the soft costs as well when making most business decisions, especially purchasing ones. Some producers are so obsessive about the quality of their product, they refuse to trust any outside source to potentially damage or compromise the organization's quality image, choosing instead to make lesser short-term profit, depending on the long-term value of a good reputation.
 
A

Aaron Lupo

#5
I figured I would take one of our less complex products disassemble it and work backwards.

I know in just a broad overview of the product there is a few things that could be changed to simplify the assembly as well as save $'s. It will be interesting to see how it turns out. This is for a project in a class I am taking. I guess depending on the grade I receive will determine if I approach Engineers responsible for this product.
 
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