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VALUE ENGINEERING: Reduce costs while maintaining or improving performance & quality requirements.

The value methodology (also called value engineering, value analysis or value management) is a powerful problem-solving tool that can reduce costs while maintaining or improving performance and quality requirements. It is a function-oriented, systematic team approach to providing value in a product or service.

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The value methodology helps organizations compete more effectively in local, national and international markets by:

Benefits of using the value methodology:

  • Decreasing costs
  • Increasing profits
  • Improving quality
  • Expanding market share
  • Saving time
  • Solving problems
  • Using resources more effectively

If applied judiciously Value methodology easily produces savings of 30 percent of the estimated cost for manufacturing a product, constructing a project or providing a service. The return on investment that public and private organizations derive from implementing VM programs averages 10 to 1. That is, for every dollar invested in a VM study – including participants’ time and implementation costs – $10 in net savings results.

VM applications:

Value methodology can increase customer satisfaction and add value to an organization’s investment in any business or economic setting. Value practitioners apply the value methodology to products and services in industries such as the following: corporations and manufacturing, construction, transportation, government, health care and environmental engineering.

Value methodology vs. other business processes:

Since value methodology’s invention in the 1940s, several other management approaches have caught the eye of business leaders: total quality management, quality function deployment, project management, concurrent engineering, re-engineering, benchmarking. The value methodology lends itself to use with other approaches, and its combined strengths – customer needs, teamwork, creativity and a rigorous system approach – rise above the strengths of other processes.

How does the value methodology work?

The value methodology works through a VM study that brings together a multidisciplinary team of people who own the problem and have the expertise to identify and solve it. A VM study team works under the direction of a facilitator who follows an established set of procedures – the VM job plan – to review the project, making sure the team understands customer requirements and develops a cost-effective solution.

The VM job plan includes pre-study and post-study phases, as well as the value study itself, which is composed of six phases:

  1. Information
  2. Function analysis
  3. Creative
  4. Evaluation
  5. Recommendation
  6. Implementation

Value methodology delivers increased value and profits:

Companies around the world have saved billions of dollars with the value methodology (also called value engineering, value analysis or value management). Value methodology easily produces savings of 30 percent of the estimated cost for manufacturing a product or providing a service.

What business managers have to say about Value Engineering:

“I am continually amazed by the impressive array of value proposals and recommendations that are developed when value methodology is applied to any and all programs, processes or projects. There is no limit to the utilization of the value methodology and no limit to the benefits that can be achieved.”

Kurt Gernerd, U.S. Department of the Interior, SAVE International Vice President-Government

“The first documented use of the value methodology in General Motors was in 1960. It is obvious that this technique has stood the test of time, but why not? One cannot argue that providing customer value and saving hundreds of millions of dollars at the same time is extremely worthwhile.”

Jim Rains, General Motors Corp., SAVE International President

“DuPont’s senior management is committed to VE, and so we’ve formally used VE on over 300 projects for improving our new and existing chemical processes. VE has saved 10 percent to 12 percent of the investment for all these projects combined, and has elevated us to best in class for project cost, as measured in industry benchmarking analyses.”

Michael Cook, DuPont Co., SAVE International Vice President-Education

“The value analysis process has been integrated into our time-to-market process, Xerox’s product-delivery process. VA enables Xerox product programs to meet or beat their customer requirements at the lowest total life cycle cost, and optimizes organizational and process productivity and effectiveness.”

Harry Rosenfeld, Xerox Corp.,

“Arthur Andersen definitely sees that the use of VE as part of an overall target-costing process will be critical to suppliers to remain profitable under the pricing pressure and year-to-year cost reduction requires by the vehicle manufacturers. If suppliers wait until production to begin cost reduction, they will not be able to achieve the required cost targets.”

Eoin Comerford, Arthur Andersen

Who Uses Value Engineering ?

A wide spectrum of businesses and industries – from automakers to zipper manufacturers – employ the value methodology to yield a high return on investment while maintaining the quality and performance of products, processes or services.

The following companies, which appear on Fortune magazine’s “Global 500” list of the largest companies in the world, employ the value methodology:

  • Boeing
  • BP Amoco
  • DuPont Co.
  • Fiat
  • General Electric
  • General Motors Corp.
  • Hewlett-Packard
  • Kmart Corp.
  • Lockheed Martin
  • Mitsubishi
  • Motorola
  • Nissan Motor
  • Northern Telecom
  • Royal Dutch/Shell Group
  • Toyota
  • TRW
  • United Technologies Corporation
  • Volkswagen
  • Xerox Corp.

Value Engineering is simple, yet effective.

by Jayanth Murthy

Acknowledgements: we have used comments and inputs from various sources. We acknowledge this and sincerely thank the various sources.  


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Lacuna in Traditional Accounting

Traditional Accounting Lacuna’s

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The difference in Thinking!

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So as the lean journey Proceeds

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Result from Traditional accounting

  1. Due to higher labor input on drilling machine, the overhead cost and hence the total product cost will show an increase.
  2. Reduced inventory may give a short-term negative impact.
  3. Could lead to additional cost for monitoring and tracking higher number of small batches

 

But traditional accounting will not show:

  1. Created additional capacity on CNC machines
  2. Reduced lead time and increased on time delivery
  3. Enhanced flexibility for product change due to reduced batch size
  4. The impact of enhanced cash flow due to reduced inventory on the product cost

Acknowledgement: Brian Maskell


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Manage change

The KMS, Model for WCP – World Class Performance, Operational Excellence and CI

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The Change Management Kaizen Model

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The Support Kaizen Model & the Kaizen Strategy

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Kaizen Promotion Office

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“Project” Kaizen Experts

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Annual Strategy Planning

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Hoshin Kanri

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 Top Scorecard Deployment (Breakdown) 

ImageStrategy Planning

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With Hoshin Kanri

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Steering Meetings

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Kaizen KCM Audit: Strategy and Hoshin Kanri Pillar

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Kaizen KCM Audit: Performance and Qualification Pillar

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Kaizen KCM Audit: Communication and Audit Pillar

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 Acknowledgement: Euclides Coimbra

9th National Quality Conclave

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As you are aware, Quality Council of India have been successfully conducting National Quality Conclaves for the last several years. We are happy to share that KAIZEN Institute India was again invited as a speaker at their 9th National Quality Conclave which was on April 15-16, 2014 at Hotel Le-Meridien, New Delhi.

To read more click here


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Bell The Cat

There was a grocery shop in a town. Plenty of mice lived in that grocery shop. Food was in plenty for them. They ate everything and spoiled all the bags. They also wasted the bread, biscuits and fruits of the shop. 

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The grocer got really worried. So, he thought “I should buy a cat and let it stay at the grocery. Only then I can save my things.” 

He bought a nice, big fat cat and let him stay there. The cat had a nice time hunting the mice and killing them. The mice could not move freely now. They were afraid that anytime the cat would eat them up.

The mice wanted to do something. They held a meeting and all of them tweeted “We must get rid of the cat. Can someone give a suggestion”? 

All the mice sat and brooded. A smart looking mouse stood up and said, “The cat moves softly. That is the problem. If we can tie a bell around her neck, then things will be fine. We can know the movements of the cat”. 

“Yes, that is answer,” stated all the mice. An old mouse slowly stood up and asked, “Who would tie the bell?” After some moments there was no one there to answer this question. 

Moral: Empty solutions are of no worth

Acknowledgement: http://www.english-for-students.com/Bell-The-Cat.html


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Announcing the Kaizen Week @ Africa

Announcing the KAIZEN Week –a week packed with learning opportunities  

We are delighted to present to you the KAIZEN Week, which is starting from 12th May to 16th May at the Nairobi Safari Club. The program is designed to introduce & refresh the concepts of KAIZEN that drives Manufacturing Excellence.

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  • On 12th May the first program is about identifying the invisible wastes in your operations which kills productivity.
  • The second (13th May) day helps the participants learn value stream mapping – a powerful way to capture the current state, the current waste and a way to measure.
  • The third (14th May) day is devoted to equipment improvement and effectiveness – understand the sixteen losses related to equipment and how to reduce them.
  • The last two (15th & 16th May) days opens up the world of standardization and sustenance. Most organizations are challenged here and find it difficult to sustain whatever is improved.  Understand DWM – the practice behind sustenance.

 To view or download the eBrochure please click here.

 Mark your diary for 12th to 16th May 2014 – Be there at Nairobi Safari club.


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A Day in The Life of Kaizen Supervisor

Purpose of this Article

To provide you with a model day in the life of a Kaizen supervisor focused on daily continual improvement

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Definition of a supervisor

Leader – one who directs, coaches and inspects the work, actions, and performance of others.

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The 5 Necessary skills of a lean supervisor

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Roots of Daily Kaizen: TWI Job instruction

  1. Breakdown a jobs for the instruction, and identify the important steps and key points, then…
  2. Prepare the operator to learn;
  3. Give a proper demonstration
  4. Have the operator try out the performance
  5. Taper of coaching while continuing to follow-up

 

Role of Kaizen supervisor

Rapid response;
Maintain Flow;
Identify Problems;
Correct Problems;
Ensure quality, safety, cost and Delivery;

A sample Day in the Life of Lean supervisor

6:15 Arrive before shift starts
Prepare for day
Check Shift – to shift – Log book

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Confirm start up conditions

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6:45 am Greet team Members

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6:50 am the Daily start up Meetings

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Conform Attendance

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4 Key Metrics on Communication Board

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7 am Shift Starts – Confirm quality and Product

Verify standard work

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8 am update Production control board

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8:15 am Learn a Job on the Line

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9:30 am Break

9:40 am confirm fool time start up

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9:50 am Conduct Safety Meeting

10 am Gemba walk with manager

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11:30 am Lunch

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12:00 pm do Kaizen on Line

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Post a Kaizen Newspaper

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2:00 pm Break

2:15 pm Prepare for Supervisor’s Meeting

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3:00 pm Walk the Line

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3:15 pm Daily 5S

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3:30 pm End of Shift

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3:35 pm update shift- to-shift log book

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3:40 pm prepare for Next work Day

Kaizen supervisor standard work

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Continuous Improvement Cycle

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Characteristics of Kaizen supervisor

Believe in the need for safe work
Know the processes in your area “Backwards and forwards”
Be able to train each associate at each process using standard work
Be able to lead problem solving quickly and effectively
Know the measures in your area
Meet all your company’s training requirements

Acknowledgement: Euclides Coimbra