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.

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.  

Lacuna in Traditional Accounting

Traditional Accounting Lacuna’s

The difference in Thinking!

So as the lean journey Proceeds

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

Manage change

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

The Change Management Kaizen Model

The Support Kaizen Model & the Kaizen Strategy

 

Kaizen Promotion Office

“Project” Kaizen Experts

 

Annual Strategy Planning

Hoshin Kanri

 Top Scorecard Deployment (Breakdown) 

Strategy Planning

Without Hoshin Kanri

With Hoshin Kanri

Steering Meetings

Kaizen KCM Audit: Strategy and Hoshin Kanri Pillar

 

Kaizen KCM Audit: Performance and Qualification Pillar

 

Kaizen KCM Audit: Communication and Audit Pillar

 Acknowledgement: Euclides Coimbra

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. 

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

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 12^th May to 16^th May at the Nairobi Safari Club. The program is designed to introduce & refresh the concepts of KAIZEN that drives Manufacturing Excellence.

• On 12^th May the first program is about identifying the invisible wastes in your operations which kills productivity.
• The second (13^th 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 (14^th May) day is devoted to equipment improvement and effectiveness – understand the sixteen losses related to equipment and how to reduce them.
• The last two (15^th & 16^th 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.

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

Definition of a supervisor

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

The 5 Necessary skills of a lean supervisor

 

 

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

Confirm start up conditions

6:45 am Greet team Members

6:50 am the Daily start up Meetings

Conform Attendance

4 Key Metrics on Communication Board

 

7 am Shift Starts – Confirm quality and Product

Verify standard work

 

8 am update Production control board

8:15 am Learn a Job on the Line

9:30 am Break

9:40 am confirm fool time start up

9:50 am Conduct Safety Meeting

10 am Gemba walk with manager

11:30 am Lunch

12:00 pm do Kaizen on Line

Post a Kaizen Newspaper

2:00 pm Break

2:15 pm Prepare for Supervisor’s Meeting

3:00 pm Walk the Line

3:15 pm Daily 5S

3:30 pm End of Shift

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

3:40 pm prepare for Next work Day

Kaizen supervisor standard work

Continuous Improvement Cycle

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

 

Kaizen Story – Set your Priorities

A philosophy professor stood before his class with some items on the table in front of him. When the class began, wordlessly he picked up a very large and empty mayonnaise jar and proceeded to fill it with rocks, about 2 inches in diameter.

He then asked the students if the jar was full. They agreed that it was.

So the professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles, of course, rolled into the open areas between the rocks.

He then asked the students again if the jar was full. They agreed it was.

The professor picked up a box of sand and poured it into the jar. Of course, the sand filled up the remaining open areas of the jar.

He then asked once more if the jar was full. The students responded with a unanimous “Yes.”

“Now,” said the professor, “I want you to recognize that this jar represents your life. The rocks are the important things – things that if everything else was lost and only they remained, your life would still be full. The pebbles are the other things .“If you put the sand into the jar first,” he continued, “there is no room for the pebbles or the rocks. The same goes for your life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you. Pay attention to the things that are critical to you.

“Take care of the rocks first – the things that really matter. Set your priorities. The rest is just sand.”

Acknowledgement: http://aslsmooth.com/index.html

Lean Accounting Measures

Some unique Requirements

Basis	Requirements
Lean organization work in teams and not as individuals	So the measures have to focus on the team at attaining its goals
Lean organizations focus on the process to improve the result	Hence critical success factors needed to achieve the goal are to be measured  and not the result alone
Lean organizations focus on adding value for the customer	The measures adopted must demonstrate ability to effectively produce value for the customer
Lean organization keep striving for improvement	The measures must be proactive-providing an immediate guidance for improvement

 

Frequency of lean Measurements

The measures have to be proactive hence the frequency must be determined by :

Caution:

What is wrong with Traditional Measurements?

1. They motivate non lean behavior

• Such as building large batches and increasing inventory which ruins flow.

2. The Measurements come too late to be useful

• In most companies monthly reports are made and much time is spent explaining variances.
• In some cases reports giving daily information are available but they do little to support the company’s Lean goals.

   3. They focus primarily on financial information

• Such as efficiency of people, machine utilization, manpower utilization, overhead absorption etc.

    4. The Measurements waste a lot of time gathering data

• Detailed information is collected –manpower utilization per job, machine time per job,    materials issued etc.
• As we move to lean manufacturing the burden of data collection becomes worse. Smaller batches lead to more work orders, more tracking, more manpower reporting, more machine time reporting etc.
• Tracking all this through ERP etc. is just automating waste.

Lean Performance measures- Various Domains

• Cell / Process Measures- the purpose of these measures is to provide the cell team members with the information they need to meet the customers needs today-to get done today what needs to be done. These are action oriented measures. If things go wrong these measurements trigger action to correct problems.
• Value Stream Measures- the purpose of these measures is to initiate continuous improvement in the value stream and also as a primary control mechanism of the business. They drive change not merely report outcomes.  These changes must lead to increased value, reduced waste, improved flow and higher profitability. The actual numbers reported for each measurement are of less importance then the rate and direction of the change.

Examples of Lean Measures :

• As such unique appropriate measures can only be decided by actual working conditions, processes and industry requirements, some starter examples are given in the following tables.
• Many companies use variants or alternates to the measurements suggested.
• Some supporting measurements- dealing with safety, training etc. are also used. These do not as such track the lean performance but do provide useful information on the state or progress of lean transformation.

Cell performance measures -starter set examples

 

 

Value Stream performance measures -starter set examples

Making the Lean measurements work

1. The supervisors and Managers must USE the measurements to monitor the progress on the shop floor.
2. Eliminate any other measurements.
3. The measurements must be easy for people to do.
4. Listen to the users and change measurements if required .
5. Provide a NO- BLAME workplace.
6. It is unhelpful to compare two separate cells or value streams-can prove counter productive.
7. The performance measurements must be directly related to the company’s business strategy.

 

Acknowledgement: Brian Maskell

 

 

Now announcing Certified Kaizen Practioner (CKP) in Africa

Objective of CKP:

It helps to dispose of a basic knowledge and applies the KAIZEN methods and techniques, TPM and TFM, which are necessary in order to start off the processes of continuous improvement. To know more about the program or to register please click here.