Cost Reduction and Value Creation Through Value Methodology

Topics: Design for X, Design, Industrial engineering Pages: 10 (2981 words) Published: April 15, 2011
Cost reduction and value creation through Value Methodology

Dr .Shyamkant.V. Shrigiriwar. SIOM-Pune

Globalization has sharpened competition. Powerful factors are driving globalization: falling trade barriers; fast-paced technological advances; declining communications and transport costs; international migration; and highly mobile investment. The main challenge firms facing are how to take advantage of new resources and markets while dealing with intense and growing global competition. This paper addresses how Value Methodology (VM) can help in achieving an edge over competitors. In today's market, Value Methodology is important improvement tool. Application of VM resulted in typically by 15 to 25 percent reduction of manufacturing cost, investment cost, customer warranty cost, and procurement costs. Value Methodology is practiced by some Indusries to its Customer and for Business promotion. However, Value Methodology is not immune to. Globalization and increasing competitive pressures, technology up gradation or obsolescence one must innovate or die. Introduction:-

To keep pace with intensifying global competition, business Organizations are always looking for new management techniques and best practices to enhance their product /service quality and profitability. But some times an old technique proves to be the best; one of such technique is Value Methodology. Value Methodology has emerged as highly effective and practical management techniques of the world. I define Value Methodology technique as a combination of Value Analysis and Value Engineering. Value Analysis is used for the Existing Products or Services and Value Engineering applied for New Product or Service Development. This definition I am practicing for last two years with different customers. Most successful Organization of the world uses VM technique for continuous improvement of its product and service quality, market share, innovation and profitability during current years.

Value Methodology facilitates in enhancing customer value by reducing cost, making use of various improvement tools like Lean facilitates in enhancing customer value by reducing cost and improving delivery speed by eliminating non-value added activities (waste), and Six Sigma improves quality by reducing variations. In this paper I have explained how the VM technique is used for getting customer satisfaction by suggesting improvements in products or services.

The Integration Model
During the design stage of product / service, a significant amount of information is gathered and analysed in order to support the decision making process that leads to successful products. Various techniques have been used helped to collect, organize, analyse, synthesize, and display the information used in the design process. Quality Function Deployment (QFD), Value Analysis / Value Engineering (VE), 8D Analysis, 5W 2H analysis, Failure Mode Effect Analysis (FMEA) and Design for Manufacture and Assembly (DFMA) are among these techniques. Each one of them represents a formal methodology aimed at accomplishing particular objectives. Successful application of these tools needs an administrative system to ensure proper deployment of it. We have introduced these tools as part of a business philosophy that provides streamlined design procedures at low cost by providing offshore services. Typically, individuals (champions) within organizations are trained in the techniques and are responsible for implementing them. Extensive training, multidisciplinary team collaboration, expert guidance and long work sessions are required for successful implementation. The lack of any of these elements, or an attitude of the champion are detrimental to collaboration, can significantly affect the effectiveness of these tools. Experience shows that each tool presents particular strengths and weaknesses that make...
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