THE CONCEPT OF VALUE
The value of a product will be interpreted in different ways by different customers. Value is subjective. Just as beauty lies in the eyes of the beholder, value is highly dependent upon perspective. Frequently, the analyst will discover that the different perspectives will lead to conflicting definitions of value. But usually its common characteristic is a high level of performance, capability, emotional appeal, style, etc. relative to its cost. This can also be expressed as maximizing the function of a product relative to its cost:
Value = (Performance + Capability)/Cost = Function/Cost
Value is not a matter of minimizing cost. In some cases the value of a product can be increased by increasing its function (performance or capability) and cost as long as the added function increases more than its added cost. The concept of functional worth can be important. Functional worth is the lowest cost to provide a given function. However, there are less tangible "selling" functions involved in a product to make it of value to a customer.
INTRODUCTION TO VALUE ANALYSIS
Lawrence Miles conceived of Value Analysis (VA) in the 1945 based on the application of function analysis to the component parts of a product. The technique simultaneously pursues two complimentary objectives:
• Maximizing the utility provided by the product or service
• Minimizing or eliminating waste.
The analyst 's goal is to eliminate as much of the non-value-added elements as possible by reengineering the design of the product or process. Equally important, the analyst also considers the possibility of substituting functionally equivalent elements for the value-added elements of the product or process design. In the latter case, a substitution is justified when the functionality of the element is maintained or enhanced at a reduced cost to the producer. Value analysis may be applied to the design and redesign of products, services, and processes