VA/VE for Manufacturing Leaders – Building a Successful Practice

Value Analysis/Value Engineering (VA/VE or VAVE) is a set of practices that finds opportunities to save costs on ongoing processes or new projects without sacrificing quality. Building and implementing a VA/VE practice in your organization is a powerful way to improve your margins, offset external costs, and provide a higher quality output. Despite this, many shops lack any sort of VA/VE process, either because they lack the resources, infrastructure, or information to implement it, or because they simply don’t know how to build the process.

Let’s go over some of the goals of VA/VE and what obstacles you may need to overcome in achieving them.

How does VA/VE work exactly?

As the name suggests, there are two major components of VA/VE:

Value Analysis

Value analysis refers to assessing the current costs produced by your organization’s manufacturing process, including:

• Procurement costs for component materials and machines
• Operational costs for producing a given product, including labour, energy costs, and machine upkeep costs
• Inventory, transportation, and storage costs of completed parts

Once you’ve uncovered these costs, you can analyze where costs are unnecessarily high compared to other options. What’s critical is that you aren’t saving based on making compromises on quality. This may seem difficult, but you’re likely to find opportunities to save that simply had gone unrealized. There’s a constant flux of new options for every step of your process that most shops are too heads-down or precommitted to recognize. The power of Value Analysis is in taking the time to discover these options.

Value Engineering

Value Engineering refers to optimizing for cost savings throughout the design process. As you determine the specifications for a new product, you assess potential costs, including:

• Material costs
• Specific costs for component parts from available suppliers
• All of the operational costs mentioned above

Again, the goal isn’t to compromise on the quality of the product, but to find opportunities for cheaper costs with the same outcomes. It’s very unlikely that the status quo process for designing new products is as cost effective as it could be. Instead, most shops are too busy to consider switching off something that works well enough.

Examples of opportunities discovered through VA/VE

Here are just a few of the many examples of savings that can be found through VA/VE:

• Design consolidation – designing products to use the same component parts between them allows for cheaper bulk purchasing
• Supplier consolidation – finding fewer providers that can supply all the components you need allows for better negotiations and fewer auxiliary costs
• Cheaper materials – sometimes alternative materials can provide sufficient quality and defect rate at a lower price
• Cheaper production process – likewise, sometimes steps can be consolidated in production, tolerances can be increased, or finishing steps can be substituted without compromising quality
• Part consolidation – it’s surprisingly common that engineers will design an entirely new product when one already exists, incurring many unnecessary costs

The most common pattern is having multiple options, each with their own costs, instead of finding a singular one that covers everything. Or, choosing more expensive options when a cheaper alternative has the same quality. No one does these things deliberately. These costs emerge because people don’t have the information they need to realize cheaper alternatives exist.

Overcoming the challenges of implementing VA/VE

Put this way, VA/VE sounds pretty simple: consolidate current costs, analyze alternatives, and find and switch to cheaper options that provide the same results. Unsurprisingly, this isn’t so easy off paper. Here are some of the major difficulties in implementing VA/VE.

Lack of information or tedious access to information

The biggest factor that prevents teams from implementing VA/VE is not having access to the information necessary to assess costs and alternatives. Looking at our above examples, all of them require immense amounts of information to make the correct decision.

Sometimes this information doesn’t exist at all because it hasn’t been stored. More often, it has been stored somewhere, but it isn’t somewhere that everyone has access to – it may be stuck in a physical filing cabinet, or trapped in one particular tool but not another. Most often of all, it does exist in a format people can access, but finding what you need exactly is extremely time consuming. If the information exists only in a gigantic spreadsheet where you need to know specific ID numbers to look something up, people will need hours to track down everything they need.

This time cost is itself a monetary cost. It pulls employees away from working on other profitable projects, delaying their completion. The key is to reduce the amount of time these VA/VE initiatives take in order to maximize the profit. This requires making information as broadly and quickly accessible as possible.

Lack of commitment to VA/VE initiatives

VA/VE requires the participation of many stakeholders at many levels. Different departments need to create infrastructure to share information. End users need to add a layer of cost analysis to all of their decision-making. As we mentioned before, these are time-consuming tasks that come at the cost of progress on other projects. Leadership also needs to acknowledge this, and proactively budget time for VA/VE initiatives, pushing back deadlines and reallocating work to accommodate.

If stakeholders are embracing VA/VE only begrudgingly, your results are going to be severely diminished. People will only complete prescribed VA/VE activities, rather than exploring opportunities for more savings.

To get people to embrace VA/VE, there’s certain strategies you should implement. First, every stakeholder needs to feel agency and participation in the development of VA/VE processes. Incorporating everyone’s perspective and objectives into the process will improve results, and also make people more enthusiastic.

Then, stakeholders need to be convinced that VA/VE will provide real value for them. First, they need to be convinced that costs will actually be reduced. Doing a trial on a small subset of products is a good way to prove this value quickly. Make sure you understand what metrics are most relevant to each stakeholder and surface those directly.

Finally, they need to be incentivized based on these savings. It doesn’t actually do anything for end users if the company makes more money and they see none of it. There needs to be some sort of compensation based on savings.

Information technology – the shortcut to VA/VE implementation

The best way to overcome these challenges and move forward quickly with VA/VE implementation is to adopt new technologies that support VA/VE. Although these technologies often have some associated costs, the savings of VA/VE will make up for them quickly. What these technologies can do is drastically reduce the time cost of implementing VA/VE.

CADDi is a perfect example of technology that enables VA/VE. We create a data lake, an all-in-one source for your manufacturing information. This allows you to surface the cost data and alternatives necessary for value analysis instantly. Our drawing analysis software helps you understand how to design cheaper products for value engineering. We automatically track down similar drawings and highlight differences so you can understand where additional unnecessary costs are being added.

Check out CADDi by signing up for a personalized demo today, or walk through our product tour. 

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