Value and cost are different things. While cost is always important, value is critical. Value refers to how well an item performs its function. An item might be low-cost but also low-value. If two items perform equally well, the one that costs less has a higher value. The aim of value analysis and value design is to increase value and decrease cost.
A simple formula looks something like this:
value of an item = performance of its function / cost
The “item” might be a product, machine, tool, system or process. Value engineering or analysis can be applied to all of this. By analyzing the cost in proportion to the end function, asking whether every part of the item is truly necessary and looking for similar parts that could perform the same function, value analysis and engineering can often bring down the cost while driving up the value.
During the engineering phase, a systematic process is applied to maximize the item’s value via good design and material choices. The goal is to keep the functionality of the item intact but find lower-cost engineering solutions.
For products that already exist, value analysis evaluates ways to reduce costs or improve function (or both) within the manufacturing process. A methodical evaluation looks at costs, function, design aspects and possible alternative components.
Value analysis and value engineering are two sides of the same coin. Both processes aim to increase the value of a product during manufacturing.
Value engineering and analysis have been shown to reduce costs in all areas— from materials to parts to production—and also improve function. Ultimately, assessing value will increase your revenue and profit per item, and allow you to revisit your designs and processes to take advantage of emerging technologies and efficiencies.