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Value Methodology (VM) studies the functions of the product, not the structure of the product, so wherever cost is incurred, there’s an opportunity for VAVE and this is why organizations need to be value-thinking about “cost management” instead of “cost cutting”.

The use of “Functional Analysis” is what differentiates VAVE from other problem-solving or cost-cutting techniques.

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Defining the Value: 

• Fact #1: Customers define “Value”.

• Fact #2: Organizations define “Value Stream”.

• Three crucial points to be identified in order to understand the concept of "Value": knowing your customer, knowing what the customer perceives as value, and identifying the areas inside the organization where value is truly created.

 

Value and Cost Model: Value=  Function/Cost

• Creative VAVE: “Better Function” at “Less Cost” --> Best Value

• Positive VAVE: “Better Function” at “Same or More Cost” --> Better Value

• Acceptable VAVE: “Same Function” at “Less Cost” --> Good Value

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When using the Value Methodology, a job plan takes multiple phases starting with the information gathering phase, and ending with presenting a solution to decision makers. Some of the work is done on-site and some is done off-site. A series of workshops are conducted with the subject matter experts to define the various functions of a product and their associated costs, alternate design ideas, evaluation of ideas, then implementing an action plan for the selected solution with all validation processes. 

 

Now, let's talk about cost:

• A product where 65-75% of the product’s cost is turned into value, is a well-designed product.

• When cost for connecting parts is high - for example 10 - 15%, it typically indicates that too little time has been put into design for assembly. 5% is generally a good value.

• Cost for robustness is important as this secures good quality. Generally, it is possible to reach good quality at 5-10% of the total cost without jeopardizing good quality.

• Cost for providing appearance is important as it is brand recognition and allows for premium price. It is possible to provide proper appearance at 5-10% of the total cost.

• Meeting compliance and regulations should amount to less than 5% of the cost

• Providing safety should amount to less than 5% of the cost