Value engineering
Value engineering systematically analyzes product functions to find ways to achieve required performance at lower cost. VE examines what each feature and component contributes, questions whether that function is necessary, and seeks alternatives that deliver equivalent value more efficiently. The methodology focuses on function and value rather than simply cutting costs.
Examples
Material substitution: A VE study on a consumer product finds that a metal bracket could be replaced with a glass-filled plastic that meets all structural requirements at 40% lower cost and easier assembly. The substitution maintains function while reducing cost.
Feature rationalization: VE analysis of a machine reveals that a high-precision adjustment feature is rarely used and could be eliminated or simplified without affecting how customers actually use the product. Removing the feature reduces part count and cost.
Process alternative: A VE team examining a fabricated enclosure identifies that sheet metal could be replaced with a single die-cast part, eliminating assembly operations and reducing total cost despite higher piece price.
Definition
Value engineering was developed in the 1940s at General Electric by Lawrence Miles, originally called value analysis. The methodology spread through manufacturing and construction, becoming a standard practice for cost optimization.
VE methodology follows defined steps: information gathering about functions and costs, function analysis that identifies what each element does and its value, creative brainstorming of alternatives, evaluation of alternatives against criteria, and implementation planning for selected improvements.
The key VE question is: "What else would accomplish this function?" This functional focus prevents cost cutting that compromises value while revealing opportunities to deliver required function more efficiently. Cost reduction that impairs function isn't value engineering; it's just cost cutting.
Procurement participates in VE by providing cost data, identifying supplier alternatives, obtaining quotes for VE proposals, and facilitating supplier input on improvement ideas. Suppliers often have VE insights from their process expertise that internal teams lack.
Frequently asked questions
What is value engineering?
Value engineering systematically analyzes product functions to find ways to achieve required performance at lower cost. It examines what each feature and component contributes, questions whether that function is necessary, and seeks alternatives that deliver equivalent value more efficiently.
Where did value engineering come from?
Value engineering was developed in the 1940s at General Electric by Lawrence Miles, originally under the name value analysis. The methodology spread through manufacturing and construction and became a standard practice for cost optimization.
How is value engineering different from cost cutting?
The defining question of value engineering is what else would accomplish this function, which keeps the focus on function rather than on the line item. Cost reduction that impairs function does not qualify as value engineering, so the method reveals efficiencies while protecting what the product actually has to do.
What are the steps in a value engineering study?
A study follows defined phases: information gathering about functions and costs, function analysis identifying what each element does and its value, creative brainstorming of alternatives, evaluation of those alternatives against criteria, and implementation planning for the selected improvements.
What role does procurement play in value engineering?
Procurement provides cost data, identifies supplier alternatives, obtains quotes for proposals, and brings suppliers into the process. Suppliers often contribute ideas internal teams miss because they know their own processes best, such as replacing a fabricated sheet metal enclosure with a single die-cast part or substituting glass-filled plastic for a metal bracket at 40 percent lower cost.
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