VALUE ANALYSIS

VALUE ANALYSIS

It is the organized and systematic study of any element of cost in a part, material or service to make certain it fulfills its function at the lowest possible cost. Value analysis is a cost reduction technique that is used to improve the value of any product or service.

Tools of Values Analysis:

1. Design Analysis: It is the step by step study of all phases of design of again item in relation to the function it performs. There are four common approaches in design analysis.

(a) Brain Storming (b) Use of Suppliers

(b) Value Analysis Chart (c) Functional Cost Approach.

2. Cost Analysis: It involves the investigation of probable cost of producing a given product. Producing cost consists of material cost, labour cost, manufacturing overheads and general overheads.




Benefits of Value Analysis
1. Helps to reduce the cost of product.
2. Help employees to understand their jobs in a better way.
3. Inspires the employees to put forward their innovative ideas.
4. Provides training to the employees.
5. Increasing the productivity, efficiency of an organization or company.
6. Provide information to the management about the expenditure in each stage of the manufacturing process of the product.

Process of Values Analysis

1. Identifying Functions Involved in the Production Process: The first step in the value analysis is to categorized the functions and associate the cost of each function involve in the production. This helps to perform the product function at lowest possible cost.

2. Analyzing Function: The next step in value analysis is to compare the usage and the manufacturing process of one with other.

3. Developing Alternatives for Affective Value: The last step in the value analysis is to stimulate new creative ideas by using various techniques.

(a) Implement creative ideas.
(b) Use of skilled labours.
(c) Gathering information about the market etc.