Value Engineering - Quality Assurance, Organization and Management - Lecture Slides, Slides for Quality Management
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Value Engineering - Quality Assurance, Organization and Management - Lecture Slides, Slides for Quality Management

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Quality Assurance, Organization and Management course title itself describes the subject's main topics. This lecture includes: Value Engineering, Lean Technique, Ve Applied, Enhance Lean and Six Sigma, Function Analysis,...
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PTTE-434, Quality Assurance, Organization and Management Value Engineering - Another Lean Tool Instructor J. R. Wixson, CVS, CMfgE

Value Engineering the Forgotten Lean Technique

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Overview

• What is Value Engineering?

• How is VE Applied?

• When is it used?

• How can it enhance Lean & Six Sigma?

• What are the differences and similarities between VE, Lean

and Six Sigma?

• What is Function Analysis and FAST?

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Lean and Six Sigma Are Not Enough

3

Cost of Goods Sold

Materials

60%

Variable O.H.

30%

Labor

10%

 Historical focus on touch

labor and variable overhead

ignores the largest piece of

the pie.

 Sourcing programs fall short

 Material cost is embedded in

the product design

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Value Engineering the Forgotten Lean Technique

4

Don't look now, but an old discipline (value analysis/value

engineering) is on the comeback trail. Originally called merely VA by

its inventor, Larry Miles, an engineer in GE's purchasing operation in

1947, VA/VE uses a value equation that says value is equal to

function divided by cost. If, for example, the buyer wants to get more

item value, he/she needs to either increase the item's functionality at

the same time he/she is containing cost; or he/she needs to reduce cost

while holding or improving its functionality. Either way, the result is

more value for the customer (Excerpt from Purchasing Magazine -

"Value Analysis makes a comeback," Jim Morgan, November 20,

2003.").

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Value Engineering the Forgotten Lean Technique

5

Value Engineering is truly the "Forgotten Lean Technique." However,

over 50 years later, it has gained recognition in private industry and

governmental agencies as an indispensable tool for cost reduction,

improved product development and product re-engineering. It is also

used to improve organizational performance and cost effectiveness as

well. The heart of VA/VE is function analysis and "Function Analysis

Systems Technique" that sets it apart from other lean methodologies by

opening the door to creative problem solving that capitalizes on an

interdisciplinary teams creative juices to arrive at truly value added,

cost effective solutions to problems ranging from design problems,

quality and reliability problems, to organizational problems resulting

in increased value and performance for the customer and the

organization.

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Value Engineering the Forgotten Lean Tool

 Value Engineering (VE) is an intensive, interdisciplinary problem solving activity that focuses on improving the value of the functions that are required to accomplish the goal, or objective of any product, process, service, or organization.

VALUE METHODOLOGY “The systematic application of recognized techniques which identify the functions of the product or service, establish the worth of those functions, and provide the necessary functions to meet the required performance at the lowest overall cost.”

John M. Bryant, VM Standard, Society of American Value Engineers, Oct. 1998

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Concept of Value

7

VALUE =

FUNCTION

COST

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VE Timeline

8

Larry

Miles

assigned to

cost

reduction

at GE

VE a success,

training of

employees and

suppliers

begins

Navy adds

VE

incentive

clause

SAVE

formed in

Wash. DC

on Oct.22,

1959

Army

Corps of

Engineers

begins VE

training

VE included

in ASPR for

military

procurements

First VE

incentive

clause

published in

Fed.

Register,

GSA staffs

for VE.

Larry Miles

takes VE to

Japan.

DOE

Order

4010.1

1970

1947195219551959196219641969198819901993Today1985

Larry

Miles

dies.

VE adopted

by NASA ofc

of facilities.

OMB

circular A-

131

published

requiring all

Federal

Agencies to

use VE to

identify and

reduce non-

essential

costs.

OMB

circular A-

131 passes

“Sunset

Review”

Charles

Bytheway

invents

FAST

Modeling

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Video - The Principles of Value Analysis/Value Engineering

9

Click here to view video (Note: For the Fall 2007 class, please contact instructor for

new link)

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When is VE used

Value Engineering is used to determine the best design alternatives for Projects, Processes, Products, or Services

Value Engineering is used to reduce cost on existing Projects, Processes, Products, or Services.

Value Engineering is used to improve quality, increase reliability and availability, and customer satisfaction .

Value Engineering is also used to improve organizational performance.

Value Engineering is a powerful tool used to identify problems and develop recommended solutions.

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Some Thoughts on Lean

The cause of poor performance is wasteful activity. Lean is a time-based strategy and uses a narrow definition of waste (non-value-adding work) as any task or activity that does not produce value from the perspective of the end customer. [1] Increased competitive advantage comes from assuring every task is focused on rapid transformation of raw materials into finished product.

[1] James P. Womack, Daniel T. Jones. "Lean Thinking," Simon & Schuster; 1st edition (1996)

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Lean Strengths

Provides a strategic approach to integrated improvements through value stream mapping and the focus on maximizing the value-adding-to-waste ratio.

Directly promotes and advocates radical breakthrough innovation.

Emphasis on fast response to obvious opportunities. (just go do it)

Addresses workplace culture and resistance to change through direct team involvement at all levels of the organization.

12

Stephen W. Thompson - Lean, TOC or Six Sigma: Which tune should a company

dance to?, Lean Directions, Society of Manufacturing Engineers, Aug. 11, 2003

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Lean Weaknesses

May promote risk taking without reasonable balance to consequence.

May not provide sufficient evidence of business benefit for traditional management accounting.

Has a limitation when dealing with complex interactive and recurring problems (uses trial and error problem solving).

13

Stephen W. Thompson - Lean, TOC or Six Sigma: Which tune should a company

dance to?, Lean Directions, Society of Manufacturing Engineers, Aug. 11, 2003

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Some Thoughts on 6s

14

Six sigma:The cause of poor performance is

variation in process and product quality. Random

variations result in inefficient operations causing

dissatisfaction of customers from unreliable

products and services. [2] Increased competitive

advantage comes from stable and predictable

process allowing increased yields, improved

forecasting and reliable product performance.

[2] George Eckes. "General Electric's Six Sigma Revolution: How General Electric and Others Turned Process

Into Profits," John Wiley & Sons; 1 edition (2000)

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6s Strengths

The rigor and discipline of the statistical approach resolves complex problems that cannot be solved by simple intuition or trial and error.

The data gathering provides strong business cases to get management support for resources.

The focus on reduction of variation drives down risk and improves predictability.

15

Stephen W. Thompson - Lean, TOC or Six Sigma: Which tune should a company

dance to?, Lean Directions, Society of Manufacturing Engineers, Aug. 11, 2003

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6s Weaknesses  Statistical methods are not well suited for analysis of

systems integration problems. (sigma can be calculated for a product specification, but how is sigma established for process interactions and faults.

The heavy reliance on statistical methods by its very nature is reactive, as it requires a repetition of the process to develop trends and confidence levels.

The strong focus on stable processes can lead to total risk aversion and may penalize innovative approaches that by their nature will be unstable and variable.

16

Stephen W. Thompson - Lean, TOC or Six Sigma: Which tune should a company

dance to?, Lean Directions, Society of Manufacturing Engineers, Aug. 11, 2003

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Some Thoughts on VE

 VE uses a interdisciplinary approach to problem solving.

 VE takes a systems approach to problem identification and problem solving.

 VE uses function analysis to improve communication among team members

 The function analysis systems technique (FAST) promotes a synergistic approach to problem solving that develops solutions far beyond that which only an individual could produce.

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Value Engineering Strengths

 VE relies on a rigorous interdisciplinary approach to problem solving.

 VE uses a systems approach to problem identification and solution.

 VE is function oriented and promotes a “clean-sheet” approach that supports innovative solutions.

 Creativity is a key component to the VE problem solving activities that promotes “breakthrough thinking.”

 VE uses a structured “job plan” that promotes consistency in application and helps assure results.

 Increased competitive advantage comes from the identification of innovative ways to accomplish key functions at a lower cost with improved quality and reliability.

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VE’s Weaknesses

 Successful VE results are dependent on the quality of information brought to the VE workshop for evaluation.

 Many times, VE is used too late in the product development cycle to impact the design, and when changes would be too costly to implement.

 There are many misunderstandings and biases against VE that have been built up over time due to misuse of the methodology.  “It cheapens the product without improving it.”

 “I’m an engineer. We do VE all the time.”

 “VE is only used for cost reduction.”

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VE Weaknesses Addressed by Lean Six Sigma

 VE weaknesses are addressed by Lean Six Sigma

 Six sigma can provide the statistical evaluation necessary to support VE solutions.

 Lean can provide Value Stream information that can lead to improved quality and throughput.

 In combination with VE, Lean and Six Sigma provide a suite of tools that can lead to superior value through innovative solutions to problems in design, quality, and productivity.

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Comparing VE to Lean

VE is not limited to areas of high volume or high dollar value (e.g., aircraft).

VE can be used by organizations with great effect in a variety of situations, including VE analysis of product/item design, packaging, industrial and logistical processes, and other areas of high cost.

Lean principles and practices offer no direct method of addressing product design.

Up to 80% of a product’s final cost could set at the time of concept approval. This leaves Lean with only 20% of vehicle cost available for Lean to improve.

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Comparing VE to Lean (Cont’d)

Lean is a strategic decision, while organizations can choose to use VE successfully and effectively in a tactical manner.

VE can work well as an isolated study event – it does not require the encompassing and pervasive level of support that an effective Lean effort requires.

Lean will reduce waste over time. VE, on the other hand, will find and fix wasteful effort very quickly, but it will generally (not necessarily) do so on an episodic basis, not a continuous or systematic basis.

VE’s value approach and tools help teams focus on the high payoff areas first and will generate larger savings sooner than you might otherwise get in Lean.

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Lean and VE Similarities

Both VE and Lean rely extensively on transforming operations into alternative forms of visual information.

In Lean, a Kaizen team will consider using a variety of visual analytical tools to identify waste.

Spaghetti diagrams, flow diagrams, bar charts, standard work sheets, and production control boards, are all part of the Lean analytical lexicon.

VE uses function analysis and FAST diagramming to describe the functional relationship of the product, process, or service and identify functions where the team should focus on improving value.

Creating by function is the high-octane fuel generating VE performance and success.

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Formula for Superior Continuous Improvement

24

Lean

Value

Engineering

Six Sigma

(CI)3=

x x

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Six Sigma Process - Click Here

25

Define the

Problem

Measure

Analyze

Improve

Control

End

A) Identify what the customer wants.

B) Organize an improvement team.

C) Create a process flow chart - (SIPOC)

A) Select “Critical to Quality Characteristic” metrics.

B) Define Performance Standards.

C) Validate the measurement System.

D) Establish baseline performance in terms of Sigma Capability - Defects per

Million Opportunities.

A) Identify significant characteristics and establish process capability.

B) Define performance targets for significant characteristics.

C) Identify root cause of process variation.

A) Identify and evaluate potential solutions. B) Implement short-term countermeasures.

C) Implement long term corrective actions.

D) Identify systemic indirect effects and unintended consequences of

improvement ideas.

E) Establish operating tolerances for new process.

A) Verify corrective actions and validate new measurement systems.

B) Determine process capability.

C) Establish and implement control plan.

Move on to next highest priority process.

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