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Value Analysis: How to understand it

The Quality Toolbook > Value Analysis > How to understand it

When to use it | How to understand it | Example | How to do it | Practical variations

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How to understand it

All commercial activities are performed with the objective of providing value of some kind, where the value is a combination of the benefits gained from the activity and the cost of achieving these benefits. In many situations, both the benefits and the real costs are not understood, for example where they are measured at such a gross level that individual activities cannot be accurately determined. This can cause problems for projects that are aimed at improving these activities, as the real value cannot be found.

Value Analysis is an approach to improving the value of an item or process by first understanding the functions of the item and their value, then by identifying its constituent components and their associated costs. It then seeks to find improvements to the components by either reducing their cost or increasing the value of their functions.

Fig. 1. The structure of value

Functions may be broken down into a hierarchy, starting with a basic function, for which the customer believes they are paying, and then followed by secondary functions, which support that basic function.

The purpose of functions may be aesthetic or use, and basic functions may be either or both of these. For example, a coat may have a use function of 'making you warm' and an aesthetic function of 'looking attractive'. Aesthetic and use functions tend to be separate, and either may be of higher value.

The product or process may be broken down into components, which can be associated with the functions they support. The value of the product or process may then be increased by improving or replacing individual components. This also applies at the whole item being analyzed, which may be completely replaced with a more functional or lower cost solution.

Although this is a simple-sounding technique, it can be quite difficult in practice, as it requires both deep analysis of the product or process to be improved, and also an innovative approach to finding alternatives.

Fig. 2. Asking Why and How

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