By continuously improving the performance of a product / service, its value could be increased thereby leading to reduction of costs. This concept is the base for Value analysis. Value of a product is a relationship between functions it performs and its cost of manufacture. It could be mathematically be expressed as follows:
VALUE = FUNCTION / COST
The above equation implies that value of a product / service could be increased either by improving the functions it performs or by reducing its cost.
Typically a product manufactured would have three types of value
a) Use Value
Every product is intended to provide a specific service. For example a washing machine is meant to wash clothes; a pen is used to write. This utility value of a product is called its ‘Use Value’.
b) Esteem Value
Certain attributes of a product make it more attractive. Buyers of the product feel esteemed to buy and own the product. Example – A gold coated pen gives an esteemed value to the buyer.
c) Cost Value
Cost of purchasing or manufacturing a product is called ‘Cost value’. In case of manufactured product it is the sum of Material, Labor and Overheads
Usage / Benefits of value analysis:
1) Identify specific solutions to problems
2) Identify focus areas for innovation
Function Analysis System Technique is an evolution of Value Analysis process. It creates a HOW-WHY model of a function i.e. it asks the below questions
a) HOW a function is performed (what is the method)?
b) WHY is it performed (with what goal is it performed)?
The model therefore targets to create methods for achieving the desired goals of a task.