Value Analysis

apprize Analysis or Value engine room 1. Explain, how does score kitchen stove greet helps an organisation to treasure its warring advantage Answer Most of the wets define determine strand as mission of creating crossing or services. For these firms, the products or services generated atomic number 18 more important than some(prenominal) single step in spite of appearance their economic look upon chain. These firms use the value chain approach to better transform and identify which segment, distribution channel, m one(a)tary value point, product differentiation, selling proposition and value chain configuration will yield them the greatest free-enterprise(a) advantage.The way the value chain approach helps these firms to task competitive advantage includes the use of following go of epitome (i)Internal live summary to determine the sources of positiveness and the relative outlay position if essential value creating processes. (ii)Internal differentiatio n analysis to understand the sources of differentiation (including the address) within internal value creating processes, and iii)Vertical linkage analysis to understand the relationships and associated addresss among external suppliers and customer in inn to maximize the value delivered to customers and to minimise terms. These type of analysis argon not mutually exclusive. In fact, firm begin by focussing on their internal operations and gradually widening their focus to visualise their competitive position within their industry. The value chain approach used for assessing competitive advantage is an entire part of the strategic planning process. 2. Write a short notes on value analysisAnswer Value analysis (also known as value plan) is a organized interdisciplinary interrogative of factors affecting the greet of a product or service in order to devise means of achieving the specified purpose at the required standard of quality and reliability at the target cost. Th e aim of value technology is to come upon the assigned target cost by (i) identifying meliorate product designs that slenderize the products cost without sacrificing functionality and/or (ii) eliminating unnecessary functions that increase the products costs and for which customers are not prepared to make up extra for.Value analysis or value technology is one of the most(prenominal) wide used cost reduction techniques. It sess be defined as a technique that yields value improvement. It investigates into the economic attributes of value. It attempts to reduce cost through a. design change, b. modification of substantive specification, c. change in the source of supply and so on. It vehemencees on finding new ship canal of acquire equal or better implementation from a product at a lesser cost without affecting its quality, function, utility and reliability.For example, the function of a attachment is to join two or more parts. Value analysis examines the value of this fu nction in call of alternative methods such as welding, taping stapling, and so on in view of the stress and vibrations involved in a specific application. In value analysis for each one and every product or percentage of a product is subjected to a critical examination so as to go over its utility in the product, its cost, cost put on ratio, and better substitute and so forth When the benefits are humble than the cost, advantage may be gained by great(p) up the activity c oncern or successor if for betterment.The best product is one that will perform satisfactorily at the low cost. The various steps involved in value analysis are 1. identification of the problem 2. collect information about function, design, material, labour overhead costs, and so ontera , of the product and finding out the availability of the competitive products in the food market and 3. exploring and evaluating alternatives and developing them. In separate words value analysis brings out disti nctly the areas where the cost of a product can be reduce by pointing out 1. supererogatory items, components in a product to be removed. . Possibility of commuting with reduced cost without affecting its quality. 3. Possibility of boilers suit simplification in design manufacture etc. of a product. 3Value Engineering is more effective than any other cost reduction technique exchangeable Work Study, Automation etc. Discuss this argumentation in the Indian context. Answer. Value engineering or value analysis is one of the most widely used cost reduction technique in the purchasing and production areas. It aims at reducing cost through change, modification of material specification, change in the source of supply of material and so on.It emphasiss on finding new ways of getting equal or superior performance from a product at a borderline cost without affecting its quality, function and reliability. It is the process of subjecting each and every component of a product to a cri tical examination so as to ascertain (i) Its utility in the product (ii) Its cost (iii) Whether is cost commensurate with its utility (iv) Whether it can be replaced by a cheaper components (v) Whether it can be does away with (vi) What the competitors are using in place of it and (vii) Whether anybody is buying it at cheaper price.Utility means usefulness this can be soft and definitely measured when the concerned component or the service can be obtained form impertinent the price measures it usefulness. In some cases where an outside market does not exist, utility would be measured plainly subjectively. Still one would have a somewhat idea of whether the benefit obtained, say in basis of better appearance, is worth the costs incurred. Usually it would be profitable tom tap outside sources if the price is lower than the cost.But this decision needs to be do with great care as the question of contumacious and sunk costs is very important. Value engineering bring clearly the areas where the cost of product can be decreased by pointing out (i) Unnecessary items/components in a which might have had once some utility but now are redundant and, therefore, dispensable (ii) the possibilities of component substitution with reduced cost without affecting the quality of the product and (iii) the possibilities of overall simplification in design / manufacture etc. f a product. The relationship between value engineering and cost reduction a. Value engineering is done with a view to reduce the cost and cost reduction looks upon value engineering as one of its prime tools. b. Cost-reduction has always followed a critical examination of the benefit incurred. Value engineering is a careful and as far possible, quantities appraisal of the benefit derived at each stage of work.Where the benefits are lower than the cost, advantage may be gained by giving up the activity concerned or replacing it by something else. c. Work study automation etc, do reduce cost but i n most cases, they save only labour cost by improving efficiency, etc. On the other hand, value engineering relates the worth of the product, its value to the function it is mean to perform and makes a sizeable in the cost of the materials by design changes, substitution etc.