2nd Asian Value Engineering Conference – 2012

INDIAN VALUE ENGINEERING SOCIETY (INVEST)

VALUE ENGINEERING the DMAIC way

N.C.Narayanan

CMD, SSA Techknowlogies

NC. Narayanan, known as „NC‟, is the Founder & Chairman of SSA Group of companies based in India. It was
founded in 1999 and provides business solutions for improving the competitiveness of any enterprise. He
founded SSA Techknowlogies in 2008 with a missionary zeal of sharing his product design wisdom for
developing Indian industries and strengthening their New Product Introduction (NPI) systems. NC‟s vision for
SSA was (and is) to create a result-oriented consulting resource at an affordable price, focusing on ROI for its
clients. NC is a Gold Medallist in mechanical engineering and has earned his MS (Research) in Finite Element
Method (FEM) from IIT, Chennai. In his 30 years of Design career, NC has held many senior level positions,
such as Chief Designer at Lucas-TVS and Head of Lighting Technolgy in Crompton Greaves Ltd. He founded
SSA with a missionary zeal to make “Made in India” synonymous with Quality.

.
ABSTRACT In DFSS (Design For Six Sigma), a “Market-in”
approach is suggested to identify the latent and
The paper demonstrates an improvised stated needs of the customer before the Concept
methodology for VE by combining the philosophy designs is undertaken for functionality. The
of six sigma and VE. This approach provides an DMAIC approach for VE suggested in this paper
interface to the attributes Critical To Customer aligns with the “Market-in” philosophy of DFSS
(CTQ‟s) with the product fuctionality to ensure that recommended in the IDENTIFY phase of IDOV
VE efforts aligns with the customer. CTQs with methodology.
importance rating will help the designers to
evaluate the fucntional worth in a systematic way. The value definition of six sigma as proposed by
This enables the value specialist to evaluate each Mikel J Harry identified factors contributing to the
functions keeping the customer in perspective. value of the product. They are UTILITY,
This approach also helps the designers to avoid CONVINIENCE, LIFE and COST. Figure 1 shows
possible omition of a fuctionality which is how they are related to one another. The process of
important for the customer. This method combines VE proposed in this paper shall help the value
the numerical rigor of six sigma by creating a new specialist to capture the perceived value as per the
system for functional worth analysis. The attributes cited above. This new method for VE
RDMAIC (Recognize-Define-Measure-Analyse- introduced a numerical method for value
Improve-Control) frame work of six sigma is assessment based on customer importance rating
applied to VE enabling the value specialist to use rather than relying on the VE team‟s judgement.
standard templates along with Gate reviews.

INTRODUCTION

Traditionally, designers develop their new products

in a “Product-Out” approach where in the designer
incorporates the fuctionality that he/she feels
important (rather than customer) or implements a
new technology and invariably the new product
fails in the market. The success rate of new
products is as low as only 35% world wide. Even
while VE is undertaken on these products for cost
reduction or value enhancement, invariably the Figure 1: Relation of Value
needs of the customers are not factored leading to
customer dissatisfaction. In another words the VE
also follows the “Product-out” approach.
 2nd Asian Value Engineering Conference – 2012
INDIAN VALUE ENGINEERING SOCIETY (INVEST)
After rigorous research and numerous analysis for Phase 6: Control Phase
2 years, the authour developed the 6 phase Presenting the new proposal for the product with
methodology of a new approach to VE and titled as Target Cost and implementing it with proper
VE DMAIC (Value Engineering DMAIC). One more monitoring and auditing for sustaining the
value adding step added in the new methodology benefits.
VE DMAIC is “Recognize” phase in which the VE
specialist selects the right product for VE. One
more value adding approach added in the new
methodology VE DMAIC is strcutured in the new
phases as below:

R - Recognize
D - Define.
M- Measure
A-Analyze
I – Improve
C – Control
Figure 2 explains the phase wise flow.

This method is designed to facilitate application of

METHOD FLOW
VE both in engineering as well as service process
design. VE DMAIC was tested on consumer goods
Recognize Phase:
like a pen and desk telephone and the results were
astonishing with saving upto 25% of overall
As mentioned, this phase recognizes the business
manufacturing cost.
needs and selects the product on which Value
Engineering is conducted. The steps associated
METHODOLOGY
with this phase are,
 Identify the product, which will undergo
Value EngineeringDMAIC consists of 6 phases, the value study.
which have different steps within it.  Compare the following aspects:
o Market share value of all the
Phase 1: Recognize Phase products in the Company
Recognize business needs and selecting the o Revenue generated from the
product on which Value Engineering DMAIC products
o Competitiveness of products in
method will be conducted.
market
 Selecting and Maintaining close working
Phase 2: Define Phase relationship between the value team leader
Collecting the appropriate information of the and the manager sponsoring a project
product relating with cost and part specification generates Value.

Phase 3: Measure Phase Define Phase:

Identifying and prioritizing the functions critical
to customer requirements This phase focuses on collecting all the data related
to product. This data consists of Voice of the
Phase 4: Analyze Phase Customer (VOC), Benchmarking, Key buying
Identify the root causes for improper value Factor, Critical to Quality specifications and Bill of
distribution from functional analysis Material.
 Initial process is to collect the VOC from
Phase 5: Improve Phase direct interaction and Gemba study and
Generation of alternate concepts for the functions document them.
of the product value to the product  Benchmarking these requirements with the
competitors adds value, as it reflects the
current status from the customer demands.
(Figure 3 – KBF)
 2nd Asian Value Engineering Conference – 2012
INDIAN VALUE ENGINEERING SOCIETY (INVEST)
 This step is required to calculate the
WORTH of the functions. o Re-Engineering – If the VR is
 Documenting the number of parts opens less than 1, it means that the cost
the picture of different functionality invested is more than required
incorporated in the product and overall (Worth) on that part/component.
cost. This implies that there is a cost
 The manufacturing cost is also calculated saving opportunity on this part.
in this stage. o Improvement – If the VR is
greater than 1, it means that the
cost invested is lower as
compared to required (Worth) on
that part. This implies that an
opportunity exists to provide
additional value to customer..
Improve Phase:

All the investigation is documented and the critical

areas are identified and prioritized for
improvements. This phase generates and selects
concepts as solutions, to overcome the additional
cost identified from the prior phase.
Figure 3: Key Buying Factor
 Various concepts are generated using
Measure Phase: concept generation tools like TRIZ, Six
Thinking Hats, SCAMPER.
Measure phase is the vital part of this Analysis on  These concepts are selected by
cost deduction. In this phase Value is calculated for brainstorming in the criteria identified
each and every function by ratios of worth and cost. using tools like Analytical Hierarchy
Objective of this phase is to, Process and Pugh matrix.
 State the functions of all the parts  Cost is the vital criteria for selection.
 Identify the functions required for the  If required, FMEA is also executed on the
system to function using FBD, FAST. new designs
 Compare the worth (Customer
requirements) with functionality cost Control Phase :
using Customer need-Function-Cost
(CFC) Analysis, illustrated in Figure 4. This phase is the final stage of the value and cost
 Value Ratio (VR= Worth/Cost) of each improvement Analysis. Here, the Top management
component is calculated, after have to be convinced to implement the changes
implementing this analysis. required for the product to function with higher
productivity life and minimum manufacturing cost.
Analyze Phase:  All the concepts selected are implemented
to build a prototype and reliability
As the name implies, Analyze phase investigates assessment is executed to calculate the
the potential causes which effect the product product life.
functionality, adding additional cost.  These assessments record the actual
 This investigation technique identifies, manufacturing cost associated with the
o Root cause of unwanted functions improvements.
which is additional cost.  The management is shown Benefit
o Magnitude of these problems. Analysis Table (BAT) which documents
 This analysis also identifies the focus area the Cost Savings and /or Value
by differentiating, Re-Engineering and enhancements after conducting this
Improvement on basis of VR of Analysis and Improvements.
components.(Figure 5)  The whole project is presented to the Top
management for the approval.
 2nd Asian Value Engineering Conference – 2012
INDIAN VALUE ENGINEERING SOCIETY (INVEST)

Customer Function Cost Analysis

Figure 4
 2nd Asian Value Engineering Conference – 2012
INDIAN VALUE ENGINEERING SOCIETY (INVEST)

Figure 5: Analysis Investigating

On a Lighter Note
 2nd Asian Value Engineering Conference – 2012
INDIAN VALUE ENGINEERING SOCIETY (INVEST)

DMAIC
VE Traditional VE

Phases Objective Phases Objective

To Identify the product to be VE projects are chosen based on cost

Recognize
developed and analyze the Market Selection Phase reduction requirements to improve
Phase
Value of products profitability

Defines the VE objectives and VOC is

collected to drill down to CTQs.
Customer importance to functionality
is obtained through VOC. The Information To collect all the information of the
Define Phase
customers Stated and Latent Needs are Phase product which undergoes Value Study
captured. Part of QFD matrix is
applied to get the customer
perspectives.

Clearly establishes the ratio of

functional worth using customer To generate functional analysis on the
Measure Phase Function Phase
importance ratings. Focus areas are part and understand the vital parts
prioritized numerically.

To Identify the Root Cause for the To generate better ideas for the
Analyze Phase Creativity Phase
imbalance of ratio of worth required functions

To generate and select alternative and

Evaluation To select appropriate idea for the parts
Improve Phase robust concepts for the required
Phase functions
Functions with respective to Cost

To represent the proposed Solutions

and compute the reliability of the
product and Validate its performance
Presentation To propose the selected idea to the top
Control Phase with respective to the limitations. Risk
Phase management for their decisions
analysis could be added to evaluate
risk using DFMEA (Optional).
Sustaining benefits are addressed.

Implementation To implement the developments

Phase suggested by the top management

To monitor the developments made in

Audit Phase
the product
 2nd Asian Value Engineering Conference – 2012
INDIAN VALUE ENGINEERING SOCIETY (INVEST)

CONCLUSION:

Value Engineering VEDMAIC is the next generation

of VA/VE approach that enhances the power of
traditional VA/VE methods by interfacing with the
customer, numerical evaluation for objectivity,
tools & techniques for structured thinking by the
VE specialists in that will enable the designers. The
RDMAIC methodology aids the designers to
manage their projects with intermediate gate
reviews in standardized templates. The VEDMAIC
approach is also ideal for application of VE for
service processes. This method will take the
traditional VE to its next level of maturity.

END OF DOCUMENT