CHAPTER

0
Introduction to
Operation Management
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
What is Operations Management?
The business function responsible for
Planning,
Coordinating, and
Controlling
the resources needed
to produce a companys
products and services
Operations Management Definition
Operations management is defined as:
the design,
operation, and
improvement of the systems
that create and deliver
the firms primary products and
services.

Why Study Operations Management?
Operations
Management
Business Education/
Career Opportunities
Systematic Approach
to Org. Processes
Increase Competitive
Advantage/Survival
Cross-Functional
Applications
Operations Decision Making
People Plants Parts Processes
Planning and Control
Materials &
Customers
Products &
Services
Input Output
Operations Management
Marketing Strategy Finance Strategy
Marketplace
Corporate Strategy
Operations Strategy
The Transformation Process (value adding)
Quality
Management
Statistical
Process Control
Just in Time
Materials Requirement Planning
Inventory Control
Aggregate
Planning
Operations Management - Overview
Project
Management
Supply Chain
Management
Process Analysis
and Design
Process Control
and Improvement
Waiting Line Analysis and
Simulation
Services
Manufacturing
Operations
Strategy
Facility Layout
Consulting and
Reengineering
Process Analysis
Job Design
Capacity Management
Planning for Production
Supply Chain
Strategy
Operations Strategy
Customer Needs
Corporate Strategy
Operations Strategy
Decisions on Processes
and Infrastructure
Example
Strategy Process
More Product
Increase Org. Size
Increase Production Capacity
Build New Factory
Competitive Dimensions
Cost
Quality and Reliability
Delivery
Flexibility
Speed
Reliability
Coping with Changes in Demand
New Product Introduction
Speed
Flexibility
CHAPTER
1
Product Life Cycle
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
Product Life Cycles
May be any length from a few hours
to decades
The operations function must be
able to introduce new products
successfully
Product Life Cycles
Negative
cash flow
Introduction Growth Maturity Decline
S
a
l
e
s
,

c
o
s
t
,

a
n
d

c
a
s
h

f
l
o
w

Cost of development and production
Cash
flow
Net revenue (profit)
Sales revenue
Loss
Figure 5.1
PLC
Product Life Cycle
Introductory Phase
Fine tuning may warrant unusual
expenses for
1. Research
2. Product development
3. Process modification and
enhancement
4. Supplier development
.
Product Life Cycle
Growth Phase
Product design begins to stabilize
Effective forecasting of capacity
becomes necessary
Adding or enhancing capacity may
be necessary
.
Product Life Cycle
Maturity Phase
Competitors now established
High volume, innovative
production may be needed
Improved cost control, reduction
in options, paring down of
product line
PLC-Maturity/Decline
.
Product Life Cycle
Decline Phase
Unless product makes a special
contribution to the organization,
must plan to terminate offering
PLC
Product Life Cycle Costs
Costs incurred
Costs committed
Ease of change
Concept Detailed Manufacturing Distribution,
design design service,
prototype and disposal
P
e
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n
t

o
f

t
o
t
a
l

c
o
s
t

100
80
60
40
20
0
Product-by-Value Analysis
Lists products in descending order of
their individual dollar contribution to
the firm
Lists the total annual dollar
contribution of the product
Helps management evaluate
alternative strategies
Product-by-Value Analysis
Individual
Contribution ($)
Total Annual
Contribution ($)
Love Seat $102 $36,720
Arm Chair $87 $51,765
Foot Stool $12 $6,240
Recliner $136 $51,000
Sams Furniture Factory
CHAPTER
2
Product & Service Design
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
Product & Service Design
The process of deciding on the unique
characteristics of a companys product &
service offerings
Serves to define a companys customer base,
image, competition and future growth


Products versus Services
Products:
Tangible offerings
Dimensions, materials, tolerances & performance
standards
Services:
Intangible offerings
Physical elements + sensory, esthetic, &
psychological benefits
Strategic Importance
Products & service offerings must support the
companys business strategy by satisfying the
target customers needs & preferences
If not, the company will lose its customer base
and its market position will erode
Steps in Product Design
Idea Development:
A need is identified & a product idea to satisfy it is put
together
Product Screening:
Initial ideas are evaluated for difficulty & likelihood of
success
Preliminary Design & Testing
Market testing & prototype development
Final Design
Product & service characteristics are set
Idea Development
Existing & target customers
Customer surveys & focus groups
Benchmarking
Studying best in class companies from your industry or
others and comparing their practices & performance to
your own
Reverse engineering
Disassembling a competitors product & analyzing its
design characteristics & how it was made
Suppliers, employees and technical advances
Product Screening
Operations:
Are production requirements consistent with existing
capacity?
Are the necessary labor skills & raw materials available?
Marketing:
How large is the market niche?
What is the long-term potential for the product?
Finance:
What is the expected return on investment?
Break-Even Analysis
Break-Even Analysis
Total cost = fixed costs + variable costs (quantity):


Revenue = selling price (quantity)


Break-even point is where total costs = revenue:
Q VC F TC
Q SP R

VC SP
F
Q or
Q SP Q VC F or R TC

Break-Even Analysis Example
A firm estimates that the fixed cost of
producing a line of footwear is $52,000 with a
$9 variable cost for each pair produced. They
want to know:
If each pair sells for $25, how many pairs must
they sell to break-even?
If they sell 4000 pairs at $25 each, how much
money will they make?
Example Solved
Break-even point:


Profit = total revenue total costs
pairs
VC SP
F
Q 3250
9 $ 25 $
000 , 52 $

000 , 12 $
4000 9 $ 000 , 52 $ 4000 25 $

Q VC F Q SP P
Preliminary Design & Testing
General performance characteristics are
translated into technical specifications
Prototypes are built & tested (maybe offered
for sale on a small scale)
Bugs are worked out & designs are refined
Final Design
Specifications are set & then used to:
Develop processing and service delivery
instructions
Guide equipment selection
Outline jobs to be performed
Negotiate contracts with suppliers and distributors

Other Design factors
Design for Manufacture
Product Life Cycle
Concurrent Engineering
Design for Manufacture (DMF)
Minimize parts
Design parts for
multiply applications
Use modular design
Avoid tools
Simplify operations

Design For Manufacture Benefits
Lower costs:
Lower inventories (fewer, standardized
components)
Less labor required (simpler flows, easier tasks)
Higher quality:
Simple, easy-to-make products means fewer
opportunities to make mistakes
Concurrent Engineering
A design approach that uses multifunctional
teams to simultaneously design the product &
process
Replaces a traditional over-the-wall approach
where one group does their part & then hands
off the design to the next group
Sequential Design
Concurrent Engineering
Concurrent Engineering Benefits
Representatives from the different groups can better
consider trade-offs in cost & design choices as each
decision is being made
Development time is reduced due to less rework
(traditionally, groups would argue with earlier
decisions & try to get them changed)
Emphasis is on problem-solving (not placing blame
on the other group for mistakes)
Service Design
Service typically includes direct interaction
with the customer
Increased opportunity for customization
Reduced productivity
Cost and quality are still determined at the
design stage
Delay customization
Modularization
Reduce customer interaction, often through
automation
Service Design
Figure 5.12
Service Design
Figure 5.12
Application of Decision Trees to
Product Design
Particularly useful when there are a
series of decisions and outcomes which
lead to other decisions and outcomes
Application of Decision Trees to
Product Design
1. Include all possible alternatives and states
of nature - including doing nothing
2. Enter payoffs at end of branch
3. Determine the expected value of each
branch and prune the tree to find the
alternative with the best expected value
Procedures
(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD

Hire and train engineers

Do nothing
Figure 5.14
(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD

(.6)
Low sales
(.4)
High sales
Hire and train engineers

Do nothing
Figure 5.14
$2,500,000 Revenue
- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost
$1,000,000 Net
$800,000 Revenue
- 320,000 Mfg cost ($40 x 8,000)
- 500,000 CAD cost
- $20,000 Net loss
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)
(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD
$388,000
Hire and train engineers
$365,000
Do nothing $0
$0 Net
$800,000 Revenue
- 400,000 Mfg cost ($50 x 8,000)
- 375,000 Hire and train cost
$25,000 Net
$2,500,000 Revenue
- 1,250,000 Mfg cost ($50 x 25,000)
- 375,000 Hire and train cost
$875,000 Net
$2,500,000 Revenue
- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost
$1,000,000 Net
$800,000 Revenue
- 320,000 Mfg cost ($40 x 8,000)
- 500,000 CAD cost
- $20,000 Net loss
Figure 5.14
Transition to Production
Know when to move to production
Product development can be viewed as
evolutionary and never complete
Product must move from design to production in a
timely manner
Most products have a trial production period to
insure producibility
Develop tooling, quality control, training
Ensures successful production
Transition to Production
Responsibility must also transition as the
product moves through its life cycle
Line management takes over from design
Three common approaches to managing
transition
Project managers
Product development teams
Integrate product development and manufacturing
organizations
PACCAR
PACCAR is a global technology leader in the:
Design,
manufacture and
customer support of premium
light-,
medium- and
heavy-duty trucks under the
Kenworth,
Peterbilt and
DAF nameplates.
Paccar Trucks
.
Paccar Trucks
.
Caterpillar Product Design
.
Walking Dragline
.
Walking Dragline
.
CHAPTER
3
New Product Development
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
New Product Development
.
New Product Development
.
Stage 1: Idea Generation
New product ideas have to come from somewhere.
But where do organizations get their ideas for NPD?
Sources include:
Market Research
Employees
Consultants
Competitors
Customers
Distributors and Suppliers

Idea Generation
.
Stage 2: Idea Screening
This process involves shifting through the
ideas generated above and selecting ones
which are feasible and practical to develop.
Pursing impractical ideas is expensive and a
waste of resources.
Idea Screening
.
Stage 3: Concept Development and
Testing
The organization may have come across what they
believe to be a feasible idea, however, the idea needs
to be taken to the target audience.
What do they think about the idea?
Will it offer the benefit that the organization hopes it
will?
or have they overlooked certain issues?
Will there be a demand for the product?
Note the idea taken to the target audience is not a
working prototype at this stage, it is just a concept.
Concept Development & Testing
.
Stage 4: Marketing Strategy and
Development
How will the product/service idea be launched
within the market?
A proposed marketing strategy will be written
laying out the:
marketing mix strategy of the product,
the segmentation,
targeting and
positioning strategy and
expected sales and profits.
Marketing Strategy & Development
.
Stage 5: Business Analysis

The company has a great idea:
the marketing strategy seems feasible,
but will the product be financially worth while in
the long run?
The business analysis stage looks more deeply into
the CASHFLOW the product could generate,
what the cost will be,
how much market shares the product may achieve and
the expected life of the product.

Business Analysis
.
Stage 6: Product Development
At this stage the prototype is produced.
The prototype will :
undergo a serious tests,
and will be presented to a selection of people
made up of
the target market SEGMENT to see if changes
need to be made.
Product Development
.
Stage 7: Test Marketing
Test marketing means :
testing the product within a specific geographic
area.
The product will be launched within a particular
region
so the marketing mix strategy can be monitored
and
if needed modified before national launch
Test Marketing
.
Stage 8: Commercialization
If test marketing is successful the product is ready
for national launch.
The following decisions regarding the national
launch need to be made:

timing of the launch
how the product will be launched
where the product will be launched
will there be a national roll out or
will it be region by region?

Commercialization
.
Conclusion
The eight stages of product development may seem
like a long process but they are designed to save
wasted time and resources.
New product development ideas and prototypes are
tested to ensure that the new product will meet target
market needs and wants.
There is a test launch during the test marketing stage
as a full market launch is expensive.
Finally the commercialization stage is carefully
planned to maximize product success, a poor launch
will affect product sales and could even affect the
reputation and image of the new product.

CHAPTER
4
Process Design
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
Design:
To design refers to the process of originating
and developing a plan for a product, service or
process.

Process:
Is any part of an organization which takes a set
of input resources which are then used to
transform something into outputs of products
or services.
Process Design
Processes that
Design Products
and Services
Concept Generation
Screening
Preliminary Design
Evaluation and
Improvement
Prototyping and final
design
Processes that
Produce Products
and Services
Supply Network Design
Layout
and Flow
Process
Technology
Job
Design
Process design
Nature of the design activity:
1) Design is inevitable products, services and the
processes which produce them all have to be
designed.
2) Product design influences process design
decisions taken during the design of a product or
service will have an impact on the decisions taken
during the design of the process which produces
those products or services and vice versa.
Product & services design are
interrelated to its process design
Decisions taken during the design of the product or service will have
an impact on the process that produces them and vice versa
Products and services
should be designed in
such a way that they
can be created
effectively
Processes should be
designed so they can
create all products
and services which
the operation is likely
to introduce
Designing the
Product or
Service
Designing the
Processes that
Produce the Product
or Service
Process Design and Product/Service Design are Interrelated

To commit to the detailed design of a product or service
consideration must be given to how it is to be produced.
Design of process can constrain the design of products and
services.
The overlap is greater in the service industry:
Service industry - it is impossible to separate service
design and process design they are the same thing.
Manufacturing industry - it is possible to separate product
design and process design but it is beneficial to consider
them together because the design of products has a major
effect on the cost of making them.
Process and product/service design must satisfy customer
Products/services designer customers satisfaction criteria
Aesthetically pleasing
Reliability
Meets expectation
Inexpensive
Quality
Easy to manufacture and deliver
Speedy
Process designer customers satisfaction achieved through:
Layout
Location
Process technology
Human skills
The design activity is itself a process
Finished designs
which are:
High quality: Error-free designs
which fulfil their purpose in an
effective and creative way
Speedily produced: Designs
which have moved from
concept to detailed
specification in a short time
Dependably delivered: Designs
which are delivered when
promised
Produced flexibly: Designs
which include the latest ideas
to emerge during the process
Low cost: Designs produced
without consuming excessive
resources
TRANSFORMED
RESOURCES
Technical information
Market information
Time information
TRANSFORMING
RESOURCES
Test and design
equipment
Design and technical
staff
THE DESIGN
ACTIVITY
OUTPUT INPUTS
Relatively early in the design activity the
decisions taken will commit the operation
to costs which will be incurred later
100%
0%
Percentage of final
product cost
committed by the
design
Percentage of
design costs
incurred
Start of the
design activity
Finish of the
design activity
Designing processes
Process mapping
Process mapping symbols
Improving processes
Process performance
Throughput, cycle time & work in process
Process mapping

Used to identify different types of activities.

Shows the flow of material, people or
information.

Critical analysis of process maps can improve
the process.
Operation (an activity
that directly adds value)
Inspection (a check of
some sort)
Transport (a movement
of some thing)
Delay (a wait, e.g. for materials)
Storage (deliberate storage,
as opposed to a delay)
Process mapping symbols derived
from Scientific Management
Decision (exercising discretion)
Process mapping symbols derived
from Systems Analysis
Direction of flow
Input or Output from the process
Activity
Beginning or end of process
Process mapping symbols
Standard sandwich process
Raw
Materials
Assembly
Stored
Sandwiches
Move to
Outlets
Stored
Sandwiches
Sell
Take
Payment
Customer
Request
Raw
Materials
Assembly
Take
Payment
Customer
Request
Customized sandwich old process
Prepare
Assemble as
required
Take
payment
Bread and
Base filling
Stored
Bases
Fillings
Assemble whole
sandwich
Customer
Request
Use standard
base?
Assemble from
standard base
No
Yes
The operation of making and
selling customized sandwiches
The outline process of making and
selling customized sandwiches
The detailed process of
assembling customized
sandwiches
Sandwich
materials and
customers
Customers
assembled to
sandwiches
Customized sandwich improved new process
Bread and
Base filling
Assembly of
sandwich
bases
Stored Bases
Fillings
Assemble whole
sandwich
Take
Payment
Customer Request
Use standard
base?
Assemble from
standard base
No
Yes
Left hand Right hand
Pick up base plate
Insert into fixture
Pick up two supports
Locate back plate
Pick up screws
Locate screws
Pick up air driver
Fasten screws
Replace air driver
Pick up centre assembly
Inspect centre assembly
Locate and fix
Switch on timer
Wait to end test
Inspect
Transfer grasp
Put aside
Wait
Hold base plate
Wait
Hold centre assembly
Inspect
Transfer grasp
Wait
Two handed process chart
Process performance
Process performance can be judge against the
five key performance objective:
Quality
Speed
Dependability
Flexibility
Cost
Throughput, work content, cycle time, and work
in process
Throughput the time for a unit to move through
the process
Work content the total amount of work required to
produce a unit of output (measured in time)

Cycle time The average time between units of
output emerging form the process

Work in process (WIP) unfinished items in a production process
waiting for further processing e. g. when customers join a
queue in a process they become WIP
throughput = work in process x cycle time
Project Processes
One-off, complex, large scale, high work
content products
Specially made, every one customized
Defined start and finish: time, quality and cost
objectives
Many different skills have to be coordinated
Fixed position layout
Project Process
Jobbing Processes
Very small quantities: one-offs, or only a few
required
Specially made. High variety, low repetition.
Skill requirements are usually very broad
Skilled jobber, or team of jobbers complete
whole product
Fixed position or process layout (routing
decided by jobbers)
Jobbing Process
Batch Processes
Higher volumes and lower variety than for
jobbing
Standard products, repeating demand. But
can make specials
Specialized, narrower skills
Set-ups (changeovers) at each stage of
production
Process or cellular layout
Batch Process
Mass (Line) Processes
Higher volumes than Batch
Standard, repeat products
Low and/or narrow skills
No set-ups, or almost instantaneous ones
Cell or product layout
Mass Process
Continuous Process
Extremely high volumes and low variety: often
single product
Standard, repeat products
Highly capital-intensive and automated
Few changeovers required
Difficult and expensive to start and stop the
process
Product layout: usually flow along conveyors
or pipes
Continuous Process
Volume Low High
Volume Low High
V
a
r
i
e
t
y

L
o
w

H
i
g
h

V
a
r
i
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t
y

L
o
w

H
i
g
h

Project
Jobbing
Batch
Mass
Contin-
uous
Professional
service
Service shop
Mass service
Service process
types
Manufacturing process
types
CHAPTER
5
Cross Functional Product Design
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
Cross Functional Product Design
A cross-functional team is a group of people with different
functional expertise working toward a common goal.
It may include people from
finance,
marketing,
operations, and
human resources departments.
Typically, it includes employees from all levels of an
organization.
Members may also come from outside an organization (in
particular, from suppliers, key customers, or consultants).


Cross Functional Product Design
Cross-functional teams often function as self-
directed teams assigned to a specific task
which calls for the input and expertise of
numerous departments.
Assigning a task to a team composed of multi-
disciplinary individuals increases the level of
creativity and out of the box thinking.

Cross Functional Product Design
Each member offers an alternative
perspective to the problem and potential
solution to the task.
In business today, innovation is a leading
competitive advantage and cross-functional
teams promote innovation through a creative
collaboration process.

Cross Functional Product Design
Members of a cross-functional team must be
well versed in multi-tasking as they are
simultaneously responsible for their cross-
functional team duties as well as their normal
day-to-day work tasks.
Decision making within a team may depend
on consensus, but often is led by a
manager/coach/team leader.


Cross Functional Product Design
Leadership can be a significant challenge with
cross-functional teams.
Leaders are charged with the task of directing
team members of various disciplines.
They must transform different variations of
input into one cohesive final output.
Cross-functional teams can be likened to the
board of directors of a company.

Cross Functional Product Design
A group of qualified individuals of various
backgrounds and disciplines are assembled to
collaborate in an efficient manner in order to
better the organization or solve a problem.

Concurrent Engineering
Concurrent engineering can be defined
as the simultaneous development of
design functions, with open and
interactive communication existing
among all team members for the
purpose of:
reducing time to market
decreasing cost
improving quality and reliability

3
Phased versus Overlapping Approach in New
Product Development
Design
information
processing
Activity
1
Activity
2
Activity
3
Information batch size
Single batch
transfer of
info
Phased Approach
Start of
Activity 2
Start of
Activity 3
Elapsed
time
Design
information
processing
Activity
1
Activity
2
Small batch transfer of info
Overlapping Approach
Start of
Activity 2
Start of
Activity 3
Elapsed
time
____________________________________________________________
New Product Development: The New Time Wars Joe Blackburn, 1991. 3a
CHAPTER
6
Design for Manufacture &
Assembly
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
Introduction to
Design for (Cost Effective) Assembly and
Manufacturing
Purpose Statement
To provide an overview of Design for
Manufacturing and Assembly (DFMA)
techniques, which are used to minimize
product cost through design and
process improvements.
Objectives
Participants will understand:
Differences and Similarities between Design for
Manufacturing and Design for Assembly
Describe how product design has a primary influence
Basic criteria for Part Minimization
Quantitative analysis of a designs efficiency
Critique product designs for ease of assembly
The importance of involving production engineers in DFMA
analysis
Design for Assembly
Definition: DFA is the method of design of the
product for ease of assembly.
Optimization
of the part/system
assembly
DFA is a tool used to assist the design teams in the design of
products that will transition to productions at a minimum cost,
focusing on the number of parts, handling and ease of assembly.
Design for Manufacturing
Definition: DFM is the method of design for
ease of manufacturing of the collection of
parts that will form the product after
assembly.
Optimization of the
manufacturing
process
DFA is a tool used to select the most cost effective material and
process to be used in the production in the early stages of product
design.
Differences

Design for Assembly (DFA)
concerned only with reducing product
assembly cost
minimizes number of assembly operations
individual parts tend to be more complex in design

Design for Manufacturing (DFM)
concerned with reducing overall part
production cost
minimizes complexity of manufacturing operations
uses common datum features and primary axes

Similarities
Both DFM and DFA seek to reduce material,
overhead, and labor cost.
They both shorten the product
development cycle time.
Both DFM and DFA seek to utilize standards
to reduce cost
Terminology
Design for Manufacturing (DFM) and Design for
Assembly (DFA) are now commonly referred to as
a single methodology, Design for Manufacturing
and Assembly (DFMA) .
Design

70 - 80%
Manufacturing
20 - 30%
What Internal Organization has the most
Influence over Price, Quality, & Cycle Time?
Time Into the Design Process
P
e
r
c
e
n
t
a
g
e

100
90
80
70
60
50
40
30
20
10
100
90
80
70
60
50
40
30
20
10
High









Low
Cost of Change
Design Freedom to
Make Changes
Knowledge of Design
Behavior
Production
Process
Capability
Knowledge
DFSS
Marketing
Knowledge
Knowledge and Learning
Concept Design
Design for
Assembly
Design for
Manufacturing
Detailed Design
Optimize Design for
Part Count and
Assembly
Optimize Design for
Production Readiness
Sequence of Analysis
Design for Assembly
DFA is a process that REQUIRES
involvement of Assembly Engineers
Design for Assembly Principles
Minimize part count
Design parts with self-locating features
Design parts with self-fastening features
Minimize reorientation of parts during assembly
Design parts for retrieval, handling, & insertion
Emphasize Top-Down assemblies
Standardize partsminimum use of fasteners.
Encourage modular design
Design for a base part to locate other components
Design for component symmetry for insertion
DFA Process
q Product Information: functional requirements
q Functional analysis
q Identify parts that can be standardized
q Determine part count efficiencies
Step 2
Step 1
q Analyze data for new design
Step 3
q Identify handling (grasp & orientation) opportunities
Step 4
q Identify insertion (locate & secure) opportunities
Step 5
Step 6 q Identify opportunities to reduce secondary operations
q Identify quality (mistake proofing) opportunities
Benchmark when possible
q Determine your practical part count
Step 7
DFA Analysis Worksheet
Cummins
Tools
q Product Information: functional requirements
q Functional analysis
q Identify parts that can be standardized
q Determine part count efficiencies
Step One
Considerations/Assumptions
The first part is essential (base part)

Non-essential parts:
Fasteners
Spacers, washers, O-rings
Connectors, leads

Do not include liquids as parts
(e.g.. glue, gasket sealant, lube)
Step
One
Part Identification
List parts in the order
of assembly
Assign/record part
number
So take it apart!
Count Parts & Interfaces
List number of parts
(Np)
List number of
interfaces (Ni)
Your Turn
List parts in the order of assembly.
Assign part number to keep up with the part.
List number of parts (Np)
List number of interfaces (Ni)



Current
Design
Consider
Specification
Other
Options
Does the part
move relative
to all other
parts already
assembled?
Is the part of
a different
material, or
isolated from,
all other parts
already
assembled?
Is the part
separate to
allow for its
in-service
adjustment or
replacement?
Is the
movement
essential for
the product
to function?
Is a different
material or
isolation
essential for
the product
to function?
Is the
adjustment or
replacement
essential?
Must the part
be separate
to provide the
required
movement?
Must the part
be separate
to satisfy the
different
material or
isolation
requirement?
Must the part
be separate
to enable the
adjustment or
replacement?
Y
Y
Y Y
Y
Y
Essential
Part
N N N
N N N
Y
Y
Y
N N N
Non
Essential
Part
Determine Theoretical Min. No. of Parts
M
o
v
e
m
e
n
t

I
s
o
l
a
t
i
o
n

A
d
j
u
s
t
m
e
n
t

o
r

R
e
p
l
a
c
e
m
e
n
t

Current Design Consider Specification Other Options
Does the part move
relative to all other
parts already
assembled?
Is the part of a
different material, or
isolated from, all
other parts already
assembled?
Is the part separate
to allow for its in-
service adjustment
or replacement?
Is the movement
essential for the
product to function?
Is a different
material or isolation
essential for the
product to function?
Is the adjustment or
replacement
essential?
Must the part be
separate to provide
the required
movement?
Must the part be
separate to satisfy
the different
material or isolation
requirement?
Must the part be
separate to enable
the adjustment or
replacement?
Y
Y
Y Y
Y
Y
Essential
Part
N N N
N N N
Y
Y
Y
N N N
Non Essential
Part
Functional Analysis
M
o
v
e
m
e
n
t

I
s
o
l
a
t
i
o
n

A
d
j
u
s
t
m
e
n
t

o
r

R
e
p
l
a
c
e
m
e
n
t

Determine if Parts Can be Standardized
Can the current parts be
standardized?:
Within the assembly
station
Within the full assembly
Within the assembly
plant
Within the corporation
Within the industry
Should they be?
(Only put a Y if both
answers are yes)
Theoretical Part Count Efficiency
Theoretical Part
Count Efficiency

Theoretical Min. No. Parts
Total Number of Parts


Theoretical Part 1
Count Efficiency 10


Theoretical Part
Count Efficiency

=
= * 100
= 10%
* 100
Goal
Rule of Thumb Part
Count Efficiency Goal >
60%
DFA Complexity Factor Definition
Cummins Inc. metric for assessing complexity
of a product design
Two Factors
Np Number of parts
Ni Number of part-to-part interfaces

Multiply the two and take the square root of the
total
This is known as the DFA Complexity Factor
S Np x S Ni
DFA Complexity Factor Target
Smaller is better (Minimize Np and Ni)
Let Npt = Theoretical Minimum Number of parts
from the Functional Analysis
Npt = 5
Let Nit = Theoretical minimum number of part to part interfaces
Nit = 2(Npt-1)
Nit = 2(5-1) = 8
Part 2
Part 3
Part 4
Part 5
Part 1
DCF S Np x S Ni
DCFt S Npt x S Nit
DCFt 5 x 8 = 6.32
Determine Relative Part Cost
Levels
Subjective estimate
only
Low/Medium/High
relative to other parts
in the assembly
and/or product line
Cost Breakdown
Media paper 21.4%
Centertube 3.6%
Endplates (2) 3.0%
Plastisol 2.6%
Inner Seal 4.0%
Spring 0.9%
Shell 31.4%
Nutplate 21.0%
Retainer 4.8%
Loctite 0.3%
End Seal 7.0%


Step Two
Determine Practical Minimum Part Count
Determine Practical Minimum Part Count
Team assessment of
practical changes
Tradeoffs between part
cost and assembly cost
Innovation
No. Parts
Current Design
Practical Min.
No. Parts
Practical & Achievable
Theoretical Number of
Parts...
Theoretical Min.
No. Parts
Blue Sky
Creativity & Innovation
Part Count Reduction
Assembly Saving
(DFA)
Part Manufacture
Saving (DFM)
Saving
Optimum
Total Saving
Cost of Assembly Vs Cost of Part Manufacture
Implementation
Risk
High Medium Low
Short
Term
Medium
Term
Long
Term
Step
Two
Idea Classification
Dont constrain yourself to incremental improvement
unless you have to!
This style doesnt tear paper like the claw style and is much cheaper
to produce!
Steps
One &
Two
Product Information:
functional requirements
Functional analysis
Identify parts that can be
standardized
Determine part count
efficiencies
Determine your practical part count
Instructions

Your Turn...
Fasteners
A study by Ford Motor Co. revealed
that threaded fasteners were the most
common cause of warranty repairs

This finding is echoed in more recent
survey of automotive mechanics, in
which 80% reported finding loose or
incorrect fasteners in cars they
serviced
Step
One
Component Elimination
Example: Rollbar Redesign
24 Parts
8 different parts
multiple mfg. & assembly
processes necessary
2 Parts
2 Manufacturing processes
one assembly step
..If more than 1/3 of the components in a product are
fasteners, the assembly logic should be questioned.
Fasteners: Cummins Engines
Data from Munroe & Associates October 2002
Engine Type Number of
Components
Number of
Fasteners
Percent
Fasteners
B Series, 6 Cyl 5.9L 1086 436 40%
B Series, 4 Cyl 3.9L 718 331 46%
C Series, 8.3L 1111 486 44%
Standard Bolt Sizes
Minimize extra sizes to both reduce inventory
and eliminate confusion during assembly
M5 x .8 M6 x 1.0 M8 x 1.25 M10 x 1.5 M11 x 1.25M12 x 1.25M12 x 1.75 M14 x 1.5 M16 x 2.0 Qty Required
12mm 0
14mm 2 2
16mm 3 3
20mm 4 8 8 20
25mm 6 6 12
30mm 3 8 11
35mm 10 35 45
39.5mm 32 12 10 4 58
40mm 41 27 6 74
45mm 22 9 1 32
50mm 4 9 25 18 12 68
60mm 13 8 15 36
70mm 6 6
Required 2 7 93 152 75 16 21 0 1 367
Candidates for elimination
Fastener Cost
Select the
most
inexpensive
fastening
method
required
plastic bending
riveting
screwing
snap fit
General Design Principles
Self-fastening features
General Design Principles
Asymmetric Part
Symmetry of a part
makes assembly easier
Symmetry eliminates reorientation
General Design Principles
Top-Down Assembly
General Design Principles
Modular Assemblies
1. Imaging
2. Drives
3. Development
4. Transfer/Stripping
5. Cleaning
6. Fusing
7. Charge/Erase
8. Copy Handling
9. Electrical Distribution
10. Photoreceptor
11. Input/output Devices
Xerox photocopier
Designed
Detailed
Prototyped
Produced
Scrapped
Tested
Re-engineered
Purchased
Progressed
Received
Inspected
Rejected
Stocked
Outdated
Written-off
Unreliable
Recycled
late from the supplier!
Eliminated Parts are NEVER
Step
Three
Identify quality (mistake proofing)
opportunities
Mistake Proofing Issues
Cannot assemble wrong
part
Cannot omit part
Cannot assemble part
wrong way around.
symmetrical parts
asymmetrical parts
Mistake Proofing Issues
72 Wiring Harness
Part Numbers
CDC - Rocky Mount,
NC
Step Four
Identify handling (grasp & orientation)
opportunities
Quantitative criteria
Handling Time: based on assembly process and
complexity of parts
How many hands are required?
Is any grasping assistance needed?
What is the effect of part symmetry on assembly?
Is the part easy to align/position?
Handling Difficulty
Size
Thickness
Weight
Fragility
Flexibility
Slipperiness
Stickiness
Necessity for using 1) two hands, 2) optical
magnification, or 3) mechanical assistance
Handling Difficulty
size slipperiness
sharpness flexibility
Eliminate Tangling/Nesting
Step Five
Identify insertion (locate & secure)
opportunities
Quantitative criteria
Insertion time: based on difficulty required for
each component insertion
Is the part secured immediately upon insertion?
Is it necessary to hold down part to maintain location?
What type of fastening process is used? (mechanical,
thermal, other?)
Is the part easy to align/position?
Insertion Issues
Provide self-aligning & self locating parts
Insertion Issues
Ensure parts do not need to be held in
position

Insertion Issues
Parts are easy to insert.
Provide adequate access & visibility
Insertion Issues
Provide adequate access and visibility
Step Six
Identify opportunities to reduce secondary
operations
Eliminate Secondary Operations
Re-orientation (assemble in Z axis)
Screwing, drilling, twisting, riveting, bending,
crimping.
Rivet
Eliminate Secondary Operations

Welding, soldering, gluing.
Painting, lubricating, applying liquid or gas.
Testing, measuring, adjusting.

Error = Sum all Ys in Error Columns
Proofing Theoretical Min. No. Parts
Handling = Sum all Ys in Handling Columns
Index Theoretical Min. No. Parts
Insertion = Sum all Ys in Insertion Columns
Index Theoretical Min. No. Parts
2
nd
Op. = Sum all Ys in 2nd Op. Columns
Index Theoretical Min. No. Parts
Assembly Metrics
Analyze All Metrics
First consider:
Reduce part count & type Part Count Efficiency
& DFA Complexity Factor
Then think about:
Error Proofing Error Index
Then think about:
Ease of handling Handling Index
Ease of insertion Insertion Index
Eliminate secondary ops. 2
nd
Op. Index
Set Target Values for These Measures
Complete the
remaining columns &
calculate your
products
Assemblability
Indices
Instructions

Steps
Two -
Six
Your Turn...
Step
Seven
Analyze data for new design
DFA Process
Product Information: functional requirements
Functional analysis
Identify parts that can be standardized
Determine part count efficiencies
Step 2
Step 1
Analyze data for new design
Step 3
Identify handling (grasp & orientation) opportunities
Step 4
Identify insertion (locate & secure) opportunities
Step 5
Step 6 Identify opportunities to reduce secondary operations
Identify quality (mistake proofing) opportunities
Benchmark when possible
Determine your practical part count
Step 7
In order of importance:
DFA Guidelines
Reduce part count & types
Ensure parts cannot be installed incorrectly
Strive to eliminate adjustments
Ensure parts self-align & self-locate
Ensure adequate access & unrestricted vision
Ensure parts are easily handled from bulk
Minimize reorientation (assemble in Z axis) &
secondary operations during assembly
Make parts symmetrical or obviously
asymmetrical
Consideration of True Production costs and the
Bill of Material Costs,
Typical Costing
Total Cost
Pareto by Part Cost
1. Castings $$
2. Forging $$
3.
-------
------
------
-------
------
n. Fasteners c
Pareto by Total Cost
1. Fasteners $$$$$
2. -----
3. ------
-------
------
------
-------
------
n. Castings $$
Understanding Product Costs
Have we selected the Best Technology or Process
to fabricate the parts?
Is hard tooling Required...
Selection of Manufacturing
Method
Have we selected the best Material needed for
function and cost?
Have we looked at all the new
Technology that is available
Has the Design Addressed Automation
Possibilities?
Is the Product configured
with access for and the
parts shaped for the
implementation of
automation?
Selection of Manufacturing
Method
Part Features that are Critical To the
Products Functional Quality
Every Drawing
Call Out is not
Critical to
Function and
Quality
Understanding Component
Features
Key DFMA Principles
Minimize Part Count
Standardize Parts and Materials
Create Modular Assemblies
Design for Efficient Joining
Minimize Reorientation of parts during
Assembly and/or Machining
Simplify and Reduce the number of
Manufacturing Operations
Specify Acceptable surface Finishes for
functionality
1. Assembly Automation and Product Design
G. Boothroyd, Marcell Dekker, Inc. 1992
2. Product Design for Manufacture and Assembly
G. Boothroyd and P. Dewhurst, Boothroyd Dewhurst, Inc. 1989
Marcell Dekker, Inc. 1994
3. Design and Analysis of Manufacturing Systems
Prof. Rajan Suri University of Wisconsin 1995
4. Product Design for Assembly: The Methodology Applied
G. Lewis and H. Connelly
5. Simultaneous Engineering Study of Phase II Injector Assembly line
Giddings & Lewis 1997
6. Design for Manufacturing Society of Manufacturing Engineers,
(VIDEO)

References
CHAPTER
9
Product and
Service Design
McGraw-Hill/Irwin
Operations Management, Eighth Edition, by William J. Stevenson
Copyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Major factors in design strategy
Cost
Quality
Time-to-market
Customer satisfaction
Competitive advantage
Product and Service Design
Product and service design or redesign should be
closely tied to an organizations strategy
Translate customer wants and needs into
product and service requirements
Refine existing products and services
Develop new products and services
Formulate quality goals
Formulate cost targets
Construct and test prototypes
Document specifications
Product or Service Design Activities
Reasons for Product or Service Design
Economic
Social and demographic
Political, liability, or legal
Competitive
Technological

Objectives of Product and Service Design
Main focus
Customer satisfaction
Secondary focus
Function of product/service
Cost/profit
Quality
Appearance
Ease of production/assembly
Ease of maintenance/service
Taking into account the capabilities of the
organization in designing goods and
services
Designing For Operations
Legal
FDA, OSHA, IRS
Product liability
Uniform commercial code
Ethical
Releasing products with defects
Environmental
EPA
Legal, Ethical, and Environmental Issues
Regulations & Legal Considerations
Product Liability - A manufacturer is liable for
any injuries or damages caused by a faulty
product.
Uniform Commercial Code - Products carry an
implication of merchantability and fitness.
Designers Adhere to Guidelines
Produce designs that are consistant with the
goals of the company
Give customers the value they expect
Make health and safety a primary concern
Consider potential harm to the environment
Other Issues in Product and Service Design
Product/service life cycles
How much standardization
Product/service reliability
Range of operating conditions


Life Cycles of Products or Services
Time
Introduction
Growth
Maturity
Saturation
Decline
D
e
m
a
n
d

Figure 4.1
Standardization
Standardization
Extent to which there is an absence of variety in
a product, service or process
Standardized products are immediately
available to customers
Advantages of Standardization
Fewer parts to deal with in inventory &
manufacturing
Design costs are generally lower
Reduced training costs and time
More routine purchasing, handling, and
inspection procedures
Advantages of Standardization (Contd)
Orders fillable from inventory
Opportunities for long production runs and
automation
Need for fewer parts justifies increased
expenditures on perfecting designs and
improving quality control procedures.
Disadvantages of Standardization
Designs may be frozen with too many
imperfections remaining.
High cost of design changes increases
resistance to improvements.
Decreased variety results in less consumer
appeal.
Mass customization:
A strategy of producing standardized goods or
services, but incorporating some degree
degree of customization
Delayed differentiation
Modular design
Mass Customization
Delayed differentiation is a postponement
tactic
Producing but not quite completing a product
or service until customer preferences or
specifications are known
Delayed Differentiation
Modular Design
Modular design is a form of standardization in
which component parts are subdivided into
modules that are easily replaced or
interchanged. It allows:
easier diagnosis and remedy of failures
easier repair and replacement
simplification of manufacturing and assembly
Reliability
Reliability: The ability of a product, part, or system
to perform its intended function under a prescribed
set of conditions
Failure: Situation in which a product, part, or
system does not perform as intended
Normal operating conditions: The set of
conditions under which an items reliability is
specified
Improving Reliability
Component design
Production/assembly techniques
Testing
Redundancy/backup
Preventive maintenance procedures
User education
System design
Product Design
Product Life Cycles
Robust Design
Concurrent Engineering
Computer-Aided Design
Modular Design
Robust Design: Design that results in
products or services that can function
over a broad range of conditions
Robust Design
Degree of Newness
1. Modification of an existing product/service
2. Expansion of an existing product/service
3. Clone of a competitors product/service
4. New product/service
Phases in Product Development Process
1. Idea generation
2. Feasibility analysis
3. Product specifications
4. Process specifications
5. Prototype development
6. Design review
7. Market test
8. Product introduction
9. Follow-up evaluation
Idea Generation
Ideas
Competitor based
Supply chain based
Research based
Reverse Engineering
Reverse engineering is the
dismantling and inspecting
of a competitors product to discover
product improvements.
Research & Development (R&D)
Organized efforts to increase scientific
knowledge or product innovation & may
involve:
Basic Research advances knowledge about a
subject without near-term expectations of
commercial applications.
Applied Research achieves commercial
applications.
Development converts results of applied
research into commercial applications.
Manufacturability
Manufacturability is the ease of fabrication
and/or assembly which is important for:
Cost
Productivity
Quality


Concurrent Engineering


Concurrent engineering
is the bringing together
of engineering design and
manufacturing personnel
early in the design phase.
Computer-Aided Design
Computer-Aided Design (CAD) is product
design using computer graphics.
increases productivity of designers, 3 to 10 times
creates a database for manufacturing
information on product specifications
provides possibility of engineering and cost
analysis on proposed designs
Recycling: recovering materials for future use
Recycling reasons
Cost savings
Environment concerns
Environment regulations
Recycling
Service Design
Service is an act
Service delivery system
Facilities
Processes
Skills
Many services are bundled with products
Service Design
Service design involves
The physical resources needed
The goods that are purchased or consumed by
the customer
Explicit services
Implicit services
Service Design
Service
Something that is done to or for a customer
Service delivery system
The facilities, processes, and skills needed to
provide a service
Product bundle
The combination of goods and services provided
to a customer
Service package
The physical resources needed to perform the
service
Tangible intangible
Services created and delivered at the same
time
Services cannot be inventoried
Services highly visible to customers
Services have low barrier to entry
Location important to service
Differences Between Product
and Service Design
Phases in Service Design
1. Conceptualize
2. Identify service package components
3. Determine performance specifications
4. Translate performance specifications into
design specifications
5. Translate design specifications into delivery
specifications
Service Blueprinting
Service blueprinting
A method used in service design to describe and
analyze a proposed service
A useful tool for conceptualizing a service
delivery system
Major Steps in Service Blueprinting
1. Establish boundaries
2. Identify steps involved
3. Prepare a flowchart
4. Identify potential failure points
5. Establish a time frame
6. Analyze profitability

Characteristics of Well Designed
Service Systems
1. Consistent with the organization mission
2. User friendly
3. Robust
4. Easy to sustain
5. Cost effective
6. Value to customers
7. Effective linkages between back operations
8. Single unifying theme
9. Ensure reliability and high quality
Challenges of Service Design
Variable requirements
Difficult to describe
High customer contact
Service customer encounter
Quality Function Deployment
Voice of the customer
House of quality
Quality Function Deployment
QFD: An approach that integrates the voice of the
customer into the product and service development
process.
The House of Quality
Correlation
matrix
Design
requirements
Customer
require-
ments
Competitive
assessment
Relationship
matrix
Specifications
or
target values
Figure 4.4
Customer
Requirements
Easy to close
Stays open on a hill
Easy to open
Doesnt leak in rain
No road noise
Importance weighting
Engineering
Characteristics
E
n
e
r
g
y

n
e
e
d
e
d


t
o

c
l
o
s
e

d
o
o
r

C
h
e
c
k

f
o
r
c
e

o
n

l
e
v
e
l

g
r
o
u
n
d

E
n
e
r
g
y

n
e
e
d
e
d


t
o

o
p
e
n

d
o
o
r

W
a
t
e
r

r
e
s
i
s
t
a
n
c
e

10 6 6 9 2 3
7
5
3
3
2
X
X
X
X
X
Correlation:
Strong positive
Positive
Negative
Strong negative
X
*
Competitive evaluation
X = Us
A = Comp. A
B = Comp. B
(5 is best)
1 2 3 4 5
X AB
X AB
XAB
A X B
X A B
Relationships:
Strong = 9
Medium = 3
Small = 1
Target values
R
e
d
u
c
e

e
n
e
r
g
y


l
e
v
e
l

t
o

7
.
5

f
t
/
l
b

R
e
d
u
c
e

f
o
r
c
e

t
o

9

l
b
.

R
e
d
u
c
e

e
n
e
r
g
y


t
o

7
.
5

f
t
/
l
b
.

M
a
i
n
t
a
i
n

c
u
r
r
e
n
t

l
e
v
e
l

Technical evaluation
(5 is best)
5
4
3
2
1
B
A
X
BA
X B
A
X
B
X
A
BXA
BA
X
D
o
o
r

s
e
a
l


r
e
s
i
s
t
a
n
c
e

A
c
c
o
u
s
t
.

T
r
a
n
s
.

W
i
n
d
o
w

M
a
i
n
t
a
i
n

c
u
r
r
e
n
t

l
e
v
e
l

M
a
i
n
t
a
i
n

c
u
r
r
e
n
t

l
e
v
e
l

House of Quality Example
Figure 4.5
1. Increase emphasis on component
commonality
2. Package products and services
3. Use multiple-use platforms
4. Consider tactics for mass
customization
5. Look for continual improvement
6. Shorten time to market
Operations Strategy
Shorten Time to Market
1. Use standardized components
2. Use technology
3. Use concurrent engineering
CHAPTER
11
Value Analysis
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)
INTRODUCTION
The concept of value analysis was developed
during World War II by Lawrence D. Miles of
General Electric Company.

Worth to you
Value = ------------------
Price you pay

Value Analysis is an effective tool for cost reduction and the results
accomplished are far greater.

It improves the effectiveness of work.

It is an organised approach to a problem.

It is value applied at the design stage itself.

It reduces unnecessary costs, obvious and hidden which can be
eliminated without adversely affecting quality, efficiency, safety and
other customer features.
VALUE ANALYSIS
DEFINITION
Value Analysis can be defined as,
A process of systematic review that is applied to
existing product designs in order to compare the
function of the product required by a customer to
meet their requirements at the lowest cost
consistent with the specified performance and
reliability needed.
APPLICATION OF VALUE ANALYSIS
1. Capital goods plant, equipment, machinery, tools, etc.
2. Raw and semi-processed material, including fuel.
3. Materials handling and transportation costs.
4. Purchased parts, components, sub-assemblies, etc.
5. Maintenance, repairs, and operational items.
6. Finishing items such as paints, oils, varnishes, etc.
7. Packing materials and packaging.
8. Printing and Stationery items.
9. Miscellaneous items of regular consumptions.
10. Power, water supply, air, steam & other utilities (services).
OBJECTIVES OF VALUE ANALYSIS
1) To provide better value to a product/service.
2) To improve the companys competitive position.
3) To ensure that every element of Cost (
Labour
Materials
Suppliers and service )
contribute equally to the Function of the product.
4) To Eliminate unnecessary Cost.

STEPS CARRYING VALUE ANALYSIS
Establish the objectives (eg, cost reduction).
Consider a team for marketing, sales, production,
purchasing, etc.
Analyse the production process of the supplier company.
Decompose various characteristics of purchased product.
Hold a creative brainstorming session to explore all
alternative possibilities.
Sort the ideas to establish the cost of each.
Select the best alternative.
Develop a plan for implementing the change.
To understand value analysis it is necessary to understand some key
concepts:

Value: the ratio between a function for customer satisfaction and
the cost of that function.

Function: the effect produced by a product or by one of its
elements, in order to satisfy customer needs.

Value analysis: methodology to increase the value of an object to
be analysed could be an existing or a new product or process, and it
is usually accomplished by a team following a work plan.

Need: something that is necessary or desired by the customer.
How Does It Work?
TECHNIQUES OF VALUE ANALYSIS
DESIGN ANALYSIS

CHECKLIST

BRAINSTORMING

PRICE ANALYSIS
The Value Analysis Process
Value analysis is based on the application of a systematic work plan
that may be divided into various steps:

orientation/preparation

Information

Analysis

Innovation/creativity,

Evaluation and implementation and monitoring.

The application of value analysis only needs to make use of basic
techniques such as matrixes, pareto chart, pert and gantt diagrams, etc.
In reality, a complex number of reasons exists that
necessitate the structured approach of value analysis as a
means of logical cost reduction.

These reasons can be divided into two
key sources,

1) those that lie within the business and secondly

1) those that are stimulated by the
market for the product or service.
Why Use Value Analysis
SIX WHATs OF VALUE ANALYSIS
1) What is it ?
2) What does it do ?
3) What does it cost ?
4) What is it worth ?
5) What else will do the job ?
6) What does that cost ?
THE PHASES OF VALUE ANALYSIS JOB
PLAN
SELECTION & ORIENTATION
ANALYSIS
RECORDING IDEAS
SPECULATION
INVESTIGATION
RECOMMENDATION
IMPLEMENTATION
BENEFITS TO BE ACHIEVED BY VALUE
ANALYSIS
Better purchasing techniques
Better suppliers & manufacturing methods
Lower operating costs
Standardisation & re-evaluation
Substitution & packaging
Better material handling
Better inventory control
Lower maintenance & overhead cost
Value analysis is a technique with immense possibilities, and
systematically employed, it can achieve great economies and increased
efficiency.
Although good results have been obtained in several individual cases in
some industries, only a large scale and systematic application of this
technique in all industries, and in defence production, can result in
substantial economies on a national scale.

To conclude, we can say that benefits of value analysis include,

Reduced production cost,
Materials and distribution cost,
Improved profit margin,
Increased customer satisfaction.
CONCLUSION