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  Value Analysis

Introduction to Value Analysis

It might not be out of place here to understand the mean of the word 'value'. Since a matter of fact, the word 'value' comprises dissimilar meanings for dissimilar persons. For instance, for a designer the meaning of 'value' is the quality of the product, for a salesman the word ''value'' means the price that he can fetch for the product in the market, and for the top-management the word ''value'' means return on capital employed.

Though, an industrial product might comprise the following concepts of value :

1. Use Value

This considers to the characteristics that the products should possess to give a helpful service for that it is intended. For example, a watch is meant for indicating time. In case it provides fairly correct time, it is providing its full use value. The employ value is measured in terms of quality of performance. In order to determine whether a product is providing good value, for the money spent on it, it will be suitable to divide its worth for the concerned person through the price paid for it.

A product might perform various functions. Consequently, its use value can be split into three categories:

(a) Primary use value;

(b) Secondary use value; and

(c) Auxiliary use value.

For example, paint has dissimilar use values. It has basic use value while it is applied to protect some surface. It has a secondary utilize value while it is employed for marking lines on the road for crossing through pedestrians. It has an auxiliary utilize value while it pleases aesthetic sense. Such type of a functional classification would assist one in identifying that paint one should use remember the objective. If this is not ended, perhaps one might use costly enamel paint in which use of ordinary paint would have been prudent.

2. Cost Value

The value is computed in terms of cost in case product is pretend in the organisation. It considers to the cost of production. It considers to cost of its purchase in case a product is procured from outside.

3. Exchange Value

It considers to sales value that a product would fetch. It is significant for the sales department because the profit is excess of the selling price (that is exchange value) over the cost of the product. Therefore, the sales department might be determined what value the product has for the customers since compared to competitive products available in the market. It will assist in advising the management in fixing the selling price of the product.

4. Esteem Value

This might also be considered to as the prestige value. Specific products or articles have value just due to their attractiveness or respected characteristics. A watch made of gold has an esteem value for its owner, even though its value is not more than that of an ordinary watch. For a number of people purchase of a gold watch might be a waste. Though, it commends a value for the person who desires to impress upon others and so have a personal satisfaction.

Important of Value Analysis in Cost Reduction

Also known as value engineering, the approach focuses on enhancement in value through resultant to a careful and in-depth study of products at the stage of their designing. The dissimilar components can be again designed or standardised. Less costly manufacturing processes or techniques might also be employed. Such type of a study reveals the fields that include avoidable costs and after locating these areas, steps can be taken to eliminate or if not feasible decrease such not wanted costs, of course, with no in any way compromising on quality.

Following points justify consideration before embarking on value analysis in order to significantly examine each and every product and its part:

(i) Cost-benefit analysis or the item must be performed.

(ii) The feature of standardisation should be seriously looked into.

(iii) The need of redesigning should be assessed in order to contain durability.

(iv) Combination of activities, items or segregation should also be referred to decrease costs of incentives etc.

(v) Function of the item must be evaluated and identified.

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