Obtaining the optimum balance between the design and engineering of a product and its related costs helps to ensure profitability while also driving sales and maintaining a good business reputation. Value analysis and value engineering is an in-depth, organised study carried out to identify value-add and non-value-add elements of product design, specification and process. It goes beyond examining the raw material and components required for a product and identifies opportunities to streamline costs across the whole lifecycle of the product.
Taking a meticulous approach to the value analysis and value engineering process, our cost and value engineers help businesses enhance their products’ worth, optimising their commercial output and eliminating unnecessary costs. We aim to always work with cross-functional teams within our clients’ businesses to gain an exhaustive understanding of the product lifecycle while leveraging our proprietary digital platform to achieve the best outcomes.
Vendigital Approach
There are five steps involved in our VAVE process, each of which is underpinned by our expertise and capability in procurement and strategic sourcing, cost modelling, analytics and data science, as well as deep industry knowledge and significant experience of manufacturing operations.
When conducting value analysis, we assess the function of the value-to-cost ratio to find cost reduction opportunities. These same principles are applied for value engineering but are used during the product development stage.
At this initial stage, we gather and organise the data on all the relevant aspects of the product’s design and development. This data could include Bill of Material analysis, CAD drawings, material specifications, tolerances and treatments.
With the insight obtained from our data preparation, our experienced consultants can then define and assign functions, creating a VAVE matrix with component-level assessments and competitor analysis.
The next crucial stage is conducting tear-down workshops, which involve completing a comparative analysis of all product costs with that of competitors. This process supports the development of ‘should cost’ models for product components and scenarios.
At this point, our experienced cost and value engineers work closely with stakeholders to build an action plan. We create a matrix, aligning costs to value, and run idea generation workshops to identify cost drivers and savings. The action plan details the necessary negotiations, ROI design change and resourcing activities needed to achieve the required outcomes.
Once the action plan has been created and agreed upon, our consultants can lead or co-lead negotiations with suppliers and run sourcing activities to implement it. We support our clients with achieving buy-in and engagement from all stakeholders, so the progress made is sustainable and supports longer-term cost optimisation.
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VAVE is all geared towards reducing costs while improving product function. It ensures a product is not over-engineered or under-designed but achieves the optimal balance for its assigned task and has a correctly determined price. Over-engineering a product can result in unnecessary expenditure. However, if it is under-designed, there is a risk of a loss of revenue through reduced sales. Intelligent VAVE that achieves this careful balance is therefore critical for delivering wider benefits for the company.
Reducing unnecessary costs takes care of a company’s bottom line. It provides more cash availability to invest in growth while placing the company in a stronger and more resilient position to meet future challenges.
A significant aspect of VAVE is improving a company’s products or services. It considers each product’s components and carries out a comparison to what’s available on the market. This evaluation creates a better-engineered product that fulfils its designated tasks to a high standard. A better product supports an uplift in sales while having a competitive edge increases market share.
A high-performing product on the market, which successfully delivers on its functions, creates improvements in customer satisfaction. A company’s business reputation then strengthens as customers share feedback and generate positive product awareness.
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