MISSED VALUE OUT OF CONTINUOUS IMPROVEMENT AND HOW TO GET IT




by Valorie Hendrix


As Continuous Improvement professionals, we strive in achieving a balance between quality, timeliness, and value; all are expectations of customers. There are multiple methodologies, such as Lean, TPS, TOC, Six Sigma and Total Quality Management that provide for the expectations of timeliness and quality. These methodologies remove any of the non-value-added waste within the process to make them more efficient and effective.


But what in Continuous Improvement evaluates value? Not to denote these mentioned methodologies do not create value. They do, but those are not the objective of their methodologies. The value from mentioned methodologies is a byproduct which in turn do not make as much of an impact to the end user as if you were to use a methodology that analyzed, calculate, defined, and created value.


When we think about value, it is a form of analyzing a degree of psychology and economics. The psychology part of value assesses what in our mind we need or want from a product or service. While the economic side is an equation to what are we will to sacrifice (monetary) for that product or service. This we can define that Customer Value is as follows:

This understanding of what a customer wants and needs goes beyond the requirements of an efficient and quality methodology. It goes into a Value Analysis methodology.


Value Analysis questions the current process/product with:

· How can we add additional value to the customer?

· How can this part or service be done with less cost?

· How can it perform in the shortest amount of time?

· What alternative can we use?


One of the requirements of a customer, that often overlooked, is the target cost of the product or service. In efficiency and quality, analyzing all cost and comparing them to the target market cost are not part of the process.

Value Analysis/Value Engineering (VA/VE) is the assessment of analyzing the cost of products and/or services to their functions. Providing team members, a function to cost understanding of the product and/or service. Making comparison to parts, subassemblies, and processes to determine if it can be then eliminated or if there are other alternatives that can do the same or better function at a lower cost.


As you can assess, there are three major functions that VA/VE does:

1. Increase function

2. Decrease cost

3. Combination of increasing function and decreasing cost


VA/VE works in simultaneously to Lean and other Continuous Improvement initiatives since the objective of CI is to solve problems within the organization. We can see similarities in other CI methodologies and VA/VE in the aspect that both methodologies are used to increase the customer experience and remove any non-value-add objectives using a set of problem-solving technique. Lean Six Sigma and VA/VE uses the requirements of customer to make decisions that will correct and fix problems with the product or service.


VA/VE provides a different outlook, objective, and process towards determining the problem and solving the solution. VA/VE job plan is different from the DMIAC that Lean Six Sigma provides. VA/VE goes as follow:




Pre-study Stage

The pre-study provides all the framework and criteria that the team will need to continue in each phase of the project. This would require such objectives and information such as:

· Analysis of the problem or solution that need solved

· Strategic Development

· Steering Committee

· Schedule

· Project Charter


Job Study Stage: provides an outline to the progress and goal of the VA/VE project. The overall goal is to see the product or service function effectively while also increasing profit margins of the organization. The job study consists of six phases as follows:


Information Phase: this phase will gather and assess all the data and information needed to make critical decisions as the team passes through the phases of the VA/VA Job Plan. Here are few of the general information your team may need:

· Technical

· Economical

· Competition

· New Technology

· Customer Requirements

· Market Analysis

· SWOT

· Competitive Analysis

· Patents

· Laws and Regulations

· Standards

· Organization’s rules


Functional Analysis Phase: this phase will analyze the cost of a product and/or service to its functions. The easiest way to do this is by using a Functional Analysis System Technique (FAST). FAST gives a visual interpretation towards the function’s independency to one another. It also explains “How,” “Why,” and “When” during the function evaluation. This analysis can provide detail of functions that are unwanted and question if there are alternative ways to do that same function. The second tool used in the Functional Analysis Phase, is the Value Analysis Matrix (VAM). The VAM gives a calculated assessment of the function to the cost of that function and compares it to the target cost of the function. Any cost that are above the target cost function cause concerned to reviewed for cost reduction.


Creative Phase: During the Creative Phase, your team will be brainstorming ideas for alternatives to reduce cost or increase functionality of the product and/or service. It is important to note that during our brainstorming phase, that there is no judgement. All ideas, no matter how out field they may be, will lead to more ideas. Eventually, one or more of these ideas will be the solution.


Evaluation Phase: This phase will be eliminating ideas from the Creative Phase that do not meet the standards, regulations, and requirements. During this phase, we will be using qualitative and quantitative analysis to refine the list and determine the best alternatives.


Development Phase: Will determine if the alternatives from the end of the Evaluation Phase will be feasible. Your team will be analyzing the cost, economic risk, timing, and market acceptance.


Presentation Phase: This phase will bring about all the ideas, data, and information to make a presentation for the Steering Committee or decision makers. It will be up the decision makers to determine which, if any, changes will be made to increase functions and/or decrease cost. Be prepared for any questions the committee may have. All information needs to be accurate. Any inaccurate information will lead to possible wrong decisions.


Post Job Study

The Post Job Study will address the following:


Implementation Phase: This phase will implement all changes made by the Steering Committee. This will address any training, design, tooling, supplier, and location changes. It will devise a list of actions and accountability for the changes to take place.


Follow Up Activities: Follow up activates is to ensure that there are no issues during and after implementation. That all the changes are running smoothly for suppliers, operators, and customers. If there are any changes needed, correct them in conformance to your organization’s standards. A feedback loop is important to create to make sure there is feedback for more VA/VE projects.


VA/VE works with and not against your current Continuous Improvement culture. You have already implemented a team of creative, problem-solving, convergent, thinkers. Now you can add a different type of problem-solving technique. It will allow your team not just to look at how the process flows but also how cash flows through the process and the functions that are then built-in assemblies.

The culture of Continuous Improvement needs to be more divers in their options of analyzing, assessing, collecting, problems-solving techniques. Adding VA/VE into one’s culture will not just add benefits of reducing cost, but it will add benefits of increasing the functionality to your consumers while challenging the questioning “Can we do this better/quicker/easier with less cost?” Allowing your team to enhance the end user experience of your product or service. VA/VE was not made to replace an already in place CI system, but to provide the missing link of adding additional value to your CI culture.


 

Valorie Hendrix has 10 years of manufacturing experience in Lean, Quality, and Value Analysis. She is currently owner and consultant of Dynamic Empire Consulting.

Connect with Valorie on her LinkedIn at: Linkedin.com/in/valorie320