You are on page 1of 112

CONCEPTS AND TECHNIQUES

OF VALUE ANALYSIS TO EFFECTIVELY
CONTROL COST










NOR AMALINA BINTI MOHAMED DANI











UNIVERSITI TEKNOLOGI MALAYSIA
CONCEPTS AND TECHNIQUES OF VALUE ANALYSIS
TO EFFECTIVELY CONTROL COST







NOR AMALINA BINTI MOHAMED DANI







A project report submitted in partial fulfillment of the
requirement for the award of the degree of
Master of Science Engineering Business Management





Razak School of Engineering and Advanced Technology
Universiti Teknologi Malaysia





JANUARY 2014
“I/We* hereby declare that I/We* have read this thesis and in my/our*
opinion this thesis is sufficient in terms of scope and quality for
the award of the degree of Master of Science (Engineering Business Management).



Signature : ……………………………….
Name of Supervisor 1 : Dr. Mohamed Azlan Bin Suhot
Date :



Signature : ………………………………
Name of Supervisor II : Dr. Mohd Khairi Abu Husain
Date :

*Delete as necessary











ii
I declare that this thesis entitled “Concept and Techniques of Value Analysis to
Effectively Control Cost” is the result of my own research except as cited in the
references. The thesis has not been accepted for any degree and is not concurrently
submitted in candidature of any other degree.



Signature : ……………………………………
Name : Nor Amalina Binti Mohamed Dani
Date :

















iii







To my beloved mother and family for their
endless love and support



















iv

ACKNOWLEDGEMENT




First and foremost, I would like to express my greatest gratitude to Almighty
God for giving me strength and courage to finally complete this project with the best
that I could. Indeed, without His Help and Well, nothing will be accomplished.

My deep and sincere gratitude goes to my most respected supervisors, Dr.
Mohamed Azlan bin Suhot and Dr. Mohd Khairi bin Abu Husain for the
encouragement, guidance and motivation throughout the completion of this project.
This project could not have been done so well without their sincere comments and
encouragements. It was a great privilege to work under their supervision.

My heartfelt thanks go to Mr. Zulhasni Abdul Rahim, TRIZ Specialist who
has provided guidance and assistance throughout the project. I shall never forget the
endless encouragement and assistance he has provided. I would also like to thanks to
Proton Holding Berhad especially Vehicle Management Department for providing
the resources for my project. I would also like to take this opportunity to extend my
sincere thanks to all my classmates and whoever that have helped me directly or
indirectly throughout the completion of this project. The uphill struggle is hard and
could not have been achieved without the inspiration and motivation from the people
around me. I owe them so much and I wish them the best in their future endeavors.

Last but not least, I would like to acknowledge the endless love, passion, and
support of my beloved mother and family. Thank you for the unconditional support
and encouragement to pursue my interests and dreams to make the best character out
of me. I will always be grateful to have both of you.

v

ABSTRACT




Value analysis is one of the most widely used cost reduction techniques. It
emphasizes on finding new ways of getting equal or better performance from a
product at a lesser cost without affecting its quality function, utility and reliability.
The research aimed to assess and investigate the application of value analysis, and
how this rolls out in practice within the manufacturing context, to study the degree of
awareness and understanding of value analysis and to study the drivers and obstacles
in implementing value analysis in local manufacturing industry. The basics of Value
Analysis methodology and its different phases are explained in a brief which can be
implemented to a product for its optimization. It explores each part of the Value
Analysis job plan for the successful application of the technique. Each part of VA job
plan is discussed and executed to get the detailed information about the product. The
methodology used in this study is qualitative approach using data extracted from case
study and semi structure interviews. PREVE's car seat was selected for the value
analysis study. A case study has been discussed and an analysis has been carried out
by this process to achieve product optimization. A thorough analysis has been done
for choosing the most viable option from the various feasible choices available to
attain a concrete solution. At the end the results obtained after the implementation of
this technique are discussed. The management support and initiatives, product
diversities, competition, customer requirement and adequate knowledge and
awareness were the influential factors in VA adoption. Whilst, lack of commitment
and communication and problem solving and idea generated during VA workshop
are the impeding factors found in the study.



vi


ABSTRAK



Analisis nilai merupakan salah satu teknik pengurangan kos yang paling
meluas digunakan. Ia telah menekankan penemuan cara-cara baru untuk
mendapatkan prestasi yang sama dengan atau lebih baik dari produk pada harga yang
lebih rendah tanpa menjejaskan fungsi kualiti, utiliti dan reliabiliti. Kajian ini adalah
bertujuan untuk menilai dan meneroka aplikasi analisis nilai, dan bagaimana aplikasi
analisis nilai ini digunakan dalam konteks pembuatan, mengkaji tahap kesedaran dan
kefahaman tentang analisis nilai dan mengkaji cabaran dan halangan dalam
melaksanakan analisis nilai dalam industri pembuatan tempatan. Kaedah asas analisis
nilai dan fasa-fasa yang berbeza diterangkan secara ringkas dan setiap bahagian
rancangan kerja analisis nilai diterokai bagi menjayakan aplikasi dan
mengoptimumkan sesuatu produk. Pendekatan secara kualitatif digunakan dalam
kajian ini dan data diperolehi diekstrak daripada kajian kes dan semi struktur
temubual. Kerusi kereta Preve di pilih untuk kajian nilai analisis ini. Kajian kes telah
dibincangkan dan analisis yang menyeluruh telah dilakukan untuk memilih alternatif
yang paling sesuai dari alternative yang tersenarai bagi mencapai satu penyelesaian
yang konkrit. Sokongan dan inisiatif pengurusan, produk diversiti, persaingan,
keperluan pelanggan dan kesedaran dan pengetahuan yang cukup adalah faktor-
faktor yang mempengaruhi dalam penggunaan analisis nilai. Manakala, kekurangan
komitmen dan komunikasi dan penyelesaian masalah dan idea yang dihasilkan
semasa proses analisis nilai merupakan faktor-faktor yang menghalang yang terdapat
dalam kajian ini.





vii

TABLE OF CONTENTS




CHAPTER TITLE PAGE

DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACTS v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF TABLES xii
LIST OF FIGURES xiii
LIST OF ABBREVIATIONS xiv
LIST OF APPENDICES xv
LIST OF SYMBOLS xvi

1 INTRODUCTION
1.0 Introduction 1
1.1 Background of Study 1 - 3
1.2 Scope of the Study 4
1.3 Problem Statement 4 - 5
1.4 Objectives of the Research 5
viii

1.5 Chapter Scheme 6

2 LITERATURE REVIEW
2.0 Introduction 7
2.1 History of Value Analysis 7 - 10
2.2 Definition of Value Analysis 10 - 12
2.3 Value Analysis 12 - 14
2.3.1 Value Analysis Methodology 14 - 19
2.3.2 How Does Value Analysis Work 20
2.4 Value Analysis Application - Case Studies 21 - 25

3 RESEARCH METHODOLOGY
3.0 Introduction 26
3.1 Overview of the Methodology 27
3.2 Data Collection Instruments 28 - 33

4 RESULTS & DISCUSSION
4.0 Introduction 34


Part A: Company’s Background and Adoption of Value Analysis

4.1 Company’s Background 35 - 36
4.2 Vehicle Reduction Cost 36 – 37

ix

4.3 Adoption of Value Analysis
4.3.1 Reasons and Objectives of VA 37 - 39
4.3.2 Challenges in VA 40


Part B: Product Information and Implementation of VA

4.4 PROTON’s Preve Car Seat 41 - 42
4.5 Implementation of VA
4.5.1 Information Phase 43 - 44
4.5.2 Functional Phase 45 - 52
4.5.3 Creative Phase 53 - 55
4.5.4 Analytical Phase 56
4.5.5 Evaluation Phase 56 - 61
4.5.6 Recommendation Phase 62 – 64
4.6 Conclusion 65


Part C: VA Awareness and Knowledge

4.7 Awareness and Knowledge of VA 66 - 67


5 CONCLUSIONS
5.1 Conclusions 68 - 71
5.2 Limitation and Future Works 71 – 72

x


REFERENCES 73 – 76
APPENDICES 77
xi

LIST OF TABLES




TABLE NO. TITLE PAGE
2.1 VA Job Plans from Different Experts/Societies 15
4.1 Defining Functions 45 - 46
4.2 Functional Cost Analysis 51
4.3a Idea Generation – Head Restraint 53 - 54
4.3b Idea Generation – Back Protector 54
4.4 Criteria Definitions 56
4.5 Allotted Point of Criteria 57
4.6 Comparisons of Classifications 57
4.7 Matrix Evaluation Process 58
4.8a Percentage Weightage 58
4.8b Grading for Evaluation 59
4.9a Criteria Weighing Process – Head Restraint 60
4.9b Criteria Weighing Process – Back Protector 61


xii

LIST OF FIGURES




FIGURE NO. TITLE PAGE

2.1 Value Study Process Flow Diagram 19
3.1 Steps of Case Study 29
3.2 The Interview Process Flow 31
4.1 The Sectional of the Car Seat 41
4.2 The Explode View of Car Seat 43
4.3 FAST Diagram 48
4.4 Proposed Idea for Implementation – Back Protector 63
4.5 Proposed Idea for Implementation – Head Restraint 64







xiii

LIST OF ABBREVIATIONS




DEA Data Envelopment Analysis
DFA Design for Assembly
FAST Functional Analysis System Technique
MVF Multi Vehicle Purpose
PROPEX Process and Operational Excellence
QFD Quality Function Deployment
VA Value Analysis
VCR Vehicle Cost Reduction
VE Value Engineering
VM Value Management







xiv

LIST OF APPENDICES


APPENDIX TITLE PAGE
1 Interview Questionnaires 77
















xv

LIST OF SYMBOLS

○ Applicable
∆ Applicable but certain condition
× Not Applicable

xvi
CONCEPTS AND TECHNIQUES
OF VALUE ANALYSIS TO EFFECTIVELY
CONTROL COST










NOR AMALINA BINTI MOHAMED DANI











UNIVERSITI TEKNOLOGI MALAYSIA
CONCEPTS AND TECHNIQUES OF VALUE ANALYSIS
TO EFFECTIVELY CONTROL COST







NOR AMALINA BINTI MOHAMED DANI







A project report submitted in partial fulfillment of the
requirement for the award of the degree of
Master of Science Engineering Business Management





Razak School of Engineering and Advanced Technology
Universiti Teknologi Malaysia





JANUARY 2014
“I/We* hereby declare that I/We* have read this thesis and in my/our*
opinion this thesis is sufficient in terms of scope and quality for
the award of the degree of Master of Science (Engineering Business Management).



Signature : ……………………………….
Name of Supervisor 1 : Dr. Mohamed Azlan Bin Suhot
Date :



Signature : ………………………………
Name of Supervisor II : Dr. Mohd Khairi Abu Husain
Date :

*Delete as necessary











ii
I declare that this thesis entitled “Concept and Techniques of Value Analysis to
Effectively Control Cost” is the result of my own research except as cited in the
references. The thesis has not been accepted for any degree and is not concurrently
submitted in candidature of any other degree.



Signature : ……………………………………
Name : Nor Amalina Binti Mohamed Dani
Date :

















iii







To my beloved mother and family for their
endless love and support



















iv

ACKNOWLEDGEMENT




First and foremost, I would like to express my greatest gratitude to Almighty
God for giving me strength and courage to finally complete this project with the best
that I could. Indeed, without His Help and Well, nothing will be accomplished.

My deep and sincere gratitude goes to my most respected supervisors, Dr.
Mohamed Azlan bin Suhot and Dr. Mohd Khairi bin Abu Husain for the
encouragement, guidance and motivation throughout the completion of this project.
This project could not have been done so well without their sincere comments and
encouragements. It was a great privilege to work under their supervision.

My heartfelt thanks go to Mr. Zulhasni Abdul Rahim, TRIZ Specialist who
has provided guidance and assistance throughout the project. I shall never forget the
endless encouragement and assistance he has provided. I would also like to thanks to
Proton Holding Berhad especially Vehicle Management Department for providing
the resources for my project. I would also like to take this opportunity to extend my
sincere thanks to all my classmates and whoever that have helped me directly or
indirectly throughout the completion of this project. The uphill struggle is hard and
could not have been achieved without the inspiration and motivation from the people
around me. I owe them so much and I wish them the best in their future endeavors.

Last but not least, I would like to acknowledge the endless love, passion, and
support of my beloved mother and family. Thank you for the unconditional support
and encouragement to pursue my interests and dreams to make the best character out
of me. I will always be grateful to have both of you.

v

ABSTRACT




Value analysis is one of the most widely used cost reduction techniques. It
emphasizes on finding new ways of getting equal or better performance from a
product at a lesser cost without affecting its quality function, utility and reliability.
The research aimed to assess and investigate the application of value analysis, and
how this rolls out in practice within the manufacturing context, to study the degree of
awareness and understanding of value analysis and to study the drivers and obstacles
in implementing value analysis in local manufacturing industry. The basics of Value
Analysis methodology and its different phases are explained in a brief which can be
implemented to a product for its optimization. It explores each part of the Value
Analysis job plan for the successful application of the technique. Each part of VA job
plan is discussed and executed to get the detailed information about the product. The
methodology used in this study is qualitative approach using data extracted from case
study and semi structure interviews. PREVE's car seat was selected for the value
analysis study. A case study has been discussed and an analysis has been carried out
by this process to achieve product optimization. A thorough analysis has been done
for choosing the most viable option from the various feasible choices available to
attain a concrete solution. At the end the results obtained after the implementation of
this technique are discussed. The management support and initiatives, product
diversities, competition, customer requirement and adequate knowledge and
awareness were the influential factors in VA adoption. Whilst, lack of commitment
and communication and problem solving and idea generated during VA workshop
are the impeding factors found in the study.



vi


ABSTRAK



Analisis nilai merupakan salah satu teknik pengurangan kos yang paling
meluas digunakan. Ia telah menekankan penemuan cara-cara baru untuk
mendapatkan prestasi yang sama dengan atau lebih baik dari produk pada harga yang
lebih rendah tanpa menjejaskan fungsi kualiti, utiliti dan reliabiliti. Kajian ini adalah
bertujuan untuk menilai dan meneroka aplikasi analisis nilai, dan bagaimana aplikasi
analisis nilai ini digunakan dalam konteks pembuatan, mengkaji tahap kesedaran dan
kefahaman tentang analisis nilai dan mengkaji cabaran dan halangan dalam
melaksanakan analisis nilai dalam industri pembuatan tempatan. Kaedah asas analisis
nilai dan fasa-fasa yang berbeza diterangkan secara ringkas dan setiap bahagian
rancangan kerja analisis nilai diterokai bagi menjayakan aplikasi dan
mengoptimumkan sesuatu produk. Pendekatan secara kualitatif digunakan dalam
kajian ini dan data diperolehi diekstrak daripada kajian kes dan semi struktur
temubual. Kerusi kereta Preve di pilih untuk kajian nilai analisis ini. Kajian kes telah
dibincangkan dan analisis yang menyeluruh telah dilakukan untuk memilih alternatif
yang paling sesuai dari alternative yang tersenarai bagi mencapai satu penyelesaian
yang konkrit. Sokongan dan inisiatif pengurusan, produk diversiti, persaingan,
keperluan pelanggan dan kesedaran dan pengetahuan yang cukup adalah faktor-
faktor yang mempengaruhi dalam penggunaan analisis nilai. Manakala, kekurangan
komitmen dan komunikasi dan penyelesaian masalah dan idea yang dihasilkan
semasa proses analisis nilai merupakan faktor-faktor yang menghalang yang terdapat
dalam kajian ini.





vii

TABLE OF CONTENTS




CHAPTER TITLE PAGE

DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACTS v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF TABLES xii
LIST OF FIGURES xiii
LIST OF ABBREVIATIONS xiv
LIST OF APPENDICES xv
LIST OF SYMBOLS xvi

1 INTRODUCTION
1.0 Introduction 1
1.1 Background of Study 1 - 3
1.2 Scope of the Study 4
1.3 Problem Statement 4 - 5
1.4 Objectives of the Research 5
viii

1.5 Chapter Scheme 6

2 LITERATURE REVIEW
2.0 Introduction 7
2.1 History of Value Analysis 7 - 10
2.2 Definition of Value Analysis 10 - 12
2.3 Value Analysis 12 - 14
2.3.1 Value Analysis Methodology 14 - 19
2.3.2 How Does Value Analysis Work 20
2.4 Value Analysis Application - Case Studies 21 - 25

3 RESEARCH METHODOLOGY
3.0 Introduction 26
3.1 Overview of the Methodology 27
3.2 Data Collection Instruments 28 - 33

4 RESULTS & DISCUSSION
4.0 Introduction 34


Part A: Company’s Background and Adoption of Value Analysis

4.1 Company‟s Background 35 - 36
4.2 Vehicle Reduction Cost 36 – 37

ix

4.3 Adoption of Value Analysis
4.3.1 Reasons and Objectives of VA 37 - 39
4.3.2 Challenges in VA 40


Part B: Product Information and Implementation of VA

4.4 PROTON‟s Preve Car Seat 41 - 42
4.5 Implementation of VA
4.5.1 Information Phase 43 - 44
4.5.2 Functional Phase 45 - 52
4.5.3 Creative Phase 53 - 55
4.5.4 Analytical Phase 56
4.5.5 Evaluation Phase 56 - 61
4.5.6 Recommendation Phase 62 – 64
4.6 Conclusion 65


Part C: VA Awareness and Knowledge

4.7 Awareness and Knowledge of VA 66 - 67


5 CONCLUSIONS
5.1 Conclusions 68 - 71
5.2 Limitation and Future Works 71 – 72

x


REFERENCES 73 – 76
APPENDICES 77
xi

LIST OF TABLES




TABLE NO. TITLE PAGE
2.1 VA Job Plans from Different Experts/Societies 15
4.1 Defining Functions 45 - 46
4.2 Functional Cost Analysis 51
4.3a Idea Generation – Head Restraint 53 - 54
4.3b Idea Generation – Back Protector 54
4.4 Criteria Definitions 56
4.5 Allotted Point of Criteria 57
4.6 Comparisons of Classifications 57
4.7 Matrix Evaluation Process 58
4.8a Percentage Weightage 58
4.8b Grading for Evaluation 59
4.9a Criteria Weighing Process – Head Restraint 60
4.9b Criteria Weighing Process – Back Protector 61


xii
1

LIST OF FIGURES




FIGURE NO. TITLE PAGE

2.1 Value Study Process Flow Diagram 19
3.1 Steps of Case Study 29
3.2 The Interview Process Flow 31
4.1 The Sectional of the Car Seat 41
4.2 The Explode View of Car Seat 43
4.3 FAST Diagram 48
4.4 Proposed Idea for Implementation – Back Protector 63
4.5 Proposed Idea for Implementation – Head Restraint 64







xiii
1

LIST OF ABBREVIATIONS




DEA Data Envelopment Analysis
DFA Design for Assembly
FAST Functional Analysis System Technique
MVF Multi Vehicle Purpose
PROPEX Process and Operational Excellence
QFD Quality Function Deployment
VA Value Analysis
VCR Vehicle Cost Reduction
VE Value Engineering
VM Value Management







xiv
1

LIST OF APPENDICES


APPENDIX TITLE PAGE
1 Interview Questionnaires 77
















xv
1

LIST OF SYMBOLS

○ Applicable
∆ Applicable but certain condition
× Not Applicable
















xvi
1

CHAPTER 1




INTRODUCTION




The introduction includes 4 subsections. First of all, the background of study shows
the importance of study and interest of the topic. Second, the scope of the study will
be addressed in order to provide clear focus and outline the concepts. Then, the
problem area will discussed and lead to the purpose of this study.




1.1 Background of Study


All organizations strive to create value for their customers. Value analysis,
therefore is a scientific method to increase this value. It has evolved into an
innovative tool that develops alternative through evaluation of creative ideas. Value
analysis aims to simplify products and process. Thereby, increasing efficiency in
managing projects, resolve problems, encourage innovation and improve
communication across organization. Value analysis enables organization to
contribute in the value addition process by continuous focus on product design and
services. Value analysis provides a structure through cost saving initiatives, risk
reduction and continuous improvement. This study will analyze the process by which
2

value analysis is applied in an organization to achieve reduced cost and improved
quality.


Value Analysis is an important and powerful tool for improvement in the
performance of the products, systems or procedures. It is a cost effective approach
which improves the performance without jeopardizing the function(s) and without
compromising on quality, reliability etc. Miles defined Value Analysis in his book,
(Miles, 1987) as “an organized creative approach which has for its purpose the
efficient identification of unnecessary cost i.e. cost which provides neither quality nor
use, nor life, nor appearance, nor customer features”.


According to Miles (1963), the reasons for the unnecessary cost incurred are
due to poor design and incorrect materials selection, poor build ability and habits.
Value analysis should not be treated as a mere cost reduction technique or
cheapening of the product. It is more comprehensive and the improvement in value is
attained without any sacrifice in quality, reliability maintainability, availability,
esthetics etc. When unnecessary cost of a product or system, which is irrelevant to
the specific functions, is removed, cost is reduced performance enhanced and
maintained (Fong, 1999). Miles was responsible for the establishment of value
analysis and since then the technique is very much accepted in various industries.
There is consensus that Miles is regarded as the “Father of VE” (Davies, 2004).


Value analysis can be used over and across all the design, manufacturing and
purchasing phases towards a common objective; to obtain from a product an
equivalent performance, or even improve it in such a way to that its cost is reduced.
Value analysis technique is applicable to all type of sectors, business or economic
sector which include construction, service, government, agriculture, education and
healthcare (McDowell, 1996). Initially, value analysis was introduced in
manufacturing industries.


3

Costs are the direct product of people and depend on their knowledge or lack
of it, logic, attitudes and feelings and environment. To minimize cost, the causes
must deal with; to deal with the causes, the overall strategy which called “value
analysis” was created (Wixson, 1987). This cost reduction usually entails an
improvement in the product quality and other product enhancement such as lead time
reduction, weight cut, improved manufacturability, enhanced operation, increased
safety, etc.


Cost management is a continuous process which integrated activity within an
organization‟s which include products or services entire life cycle. It is most
effectively applied during pre-production phases (planning and design) where the
greatest impact can be achieved and would be effective if it is part of the company
policy, suitable environment and availability resources within the company
(Yoshikawa, Innes and Michelle, 1995). One of the key methods in cost management
is value analysis and that aims to provide better products or services for lesser cost
(David, 1999).


An organization needs to reduce unnecessary cost by identifying and
eliminating waste at the earliest opportunity. Therefore, value analysis is an effective
tool for cost reduction and the results accomplished are far greater.












4

1.2 Scope of the Study


The scope of this study involves the following:


i. This research is basically to study the extent of use value analysis,
reason for its adoption and the factors that influence and impede its
adoption within material or component of manufacturing in the
company.


ii. This study will be conducted in a manufacturing company in which
value analysis is being used or adopted.


iii. The scope of the research is to meet the mentioned objective. The
focus will be highlighted to the concepts and techniques of value
analysis applied and how this rolls out in practice within the
manufacturing context, particularly in design and build projects to
effectively control cost.




1.3 Problem Statement


Value analysis methodology has become very useful in process design and
manufacturing as a tool that can optimize projects administration, business and
manufacturing processes and scheduling facilitation. The benefits of value analysis
include decreasing costs, increasing profits, improving quality, improving speed of
service delivery and performance, and enhancing customer satisfaction. Various
interventions have been sought and implemented by the manufacturing sector to
5

improve on production performance and service delivery systems approaches. This
study is to know how the manufacturing company implement or practice of the value
analysis and to identify whether the level of cost savings and improvement in
functionality or quality of manufacturing company able to achieve from value
analysis.




1.4 Objectives of the Research


Motivated by the mentioned problems, the objectives of this research are
defined as the followings:


1) To assess and investigate the application of value analysis, and how
this rolls out in practice within the manufacturing context.


2) To study the degree of awareness and understanding of value analysis
in local manufacturing industry.


3) To study the drivers and obstacles in implementing value analysis in
local manufacturing industry.








6

1.5 Chapter Scheme


Chapter 1 presents introduction of the study which contains background
studies, problem statement, objectives of the study and the scope of the study.
Chapter 2 elaborates the critical review of literature related to the concepts and
techniques of value analysis to effectively control cost. Chapter 3 elaborates the
method used in this study, which involves case study on value analysis in the case
company and semi structured interview. Chapter 4 explains the results, their analysis
and discussion. Chapter 5 concludes the findings of the concepts and techniques of
value analysis to effectively control cost as well as the future work of this study.



7

CHAPTER 2




LITERATURE REVIEW




2.0 Introduction


In this chapter, all the important information related of this project is stated.
The literature review can give a brief explanation about the concept and technique of
value analysis. Some of the points in this chapter can give extra information which is
useful while doing this project.




2.1 History of Value Analysis


Value Analysis was conceived in the early 1940s by Lawrence D. Miles while
he was employed by General Electric, a major defense contractor which was facing
the scarcity of strategic materials needed to produce their products during World War
II. Miles realized that if value and related innovation improvements could be
systematically managed then General Electric would have a competitive advantage in
the marketplace. With that in mind, Miles accepted the challenge and devised the
8

function analysis concept, which he integrated into an innovative process he later
termed value analysis (Miles, 1972; SAVE International, 2007).


Miles understood that products are purchased for what they can do either
through the work they perform or the pleasing aesthetic qualities they provide. Using
this as his foundational information, he focused on understanding the function of the
component being manufactured. He questioned whether the design could be
improved or if a different material or concept could achieve the function. These
specialized teams typically address project-related issues such as increased sales
revenue, improved product performance, and reduced resource usage (Miles, 1972;
SAVE International, 2007).


To focus on the function itself, he used an active verb and a measurable noun
in combination to characterize the benefit that a part‟s function provides. He then
searched for other ways or methods to achieve the benefit of that intended function.
From this research, function analysis, the key foundation of value methodologies was
developed and has become a tool to help individuals and teams manage the way a
concept is understood. These specialized teams typically address project-related
issues such as increased sales revenue, improved product performance, and reduced
resource usage (Miles, 1972).


The U.S. Army and Navy, and other companies, soon realized the success of
Larry Miles‟ methods. As the application of value analysis expanded, there was also
a change in context from review of existing parts to improving conceptual designs.
This was one of two factors that marked the emergence of value engineering. The
other was a desire by the U.S. Navy to use the Value Analysis techniques for project
improvement in the early 1950s when there was a moratorium on hiring “analysts.”
Since engineering positions were available, individuals practicing this new discipline
were employed as “Value Engineers” (SAVE International, 2007).


9

As the value methodology gained in popularity, a group of practitioners
formed a learning society to share insights and advance their innovative capabilities.
Thus, in 1959, the “Society of American Value Engineers” was incorporated in
Washington, DC. Soon, the value methodology was used in government, private
sector, manufacturing and the construction industries to improve the value of projects
and afterwards value concepts was spread worldwide.


The Department of Defense‟s Bureau of Ships (now the Navy Ships System
Command) 1954, was the first government organization implement a formal
program. They called the program “Value Engineering (VE)” to reflect the emphasis
on their objective and type of organization which was engineering. The name is now
the most commonly used and well accepted since the chartering of Society of
American Value Engineers (SAVE) in 1959. However, it was not late until 1961 that
the program was formally implemented throughout the Department of Defense in
USA (SAVE International, 2007).


Before the death of Miles in 1985, the Value Analysis process had gained
world-wide acceptance. In 1970, value analysis practices and applications were
introduced in other parts of the world namely, Japan, Italy, Australia and Canada
(Cheah and Ting, 2005). In later years, it usages spread to Australia, New Zealand
and the United Kingdom (Mazlan, 2002). Concurrent with this growth, a number of
other value improving tools, techniques, and processes emerged, many of which were
complementary to and were integrated with the value concepts. In an effort to attract
the developers and practitioners of these emerging methods to our membership, the
name of the society was changed to “SAVE International” in 1996 (Save
International, 2007).


In Malaysia, value analysis (known as Value Management) was formally
introduced in 1986 (Jaapar and Torrance, 2007) by Roy Barton from Canberra
University, Australia to the Quantity Surveying Department in the Universiti
Teknologi Malaysia. Mohd Mazlan was privileged to be the one of the participants in
10

that value management training program. During the year of 1999, the first National
Seminar on Value Management was organized by IKRAM, JKR, officiated by Tun
Daim Zainudin, then Minister of Finance Malaysia. In his opening speech, he
strongly suggested the industry to take up Value Management on board due to the
benefits offered by the concept.


Institute of Value Management of Malaysia (IVMM) was registered in May
2000, due to the positive response from the construction and manufacturing
industries and formalized with 20 founding members to promote awareness of the
technique and its benefits. Currently the membership of the Institute has grown to
over 200 members.




2.2 Definition of Value Analysis


Value has been defined in different ways by the different authors. The
definition of VA given by Miles has been presented in Chapter 1. The definitions and
elaboration to value analysis given by other eminent experts, practicing organization
and VA societies have been included in subsequent paragraphs.


John H. Fasal (1972),
Value analysis is the methodical investigation of all components of an existing
product with the goal of discovering and eliminating unnecessary costs without
interfering with the effectiveness of the product. In value analysis, the systematic
analysis of a product is performed in terms of an already existing prototype of the
product; all information concerning the actual costs and all specifications
determining required performances are obtained from past experience with the
prototype itself.

11

Zimmerman and Hart (1988)
Value analysis is a proven management technique using systematized approach to
seek out the best functional balance between cost, reliability and performance of a
product or project. The programme seeks to improve the management capability of
people to promote progressive change by identifying and removing unnecessary cost.


Rich and Holweg (2000)
Value analysis can be defined as a process of systematic review that is applied to
existing products 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.


Dell‟Isola (2003)
Value analysis (also referred as Value Engineering) as an organized, systematic and
multidiscipline team approach that analyzes the function of systems, equipment,
facilities, services and supplies for the purpose of eliminating unnecessary costs
while maintaining the required performance, quality and safety of the functions
required by customers. The application of value analysis is also extended to services
or organizations such as hospitals and government agencies and was also popular
among the construction industry.


Society of Japanese Value Engineering (SJVE)
Value analysis is defined as a systematic approach to analyzing functional
requirements of products or services for the purposes of achieving the essential
functions at the lowest total cost. This reflects that VA is applied to products and
services through analyzing each of the functions involved. SJVE also suggested that
the services where VA can be applied include software items in manufacturing
organization.



12

Society of American Value Engineers (SAVE)
Value analysis is a professionally applied, function-oriented, systematic team
approach used to analyze and improve value in a product, facility design, system or
service - a powerful methodology for solving problems and or reducing costs while
improving performance and quality requirements.




2.3 Value Analysis


Value analysis is one of the most widely used cost reduction techniques. It
emphasizes on finding new ways of getting equal or better performance from a
product at a lesser cost without affecting its quality function, utility and reliability.
Value analysis bring clearly the areas where the cost of product can be decreased by
pointing out the unnecessary items or component in which have had once some
utility but now redundant therefore has to dispensable, the possibilities of component
substitution with reduced cost without affecting the quality of the product and the
lastly, the possibilities of overall simplification in design or manufacture of a
product.


The objective of Value Analysis is to achieve equivalent performance for
lower cost without “reducing in the slightest degree of quality, safety, life, reliability,
dependability and the features and attractiveness that the customer wants”
(Miles,1972). The aim of Value Analysis is also to achieve an assigned target product
cost by (i) identifying improved product designs that reduce the product‟s cost
without sacrificing functionality and/or (ii) eliminating unnecessary functions that
increase the product‟s costs and for which customers are not prepared to pay extra for
(Miles, 1972).


13

Zimmerman (1982) stated that the goal of VA study is to realize true value
for the owner. The value may come in the form of removing unnecessary cost to the
project or it may come in the form of providing a more workable product that would
decrease the costs of arising and operating the facility. Value is that elusive
commodity that all attempt to achieve in design. Value in the context is considered to
be value for money that is received in return of a project or service.


Value analysis defines a “basic function” as anything that makes the product
work or sell. A function that is defined as “basic” cannot change. Secondary
functions also called “supporting function” could be modified or eliminated to reduce
product cost (Crow, 2002). As VA progressed to larger and more complex products
and systems, emphasis shifted to "upstream" product development activities where
VA can be more effectively applied to a product before it reaches the production
phase. However, as products have become more complex and sophisticated, the
technique needed to be adapted to the systems approach that is involved in many
products today. As a result, value analysis evolved into the "Function Analysis
System Technique" (FAST) which is discussed later.


Value analysis and value engineering look synonymous but the difference
between them is; (Stoll, 1999)


i. Value Analysis
A remedial process where the techniques are applied to an existing
product with a view to improving its value


ii. Value Engineering
A technique applied when a new product is at the design stage to
ensure no bad features is included.


14

Schwarz and McConkey (1974) consider that whatever title is used for the
methodology, VA and VE or VM, they will use the techniques and job plan to
achieve similar aims. Cheah and Ting (2005) acknowledge the distinctions between
VA, VE and VM, with VM being a style of management applied at corporate levels,
while VA and VE apply tools and methods at the operational level.




2.3.1 Value Analysis Methodology


The value analysis methodology is based on a multi-stage job plan,
sometimes also called as "value analysis job plan". Some sources list five phases,
while others range up to eight. Table 2.1 shows the sequence of phases of different
job plan given by some leading experts or practitioner and societies exercising value
analysis job plan.

















15

Table 2.1: VA Job Plans from Different Experts/Societies




The Job Plan outlines sequential phases to be followed which support team
synergy within a structured process, as opposed to a collection of individual
opinions. The activities conducted during each phase of the Job Plan will stimulate
the team to identify ideas and develop them into alternatives to the original concept
or design. The principal phases of the job plan are information, speculative,
analytical and proposal. However, in practice, the VA job plan can be divided into
following six phases (Miles, 1972; SAVE International, 2007);




16

i. I nformation Phase

During this phase, the team gathers as much as possible about the design,
background, constraints and projected costs of the project. The team is
made familiar with the present state of the project. All team members
participated in a functional analysis of the project as a whole, and then of
its component parts, to determine the true needs of the project. Areas of
high cost or low worth are identified.


ii. Functional Analysis Phase

During the functional analysis phase, the project will be analyzed in order
to clarify the required functions. It tries to identify what functions are
important and which performance characteristics are required for these
functions.


iii. Creativity Phase

This step requires a certain amount of creative thinking by the team. A
technique that is useful for this type of analysis is brainstorming. This
stage is concerned with developing alternative, more cost effective ways
of achieving the basic function. All rules of brainstorming are allowed,
and criticism needs to be avoided as it could cease the flow of ideas.
Simply list down all ideas, not regarding whether they sound apparently
ridiculous. Two powerful techniques to promote creativity are as follows:


a. Establish positive thinking: Here, the team split-up the judicial
part of the mind from the creative part by insisting that they do not
attempt to judge an idea simultaneously when it is being created.


17

b. Develop creative ideas: This is done by cultivating abandoned
thinking and developing a multitude of ideas and approaches for
accomplishing the defined functions. The desired thing at this
point is a large number of ideas, no matter whether they look
ridiculous. A number of check-lists and idea-stimulators could be
used for the purpose.


iv. Analytical Phase

Analytical phase of the value analysis job plan has following two basic
objectives;


a. To select tor further analysis, the most promising of the idea
generated during the creativity phase and;


b. To submit these ideas to preliminary screening and to identifying
the meaningful and feasible ideas.


During this phase, the ideas must be refined to meet the necessary
environmental operating conditions of the particular situation. Ideas
obviously, do not meet these requirements are dropped. Ideas having
potential, but beyond the capability of present technology are put aside for
possible discussion with the concerned parties. The remaining ideas arc
potentially workable aids are cost analyzed.






18

v. Evaluation Phase

In this phase of the workshop, the VA team judges the ideas developed
during the creative phase. The VA team ranks the ideas. Ideas found to be
irrelevant or not worthy of additional study are disregarded; those ideas
that represent the greatest potential for cost savings and improvements are
selected for development. A weighted evaluation is applied in some cases
to account for project impacts other than costs (both capital and life
cycle).


Ideally, the VA team would like to evaluate all attractive ideas but time
constraints often limit the number of ideas that can be developed during
the workshop. As a result, the team focuses on the higher ranked ideas.
This phase is designed so that the most significant ideas are isolated and
prioritized


vi. Recommendation Phase

In the development phase, final recommendations are developed from the
alternatives selected during the analysis phase. Detailed technical and
economic testing is conducted and the probability of successful
implementation is assessed.


The presentation phase is actually presenting the best alternative (or
alternatives) to those who have the authority to implement the proposed
solutions that are acceptable.


During the implementation and follow-up phase, management must assure
that approved recommendations are converted into actions. Until this is
done, savings to offset the cost of the study will not be realized.
19

Figure 2.1 illustrates the Job Plan process flow. Each of the Job Plan phases must be
performed in sequence because each phase provides information and understanding
necessary for the successful execution of the next phase.




Figure 2.1: Value Study Process Flow Diagram
(Source: SAVE International Value Standard Edition 2007)













20

2.3.2 How Does Value Analysis Work?


Value Analysis reduces costs by eliminating wasteful practices. This can be
done in several areas;


i. Material Substitution
Value Analysis promotes the substitution of materials and methods with
less expensive alternatives, without sacrificing functionality. It is focused
solely on the functions of various components and materials, rather than
their physical attributes. The substitution of materials and methods were
often found to reduce costs and provided equal or better performance. The
unnecessarily expensive inputs sometimes can be replaced by less
expensive one that functions just as well (John Kelly and Steven Male,
2013).


ii. Process efficiency and optimization of production
More efficient processes or steps can be used and the product or the
program can be redesigned so that it is easier to produce or accomplish.
Reducing unnecessary parts or steps, unnecessary precision and
unnecessary production operations can lower costs, and increase
manufacturability, reliability and profits. Process engineering can be used
to increase process efficiency (Kaufman, 2009).


iii. Energy Utilization
Utilizing energy efficient equipment will create more value in the long
run despite its initial investment.


iv. Avoiding products with more features than required will minimize cost.

21

2.4 Value Analysis Application – Case Studies


In the beginning, period the method of value analysis was used to
investigation products but after years, its range of application was broadened.
Nowadays, the value analysis is used to rationalizing of the course of technological
processes, administrative procedures, and organization of auxiliary processes;
organizational structures etc. (Roszak, 2007). The analysis of value is one of the
basic methods of preparation and undertaking the decision of choice of correct
solution, it enables to solve complex problems in a transparent and effective way
(Roszak, 2008)


Amit Sharma and Harshit Srivastava (2011) conducted study of a bath fitting
product namely „Conc. Flush Valve‟ in which the material of the product is changed
according to the value analysis methodology. In their study, they have incorporated a
tool name as Decision Matrix. A proper decision matrix is prepared for choosing the
appropriate alternative from the feasible choices available. The material is chosen
such that cost is reduced without affecting the value of the product and its design.


The push button has been found to be costly and the cost to the part made out
from it is also costly. It is recommended that the push button should be made in the
factory without changing the design of it through process die casting. At the present,
push button is made from brass and is proposed to change the push button made from
Zamak (an aluminum alloy) which is cheaper than brass and with the use of the same
process the excessive cost of machining is also eliminated.


Kurtys (1998) stated that determination of the costs of functions is very
important during the comparative investigations when the product is compared to
other products of the competition or different enterprises because it permits to find
the weak point of the compared article. It is also used in comparing with the products
22

not comprising all the functions and mainly in the case of products making the same
functions.


Chougule and Kallurkar (2012) have conducted a study on the use of value
analysis techniques for cost reduction in production industry for Universal Testing
Machine. Six of components from Universal Testing Machine have been applied for
value analysis techniques for the cost reduction. The unnecessary increase cost is due
to the use of expensive material and increase in variety of hardware items thereby
increasing the inventory.


Value engineering is executed in this case study by implementing design
modifications and change in materials of component. The design modification was
suggested for Dial Bracket and Top Bearing in order to reduce the weight and
material requirement and consequently the cost. The Recorder Gears, Range Selector
Knob and Hand Wheel of Brass, Cast Iron are replaced by Nylon. The execution of
value analysis and value engineering techniques to selected six components results in
net saving of 20%.


Amit Sharma and Belokar (2012) made a study on enhancing value of Slit
Housing. Slit Housing is used as a component in assembly of microscope in the field
of eye inspection at moisture free environment. The present specification of this part
and its material used are costlier than the average industry cost. This product is
chosen because of the increased competition from different manufacturers in the
same category. Value analysis is executed in this case study by increase the value of
the product by substituting another material in place of the one that is currently in
use.


By changing the materials of component to ABS plastic, there are various
advantages have been observed in terms of cost reduction, increase in overall
production, reduction in manpower, and reduction in scrap. The execution of value
23

analysis to the slit housing resulted net saving per product: Rs 57.32, percentage
saving per product: 36.79%, annual demand of the product: 10,000 units, total annual
saving: Rs 573,200 and value improvement: 58.20%.


Amit Sharma and Belokar (2012) made a study on Focus Adjustment Knob
(Model SL250) for Slit Lamp in microscope which is used to adjust the focus of lens
for magnification purpose. The present specifications of this part and its material
used are costlier than the average industry cost. In their study, they have used the
concept of VA to analysis the focus adjustment knob of microscope and with the
critical evaluation of it they were able to increase the value of the product by
substituting another material in place of the one that is currently in use. Value of this
product can be increased by maintaining its functions and reducing its cost or
keeping the cost constant and increasing the functionality of the product


The best feasible solution from the available alternatives is chosen through
the feasibility ranking table; i) Change the material to steel ii) Use Nylon unit iii) Use
existing material. From the table, it is seen that the alternative (ii) Use Nylon Unit has
the maximum value. By changing the material of component to Nylon unit, there are
various advantages have been observed in terms of cost reduction, increase in overall
production, reduction in manpower, and reduction in scrap. The total savings after
the implementation of VA are; cost before analysis: Rs 29.99, total cost of nylon
knob: Rs 18.40, saving per product: Rs 11.59, percentage saving per product: 38.64
%, annual demand of the product: 8000 units, total annual saving: Rs 92,720 and
value improvement: 62.98%.


Ignacio, El-Diraby and Hesham (2007) made a study integrating the value
analysis and Quality Function Deployment for evaluating design alternative. The
proposed approach uses value analysis, quality function deployment (QFD) and data
envelopment analysis (DEA) to optimize the owner decision. The integrated
framework is able to elicit customer requirement through the FAST, relate various
design options to each customer requirement through use of QFD and lastly, provide
24

a decision support environment to assist in selecting the most suitable alternative.
These frameworks were successfully used on a high tech research facility
construction project.


In the study made by Roszak and Szewieczek (2007), cog wheels were
produced in two different technological processes. The analyses of the processes are
based on the value analysis that allows evaluating of applied technologies of
production. The entrance materials for analyzed processes were steel 18CrNi8 for
cog wheel 1 produced from forged shape, and steel 41Cr4 for cog wheel 2 produced
from rod. In the technological process of cog wheels 1, there are carbureting,
volumetric tempering and absolving; however in technological process of cog wheel
2, there are preliminary volumetric tempering as well as absolving and inductive
tempering. The differences in kind of operation thermal processing result from
different entrance materials to processes and their characteristic.


In their study was indicating that the use of forged shape in realization of
presented productive process allows getting more profitable cost results, it means that
the process is cheaper. The analysis of functions makes it possible to separate from
existing technological, constructional or organizational solutions. It enables to look at
the product in a new way what permits to find completely new interesting and
original solution and distinguishes it from the traditional methods.


Based on the literature review, it can be concluded that value analysis is one
of the most widely used cost reduction techniques. It emphasizes on finding new
ways of getting equal or better performance from a product at a lesser cost without
affecting its quality function, utility and reliability. Value analysis bring clearly the
areas where the cost of product can be decreased by pointing out the unnecessary
items or component in which have had once some utility but now redundant therefore
has to dispensable, the possibilities of component substitution with reduced cost
without affecting the quality of the product and the lastly, the possibilities of overall
25

simplification in design or manufacture of a product. It also provides a process to
systematically improve the existing goods and builds value into a product.



26

CHAPTER 3




RESEARCH METHODOLOGY




3.0 Introduction


This chapter elaborates the methodology used for this study. According to Emory and
Cooper (1991), in order to obtain the research objectives stated, research design is
used to plan the overall programme and structure of the problem under investigation
thus empirical evidence can be discovered. Thus, the choice of research methodology
employed depends on the nature, features and context of research. This research
aimed to assess and investigate the application of VA and how this rolls out in
practice within manufacturing context, awareness and understanding of VA and
obstacle in implementing VA. Therefore, a case-study and semi-structure interview
was employed.






27

3.1 Overview of the Methodology


In this study, qualitative approach is chosen to carry out the research problem and
reach the purpose of this thesis. Qualitative research has been described by Creswell
(1998), as being exploratory and attitudinal seeking to the research explain, to
understand, to explore and to evaluate opinion or perception. Qualitative research is
intended to penetrate to the deeper significance that the subject of the research
ascribes to the topic being researched which involves an interpretive, naturalistic
approach to the subject and gives priority to what data contribute to important
research questions or existing information.


Primary Data
Case-study and semi structured interviews was employed. These are an appropriate
approach for this study. Case study will provide rich raw material for advancing
theoretical ideas and provide insight at all stages of the theory building process. Semi
structured interview will extensively able to explore on the actual scenario and latest
progress that occurs in the industry (Kotabe, Parente and Murray, 2007; Enkel and
Gassman, 2010).


Secondary data
Secondary data collected include company annual reports, progress reports, press
releases, electronics websites and research publications. Basically, the secondary data
were used to enhance or sometimes to support primary findings.








28

3.2 Data Collection Instruments


The data collection effort for this study was extensive and a wide variety of data was
collected.


a) Case Study

A case study is a research method selected for this study which allows for
an in-depth examination of events, phenomena, or other observations
within real life context for purposes of investigation, theory development
and testing or simply as a tool for learning. Researcher Yin (1984) defines
the case study method as an empirical inquiry that investigates a
contemporary phenomenon within its real life context; when the
boundaries between phenomenon and context are not clearly evident and
in which multiple source of evidence are used.


Merriam defines a qualitative case study as an intensive, holistic
description and analysis of a single instance, phenomenon or social unit.
In this study, PREVE's car seat was selected as case study for the study of
value analysis amongst other of the car seat of various car produce by
PROTON and the present paper is the result of the study undertaken.


The flow of the case study process adapted from (Tellis, 2007) is shown
in Figure 3.1


29



Figure 3.1: Steps of Case Study


The following are some of data collection techniques employed in case
study;


i. I nterview Data

In this study, an interview is chosen in order to collect data
because this method is useful for a researcher to focus on a
particular topic and gain information from individuals (Hesse-
Biber and Leavy, 2005). The goal of interview is to deeply explore
the respondent‟s point of view, feelings and perspectives
(Douglas, 1985).


A semi-structure interview is open, allowing new ideas to be
brought up during the interview as a result of what the interviewee
30

says. Semi structured interviews are employed because are useful
for asking a set of questions to guide the conversation. Moreover,
semi structured interviews allow interviewees freedom to talk
about what is of interest or important to them (Hesse-Biber and
Leavy, 2005). This can lead to a new and unexpected direction to
develop and explore new topics.


All interviews were solely conducted through in semi structure
interviews. Semi-structure interviews were conducted with VCR
personnel‟s involved in the VA process. Four VCR personnel
were selected. Two interviewees were TRIZ Specialists and
another two interviewees were VCR Engineers that are
responsible to analyze and evaluate components to improve the
material usage, overall design and manufacturing process and also
develop benchmarking cost center for all PROTON models and
DRB-HICOM subsidiaries.


Arrangements for the interview session were set earlier, to ensure
availability of the interviewees. Objective of the interview and
questions for interview session were given in advance to
interviewees via e-mail. All informants were given the same set of
questions, to ensure consistency between interviews.


During the interview, informants were asked to provide their
background information which included their qualification, years
of experience with the present company, educational background
and their job responsibilities. They were also asked to provide
information on their involvement and views on VA. This has
enhanced the research findings as it has provided a holistic
perspective of VA practice that has taken place within the case
company, awareness and understanding of VA, challenge and
31

obstacle in implementing VA. In addition, each transcript once
completed was sent to respective interviewees for content
validation. Interviewees responded on any mistakes, improved and
clarified to ensure validity and reliability of the information
(Binder, 2008).


Interview data have been cross checked for any conflicting or
inconsistent findings by relying upon responses from multiple
respondents (Alam, 2005). Interview transcripts were analyzed;
direct and indirect answers were determined, and those answers
that have similar meaning were grouped together. The extent of
the interview data were corroborated with reviewed of documents
such as VA report and continual improvement reports.


Data was triangulated to enhance the construct validity of findings
(Brewerton and Millward, 2003; Yin, 2003). The flow of the
interview process adapted from (Yahaya, 2008) is shown in
Figure 3.2


32


Figure 3.2: The I nterview Process Flow


ii. Documents and records

The third method of data collection is through analyzing the
written documents. Company records and documentation relating
to VA were inspected. The documents include reports on VA
exercises undertaken and continual improvement procedural rules.
The VA documents and reports, current customers and suppliers‟
lists, types of materials and products list are reviewed and
analyzed too. Further information on the company‟s background
was also gathered from the internet and professional journal.
These documents were collected and analyzed.





33

iii. Archival Sources

As part of data collection process, archival source is also
collected. Most of information about the company‟s background
was gathered from the company‟s website. The information
included the company‟s profile, products and facilities,
subsidiaries company and product produced.



























34

CHAPTER 4




FINDINGS AND DISCUSSION




4.0 Introduction


This chapter will present the findings and discussion of the research study
undertaken. The findings and discussion is divided into to three parts. Part A shows
the case company‟s background and adoption of VA. Secondly, Part B illustrate the
product information and enlighten the six phases of value analysis systematic
approach undertaken in the project as per discussed in literature review. Then, Part C
will discuss the awareness and knowledge of VA and thus, provided a holistic view
of the VA.




35

Part A: Company’s Background and Adoption of VA


4.1 Perusahaan Otomobil Nasional Berhad (PROTON)


The Malaysian automobile manufacturer, PROTON (Perusahaan Otomobil
Nasional Berhad) which is the subject of this case study was established over 25
years ago. One of the main objectives for the creation of PROTON was to propel
Malaysia into the 21
st
century as an industrialized nation where the acquisition of
technological knowledge, know-how expertise would help the country achieve short
term and long term goals. From a Government-Linked Company, year 2012 marked
a new phase for PROTON as the national car maker now a private entity following
its takeover by DRB HICOM Berhad.


The company is located at HICOM Industrial Estate, Shah Alam; one of the
big industrial area in Malaysia. The PROTON Shah Alam manufacturing complex
includes the original Main Plant and Multi Vehicle Factory (MVF). The plant
contains a separate engine machining and assembly building within the complex
where cylinder blocks, crankshaft and camshafts for the CamPro engine are
machined and subsequently assembled.


The Main Plant's capacity is 150,000 units while the MVF capacity is 50,000
giving a total capacity of 200,000 units per year. Currently, the main plant currently
produces the Saga, Waja and Arena models. The Saga is the highest volume model
produced, averaging about 6,378 units a month during the period under review, and
is expected to increase to 7,300 units a month for the next financial year (Annual
Report, 2011). DRB-HICOM Berhad plans to redevelop PROTON‟s manufacturing
complex in Shah Alam into an integrated development that will generate around
RM4 billion in gross development value (Business Times, 2013).


36

As a global automotive challenger, PROTON conducts research in its center‟s
throughout the world, on new technologies to create cars that are unique in both
design and driving performance. To boost the quality of its products, PROTON
performs a continuous company-wide quality improvement programme and quality-
conscious work culture that assures quality in everything (products and individuals),
quality in the way things are done (doing it right the first time), quality in spending,
including reducing materials costs, high-quality products (end products must be of
the right technology and designed to meet market expectations); and quality services
to customers, including after-sales support (Annual Report, 2011).


Throughout the past 25 years of operations, PROTON has garnered many
awards and recognition from the automotive industry. The latest on February 2013,
the Preve was awarded with 5 stars rating by Australasian New Car Assessment
Program (ANCAP) Safety Rating, a historical first for PROTON.




4.1.1 Vehicle Cost Reduction


The Vehicle Cost Reduction was established on 1
st
February 2010. The VCR
team is a group of fully trained engineers that are responsible for generating and
analyzing cost saving ideas to accomplished Process and Operational Excellence
(PROPEX) goals. The Process and Operational Excellence (PROPEX) project is
already in its one and a half years journey and is gaining momentum.


Eventually, PROPEX will increase PROTON‟s profit margin without
sacrificing customer satisfaction and of course avoid increment of On the Road
(OTR) price regardless of material cost increases amongst others (Annual Report,
2011). Many initiatives across PROPEX are now in the implementation mode. One
of the initiatives is known as Complexity Management.
37

Besides this, the team also plays an important role to make sure all feasible
ideas are implemented. Currently, there are 6 full time PROTON engineers run the
whole streamline. The Company‟s main VCR objectives are to;

 Minimize effect of material cost increase to the car price
 Consider cost improving activities even at designing stage




4.2 Adoption of VA


4.2.1 Reasons and Objectives of VA


The Malaysian automotive industry is perceived as an engine of industrial
which provides technological capabilities, generates inter industry linkages and is
also seen as a source of national pride (Gabilaia, 2001). Increased global competitive
and complexity within Malaysian automotive sector has led the case company to find
ways to maximized products, values, processes, projects or services. Due to intense
competition and uncertain business environment, have put significant pressure on
case company to make sound business decisions. Therefore, it is pertinent to the case
company to conduct VA exercise in order to manage cost of parts and components
regardless of the degree of competition exist in the market


The main reason why VA was applied within case company in the first place,
was to focus on reducing costs of components and parts, followed by it is a useful
and efficient method to reduce unnecessary costs as well as it is a value enhancing
tool. According to researchers, the application of VA is due to several reasons. These
includes promoting image (Cheah and Ting, 2005), fulfilling customer requirements
(Prasad, 1998), meeting quality requirements (Chakravathy, 1991; Fong, 1998b; Chin
et al., 2005) and becoming competitive (Sharma et.al, 2006).
38

The objectives of conducting VA within the case company are to achieve
minimum cost saving target, to reduce cost of material and parts and also to be able
compete successfully with other automotive companies. VA as an innovative tool has
been applied within the case company due to its relative advantages over other
techniques and through VA exercises the case company was able to achieve material
cost reduction of its parts and components. The resultant of material change, for
example in the case of car seat enables company to standardize its material
utilization. It seems that VA exercise enable cost management or cost control to be
practice effectively within the company.


The cost saving achieved through VA enable the company achieve its Key
Performance Index (KPI) and improve cost effectiveness and also promote team
cohesiveness among the parties involved in the VA exercises. The case company had
always been engaged in planning and undertakings ways and means to reduce costs
while improving the quality and safety aspects of its vehicles. Even though cost was
reduced however, it did not affect the quality and reliability of products. As pointed
out by the Proton Executive Chairman,


“We have done the VE exercise to ensure that despite the price reduction, we
have enhanced the quality, safety and features of our vehicles.”

(News Straits Times, 2013)


The management support and initiatives also have influence to VA adoption.
The developing and establishing VA program requires support and commitment from
the top management. The adoption of VA within case company was perceived as
directive from the top management and decisions pertaining to VA exercises required
the approval of management. According to Rogers, majority of organizations has
collective and authority innovation decision. According to informants, VA was
adopted by company with the aim of meeting quality products requirement stipulated
by the customer and consistent with the corporate objectives. VA is believed to be
39

compatible with the other technique adopted by company which includes quality
management system.


The case company has a wide range of automotive parts and component,
manufacturing facilities and also strong R&D capabilities that contributed to the
company securing long term contract from various customers. The wide range of
manufactured parts and components in the case company has resulted in a variety of
continuous improvement such as VA being implemented. Material diversity and
production volume of each parts and components have essentially influenced the
adoption of VA. This finding concurs with Cooper (1998) and Bjornenak (1997), the
diversity of products within the case company has influenced the adoption of VA.


The implementation of VA can be seen as a convenient and relevant exercise
to reduce price of materials, components and parts. Therefore, VA was applied as a
routine exercise for cost reduction within the case company. The continuous VA
exercises thus, the case company was able to achieve material cost reduction in the
manufacturing of its parts and components, target cost saving and enable cost
management or cost control to be practice effectively within the company.


The national carmaker's revenue rose 9.03 per cent to RM 8,969.9 million
from RM 8,226.9 million a year earlier (Annual Report, 2011). One of the reasons of
this achievement is due to the introduction of new models with higher profit margins,
stronger sales volume and savings from group-wide cost-reduction initiatives.








40

4.2.2 Challenges in VA Implementation


This sub section explains the challenges in VA implementation within the
case company. The major hindrance of implementing VA within the case company is
lack of commitment and communication for VA workshop. The lack of
communication and commitment on the VA project affect the development of a VA.
Value Analysis is a team process and requires strong team working and
interdisciplinary to face decision making. The group decisional process can be very
difficult and unproductive if not managed in the proper way (Nunamaker et. al.,
1997).


Value studies rely on the synergy of teams working together to solve a
common problem. The individual strengths of every team member are molded into a
dynamic team that achieves often startling results. Effective team members typically
possess many attributes, including the ability to think outside the box and a
willingness to examine solutions beyond the standard ones.


Another impediment to VA is problems solving and idea generated during
value analysis process. During the process of idea generation, personal and/or social
blocks from this situation can arise. Unfortunately these blocks are often out of
awareness, or consciousness. These uncertainties distorted creative and intellectual
abilities. Therefore, to remove obstacles to creativity, identifying the hurdles was
needed on the creative process. The application of VA could cause delays and result
in more time needed for completion.







41

Part B: Product Information and Implementation of VA


4.3 PROTON PREVE's car seat


Amongst the car seat of various car produce by PROTON, PREVE's car seat
was selected for the value analysis study and the present paper is the result of the
study undertaken. Car seats are an essential part of the driving compartment in a
vehicle. The seat is the car subsystem most important in determining the quality of
the life spent travailing in a car. The standard car seat is designed to support thigh,
the buttocks, lower and upper back and head support. Most of vehicles have three
main parts; the seat back, seat base and the headrest. These components are usually
constructed from foam to provide comfort to the rider. As mentioned by Na et al.
(2005), drivers‟ comfort was as important as the functional and aesthetic design of
automobiles since consumers are more and more concerned about safety and
comfortable driving. Nowadays, with drivers spending more time in their car on
longer commutes, they expect a comfortable ride (Matthew, 2010).


There are several car seat parts that make up a car seat. These include rails,
latches, seat, frames, spring and seat covers. Each part is assembled individually with
special tools and equipment to create an entire car seat. The sectional of the car seat
presented at Figure 4.1. The present specification of this part and its material used
are costlier than the average industry cost. Therefore, a need was felt to improve the
cost of the product without affecting the quality which is possibly only through value
analysis study. Value of this product can be increased by maintaining its function and
reducing its cost by changing the alternatives material.


In the global automotive seating market, suppliers must offer seats that are
more comfortable, durable, safer and also lighter and cheaper. These market drivers
have led manufacturers to use alternative and advanced materials in designing seats.

42







Figure 4.1: The sectional of the car seat






43

4.4 Implementation of VA


The job plan provides the framework undertaking VA in a planned and
systematic manner. Normally, the job plan is organized by a value team leader. The
value analysis systematic approach followed in this car seat project comprises a six
phases job plan as per discussed in literature review. The process of implementation
of value analysis is discussed as follows;


i. I nformation Phase

The purpose of this phase is to gain an understanding of the project being
studied and to obtain all essential facts relating to the project. During the this
phase, the VA team made familiar with the present state of the car seat and
gains as much information as possible about the design, background,
constraint and projected costs of the project. The following items are
generally prepared prior to the VA workshop;

a. Technical drawing
b. Technical specifications
c. Bill of materials
d. Number of components/parts list


All team members participated in a functional analysis of the project as a
whole. The VA team performs functional analysis of parts or component to
determine the true needs of the project and identify the cost areas. The area of
high cost and low are identified. The criteria for the selection of parts and
components for VA exercises depends on the most contribution to cost
saving. Part or component that contributed to most cost saving would then be
selected.

44

The explode view of car seat for the value analysis is given at Figure 4.2. It
represents the various components of the car seat.





Figure 4.2: The explode view of car seat


45

ii. Functional Phase

Once the team selects the project and gathers all the relevant data and
information concerning car seat, the next step would be to identify and list all
the functions that are performed by the product. These functions therefore
make the car seat work effectively or contribute to the salability of the
product. „Function‟ can be defined, as the use demanded of a part of a
product and the esteem value that it provides. Functional analysis outlines the
basic function of a product using a verb and a noun. There are two types of
functions; basic and secondary function within the scope of a study item.


i. Basic function is the main reason for the existence of the product and
if it is eliminated, the product cannot serve the need of the user. Basic
function will not disappear even in a different design approach.


ii. Secondary functions or sometimes called as support functions play
only enabling role; merely to make the basic function achievable.
Secondary functions are considered to make no contribution to worth
but add directly to the cost. Consequently, value improvement efforts
aim at minimizing the number of secondary in the project and hence
the necessity of identifying the secondary functions.


While classifying the functions into basic or secondary, it is important to look
for the basic functions of the whole project rather than the basic function of
individual part since the basic function. This may seem trivial at first and
almost necessary but in fact it is a very important since all subsequent actions
originate from this step. The effort to probe the functions paves the way for
deeper thinking process and a greater creativity that lead to generation of
large number of ideas. The defining function of car seat is illustrated in Table
4.1.
46


Table 4.1: Defining Functions


VERB NOUN BASIC SECONDARY
Absorb Weight ○
Support Weight ○
Comfort User ○
Aid Cover/Shape ○
Emphasize Appearance ○
Comfort User ○
Repel Water ○
Prevent Tire ○
Support Weight ○
Hold Safety Lamba ○
Locate Head restraint ○
Locate Lean restraint knob ○
Support Weight
Locate Buckle
Comfort User
Hold Spring
Hold Foam
Absorb Weight
Comfort User
4 Cushion Frame
5 Cushion Spring
1 Foam
2 Upholstrey (Cover)
3 Back Frame
NO. PARTS
FUNCTION RESTRICTIONS
(SPEC.)
FUNCTION
CLASSIFICATION REMARKS
47


VERB NOUN BASIC SECONDARY
Comfort User ○
Move Position ○
Change Position ○
Control Angle ○
Secure Position
Secure Position ○
Move Position ○
Change Position ○
Comfort User ○
Secure Position ○
Move Position
Change Position
Comfort User
Support Head restraint ○
Secure Position
Comfort User
Protect User
Comfort User ○
Attract User ○
Comfort User
Minimize Position ○
Maximize Position
Secure Position
12 Wire Frame Aid Upholstrey ○
REMARKS
6 Reclainer Level
7 High Adjuster
NO. PARTS
FUNCTION RESTRICTIONS
(SPEC.)
FUNCTION
CLASSIFICATION
11 Slider Bar (Adjust
backward and forward)
8 Plastic Lumbar
9 Head Restraint Knob
10 Head Restraint
48

In order to establish inter-relationship of the function and the true light of
the project, the preparation of Function Analysis System Techniques
diagram was taken up next. The FAST (Functional Analysis System
Technique) diagram as described by Kaufman has been used to map and
organize the functional context of the project.


FAST is a powerful analysis process to analyze the functions and reduce
the cost of physical components, assemblies, hardware products and
construction projects. Function analysis techniques are used in defining,
analyzing and understanding the functions of car seat, how the functions
relate to one another and which required attention if the value of car seat
is to be improved.


The VA teams has developed the FAST diagram starting from the highest
order function of the components which is crucial as it support its
„output‟ i.e. support weight. Indeed, the functions makes sure that car seat
are comfortable, has the right adjustment possibilities, safety and etc. The
Figure 4.3 illustrates the FAST diagram of car seat.


The FAST diagram begins with the „root‟ function „support weight. The
exercised was started by placing the basic function; „allocate bottom
space‟, „allocate back space‟ and „align user‟ at the left hand side. Then
the supporting functions which are „assure convenience‟, „assure
dependability‟, „satisfy user‟ and „attract user‟ are placed below and
questioning „how‟ and locating and placing the correct answer or function
next to it. Then „why‟ question was asked to check the function at the left
hand side.

49




Figure 4.3: FAST Diagram
(Source: Perusahaan Otomobil Nasional Berhad)
50

This questioning of „how‟ and „why‟ had led to the team members to a lot
of discussion and debate resulting in redefining of some of the functions.
The team was decided to focus on functions related to the critical path of
„assure dependability‟ and „satisfy user‟.


All the functions that having relationship with the function „assures
dependability‟ and „satisfy user‟ have been carefully detailed. The
important redefining was head restraint and back protector for the
functions of „assures dependability and „satisfy user‟ that will triggering
generation of creative ideas in the creative phase. The debate and
underlying thinking process in the preparation of the FAST diagram were
of enormous help for the success of the project. The costs for all functions
were allocated from the data developed. The function cost analysis is
given at Table 4.2.


The function costing or analysis questions every cent being spent for the
correct function it is designed to serve. The target cost for the all
functions were stated so that allowable amount of cost incurred on a part
or components still earn the required profit from that product. Target
costing is a disciplined process for determining and achieving a full-
stream cost at which a proposed product with specified functionality,
performance, and quality must be produced in order to generate the
desired profitability at the product‟s anticipated selling price over a
specified period of time in the future (Clifton, Bird, Albano and
Townsend, 2004).



51

The percentage weightage figures also are used in setting the goals for
the alternatives to be generated for the selected functions. The functions
selected on the basis of high cost (C- F) for taking to the next creation
phase are i) Protect Component and ii) Comfort User.


52

Table 4.2: Functional Cost Analysis


FUNC.
NO.
FUNCTION FIELD
PERCENTAGE
WEIGHTAGE
CURRENT
COST [C]
TARGET%
TARGET
COST
[F]
C-F PRIORITY
1 Allocate bottom space 3% 15.00 8.00 7.00
2 Allocate back space 18.00 10.00 8.00
3 Align user 1% 20.00 15.00 5.00
4 Assure convenience 2% 55.00 20% 36.00 19.00 ❸
5 Assure dependability 18.00 13.00 5.00
6 Attract user 18.00 13.00 5.00
7 Satisy User 30% 65.00 35% 35.00 30.00 ❷
8 Protect component 40% 80.00 35% 43.00 37.00 ❶
9 Strengthen component 5% 28.00 18.00 10.00
10 Comfort user 3% 10.00 8.00 2.00
11 Repeal water 2.5% 14.00 9.00 5.00
12 Transmit warning signal 2.5% 14.00 9.00 5.00
13 Protect user 1% 13.00 7.00 6.00
14 Enhance appearance 20.00 10.00 10.00
15 Absorb weight 23.00 13.00 10.00
16 Control angle 24.00 13.00 11.00
17 Provide high adjustment 18.00 12.00 6.00
18 Provide slider forward/backward 9% 22.00 10% 12.00 10.00
19 Detect force 25.00 16.00 9.00
RM500.00 RM300.00 RM200.00
FUNCTIONAL COST ANALYSIS
FRONT SEAT ASSEMBLY RH
53

iii. Creative Phase

The purpose of this phase is to produce large number of ideas for accomplishing
the functions under consideration. The team uses a group interaction process to
process to identify alternative ideas for accomplishing the function of component
or sub component of car seat. This effort begins as soon as enough information
has been gathered, reviewed and understood.


There are several formal idea stimulation exercises that may be used during this
phase of VA study. The VA team identified a list of alternatives through
brainstorming process in order to find new suitable solutions. All rules of
brainstorming are allowed, and criticism needs to be avoided as it could cease the
flow of ideas. Simply list down all ideas, not regarding whether they sound
apparently ridiculous. The greater number of ideas conceived, the more likely
that among them will be something that may eventually lead to better value. The
idea generation for head restraint and back protector are represented in Table
4.3a and Table 4.3b













54

Table 4.3a: Idea Generation – Head Restraint



PRODUCT : Driver Seat
FUNCTION NO : F4
FUNCTION REQUIRING IDEAS : Verb Easy
Noun Adjustment
CURRENT CONDITION : Toggle Bar/Plastic Lever
NO. IDEA Economy Technical
Cost
Reduction
1 Reduce size × × ×
2 Reduce diameter ○ ○ ○
3 Change shape × × ×
4 Change material ○ ○ ○
5 Change coating process ∆ ∆ ∆
6 Reduce thickness × × ×
7 One-side adjustment × × ×
8 Electric adjustment × × ×
9 Reduce rivet quantity ○ ○ ○
10 Change rivets to snap fit × × ×
11 Eliminate paint process ∆ ∆ ∆
12 Commonize lever × × ×
13 Clip type for seat mounting × × ×
14 Combine function of reclaining, height
adjuster and sliding
× × ×
15 Push button × × ×
16 Railing to fabricate directly to or
platform (Reduce parts/cost/process)
× × ×
17 Commonize grommet to other model ○ ○ ○
18 Commonize headrest - head rest guide ○ ○ ○
19 Head rest guide - half chrome (visible
area)
○ ○ ○
20 Change material within specs - head
rest guide
○ ○ ○
IDEA SHEET
IDEA GENERATION/EVALUATION OF IDEAS
55






Table 4.3b: Idea Generation – Back Protector



NO. IDEA Economy Technical
Cost
Reduction
21 Head rest foam - solid to hollow
(reduce material)
∆ ∆ ∆
22 Decrease foam thickness ○ ○ ○
23 Combine head rest with seat body × × ×
Symbols:
○ Applicable
∆ Applicable but certain condition
× Not applicable
PRODUCT : Driver Seat
FUNCTION NO : F7
FUNCTION REQUIRING IDEAS : Verb Protect
Noun Components
CURRENT CONDITION : Back Protector/Anchor Cover
NO. IDEA Economy Technical
Cost
Reduction
1 Reduce size of back protector ○ ○ ○
2 Deletion anchor cover - replace by
rubber to cover sharp edge
○ ○ ○
○ Applicable
∆ Applicable but certain condition
× Not Applicable
Symbols:
IDEA SHEET
IDEA GENERATION/EVALUATION OF IDEAS
56

iv. Analytical Phase

Here the ideas were refined, combined and screened to remove non workable
ones from the list. The shortlisted workable solutions are given below;


Component/Part Alternatives

Back protector
Reduce size of back protector

Deletion anchor cover - replace by rubber to cover sharp edge
Head rest Reduce diameter
Change material
Reduce rivet quantity
Commonize grommet to other model
Commonize headrest - head rest guide
Head rest guide - half chrome (visible area)
Change material within specs - head rest guide
Decrease foam thickness


The selected ideas were further investigate to know their rating as workable
solutions. This is to assess the feasibility, technical adequacy, advantages and
limitation in detail. This portion of the effort includes developing detailed
technical and economic data for the shortlisted ideas, facilitating further detailed
evaluation.


v. Evaluation Phase

Starting from the data collected in the Information Phase, the functions devised
and organized in the Functional Phase and the alternatives designated in the
Creative Phase, the VA team performed a set of evaluations to select the most
promising ideas shortlisted during the Analytical Phase. In this phase of the
workshop, the VA team judges the ideas developed during the creative phase.
57

The VA team ranks the ideas. Ideas found to be irrelevant or not worthy of
additional study are disregarded; those ideas that represent the greatest potential
for cost savings and improvements are selected for development.


The criteria were established which each alternative shall meet in order to be
considered further. Five criteria were identified and are presented in Table 4.4
below;

Table 4.4: Criteria Definitions
Criteria Definitions
Cost Lower cost of implementation
Function The use of a part of a product and the esteem
value that it provides.
Quality Ability to meet specific requirement
Reliability The ability of component to perform its
required functions
Safety Conditions for consumers' safety


The criteria were listed with the symbols A, B, C, D and E. The required
weightage points were initially allotted each criterion out of maximum of 100
point as described in Table 4.5 below;


Table 4.5: Allotted Point of Criteria
SYMBOL CRI TERIA
MAX.
POI NTS
ALLOTTED
POI NTS
A Cost 100 70
B Function 100 75
C Quality 100 70
D Reliability 100 65
E Safety 100 80
TOTAL 500 360

58

Further steps, the remaining of 140 points from the total of 500 points are
distributed equally among 10 comparisons giving each comparison a maximum
of 14 points for further analysis. The weight sharing of 14 pints for the
comparisons of major, medium, minor and equal classifications was done below;


Table 4.6: Comparisons of Classifications

Major Difference 13 – 1
Medium Difference 11 – 3
Minor Difference 9 – 5
Equal 7 – 7


Next, the criteria were compared in pairs, and weightage points were allotted as
shown in the matrix overleaf;


Table 4.7: Matrix Evaluation Process



B C D E TOTAL
A A – 7 A – 7 A – 9 A – 11
34

B – 7 C – 7 D – 5 E – 3

B B – 9 B – 11 B – 9
36

C – 5 C – 3 C – 5

C C – 9 C – 11
32

D – 5 E – 3

D D – 13
26

E – 1

E 12





59

The tabulation of final scoring is as shown below;


Table 4.8a: Percentage Weightage

ALLOTED
POI NTS
FROM
MATRI X
TOTAL
%
WEI GHTAGE
70 34 104 21
75 36 111 22
70 32 102 20
65 26 91 18
80 12 92 19
360 140 500 100



After the weightages for the criteria have been calculated, the ideas for each
function can be evaluated by allotting the value point of each idea. Each idea was
considered and evaluated against all the criteria. The grading used for evaluation
of the ideas is as below:


Table 4.8b: Grading for Evaluation

Grading for Evaluation
Excellent 5
Very Good 4
Good 3
Satisfactory 2
Poor 1


After completion of evaluation process for all ideas, the evaluation results thus
arrived at Table 4.9a and Table 4.9b

60

Table 4.9a: Criteria Weighing Process – Head Restraint



Cost Function Quality Reliability Safety
21 22 20 18 19
3 2 3 3 3
63 44 60 54 57
4 5 4 4 5
84 110 80 72 95
3 2 2 3 3
63 44 40 54 57
3 3 3 2 3
63 66 60 36 57
3 3 3 3 3
63 66 60 54 57
3 3 2 3 3
63 66 40 54 57
3 4 3 3 4
63 88 60 54 76
4 3 4 4 5
84 66 80 72 95
2 Change material 441




278




7 Change material within specs -
head rest guide
ALTERNATIVES
CRITERIA
TOTAL
WEIGHTAGES
RANK
HEAD REST
NO.
341
8 Decrease foam thickness 397
5 Commonize head rest - head
rest guide
300
6 Head rest guide - half chrome
(visible area)
280
3 Reduce rivet quantity 258
4 Commonize grommet to other
model
282
1 Reduce diameter
61

Table 4.9b: Criteria Weighing Process – Back Protector



Cost Function Quality Reliability Safety
21 22 20 18 19
3 3 4 3 4 ❷
63 66 80 54 76 339
4 5 4 3 5 ❶
84 110 80 54 95 423
RANK
BACK PROTECTOR
NO. ALTERNATIVES
CRITERIA
TOTAL
WEIGHTAGES
1 Reduce size of back protector
2 Deletion anchor cover - replace
by rubber to cover sharp edge
62

vi. Recommendation

The purpose of this phase is to prepare and submit the planned proposals with
advantages and limitations to the management and also to review the proposals if
any reason, these are unacceptable to the management. The cost estimates were
worked out with sufficient accuracy to support the validity of the saving potential
calculations. The proposals with the expected savings were also indicated.


COST SUMMARY



Present Cost
Proposed I dea for
I mplementation
Potential Saving
%
Back Protector RM 65.00 Replace leather to fabric 35%



COST SUMMARY



Present Cost

Proposed I dea for
I mplementation
Potential Saving
%
Head Rest RM 80.00 Change leather to fabric 35%
Reduce foam



The final implementation plans recommended and presented to the top
management are as below presented in Figures 4.4 and 4.5
63



Figure 4.4: Proposed Idea for Implementation – Back Protector
64



Figure 4.5: Proposed Idea for Implementation – Head Restraint
65

4.6 Conclusion


In the case study discussed above, the case company has used the concept of Value
Analysis to analysis the car seat and with the critical evaluation of it the case
company was able to increase the value of the product by substituting another
material in place of the one that is currently in use. The various advantages have been
observed in terms of cost reduction.


In future, the alteration of design of the product and integrate this technique with
various other prevailing industrial engineering tools will bring down the cost by
substantial margin and thereby increasing the value of the product. The tools like
QFD, TRIZ and VE can be integrated with VA which can be further enhance the
value of product.
66

Part C: VA Awareness and Knowledge


4.7 Awareness and Knowledge of VA


This sub-section aims to discover the awareness and knowledge of VA within
the case company. The awareness and knowledge about VA general concepts and it
implementation within the case company were focused only on VCR. Semi-
structures interviews were conducted with VCR personnel. Four interviewees were
selected. Two interviewees were TRIZ Specialists and another two interviewees were
VCR Engineers. The informants were asked to provide years of experience, job
responsibility and information on their involvement and views on VA.


Based on interview conducted, the informants had an understanding of the
concepts and technique of VA and were generally aware and had sufficient
knowledge on VA and its practice within their organizations. VA culture includes
awareness and sufficient knowledge of existing methods and tools besides an
awareness of managerial and environmental conditions, which facilitate VA to thrive
within an organization (Aliza, 2010). This result revealed that VA culture was
present within the case company and most of the VCR staffs were aware and
possessed sufficient knowledge of VA.


The informants were required to indicate whether they had attended seminars,
courses or training pertaining to VA. They were also required to provide information
the types of VA training that they had attended. Seminars or conference, courses and
on-job training were the more common type of VA training provided to enhance
employees knowledge on VA application in this case company. According to
informants, more than 50 current technical and management staff have received value
analysis training. Therefore, it can be concluded that most of VA training activities
were obtained and developed within the case company. These types of VA training
67

are the most important element of a comprehensive VA program. The continual
emphasis placed on training has put VA reach at its full potential.


According to informants, VA trainings have enabled a VA culture to be
nurtured and developed within the case company. Hence, this had developed
awareness and built competence amongst the employees. Thus, this result further
confirms a relatively high level of awareness and sufficient knowledge of informants
on VA and its application. This finding concurs with Fredrickson et al. (2004) and
Liu (2003) that public media which include trainings, seminars and books have
influenced the adoption of VA within the company.


Overall, most of the VCR staffs were aware and possessed sufficient
knowledge of VA, as evidence showed that they had attended seminars or courses
and training pertaining to VA. The appropriate knowledge of VA concept and tools,
and coupled with the awareness of the managerial and environmental conditions
suitable for VA makes possible a common way of thinking towards facilitating VA
within the case company.








68

CHAPTER 5




CONCLUSIONS AND RECOMMENDATIONS




This chapter will provide the general conclusions from research study. It concludes
the findings of the concepts and techniques of value analysis to effectively control
cost as well as the future work of this study.




5.0 Conclusion


This study explores the concepts and techniques of value analysis applied and
how this rolls out in practice within the case company. The adoption of VA as an
innovation tool and the influential and the impeding factors are also identified within
the case company. In this study, qualitative approach is chosen to carry out the
research problem and reach the purpose of this thesis. Case-study and semi structured
interviews was employed. These are an appropriate approach for this study.


Value analysis is one of the most widely used cost reduction techniques. It
emphasizes on finding new ways of getting equal or better performance from a
product at a lesser cost without affecting its quality function, utility and reliability.
69

Value analysis bring clearly the areas where the cost of product of the case company
can be decreased by pointing out the unnecessary items or component in which have
had once some utility but now redundant therefore has to dispensable, the
possibilities of component substitution with reduced cost without affecting the
quality of the product and the lastly, the possibilities of overall simplification in
design or manufacture of a product.


VA was applied as a routine exercise for cost reduction within the case
company. To perform the implementation, the case company followed the approach
as described in literature review that deals with six phases. The Job Plan outlines
sequential phases to be followed and the implementation of VA within case company
was in structured and systematic manner. The case company has fully exploit the
potential of maximum application of VA and enjoyed considerable amount of cost
saving. This finding concurs with Omigbodun and Yoshikawa, VA should be applied
in a structured and systematic manner using proper tools which can be realize the
optimum benefit of VA. The cost saving achieved through VA enable the company
achieve its Key Performance Index (KPI) and improve cost effectiveness.


The main reasons of VA was applied within case company in the first place,
was to focus on reducing costs of components and parts, and followed by it is a
useful and efficient method to reduce unnecessary costs as well as it is a value
enhancing tool. The objectives of adopting of VA within case company are to
achieve minimum cost saving target, to reduce cost of material and parts and also to
be able compete successfully with other automotive companies. VA was used as a
cost control or cost reduction within the case company by focusing of VA exercise
on material as material cost constitutes a significant of total cost of production of the
parts or components.


The impediment factors to VA adoption are lack of communication and
commitment and problem solving and idea generated during VA workshop. The
prime factor of the success or failure of a study is how VA team members conduct
70

themselves in dealing with others. In order to assure success, communication and
commitment from people at all levels in an organization must be gained. Their
commitment and cooperation must come as part of the creative spirit. During the
process of idea generation, personal and/or social blocks from this situation can arise.
Therefore, to remove obstacles to creativity, identifying the hurdles was needed on
the creative process to avoid application of VA delays.


PREVE's car seat was selected for the value analysis study. The present
specification of this part and its material are costlier than the average industry cost.
Therefore, a need was felt to improve the cost of the product without affecting the
quality which is possibly only through value analysis study. The case company has
used the concept of Value Analysis to analyze the car seat and with the critical
evaluation of it; the case company was able to increase the value of the product by
substituting another material in place of the one that is currently in use. The value
analysis systematic approach followed in this car seat project comprises a six phases
job plan as per discussed in literature review. The resultant of material change
enables company to standardize its material utilization. It seems that VA exercise
enable cost management or cost control to be practice effectively within the
company.


The finding revealed that VA culture was present within the case company
and the majorities of the VCR staffs were aware and possessed sufficient knowledge
of VA. Seminars or conference, courses and on-job training were the more common
type of VA training provided to enhance employees knowledge on VA application in
the company. The continual emphasis placed on training has put VA reach at its full
potential and enabled a VA culture to be nurtured and developed within the case
company


Overall, the results provided evidence that VA was used as a cost control or
cost reduction within the case company and the implementation of VA within case
company was in structured and systematic manner consistent with the job plan
71

approach. The management support and initiatives, product diversities, competition
and customer requirement were the influential factors in VA adoption. The impeding
factors to VA adoption are lack of commitment and communication and problem
solving and idea generated during VA workshop. Parties‟ involvements in VA were
aware and possessed sufficient knowledge of VA. They have proper training and
courses on the fundamentals of VA tools.




5.2 Recommendations and Future Research


Due to time limitations and constraints in getting full cooperation from the
case company, this study only concludes the findings of case study done in a short
time frame. The data were only focused on VCR and should have been lengthened,
so as to obtain a much reliable data. The awareness and knowledge of VA should be
investigated to the wider population. The findings are only associated with VCR.


Besides, the case company refused to share their internal data as they want to
comply with their company‟s policy of not giving outsiders any information
concerning the company. The situations occurs some privately-owned companies,
especially those that are highly profitable and operates internationally, refused to
share their internal data as they want to comply with their company‟s policy of not
giving outsiders any information concerning the company, especially their business
strategies and the way they perform their work. This is due to the reason that, a
highly successful company will always ensure that their core competencies are not
copied by their competitors.


Future research on concepts and technique of value analysis to effectively
control cost should also involve the study on VA with other automobile
manufacturing and others sector, comparing VA practices in order to determine the
72

similarities and dissimilarities and the influential factors adoption of VA and the
degree of awareness and knowledge between two sectors.

Little is known about TRIZ (Theory of the Solution of Inventive Problems)
thus, further research in comparing VA and TRIZ practices should be examined.
TRIZ is powerful methodologies based on empirical data that can be providing
solution concepts for a wide range of technical and non-technical problems
(Altshuller Institute, 2010). Both VA and TRIZ have relative strengths and
weaknesses. The combination of VA with TRIZ would offer an opportunity to
identify higher value solutions more quickly than either technique alone as TRIZ can
generate a large set of potential solutions that are highly innovative.


Design for Assembly (DFA) is a methodology which improves the
manufacturability of assembled products and primarily intended to reduce the
assembly costs of a product by simplifying the product design. It does so by first,
reducing the number of parts in the product design, and then by ensuring that
remaining parts are easily assembled. DFA constitute the approach of simplification
which results in cost reduction and productivity improvement while VA constitutes
approach of cost reduction. Thus, further research for integration of DFA and VA
should be examined as both techniques will bring down the cost and thereby
increasing the value of the product.


As we all know, the world is dynamic and of course, there is uncertainty of
trends that will happen in the near future. Due to intense competition and uncertain
business environment, have put significant pressure on companies to make sound
business decisions. Thus, future study is needed to examine if there is a new ways of
reduction cost or engineering tools to effectively control cost in order to fore run the
global competition.
73

REFERENCES

Annual Report Proton Holdings Berhad. (2011).
Business Times. (2013).
Amit Sharma, H. S. (2011). A Case Study Analysis through the Implementation of
Value Engineering. International Journal of Engineering Science and Technology.
Binder, M. (2008). The importance of collaborative front loading in automotive
supply networks. Journal of Manufacturing Technology Management, 19 (3), 16.
Bjornenak, T. (1997). Diffusion and accounting: the case of ABC in Norway.
Management Accounting Research, 8(3), 3 - 17 .
Cheah, C. Y. J , & Ting, S. K. (2005). Appraisal of Value Engineering in
Construction in Southeast Asia. International Journal of Project Management, 23,
151-158.
Chougule M.A, D. K. (2012). Use of Value Analysis Technique for Cost Reduction
in Production Industry - A Case Study. International Journal of Engineering Science
and Technology.
Cooper, R. B. (1990). Information Technology Implementation Research: A
Technological Diffusion Approach. Management Science, 36, 123-139.
Davies, K. E. (2004). Finding value in value engineering. Cost Engineering, 46(12),
24 – 27.
Emory, C.W. and D.R. Cooper. (1991). Business Research Methods (4 ed.). Boston:
Irwin.
Enkel, E., & O. Gassmann. (2010). Creative imitation: exploring the case of cross-
industry innovation. R&D Management, 40(3), 256-270.
74

Fallon C. (1971). Value Analysis to Improve Productivity. In F. C, Value Analysis to
Improve Productivity. John Wiley & Sons, Inc.
Fasal, J.H. (1972). Practical Value Analysis Methods. Hayden Book Company
Incorporation.
Fong, P. (1998). Value Engineering in Hong Kong - A Powerful Tool for Changing
Society.
Fong, P. S. (1998). Value Management applications in construction. AACE
international Transactions. Morgan, 6: 1 - 5.
Habibollah Najafi, A.A. (2010). Value Engineering and its Effect in Reduction of
Industrial Organization Energy Expenses. World of Academy of Science,
Engineering and Technology, 38.
Ignacio Cariaga, T. E.-D. (2007). Integrating Value Analysis and Quality Function
Deployment for Evaluating Design Alternatives. Journal of Construction Engineering
and Management.
Isola M.D. (2003). Value Analysis.
Jaapar, A., & Torrance, J. V. (2007). Prototype Value Management Guidelines for
the Malaysian Construction Industry. Paper presented at the QSIC 2007- Enhancing
& Empowering the Profession, Crown Plaza Mutiara Hotel, Kuala Lumpur,
Malaysia. Paper presented at the QSIC 2007- Enhancing & Empowering the
Profession. Crown Plaza Mutiara Hotel, Kuala Lumpur, Malaysia.
Kaufman, J. (1998). The Power of FAST in Value Management. CVSA International
Conference, 7, 1 - 8.
Kaufman, J. J. (2009). Value Management: Creating Competitive Advantage. Sakura
House Publishing .
Kotabe, M. R. (2007). Antecedents and outcomes of modular production in the
Brazilian automobile industry: a grounded theory approach. Journal of International
Business Studies, 84-106.
75

Kurtys, E. (1998). The Value Analysis as a Tool of Optimization of Costs in Own
Companies. Publication AE Poznan.
Lawrence D. Miles Value Foundation . (n.d.). Retrieved Jan 31, 2013, from
Lawrence D. Miles Value Foundation: http://www.valuefoundation.org
M. Roszak, D. Szewieczek. (2007). Application of value analysis in processes of
cog-wheels production. Journal of Achievements in Materials and Manufacturing
Engineering, 20 , 59-562.
M. Roszak, D.S. (2003). Manufacturing Technology and Value Added. 12th
International Scientific Conference, Achievements in Mechanical and Materials
Engineering, (pp. 759 - 762). Glikwice - Zakopane.
M.T. Roszak. (2008). Methodology of evaluation of value created in the productive
processes. Journal of Achievements in Materials and Manufacturing Engineering, 31
(2).
Male, J. K. (2013). Value Management in Design and Construction the Economic
Management of Projects. New York: Chapman & Hall.
Mazlan, C. M. (2002). Value Management Principles and Applications. Petaling
Jaya: Prentice Hall.
McDowell, T. (1996). Value Management: Surviving in the Millennium via diligence
rewarded. Management Accounting, 74(7), 48 – 50.
Miles, L. D. (1972). Techniques of Value Analysis Value Analysis and Engineering.
In L. D. Miles, Techniques of Value Analysis anTechniques of Value Analysis and
Engineering. McGraw-Hill, Inc.
Nick Rich, M.H. (2000). Value Analysis Value Engineering. Cardiff, United
Kingdom: Lean Enterprise Research Centre.
Nunamaker, J.F., Vogel, D.R., & Potter, R. (1997). Individual and team trends and
implication for business firms. Advances in the study of Enterpreneurship,
Innovation and Economic Growth. 9 JAI Press, Inc.
76

Roszak, M. (2004). Evaluation of Selected Productive Processes Based on the Value
Analysis.
SAVE International. (n.d.). Retrieved Jan 30, 2013, from SAVE International: SAVE
International website: http://www.value-eng.org
Sharma, U. (2001). Management accounting and control system changes in a public
sector context: a case study. Paper presented at the Asia Pacific Interdisciplinary
Research in Accounting (APIRA) Conference, Adelaide.
Tellis, W. (1997). Application of a case study methodology. The Qualitative Report
(Vol. 2).
Value Engineering. (n.d.). Retrieved March 2013, from Value Engineering:
www.valueeng.org
Value Management Academy. (n.d.). Retrieved 2013, from Value Management
Academy: http://www.vm-academy.com
W., F. P. (1999). Function oriented creative group problem solving. Creativity and
Innovation Management, 8(3), 210-222.
Wixson, J. R. (n.d.). Improving Product Development with Value Analysis: A Total
Management Tool.
Yahaya, S. (2008). New Product Development Decision Making Process at Selected
Technology Based Organizations in Malaysia," (PhD Thesis), Engineering Business
Management, Universiti Teknologi Malaysia.
Yin, R. K. (2003). Case Study Research: Design and Methods (3rd ed.). Sage
Publications.
Yoshikawa, T. I. (1995). A Japanese Case Study of Functional Cost Analysis.
Management Accounting Research, 6, 414 -432.
Younker, D.L. (2003). Value Engineering Analysis and Methodology. Marcel
Drekker Incorporation.

77

APPENDIX

INTERVIEW QUESTIONS
1. How many years of experience do you have in VA?
2. In your experience, how useful is VA as a tool/methodology
3. What influenced the initial adoption of VA in Proton?
4. What formal goals does Proton define for VA studies?
5. What outputs does Proton expect from VA studies?
6. Are risk issues considered when undertaking VA studies in Proton?
7. Are quality management issues considered when undertaking VA studies in
Proton?
8. What types of VA training provided by Proton?
9. Who is being trained in VA? How many of Proton‟s current technical and
management staff have received VA training?
10. How would you describe the level of top management support of VA within
your organization?
11. What level of cost savings Proton typically able to achieve from a Value
Analysis study?
12. What improvement in functionality or quality Proton typically able to achieve
from VA study?
13. What aspects of Proton‟s VA do you consider the strongest and weakest?
Why?
14. What opportunities and threats exist for your organization‟s VA program?
lxxviii