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Value Engineering Tools In The New Product Development Process Management Essay

1657 words (7 pages) Essay in Management

5/12/16 Management Reference this

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To survive in this world, the organization’s ability to continual develops high value products for the company consumer is important. Value Engineering tools is a good uses in the New Product Development (NDP) process which can insure the new products are developed according to customers need and have great return on investment. The term Value Analysis (VA) is used to the value process which applied to the existing products.

The term Value Engineering (VE) is used when the process is applied to new products. Many businesses in many countries have been successful applying VA to Gerhardt – Managing Value Engineering in New Product Development – 2 – existing products. The application of VE to new product development (NPD) has been more difficult. Japanese companies have been most successful in applying VE to NPD. A lot of Japanese companies began using VA in the 1960’s and turn to VE in NPD during the 1970’s. Japanese companies have continued to develop the process for VE in NPD. Isuzu as an example introduced VA in 1959 and VE in NPD in 1979. After Isuzu, Hitachi Construction Equipment introduced VA in 1960 and VE in NPD in the 1970’s. VA/VE appeared since it’s beginnings in the 1940’s as an good productivity tool. Lawrence Miles at the General Electric Co was originated the VA/VE. The main idea of VA/VE is to analyzing the function of a product, process or service. Value is maximized by the optimizing the equation which is

Value = Function/Cost

SAVE International, The Value Society, has published a Value Methodology Standard which describes the VA/VE process. This process known as the Value Methodology Job Plan is used for VA workshops. Post-study and Pre-study activity is some idea of the plan.

The Plan consists of six sequential process:

1. Information Phase

2. Function Analysis Phase

3. Creative Phase

4. Evaluation Phase

5. Development Phase

6. Presentation & Implementation Phase

Ingersoll Rand has based on best practices in the overall industry and internal best practices to develop a process for VE in NPD. A lot of the external best practices are come from Japan.


The probabilities of successful new products that meet customer desires and organization’s operating income requirements have overall been low. Robert Cooper in his 3-part series on “Benchmarking Best NPD Practices” show that approximately one in ten product concepts succeed commercially. The proper application of tools associated with VE can improve the success rate. The VE tools that are used in the VE process at

Ingersoll Rand includes the following:

1. Product-Technology Roadmap

2. QFD/VOC Quality Function Deployment/Voice of the Customer

3. Competitive Benchmarking & Tear-down Analysis

4. Target Costing

5. Part Cost Models

6. Value Engineering (Zero, First and Second Look)

7. DFMA Design for Manufacture and Assembly

8. DFMEA & PFMEA Design & Process Failure Mode and Effects Analysis


There is a good business planning tool that helps to developing the strategy to have high value products that meets customers need and can be used for target future costs in the product which is the Product-Technology Road Mapping. The roadmap process first is to identify customer drivers, define the market and develop a competitive strategy from the competitive landscape. Then this information is then used to map to the product drivers and a product roadmap is developed. With the forward cost model, the technology roadmap is developed. This technology roadmap is then mapped to the summary and action plan.


In order to provide value to the customer it is important to understand the qualitative and quantitative wants of the customer. There are a number of ways to obtain the VOC. These methods include:

1. Interviews (Face to face and phone)

Gerhardt – Managing Value Engineering in New Product Development – 5 –

2. Surveys (Mail, phone, internet)

3. Observations

4. Customer feedback

5. Focus groups

6. Trade shows

Typical market surveys do not have the necessary information on the value perceived by the customer for various functions. But the Conjoint analysis, alternative solutions matrices and value mapping are techniques used to help understand what customer’s needs and the value of vehicle options. The Benchmarking and the voice of the Customer and market input is one of the best discriminators to evaluate the best and worst performers. In order to provide high value products the company have to know what is of value to customers.


The Competitive benchmarking not only involves benchmarking products, but also materials and manufacturing processes. The NPD-VE team needs to have knowledge of the best worldwide technology, materials and processes in order to provide products with the highest value to the customer. The US auto industry was one of the first implementers of product tear-down in the 1960’s (21). Competitive vehicles, were reviewed for initial defects, tested and operated for thousands of miles over various roads. Failures that occurred during testing and operation were reviewed. The vehicles were then torn down and the parts were displayed on tables in a large building. Engineers, manufacturing experts and marketing personnel were invited to review and analyze the parts for ideas and best practice concepts. General Motors introduced the static tear-down method to Isuzu in the early 1970’s. Isuzu further refined the tear-down process and incorporated it into their VA/VE process. The process is documented in the book “Value Analysis Tear-Down” by Yoshihiko Sato and Jerry Kaufman (51). Sato and Kaufmann present the following data on the percentage of VA/VE ideas generated during their 5 steps:

Step Percent Contribution

1. Select competitor product 5%

2. Disassembly 30%

3. Analysis 40%

4. Display 10%

5. Examination 15%

In order to have good completion, the value engineering also present a seven-step process for product benchmarking.

1. Form a list of design issues

2. Form a list of competitive or related products

3. Conduct an information search

4. Tear down multiple products in class

5. Benchmark by function Gerhardt – Managing Value Engineering in New Product Development

6. Establish best-in-class competitors by function

7. Plot industry trends


Value Engineering is based on analyzing the functions, process or service of a product to maximizing value principle. Providing function and quality at the minimum cost will have the product value maximized. VA is the term used when applied to existing products and VE when applier to new products. VE in NPD has evolved into 3 phases. The 3 phases are sometimes referred to as Product development VE in Japan.

1. Zero Look VE

2. First Look VE

3. Second Look VE

Zero Look VE

The word “Zero-Look VE” appears as a consequence of the principles of VE being applied earlier in the NPD process. At one time First-look VE was the earliest that VE principles were applied in NPD. It became apparent that extra benefits could be obtained by moving VE further forward in the NPD process. Zero Look VE is the application of VE principles at the concept proposal stage. One of its objectives Gerhardt – Managing Value Engineering in New Product Development – 9 – is to introduce new forms of functionality that did not previously exist. Although there are times that this phase is referred to as Product Planning VE. Sawaguchi from the Japanese SANNO Institute describes the application of the “Combination of Patterns of Evolution of Technological Systems” from TRIZ with Zero Look VE and First Look VE. The Japanese refer to Zero Look VE and First Look VE as Product Development VE. During the Zero Look VE creativity techniques such as brainstorming and TRIZ (6,23,24) are used to establish possible solutions to meet the function and objectives to improve the quality of products.

First Look VE

The main focuses of First-look VE is on the elements of product design once the overall concept has been established during Zero-look VE. First-look VE is used to meet the target costs which were established during Stage 2 of the NPD stage process. Suppliers are asked to participate in first look VE to meet the target costs. But there got times that several cycles of First- Look VE is required to meet the target costs.

Second Look VE

To selected subsystems and parts where are not being met which is applied by Target Costs Second-look VE. It can be applied during the development stage or during the last half of the planning stage. The main point is to improve the product value, while increase the functionality and lower the cost of the proposed components in order to meet the Target Cost and functionality objectives. Besides that the Second-look VE activity in Japan closely resembles VA activity in the USA. Nakashima from Toshiba indicated that Second-look VE is not as profitable when compared to Zero-look and First-Look VE in the product planning and development stage.


There are principles are good to apply with VE in NPD which is the DFMA . Pioneering research in DFMA was done by Geoffrey Boothroyd, Peter Dewhurst and Winston Knight. Geoffrey Boothroyd received grants from the National Science Foundation, SME and industry for research on DFMA. Moreover, the DFMA helps to reduce assembly time and combine functions to create higher value products, which also can be use by looking up data in the charts with the manual technique. The DFMA data is can get from software which from the Boothroyd Dewhurst Inc. and Munro & Associates. To provide the highest value products to customers selecting the optimum manufacturing process is important.

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