Value analysis

Value analysis is a systematic review of the production, purchasing and product design processes to reduce overall product costs. This can be accomplished through a variety of activities, including the following:

  • Designing products to use lower-tolerance parts that are less expensive

  • Switching to lower-cost components

  • Standardizing parts across product platforms in order to achieve volume discounts

  • Altering production processes to minimize the amount of production cycle time, thereby reducing labor costs

  • Introducing automation to strip labor costs out of the production process

  • Altering product packaging to lower its cost while still protecting the product

The process is not a wholesale attack on costs. Costs are only reduced when the result will not impact the perceived level of quality experienced by customers, or the level of customer satisfaction.

Related Courses

Activity-Based Management
Constraint Management 
Lean Accounting Guidebook