Value engineering is a structured process for reducing the cost of products by using less-expensive components and minimizing costs in the production process. This can include alterations to the product design, adding efficiencies to the production process, sourcing from lower-cost suppliers, and so forth. A variation on the concept is to improve the functionality of a product without increasing its cost. Ideally, costs are reduced without negatively impacting customer perceptions of the product. The best point at which to engage in value engineering is the design phase of a product, since this is the point at which costs are locked in for the life of the product.
Value engineering can be a valuable tool for continually reducing the cost of a product throughout its product life cycle, which makes it more competitive.