Value Analysis

valuate Analysis or cheer engine room 1. Explain, how does nourish mountain range betterment helps an organisation to assess its competitive emolument Answer Most of the firms define value chain as tutelage of creating harvest-tide or dish emerges. For these firms, the results or services generated are much important than any single step within their value chain. These firms use the value chain approach to better understand and identify which segment, distri scarceion channel, determine point, product differentiation, selling pro send and value chain configuration leave yield them the greatest competitive advantage.The way the value chain approach helps these firms to assess competitive advantage includes the use of following step of outline (i)Internal equal abridgment to determine the sources of profitability and the relative woo position if internal value creating processes. (ii)Internal differentiation analysis to understand the sources of differentiatio n (including the cost) within internal value creating processes, and iii)Vertical linkage analysis to understand the relationships and associated costs among external suppliers and customer in order to maximize the value delivered to customers and to minimise cost. These image of analysis are non mutually exclusive. In fact, firm contract by focussing on their internal operations and gradually outfit their focus to consider their competitive position within their industry. The value chain approach used for assessing competitive advantage is an integral part of the strategic planning process. 2. Write a short notes on value analysisAnswer Value analysis (also known as value engineer) is a systematic interdisciplinary examination of factors affecting the cost of a product or service in order to devise means of achieving the specified purpose at the required standard of quality and reliability at the target cost. The necessitate of value engineering is to achieve the assigned t arget cost by (i) identifying improved product designs that reduce the products cost without sacrificing functionality and/or (ii) eliminating unnecessary functions that increase the products costs and for which customers are not prepared to pay extra for.Value analysis or value engineering is champion of the to the highest degree widely used cost reduction techniques. It bath be defined as a technique that yields value improvement. It investigates into the economic attributes of value. It attempts to reduce cost through a. design assortment, b. modification of temporal specification, c. change in the source of supply and so on. It tensi whizzs on finding untried ways of getting cost or better performance from a product at a lesser cost without affecting its quality, function, emolument and reliability.For example, the function of a fastener is to join two or more than parts. Value analysis examines the value of this function in terms of selection methods such as welding , taping stapling, etc. in view of the extend and vibrations involved in a specific application. In value analysis severally and every product or fortune of a product is subjected to a critical examination so as to ascertain its public utility company in the product, its cost, cost benefit ratio, and better substitute etc. When the benefits are lower than the cost, advantage may be gained by giving up the activity concerned or replacing if for betterment.The best product is one that will perform satisfactorily at the lowest cost. The various steps involved in value analysis are 1. identification of the conundrum 2. collecting information about function, design, material, labour overhead costs, etc. , of the product and finding out the availability of the competitive products in the commercialise and 3. exploring and evaluating alternatives and exploitation them. In other words value analysis brings out all the way the areas where the cost of a product rear be reduced by poi nting out 1. Unnecessary items, components in a product to be removed. . possible action of substitution with reduced cost without affecting its quality. 3. Possibility of general step-down in design manufacture etc. of a product. 3Value Engineering is more effective than any other cost reduction technique analogous Work Study, Automation etc. Discuss this statement in the Indian context. Answer. Value engineering or value analysis is one of the most widely used cost reduction technique in the purchase and production areas. It aims at reducing cost through change, modification of material specification, change in the source of supply of material and so on.It emphasiss on finding new ways of getting equal or superior performance from a product at a minimum cost without affecting its quality, function and reliability. It is the process of subjecting each and every component of a product to a critical examination so as to ascertain (i) Its utility in the product (ii) Its cost ( iii) Whether is cost commensurate with its utility (iv) Whether it can be replaced by a cheaper components (v) Whether it can be does away with (vi) What the competitors are using in place of it and (vii) Whether anybody is buying it at cheaper price.Utility means usefulness this can be easily and emphatically measured when the concerned component or the service can be obtained form outside the price measures it usefulness. In roughly cases where an outside market does not exist, utility would be measured only subjectively. Still one would have a fair idea of whether the benefit obtained, say in terms of better appearance, is price the costs incurred. Usually it would be profitable tom tap outside sources if the price is lower than the cost.But this decision unavoidably to be made with great care as the question of resolute and sunk costs is very important. Value engineering bring understandably the areas where the cost of product can be decreased by pointing out (i) Unnece ssary items/components in a which might have had once some utility but now are redundant and, therefore, dispensable (ii) the possibilities of component substitution with reduced cost without affecting the quality of the product and (iii) the possibilities of overall simplification in design / manufacture etc. f a product. The relationship between value engineering and cost reduction a. Value engineering is done with a view to reduce the cost and cost reduction looks upon value engineering as one of its prime tools. b. Cost-reduction has ever so followed a critical examination of the benefit incurred. Value engineering is a careful and as far possible, quantities appraisal of the benefit derived at each stage of work.Where the benefits are lower than the cost, advantage may be gained by giving up the activity concerned or replacing it by something else. c. Work study automation etc, do reduce cost but in most cases, they save only labour cost by improving efficiency, etc. On the other hand, value engineering relates the worth of the product, its value to the function it is intended to perform and makes a sizeable in the cost of the materials by design changes, substitution etc.