As obvious as it might seem, at the beginning of a VE project it is very important to clearly define why you've started in the first place. To improve performance of your product & company of course, but what's it you are aiming for exactly? Is it reducing costs? Increasing Value? Or both: increasing your margins either way? Is it your current product you'd want to improve, or does a innovative next-generation product have your preference? These are all very important questions that need to be answered in the first stage of a Value Engineering Project.
Value Engineering
A value engineering project roughly takes the following five stages from kick-off to results.
- Define your Needs, Goals & Targets
- Ideate, Explore & Brainstorm
- Analyze, Evaluate & Decide
- Execute & Implement
- Track & Achieve results
This blog will look deeper into each of these stages, so you'll know what to expect and what to look out for.
Todays topic: Stage 1 - Define your Needs, Goals and Targets.
Stage 1: Define your needs, goals and targets
This first stage of the project, the main focus is to determine the way of working from start to end. First, the reason behind the project needs to be clearly defined. Why organize this project now, for this particular product? Based on this cause, the 'objective and targets of the project have to be stated. Defining the results aimed for provides direction throughout the project, and helps evaluation afterwards. Lastly, also the scope and boundaries of the project & its solutions need to be properly defined. Let's look to each of these aspects in some more detail:
Cause
Although value engineering can be valuable at any stage of the product lifecycle, often there is a clear problem or need creating the urgency for an optimization project. Common causes many of our clients often recognize are:
- Decreasing sales
- Significantly lower-priced Competitors
- Small Product Margins
- High Production / Procurement Costs
- Poor Customer Satisfaction
- Expected End of Product Life
Understanding your current needs can help you narrow the objective of the upcoming project,
increase your chances of success and provide guidance along the way.
Objective
The definition of your company's needs and the project goals and targets resulting from it largely affect the project trajectory that follows. Ideas for Cost Down are often found within your organization internally. Determining which materials and processes could be optimized, & which parts could be integrated or even left out completely often is a good starting point. Also supplier selection and negotiation can play a big role here.
Targeting Value Up often shifts focus to a more customer & market based approach. What other pains could your product solve for your customers? Which parts of your product's service and maintenance could be further improved? Which other markets could be entered with your product?
Combining the two objectives above is where the magic happens. Increasing margins can be achieved by both cost cutting and value adding, and thus focusses on increasing performance in both your market & internal processes.
Sometimes it helps to define a clear, quantitative target on your objective. Depending on your organization, a clear target (e.g. identification of 20% cost down potential) can help motivate your people and creates an urgency for your project. Whereas others can find such a target limiting, scary or refraining. Knowing your people and culture is key!
Scope and Requirements
After stating your goals, it's very important to define the boundaries in which these goals should be reached. Bad ideas don't exist while brainstorming, and sessions should be free of boundaries, open and tolerant. However, pre-defined scope and requirements are very helpful in phase 3. Analyze, Evaluate & Decide.
How much change is allowed? is there only room for some small tweaking, or is complete redesign an option? Should some integrations or compatibilities remain untouched? Is it desirable to maintain a certain level of similarity to the current product? Are all questions to keep in mind. Regardless of the answers, it all comes down to stating the starting point of analysis: is it improvement of your current solution, or a better solution to your customer's problem you are looking for?
So, what's next?
Before continuing to stage 2, it is very important to have answered all questions raised above, as the goals and objective largely affect the way of working in the next stages. However, answering all questions above can be a challenge on its own.
Our experts can help you scope, manage, & facilitate your project and assist in all required Cost & Value Engineering.
Please Contact us for more information or personalized advice.
Stage 2: Ideate, Explore and Brainstorm
After a clear definition, it's time for action. Depending on the project objective, the second phase is often based around a Teardown Workshop: a hands-on brainstorm session executed in a team representing all departments of your organization. However, prior to those sessions, some homework needs to be done... Read all about it in our next blog!
