Question. 3)What is value Engineering
and Analysis. Explain how to organize
value engineering function in shoe manufacturing organization
Ans :
The concept of value engineering originated during the
Second World War. It was
developed by the General Electric Corporations (GEC). Value
Engineering has gained
popularity due to its potential for gaining high Returns on
Investment (ROI). This
methodology is widely used in business re-engineering,
government projects, automakers,
transportation and distribution, industrial equipment,
construction, assembling and
machining processes, health care and environmental
engineering, and many others. Value
engineering process calls for a deep study of a product and
the purpose for which it is
used, such as, the raw materials used; the processes of
transformation; the equipment
needed, and many others. It also questions whether what is
being used is the most
appropriate and economical. This applies to all aspects of
the product.
Simplification of processes reduces the cost of
manufacturing. Every piece of material and
the process should add value to the product so as to render
the best performance. Thus,
there is an opportunity at every stage of the manufacturing
and delivery process to find
alternatives which will increase the functionality or
reduce cost in terms of material,
process, and time.
The different aspects of value engineering can be
encapsulated into a sequence of steps
known as a ‘Job Plan’. Value Engineering in organisations
helps to identify:
·
The problem or situation that needs to be
changed/improved
·
All that is good about the existing situation
·
The improvements required in the situation
·
The functions to be performed
·
The ways of performing each function
·
The best ways among the selected functions
·
The steps to be followed to implement the
function
·
The person who executes the function
It should be remembered that we are not seeking a cost
reduction sacrificing quality. It has
been found that there will be an improvement in quality
when systematic value analysis
principles are employed
Value analysis
in Value engineering (VE) is an efficient method to develop the value
of goods or products and services by using an assessment of
function. Value, as defined is
the relation of function to cost. Value can consequently be
increased by either improving
the function or reducing the cost. It is a primary
principle of value engineering that basic
functions be preserved and not be reduced as a result of
pursuing value improvements.
1.
Manufacturing: Systematic analysis that
identifies and selects the best value alternatives
for designs, materials, processes, and systems.
It proceeds by repeatedly asking "can the cost of this
item or step be reduced or eliminated, without diminishing
the effectiveness, requiredquality,
or customer satisfaction?" Also called value
engineering, its objectives are (1) to
distinguish between the incurred costs (actual use
of resources) and the costs inherent (locked
in) in a particular design (and which
determine the incurring costs), and (2) to minimize the
locked-in costs.
2.
Purchasing: Examination of
each procurement item to ascertain its total cost of acquisition, maintenance,
and usage over its useful life and, wherever feasible, to
replace it with a more cost effective substitute. Also called value-in-use analysis.
VALUE
ENGINEERING CAN BE APPLIED TO A SHOE MANUFACTURING
FIRM IN THE FOLLOWING AREAS
1.SHOES DESIGN
-make the design simple
- long lastinge
-
---------------------------------------------------------
2.SHOES RAW MATERIAL / PARTS PROCUREMENT
-establish the demand planning system [ reduce the fluctuations in production]
-establish the inventories of raw materials [ reduce the cost of stock holding]
-establish the economic order quantity [ """"""""""""""""""""""""""""""]
------------------------------------------------------------------------------
3. SHOE PRODUCTION PLANNING
-establish an effective / efficient production planning system [ cost savings]
------------------------------------------------------------------------------
4.SHOE PRODUCTION
-establish a lean production [ cost effective]
----------------------------------------------------------------------
5. SHOES TOTAL QUALITY ASSURANCE.
-set up quality assurance system to reduce quality problems/ rejections]
[ cost savings ]
-------------------------------------------------------------
6.SHOES FINISHED GOOD INVENTORY
-match the finished stock inventory to market demand / sales requirements]
[ cost saving in stock holding ]
--------------------------------------------------------------------
7.SHOES CUSTOMER SERVICE
-provide effective customer order processing/order service/
timely despatch to customers.
[ adds value to customers / reduces distribution cost]
----------------------------------------------------------------------------
8.SHOES AFTER SALES SERVICE
-offer warranty/ after sales service to customers
[ adds value to the product and increases sales ]
============================================
SHOES MANUFACTURER CAN ADD VALUE/ REDUCE COST
BY APPLYING THE VALUE ANALYSIS -JOB PLAN TO EACH
OF THE ABOVE LISTED 8 STAGES OF SHOES MANUFACTURING.
VALUE ANALYSIS -- The Job Plan
Value Engineering is often done by systematically following a multi-stage Job Plan. IT IS a 8-step procedure , called the Value Analysis Job Plan. Others have varied the Job Plan to fit their constraints. One modern version has the following eight steps:
PREPARATION
INFORMATION
ANALYSIS
CREATION
EVALUATION
DEVELOPMENT
PRESENTATION
FOLLOW-UP
FIRM IN THE FOLLOWING AREAS
1.SHOES DESIGN
-make the design simple
- long lastinge
-
---------------------------------------------------------
2.SHOES RAW MATERIAL / PARTS PROCUREMENT
-establish the demand planning system [ reduce the fluctuations in production]
-establish the inventories of raw materials [ reduce the cost of stock holding]
-establish the economic order quantity [ """"""""""""""""""""""""""""""]
------------------------------------------------------------------------------
3. SHOE PRODUCTION PLANNING
-establish an effective / efficient production planning system [ cost savings]
------------------------------------------------------------------------------
4.SHOE PRODUCTION
-establish a lean production [ cost effective]
----------------------------------------------------------------------
5. SHOES TOTAL QUALITY ASSURANCE.
-set up quality assurance system to reduce quality problems/ rejections]
[ cost savings ]
-------------------------------------------------------------
6.SHOES FINISHED GOOD INVENTORY
-match the finished stock inventory to market demand / sales requirements]
[ cost saving in stock holding ]
--------------------------------------------------------------------
7.SHOES CUSTOMER SERVICE
-provide effective customer order processing/order service/
timely despatch to customers.
[ adds value to customers / reduces distribution cost]
----------------------------------------------------------------------------
8.SHOES AFTER SALES SERVICE
-offer warranty/ after sales service to customers
[ adds value to the product and increases sales ]
============================================
SHOES MANUFACTURER CAN ADD VALUE/ REDUCE COST
BY APPLYING THE VALUE ANALYSIS -JOB PLAN TO EACH
OF THE ABOVE LISTED 8 STAGES OF SHOES MANUFACTURING.
VALUE ANALYSIS -- The Job Plan
Value Engineering is often done by systematically following a multi-stage Job Plan. IT IS a 8-step procedure , called the Value Analysis Job Plan. Others have varied the Job Plan to fit their constraints. One modern version has the following eight steps:
PREPARATION
INFORMATION
ANALYSIS
CREATION
EVALUATION
DEVELOPMENT
PRESENTATION
FOLLOW-UP
Question. 5)Explain with the help of block diagram the
purchasing decision making process
in an engineering organization. Briefly discuss the
process of vendor rating.
Ans :
Buyers who face a new-task buying
situation are likely to adopt a formal decision-making process (DMP), which may
involve up to eight separate stages. Purchases that are modified or straight
re-buys may skip some of these stages.
Following is the DMP for the typical new-task purchase. Although the DMP is shown to be a linear sequence of progressive stages, in practice the stages are rarely neatly sequential or discrete. Sometimes the stages may occur out of sequence or simultaneously, or not at all if it is a fairly straightforward re-buy. None the less, the DMP does provide a helpful guide to the distinguishing features of each of the typical buying stages.
Following is the DMP for the typical new-task purchase. Although the DMP is shown to be a linear sequence of progressive stages, in practice the stages are rarely neatly sequential or discrete. Sometimes the stages may occur out of sequence or simultaneously, or not at all if it is a fairly straightforward re-buy. None the less, the DMP does provide a helpful guide to the distinguishing features of each of the typical buying stages.
Vendor
rating
A vendor rating,
also known as a supplier rating, is based on a formal system of evaluating
the
companies that supply materials or services to an organization.
The process is meant to
encourage
a high-quality, efficient vendor-to-customer relationship. Overall,
vendors are
typically
judged by both the services they offer and what capabilities they possess. A
variety
of factors, which depend on the particular vendor, are reviewed and the
results are
usually
quantified with either a numerical score — possibly expressed as a percentage —
or
a rating from
poor to excellent.
There are
several common elements that are factored into a
typical vendor rating. An
organization will usually evaluate the
overall vendor experience, including the quality of
service, the timeliness of delivery, the quality of
the product type, and the accuracy of the
amount delivered. Evaluations will also often
consider what the vendor has to offer as far as
the ability to provide certain materials and
services and at what cost. Issues such as billing
accuracy and timeliness, warranty, and whether or
not services and products conform to the
market average are also often considered.
The
complexity of a vendor rating program depends upon the size of
the organization.
Many companies have a supplier relationship
management program which handles
the rating process on an ongoing
basis. Smaller companies may not conduct as frequent or
as thorough evaluations, though they will often use
several of the same criteria. Whatever
the size of the organization, one of the key factors
of developing an
effective vendor rating system is to
determine which elements are critical to the success of
the organization being served before starting an
evaluation.
A vendor rating system
can be used to determine whether or not a supplier relationship
is worth pursuing. If a vendor falls below
a certain level of quality, an organization may
issue a warning that certain aspects of service must
be improved in order to sustain the
relationship. An organization may also use a
particularly low score or rating as the grounds
for terminating a vendor relationship.
In
order for a vendor rating program to be effective, the details
of the evaluation and
the expectations of the organization must be made
clear to the supplier. Many companies
accomplish this with a formalvendor education
program. After initial communication about
the parameters of the vendor reviewprocess,
the organization will typically establish some
sort of regular system of communication in which
the vendor is informed of any issues that
may have changed the rating, whether in a
positive or negative direction.
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