CHAPTER TWO
LITERATURE REVIEW
Value Analysis is defined by George W Alfine (2000) as a prove technique for obtaining maximum value for every dollar spent. Better still, as the organized and systematic study of every element of cost in a part, materials, component, equipment, services or supplies to make certain part it fulfils it functions at the lowest possible cost, it employs techniques which identify the function the user wants from a product or services. It established by comparison the appropriate cost for each function, then causes required knowledge, creativity and initiative to be used to provide each function for that cost.
Value engineering:- The terms “value Analysis†and “Value Engineering†will be used sinuously although some authors prefer to define value engineering as the application of value analysis techniques in the engineering share of responsibility and value analysis is as the application of value analysis techniques in the materials procurement sphere value analysis/value engineering is strictly a team effort, freedom of suggestion of proposal in both spheres should be accorded with both functions. Purchasing must question purchasing practice, such as sourcing and award decisions based on price.
Generally speaking, most things posses two types of value esthetic and functional values. Hence, a buyer must first determine which value is more important in the item be is purchasing. In industry the vast majority of materials and components are purchased for their functional value. For instance a user had little concern for the esthetic value of internal machine parts that hidden from view.
Industrial value analysis therefore focuses on functions. The analyst attempts to determine how a specific and function can be performed effectively at the lowest total coast. Thus, L.D. Miles was assigned the task to developing a systematic approach to the investigation of function and cost aspect of existing materials specification during the 2nd world ward an he successfully met the challenge and subsequently pioneered the systematic procurement concept general electric called “Value Analysisâ€. And in 1954, the Navy Bureau of ships adopted a modified version of general electrics value analysis concept in attempt to reduce cost of ships and related equipment. In its application the navy directed its effort primarily at cost avoidance during the initial engineering design stage and called the program.
Value Engineering: even though it embodied the same concepts and techniques and Geberk Electrics value analysis program. In operational sense however, the two terms typically are used synonymously in industry today-only the timing differs, hence, throughout this project work, the term value analysis is used for the term value engineering. The techniques of value analysis represent a potentially powerful set of tool which can be used management in controlling materials cost the fundamental objective of all value analysis activities is the procurement and manufacturing of materials representing the “best buy†in terms of functions to be performed. In this sense, the ideal is not new, it is synonymous with long standing objective of goods purchasing the unique features of current value analysis program however, i.e in the systematic and thorough approach used in attaining this objective suffices to say that only after this widespread publicity of miles original work and a significant number of manufacturing organization make a converted and methodical effort to engineer unnecessary cost out of the parts used in their productions. And in value analysis programmes, management attempt to co-ordinate the talents of personnel in engineering, production and purchasing leading to improvement in the existing rather than new specifications. Lee and Dobler (2002) in an attempt to defined value analysis and explain all that the program entail C.K. Lyson in his book also endeavours to go into the backgrounds of the exercise by saying that “value analysis was developed by the General Electric company (U.S.A) at the end of the world war II and that one of pioneer in this approach to cost-reduction was Lawrence D. Mile whose book techniques of value analysis and engineering (McGraw Hill, 1972) is still the classic on the subject.
