The Significance Of Value Analysis And Value Engineering In United Foam Plc, Ilorin

CONCEPT OF PRODUCT DESIGN
Value Engineering has lead to extensive studies on product design adopted in the manufacturing industry (Sharma et al., 2006). The application of Value Engineering is best suitable at the beginning stage of a product development cycle because it gives the much needed direction on how improvement can be achieved. VE Study is applied during the design planning stage to define project functions, goals, objectives, requirements, design Criteria and Scope of Work (SOW). According to Chirag (2010) “A product design should incorporate characteristics such as its appearance, the material it is made of, its dimensions and tolerance and performance standard”.
2.1.4     CONCEPT OF FUNCTION ANALYSIS
The concept of function analyses is the procedure involves in ascertaining alternative methods for carrying out a given functions, this was later developed to as Value Engineering. Functional analysis has similarities to value engineering in that it is applied during the development stage of a new product, but it uses the functions of a product (or service) as the basis for cost management. According to CIMA as stated in Norwood (2013), “Functional analysis is an analysis of the relationship between product functions, their perceived value to the customer and their cost provision”. Norwood (2013) opined that “Functional analysis is concerned with improving profits by attempting to reduce costs and/or by improving products by adding new features in a cost effective way that are so attractive to customers that profits actually increase”.
2.1.5    CONCEPT AND MEASURES OF PROFITABILITY
Profitability is viewed by Husnan (2001) as the ability of the firm to raise profit from sales, asset, and certain capital stock.” Profitability is one of most frequently used financial performance indicator in organization. Profitability ratio in one form or another, are intended to measure how efficiently the firm manages its operations. Gross profit margin (GPM), Earnings per share (EPS) and Book value per share (BVPS) are the profitability measures used in this study.
2.1.6    THE FOCUS OF VALUE ANALYSIS
The key focus of the VA approach is therefore the management of ‘functionality’ to yield value for the customer. VA process is concerned with removing a specific type of cost. This cost is one that can be removed without negatively affecting the function, quality, reliability, maintainability or benefit required by the customer. As such, the target for all VA activities is to find these costs as opposed to simply re-engineering a product design with no real purpose to the re-engineering exercise. The VA approach is therefore formal and systematic because it is directed towards highlighting and dealing with these ‘recoverable costs’ of production. The objective is to create value for money as opposed to creating new products that do not provide customer satisfaction but are relatively inexpensive.
2.1.7    THE USE OF VALUE ANALYSIS
    The structure approach of value analysis are means of logical cost reduction. These can be divided into two key sources. Those that lie within the business and secondly those that are stimulated by the market for the product or services. The designer may not be aware of best practice with which to develop an option of design, the designer of VA may also be improper of the cost implications of one design over another due to insufficient information or a pour understanding of new materials and technologies that could be used to make the product. Therefore the review process allows the opportunity to incorporate these new sources of cost reduction. The process also offers vital information feedback to the designer regarding the performance of the design in production.
2.1.8    DIFFUSION OF INNOVATION
Innovation is perceived as an important research area because innovations are expected to aid organizations to successfully adapt to and continue to exist in volatile business environments (Emsley, 2005). Innovation is defined by Rogers (2003, p.12) as an idea, practiced or objects that is perceived as new by an individual or other unit of adoption.”