Value Analysis

Reference for Business

Lawrence D. Miles developed Value Analysis (VA) at General Electric in 1947. The technique simultaneously pursues two complimentary objectives: maximizing the utility provided by the product or service and minimizing or eliminating waste. Toward this end, the value content of the product or process realized by the consumer is defined. Using the user’s definition of value as a filter, the product’s components or the steps in the production or service-delivery process are classified as either value-added or non-value-added. The analyst’s goal is to eliminate as much of the non-value-added elements as possible by reengineering the design of the product or process. Equally important, the analyst also considers the possibility of substituting functionally equivalent elements for the value-added elements of the product or process design. In the latter case, a substitution is justified when the functionality of the element is maintained or enhanced at a reduced cost to the producer.

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