Value Analysis/Value Engineering (VA/VE) is a method with system management technique. The original purpose of this method is to do value analysis and to find out the better way to reduce cost in the process of producing and still keep product at the same function level. VA/VE was first used from Miles in company G.E in 1947 and was also used world widely and endorsed by many different areas. The most two important organizations of researching and publishing concerning this method are Save international and Value world. Some crucial research paper and conducting will be discussed here.
VA/VE splits in two different parts; VA (value analysis) which is a process that includes some techniques to achieve our main purpose which are improving the profitability of a certain existing product applications and reducing the product’s cost. The key to be successful in VA, the one who conducts VA must have enough knowledge of the cost of product, customer requirements and related manufacturing processes for production. Another part
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is VE, value engineering, which applies to a new product and it uses the same concepts and techniques that applied for VA to pre-manufacturing stages like prototype, concept development and design.VE could also include re-engineering an existing product that needed to be improved. In conclusion, VA/VE can be applied in four opportunities as Figure 2-2 (Opportunities where VA/VE can be applied)
Figure 2-2: Opportunities where VA/VE can be applied Source: summarized by author
In figure 2-2, there are four opportunities to utilize VA/VE. For this study, the author will try to use VA/VE to reduce the cost of branding strategy. In the case company, the managers conducted some different ways to build a strong brand but they do not really understand which method can bring up most of brand value. Thus, with the method, VA/VE, will be more obvious for the managers to construct the brand more effectively and also cost less.
Key successful factor of VA/VE
All companies should think how to upgrade competitiveness. Improving cost is one of the main methods to elevate competitiveness. There are six factors to popularize VA/VE in company.
Deployment opportunities of VA/VE
New product optimization
Tactical support need
Strategic cost
reduction Obsolescence
1. Support from the management class of an enterprise such as support from manager or CEO.
2. Authorized project manager from CEO.
3. Studying out process and method of VA/VE to reduce problems when conducting VA/VE.
4. Establishing a VA/VE team with representative from all departments.
5. Becoming a model team and becoming learning model in company.
6. Knowledge management to reduce time wasting and promote efficient in company.
2.4.1 Developing of VA/VE
VA/VE can be traced back from World War Two, at that time, there were extremely lack of resource and made most of firms must to find some alternative raw materials, alternative production process. After using new way to produce, most firms found that the alternative methods having higher performance and also lower cost. Thus, some people started to do some research on this kind of methods to maintain same product function level and cost less. Here are some important milestones of VA/VE developing:
Table 2-2: Developing of VA/VE Time Name / Organization Applied Area
1947 Mr. Miles /GE company Analyzing cost and function and developing method of cost down called Value analysis. Applied on the process on purchasing electronic materials.
1954 US Department of Defense
Ship design、Arms procurement
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1959 Society of American Value Engineers(SAVE)
Established
1963 US Navy The first government unit which added
provision of VA/VE in contracts.
1967 Senate Public Works Committee
Held Value engineering applied to government units of hearings
1970 Japan Established Society of Japan Value
Engineers(SJVE)
1974-1976 American Public Affairs Requests executive Value Engineering
1981 Council for Economic Planning And
Development in Taiwan
Published Value Engineering Method and Theory
1987 Department of rapid transit system of Taipei
VA/VE can make sure how many programs and expected implementation of the results. And then is the core process of VA/VE, Function analysis. In function analysis process, definition of function and evaluation are the most important part.
In Taiwan, VA/VE can be applied in three fields which are Construction industry, manufacturing and Services.
1. Construction industry
Started from Council for Economic Planning and Development in Taiwan and the department of rapid transit system of Taipei city government got the first financial aid on conducting VA/VE.
2. Manufacturing
Most of Private companies conducted VA/VE because of the requesting from foreign partners. For example, Huffy Bicycle Co. from the USA asked Taiwan suppliers to conduct VA/VE since 1993.
3. Services
Taiwan Post Office also conducted VA/VE plan since 2002.The main purpose was popularizing VA/VE and lower the cost of post.
Therefore, we can realize that VA/VE method has already spread for a while and used wildly in different industries. According to the wildly used, we can also conduct the survey on the brand valuation and also conduct VA/VE on the research case company.
2.4.2 Calculating of VA/VE
In this study, the mainly use of VA/VE is its formula and steps to apply management advice. The basic formula of VA/VE is
Value = Functional coefficient / Cost coefficient
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Functional coefficient will be calculated by customer questionnaire which means the marketing perspective and cost coefficient will be calculated from the real situation of a company which means financial perspective was also included.
From the result of calculating, the author can realize which construct of brand equity can obtain the best value (effect) to manage the brand.