Management

Value Management
by

Jerry J. Kaufman

Sakura House Publications

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Editor: D. Paul Scarbrough

Copyright © 2008 by Sakura House Publications.

All Rights Reserved. No part of this book may be reproduced or transmitted in any form or by any means now known or to be invented, electronic or mechanical, including photocopying, recording, or by any information storage or retrievalsystem without written permission from the author or publisher, except for brief inclusion of quotation in a review.

Published in Canada by Sakura House Publications 44 Victor Ave. Etobicoke Ontario, Canada M8V 2L9 ISBN: 978-0-9809228-1-3

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Value Management

CHAPTER 1

Value Management Overview 1
In the Beginning 2 4 7 10 10
12

Later Development Value Management A Changing WorldApplications 12

The Objective of Value Management

The Problem with Problem Solving Defining the Problem 13 Some Examples 14 CHAPTER 2

The Job Plan 17
Five Steps 17 19 The Pre-event Phase

Exploring Pre-event Techniques 21 Selecting Team Members 28

Widget Project Checklist 30
From Marketing and Sales 30 From Manufacturing 30 From Engineering 31 From Purchasing 31 From QualityAssurance/Field Support 31 From Finance/Cost Accounting 32 From General Management 32 CHAPTER 3

Function Analysis 33
Describing Functions Active Verbs 34 36 Measurable nouns 34

Using Two Words to Describe Functions 37 Defining and Classifying Functions 38

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Rules Governing Basic Functions 39 Rule 1: Once defined, a basic function cannot change. 40 Rule 2: The cost to satisfy a basicfunction is usually less than 5 percent of the total product cost. 41 Rule 3: You cannot sell basic functions alone, but the supporting (secondary) functions cannot be sold without first satisfying the basic function. 42 Rule 4: The loss of the basic function(s) causes the loss of the market value and worth of the product or service. 42 Function Examples 43

Random Function Determination
Levels ofAbstraction 44 Component-Function Selection 45

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Function Cost Matrix

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Levels of Abstraction 48 CHAPTER 4

The Power of FAST 51
How Does FAST Work? Intuitive Logic 53
Backward Thinking 56 The Language of FAST 57 Moving the Level of Abstraction 60 Logic Paths 61 Sensitivity Matrix 61

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A Case Study Using FAST

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Forming the Team 63 Collecting Random Functions 64Constructing the FAST Model 65 Reading and Analyzing the FAST Model 66

Business Systems Re-Engineering and FAST 69

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Value Management

Conclusions
CHAPTER 5

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Value Management and Marketing 73
Know Your Customer 74 75 76 Know Your Competition

Product Performance Profile

Defining Value Attributes 77 Scaling Attributes 78 Slicing the Attributes 78 Scaling the Attributes 80Graphically Displaying the Attributes 82 Evaluating Proposals 86

Setting Targets Conclusions
REFERENCES 93 FURTHER READING 94 ABOUT THE AUTHOR 95

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Trading Off Attributes 90

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Value Management

CHAPTER 1

VA L U E MANAGEMENT O V E RV I E W

Value Management (VM) is more than a tool or technique for reducing product cost. Over the last fifty-plus years of itsexistence, VM has matured into a method that employs a set of disciplines proven to solve a broad range of management issues successfully and dramatically to create competitive advantage for the company. To gain some appreciation for the scope and effectiveness of this method, this book explores some key elements that make VM work so well. English is the only Western language that uses the two words“value” and “worth” interchangeably. Webster's New Collegiate Dictionary defines “value” and “worth” as follows: Value—a fair return or equivalent in goods or services or money for something exchanged: the monetary worth of something. Worth—monetary value: the value of something measured by its qualities or by the esteem in which it is held.

Value Management

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VALUE MANAGEMENT OVERVIEW...