What is value analysis? How can the concept be expanded?

Answer 1

The simple technique of value analysis can also be used to generate process-improvement ideas. In value analysis, each activity in the process is analyzed for the value it adds to the product or service. The value added is determined from the perspective of the customer. Activities can add:
Real value:Value for which customer is willing to pay.
Business value:Value that helps the company run its business.
No value:An activity that should be eliminated.
Activities that cost more than their value added should be improved. The Fitter Snacker expense report process does not provide real value, because Fitter Snackers customers do not care whether sales employees receive prompt and accurate reimbursement of their business expenses. However, the expense report process does provide business value, and it should provide this value at a minimum cost. Evaluating the value of a business activity is not a hard science. Determining the value of a good or service is easy - it's what someone is willing to pay for it. Applying this idea to a part of a business process is more challenging, because parts of a process can't be sold on the open market. While a challenging task, evaluating each activity on the basis of value provided can highlight opportunities for improvement.
The value analysis concept can be expanded to look at both the time and cost of each process step. For each step in the current process, you would estimate the actual time and cost. Then you would estimate the value-added time and cost determining how much of the actual time is adding value and how much of the cost is worth paying for.
We will use a Fitter Snacker process to illustrate value analysis. The company's mail expense report function could cost upwards of $50, including not just the cost of the envelope and postage, but also the time spent by the salesperson to mail the expense report. The value analysis includes elapsed time for mailing the expense report the length of time from when the salesperson mails the report until the sales manager receives it. This elapsed time should include the time it takes for the salesperson to find a mailbox, the time for the postal service to deliver the expense report to the company headquarters, plus the time it takes the company's internal mail system to deliver the expense report to the sales manager.