Value Analysis
A systematic method for improving the value of goods or services by examining their function and identifying ways to achieve the same function at lower cost without sacrificing quality.
Value analysis (also called value engineering in design contexts) is a structured problem-solving methodology that focuses on function rather than form. It asks: "What does this product or service do, and can we achieve that function more efficiently?" The approach was developed by Lawrence Miles at General Electric in the 1940s and remains a core procurement technique.
The value analysis process typically involves a cross-functional team (procurement, engineering, operations, finance) that systematically evaluates each component or feature of a product against its cost contribution. Components that add cost without adding proportional value are targeted for redesign, substitution, or elimination.
Example: A value analysis of a custom metal bracket reveals that switching from machined stainless steel (€12/unit) to stamped galvanized steel (€3.50/unit) achieves identical structural performance for the application, saving €850K annually on a volume of 100K units.