PLM and Value Engineering

PLM and Value Engineering

This weekend I was thinking about Value Engineering and how it can be supported in Product Lifecycle Management. So, just to bring everybody on this same page – Value Engineering. Value Engineering is taking origins in General Electric in WWII and focus on systematic approach of product improvements. For me, Value Engineering is representing a very interesting problem.

The core problem of Value Engineering, as I can see it, is in the process of systematic information gathering related to product development. My short problem definition is how systematically connect product value (worth) and product costs. This is the time when I’m thinking PLM can focus on. Since PLM can connect these two in the very systematic way, it can connect “dots” of product functions in the very early design stages, manufacturing processes and consumers/end users.

So, how do you think Value Engineering is represented today in PLM. My first test is Google. Search for “Value Engineering” and PLM brings very little results. You can see them here. Your result, of course, will be local. From what I’ve seen, Aras was there in the end of the first page. However, in general, I can see, PLM is neglecting Value Engineering as a term. So, I decided to dig inside and see if does it make sense to support Value Engineering in PLM

Definition of Value Engineering
Wikipedia: Value engineering (VE) is a systematic method to improve the “value” of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore, be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.

Value Calculation
You can calculate the value as worth of a specific product feature divided by cost of this feature development total cost. So, assuming you have all information, you can calculate the value of product you are manufacturing for your users.

Functions and Features Definition
This is something that comes very early during a product design and planning process. As every product, before you start to design it, you are facing your future customers. Based on that you can define what functions you have to put in your product. In the end of this process, you can transform your product functions into product features.

Lifecycle Cost of the Feature
When we’ve done with the initial product features definitions, we need to calculate cost of each feature. However, we need to assume total lifecycle cost including design, manufacturing, support, disposal, etc. This is a place where PLM should effectively come to play since PLM should have all lifecycle information about a product.

Worth of the feature
The most important point. You need to estimate what is the worth of each feature for customer. However, it is not a simple task. You can use historical information, get an online survey, use any other information. I have to say, that when you live in Google-era, you may have lots of alternatives to get this information than when you had before. Of course, it depends on the type of products you manufacture. You may check QFD (Quality Function Development) methodologies. I found it very practical approach. As soon as you have done with worth of the features, just go and get a balanced view of your product value.

PLM Benefits
What I think, can be ultimate PLM benefits. If you have successfully deployed PLM system, you have a good chance to have lots of information you need already in your system. If your PLM covers requirements, you need to have a functional breakdown. If you PLM is linked to manufacturing, you have a good chance for costing information to be available.

PLM Challenges
The biggest challenge, is that PLM integration with the rest of the company is somewhat that not happening in all organizations. Most of PLM systems are still focused on engineering processes and connected well to customer’s, sales, marketing and, even, manufacturing functions. However, by focusing on value engineering, we can provide additional “values” to get things done in PLM way.

What is my conclusion today? Value Engineering has obvious values and benefits for the organization. However, ability of PLM systems to manage all information is critical. What is very important is to have cost information inside of PLM. Value Engineering approach can be, in my view, used as one of the PLM strategies in the organization to solve real problems.

Just my thoughts…
Best, Oleg

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  • Enabling value engineering within PLM might turn out to be a paradigm shift. I believe the same applies to your post on CAE. To the best of my understanding, PLM is more of an enabler for engineering and is still document centric. Can PLM actually do( or encompass) engineering remains to be seen?
    The first step would be to enable a good cost management functionality within PLM at various levels of program, project etc.

  • Shekhar B

    Value engineering in PLM would be a huge + for any organization however the practicality of it needs to be analyzed. Especially because this will encroach heavily on the ERP, MES side of functions.

    For instance … Most probably any organization has a single ERP system because the organization’s financial reports are derived out of it every quarter. A typical large organization may have multiple PLMs (Whatever reasons… M&A, Best for the purpose etc…) Integrated product cost normally is only visible in the ERPs and not PLMs. So unless all different aspects of costs cannot be attributed to a product/part in an integrated manner, we may not realize the value engineering in a single PLM. However since the definition of PLM is based on “process” and not “system” you probably can end up with a mash-up value engineering module…

  • Peter Stoffels

    I did expect a relation to ISO 10303.

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  • Lokendra, Thanks for the comment. I agree, Value Engineering in PLM can create a shift in the way people doing PLM business. However, if I think again, this is sort of vision PLM created before – to manage a product lifecycle. When you hold “lifecycle”, you actually can derive the rest of services. It is funny – you mentioned “cost” issues, and I just posted “cost topic” today without knowing you commenting…. Best, Oleg

  • Shekhar, Mashup value engineering. That’s interesting idea! I must say that I considered “mashups” as the only possible strategy to integrated systems for the coming 10 years. To old days of integration by hard-wiring systems are almost gone… Nobody wants to do so. Thanks for your comments! Best, Oleg

  • Peter, Thanks for your comment! What role do you see for ISO 10303? Do you think about data exchange/integration? Best, Oleg

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