1. business and industrial
2. manufacturing

How to Establish an Internal VM Process in a Manufacturing
Organization
by James D. Bolton, PE, CVS, PVM
Jim Bolton is a Certified Value Specialist (CVS) and a
Professional in Value Management (PVM) conducting numerous
Module I Workshops globally where he has been the advisor and
mentor for over 170 certified AVS practitioners. He is currently
the Design for Value Global Lead for Whirlpool Corporation
where he has responsibility for developing a global Value
Engineering and Design for Manufacturing and Assembly process
within the corporation. Jim was appointed Vice President of
Global Affairs for SAVE International in June 2009 after just
completing serving six years on the SAVE International
Certification Board. He is the current Administrative Director for the Greater Michigan
Chapter of SAVE International and is a past Director on the Miles Value Foundation.
Besides presenting VE technical papers at the last nine SAVE International Annual
Conferences, Jim has also presented VE papers at the Canadian Society of Value Analysis
(CSVA) in October of 2001 (Toronto), at the 36th and 38th SJVE Conferences (Tokyo,
Japan in November 2003 and Nagoya, Japan in September 2005), at the 2nd International
Conference of Value Engineering and Enterprise Technology Innovation in 2004
(Hangzhou, China), at the Inaugural Asia Pacific Convention in Hong Kong in November
2006 and was a keynote and technical speaker at the CSVA Annual Conference in
October 2008 and at the 25th National INVEST Conference held in Kolkata on December
18-19, 2009. Jim holds a BSME and MSME from Purdue University, has lectured at
various universities in the area of VE and was presented with SAVE International’s Rising
Star Award and a Presidential Citation at the 44th and 46th Annual SAVE International
Conferences respectively. Previously, Jim spent 23 years at Harrison Division of General
Motors (now Delphi Thermal Systems), in a variety of assignments from product design,
to purchasing, to manufacturing engineering. During his stay at GM, he earned three U.S.
patents on various engine cooling and climate control products while using DFMA and
helped build a manufacturing facility with a General Motors/Daewoo joint venture
company, DHMS, in Korea from 1986-7. Jim received the DFMA Supporter of the Year
Award at the 2007 International Forum on DFMA held in Warwick, RI and is a registered
Professional Engineer in both the states of New York and Michigan.
Abstract
The ability of manufacturing organizations to develop or expand an internal Value
Methodology (VM) process today is critical to the long-term success of that organization,
especially in the recent difficult economic situation which is taking place globally. As
manufacturing organizations are trying to stretch all the money they earn, it is more
important now than ever for them to initiate or expand a VM process as it will bring the
biggest return on investment than any other cost improvement process available today.
This has been the experience at Whirlpool globally over the last two years. This paper
will give some incites on how and why this VM process is so important and a method
which can be used to obtain internal management’s commitment to initiate or expand an
internal VM process such that it remains a part of the company culture. Success breeds
success and the VM process will sell itself when properly applied. If you are interested in
obtaining success in your manufacturing organization or business, than this technical
paper is a ‘must not to miss’ at the 2010 SAVE International Annual Conference in June.
Background
How does one develop or expand an internal Value Methodology process in a
manufacturing organization? Many manufacturing organizations that have tried to do this
have failed, or, may get one going temporarily, but soon after, it loses momentum and dies
a slow and torturous dead in favor of the next newer process which promises to drive
value for that organization. The key to the development of an internal manufacturing VM
process is top management commitment. Without dedicated upper management
commitment and an understanding of the principles of the Value Methodology, a
successful long-term internal VM process can’t be maintained in the manufacturing sector.
Many manufacturing executives associate VM with cost reduction, and although cost
reduction is many times the result, it is by no means equivalent to the VM. In the author’s
opinion, an internal VM process for a manufacturing organization must be driven from the
top down such that it is integrated within the total corporate strategy of that company. The
manufacturing organizations which have integrated the VM process into their corporate
strategy and product development process are the ones which will be able to not only
initiate, but also sustain that process over the long haul. An internal VM process will
drive total product cost leadership and deliver the ultimate value to that manufacturing
organization’s shareholders, trade partners, and final end users. Besides increasing market
share globally, an internal VM process in a manufacturing organization will train others
how to think about value which enhances the number of loyal customers whom will drive
further growth, because, it’s not just about cost. Not let us explore how to get started.
Getting started
One of the keys to obtaining true management commitment and support for the VM
process is to have the top executives in a manufacturing organization participate in a 40hour SAVE International Module I workshop where a well balanced cross-functional team
is secured. During this training, the VM process will not only be explained in detail along
with the benefits of utilizing this approach, but the team members will have a chance to
obtain hands-on experience utilizing function analysis tools which are the heart and soul
of this methodology. This initial VM Workshop needs to be led by a certified VM
professional whom has demonstrated successful results from previous studies such that the
results of the in-house Module I Workshop yields tremendous success to deliver value to
the manufacturing organization and its customers. It will also demonstrate the advantages
of the VM process over other cost reduction, Six Sigma, and lean processes.
Once the top management of a manufacturing organization understands VM and its
powerful function analysis approach utilizing a cross-functional team, they will be able to
appreciate that if their products and processes are subjected to this methodology, major
long-term benefits will be generated to enhance value to their manufacturing organization.
Value is not measured at the time of the initial sale, but as the formula below explains:
Value = Performance of Required Funtion
Cost to Acquire Function
Value is the performance of the required function divided by the cost to acquire that
functions and must be measured over the intended lifespan of the product. If a
manufacturer has the lowest initial price in the market for any given product but the
highest warranty and repair cost over the intended life of the product, than the customer
doesn’t receive the best value. In addition to adding value for their customers, many
patented products and processes are unveiled as a result of correctly applying the function
analysis approach. Once these principles are understood by the top executives of a
manufacturing organization, it is much easier to achieve the necessary commitment to
utilize this technique for all of its products and processes globally and to establish an
internal manufacturing VM process dedicated to improving the company’s product cost
leadership effort. This sounds simple, but this will be the most difficult task in this
process of establishing and developing a successful internal Value Management process
for a manufacturing organization. Without this fundamental knowledge of the total
benefits that VM offers to a company, a long-term internal VM process will surely be
difficult to establish or will eventually fail as that organization undergoes downsizing,
which has happened in recent years with the current economic challenges.
Selecting a VM Professional
Now that the top management of a manufacturing organization understands the total
benefits of the VM process, they need to either hire a certified VM professional or develop
an internal manager to head up the internal VM process. In selecting this manager, the
manufacturing organization should seek to locate a VM professional whom holds a CVS
certification and a Module I certification such that they may not only be capable of leading
internal VM studies, but will also have the ability to certify those that participate in these
studies in the use and application of the various VM tools. If the manufacturing
organization either can’t find such an individual or decides to look internally for a
candidate to lead its internal VM process, there are certain qualifications which would be
desirable for this individual. Someone with a good product and process background is
highly desirable, and someone with an appreciation for industrial engineering or the
costing of products and processes is also desirable. This manager’s first step, if he has not
been trained with this 40-hour SAVE International Module I workshop, is to participate in
such a workshop at a remote site, or to hire a VM professional to facilitate this workshop
on-site with products and or processes that are manufactured by his own company. The
on-site training is superior to the off-site training, since the VM workshop will focuses on
a specific product or process and it might as well be a product or process that the manager
is familiar with rather than one for which he has little interest. SAVE International’s web
site at www.value-eng.org has a list of consultants that are authorized to facilitate these
Module I Workshops and more details about this course are available from this site.
Selecting a Project
If an on-site Module I training workshop is selected, the manufacturing organization needs
to determine what product or process needs to be studied for this workshop. This may be
a difficult decision, but the selection should be based on a variety of criteria. Some of
those criteria include the profitability of the product or process in question, the complexity
of the product or process, the importance of the product or process to the overall long-term
growth of the company, and how much longer this particular product or process will be
utilized before it is either replaced or cancelled. First, it is important to select a product
where the manufacturing organization needs to improve its profitability, where the product
is strategic to the long-term success of the company, and where the product is expected to
be in production for at least two years or more. It would also be beneficial to study a
product which is in the early concept phase, also known as a Value Engineering study, as
illustrated by Figure 1 below:
Figure 1
since the opportunity for improvement potential is the greatest. This is because the further
down the development path for any given product or process, the more money is spent for
concept drawings, prototypes, supplier or in-house tooling, engineering and development
costs including validation testing, etc. and thus any savings that is identified must now be
offset with the additional cost to perform these functions again.
Selecting the Study Team
The next step in developing an in-house VM process is to select a project study team.
This will be somewhat determined by the product or process selected, but no matter what
product or process is selected, a cross-functional, multi-disciplined team is imperative.
This means, that the study team should have ideally 6-8 team members from such areas as
product (or process) design, manufacturing, manufacturing (or production) engineering,
purchasing, sales (or marketing), program management (product or process team leader),
and finance (or cost estimating). This cross-functional team should all have a vested
interest in the project being studied, where their input will have an impact on the outcome
of the workshop. In addition, all participants must be ‘team players’, whereby they
respect the views of other team members even if their views may strongly disagree. This
is an important and possibly difficult task to accomplish, especially if you don’t have any
knowledge on how the potential participants may react with others chosen for the team.
Nevertheless, this blending of personalities is of up-most importance for a truly successful
VM workshop.
One key will be to invite people at the same level within the organization rather than
members from different levels, where a senior level manager might intimidate a lower
level member of team. This is especially important during the creativity phase of the
workshop and could really limit the team’s success during this activity. In addition, it is
often a good idea to invite someone from a totally different product or process area or has
a completely different type of experience as this will also help the team to potentially
generate some fresh ideas due to the fact that the experts on the team may not be able to
‘see the forest from the trees’ as they are too close to the project being studied. As you
develop the manufacturing workshop study team, if you seek to utilize these guidelines,
your chances of a really successful event that will drive real value to your customers will
be enhanced.
Developing the VM Job Plan for a Manufacturing Organization
After identification of the project and the cross-function workshop study team is selected,
the manufacturing organization must adhere to the VM job plan or process as illustrated in
Figure 2 below if they are going to be successful in achieving the best project value.
Generic VM Job Plan for a Manufacturing Organization
Pre-Workshop Activities
Information Phase
Function Phase
Creativity Phase
Evaluation Phase
Development Phase
Implementation Phase
Follow-up Phase
Figure 2
Although this job plan may vary somewhat from company to company and project to
project, all VM job plans must have the minimum of five different and distinct phases as
follows: 1) Pre-Workshop, 2) Function Phase, 3) Creativity Phase, 4) Evaluation Phase,
and 5) Development Phase. Some VM professional will combine the Information Phase
with the Function Phase and other VM professionals will combine the Development (or
Recommendation Phase as is often used) and the Implementation and Follow-up Phases,
however, I like to keep them separate as I believe they have important differences. When
establishing an internal VM process for a manufacturing organization, I always like to
keep the Implementation Phase and the Follow-Up Phase as separate phases since no real
value is accomplished until the ideas from a VM workshop are put onto production and
monitored for a certain length of time to ensure success. I will take a little time to explain
each of these mandatory phases of the VM job plan in the next few paragraphs.
Pre-Workshop Activities
Although some VM professionals may not refer to pre-workshop activities as a separate
phase in the VM job plan, I personally feel it is the most important phase to guarantee
success when utilizing the VM process. There are a variety of important pre-workshop
activities, some of which have already been described, which are absolutely critical to the
success for any VM study. These include such things as:
Pre-Workshop Activities for a Manufacturing VM Study
Selection of Project to be studied
Selection of Project Team, Workshop Location, Date, and Time
Gathering of Data in Workbook Format Required for the Information Phase
Since we have already discuss the importance of selecting the right project to be studied
and the right team to study the selected project, I will not spend any more time on them
here except to say that they are both critical decisions which must be made carefully in
order to ensure the chance of success for the VM study and both are part of what I refer to
as pre-workshop activities. If these activities are not well executed, the VM study will not
yield as effective results as could have been achieved if better selections were made. The
final, and equally as important part of the pre-workshop activities, is selecting the
location, date, time and information required for the selected project, such that all team
members may have equal knowledge of these facts during the Information Phase of the
actual VM Workshop. All of these items need to be discussed at the pre-workshop team
meeting which should be held a minimum of two weeks prior to the actual VM Workshop.
If it is not convenient for all team members to attend this meeting in person, a conference
call may be scheduled to ensure that all of this information is secured prior to the
workshop.
There are advantages of selecting the actual manufacturing site of the studied product for
the VM Workshop as assess to the assembly or process line is easier, however, the
disadvantage is that the manufacturing or process engineers engaged in the study may be
pulled out of the workshop if a process crisis happen during this workshop. I personally
seek to always have the VM Workshop facilitated at the actual site where the product or
process is manufactured as I always require the complete workshop team to engage in a
line walk as part of the Information Phase of the workshop. In addition, it also ensures
that the marketing and purchasing representatives have the opportunity to review the
actual manufacturing process.
The next item of importance that is part of the pre-workshop activities is determining the
time and date for the actual VM study. A complete VM study can’t be properly facilitated
in less than three day in the author’s opinion and those days should be in sequential order
as the VM process is a building block process and gaps in between each major phase
really degrades the success of the workshop. Therefore, a date should be selected such
that the complete workshop team can dedicate a 3-day block of time to focus on the actual
product or process being studied. A time should be selected to accommodate all of the
participants comfortably and works for the manufacturing plant with shift schedules, etc.
Finally, all of the information mentioned in the Information Phase below must be gathered
by the workshop team members and submitted to the VM Workshop facilitator such that
he may add this data to the individual team workbooks which I recommend that each team
member receive at the actual workshop. If all of this information is not secured prior to
the workshop, it will be very difficult to be successful with the VM process. I can’t
overemphasize the need to complete the preparation of this information prior to the actual
workshop. In the author’s opinion, 50% of the success rate of the VM workshop depends
upon the proper collection and distribution of this data.
Information Phase
The VM facilitator has the responsibility to gather from the VM Workshop team members
a variety of information which is critical for all team members to be familiar with during
the Information Phase. This information per Figure 3 below should be assigned to the
appropriate team members to submit to the VM facilitator prior to the actual VM
workshop such that team workbooks may be distributed during the workshop.
Information Required for a Manufacturing VM Study
Marketing Data with Voice of the Customer & Quality Function Deployment
Customer Statement of Work (Requirements Document)
A Costed Bill of Material with Material and Process Type identified all parts
Supplier Footprint Identifying Manufacturing Locations for purchased parts
Competitive Analysis Data based upon the Project being Studied
Any Target Costing objectives for the Studied Project
Drawings of all Components (or sub-processes) for the Studied Project
Job Descriptions for each Station of the Manufacturing Production Process
For Product Workshops – Sample or Prototype Components (if available)
For Process Workshops – Plant Layout and Flow Chart of Process
For Product Workshops – DFMEA
For Process Workshops - PFMEA
Finite Element Analysis or Mold Flow (or process flow) Studies
Internal Design, Code, and Legislative (or Process) Specifications
Summary of Design (or Process) Quality or Warranty Problems
Test (Validation) Results for Studied Design or Process
Figure 3
Preparation for the Actual VM Study
The next job for the internal VM team leader or facilitator of a manufacturing organization
is to conduct the actual VM workshop itself. A good facilitator lays down some strict
rules at the beginning of the workshop and then enforces them during the workshop
without exception. First, due to the fact that the VM process is a building block process
with the following phase depending on the proper execution of the previous phases, I
expect complete participation from all team members for the total length of the workshop.
Secondly, I don’t allow cell phones or pagers or computers to be turned on during the
workshop with the exception of one computer that may be required for accessing
necessary data. There are sufficient breaks planned in the workshop agenda to make
important calls, check e-mails, and these types of distractions can adversely affect the
effectiveness of the VM process and/or the facilitator. Thirdly, I will strongly encourage
participation from all team members while in the workshop by requiring various team
members to review with the whole team data they supplied for the VM workbooks and by
asking specific questions of team members who seem to be just ‘going along for the ride’.
If a VM workshop is going to be effective in the long term, then it needs the participation
from all of the cross-functional team members so that everyone feels they had a part in the
VM process and the results from that process. Each discipline represented on the
workshop team has different experience that will help the team to better understand how
true value may be achieved. Finally, and most important, it is the internal manufacturing
facilitator’s responsibility to ensure that the VM job plan with all of the phases mentioned
in this paper are followed implicitly without compromise. If any phases are skipped, the
success of the VM job plan will be severely hampered if not totally destroyed. For this
reason, the internal VM facilitator must be convinced that the SAVE International VM job
plan as re-enforced in this paper is the only job plan that will be followed.
Functional Phase
The most important phase for the internal manufacturing VM facilitator to conduct
properly is the function phase of the workshop. This can be done initially with the
training of all participants in the basic terms of the functional analysis process including
basic, secondary, supporting, unnecessary, design, all-the-time, higher, and lower order
functions. It is then important to explain the functional analysis process and the method of
describing functions with an “active verb” and a “measurable noun”. This step of
identifying and classifying functions is critical to the success of the workshop. Next, the
use of various functional analysis tools such as FAST diagrams (see Figure 4) or
Cost/Function Worksheets (see Figure 5) need to be discussed and those tools that the
facilitator is most comfortable with should be employed in this stage of the workshop. I
personally find that both of these tools are very helpful during the function analysis phase
of the VM process and I always require every team to create their own FAST Diagram and
Cost/Function Worksheet even if other teams have generated these tools for similar
products.
It is important that the internal manufacturing VM facilitator reinforces the two word
functional analysis technique as stated above and stresses that specific component or
process names not be used to describe a function. In the author’s opinion, all VM study
teams should attempt to complete a FAST diagram for the product or process that is being
studied. The benefits of understanding the product or process from a functional and
logical point of view are so evident when using a FAST diagram that any study without
such a diagram will struggle to achieve the maximum potential for the company involved.
If the cost/function worksheet is utilized, each component of the product or process being
studied needs to have a cost assigned to all those functions identified that may have a
relationship to that component. The cost/function worksheet technique helps to prioritize
which functions have the highest cost impact on the product or process being evaluated.
This information can then be utilized to identify those functions that have the highest cost
and thus need to be selected for further study in the next phase of the workshop, that of the
creativity phase.
TECHNICAL FAST Diagram
Product or Process:
HOW?
MICROWAVE OVEN
Date:
21AP10
WHY?
(What Work Must Be Done?)
"DESIGN FUNCTIONS"
Higher
Order
Function
ENHANCE
TASTE
"ALL THE TIME FUNCTIONS"
MAINTAIN
INTEGRITY
DISPLAY
TIME
ENHANCE
DURABILITY
ENSURE
SAFETY
INSTRUCT
OPERATOR
ENHANCE
CAPACITY
MAINTAIN SAFETY
EXHAUST
AIR
ILLUMINATE
PRODUCT
SAVE
ENERGY
PREVENT
INJURY
ENHANCE
AESTHETICS
BASIC FUNCTION
SECONDARY
FUNCTIONS
HEAT
FOOD/BEVERAGE
GENERATE
HEAT
ACTIVATE
MOLECULES
CONVERT
ENERGY
WHEN
CAUSED
BY OR AT
THE SAME
TIME AS
LOWER
ORDER
FUNCTION
Critical Path
SCOPE OF PROJECT
Figure 4
CONNECT
CIRCUIRTS
SELECT
CYCLE
APPLY
FORCE
COST / FUNCTION WORKSHEET
DATE:
FACILITATOR:
ALPHA TEAM
CONCEPT MWO
PROECT:
21AP10
Jim Bolton
FUNCTION (ACTIVE VERB / MEASUREABLE NOUN)
PART or OPERATION:
CAVITY
PCBA
HIGH VOLTAGE
TRANSFORMER
HOOD MOTOR
MAGNETRON
OUTER WRAPPER
DOOR FRAME
INTERLOCK WIRE
HARNESS
DOOR BODY
BOTTOM PLATE
AIR GUIDE BASE PLATE
TOUCH FOIL
FUNCTIONAL TOTAL
Cost
17.0000
Check
sum
CONVERT
ENERGY
CONNECT
CIRCUIRTS
SELECT
CYCLE
EXHAUST AIR
PREVENT
INJURY
0.340
100%
9.456
11.4520
1.145
11.1300
20%
8.016
1.145
10%
70%
10%
0.557
0.557
90%
5%
5%
8.4800
0.424
0.424
100%
3.392
5%
6.1800
0.848
5%
0.618
100%
30%
80%
0.266
0.615
0.615
100%
0.820
15%
3.4000
20%
80%
1.224
35%
10%
10%
20%
1.224
0.459
40%
19.60
10%
0.410
0.680
100%
100%
0.532
5%
1.435
15%
2.720
24.29
40%
0.532
35%
4.1000
FUNCTIONAL RANKING:
10%
20%
1.862
100%
3.0600
40%
2.472
1.184
5.3200
$ 122.59
10%
0.618
10%
4.736
3.392
40%
1.854
100%
5.9200
50%
10%
1.145
100%
5%
1.560
10%
10%
10.017
20%
10%
1.560
80%
100%
ENHANCE
CAPACITY
8.500
1.576
60%
12.480
100%
ENHANCE
AESTHETICS
0.850
4%
3.152
100%
MAINTAIN
INTEGRITY
3.400
2%
15.7600
15.6000
MAINTAIN
SAFETY
0.680
40%
4.38
15%
12.40
5.76
18.65
8.55
10.18
9.03
1
2
9
4
8
3
7
5
6
CONVERT
ENERGY
CONNECT
CIRCUIRTS
SELECT
CYCLE
EXHAUST AIR
PREVENT
INJURY
MAINTAIN
SAFETY
MAINTAIN
INTEGRITY
ENHANCE
AESTHETICS
ENHANCE
CAPACITY
Figure 5
Creativity Phase
Although most facilitators can conduct a creativity activity, the creative phase using the
VM job plan needs some explanation and VM training. A good internal manufacturing
VM facilitator will provide the workshop team with some basic training on brainstorming
and other creative activities but the most important part of the VM creativity phase, is to
conduct this phase by function rather than by component or process or some other criteria.
If brainstorming is utilized in this phase of the workshop, then ideas for each function
must be identified based on the most expensive function as identified in the Cost/Function
Worksheet down to the less expensive functions. A potential goal during this creativity
phase is to develop a minimum of 50 ideas for each function identified on the
Cost/Function Worksheet or until all ideas related to that function have been brought
forward. In this manner, if all functions on the Cost/Function Worksheet can’t be
brainstormed due to time constraints, as least those functions, which have the highest cost
and thus represent the greatest impact to the final product or process, are evaluated.
It is very important for the facilitator to make sure that no criticism or evaluation of the
ideas generated is done in this phase of the workshop. Once again, this requires the
facilitator to be very strong in laying down the rules for participation such as not to hinder
the creativity in this phase of the job plan. Many good ideas are never recorded or even
spoken due to criticism being allowed in this phase of the job plan. In addition, it is
important to emphasize that all members of the study team are equals in this workshop and
no idea is a dumb idea. Exercising these principles may be difficult if not impossible to
achieve especially if study team members are at different levels of management or have
different levels of experience, however, it will be the facilitator’s responsibility to make
sure that all ideas are recorded for all to see and that all team members participate. Be
sure not to limit this part of the job plan when ideas stop flowing freely. Continue to ask
the ‘how else’, ‘where else’, and ‘what if’ questions for each function developed in the
previous phase of the job plan. At least 25% of the overall allotted time for a workshop
should be spent in the creativity by function phase. ‘Piggyback’, ‘hitchhike’, or ‘expand’
on ideas already recorded to generate slightly different ideas and try not to quit until you
have 50 ideas for each major function. If you use this method and follow these guidelines
specifically, you should have a successful creativity job plan for the product or process
under study.
Evaluation Phase
There are many ways to conduct an evaluation phase in a manufacturing VM process
however the internal facilitator needs to develop a procedure that is comfortable and will
meet the needs of that organization. One method that is commonly employed to evaluate
ideas from the creativity phase is the cost-ranking matrix. In this process, ideas may be
ranked into an ‘A’, ‘B’, ‘C’, ‘D’, ‘E’,
Cost Ranking Matrix ‘F’ category based on potential savings
RUNNING
SHORT
LONG
CHANGE
TERM
TERM
and timing required to implement the
idea into production (see Figure 6
attached). Exactly how the ideas are
ranked is up to each facilitator to
manage, however, if an idea totally
eliminates a component or process or
represents a potential high
Figure 6
savings and can be done fairly quickly (within a 3-6 month window) with minimum
investment, then I usually rank it as an ‘A’ idea. If an idea has high potential savings but
will require tooling changes, validation, and customer approval, then it might be ranked a
‘B’ idea as it most likely will take longer than 3-6 month to implement. If an idea has
major customer interface or technical challenges yet has high potential savings, then this
idea might be ranked a ‘C’ idea. Each manufactured product or process may dictate
different criteria for the ranking of these ideas, however, the most important thing to
remember, is to use the same criteria for all ideas. Those ideas with smaller savings
potential should be ranked ‘D’, ‘E’, or ‘F’ ideas based upon timing. All ideas need to be
ranked, and afterwards, included on a spreadsheet grouped by categories similar to that
shown in Figure 7 below’
A
D
B
E
C
F
Figure 7
Development Phase
This is the phase where a lot of VM projects get bogged down if not completely halted. I
have found that the development of business cases where prioritized ideas are grouped
together which could be implemented with the same resources in the same time frame and
that will generate a specific payback for the manufacturing organization is the best method
to obtain traction for ideas generated in the creativity phase. First, group the ‘A’ and ‘D’
ideas together, the ‘B’ and ‘E’ ideas together, and the ‘C’ and ‘F’ ideas together as it is
best to combine high and low savings ideas together that can be executed within the same
timing per Figure 8 below where ‘B’ and ‘E’ ideas are combined.
Figure 8
After all of the ideas from the creativity phase are group into categories with similar
timing which could be validated with the same resources, then the development of
business cases is initiated. These business cases need to include the following:
a.
b.
c.
d.
e.
f.
A clear definition of the design or process changes recommended
The advantages, disadvantages, and associated costs for these changes
Capital and/or tooling required for change
Validation tests and associated costs to implement the idea
Customers affected by change and approvals required
A detailed listing of all the proposed design or process changes including:
1. Individual Part Numbers (P/N) or process numbers to be changed
2. Description of each P/N or process to be changed
3. The current and estimated cost of the design or process change
4. Any quantity differences per item from the current and proposed
5. The total annual volume that could be affected as a result of this change
6. Any supplier change for the current vs. proposed design or process
7. All savings such as labor or process reduction based upon proposed change
8. The team confidence level that the business case can be implemented
9. An implementation action plan with assigned responsibility and target dates
Once all of these items are identified on the attached Excel spreadsheet, the macros in the
spreadsheet will calculate the overall savings per business case, the annual savings, and
the total investment required and the payback for the business case per Figure 9 below.
Figure 9
The next step in the development phase after all of the business cases are completed, is to
have the internal manufacturing VM leader organize and facilitate a management reportout meeting to gain management approval from the organization for resources which will
be required to implement all of the business cases that are presented. During this reportout meeting, the workshop team members should present the various business cases to the
management team in enough detail so that they may secure the required support to
proceed with the actions in each business case. The complete workshop team should be
in attendance for this management report-out meeting as well as the manager for each of
the workshop team members and the plant management staff of the plant where the
workshop was facilitated. In addition, management team members who can make
decisions for both financial and human resource allocation should be invited to participate
in these management report-out meetings such that the project team leader can gain the
support required to implement the business cases developed during the actual VM
workshop. It is best to hold this management report-out meeting in the same room that the
actual VM workshop was facilitated in and immediately upon the conclusion of
developing the business cases such that the momentum of the workshop is not lost and
decisions can be make promptly such that implementation plans can be executed without
delay to the timing predicted in the business cases.
Implementation Phase and Follow-up Phase
The global Design for Value Department at Whirlpool Corporation has responsibility for
working with project teams to develop alternative concepts and technical solutions which
can meet the target cost objectives established for any given product or process. Once
these alternative concepts are developed via the business cases as mentioned above, they
are then followed up by the project team leaders for implementation with the already
established standard product development process used by Whirlpool globally. The
Design for Value (DFV) department is basically an engineering consulting group reporting
to the engineering department whose main responsibility is to train and embed the VM
process into the manufacturing organization such that the project teams have the ability to
deliver the most cost competitive designs which will meet customer objectives at the best
value. The project teams are then responsible for implementing the best ideas, concepts,
and alternative solutions such that target costs are obtained for any given product or
process. This VM process is proving to help our organization deliver cost effective
products which meet customer expectations over the life cycle of the product.
Conclusion
In this paper, I have sought to explain how a manufacturing organization can develop a
successful internal VM process which can expand globally even during difficult economic
conditions. A real key for the development and rapid growth of the internal VM process
within Whirlpool Corporation has been the management report-out meetings after the
completion of a VM Workshop. Success breeds success and once management
commitment is obtained, there will be a natural pull which will be created for this type of
activity in all of the product categories globally for any manufacturing organization. The
success of this VM process on several manufacturing projects within a few short months
in various countries and on various products as facilitated by a VM specialist has shown
that the VM process can work for any given situation as long as the guidelines in this
technical paper are followed. This commitment and discipline to VM must then be
embedded into the culture of the manufacturing organization by incorporating it into the
product development process for that company. Only then, will that manufacturing
organization reap the benefits of implementing a successful internal VM process that will
be self-sustaining in delivering the best value to its customers for the long-term.