Industrial Engineering
Industrial Engineering
Industrial Engineering
BY L. D. MILES
Value Analysis Division, Purchasing Dept. GENERAL ELECTRIC C O .
ment of value to all General Electric products. In Engineering, Value Analysis brings a new outlook timely question, to component parts design. It stimulates the costconsciousness of every engineer to make certain that new designs include the latest advances in lowcost production techniques. For Manufacturing, to supplement the mnstant edlorts of methods men and planners, Value Analysis represents a valuable new tool, extending the range of those responsible for dollar production and bringing their problems directly into the shops of suppliers. To any group in the company, Value Analysis offers a basic approach
answer to this question can mean the difference between profit and loss for any company. Unless a company's product ia worth its cost, it does not represent good value and cannot maintain its position in a competitive market. Timely because a competitive market i here. Management faces a s challenge, and at General Electric management is acting. It is taking steps to make certain that G. E. products are worth the money. Specifically dedicated to this task, along w t numerous other servih
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ices and publications offered by the Company for internal use, is the Value Analysis Program. Value Analysis represents an important concept
in modern industrial management. Through Value
and the results that have been obtained in representative case histories is the subject of this report. Its success in General Electric is due not only to its basic soundnem but to a large degree to the enthusiastic support of management at all levels in Purchasing, -nee-, and Manufacturing.
Analysis, management makes Purchasing a fulltime partner in cost reduction, and thus taps a reservoir of skill and knowledge that bring enrich-
Copyright 1949 by MeGraw-Hill Publishins C . 330 W. 42nd St.. New York 18, N. Y. o.
ates. One is the study of existing products, the other is the design of new products. In both areas, its major objective is equivalent quality at lower cost. In the study of existing products, Value Analysis focuses attention on each part in the apparatus. It notes the function of the part, seeking to eliminate or simplify it, combine it with another part, or replace it with a standard item. It considers the material used to determine whether some other material offers better value. For the same reason, processes and manufacturing methods are examined, purchasing arrangements are reviewed, and the wares of specialized vendors and the services of specialized suppliers are scrutinized. The entire procedure is an intensive effort to uncover every possibility for greater value in the product. Directly affected by these activities are Engineering, Manufacturing, and in fact, any'part of the company that influences product
cost. But Value Analysis in no way interferes with their normal duties and responsibilities. Value Analysis operates through trained specialists who work in full cooperation with each unit and constantly receive valuable ideas from them. Analysts investigate and uncover possibilities for savings. These are offered as suggestions to those who are responsible for making a decision and taking action. In this way, there is no overlapping of functions, no areas of friction. And nothing is more important in the success of a Value Analysis Program. It is only through this smooth teamwork that it is possible to realize the tremendous savings the program can produce. Furthermore, this setup creates excellent relations witd all other parts of the company, and pern.its Value Analysis to concentrate on its prime function-that of promoting and generating ideas for value improvement. General Electric is organized with a central department, which buys certain generally used commodities and which
is the "policy group." In addition each operating department has a purchasing group which buys materials peculiar to their operation. The Value Analysis central division assists and supports the activities of the various Value Analysis groups throughout the company.
High tool charges often prevent the application of low-cost manufacturing methods to small-lot, low-quantity production. Yet, there are suppliers with special equipment that enables them to do this class of work with low charges for tooling. Parts below illustrate what can be done through specialty stamping shops.
CASTING
STAMPING
2- PIECE
ASSEMBLY
STAMPING
As casting, part required considerable machining and cost $1.76. P a r t , a s stamping, costs 25$. Tool charge was $100
Made a s 2-piece assembly, pawl cost $1. Changed to stamping, cost is now 8&. Tool charge a t specialty shop was $50
ings. Knowledge of the supplier's problems and the reason for the cost of the job, in turn, often suggests what the company can do to make his task easier. In such negotiations not only do value analysts take part but also company engineers and manufacturing men who are responsible for making decisions on each of the possibilities as they turn up during the course of the discussion. Sound, capable suppliers are an invaluable part of the program. Specialty fabricators, in particular, offer many opportunities for unusual and unexpected cost reductions. A most important task of Value Analysis is to learn of these suppliers and to establish sound working relations of mutual benefit to both parties.
Cable connector was made of 4 parts produced within the company. Change to specialty vendor's standard cable connector parts saved 3$ on each, amounting to $25,000 yearly
Switch assembly with parts made in the plant cost 9OQ. Vendor was found who carried usable components as standard. New cost is 206
atic procedure. It is true that startling results sometimes come from spur-of-the-moment ideas. But for consiaent results a definite pattern should be developed. In this way, no possibility is overlooked and the value analyst applies his efforts in the manner that is most likely to bear fruit.
3. Breakdown of costs on each part, including material, labor, and overhead, or if purchased part, name of vendor. 4. Breakdown of assembly and sub-assembly costs. 5. Copy of planning cards or general description of the process. 6. Actual samples of the individual parts and the assembly using the parts, where practicable.
This information is basic and essential for a thorough job. Complete data are the only sound basis for intelligent analysis.
for the design of the product. Here is the man most intimately acquainted with the apparatus. With him the analyst discusses all aspects of the product: What the engineer likes or dislikes about it. Whether he has definite plans for redesign in the near future. Whether shortages may have dictated some of the material specifications. Whether there are changes the engineer contemplates but hasn't had time to check. Together they discuss the function and essential features of each part in the product. In effect, the v S u e analyst b:~comes a partner of the engineer. joining with him in the allimportant effort to obtain a better
This is the most critical step in the procedure for a wrong decision at this point may cause the loss of hundreds of dollars in unrealized savings. To minimize the danger of cursory analysis and snap judgments, the analyst follows a definite procedure for measuring value. This procedure is outlined in ten questions that have been crystallized from experience gained in the analysis of hundreds of jobs. 1. Does its use contribute to value? 2. Is its cost proportionate to its usefulness? 3. Does it need all its features? 4. Is there anything better for Does its use the intended use? contrlbut. to value? 5. Can a standard or a vendor's In the assembly a t top a brass thumb screw and screw machine part held standard be found which will be the cover to the base. The stud, tapped useable? on one end to receive the screw, was 6. Can a useable part be made welded to the base. I n new assembly the same purpose is accomplished by by a lower cost method? using a plated steel screw long enough 7. Is it made on the proper toolt easage a tapped hole in the base ing, considering volume? o and the stud is eliminated. Thus, the 8. Do material, reasonable labor, stud made no contribution to the value reasonable overhead, and reasonof the product able profit total its costs? 9. Will another dependable supproduct at lower cost. The part- plier provide it for less? nership in no way effects the engi10. Can anyone buy it for less? neer's authority or responsibility. It simply gives him another tool, Note the Function of the Part extending his range and making it The first three questions are prieasy for him to obtain detailed in- marily concerned with the funcformation that was not so readily tion of the part-its purpose in the available previously. apparatus. These are basic and This meeting is a most import- should be considered first. There ant step. Good value can be ob- is little point in arranging to buy tained in any product only if there or make a part for less if it may be is full cooperation among all who possible to save more by accomhave a part in its manufacture. plishing the purpose some other Value Analysis is not a means of way. Essentially these questions checking on other sections of the suggest the possibility of eliminatorganization, nor is it a fault-find- ing the part, combining it with ing group. It i~ a service group another part, or simplifying it. that helps other sections with their Consider Materials and Processes problems. Lack of material at the time of Don't Miss the Pennies design may force specifications of The value analyst doesn't over- something that gives less value Book pennies-16 each on 1,000,000 than that which is now available. means $10.000; 106 each on 50,000 Further, new processes are developed and others improved such means $5,000. that over a period of years procApply 10 Measures of Value esses that once were best known Having gathered all pertinent for the job now represent less information concerning the appa- value than others currently availratus under study, the analyst is able. Thus, question 4 refers spenow ready to weigh the value con- cifically to other materials and tent of each piece in the product. processes.
obtained, machined and handled, the compound is provided, and the button is molded, packed and shipped to the using department for 3C. Thus far, this is a n excellent example of value. But when, in the using department, it was found that it cost a n additional 3 to C All in the letters by wiping white paint on and off the face, this operation was pointed out a s being unproportionately costly and worthy of further study
At left, is a control device made of copper tubing costing 106. The operating function required a large section a t one end, but for assembly purposes a tube of smaller diameter was needed at the other. Hence, a large and small diameter tube were brazed together. At center is the flrst improvement costing 6C. The same device was made entirely of large diameter tube with one end swaged to the proper size for assembly. Performance was the same. At right is the latest method. Tests prayed that recent improvements in the instrument eliminated the need for the large diameter tubing. Small tubing throughout costs 56
savings lies in changing the method of manufacturing the part. Methods are determined by such factors as drawing details and specifications, inspection requirements, production quantities, tooling and equipment available. The method may be fixed and production may begin without final exploration of a n alternate method
Special alloy springs for one job cost $15,000 for a year's supply, an& the springs were not too stable. The equivalent spring in stainless steel is stable and costs only $9,000 for a oneyear supply. Switch handle a s a brass screw machine part cost 5 each. Same C design as a miniature zinc die casting, brass-plated, is purchased for 16, including tool cost. On yearly requirement of 1,000.000 pieces, saving is $40,000,yet quality is equivalent
for producing a particular part. Such a n investigation may reveal that slightly modifyihg the design will permit a much faster manufacturing method. The analyst, having complete information on the specific item and on the other IS made on proper tooling it items with which it is assembled, considering volume? is in an excellent position to unWfth lot-sizes in the millions, plastic cover such possibilities. -part a t left cost $12 per M, while that When parts are made by outside a t right, in lower quantities cost $8 suppliers, the problem is some- per M. Why? $12 one was first and what more complex, as complete was tooled with best known molds. details are oftentimes lacking. But Other part, tooled later, utilized an in the science of mold the "value approach"-asking, "Is interim advance found that new molds design. It was it worth the money?"-will indi- would save their cost each in 4 weeke cate those items on which the analyst should establish close contact with the supplier, study his detailed costs and methods, and jointly determine what can be done to improve his manufacturing DO material. and reasonable labor. methods.
Shaft has material cost of 36, no close tolerances, and total cost of 506. Obviously the cost is not reasonable. Job is now bought outside for 156 complete
Machined part a t left cost 3%U. With 0.005 in. additional tolerance on length, part is upset and Blanchard ground for l%6. Rubber part, right, formerly molded is cut from extruded stock a t a saving equal to 2/3 former cost
Note Tooling
Quantities change. Methods c h a n g e . Available materials change. Still, too frequently tooling is not re-examined. As in question 5, whether a part is manufactured or purchased, its tooling must be examined. Thus, question 7 is asked. In addition to individual cost elements, Value Analysis considers total part cost. To insure that all costs are fair and reasonable the eighth question is essential.
Nut on left is less than standard across the flats to avoid interference a t the corners in assembly. Made in the plant. its cost was 156. Analyst found a suitable special as a vendor's standard. Cost I t . Added thickness of nut was no disadvantage. Brass eyelet cost $1.45 per M. Shoe industry uses standqrd eyelet which would do the job equally well. Cost for this vendor's standard is $0.89 per M
Except for proprietary processes, the analyst must satisfy himself that the answer here is always "NO"
vendors and their particular abilities is of the utmost importance to the value analyst. It is his duty to determine who is best equipped to render the service that is being bought. And in what quantities
his purpose to make them think. And, finally, in question 10, comes a very important point"Can anyone buy it for less?" Except for proprietary processes, the analyst must satisfy himself that the answer here is always "No."
- i l l OLD
Conferences with suppliers often turn up helpful suggestions for greater value. For example, fltting originally was a n elbow, made of 2 pieces a t a cost of 11C. First attempt was to make the part in one piece, but cost then went to 12t. Next, value analyst and supplier set 56 a s their bogey and found t h a t only way to meet bogey was to make part straight. Investigation showed that bend readily could be made in part, to which fitting is connected. Countless jobs have been improved through the planned conference method
and on what terms the best price can be obtained. It is not enough to know dependable suppliers, the analyst must know how to stimulate their thinking-how to help them obtain greatest efficiency in their shop. It is not the purpose of the value analyst to put unreasonable pressure on suppliers, but it is
apply good judgment in sifting the various ideas for each part and in deciding those that offer real possibilities for improvement. These are presented in a brief status summary listing: complete identification, sketch, present and proposed costs (often several proposals are listed), suggestions for reaching proposed costs, and space for entering data such as: actual results obtained, effective date of changes, and reasons for refusal to adopt suggestions. These items are usually not new to the engineer, the manufacturing man, or the buyer, for they have been working with the analyst-but the summary does bring the attention of each to unfinished items in his category. A summary is made for each individual part on which improvement in value is possible, and parts which already represent value are also listed. Thus, at the end of the study, the value analyst reports on every item in the apparatus. In these reports anticipated vearly savings are not shown. Value analysts indicate only per piece or per lot-size savings. The operating department that adopts the Value Analysis suggestion and follows through on it reports to management the actual yearly savings that were realized. This practice is another important factor in maintaining the good relations and co-operative spirit that is absolutely essential to the success of the. Value Analysis Program.
services is well understood by all. It will be worth-while, however, to review the contribution being made by the drafting organization. Elimination and simplification are two of the basic principles of Value Analysis. These apply to the design of new products equally as well as to the analysis of existing apparatus. Further, although it is essential t o examine products periodically to take advantage of
the latest developments for lowcost production, it is likewise essential to apply these new ideas to products presently on the board. One who can do this successfully is the individual draftsman. Supervision may generate ideas, suggest, plan-but the man on the board is the one who actually puts the plan into action. To effect real savings in design, therefore, Value Analysis must also be beamed directly to the draftsmen. Best for this purpose is a
planned program that utilizes every medium to stimulate the cost-consciousness of draftsmen and to enlist their support in searching every drawing for every possible saving. Flyers, posters, group meetings, and reading matter all are used. The program is a continuing one to provide the benefits of constant emphasis and repetition. Information is furnished in small, easy-totake doses. And above all, the program is a draftsman's program,
with, participation and contributions by draftsmen encouraged. Draftsmen are sold on the Value Analysis objective - equivalent quality a t lower cost-and are sold, too, on pertinent Value Analysis procedures, such as: elimination, ,simplification, use of standard parts, survey of materials and processes. They are given useful ideas and factual data. In turn, they generate ideas and contribute to the program. When
they do, their suggestions are rewarded. In this way, an additional incentive is provided over and above natural enthusiasm the program is bound to create. Factual data provided for guidance in designing for low cost include checklists stating the points to consider in castings, moldings, punchings, formed parts, and so on. In addition, up-to-date figures on the cost per unit of weight, volume, and strength of commonly
used materials is provided by the Value Analysis Division of the purchasing department. The program pays its cost many times over. A properly informed, alert draftsman can save his weight in gold. Today more than ever before the challenge to modern industry is to produce more with less effort. Drafting is meeting this c h a l l e n g e a n d one of its most powerful weapons is Value Analysis.
ALUE ANALYSISis a way of thinking, a way of acting. Its basic philosophy is, "There is a better way to obtain equivalent quality at lower cost, only it has not as yet been found." Each of the ten basic measures of value suggests innumerable possibilities that may improve the product. A partial list follows:
tempers of copper and many types of bronze. Remember that half the weight of copper will carry the same current as equivalent bronze. (c) Remember also that M to ?h the weight of spring brass carries equivalent current to phosphor bronze and the price per pound is also less. (d) Use lithograp'?ed in-
1. A thorough understanding of materials together with experience applying materials. 2. Creative imagination along mechanical lines.
3. Engineering experience.
5. A desire to work with others and a general knowledge of how to accomplish it successfully.
II. DESIRABLE QUALIFICATIONS
valuable assistance from them. 2. Planning department experience. 3. Apprentice training. 4. Factory engineering experience. Added to these is the need for a man with an aggressive, inquiring mind. He must not accept customary solutions. He must be alert to new ideas and ever anxious to explore the possibilities of a new process. He must not be discouraged by opposition and the unwillingness of some suppliers to try out suggestions. He must be persistent.
7. Mentally review all new processes and products in trade magazines for applicability.
8. Determine how similar jobs are done by others-within and outside the company.
9. Find in the company a pro-
For assemblies: 1. Alter for automatic assemblg: ( a ) Don't use a complicated terminal when simple flattened wire applied by an automatic stapler would do as well. (b) To eliminate much adjusting labor, use prefired beryllium copper instead of phosphor bronze. (c) Don't have springs pressing against all of the assembly parts. (d) Don't assemble concealed parts between plates. Make up some subassemblies which are made openly and snapped together.
10. Don't accept first effortchallenge further endeavor. Value Analysis only begins after the answer is "no."
1 . If it is big enough, talk it 1 over with the boss. He will probably have some good ideas.
stead of etched nameplates. (e) Use Terratex instead of mica for high-temperature, low-voltage applications. (f) Buy an aluminum or other disc instead of sheet or strip stock. (g) Use more magnesium extrusions. Magnesium tubing is lower in cost foot for foot than either aluminum or copper. (h) Don't use .drill rod if steel rod will do the job. 2. Higher-cost material: A t times, a more expensive material, by its nature and properties, will afford a simplified part and lower-cost assembly. 3. Unusual but available raw materials: (a) preplated steel; (b) expanded metal; (c) embossed metal; (d) rubberclad metal; (e) fiberclad or metalclad metals. 4. Other methods of fabrication: (a) diecasting; (b) extrusion; (c) permanent mold casting; (d) lostwax casting; (e) miniature casting; (f) electro-forming; (g) powder metallurgy; (h) fabrica-
tion from copper or brass tubing; (i) low-cost, low-quantity starnpings; (j) miniature casting on wire, cord, tape, or rod; ( k ) miniature casting automatically with inserts.