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QFD and Value Engineering (VE)

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Since the 1960s, Quality Function Deployment (QFD) has been used by companies around the world and in numerous industries to add quality, value, and customer satisfaction during the design and development of new products and services. Through a linked series of analytic tools, the Voice of the Customer can be deployed into design, build, and delivery specifications and identify the critical tasks to achieve them. We define value to customers as the "magnitude of my problem" divided by the "price I pay to solve it."

Though most QFD studies focus on improving customer satisfaction by increasing the functionality or performance of the product, in these difficult economic times it may also be necessary to look at reducing price. Price is defined as cost plus profit, and traditional cost cutting approaches include value engineering to reduce design cost or lean activities to reduce manufacturing waste. With QFD, an additional approach can be to remove functions and performance that add little value to customers - in other words, bring features in line with the benefits they give the customer, as defined by the customer.

Actually, Cost Deployment was integrated into QFD by Dr. Akao in the 1980s but it has never gained much traction outside Japan. Let's re-visit Cost Deployment as well as review additional tools for Cost-Cutting based on Reverse-QFD, Value Engineering (VE), and others methods.

Here are some of the ways QFD can be used to affect cost.

  1. Initial product functionality reduced by design with cost deployment and reverse QFD
  2. Reduced initial product performance by design with cost deployment and reverse QFD
  3. Reduced product performance over time by design
  4. Reduced reliability and durability of function over time by design
  5. Reduced parts cost, and comparing parts cost vs. system cost by design, including commonization and reuse of parts, volume purchases, Value Analysis/Value Engineering (VA/VE).
  6. Reduced assembly cost by design.
  7. Managing variation in design and manufacturing
  8. Managing variation in customer usage through better understanding of scenarios, user training, built-in monitoring (performance, maintenance, service)

Here, number 5 and 8 will be discussed. . . . .

Managing Variation in Customer Usage

Another source of variation can be the user. Part of the design process is to determine the misuse and abuse limit for a product. The problem is that it can drive up the cost by overdesigning excess capacity or durability for the user.

In the past, many vehicles were overdesigned because there were user caused failures that had to be "fixed." The result was a more reliable and durable product for that aspect because it was more robust to both product variation and user variation.

But a more cost-effective design can address this variation. Users (customers) may use something however they choose, but the seller doesn't have to warrant or be responsible for all uses. The objective is to design a product that satisfies the number of people we wish to sell to for the price they are willing to pay. The user can be educated on how to best use the product via instructions and/or optional or required training. However, for mass produced products, this is generally an ineffective way to educate users.

The new approach is to manage user variation by marketing to targeted consumers. This requires getting the voice of those customers to find out how they would use the product. Modern Blitz QFD® tools like the customers segments table and customer process model are designed specifically for this.[ii]

Price, color, styling can also be addressed using Kansei Engineering and Lifestyle Deployment[iii], and retail distribution and marketing are ways that targeted users can be selected based on their more homogeneous, hence more common, usage of the product.

Fig 5 and 6: Value Analysis, Quality Characteristics, QFD Customer Value study

Value Analysis / Value Engineering (VA / VE)

Cost is always an important factor in product development. Part cost is generally left out of the House of Quality due to its ability to skew/overshadow the importance of other characteristics.

When incorporated into Cost Deployment, value analysis and value engineering allow you look at cost from an end users perspective or from an engineering point of view. This should help identify potential part reductions and possibly combine part functions to keep cost in line with value.

The theory behind value analysis is to put cost into the areas that have the most value to the customer. The value analysis takes the parts percentage cost based on the total system part cost and distributes it against value of the part from the quality characteristic/parts matrix (figure 5). Value Engineering helps in determining which functions might be best combined into a single part.

The VE analysis takes the parts percentage cost based on the total system part cost as a ratio of the parts percent function in the system. This can then be graphed to see where function/cost mismatches present opportunities for cost reduction efforts (figure 6). Parts that have function-to-cost ratios above the diagonal line indicate that the cost is higher than the functionality and are therefore candidates for cost reduction efforts, including commodity and communization as mentioned above.

Conclusion

The economic pressures on producers of products and services will continue to mount in the current economy. QFD can enable the developers of these products to view cost reduction from the perspective of the user and customer, not just the manufacturer.

Here we have outlined some of the considerations and examples of how both traditional and modern Blitz QFD® tools can be used to reduce costs in design, manufacturing, delivery, and usage. More detailed examples and tools are explained in the 2009 paper "Cost-cutting QFD: How to Reduce Non-value Added Costs in Goods and Services" by Harold Ross, Director of the QFD Institute, USA

Also essential is to upgrade the math that you use in QFD/DFLSS analyses using AHP, to ensure proper allocation of priorities to design and cost issues. With QFD, costs can be determined by value to the customer based on what matters most to them.

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[i] Dimsey, Jim and Glenn Mazur. 2002. "QFD to Direct Value Engineering in the Design of a Brake System." Transactions of the 14th Symposium on QFD. QFD Institute. ISBN 1-889477-14-1

[ii] Hepler, Carey and Glenn Mazur. "The Analytic Hierarchy Process: Methodologies and Application with Customers and Management at Blue Cross Blue Shield of Florida." Transactions of the 19th U.S. and 13th International Symposia on QFD. QFD Institute. ISBN 1-889477-19-2. 2007

[iii] Mazur, Glenn. 2005. "Lifestyle QFD - Incorporating Emotional Appeal in Product Development" Transactions of the 17th Symposium on Quality Function Deployment. ISBN 1-889477-17-6

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