Reducing Process Cost with Lean, Six Sigma, and Value Engineering Techniques

Below is an excerpt from our book Pries, K., & Quigley, J. (2013). Classical Techniques. In Reducing process costs with lean, six sigma, and value engineering techniques (pp. 135-138). Boca Raton, FL: CRC Press.

This is the second part, part one is located here.

Miles also identified the concept of basic and secondary functions. Basic functions are the fundamental reason the customer is willing to buy the product or service. The basic function of an automobile is to transport the customer. The basic function of a shoe is to “protect foot.” Secondary functions are those functions for which the designer has the flexibility to find an effective solution. A secondary function supports the basic function. Miles discovered that secondary functions are often a huge component of the total cost of the product.

A simple plan for proceeding through the Miles approach is as follows:

1. Separate the functions (we can use a spreadsheet format to capture our preliminary ideas).
2. Work and rework the two-word descriptions with particular attention being paid to those we might be able to measure
3. Analyze each function for methods, materials, measurements, manpower, and machines as well as environmental considerations.
4. We can build an Ishikawa diagram for each function. The depth of labor we put into this project will be dependent on the expected cost savings.
5. Estimate the cost of each function.
6. Roll-up the costs of the functions to calculate an overall cost for the product or service.
7. Prepare work in a spreadsheet format for cost comparisons.
8. Be patient and diligent

Miles also recognized that a given product or service might have functions that are dependent on other functions. The solution approach chosen here was list the functions in an appropriate order, which is easy to say and often difficult to execute.

1. Evaluate each function as if it were a simple function.
2. Move on to a dependent function and continue to evaluate.
3. Complete the list by following the logic of the dependencies.

Miles was also highly concerned with accurate cost analyses of products and services. He suggested that function-property relationship (e.g., nomograms and other plots of performance) were readily available to designers. Usually the designer could also find the property-material relationships as well (e.g., tensile strength). Some catalogues provide material-cost information. He declared that we can then work our way back to functional cost from the material cost information.

Finally, Miles stated that costs were really based on comparisons, since “value” is an ambiguous term with no absolute measure. This concept implies that we must understand what is valuable to the customer. In some cases, the aesthetics may be of more importance to a given customer (e.g., they might like the way the painting looks in their house). In cases where the product is not seen by the end customer, the aesthetics of the product may have minimal importance.

Miles provide a straightforward algorithm for working through the value analysis problem, using the following steps:

1.  Identify the functions.

2.  Separate functions.

a. Start with the total or basic function.

b. Proceed to sub consciousness.

3.  Group functions into assemblies with well-defined purposes (somewhat similar to what we do when we create an affinity diagram).

4.  Recognize the problem at hand.

5.  Capture required information (e.g., materials cost).

6.  Explore new solutions creatively.

7.  Select the best choices, with especial attention on cost.

8.  Assess the disadvantages of the best solutions and minimize these, much as we do with robust design.

9.  Execute the new set of improved solutions.

10. Eliminate any “show stoppers.”

11. Push the project to a decisive conclusion

Miles used the term “results accelerators,” which included:

1. Information from the best source
2. Dropping of assumptions sufficient to annihilate preconceptions and permit real refinement.
3. Use real creativity rather than copying the previous solution or only “tweaking” the previous solution.
4. Push through “show stoppers.”
5. Feel free to use industry specialists (e.g., supplier experts, customer experts, consultants, and contractors).
6. All tolerances should have a cost associated with them (once again, this relates well with robust engineering, where tolerance design occurs at the end of the process).
7. If commercial-off-the-shelf products meet the requirements, then use them in the solution.
8. Be willing to pay the supplier for their knowledge; after all, they are then functioning as a consultant to our firm.
9. Use the appropriate standards—it makes no sense to ignore a standard and lose money subsequently because we must recall the existing product and redesign the product and production process.
10. Personalize the spending; after all, money spent on wasted time is money that won’t be used for a bonus, profit sharing, or any other reward system.

Miles’s concepts were brilliant and provided the underpinning for the functional analysis system technique. Snodgrass and Kasi provided further theorizing on the approach. Other individuals have contributed to the body of knowledge related to FAST: Charles Blytheway (Sperry Corporation), Wayne Ruggles (Value Analysis, Inc.), and Theodore Fowler (Value Standards, Incorporated).

Snodgrass and Kasi broke their process into discrete phases:

1. Information

2. Creativity

3. Evaluation

4. Planning

5. Implementation

As with Miles, Snodgrass and Kasi realized that a large part of the problem with our products and services lay within the way people coded their expectations of the functionality of the product or service. They used the same verb-noun concept proposed by Miles. One of their epiphanies occurred when they realized that users of a product often do not understand the constraints of the product. Again, agreeing with the insight of Miles, they felt that the key concept was the determination in unambiguous terminology of exactly what a product/service was supposed to do.

We can take a look at function identification, which may be the single most difficult step in the process of determine exactly what the product is supposed to do. One issue lies with assumptions that a given function or group of functions must be present, much like the situation with human beings—they don’t pay a doctor a prescription; they pay the doctor in order to feel better. These kinds of assumptions can become limiting concepts; that is, they are illusory constraints. An example of this issue in school counseling occurs when we try to define what a counselor does.

1. Do they provide psychotherapy for students?

2. Do they reassign students to different classes?

3. Do they inform students of poor scholastic performance?

We suggest that the counselor’s basic function is to “champion students” even though this sounds like hand-waving