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PREPARING FOR A SUCCESSFUL VALUE MANAGEMENT WORKSHOP

PREPARING FOR A SUCCESSFUL VALUE MANAGEMENT WORKSHOP. Vince Thomson Based on an article by J. Jerry Kaufman, CVS. The Processing of Information - The Pre-Event Phase. Problem Definition. What is the problem we are about to resolve?

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PREPARING FOR A SUCCESSFUL VALUE MANAGEMENT WORKSHOP

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  1. PREPARING FOR A SUCCESSFUL VALUEMANAGEMENT WORKSHOP Vince Thomson Based on an article by J. Jerry Kaufman, CVS

  2. The Processing of Information - The Pre-Event Phase

  3. Problem Definition What is the problem we are about to resolve? The XYZ Car Group is launching an Enhanced Power Steering System for a future platform. The unit target price is established at $205 for the first year’s production. This equates to a target cost of $185 per unit. Why is this considered a problem? A competitor’s bid for EPS is 23% less than XYZ’s current system priced at $270 at a value leading $221. XYZ Purchasing has globally quoted the EPS system components at $205 with a 14% profit before taxes. Why do we believe a solution is necessary? (or What is the consequence of not solving the problem?) If XYZ is to protect and increase its market share, XYZ must dominate the emerging market. Since price is dominant, XYZ must resolve the price/cost gap and create a viable business case to obtain the new business. Failure to achieve this objective will necessitate downsizing the XYZ division.

  4. Project Goals 1, Achieve a Unit Target Cost goal of $185 for the first year’s production quantity of 2,000,000 units. 2. Capture ideas for Advanced System opportunities. 3. EPSSystem performance will be equal to or better than the unit it is replacing. 4. Focus on improvements in noise (mechanical and electrical), i.e., “zipper”, sizzle, lash vs friction. 5. Meet minimum acceptable requirements on all attributes.

  5. Attribute Definitions

  6. Attribute Scale

  7. Paired Comparison FACTOR • Low • Medium • High

  8. Paired Comparison 1. Take a “snapshot” of the current conditions of the project. 2. Consider ONLY the attributes being paired. 3. If you were given resources to IMPROVE only one of the pair being evaluated, which would you choose. 4. Choose Minor (1) Medium (2) Major (3) or degree of importance in making the improvement.

  9. Product Performance Profile - Original

  10. Product Performance Profile - Competitor

  11. Product Performance Profile - Proposed

  12. Product Performance Profile

  13. Attribute Guidelines

  14. Attribute Guidelines  Select from 5 to 8 attributes  Customer and business goals can be intermixed.  Attributes are acceptable in a range of “goodness.” Not binary (good or bad). • Attributes should be independent of each other. • Attribute weights must reflect the problem definition.

  15. Attribute Definitions

  16. Attribute Guidelines  Select from 5 to 8 attributes  Customer and business goals can be intermixed.  Attributes are acceptable in a range of “goodness.” Not binary (good or bad). • Attributes should be independent of each other. • Attribute weights must reflect the problem definition.

  17. Summary  Do prepare VE (improvement) projects.  Select criteria carefully. • Only choose those criteria that add substantial value. • Consider the strategic value of the project.

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