Page 327 - DMGT501_OPERATIONS_MANAGEMENT

Unit 14: Purchasing

action without realizing it, because of our own bias. Conversely, the more abstractly we can Notes
define the function of what we are trying to accomplish, the more opportunities we will have for
divergent thinking.
This high level of abstraction can be achieved by describing what is to be accomplished with a
verb and a noun. In this discipline, the verb answers the question, "What is to be done?" or, "What
is it to do?" The verb defines the required action. The noun answers the question, "What is it
being done to?" The noun tells what is acted upon. Identifying the function by a verb-noun is not
as simple a matter as it appears.
Identifying the function in the broadest possible terms provides the greatest potential for
divergent thinking because it gives the greatest freedom for creatively developing alternatives.
A function should be identified as to what is to be accomplished by a solution and not how it is
to be accomplished. How the function is identified determines the scope, or range of solutions
that can be considered.
That functions designated as "basic" represent the operative function of the item or product and
must be maintained and protected. Determining the basic function of single components can be
relatively simple. By definition then, functions designated as "basic" will not change, but the
way those functions are implemented is open to innovative speculation.
As important as the basic function is to the success of any product, the cost to perform that
function is inversely proportional to its importance. This is not an absolute rule, but rather an
observation of the consumer products market. Few people purchase consumer products based
on performance or the lowest cost of basic functions alone. When purchasing a product it is
assumed that the basic function is operative. The customer's attention is then directed to those
visible secondary support functions, or product features, which determine the worth of the
product. From a product design point of view, products that are perceived to have high value
first address the basic function's performance and stress the achievement of all of the performance
attributes. Once the basic functions are satisfied, the designer's then address the secondary
functions necessary to attract customers. Secondary functions are incorporated in the product as
features to support and enhance the basic function and help sell the product. The elimination of
secondary functions that are not very important to the customer will reduce product cost and
increase value without detracting from the worth of the product.
The cost contribution of the basic function does not, by itself, establish the value of the product.
Few products are sold on the basis of their basic function alone. If this were so, the market for "no
name" brands would be more popular than it is today. Although the cost contribution of the
basic function is relatively small, its loss will cause the loss of the market value of the product.
One objective of value analysis or function analysis, to improve value by reducing the cost-
function relationship of a product, is achieved by eliminating or combining as many secondary
functions as possible.

14.3.2 Value Analysis Process

The first step in the value analysis process is to define the problem and its scope. Once this is
done, the functions of the product and its items are derived. These functions are classified into
"basic" and "secondary" functions. A Cost Function Matrix or Value Analysis Matrix is prepared
to identify the cost of providing each function by associating the function with a mechanism or
component part of a product. Product functions with a high cost-function ratio are identified as
opportunities for further investigation and improvement. Improvement opportunities are then
brainstormed, analyzed, and selected.

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