Page 153 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes which aimed at identified functions given by a product or part of it. Functions have an
important (weight) and a cost. These costs are quantified and this leads to a list of functions
ordered by their importance and value.
At innovation phase, alternatives are generated starting from the analysis of functions
and cost, as well as a search for means that allow elimination, change or improvement and
functions. The evaluations stage represents a confrontation of ideas, a collection of
information about the feasibility and cost of those ideas and measures the values of the
best idea. The implementation and monitoring phase summarizes and concludes the work
that has been done here along with specific proposal. Action plans for implementation are
equally described. Some of the major advantages of using value analysis according to
Jarvis (2002) can be summarized into a high customer orientation focusing on those aspects
of the product/service that better satisfy customers’ needs. Value analysis equally brings
cost reduction by eliminating functions that do not supply specific advantages to satisfy
customers’ requirements.
Also, new ideas that arise from the creativity/innovation phase may add radical changes
and therefore competitive advantages that will be regarded by the market. In addition,
value analysis creates a new systematic mentality to be taken into account for the designs
of new products or to systematically improve the existing ones. By eliminating cost
functions, Jarvis (2002) pointed out that the only drawback to the value analysis process is
that it requires thorough supervision, lesser number of staff but with higher intelligence
than is required by ordinary traditional approach to achieving organizational objectives.
Some components (vitamins and minerals) of Bournvita perform the same function.
Customers’ response to price-quality relationship is swift. Since Value Analysis is only
practiced on a fairly satisfactory level and customers demand for reduced prices and
improved quality products, there is still need for improvement in term of quality and
price which will increase productivity, enhance sale revenue and goodwill, ensure
satisfaction of customers, creditors and suppliers as well as employees (corporate efficiency)
through the spiral effect on sales, return and profitability as well as dividends.
The staffs are not well informed of the practice of Value Analysis Concept which results in
the current low level of practice of value analysis as well as the company’s current low
level performance (profitability) of Cadbury Plc. This result is adjudged less satisfactory
if an improved practice of value analysis is capable of improving corporate efficiency as
revealed by Courtney’s (2002) study where one of the world’s leading managing companies
dramatically increased its efficiency and saves more than seven million dollars ($7m).
This translates to mean that the company can still do better by jettisoning the outdated,
less effective traditional approach, adopt the new mantra ‘value analysis’ and thereby
overcome corporate inefficiency.
Questions
1. Study and analyze the case.

2. Write down the case facts.
3. What do you infer from the case?

Source: http://www.unilorin.edu.ng/publications/olaniyi/Publicatn%203.htm
10.7 Summary

 Value analysis is a technique with immense possibilities, and systematically employed, it
can achieve great economies and increased efficiency.

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