[Vision2020] Value Engineering

[Jeff Harkins]

Many of you have been slamming WalMart for introducing products for 
segment marketing.  The issue you are discussing is value 
engineering.  Below is a primer on value engineering.  Following that 
is a link to an announcement by Levi Strauss describing their new Red 
Tag Signature Line (2002)

WalMart and other mass distribution channel merchandisers across the 
globe are fully engaged in value engineering - a process that lowers 
cost, improves functionality and/or provides a product to a segment 
that previously had no opportunity for consumption.

Following the Straus piece is a link to a global site on value 
engineering which provides additional links to value engineering issues.

The key to success for value engineering  is to have mass channel 
merchandisers add value engineered products to their inventory.  It 
appears that all mass merchandisers are supporting this 
initiative.  WalMart did not invent this concept; but they have advanced it.

Value engineering




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Value Engineering is a systematic method to improve the "Value" of 
goods and services by using an examination of FUNCTION. Value, as 
defined, is the ratio of Function to Cost. Value can therefore be 
increased by either improving the Function or reducing the cost. It 
is a primary tenet of Value Engineering that quality not be reduced 
as a consequence of pursuing Value improvements.

In the United States, Value Engineering is specifically called out in 
Public Law 104-106, which states "Each executive agency shall 
establish and maintain cost-effective Value Engineering procedures 
and processes."

Value Engineering is sometimes taught within the 
<http://en.wikipedia.org/wiki//wiki/Industrial_engineering>industrial 
engineering body of knowledge as a technique in which the value of a 
system's outputs is 
<http://en.wikipedia.org/wiki//wiki/Optimization_%28mathematics%29>optimized 
by crafting a mix of performance (Function) and costs. In most cases 
this practice identifies and removes unnecessary expenditures, 
thereby increasing the value for the manufacturer and/or their customers.

Value Engineering uses intuitive logic (a unique "how" - "why" 
questioning technique) and the analysis of Function to identify 
relationships that increase Value. It is considered a quantitative 
method similar to the Scientific Method, which focuses on Hypothesis 
- Conclusion to test relationships, and Operations Research, which 
uses model building to identify predictive relationships.

Value Engineering is also referred to as "Value Methodology".


Here is a link to an announcement by Levi Strauss about their new 
mass channel products - the red Signature line:

http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=23&contId=4701

Please note that this product was announced by Levi Strauss in 2002.

Here is the link to other sites (global) that are involved with value 
engineering:  http://www.value-engineering.com/weblinks.htm 
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