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CHAPTER 8
PURCHASING ANALYSIS TOOLS AND TECHNIQUES
The team then had some of the new envelopes sent to several different
locations around the country and asked company associates to put paper into
the envelopes and send them back via courier. No noticeable change to the
envelopes occurred and they functioned well. At that point approval was given
to go to full production and the programme was launched.
The next challenge was to move away from six colours to two. Through the
above actions, savings were realised in the region of 4-5% on costs, amounting
to several hundreds of thousands of dollars a year.
8.2.2 SELECTING A PRODUCT TO BE VALUE-ANALYSED
To make the best use of value analysis, it is important to select items for study
that will potentially yield the best results for effort expended. The following
product characteristics lend themselves to value analysis:
• High value or cost.
• Complex design.
• High levels of scrap.
• High levels of labour.
• Parts that can potentially be standardised and/or used in other applications.
• Out-of-date or obsolete components.
• Raw materials that may have substitutable, lower-cost materials available.
• Products that are of poor or inconsistent quality [1].
8.3 VALUE ANALYSIS APPROACH
8.3.1 COMMON APPROACH TO VALUE ANALYSIS
Value analysis should follow a systematic approach. The most common
approach for a company applying value analysis is to create a team composed
of representatives from the various disciplines/departments within the company.
Departments working alone cannot do as well collecting information and making
proposals affecting others; it is important to include representation from all
areas. Purchasing is often the lead discipline and responsible for carrying out
the initial cost analysis [1].
A structured series of steps, which would vary with size and type of enterprise,
should be followed when conducting a value analysis exercise and typically
includes the following:
• Preparation:
Teammembers brainstorm and list those aspects of the product
that they believe will be impacted by the study.
• Gather information:
Gather relevant information and make known
opportunities for improvement.
• Analysis:
Evaluate ideas and select those worthy of development.
• Generation of ideas:
Generate a large quantity and variety of ideas.