A discipline is a universally accepted system of instructions, rules, regulations, and learning that together form a defined body of knowledge that is religiously adhered to and adopted by its practitioners. As Alexander Massey tells us, “…while the strength of (a) discipline must depend partly on its flexibility and openness to a diverse way of working, there must be some common threads – technical and philosophical – which enable us to say, yes, we all belong (to this discipline).” This is not the high standard whereby organizations are measuring their value analysis programs today, even though this tried and true system is universally accepted as a true discipline.
As opposed to the conventional wisdom, value analysis isn’t a committee of 20+ members meeting to review and approve contracts. It’s not negotiating or bidding to reduce a supplier’s costs. Nor is it standardization, new product, service, or technology conversions or introductions, or approving new product, service, or technology requests. Value analysis isn’t any of these things that many organizations call value analysis.
Value analysis is a powerful savings tool that, if not practiced scientifically or not practiced at all, will generate only meager savings. Conversely, if the right people have the right tools, training, and a proven value analysis system, and if value analysis practitioners are deployed to look at the right information, then millions of dollars can be saved for that organization annually.
Our studies show that only 1 in 10 organizations are really practicing and applying the classic tenets of value analysis, thereby missing the opportunity to slash 7% to 15% off their non-salary/supply chain expenses annually. This is because they think they are practicing value analysis, but they are really doing something else, such as, bidding, comparison-shopping, or negotiations.
The “ripe fruit” has been picked in organizations through re-negotiation of contracts, standardization, and prime vendor contracts, thereby obtaining the lowest price for the commodities you purchase. Now is the time to drive out all the hidden costs in your products, services, and technologies by having value analysis become a true discipline at your organization.