The Ultimate Cost Management Tool to Facilitate Improvement in the Products, Processes and Services You Employ In Your Operations By 5% to 7%

Most corporations’ non-salary expense initiatives are focused on lowering the purchase price of their products, processes and services as if this is the only weapon they have in their arsenal in combating the negative effects of the price pressures of the global economy. In reality, this is the least potent strategy that can be employed to dramatically lower your non-salary expenses. Why?

Your Suppliers Don’t Have More to Give

Over the next few years, the savings from your price, standardization and prime vendor contracts will be almost invisible. In fact, non-salary savings, across the board are flat, and will continue to be, as corporations continue to squeeze their suppliers for better pricing. Your vendors are screaming that they have no more price concessions to give to their customers. We call this THE LAW OF DIMINISHING RETURNS. Now, what can we do about it?

Price is Only the Tip of the Iceberg

Let us now think of your supply cost in terms of an iceberg. Our research has documented that corporations are saving only about 1% on their non-salary expenses annually with their price, standardization and prime vendor contracts on the piece of the iceberg that is shown above the waterline. However, the real savings are below the waterline and can only be reached with functional tools like the Value Analysis Navigator™. In fact, it has been our clients’ experience to save 26% to 78% on individual purchases, through functional analysis, by focusing their cost control efforts on streamlining and reinventing their products, processes and services, as opposed to spinning their wheels with constant focus on price strategies.

Purchase Cost is Only the Tip of the Iceberg

By embracing the 6-step Value Analysis Funneling Process™ embedded in the Value Analysis Navigator™, your corporation will be able to eliminate their fixation of cost managers on purchase price and focus instead on non-salary expense management efforts on determining their exact customer requirements by building specifications from a blank piece of paper. Then, big savings can be obtained by eliminating waste and inefficiency in your products, processes and services with scientific value analysis studies to determine non-conforming feature-rich products, processes and services, along with wasteful methods and practices being employed, and by maintaining conformance to requirements in all of your specifications.

Is Your Corporation “Winging It”?

Our studies show that most corporations are “winging it” when it comes to value analysis, which has high name recognition, but very few corporations are practicing its classic tenets. Value analysis, in its classic form, is the misunderstood, underutilized, yet most powerful non-salary savings technique in business today, if the concept of value analysis is applied consistently and artfully. Unfortunately, most organizations who say there are doing value analysis, are doing something else and calling it value analysis with meager results!

 The Value Analysis Navigator™: What It Is

The Value Analysis Navigator™ is a strategic, function-oriented software tool for providing, designing or investigating the right functions (primary, secondary and aesthetic) for the millions of dollars of products, processes and services that are employed to operate your corporation annually.

Although value analysis studies focus on cost, improvements in quality and performance are also paramount in the value equation. The value analysis methodology can be applied to any product, process, service, technology, procedure or system in your organization with quantifiable results. Its goal is to ascertain, through value analysis studies, those valued characteristics deemed most important to your internal and external customers.

Strategic VA Approach to Cost Management

This powerful software tool for solving problems and/or reducing cost, while maintaining or improving the performance and quality of a product, process or service, is available as a subscription service. Just as important, value analysis is most successful as a long-term strategic approach to cost and quality improvements. Historically, the payback for value analysis initiatives has exceeded 25:1 return-on-investment for most of our clients. These are the kind of results you, too, should expect at your organization.

The Value Analysis Navigator™: What It Is Not

The Value Analysis Navigator™ is not a software tool for negotiating, bidding or doing something else to reduce a supplier’s cost. It is not any of these things most organizations call value analysis. In fact, our surveys show that only 1 in 10 corporations is really practicing or applying the classic tenets of value analysis, thereby missing the opportunity to slash 5% to 7% annually off their non-salary expenses. This is because they are not performing value analysis studies, but they are really doing something else, such as, bidding, comparison-shopping, group purchasing or negotiations.

It is our observation that most corporations have now picked “the ripe fruit” in their non-salary expenses through group purchasing, renegotiations of contracts, standardization and prime vendor contracts, thereby obtaining the lowest price for the commodities that they purchase. With little savings left in this vineyard, now is the time to move to the next level of the evolution of value analysis to drive out all of the hidden costs in your products, processes and services with the Value Analysis Navigator™.

 

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