Over the last three decades we have studied the best value analysis strategies, tactics, and techniques that leading-edge organizations have adopted to reduce costs and improve quality. We would now like to share with you six of the best practices that we have observed really work:
- Committed Culture
The first and foremost requirement for a successful value analysis program is to obtain your organization’s cultural commitment to root out all waste and inefficiency in their supply chain utilizing the value analysis methodology to do so. This cultural commitment can be achieved by: (i) Demonstrating through benchmarking how much savings can be achieved by your organization by adopting a value-based selection/evaluation system, (ii) educating top management and middle management on the benefits that can be derived by focusing their cost and quality efforts on value vs. price, and (iii) rewarding value-based performance with recognition and monetary rewards.
- Strategic by Design
It was once said that “activity without planning is a waste of time and energy,” but organizations continue to throw together value analysis teams without the right people, right processes, or without looking at the right things. On the other hand, best practice corporations have a “formal” strategic value analysis planning process to systematically design their value analysis program after appraising their strengths and weaknesses.
- Exceptional Leadership
Successful value analysis programs start with exceptional leadership from the top down who encourage, support, and nurture their value analysis teams to be the best they can be. They also inspire their value analysis teams through recognition and incentive programs to make the necessary behavioral changes that are required to break through all barriers that would hold back their ultimate success.
- Flawless Execution
Any organization can decide to have a value analysis program, but only a few know how to execute flawlessly the value-based strategies, tactics, and techniques that are required to be a winner. To do so, an organization needs to re-invent their products, services, and technologies so that they consistently meet their customers’ requirements – and not overshoot the target by trying to delight their customers.
- Team-Based Structure
Committee-based value analysis programs are inherently passive, action-adverse, and too homogenous to be effective vehicles to make positive change, whereas, team-based value analysis programs are dynamic, action-oriented, heterogeneous, and structured for change. When deciding on your value analysis structure, always opt for a team-based architecture to ensure that you have the right energy and force to make positive changes continuously.
- Outstanding Talent
Most value analysis teams’ membership is represented by department heads and managers with politically correct titles (director of operations, director of human relations, warehouse manager, purchasing manager, etc.) that look good on paper, but are they the most talented department heads and managers in your organization? At best practice organizations, value analysis team members’ criteria are based on the talent or competencies (analytical thinker, organized, reliable, enthusiastic, etc.) required for value analysis team membership. It’s just like selecting members of a baseball team. Would you select the most talented players for your team or only the players that “look good” on the playing field?
The knowledge of what really works with value analysis is just the starting point if you want to reach the “Superior Performance Stage” with your value analysis program. You must first put these best management practices into action, starting with a Strategic Value Analysis Plan™ to uncover your current program’s strengths and weaknesses, then enhance your strengths or rectify your weaknesses to meet your current challenges.
This planning process should be an annual ritual, so you can start where you are now with your value analysis program and re-invent it along the way, since a Strategic Value Analysis Plan™ is a living document that changes as disruptions surface or new and better technologies become evident.