In reality, a complex number of reasons exists that necessitate the structured approach of value analysis as a means of logical cost reduction. These reasons can be divided into two key sources, those that lie within the business and secondly those that are
stimulated by the market for the product or service.
- Products with known problems that from the pilot production stage continue to be produced but require remedial, corrective actions, and engineering change requests.
- Customer demands. Most markets require suppliers to offer a range of products and to continuously increase this offering. To avoid an explosion in the number of unique parts associated each new product many companies have introduced standard
components, platform strategies and supplier rationalization programmes. The ability to design products is seen as key to maintaining the quality, cost and delivery performance of the product. Some customers, especially those in mature markets, need to continuously reduce the costs of products in order to compete against comparatively cheaper imports. The increasing trend, across Europe, for businesses to ‗buy in‘ rather than ‗make‘ all the elements of a product means that new suppliers of materials must be educated in the VA process in order to use the specialist skills of the supplier to reduce the costs of supplied materials continuously.
- Safety and Compliance requirements for products in the market or being sold within markets that have different safety legislation implies that VA activities must be used to review the compliance of a product with the prevailing legislation and changes to that legislation. The Improvement of Product Margins.VA is often used to combat the perpetual and expected price reductions between a supplier and a customer. Therefore as a protective measure many businesses employ VA to reduce costs and to protect their own profit margins.