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Value Management

Value Management. Joseph F. Otero, Jr. CVS Value Methodology Integration Leader (& SAVE International Vice President, Education). Main Message. Pratt & Whitney Success Stories. Over 14,000 ideas for F135 jet engine for Joint Strike Fighter

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Value Management

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  1. Value Management Joseph F. Otero, Jr. CVS Value Methodology Integration Leader (& SAVE International Vice President,Education)

  2. Main Message

  3. Pratt & Whitney Success Stories • Over 14,000 ideas for F135 jet engine for Joint Strike Fighter • Commercial engine: $1/2 Million savings without weight increase • Driving to do VM earlier in Design

  4. 100 90 80 70% Percent Influence On Total Cost 70 60 5% 20% 50 5% 40 30 20 10 Burden 30% Labor 15% Material 50% Design 5% Traditional Cost Accounting Design Influence on Value Since up front decisions impact value the greatest, it’s imperative to address affordability in concept stage.Create performance/cost/weight relationships & link to Affordability initiatives.

  5. ConceptualDesign PreliminaryDesign DetailDesign Development Production Future Programs Year 1995 Year 1999 F135 in 2002 Business Requirements Customer Satisfaction VM Applying Value Management Deliver essential functions in the most profitable manner.

  6. We think we’ve discovered how to be geniuses relative to affordability. Intellectuals solve problems; geniuses prevent them. --Albert Einstein

  7. Product Learning Curve Effect 1 yr of savings/cost avoidance on major engine development Effect of Affordability Plan Predicted Estimated Cost Start Lower Learned out sooner Effect of Affordability Plan & VM PRODUCTION ENGINE UNIT

  8. Failures (seeds of Opportunity) • Resistance toward VM in a few programs • Not invented here? • A VM group disbanded when its executive retired • Process shortened until it didn’t deliver. • Grasshopper without legs is deaf? • Lesson learned: match length of study to magnitude of problem.

  9. Recommended Improvements • Pull VM into conceptual design. • Avoid problems instead of fixing them. • Use ranges of acceptability (versus hard points). • Increase potential to balance business needs with customer expectations • Continue VM throughout product development • Promote use of VECP’s

  10. Back-up Slides

  11. Encountered Barriers • Organizational Culture • Metrics drive behavior • resistance at different tiers • (embracing change: easier said than done) • Failure to implement opportunities • inadequate resources • risk aversion • schedule constraints

  12. PROJECT WILD CARD DESIGN COST MAINTAINABILITY WEIGHT CUSTOMER LEAD TIME DURABILITY MFG RELIABILITY OPERABILITY SUPPLIER FINANCE PERFORMANCE Balancing Design Deliver essential functions in the most profitable manner. Ensuring stakeholders & requirements are working together to satisfy customer needs.

  13. Why VM Works “The mere formulation of a problem is far more often essential than its solution, which may be merely a matter of mathematical or experimental skill. To raise new questions, new possibilities, to regard old problems from a new angle requires creative imagination and marks real advances in science.” - Albert Einstein Function analysis via FAST modeling is all about understanding problems with new perspective.

  14. 2-3 days analyzing the problem full day brainstorming 2 days sifting ideas 1 day packaging and analyzing Weeks implementing ideas A couple of hours deciding what to work on a half hour brainstorming Weeks to try to make the ideas work, revisiting brainstorming versus Value ManagementProcess Conventional ProblemSolving

  15. Communicate Ranges of Acceptability Minimum Acceptable values Maximum desired values Perception of value delivered by competing products Communicate Requirements Single data points Only know customer ideal Key Function of Customer Input --Vs.-- Several Alternatives Limited Choices Make Balanced Trades Possible

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