The two levers already in use to a wide extent in the companies are operational excellence and sourcing and procurement. We use lean, we measure OEE (Overall Equipment Effectiveness), we use Six Sigma, supply chain optimisation, etc. And we utilise category management, supplier optimisation, supplier negotiations, sourcing compliance, etc. All very good. All necessary. All effective.

It’s just that these initiatives never rarely question the actual product. Unfortunately, this is often regarded as a constant. What would happen if you started to ask ourselves if we could produce the product differently? Or if we allowed ourselves to ask if it is even the right product we produce? What would happen if we imagined a product which was optimised for the desired purpose as early as from the design phase, and which per definition enabled cheaper sourcing and cheaper and better production?

This is called value engineering. The value in value engineering can either be generated by enabling the product to provide improved functionality at the same cost or by maintaining the current functionality at a lower cost. It is by no means a new concept, but it used far too little if you ask me. Our experience shows that you will typically gain savings of 10-20% and payback horizons of less than 12 months when executing well-designed value engineering initiatives such as Robust Design.

Yet, we rarely see value engineering and Robust Design used consistently by our clients. The question is why.

Read the full article here.