VALUE ANALYSIS NETS 14.3% SAVINGS FIRST YEAR
THREE YEAR SAVINGS WILL CUT COMPANY OVERHEAD BY $13M
*Case studies have been anonymized for client confidentiality
Recently, a major automotive parts manufacturer tackled the elusive area of overhead expenses with Value Analysis – and consequently attained some incredible results. For years, people had stayed away from the “Chart of Accounts”, claiming that bringing in a management consultants to perform Value Analysis only work on hardware. Yet, two teams of department heads decided to take the plunge anyway and bring in an expert team of business strategy consultants. As a result, the company was able to net 14.3% savings on overhead expenses in the first year.
After only seven sessions studying the problem, the teams surprised senior management by exceeding their first-year target by 50%. Their goal had been to take $2 Million out of their overhead structure over the next three years. First year savings alone are projected at $3.8 million with three-year net savings exceeding $12 million. The office accounts team proposed 20 changes the first year for a savings of $1.2 million. And most noteworthy, the factory team proposed another $2.6 million in savings by only making six more changes, as guided by their business advisor.
Any company can get large cost savings, and improve their product, service, or process by following these guidelines:
Adjust the company’s priorities to allow time for the study.
Establish the team based on the “right people”, not on whoever is available.
Establish a specific and measurable numerical goal to work towards.
Get your customer to provide valid feedback and be involved in the changes.
Fix all serious faults identified by your customers and your team members.
OTHER PRODUCT IMPROVEMENT PROJECTS: