VALUE WORLD

4 Y / J U N K 1979 lumc 3 No. 1

T E C H N I C A L P U B L I C A T I O N F O R ^ \ o SPECIAL

INTERNATIONAL ISSUE

INSIDE — INTRODUCTION BY L A R R Y MILES

ALSO — V. E . A R T I C L E S FROM:

Japan Italy India Norway Israel South Africa

1979 INTERNATIONAL CONFERENCE

May 23-26 Washington, D.C.

p r e s e n t e d b y

S O C I E T Y O F A M E R I C A N V A L U E E N G I N E E R S

INFORMATION Donald E. Parker

Additional information concerning any aspect of the _ Director, Value Management conference can be obtained from the General Chairman: General Services Administration (PCV)

18th & F Streets, NW Washington, D.C. 20405 Washington, D.C. 20405

Tel: 202-566-1011

PUBLISHER

Society of American Value Engineers

SOCIETY OF AMERICAN VALUE ENGINEERS

220 N. STORY RD., SUITE 114 IRVING, TEXAS 75061

Phone (214) 253-5171

Managing Editor Carlos Fallon

10 Quail Hollow Drive Southport, N.C. 28461

A

B Contributing Editor — ASPI ALEX PETCHKUROW

COLLINS RADIO GROUP (MS 402-231) ROCKWELL INTERNATIONAL

1200 N. ALMA ROAD RICHARDSON. TX 75080

Contributing Editor — NASS JUDY CORBIN

NATIONWIDE MUTUAL INSURANCE 246 N. HIGH ST.

COLUMBUS, OHIO 43216

Production Editing and Printing Triangle Press P.O. Box 407

Grand Prairie, TX 75051

EDITORIAL ADVISORY BOARD

Arnold Skromme Deere & Co. Moline, IL

Oliver Hallett Executive Secretary NASS

Paul M. Bailey Pacific Gas & Electric

Art Mudge Joy Mfg. Co.

Thomas D. O'Connor West Point, PA

Harry Coffin Schwinn Bicycle Chicago, IL

VALUE WORLD Volume 3 No. 1 May/June 1979

Magazine for

A M E R I C A N SOCIETY FOR PERFORMANCE I M P R O V E M E N T

790 Broad Street, Newark, NJ 07102

and

N A T I O N A L ASSOCIATION OF SUGGESTION SYSTEMS

435 North Michigan Ave., Chicago, I L 60611

and

SOCIETY OF A M E R I C A N V A L U E ENGINEERS 220 N . STORY RD., SUITE 114

IRVING, TEXAS 75061

THIS MONTH'S FEATURES: Page An Open Letter To Joe Conn

Editorial By Carlos Fallon 2

Principles of Value Analysis By Lawrence D. Miles 3

An Interview With Jerry Kaufman 5

Human Relations In VE—How To Win Over People By S. S. Venkataramanan 6

The Super Value Approach For Dynamic Environments By Oved Friedman, MSME, CVS 9

Value Management For The Chemical And Process Industries By James W. Hudson 1 4

"New Venture Value Search" (Making Companies Well Through VE/VA)

By Chris Rand (BSC/MBA) 1 7

Value Management Into The Fields of Sales, Training, and Advertising to Improve Company Performance

By H . Keith van Heerden, PE, CVS; and Bruce Joelson 25

COLUMNS FEATURES:

Carlos Fallon 2

Opportunities 27

SUBSCRIPTIONS - S i . , k Issae $2. Yearly rate: U.S. $12 lo SAVE Men.ten. (include i . annual membership dues rale!. Nou-memben and Foreign Countries S14. Technical Society and organization bulk rales aad overseas air mail rales are available upon request. Make all checks payable to SAVE ia U.S. doHars.

Editorial by

CARLOS F A L L O N

P. 2

I N T H I S I S S U E

V . A . Principles by

L A R R Y MILES

P. 3

A n Interview with JERRY K A U F M A N

P. 5

1

Editorial by Carlos Fallon

AN OPEN LETTER TO JOE COHN

This editorial takes the fo rm of an open letter to Joe Cohn, top VE man at the White House. Quoted in the prestigious Value Engineering Digest* Mr. Cohn says, " Inf la t ion fighting has everyone's attention these days. Why doesn't VE show how i t can help carry out federal programs and projects for less . . . and still deliver the same or better quality?"

Right on! Inflation is the problem. V A / V E has made its name by reducing unnecessary costs, but inflation in­creases all costs, and worse, i t erodes the value of everybody's savings, pen­sions, and insurance.

I t has taken this economic mess to make the worid realize that today a na­tion's currency is no better than the goods i t can buy. That is where the value specialist comes in . V A / V E in­evitably helps'produce better goods for the money. At the end of the rainbow there is a better l ife for everybody — a better l i fe , not based on gold, but on human effort and human ingenuity. V A / V E task g roups have demonstrated, time and again, that the results of the labor and imagination of the workers are worth more than the results of the labor alone. The com­bination of relevant specialists at various levels releases untapped reserves of brainpower, leading to bet­ter products and services.

Better products and services mean greater buying power for our money. That is the front end of the problem. I t

affects the whole economic picture. What about "too few resources for too much money?" By drying up the money, we would be literally chasing our tail , running after the conse­quences of a much greater problem — the stagnation of U . S. productivity and failure of the GNP to keep up with the needs of the people. A positive and constructive solution to this larger part of the problem is a greater GNP based on the production of top quality pro­ducts and services.

Recession and unemployment do not produce anything. Work does. The ad­ded productivity can be made attrac­tive to the producers themselves. They should be encouraged to think and to i n n o v a t e . V A / V E p rov ides a mechanism whereby the producers can bring to the top of the house, the wealth of information that already ex­ists on the factory floor.

Doing something right, almost always costs less, so that V A / V E generates the money for making its own changes. A l l i t takes is a little more thinking by everybody and very little encouragement.

Mr . Cohn, you don't have to be sold on the value disciplines, but you are known very favorably to us; so I am using this vehicle to alert thousands of value specialists throughout the world to the anti-inflation nature of V A / V E . In your strategic spot, you can do wonders with i t . For heaven's sake, don't overregulate i t , as it has been

Carios Fallon

overregulated in the Department of Defense.

The great motivation for V A / V E in private industry is in terms of earnings per share, return on investment, return on assets, share of the market, etc. Those goodies, including product im­provement and cost reduction, are what industry strives for all the time. A n adversary relationship between the latter two, however, often stymies one or the other.

V A / V E can achieve product im­provement and cost reduction, at the same time, and in relation to each other. This better use of human resources can turn around many a U.S. industrialist f rom a baffled competitor of low priced imports into a producer of top quality products at reasonable prices.

To summarize: 1. The inflationary imbalance be­

tween too few products and services and too many dollars seeking them can be redressed at the front end by more and better products and services.

2. Drying up the dollars wi l l only lead to more stagnation. There is no

substitute for work. 3. V A / V E can help produce more

and better products and services. Its techniques of better human interac­tion, more direct communication, and planned innovation can make produc­tivity growth interesting and pleasant for the producers themselves.

*Value Engineering and Management Digest, 986 National Press Building, Washington, D.C. 20045. vol. 21, no.3, p.2.

U.S.A. A fitting introduction to an international issue of VALUE WORLD is evidence of the continuing effectiveness of Lawrence D. Miles. The great Larry, who publishes a bimonthly column on Principles of Value Analysis in PURCHASING WORLD. The column that follows is reprinted with permission of PURCHASING WORLD magazine, ©Copyright 1978 by Technical Publishing Company, a Dun and Bradstreet Company.

•

Principles ot Value Analysis By Lawrence D. Miles

Certified value specialist

Check the specs for hidden costs

No purchasing technique is any better than the preparation, planning and motivation of the person using i t . Every buyer ought to make six deci­sions before proceeding with any gameplan. He must decide:

1) That he is going to increase his ear­nings contribution to his employer.

2) That he is like a goalie who guards the net for his team. His job is to see that no money goes out unless value comes in .

3) That he wi l l not just catch the ball and quickly pass i t on. He wi l l carry it a meaningful distance toward the goal.

4) That, as in any game, he wil l have blockers and stoppers. He must expect them, prepare for them, and overcome them.

5) That he wi l l show his teammates how effectively he can run the ball and that he wants and expects to do i t .

6) That he wi l l teach his vendors to help him.

When a buyer makes those six deci­sions, he is ready for Specification Function Analysis. SFA is often a big winner for the buyer who asks ques­tions and gains more knowledge about the job at hand.

Most buyers realize that each item of a specifcation brings more function but also adds more cost. Surfaces smoother than normal, perpendiculari­ty more exact than normal, clearances tighter than normal—all are for some

functional purpose at some higher cost.

The smart buyer checks each other-than-normal specification. He learns which add cost and how much. He often finds that some specs add little or no function, and so he figures the cost benefit that would result i f those specs were not included. He forwards that information to his teammates fo r ap­propriate action.

Don' t be intimidated by the term " S p e c i f i c a t i o n F u n c t i o n and Analysis." You've probably been us­ing i t all along. And we've talked about the technique (without actually naming it) in recent columns.

Remember the pole piece, the cylin­drical slug of soft iron used in radio speakers [PW, July 78, p. 88]? The buyer who purchased 170,000 pieces/month recommended ending tighter-than-norman tolerances on the length and flange diameter of the part. Relaxed tolerances allowed a different manufacturing process, which lowered production costs by $41,000/year. That buyer was using Specification Function Analysis.

In another case, it was SFA that disclosed that all but one of the right tolerances on 700,000 tiny steel valves were not needed [PW, Apr i l 78, p 58]. This discovery meant that alternate materials, suppliers and production methods could be used to advantage.

The buyer in this instance reduced cost per thousand f r o m $60 to $1.

Taming of the screw

The buyer requires ever increasing amounts of knowledge to reduce costs and bolster profits. SFA is important because i t brings the buyer the knowledge he needs.

Consider the case of the buyer who purchased 600,000 smal l steel screws/year to drawing specifications. The screws cost $6/thousand or $3,600/year. The buyer took a close look at the special order screws and compared them with standard screws at one-third the cost.. Where was the $2 ,400 d i f f e r e n c e , the buye r wondered? He went to the requisi-tioner for some answers. Q. This is really a $2/thousand screw. Can you help me buy i t for that price? A . No, this is a special screw. The $2 price is for a standard screw.

Q. What's so special about it? A . We require a small head, and this screw has a #6 head.

Q. Does i t have a #6 shank? A . No, it has a #8 shank.

Q. I f the screw has a #6 head, why doesn't i t have a #6 shank? A . Because Underwriters' approval requires a #8 screw for this type of application.

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3

Principles of Value Analysis

Con 7 from p. 3

Q. Then why not use a #8 head so that we could buy a #8 standard screw, at a cost o f only $2/thousand? A . We use 12 of these screws on the part. Eleven standard #8 screws would be alright. But the last one screws down closely past a steel spacer, and the head might lack screwdriver clearance at assembly.

Q. Why not order 11 standard screws at one-third the cost and only one special? A . There's too much danger of a mix-up during assembly, but for a $2,400 savings, we'll look in­to i t .

Before long, the buyer learned that U L required the #8 screw because it had a large enough head to secure a small wire connection. But upon re­examination, they cleared the entire application for standard #6 screws, and the buyer's action saved $2,400/year.

This is a good juncture to reiterate an important V A principle: Never assume.

Never assume "there must be a good reason for it."

Never assume "they know what they want, and that's it."

Never assume "they know it costs extra."

Never assume "alternatives were considered before this was specified."

Never assume "a l l the facts were known when the specification was drawn up . "

Profitable examples of specification Function Analysis can be found in every type of purchase. For instance, a buyer with a home appliance manufac­turer was purchasing 60,000 spr­ings/year at 9C apiece, or $5,400/year. Each spring was the size of a cigar with a standard hook at one end and a 2-in.

straight wire and special hook at the other.

The buyer asked some questions and learned that the spring's function was to hold an idler pulley tightly against a belt; that the spring worked in both damp and dry environments; that there was plenty of room around the spring; that the straight 2-in. wire added cost but had no function other than con­necting the spring to a steel bracket.

The buyer went to his suppliers and learned they could supply an inter­changeable wound spring with stan­dard hooks on both ends for 3 e . The new spring was approved for use and purchased. Specification Function Analysis added another $300 in mon­thly earnings for the design life of the product.

I M M E D I A T E RELEASE

FATHER K N E W BEST — Ford Chicago Stamping Plant employee Peter Erdmann of Homewood explains to his daughter Ursula, 13, the idea that earned him $6,000 plus a new car under the 1978 Ford Suggestion Pro­gram. The company's 4,700-employee stamping plant near Chicago Heights gained first-place standing among 84 Ford facilities in the United States and Canada participating in the program last year. Employees at the local Ford plant won 1978 suggestion awards totaling more than $380,000.

A 21-year employee of the Ford Stamping Plant, M r . Erdmann sug­gested a way to use, rather than scrap, metal cut f r o m vehicle door panels for window openings. A tool and die tradesman, during the past two years he has won 12 Ford suggestion awards, receiving company products and cash prizes valued at nearly $36,000.

4

JAPAN Editor's note: In the last issue I mentioned J.J. Kaufman's breakthrough with his CPR ratio as a measure of the product improvement and innovative capabilities of VA/VE. Immediately on his return from Japan, Jerry prepared a column on the subject for the Japanese Society of Value Engineers NEWSLETTER. I wrote, ask­ing permission to reprint the column. Knowing how long such decisions take in the Orient, and with the deadline for this issue upon me, I decided to interview Jerry himself. Here are the results:

AN INTERVIEW WITH JERRY KAUFMAN

VALUE WORLD: Jerry, you are one of the nation's top-flight value specialists, do you think executives are really interested in cost reduction?

J.J. KAUFMAN: Only when it contributes to all of the company's objectives. Applying Value Engineering to a product whose sales are insignificant, or is in the last stages of product obsolescence, may show a good unit cost reduction. However, i t can also represent a poor return on the investment.

VALUE WORLD: Do volume and sale play a part in the selection of V A / V E projects?

J.J. KAUFMAN: Yes. This is one reason why VE can­not be dis-associated f rom marketing and sales. In terms of impact, market share and growth are much more im­portant than product cost reduction. Likewise, commit­ted sales quantities are more important as a multiplier in determining potential cost improvements than produc­tion schedules or economic lot quantities (ELQ's). VALUE WORLD: What part does cost reduction play in justifying VA/VE?

J.J. KAUFMAN: I n justifying V A / V E , cost reduction is the weakest link; product improvement is the strongest; that and contributing to such bottom lines as return on investment (ROI), return on assets (ROA), in­creased share of the market, etc.

VALUE WORLD: I f not cost reduction, what other quantitative measurement?

KAUFMAN: In our company, the cost-to-price ratio (CPR) commands the attention of Marketing and Finance, which in turn captures the attention of ex­ecutive management. Using CPR's to select which pro­ducts to pursue as Value projects during the year gives the Value Manager some measure of assurance that he is working in the mainstream of management attention, rather than in peripheral areas.

VALUE WORLD: Does CPR also measure cost reduc­tion?

J.J. KAUFMAN: CPR is a measure of margins; which can be translated into earnings. CPR does not do away with Cost Reduction, but relates it to a higher order measurement. I t also opens up new areas (function im­provements) in which the Value Engineer can operate and be measured on.

VALUE WORLD: How does product improvement f i t into the picture?

J.J. KAUFMAN: Not all Value projects can be measured by CPR. Study areas that do not relate to a product should be examined to determine their con­tribution to management objectives and reports. Perhaps the readers could contribute to these measure­ment criteria. However, product improvement seems to be the most active and common VE venture; with "Cost Reduction" as its weakest justification.

5

INDIA HUMAN RELATIONS IN VE — HOW TO WIN OVER PEOPLE

By S. S. Venkataramanan Currently a Value Engineer with the Steel Authority of India Ltd. New Delhi, Venkataramanan obtained his B.E. (Hons.) in Mechanical Engineering from Madras University in 1954 and became a Certified Value Specialist in 1977. He worked for the Indian Railways for over 21 years and was one of the chief architects of the Railways' modernized Inventory Control system. He has lectured extensively and written many articles on VE.

Abstract

Human beings, unfortunately, are not l ike machines. They cannot be switched on or o f f at wi l l nor can they

be screwed, tightened or loosened with nothing more complex than a spanner and elementary skills. They therefore, represent the one and only major challenge to success in Value Engineer­ing. How this challenge arose, how it was met and how the energy of challenge was converted to energize motivation of more of the species — Homo sapiens — is the subject of this paper, based on the author's direct ex­perience on virgin fields.

Introduction

Some time back, I came across a definition of Industrial Engineering "Inter alia", i t said that I .E . "draws upon the specialized knowledge and skills in the Mathematical, Physical and Social Sciences together with the principles and methods of Engineering Analysis and Design to specify, predict and evaluate the results to be obtained f rom such systems". The paper in question proceeded further to explain the unique characteristics of I .E . , all of which was not only true but in­teresting. However, i t occurred to me that there was practically no reference to the critical factor of Human Rela­tions or human psychology. To put it differently, Value Engineering makes itself unique not only because of its F U N C T I O N - O R I E N T E D I N ­VESTIGATION, BUT DELIBERATE C R E A T I V I T Y A N D ORGANIZED T E A M W O R K but also due to its in­sistence on developing skills and techniques to improve, maintain or

establish CONSTRUCTIVE human relations. In 1967, when I first read Larry Miles' "Techniques of Value Analysis and Value Engineering", I felt that his oft-repeated advice to "use good human relations" was perhaps overdone. In later years, I realized the reason for his insistence but never more so than in the last few years when I had to grapple with the problems of human responses to VE at close quarters.

I use the term "human responses" advisedly because what I experienced, to a large extent, was not roadblocks through the dictates of man's ego, mental inertia or plain stubbornness but actually "road-HELPS!". My over 30 lectures, two-day seminars and five-day, 40-hour workshops were at­tended, in all, by nearly 800 senior ex­ecutives/managers f rom different sec­tors of industry—large and small, government and private, heavy and light engineering. About 100 of them actually worked with hands-on live projects to develop VE alternatives but I had less problems with them than with those to whom they had to report. As I said, I received "road-help" in the form of unbiased reception and over­whelmingly appreciative response— but, paradoxical as it may sound, there were problems despite this road-help too!

Accountability

First among them was a peculiar In­dian cause for worry, especially among managers in state-owned sectors of in­dustry or government departments. This related to personal accountability for lapses in spending of public money

or for nugatory expenditure—which means, in VE language, cost incurred without function or with inadequate function performance. In the special Indian situations I referred to, this lat­ter is generally assessed with respect to stated goals in the sanctioned budget or programs and not really to the U N ­NECESSARY COST that VE seeks to unearth. Nevertheless, the fear re­mains—fear of responsibility being-fixed on individuals for failures to unearth this unnecessary cost earlier i f not for having at all caused it in the first place! This kind of action usually follows investigations by statutory audit departments or by Parliamentary Committees similar to Congressional hearings in the USA. The process in­variably causes considerable social em­barrassment and loss of prestige even i f the accused individual is finally ex­onerated (often after several months or years). The reality of this all-too-human fear, even in an ardent votary of VE, can therefore easily be imag­ined!

My reply to this question was two­fo ld ; I advised the executives

(1) to "explain honestly that VE is a new tool which we did not know of or were trained in before. Every new tool brings benefits showing the erstwhile designs or systems (and their authors) in poor light. It is part of evolution that the old order changeth, yielding place to new but this does not and can­not mean that the systems obtaining before VE were the result of in­competence or negligence. I f this were not so, we should be penalized for not

Con 'I on p. 7

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India

Con 7 from p. 6

inventing the car a century earlier and the scientists who did not produce cures for smallpox or polio before Pasteur or Salk, ought to be accused of murder!"

2. However f ind a rhetorical or scholarly answer as above may sound, it may or may not cut ice in the more down-to-earth situations or daily life in business or industry! So my second suggestion to the VE Team members and even some of the higher level managers was: "the basic function of VE was to IMPROVE V A L U E , but every individual had necessarily to secure a higher order function, at his personal level, which we may describe as M A I N T A I N L I V I N G or SAFEGUARD SELF; in a situation where the basic function conflicts with the H .O. function, the latter always wins. So, i f pushed or you expect reasonably to be so pushed into a tight c o r n e r , D I T C H V E A N D SAFEGUARD SELF.

A t the first meeting I thus addressed, I was pleasantly taken aback by the response—there was an immediate and loud applause, warm smiles of ap­proval and later even verbal confirma­tions running somewhat like " I f this VE is as pragmatic as that, i t is certain­ly worth trying and we wi l l !

Function? Maintain Confidence?

The second question raised was " I t is possible that a VE study develops an excellent alternative and it may not be possible for me to counter its claims for acceptance effectively. Never­theless, intuitively, I may feel that it is not advisable to implement that alter­native. How would you or VE act then?" The implicit question, though not overly asked outright, was "would I take it higher up and get orders passed down the line for implementa­t ion?"

This was a pauser to me for a few long moments. Perhaps synergistically, the right answer occurred to me quick enough not to render the pin-drop silence that followed the question, too loud or too uncomfortable!

" I n your area of control or opera­tion, you are the master and yours should be the last word. You, as a manager (even i f not the very top), have the perogative to turn down the Team Recommendations, however valid or well-supported they may be. There is a lot of importance attached to your judgement (intuitive or otherwise) and that is one of the things a senior level manager is paid for . I shall therefore certainly not go higher up for a different decision. But—and that is a very important but—I shall certainly remind you that A L L COST IS FOR FUNCTION and that the cost, un­necessary according to the findings of the VE Task Force—say, of Rupees 500,000 (assumed)—now seems predominanatly, i f not entirely, to secure only ONE funct ion viz; "minimize (Your) apprehension" or "maintain (Your) confidence". I shall retain the right to repeat this to you at intervals but I shall not ask you to change until you have felt your con­fidence restored or generated and your fears removed. Hopefully, you wi l l f i n d i t possible—not too late perhaps—to either accept and imple­ment the alternative or enlighten me on why the cost is necessary. I shall start the workshop on the premise that this position is unequivocally acceptable to all of y o u " .

I received the acceptance immediate­ly and in the eight projects that f o l ­lowed in two five-day workshops, never once was either fear re-expressed at any level. A l l questions centered wholly on the technical validity of team recommendations and sometimes on how design or somebody else missed or should not have missed points or results that flowed out after the VE study but it was more for introspection and correction rather than to raise road blocks.

Vested Interests

The third—and no less valid—"road-help" was how VE wil l counter "vested interests". The expression "road-help" may again sound strange.

SAVE members may well ask—is this not also a road-WocA:? Well, it wasn't—for two reasons. Firstly, the approving response to VE, after my two-hour introductory lecture and more so, after my two-day detailed seminars, was spontaneous and friend­ly, with not a word of animosity or mockery. Doubts were a plenty and even some indifference but not ridicule or derision. Secondly, the responses I am describing arose out of concern and a desire to nurture this new infant called VE. The meeting during this part of the session was more in the nature of a synectic session where the group seemed to share my concern, add their own but strove jointly to solve all. The question on vested interests in effect, therefore, was " w i l l they not k i l l V E ? " Vested interests, to explain (or is it un­familiar in America, I wonder!), come in the shape of a company having to bear expenses towards "payof f s" and kick-backs" to individuals somewhat like the Lockheed or Boeing scandals of 1977 or variations thereto. Here again, my answer seemed to be well received when I postulated that " V E — f o r all its creativity, fantasy and speculation—is based on the solid rock of reality. Vested interests—in terms of their antiquity, resilience and social damage—are perhaps second only to the world's oldest profession; so VE does not pretend it is non-existent. Assuming therefore that the VE Team unearths—rather uncomfortably to some—"unnecessary" cost in sensitive areas, it need not get killed. I t wi l l ac­cept i t , redefine it as "unavoidable though unnecessary" but, as in all other cost areas, i t wil l put a function against that cost also. Shall we say t h e n , t h a t , the cost o f Rs. 250,000//—in a particular case, is for the function, PLEASE (or appease) " M O T H E R - I N - L A W " (whoever that may be!) VE wi l l not and shall not bother about the ethics and morals, the rights and wrongs, of this function; there are other wings of the law (or of

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India Con't from p. 7

the company) to take care of them, i f indeed they care to, but mothers-in-law—whether real or euphemistic-have to be pleased and VE, in true style, wi l l not proceed to its next logical step in the Job Plan and address the question, " H o w ELSE shall we please mother - in - law?"—and hope fu l ly , come out with different ways but at less rupee cost. Do you think this is a practical down-to-earth way of tack­ling your very legitimate problem?"

Needless to say, the answer was overwhelmingly positive and thereby, to me, highly encouraging.

Credit For Results

Now comes the last of the four responses I propose to cover in this paper and this represented the crux of the selfish (but legitimate) interest that does motivate human beings and which every manager, were he wise, should exploit and in the company's or na­tional interest. " H o w exactly wi l l the results of a VE effort be shared, so far as credits or awards or other means of recognition are concerned?" For­tunately this gave me no need for a pause to think. I had long ago made up my mind on this point although I had not expected this question to be raised

so early in the operation of VE on virgin ground.

" W e l l ! " , I told my interested but in­quiring audience, " V E offers you a set of effective techniques, which need the skills of experience (in VE) and exper­tise (in your field of technology) for f r u i t f u l results. The first I shall endeavour to provide but the second is all yours. I can give new tools to a carpenter but still it is the carpenter who has to design and build the table or cupboard . The achievement therefore is predominantly his but he remembers his tools with gratitude and affection. A l l success in VE team ef­forts therefore wil l go only to two:

1. The team and the implementing agencies.

2. To the art and science of Value Engineering (rather than to the Value Engineer!)".

To make it doubly clear, I added " I n other words, all successful results and recommendations with high probabili­ty of acceptance, shall be your privilege to report and receive recognition for and failures or alternatives you are not quite happy with, wi l l by M Y duty to report! Any adverse comments or criticism in that connection f rom any quarter I shall take care of. Do you

think this is a workable proposition?" I got complete cooperation; a very

charitable comment was " Y o u seem to be quite willing to offer us a 'heads-you-win-tails-I-lose' position, which seems quite unfair. But i f that is the way you want, it is okay by us!" Of course, there were gentle hints of my being over-confident t i l l I pointed out that my confidence was in THEIR ability to make the fullest use of VE and I did not expect to be let down.

The results of the eight projects taken up so far have been highly en­couraging. Identified savings exceed Rs 50 million rupees (or over $5 million) and trials have been initiated in four cases while the remaining four are under closer review by design. I would not go so far as to claim that VE has been accepted in f u l l but it has made a significant impression; to quote one major steel plant, " . . . the participants have given an u n a m b i g u o u s l y favorable response to the workshop. The majority of them think that Value Engineering as a system has an ex­cellent usefulness for regular adoption in our plant and that extending VE training to more executives on a regular basis wil l be very much use­f u l . . . " .

1979 SAVE ENCYCLOPEDIA OF VALUE - ADDENDUM No. 1

This information filled 1 6 page booklet (8V2 x 11), is now available for immediate purchase f rom your SAVE Book store. The Addendum to the SAVE Encyclopedia of Value contains information on all bran­ches of knowledge in Value Engineering as presented in the Society of American Value Engineers Annual Conference Proceedings f rom 1977 and 1978 . Contents are presented in abstract fo rm arranqed alphabetically by subject.

To aid in the search for knowledge in Value Engineering, a primary subject index is provided for reference in identifying the works of various authors published under these major subject headings in the SAVE Annual Conference Proceedings. Abstracts include author identification, proceedings year of publication, and page number of the proceedings where ful l text of the referenced paper is presented

Recognition and thanks is given to SAVE member O.J. Vogl of the SAVE Los Angeles Chapter who prepared the Abstracts for Addendum No. 1. This publication presents abstracts of over 65 papers con­tained in the 1 977 and 1 9 7 8 SAVE Annual Conference Proceedings.

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8

ISRAEL

Oved Friedman, a graduate of Israel's Technion in Mechanical and Industrial Engineering, developed the value engineering operation of Tadiran Electronics, Ltd., the company which received Israel's National Award for productivity. In this country he attained his MSME and his MBA. He is immediate past president of the Wisconsin Chapter of SA VE and is now doctoral candidate in engineering at the University of Wisconsin. He will present the views in this paper at the SA VE Inter­national Conference in Washington, DC, May 23 to 26.

THE S U P E R 1 VALUE APPROACH FOR DYNAMIC ENVIRONMENTS

By Oved Friedman, MSME, CVS.

The value concept has come a long way since the late 40's, when Larry Miles and Fellow Pursuers established the value concept as a valid and recognized tool for creative problem-solving.

The purpose of this article is to present a modified ap­proach which wil l provide some missing links that could advance the value methodology.

The approach described herein is that of a strategy of User2 and Provider 3 which identifies the different needs and functions of all the components (elements) involved in the process of " f u l f i l l i n g needs," which is the ultimate function to be achieved. Also, it provides a starting point for the development of a workable system which incorporates the main facets of the VE job plan. The proposed system satisfies the changing needs of VE's immediate environment. Initial indications f rom several currently on-going applications show encourag­ing evidence that the proposed User-Provider strategy might enable VE and other Profit Improvement Pro­grams to better utilize their resources, gain momentum, and become a more productive factor in society.

BACKGROUND

In recent years we have been watching a negative trend in regard to value programs (VE). The present

status of vital factors for the success of VE, such as management recognition and acceptance, public understanding and value education—is far f rom satisfactory. Studies that have been conducted in recent years4 point out three main causes for the instability of VE programs: The limited image of VE, as seen by out­siders; the lack of communication skills and per­suasiveness of VE people; and, above all, the lack of management support. VE programs, that seem to have worked well in the 50's and 60's, suddenly become in­adequate in dealing with the current problems and fre­quently even fai l to obtain the approval of top manage­ment for their existence. This article wi l l approach the problem f rom a different angle. I t wi l l focus on the mutual impact of the environment and VE.

In their work, VE programs and the value people have to adjust to, and cope with, two different types of environments:

1. The external environment—the market place, society, and the world.

2. The internal environment—the company in which VE has to exist and perform (see Figure 1).

S U P E R is an acronym for Strategy of User and Provider for Effective Results.

The term User in this paper refers to direct and final users, customers, buyers or any receivers whose needs are to be satisfied.

'The term Provider in this paper refers to supplier, service agency, industrial manufacturer, seller or any other source which provides a product or a ser­vice to satisfy the needs and expectations of a User.

S A v f P ^ e d ^ ^ e f f e C t i V e " e S S ° f f u n C t i ° n a l v s " conventional cost contro! programs in manufacturing firms," 1973,

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7£ £ \

O R G A N I Z A T I O N A L BOUNDARIES

FIGURE 1. The VE Dual Environment

The interactive nature of Value Improvement pro­grams, together with the wide spectrum of potential ap­plications, points out the criticality of effective adjust­ment to changing conditions and circumstances. Such changes should involve methodological as well as opera­t i o n a l aspects. This ar t ic le deals w i t h the methodological aspects of the problem, focusing on function analysis in general and FAST diagramming in particular.

THE EVOLUTION OF FUNCTION ANALYSIS MODELS 5

The function-centered approach is the single most im­portant feature of the value concept. The uniqueness of this concept derives f r o m its ability to go beyond the physical and mental limitations of an object, or system, by defining the functions to be achieved. Therefore, any progress made in the development of techniques to analyze and define functions advances the value concept

in the battle to regain better recognition, more accept­ance and wider use.

T H E " W F " MODELS (Work Functions)

Initially, function analysis was based on the concept of the "Basic" function. By separating functions into basic and secondary ones, it is possible to determine how to perform the basic functions while trying to eliminate the remaining or secondary functions. In the early years of VE, informal function analysis techniques had dominated value projects and applications.

The first " f o r m a l " method to analyze functions was developed in the mid 60's by Charles Bytheway. His original "Basic Function Determination Technique" applied the concept of functional hierarchy, and together with a structured set of questions provided the first diagramatic model for analyzing and defining func­tions. In his model, functional relationships were divid­ed into chains, or paths, of critical and non-critical functions (see Figure 2).

s I n this article references to other F A S T diagramming models were taken from previous publications for the purpose of review only.

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HOW WHY

Support ing

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Function]

Basic Func

ic _ Required _Required _ Required JRequired ction Function Function "unction JFunction

CRITICAL PATH SUPPORTING PATH

JSupport-Ung [Function

Required 'unction

Figure 2. Bytheway "WF" Model (Partial)

Since then, several modified varations of the WF model have been developed. For example, " D o c " Rug­gles developed a simplified version of the FAST diagramming with emphasis on the critical path and its required functions. In addition, the "problem scope" was introduced. I t also supplied a more detailed descrip­tion of the problem, adding a " W h e n " to the original " W h y - H o w " elements (see Figure 3).

HOW WHEN WHY

nnl '

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I

Perma­nent

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Figure 3. Ruggles "WF" Model (Partial)

T H E " U F " MODELS (User Functions)

Although the WF models provide us with sufficient logic to analyze and define functions, they are confined to the direct work functions of the system, or object, itself. As such, W F models sometimes disregard the

needs of the specific user and his desires. The mere fact that a proposed system can perform a

needed basic function does not assure its use, unless the user utilizes i t . The focus on user needs initiated the design of a user oriented model (UF). The first useful UF model was developed by Ted Fowler and Tom Snodgrass. Their UF model added "supporting" func­tions, such as "Assure Convenience," "Assure Depen dabil i ty," etc., in response to the specific needs or wants of the user. These supporting functions, together with the basic, or work, function, significantly improved the analytic capacity of VE techniques. The model is shown in Figure 4.

HOW

W o r k

F u n c t i o n s

WHY

F u l f i l l

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S u p p o r t i n g

F u n c t i o n s

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F u n c t i o n

R e q u i r e d

F u n c t i o n

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D e p e n d a b i l i t y

A s s u r e

C o n v e n i e n c e

E n h a n c e

F u n c t i o n s

S e c o n d a r y

S u p p o r t i n g

„ F u n c t i o n s

A t t r a c t

U s e r

Figure 4. Fowler-Snodgrass "UF" Model (Partial)

As the use of the user-oriented model (UF) become more common, applications vary in structure. I n several market-oriented applications the selling element was in­cluded in the analysis of functions. 6

The increasing awareness of user's needs among value people has a significant impact on the promotion and administration of value programs. As a result of this in­creased awareness, more attention has been given to the needs and the wants of the external environment. The user oriented approach (UF) has directed us in the prop­er course. Yet, despite changes and adjustments, the results of the average value program did not "make par." A need for a new approach becomes apparent.

'See Wasserman, Marvin, "Sales market value," 1977 SAVE Proceedings, Vol. 12, pp. 105-114.

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T H E " S U P " M O D E L (Strategy for Users and Pro­viders)

I n recent years, user-oriented needs and their relevant functions have been included in an increasing number o f FAST diagrams. Since the primary purpose, or func­tion, of fu l l f i l l ing the user's needs exists in almost all ap­plications, "somebody has to do i t . " The user's counter-part in the fulf i l lment o f the need, or task, is the provider of the product or the service. Therefore, the provider cannot be omitted.

The SUP model 7 incorporates user-oriented functions and provider-oriented functions. This enables the analyst to focus separately upon the product or service f r o m the aspect of both the user and the provider. The separate concentration on functions of different nature and sources, i.e., the user's needs, the provider's system, or manufacturing, or service, etc., generates a more complete functional relationship. The SUP model represents a 4-step procedure, which is describebelow

Step I : Identify the Basic Function. See ( I ) , Fig. 5. Use standard VE techniques.

Step I I : Generalize Solution. See ( I I ) , Fig. 5. Develop a general solution to perform the basic, or work, function. See (a-1), Fig. 5.

Step I I I : Specify Solution. See (HI) , Fig. 5. 1. Step I I must be completed. 2. Accomodate (user) expectations

Identify user, then define supporting functions which satisfy personal needs See (a-2), Fig. 5.

3. Benefit, or Provider, System Define the relevant factors and con­straints or conditions, which wil l just i fy the activation of the manufac­turing, or service system, See (a-3), Fig. 5.

Step I V : Realize Solution. See ( IV) , Fig. 5. 1. Step I I I must be completed. See ( b - l ,

Fig. 5. 2. Reward Provider

Identify the social and public factors, such as values, legal requirements, etc., that affect the subjective or qualitative aspects of relevant deci­sion makers. See b-2, Fig. 5.

3. Satisfy User Identify the user social needs and motives. Examine the possibility of future conflicts or changes of needs. See (b-3), Fig. 5.

[ F u l f i l l Needs

R e a l i r.e I s o l a t i o n

( I V )

Reward i

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S a t i s f y User

THE SOCIAL ENTITY

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ENTITY

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nip lemon t —J " —̂ S e t t i n g U S u p p o r i i n g I

INDIVIDUAL HICHER LEVEL & UNIT LEVEL PRIMARY* SECONDARY

FUNCTIONS FUNCTIONS FUNCTIONS FUNCTIONS

Primary F u n c t i o n s W i l l Vary in D i f f e r e n t Problems or S i t u a t i o n s

Figure 5, The "SUP" MODEL (Partial)

'The SUP model was developed by the author and has been successfully used in product and service applications.

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The advantage of the SUP model is that all main com­ponents that are involved in " f u l f i l l i n g the needs" are represented. To actually f u l f i l l the need of human be­ings and other natural or artifical systems, four com­ponents, or elements, are necessary.

1. A user (the receiver who has an un fu l ­filled need)

2. A solution, or a purposeful function, that wi l l f u l f i l l the need i f , and when, implemented

3. A carrier, or carriers, that can and wil l implement the solution, or solutions, i f , and when, provided, and

4. A provider who supplies the carrier, or carriers for the implementation of the solution that wi l l f u l f i l l the user's needs.

It should be noted that these four elements should be defined according to the specific needs, conditions and circumstances of each case. Generally, they are clearly but loosely defined. For example: a need could be physical, social, psychological, etc.; the user, or receiver, could be human or not; the carrier could be ac­tive or passive, with physical or non-physical properties; and, the provider could be a person, organization, or any other source that provides the necessary carrier for implementing the function, or solution.

The four above-mentioned elements (users, pro­viders, carriers, and solutions or functions) compose an open-ended system.8. I t facilitates the adaptation of the SUP model to any problem or situation where hierar­chical functional relationships exist (cause-effect, means-ends, etc.). As such, and when correctly used, this Strategy of User and Provider wi l l forward the value people one step further towards the development of more effective VE programs and better applications that are more readily acceptable.

C O N C L U S I O N

On the other hand, the value people are not an in­dependent entity. They wil l succeed only i f the organization, and mainly its top management, wil l sup­port their efforts. To achieve that, they have to be ful ly recognized and accepted. Only then, wi l l they be able to deal with the more general problems and needs of socie­ty. I f the value people want to stay abreast of the dynamic changes which take place in the environment, they have to be more flexible. This should be reflected in the various activities, such as VE programs, training and promotion. The multidisciplinary approach which is being applied so successfully in value methodology should be used also in restructuring and broadening the value strategy. The SUPER value approach, and mainly the SUP model contributes to the major objectives of the organization and to the most immediate goals of management. Then, the adjustment of VE objectives and activities to their changing and dynamic en­vironments would benefit the effectiveness of existing and future Value Programs.

And , a final word. The value concept is a live entity. The ongoing process of continuous change necessitates constant improvement and adjustment of the value ap­proach, its methodology and techniques. The SUP model and the ideas discussed in this article are by no means a complete answer. A t most, it constitutes a step forward in reinforcing the ability to participate effec­tively in solving problems as individuals and as part of society.

The author wi l l appreciate your response. Please address to:

Oved Friedman 4761 N . Woodruff Ave.

Milwaukee, Wisconsin 53211 Phone: 414-961-1188

The primary demand for VE (or any other problem-solving technique) already exists. Presently, the mission of the value people is to create a secondary demand, which wil l make VE a favorable choice f rom among the various problem-solving techniques.

"A system will be construed as an "open-ended" system when it depends on the external environment in the analysis and/or the solutions of its main problems and needs.

13

ITALY

Editor's note: Jim Hudson is one of our most successful international consultants. This paper presents the introduction of VALUE MANAGEMENT to a major pro­cess industry in Italy, MONTEDISON, S.P.A., Largo Donegani 1/2, 20121 Milano, Italy. Jim, a cum laude in chemistry, now heads his own company James W. Hud­son and Associates, P.O. Box 399, Spotsylvania, VA 22553.

VALUE MANAGEMENT FOR

THE CHEMICAL AND PROCESS INDUSTRIES By James W. Hudson

The selection and solution of major problems in a complex system, such as a chemical process industry, is so apparently diff icul t that few chemical companies have considered the Value Process. The procedure described herein is one I have used successfully in large petrochemical plants, paint manufacturing, chloro-soda plants, etc. I call the procedure V A L U E M A N A G E ­M E N T .

No, I am not the first to use that name. The General Services Administration, for example, call their pro­gram V A L U E M A N A G E M E N T , a broader term that can include a greater diversity of activities than engineering and analysis.

I see V A L U E M A N A G E M E N T as being the proper name for almost all of the programs now in operation in corporations and other organizations. I t happens that we employ engineering disciplines in much that we do, and we certainly analyze existing products and pro­cedures, but these do not properly tell the whole story. The role of Value Analysis and Engineering ( V A / V E ) is to help manage the entire operation, company, organization, department, division, or what have you. Engineering and analysis are just two of the tools we use to get there. To illustrate the concept of V A L U E M A N A G E M E N T as I see i t , let us review how I in­troduced the concept to a very large petro-chemical cor­poration, MONTEDISON, S.P.A., with headquarters in Milan.

A t the SAVE Conference in Baltimore I met a gentleman f rom Milan, Dr. Ing. Agostino Sanvenero, President of SASTI, S.P.A., an engineering f i rm in Ita­ly. Dr. Sanvenero told me he was looking for an American CVS (Certified Value Specialist) to help him introduce V A / V E to Italian industry.

He and I both knew that V A / V E had been expounded in Italy f rom time to time over the past twenty years, and that some companies, like Olivetti, the manufac­turer of office machines, etc., had embraced the con­cept, but at a very low level of their operations. Usually it was an arm of Industrial Engineering. I t performed well, in many cases, but never reached the attention of top management because of goals of V A / V E were con­sidered to be details of design and production, too low on the scale of priorities to be worthy of the purview of top management.

Incidentally, the one pioneer of V A / V E that everyone remembered in Italy, was LAWRENCE D. MILES! Yes, the father of V A / V E had preceded me in Italy by many years, and they remembered him well.

Dr. Sanvenero was not a novice in V A / V E either. He had been Chief Executive Officer for O L I V E T T I and had been instrumental in introducing V A / V E to that company. However, he never believed that V A / V E achieved its f u l l potential. I t was in the wrong place. I t

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belonged at the top as a tool of management, as well as those operating departments where it now was function­ing. Together, in 1975, SASTI, and I as their Certified Value Specialist, explored the Italian market for those in need of the creative powers of V A / V E M A N A G E ­M E N T . Like Jesus said of saving souls, "...the harvest is plentiful, but the laborers are few" , and so it was in Italy. They were suffering f rom many of the pains of this country; energy shortages, the highest inflation rate in Europe, frozen labor quotas, environmental con­cerns, and a growing international competitive climate that threatened the very existence of some of their pro­ducts. They needed VA/VE. . . they needed V A L U E M A N A G E M E N T .

I t is one thing to see the needs of industry, but a dif­ferent thing to convince the top management that you are the heaven-sent angel to solve their problems. Scep­ticism reigned.

The corporations explored also had the strong feeling that they had the internal capability of incorporating a V A / V E program i f they were in need of one. This feel­ing exists today in most corporations here in America. They think they can do it by themselves.

I t is ironic, and a sad tale of woe for many con­sultants, that the consultant diagnoses the problem, ex­plains the cure, and is then promptly forgotten as they attempt to handle the V A / V E program with their own forces. Naturally I have a selfish motive, but I feel the functions (that word has a familiar ring to it) performed by the CVS consultant are vital to the success of any V A / V E program, even when they have a good internal force and leader.

What are these functions? One, as simple as it may seem, is T E A C H V A / V E . In those companies that I have observed with Value Programs, many have given the teaching phase minimal importance. The internal man feels " s i l l y " , as one man told me, to stand before the men he is with each day and teach the basic of V A / V E before each V A L U E INTERVENTION. (VI) .

I t is of paramount importance to reiterate the prin­ciples and logic of V A / V E at the start of every V A L U E INTERVENTION. (By the way, I use the broad term of V A L U E INTERVENTION to cover all types of V A / V E applications, such as, value reviews, value studies, and value workshops. Using any one type in a discussion like this tends to side-track the conversation.)

Just because a company had had a V A / V E program for many years, does not mean that the key people in the organization keep the psychology, philosophy and logic of the V A / V E methodology in mind. Not even a CVS does that! We must be constantly reminded. The V A L U E INTERVENTION wil l not optimize the results of the particular study without having the story of V A / V E told and retold and the step-by-step method followed.

For the big V A L U E INTERVENTIONS it is wise to bring in an outside CVS consultant. Not that he knows more about V A / V E than the in-house staff, but he sees the problem differently, the very essence of the "new look" we need in every V A L U E INTERVENTION. In addition, the outsider is not " fami l ia r" ; his glitter has not worn thin. He is listened to and respected more than any inside person, except those in top authority.

Perhaps the salient value of the outside CVS consul­tant is his constant necessity for shifting his viewpoint. Clients, people, projects are changing constantly. Managing this change is vital. What is V A L U E M A N A G E M E N T but managing change?

Any internal program tends to evolve into a set pro­gram. A n outside CVS brings fresh ideas, fresh ap­proaches, and that, too, is what V A / V E is all about.

With this as a background of my approach to V A L U E M A N A G E M E N T , let us return to Italy. 1976 began a new phase of our invasion of Italy. Oh, i f all in­vasions could be as peaceful and well-intentioned as the beachheads of V A / V E .

MONTEDISON executives f rom most of their divi­sions had by this time attended at least one of the many Executive Value Seminars I had conducted. This includ­ed Presidents and General Managers and their staffs. The start of real executive involvement. But they were not completely convinced that it would work well in their complex field of petroleum and chemistry.

One large project that was underway was a chemical facility that manufactured a vital intermediate. . . a pro­duct used in the manufacture of final products sold in­ternationally. How do you f ind what portion of the complex process is worthy of the investment in V A L U E INTERVENTIONS? I recommended we start with an Executive Value Seminar to review the 47 problem areas they have identified both in the operations groups and in the headquarters staff. These issues had been raised and discussed on numerous occasions and no complete agreement had been reached on their solution. The function of the executive seminar was to resolve as many as possible of these issues and decide which were too far f r o m solution to reach agreement in the short time—only two days to complete the executive seminar—alloted to each issue.

Those problems not agreed upon at the executive seminar were to be placed in one of two categories; one, those to be studied in a conventional manner and re­solved after the executive seminar, and two, those recommended to undergo a value workshop.

Both the operations personnel, including the Manager of the Plant, the headquarters staff people, chemists, and chemical engineers, were extremely knowledgeable, most with ten or more years of experience in this specific

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process. Despite this degree of competence, divergent views and viewpoints—plant operations and head­quarters always do look at problems and solutions f rom opposite ends of the pole—had polarized the group to a large degree.

The psychology of V A / V E acknowledges the human mechanism and the motivations inherent in strong, competitive individuals. Human factors, as in a l l V A L U E INTERVENTIONS, had been the main obstacle to agreement. A n earlier refresher course turned out to be the solution. I knew that all of these men participated in at least one of my previous V A L U E INTERVENTIONS in which the preparatory phase brought me up to speed technically and helped me understand the personnel better. I t had also helped the personnel understand each other better.

The executive seminar went smoothly. These men solved most of the issues without recourse to the formal plan of V A / V E . This disturbed many of the par­ticipants and those who were evaluating the V A / V E program. I t is sometimes diff icul t to convince manage­ment that V A / V E has many tools, like a mechanics tool box. We only use the tools that are necessary to properly solve the problems. In this case, the primary need was to establish a conciliatory climate so that the old polarized positions would erode and allow the best solution to be selected without opposition, and this happened in a large number of cases.

Other issues were those requiring purchasing pro­cedures such as source identification, competitive quotations, engineering verification, test procedures, library research, etc. These were agreed upon and responsibility was assigned. Those still in contention were recommended for a more detailed value interven­tion V A / V E workshop.

The point for management, I believe, is that with V A L U E M A N A G E M E N T you can be sure decisions wil l be made, on time, and that they represent the best thinking of your best men in all departments concerned or affected. The executive seminar serves well as a general reviewing board regardless of the technical in­tensity or the complexity of the problem in crossing many lines of operations, scientific skills, finance, per­sonnel, labor, production, marketing, ecology, environ­ment, safety, etc. I t brings these problems to proper focus and understanding so that polarized issues can become defused, neutralized, and harmless, and in this condition their solution is often obvious.

The purpose of this discussion was to indicate the purpose and effectiveness of the executive seminar in complex industrial operations, but so as not to leave without some coverage of the subsequent value in­terventions, a series of value workshops were convened to cover a group of related issues. In each case a Preparatory Phase uncovered much of the background facts before the value workshop. This fact was digested when appropriate, with complete documentation at­tached, and put in easily understood graphic fo rm. This greatly assists the Information Phase of the value workshop. Too many workshops are convened without this preparation and time of the entire group is wasted in trying to get the necessary facts in understandable fo rm. *•

Strong leadership by the CVS cuts short many discus­sions and semi-arguments that are non-productive, and keeps the study on the tracks, moving to a conclusion. Often the principle of the Premise Plateau was the mechanism to lead the group to more f r u i t f u l discus­sions.

The results of the series of V A L U E INTERVEN­TIONS that made up the MONTEDISON V A L U E M A N A G E M E N T program were gratifying. I never reveal details concerning a clients project, but the overall results were that two strong, polarized manage­ment groups of the company were led to clear decisions on diff icul t issues. The project was therefore in a posi­tion to proceed without delay, with the groundwork laid for better cooperation between these two groups in the future. Initial cost savings were realized that far exceed­ed the cost of the V A / V E program, but in this case, I felt the issue was far greater than was revealed by the obvious instant savings. Uncertainties in critical areas of safety and ecology could actually close the plant down i f not resolved correctly and with general acquiescence. With communities and unions sensitive to these issues, long, bitter debate within a company can provide the ammunition these outside influences need to bring a company to its knees.

V A L U E M A N A G E M E N T has great significance to top management as a means of solving problems quickly and safely, regardless of their complexity. I t works in chemical plants, petrochemical operations, steel mills, copper mines, strip mining, aerospace complexes, design-build contractors, and any other human endeavor worthy of the optimization of change.

16

NORWAY

Chris Rand is an outstanding European Management Consultant, he has been ex­tremely successful by presenting Value Analysis as a top-management tool for con­ducting business strategy.

"NEW VENTURE VALUE SEARCH" (Making Companies Well Through VE/VA)

To Be Presented By

Chris Rand (BSC/MBA) At

SAVE 1979 INTERNATIONAL C O N F E R E N C E May 24th, 1979

Washington, D .C .

1. I N T R O D U C T I O N

The "case" I have selected as part of my presentation today, is a "real l i f e " case in the midst of its develop­ment. For the benefit of the company concerned I have used an artificial name: "NORD-SHIP L t d " . Making the right name anonymous wil l not alter the actuality of the case.

For Scandinavian industrial activities — as in most in­dustries of the Western world, the decade of the 70's had indeed been very different f rom the 50's and the 60's, where trends could be extrapolated, at an average growth of 10-15%.

These drastic changes are particularly true in relation to the shipbuilding industry — that is, not only the yards, but equally the many industrial enterprises engaged in equipment manufacturing for the Marine ap­plications.

The shipbuilding industry all over the world has been — and is — in a very serious situation. Present demands have decreased to less than 50% of the total industrial capacity. The magnitude of problems we are here facing are recognized all over the world, but they are par­ticularly diff icul t in high cost areas, like for instance the Scandinavian countries.

Our "case-organization" — NORD-SHIP L td . — is in this regard typical. The company has existed for more than 100 years. In its present group-structure, through most of the post-war period.

About 60% of NORD-SHIP's capacity, employment, gross sales and profi t has up t i l l 1974 derived f rom designing and building merchant ships and marine

equipment — following the general trend of larger and larger units during the late 60s and early 70s with an average ship size of 60,000 tons per unit.

From 1973, when the order books were f u l l , new orders have diminished and the last ship on order, wi l l be delivered by the end of this year. Chances of securing new orders on ships, at prices covering materials and cost alone, are indeed meager — in world wide competi­tion with yards in Korea and similar low cost areas. As you may see, this company is facing the problem of change, as most other shipyards in the Western hemisphere. This situation has been recognized for more than 5 years. How do we challenge change?

X — X

Honoured members and guests of this SAVE Con­ference — may I at this point express my pleasure and gratitude for your kind invitation to be present today, and once more have the privilege to address this distinguished society.

As some of you may recall, some years ago I presented to this forum a paper called "Value Strategy". The principles used over the last four years in accomplishing the necessary change for the above men­tioned NORD-SHIP Industry, is very much a case on applied value strategy. A case I hope may inspire some of my value engineering colleagues to further develop and apply the powerful tool of value engineering and philosophy, in long-ranged strategic planning processes.

Con't on p. 18

17

Norway Con't from p. 17

2. T H E P R O B L E M

I think i t was the world famous management consul­tant, Peter DRUCKER, who 10 years ago formulated the words: "the age of discontinuity" — when trying to describe business environments into the 70s. Indeed he has been right!

The problem facing so many industrial enterprises during the present world recession has been — and is — their ability to foresee and manage change processes. More so, than just improving traditional products and manufacturing.

By this statement, I do not mean that productivity and manufacturing efficiency is no longer important. Of course it is — more than ever in high labour cost countries!

But — cost reduction and increased efficiency alone can in many cases no longer secure the survival of com­panies.

In "the age of discontinuity" for an increasing number of industrial enterprises, i t is simply not enough to produce in an efficient mode of operation. More im­portant today is our ability to recognize and produce the "right products".

The ability — to seek, select and develop feasible pro­ducts, characterized by a value ratio capable of living with high labour cost as well as changing and hardening boundry conditions, is in my opinion the most impor­tant context of strategic planning.

Thus — when the company is faced with this situa­t ion, no longer capable of living with their "traditional products" — we must look into the challenge of new venture search. During the 70s we have learned how im­portant these processes are to company survival, par­ticularly because in 9 out of 10 cases these change pro­cesses have to be managed with limited resources and critical timing.

May I here call to your attention Exhibit 1, describing basic strategy, (for growth and development), under the boundry conditions just outlined.

? k- , ".

May I here in particular call to your attention the im­portance of the activities 1, 2 and 4 — that is — the im­portance of concentration on "the best" (of our present activities) brutlessly "peal o f f " o f all fading products and markets and — not the least — systematic search and development within new opportunity areas, while we still have timel

Too many companies have been hesitating in carrying out activity 2 — "the peal o f f — and too slow in recognizing the importance o f systematic search.

Hence, in the f inal end they have neither economy to change, nor new venture plans to explore.

For the shipbuilding industry we are here concerned with, the outlined basic strategy has been particularly demanding^. Because the "gap" between demand and capacity has developed so suddenly and the ability to change so hampered by traditional attitudes.

A study o f vital "trend lines" for aging companies of this kind, is outlined in Exhibit 2.

* 2. -

The symptom — that is rapidly fading profitability — is indicated by trend-line I I I , and is actually caused by a fading profile concerning company uniqueness or originality (trend-line I ) .

Most attempts to counteract fading profitability are concentrated on marginal improvements, related to in­ternal efficiency (trend-line II). Over the whole range from revised wage incentive systems to computer con­trol.

However, as may be seen from Exhibit 2, such marginal improvements are actually directed towards already strong postions. Hence, the law of diminishing return governs the effects!

The cardinal threat or — if you please — the cardinal opportunity, is to focus on how we should l i f t our trend line I , regaining strength through new, original and changed orientation, related to our basic business idea concepts!

For too many years in this post-war period we have focused on marginal improvements! From the ex­perience of the 70s and into the 80s facing us, we must have learned to manage new value search. More so than just old value improvements!

Con't on p. 19

18

Norway Con't from p. 18

3. D Y N A M I C BUSINESS O R I E N T A T I O N , A N D O B J E C T I V E S .

May I next focus your attention on Exhibit 3 — try­ing, in a very simplified model, to illustrate the com­pany and its prime environments:

Oj

y) To organize, maintain and develop a continued renewal function (R & D) , capable o f adjusting our " r u n of the m i l l " to changing needs, resources and boundry conditions.

Once more, may I repeat my statement: "most established companies are more concerned w i t h marginal developments related to "the run of the m i l l " than cardinal new opportunities concerning their basic business orientation!' '

4. T H E C H A L L E N G E

In our NORD-SHIP Company, as in so many similar cases today, needs and demands, resources and boundry conditions have changed, so drastically that the present orientation no longer ful f i l l s the basic requirements for maintaining operation. I n 1975 we were faced with 3 directions of action:

1) To discontinue operation and close down. 2) To carry on the present or improved mode of opera­

t ion unti l death f r o m lack of prof i t , or — 3) Look for new opportunities.

Limited time does not permit me to give you a qualified presentation of the following three statements, A - B and C.

You have to accept them or refuse them, based on my personal experience f rom a dozen new venture develop­ment projects during the 70s.

© M y first statement concerns the importance of original ideas when looking for new opportunities. I have outlined this statement — or concept — in Ex­hibit 4. The concept of Value Strategy.

J 4

Con't on p. 20

• The company is illustrated by a rectangle, describing activities concerning "run of the mill" — © — and a triangle @, describing (long range) corporate ac­tivities, (goalsetting strategies and development). You may equally see this structure framed by the boundry conditions — that is, all limitations facing the company associated with legislation, rules and regulations — access to resources and markets etc. ® .

• On the right side of the diagram, is outlined the almost unlimited number of "needs" @ — that is, markets and opportunities. Traditionally "our company" has utilized only some sectors within this unlimited opportunities, focusing all attention on these limited selections.

• On the left side of the same diagram is indicated our resources ©. Note they are o f two di f ferent characters: — the physical, raw materials, energy, manpower etc. - and — the abstract, ranging f r o m "new ideas" to license opportunities.

The basic objective of any free enterprise, industrial company, is — and must be — to channel available resources into the organization, interact with these resources through creativity and/or manufacturing, and through these processes satisfy needs and demands in selected markets at competitive prices!

To secure this we must manage two basic tasks:

x) To develop, maintain and manage an efficient "run

19

Norway

Con't from p. 19

From a strategic point of view, competitive strength must be seeked as a vector in the quadrant described by scale-and-efficiency (as the R-axis) — and the idea content (as the I-axis).

Profi tabil i ty may be achieved "the hard way" through scale-and-efficiency, and at much lower dollar cost "the smart way" — through creativity, identity and innovation — what I have called the " I T " — v e c t o r . For companies w i t h l i m i t e d resources, focus should be made in this "IT"—vec­tor. A l l attempts should be made to look for good value through a high content of originality.

® As my second statement, I call to attention Exhibit 5, representing traditional market/technology/matrix. Here expanded f rom traditional " fou r squares" into 25 squares.

f \

3

•

c

/TO us .'J

£ •

s 2

C • /l 3 SUA

) & ?>*•'] A 0 /

% - ' •'

As already stressed, traditional improvement — "run of the m i l l " — oriented companies try to sur­vive within the 4 squares — A , B 1 and 2. — In the other extreme, troubled companies believing in Santa Claus or adviced by science-fiction-oriented consultants, look into the lower left quadrants — D , E, 4 and 5, where actually only large multi-national organizations wi th vast resources may gamble without risking the whole company. I t is my state­ment that intermediate companies with limited resources, should focus their attention particularly in the area around C.3.

Experience has proved time and time again that development focused on to specialized products and carefully selected market sectors, render the most realistic areas o f new venture search.

© As my third statement in this context, I focus on the importance of "pre-feasibility". As already out­lined, particularly with reference to Exhibit 3, (the company and its prime environments), the number of needs, markets and opportunities are almost unlimited.

Hence — in order to bring new venture search down to earth, i t is of cardinal importance to restrict the number of search areas concentrating on a limited number where "our company" — or the company concerned — has realistic chances in implementing new ventures. * Thus, through a process of pre-feasibility — in­cluding carefully selected strategy criteria for search — the number of search areas should be reduced to a maximum of 3-5.

This concept is illustrated by Exhibit 6 — indicating how attempts should be made to concentrate on search, where final feasibility is most likely.

5. S E A R C H F O R S T R A T E G Y / S T R A T E G I E S F O R S E A R C H .

Summing up the problems, challenges and objectives outlined so far, the systematic approach for value search, related to new ventures may be condensed to the Flow Diagram illustrated in Exhibit 7.

Con't on p. 21

20

Norway

Con't from p. 20

Con 'I on p. 22

21

Norway Con't from p. 21

As may be seen, this search process is divided into 5 important phases — as follows:

Phase I

Problem survey (sizing up the problem) — normal­ly encompassing a comprehensive management audit to establish the real character and magnitude of pre­sent deficiencies. Such a management audit should in­clude financial analysis — market/sales analysis — production systems — R & D-function activities — personnell resources and the bonnity of present overall strategy. This in order to avoid problem solving on symptoms attempting to establish the major cause (or causes) of deficiencies.

Phase I I Insight analysis — (encompassing the establishment of task force) detailed analysis of situation, re-evaluation of goals, basic strategy clarification, and — finally — strategic criteria for search, as well as priority on search areas.

Phase I I I The actual search phase — corresponding to the idea finding — phase of value analysis. Here-under the generation of a large number of alternative ideas associated with the search areas selected, followed by an evaluation phase reducing the number of alter­natives by means of the selected search criteria—en­ding up with complete feasibility analysis for the 3-5 selected alternatives.

Phase IV

Development and planning — encompassing the re­quired R & D-work, negotiations with potential pro­ject partners, license partners and similar, — leading up to implementation.

Phase V

Implementation phase — that is development into operational readiness — re-evaluation and follow up.

As you may already have appreciated, the Flow Diagram outlined in Exhibit 7 bears very much resemblance to the work plan normally used in value engineering analysis. This of course is no coincidence,

— my value engineering experience — as well as my long cooperation with Dr. Osborne's Institute of Creativity — has influenced this systematic problem solving ap­proach.

Time limitations prevent me f rom further detailing this recommended search plan. I feel you wil l recognize its significance when applied to the NORD-SHIP-case following:

6. CONTINUING T H E NORD-SHIP-CASE.

The threatened state o f the N O R D - S H I P -organization and their fading markets was introduced earlier.

From 1974-75, the NORD-SHIP management systematically worked on new venture/diversification alternatives, through processes outlined under phase II in Exhibit 7. The need of closing a sales gap o f approx­imately 150 million U.S. dollars per year, before 1980, became their target. A t the same time, objectives were established regarding ROI , profitability margins, capital and financing (available and needed), number of employees desired etc. As a result of these and similar objectives, compared to realistic forecasts for the fade-out in established ship-building activities, strategies for search were established.

The search phase (III) — in its final feasibility — gave priority to 3 (new venture development) areas:

1) Heavy engineering and contracting related to the home-markets and the developing oil exploration ac­tivities of the North Sea.

2) Container systems (and container housing) for developments in Middle East markets, — and

3) Turn-key engineering and contracting related to medium-sized diesel-electric power plants — equally aiming at developing countries in Afr ica and the Middle East.

I wi l l focus your attention on the third of these: As outlined, the NORD-SHIP company was basically

ship-builders, but had — as a natural consequence of this orientation — over the years established themselves as designers and manufacturers of diesel engines. As a matter of fact, their image as diesel engine designers and manufacturers had a much higher recognition inter­nationally than their ship building. Their diesel engines are licensed all over the world.

Using this strength in image, creatively combining this technology with selected special market needs and sectors (referring to Exhibit 5) — the ability to develop and secure market penetration for turn-key diesel elec­tric stations became obvious.

I t is so easy to see, afterwards.

Of course, i t has taken lots and lots o f effort , skill and patience to switch marketing f rom one target group (ship owners) to an entirely different target group.

However, here again the insignt in value engineering and persistent sales strategy, associated with "total-cost-concepts"and "good value for money" — promo­tion have succeeded.

Con '1 on p. 23

22

Norway

Con't from p. 22

Last year, turn-key power stations approaching 60 million U.S. $ were installed, and sales for delivery 1979/1980 approaching 100 million U.S. $ were negotiated. The volume, sale and the forecasts into the 80s, has made it possible to implement stage 2 in their development plan — that is, a complete value engineering "work over" related to basic system design

— (components, purchasing and transporta­tion/installation/maintenance). So far this value engineering drive has reduced the original system costs by approximately 25%, hopefully bringing the present business volume up to its expected contribution to pro­f i t .

I t sounds so simple — doesn't it?

I t is like Edison's statement: " 5 % inspiration and 95% transpiration"!

7. SUMMING U P .

When your distinguished chairman, Don Parker, almost a year ago asked me to address the SAVE Con­ference 1979 on the topic:

— "Making companies well through V E / V A " —

it struck me that the case just reported might be of some interest.

May I — in my final remarks — stress that the new venture approach outlined, in my opinion should not be described as particularly unique.

I feel that projects similar to the one described may be — and indeed have been — planned and executed by a large number of progressive companies!

— i f they have the insight into changing business trends and environments —

— courage to establish realistic and dynamic strategies capable of " l iving with the future — not only dying with the past", — and

— managerial capacity and common sense to plan and work systematically with the proper toolsl

And in my box of "proper tools" certainly the con­cept of value has its place, both in the strategic search processes and in securing "the right product its good market value "I

Oslo, March 15th 1979 Washington, D.C. May 24th 1979

News Release

I M M E D I A T E RELEASE

Ford's Chicago Stamping Plant gained first-place standing among 84 company facilities in the United States and Canada which participated in the 1978 Ford Employee suggestion program.

Last year, employees at the plant, located near Chicago Heights, won more than $380,000 in cash and new-car awards. Joseph D . Gr i l l , manager of the Chicago Stamping Plant, said that 94 per cent of the facility's 4,700 employees sub­

mitted suggestions and proposals during 1978. " I t ' s great to be Ford's 'Number One' plant," he said, " i n a program that benefited so many of our employees."

More than 1,000 Chicago Stamping Plant employees shared in the 1978 awards, some winning multiple prizes for submit­ting several useable suggestions.

Prizes for adopted ideas range f rom commendations and $30 cash awards to a maximum award of $6,000 plus a new car. There is no limit on the number of ideas an employee may submit.

Throughout North America, Ford employees received more than $5.5 million in cash and company products for the ideas they submitted during 1978. Since the program began in 1947, more than 3.9 million suggestions have been submit­ted and some 659,000 adopted. Ford has provided more than $73 million in employee awards.

Under the program, Ford men and women are encouraged to submit ideas that wi l l improve working and safety condi­tions, reduce scrap, simplify jobs and procedures, and improve the quality and handling of materials, parts and assemblies.

Ford's Chicago Stamping Plant produces doors, hoods, roofs and other parts for Ford, Mercury and Lincoln cars and trucks. Last year, its employees received $112 million in wages. A n expansion currently under way wil l add 167,000 square feet to the present 2.2 million square feet of f loor space.

23

South Africa

Value Management Into The Fields Of Sales, Training, and

Advertising to Improve Company Performance

By

H. Keith van Heerden, PE, CVS,

Managing Director S.A. Value Engineering (Pty) Ltd.

and

Bruce Joelson, Member Value Management Society

of South Africa and Managing Director,

Elna Sewing Machines

Elna Sewing Machine Centres (Pty.) L t d . is a family-owned business holding the franchise in South Afr ica for Elna products, which are manufac­tured in Switzerland. I t operates as an importing and marketing organization throughout the country.

Value Management training was in­troduced into the Elna organization with two forty-hour seminars led by Keith van Heerden in July 1975. The subjects were first , the corporate struc­ture and policy of the organization, and next the management and control of the branch offices and wholesale outlets spread throughout South Afr ica . In these seminars, both of which were attended by the Managing Director of Elna, virtually the total top management of the organization was exposed to the V E / V A disciplines, and a decision was taken that in the future

24

Value Management would become a way of life in the organization. During the above mentioned sessions, and the implementation of decisions taken, it became patently clear that the sales training courses needed in­vestigating, and a seminar was organiz­ed in-company and conducted by Bruce Joelson. A cross-section of in­volved people were brought together, including representatives of indepen­dent "E lna" dealer companies.

The objectives of the seminar, con­ducted in August 1975, were:

1. To determine the effectiveness of of the training.

2. To utilize training time effectively On the old system, training consisted of a ten day course split into two periods of five days, with a gap of ten to twelve weeks between, each attended by fifteen to twenty people. Before at­

tending f o r m a l t r a i n i n g , basic knowledge was gained in the same manner as a customer would be aquainted with the machine. Often the formal training courses were not com­pleted because progress was geared to the slowest pupil.

Subjecting the whole spectrum of sew­ing machine training to the VE Job Plan, the project team developed recommendations on which the new training programme was built.

A prime element of this is a checklist of pre-training requirements which has to be ful f i l led at the pupils home base before attending the formal course, and had the greatest influence in reduc­ing the training period by half. I t con­tains certain basic facts which have to be learned and puts the onus on the

Con't on p. 25

South Africa Con't from p. 24

homebase employer to ensure that set standards are met before committing a new person to expensive training. In addition it provides a measure of the involvement of the pupils home-base supervisers.

Formal training is now restricted to a maximum of ten persons, which en­sures close personal attention and com­plete training with concentration on key areas.

In addition the courses are now separated between sales personnel and customer-teachers. Distinction is also made between experienced and inex­perienced personnel.

As far as inexperienced persons are concerned their productivity is enjoyed almost immediately after their basic training, and are able to compete with experienced people within one month. As the new training schedules were be­ing prepared for introduction in early 1976, the area of advertising was becoming more and more a likely sub­ject for Value Management attention and a seminar-workshop was organiz­ed for mid November 1975. The pro­ject team was made up of three members of the advertising agency staff, two "E lna" dealer executives, and five Elna staff, led by a Value Specialist.

The objectives were to develop sound guide lines for "E lna" advertising, and through a common understanding, produce effective and economic adver­tising by using essential pertinent infor­mation.

In order to achieve this, two areas had to looked at:-A . The joint preparation of informa­

tion for development of the "un i ­que selling proposition" and ' ' Communication Strategy''.

B. Factors governing the creation of advertisements.

Function analysis of " A " showed the following major functions had to be performed:-

1. Analyse product. 2. Define unique selling proposi­

tion. 3. Assess marketing oppor­

tunities.

4. D e v e l o p a d v e r t i s e m e n t recommendations.

5. Identify market area/con­sumer attitudes.

6. Analyse market trends. 7. Avoid confusion. 8. A n a l y s e / m o n i t o r current

position.

Function analysis o f " B " showed the following major functions to be necessary:-

1. Check communications ob­jective.

2. Understand advertising brief. 3. Interpret . benefits ( f rom a

consumers.point of view). 4. Evaluate ideas/alternatives. 5. Pre-test effectiveness. 6. Produce ideas/alternatives.

N . B . T H E FUNCTIONS I N BOTH " A " A N D " B " WERE ARRANGED BY USING N U M E R I C A L E V A L U A ­T I O N DEVELOPED FROM A R T MUDGES' PAPER;

The creative phase generated well over three hundred ideas on these funcitons, and these were evaluated and condens­ed into eleven main areas as follows, w i t h responsibilities f o r act ion allocated as deemed necessary:-

Elna-customer/prospect informa­tion.

Technical sales information. Marketing policy. Research. Competition. Communication. Statistics. Finance. Advert production. Media utilization. Creativity.

When the existing situation was measured against these criteria it was agreed that:-1. There were deficiencies in com­

munication in both directions, which led to misunderstanding between the parties.

2. There was a lack of both qualitative and quantitative infor­mation in that (a) Pertinent information

about product was overlook­ed.

(b) Pertinent information about the market was not organized effectively.

3. The method of creating ideas and evaluating them could be improv­ed on.

4. The evaluation of individual advertisement effectiveness was inadequate.

The essence of the action-plan which resulted f rom this study was as follows:-

1. Much greater emphasis was put on the acquiring and development of pertinent in­formation.

2. Concentration on joint action and communication, with the accompanying development of advertising-agency/Elna teamwork.

3. Joint participation in creativi­ty sessions and after the resul­tant "scamps" (preliminary layouts) have been produced by the agency, joint evalua­tion of alternatives produced.

I t is said that the proof of the pudding is in the eating. I t is now just eighteen months since introduction of Value "Management" into the organization and one year since the implementation of the recommendations f rom the " t r a i n i n g " and " a d v e r t i s i n g " workshops. Certainly some mistakes were made — this is inevitable i f necks are stuck out, but on balance the scales have been tipped heavily in favour of Value Management through the positive results achieved.

The new system of training courses not only produced more effective sales people, but also improved drastically the job satisfaction factor. Thus in this field where we had a large turnover of sales-staff (over 50%) this has now been reduced to less than 10% which is acceptable in this field of business. After-training sales performance in the field had in the past born f ru i t with a new sales person after about ten to twelve weeks. This very costly time-lag, through the new system of training,

Con't on p. 26

25

South Africa

Con 7 from p. 25

was reduced to maximum of four weeks — but to date the average is in fact fourteen days.

With regard to the recommendations resulting f rom the advertising seminar it still took another two months before the advertising agency accepted them. This delay was due to their own inter­nal policies, and the well known resistance to change factor. However as soon as the recommendations were implemented the resulting adver­tisements in the various media showed a marked improvement in both effec­tiveness which benefitted the company image, and in brand-awareness of the public. Indicative of this improvement, is the fact that coupon-returns ( f rom press advertisements) have more than doubled, while the exposure level has remained constant.

In hindsight, an obvious question is why was the advertising agency not changed. This would have been easy but with no guarantee that the new agency would be any different and we had to have a common understanding. Thus we decided to perservere and change their thinking habits.

A result of this perserverence has been that far fewer meetings between advertising-agency and Elna personnel are now taking place, and much less time is being used in this respect. This is indicative of much better mutual understanding of the requirements. A measure of the combined effect of these studies is reflected in the produc­tivity of the sales force. Taking into ac­count the inflation rate which has been over 10% per annum throughout the

period under review, sales performance has improved 27% and this has had significant effect on the company's fortunes in these diff icul t times. In South Afr ica this is the first com­mercial concern to embrace the disciplines of Value Management throughout its structure.

A l l departments heads, branch managers, and even dealer executives have been through forty-hour V E / V A workshops.

The results to date have been eminently worthwhile, but Elna South Afr ica is not resting on ifs laurels and the wonder wheel of Value Management thinking is kept constantly turning. They believe f i rmly in the V E / V A dic­tum "There is always a better way".

THE WONDER WHEEL - THE ESSENTIAL FUNCTIONS OF VALUE MANAGEMENT AND VALUE ANALYSIS

26

Value Engineers

CH2M HILL, an international, employee-owned firm has immediate openings for Value Engineers in their Denver, CO and Milwaukee, WI offices. Applicants should have satisfactorily completed a 40-hour Value Engineering work shop with signifi­cant previous participation in VE activities. BS engineering required with experience in Sanitary or Mechanical engineering desirable. PE registration preferred.

Applicants must have demonstrated professional ability and skill to:

* Plan, organize, and coordinate work * Exercise good judgment and discretion * Work with and direct people * Write technical documents

Salary commensurate with experience; excellent fringe benefits. An equal oppor­tunity employer. Qualified applicants send detailed resume to:

Staff Manager CH2M HILL P.O. BOx 428

Corvallis, OR 97330

WELCOME: SOCIETE FRANSCAIS POUR L'ANALYSE DE LA VALEOUR

We are indebted for news of the founding of this national society to the March issue of Value Engineering and Management Digest © 1978 by Tufty Communications Inc.

announcing the

INTERNATIONAL CONFERENCE OF

WORLD VALUE May 23-26, 1979 Washington, D.C.

27

COMPLIMENTS OF

DETROIT CHAPTER

S P E C I A L A P P R E C I A T I O N TO OUR MONTHLY M E E T I N G GUEST SPEAKERS

JAMES W. WILCOCK ERNEST A. BOUEY

DR. ROSEMARY A. FRASER JOHN W. BRYANT DR. JOHN V. POLOMSKY DR. WALTER G. METTAL J. JERRY KAUFMAN DONALD E. PARKER

MICHIGAN STATE UNIVERSI­TY STUDENTS RICHARD G. BRADYHOUSE

Chairman & President Joy Manufacturing Co. National President Society of American Value Engineers Miami University — Oxford, Ohio Harbridge House Michigan State University Creative Synergetic Assocs., Ltd. Gardner Denver

General Services Administration (or) GSA Public Building Service

Pioneer Chapter Black & Decker

HARVEY SCHNEIDER - PRESIDENT DETROIT CHAPTER

Society o^me/tfcan^VafecSrigmeete NATIONAL OFFICE P.O. BOX 210887 DALLAS, TEXAS 75211

COMPENDIUM OF VALUE

The 1979 SAVE Compendium of Value gathers together and presents by Subject Group Books, all the papers on value technology pertaining to each Subject Group, as published in the SAVE Annual Proceedings f rom 1963 through 1978. These are individual books for each Subject Group, as shown on this order fo rm, containing exact reprints of the entire papers presented for each sub­ject, taken f rom the SAVE Annual International Conference Proceedings. For Example: The Construction Book, No. 6, contains f u l l reprints of over 60 papers presented on value technology in Construction.

Take advantage of this opportunity to augment your Library of Value Technology with a set of books dedicated to the particular Subject Groups of personal interest to you or your company. Send in the handy order fo rm now, for immediate fast delivery o f your Books.

Subject Group Book No.

No. of Pages Price

Administration 1 65 J 4.75 Application J 510 12.85 Applications (Unique) 3 136 0.75

Commercial 4 47 4.25 Computer 5 69 4.75 Construction 6 373 17.50 Contractual Aspects 7 177 10.25 Cost, Design To 8 60 4.75 Cost Effectiveness 9 130 9.50 Cost to Produce 10 25 3.50 Creativity 11 94 6.25

Data Sources 12 25 3.50 Department of Defense 13 92 6.25 Design 14 82 5.75

Education 15 104 6.50

Fast 16 79 5.50 Function 17 57 4.75 Fundamentals of V . E . 18 11 3.50

Government Agencies - (Other than DoD) 19 58 4.75

Interdisciplinc 20 45 4.25 International 21 85 5.75

Subject Group Book No.

No. of Pages Price

Life Cycle Cost 22 15- ~T5T

Maintenance 23 30 3.75 Management 24 226" 12.95 Manufacturing 25 80 5.75 Marketing 26 62 4.75

New Products 27 33 3.75

Organization 28 62 4.75

Personnel 29 37 4.00 Philosophy 30 152 9.75 Professionalism 31 66 4.95 (Value) Program Measurement 32 168 10.25 Programs 33 69 4.75 Purchasing 34 20 3.50

Software 35 59 4.75 Standards 36 22 3.56 Systems Effectiveness 37 24 3.50 Support (See Maintenance) 38 30 3.75

Techniques 39 298 14.25 Training 40 104 6.50

• Tear Off Form To Mail

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Value Engineering Slide/Tape Presentation for Management

We are pleased to announce the availability date for the slide/tape presentation on the Values of

Value Engineering. This presentation will be ready for shipment May 22, 1979.

The 20 minute presentation includes 40 color slides (35 mm) accompanied by a cassette tape with

the spoken message keyed to the visual message of the slides. This presentation can be easily con­

ducted with a carousel projector and a cassette player. This slide/tape package is a very useful tool

to aid you and your groups to introduce the V . E . message to any level of management. Al l V . E .

reference libraries should include a copy of this presentation.

Order yours today by sending a check for $250 to the S A V E National Off ice , 220 N . Story

Road, Suite 114, Irving, Texas 75061. Copies will also be available for short loan to S A V E

Chapters for special programs.

Tear Oil Form To Muii

S E N D COMPLETED ORDER FORM T O : S O C I E T Y O F A M E R I C A N V A L U E E N G I N E E R S . I N C 220 N. Story Rd. Suile 114, Irving, Texas 75061

Pleose s e n d lo m y o l t e n l i o n Ihe f o l l o w i n g i l e m s :

E n c l o s e d p l ease f i n d Check I 1 M o n e y O r d e r 1 I

i n the a m o u n t o f $

N a m e

A d d r e s s

C i t y

V A L U E ENGINEERING, SLIDE/TAPE

PRESENTATION FOR M A N A G E M E N T

" T H E V A L U E OF V A L U E ENGINEERING"

Sta t e

P A Y M E N T I N U.S. FUNDS

M U S T A C C O M P A N Y A L L ORDERS

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Society of American Value Engineers 220 N. Story Rd. Suite 114 Irving, T X 75061

Hulk Rate

U.S. Postage Pa id

Dal las , Texas

P e r m i l N o . 8293

A D D R E S S C O R R E C T I O N R E Q U E S T E D

f G R O W L E R , C V S , S R . M E M N c o s a - o ^ b b

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