Application Of Value Analysis As A Cost Reduction Tool By A Manufacturing Industry

INTRODUCTION
OVERVIEW / BRIEF REVIEW
Historically value analysis a techniques of cost reduction can be traced to World War II when companies faced serious problems of shortages of materials. The uses of substitutes become the only way-out. Surprising, there substitute were much cheaper and functioned more efficiently than the original materials.
After, this period of war, the idea was scientifically experimented as a deliberate approach by a team of engineers from general electric company (USA). This team was handed by Lawrence D miles. It was miles who corned the term value analysis. Since than value analysis has proved to be a good technique in respect of a cost reduction programme.
The primary objectives of these techniques are achieved. The required function at a lesser cost reduction is a very dynamic concept unlike cost control.
In other to meet value analysis and quality assurance to material management. The company has to maintain its standard as a result of up-spring of other industries.
Value analysis as an organized systematic study of the function of materials, parts and components involves the critical examination of good or products, which aims at improving its efficiency in use of changes in design, production techniques packaging and other related process.
The overriding consideration is that quality and reliability must be maintained. These means that value analysis techniques to all about redesigning a product or items to eliminate unnecessary cost elements without determine to the quality of the product.
A question may be asked if value analysis techniques can be implemented by one function in a manufacturing industry.
According to Zenz (1994: 469). The implementation of value analysis techniques must be the responsibility of a group with suitable knowledge and skill from purchasing department design and engineering. Production and perhaps marketing department and management account to review the components and materials in place. This primarily is intended to provide a means of consideration possible alternative in an atmosphere of open thinking and analysis to provide the right quality at a more economic cost.
The general idea behind this is the issue of quality and cost. The main objectives of every organization are to make project, just as a product is purchased to satisfy a particular purpose. For this reasons, it become important to correct or even avoid those unnecessary cost elements in a production design. This in essence stimulated the researchers interest most to carryout this research.

1.2 STATEMENT OF THE PROBLEMS
For sometime now the challenges and problems that faces mankind in the rest of the century looks so closely the daily lives of so many people as the problems of the city. For sometimes now, evidence has shown that the impact of the application of value analysis as a cost reduction tools in a manufacturing firm in most industries has not been good.
This prompted the researcher to investigate the relation or reasons for the unfriendly atmosphere. The researcher than took a critical look at the factors affecting the impact of the application of value analysis as a cost reduction tools in a manufacturing firm.
It also prompted the researcher to investigate the reason why the company has not been able to meet the increase in demand to her customers; thereafter the researcher examined the organizational structure of the company.
But in carryout this research the researcher identified some problems that hinder the progress of the organisation as regarded to the purchasing department activities.
i) The organisation does not have qualified people who are knowledgeable in value analysis programme.
ii) The organizations have little or no knowledge about value analysis and therefore cannot appreciate the role it can plan in cost reduction.
iii) Conflicting interest is a major problem in the application of value analysis programme, since every department or unit wants it to be located on its own department or want to have said.
iv) Management believe that value analysis is expensive and should be avoided.
It is a material fact that a company that by wisely and economically profits well and therefore less vulnerable to economical doom. That when people put breaken improvement in purchasing they put limit to profitability.
The researcher is faced with the problem of working modalities for the improvement of a disciplined way of attacking cost.

1.3. OBJECTIVES OF THE STUDY
The objective of this research work is aimed at finding out how effective the impact of the application of value analysis as a cost reduction tool in a manufacturing firm.
The study is undertaking in order to explore the academic relationship between classroom theory and what is practically obtainable in a manufacturing industry as regards the application of value analysis as a cost reduction technique in practical terms.
The other objectives of this research work can be stated as follows:
i) To examine the competency on staff that carryout the value analysis programme so as to know whether their competency or other wise will improve the application or not.
ii) To suggest ways to encourage the application of value analysis in the organization.
iii) To examine the conflicting interest with respect to who should be involved and who should not be involved in the programme with the view to carry along every person.
iv) To examine management physiology with respect to ascertain their mind set with regard to cost reduction.

1.4 THE SIGNIFICANCE OF THE STUDY
In view of the huge expenditure on purchase of materials use in industries, it become imperative for the implementation of value analysis techniques to reduce cost of production in industries. It is the significant of this study to make a viable and significant rectification so as to determine alternative ways of obtaining same quality materials or item but at a reduced cost.
i) The organization of the study will benefit immensely from the study since it will help them to check their current process which will help them to know whether what they are doing is right or wrong whence corrective measures are taken.
ii) The should benefit the firm of the study because it will create the necessary awareness and curiosity both in mind of those who have started applying this concept and those who are yet to apply.
iii) It is a requirement by the MBT to acquire the national diploma certificate without it I as a student cannot obtain the certificate.
iv) It has provided a leaning opportunity for the researcher to acquire skills that will help her in future assignments such as this.
v) Finally the study will be of benefit also to other students who may in future carryout similar study like this, it may serve as a data for them.

1.5 RESEARCH QUESTIONS
From the inception of the application of value analysis by the early companies during the world war II, value analysis have not been considered value by most manufacturing organizations that have embarked on it.
It therefore bears me worrisome regarding such degree of negligence on the part of management with respect to cost reduction, quality improvement and enhanced profitability.
However, the researcher is bothered with these questions which are:
i) Do you think purchasing depth has a major role to play in value analysis programme?
ii) Does value analysis lead to a drastic cost reduction in products and services in manufacturing industries.
iii) Is value analysis a good technique in respect of cost reduction programme.
iv) Has the application of value analysis techniques any significant role to play in the profitability of manufacturing company.

1.6 HYPOTHESIS OF THE STUDY
Based on the matters arising form the research question above, the following hypothesis were formulated:
i) Ho – Value analysis is not a good technique in respect to a cost reduction programme in a manufacturing industry.
ii) Hi – value analysis has been a good technique in respect to a cost reduction programme in manufacturing industries.
iii) Ho – Purchasing department has not been playing a major role in value analysis programme in a manufacturing industry.
iv) Hi – Purchasing department has been playing a major role in value analysis programme in a manufacturing industry.

1.7 SCOPE OF THE STUDY
This project focuses particularly on the impact of value analysis as a cost reduction tool in a manufacturing company case study of PZ Nigeria Plc Aba a privately own manufacturing company. More of the information needed for the study was received from questionnaire and interview administrated to various department in the company especially the functional area or unit or department e.g. purchasing, Accounting / finance, marketing, domestic operations, international operations, production, engineering etc.
Succinctly, when people put break in improvement in buying material items the put limit to profitability.

1.8 LIMITATION OF THE STUDY
Among other things, the researcher encountered the following limitation in carrying out the research work on the need for the development of the impact of the application of value analysis as a cost reduction tools in a manufacturing firms as related to Paterzon Zachonis Nigeria plc Aba. Due to the condition of our economy, the researcher is handicapped; there is lack of finance that should have allowed a most diversified research.
a) Time constraint
b) Research bases
c) Attitude of Nigerians to research
d) Official protocols
e) Finance
f) Transportation
a) TIME CONSTRAINT – this was one of the limiting factors encountered by the researcher. The time within which to complete this work is relatively small and does not allow for a detailed investigation of the facts needed by the researcher.
b) RESEARCH BASES – most respondents although knowing ht aim of this research refuses to co-operate. The researcher has to waste time persuading them to answer on question or the other. This was a result of size of the regulation involved which made the researcher used personal interview in gathering data.
c) ATTITUDE OF NIGERIANS TO RESEARCH – the tendency of respondents not to regard questionnaire and their attitude towards returning the questionnaires posed a problems to the researcher. Some returned ones did not comply with the instructions. This affected the process of the research work.
d) OFFICIAL PROTOCOLS – the protocols in the company minds many findings to the research work. This rose from the fact that company did not make available some of the vital documented data which would help thrown more light to the study.
e) FINANCE – in project like this, there are bound to be some hindrances posing as a threat to the progress of the project especially in the area of structural adjustment programme (SAP). As we all know, money is hard to come by. So the researcher has to limit him / her to the available finance / resources and has to structurally adjust the project.
f) TRANSPORTATION – this problem also passed as a big threat to the project. The researcher wasted much time for vehicle and may succeed only to get his point of call very late. At time interviews arranged may be over or missed and repeat journey become mandatory in other to meet up.

1.9 DEFINITION OF TERMS
Purchasing: as used here is an important part of material management, standing mainly for obtaining the right quality materials from the right sources in the right quality, at the right price, delivery at the right time.
Functional value: functional value as used is simply that which enables an item or product to fulfil its stated function it can also be called used value.
Esthetic value: this is simply the measure of value of beauty you scribe to an item that increases the desirability of an item or product.
Analysis: is the detailed study of examination of some thing in other to understand more about it or what it consist.
Alternative: this entails something one can choose or have out of two or more possibilities to achieve the same objective.
Exchange value: is the cash worth of something in the present form. It is the price a purchase offers for an item (market price).
Value analysis: is the systematic study of products or materials with a view to reduce their cost by redesigning to eliminate design features which add to cost but do not contribute to value.
Value engineering: value engineering is the application of value analysis technique in the pro-production or product development stage.
Re-design: this entails the process of designing a product or material again in a different way. It is an adjustment on a product design by eliminating certain features of the product.