Value Analysis and Value Engineering Industry Application

7/29/2019 Value Analysis and Value Engineering Industry Application

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Prepared by: Angelo Santos , RME

Project Title: Project Renault


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PROJECT NAME BACKGOUND:

Renault is an economy car that pioneered hatch-back revolution

in European motor industry. It played a key role in popularizing the

hatchback in Europe. The time was the economic stagnation of 1960s until

1970s.

Hatch-back is a term designating an automobile design,

containing a passenger cabin with an integrated cargo space.

Note: My idea is to integrate back label and Body label into one label design that will deliversavings in production cost and a significant increase in O.E.E. (Overall Equipment

Effectiveness)
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Diageo Philippines Supply

Content:

1. Project Overview

2. Quality Function Diaram3. Before Function Cost Matrix

4. Before Function Analysis (FAST) Diagram

5. Proposal

6. After Function Cost Matrix

7. Projected Savings - Computation

9. Conclusion / Recommendation10. References

8. After Function Analysis (FAST) Diagram


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Product Name: Gilbeys Island Lime

Juice 200ml and 375ml

Front View200ml

Back View200ml

Project Objective:

Achieve 2 Million Php cost

savings on Labels 5% Increase in O.E.E.

2% Increase in RFT

Project Overview

Product knowledge:

Product was develop as a mixer

for the Gilbeys Gin and as a

Marketing strategy to promote theOver the Top challenge of Mixing


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Quality Function Diagram

(QFD)


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Before Function Cost

MatrixFUNCTION-COST MATRIX

ITEM NAME: ISLAND LIME JUICE 375ML STATUS: BEFORE

COMPONENTSFUNCTIONS

SPECS COSTVERB NOUN P S

1 CAPS

COVER

BOTTLE XROUNDED, GREEN

AND HARD0.71

2 BOTTLE

CARRY BLEND xSHAPE,

TRANSPARENT ANDHARD 6.02CARRY LABELS x

CARRYCAPS x

3 LABELS - FRONT

CARRY BLEND INFORMATION x

READABLE PRINT,

VIRGIN PAPER

0.88

CARRYLOGO x

4 LABELS - BACK

CARRY BATCH NO. x

READABLE PRINT,

VIRGIN PAPER

0.84

CARRY

REGULATORY REQUIREMENTS x

5 GLUE (FRONT&BACK) ADHERE LABELS x

STRONG

ADHESSIVENESS

AND FAST DRY

0.12

6 LIME JUICE BLEND SATISFY CUSTOMER xGREEN, SWEET AND

SOUR8.5

TOTAL ITEM COST/BOTTLE: 17.07


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Before Function Analysis

FAST Diagram


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ProposalChange Description details :

Proposed

integration of Lime Juice Front and Back Labels. All the mandatory requirements (barcode , ingredients ,

manufacturer and etc.) will be printed at Body label thus back labels will be eliminated in the finished product.

Current


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After Function Cost MatrixFUNCTION-COST MATRIX

ITEM NAME: ISLAND LIME JUICE 375ML STATUS: AFTER

COMPONENTSFUNCTIONS

SPECS COSTVERB NOUN P S

1 CAPS

COVER

BOTTLEROUNDE, GREEN

AND HARD0.71

2 BOTTLE

CARRY BLENDSHAPE,

TRANSPARENT

AND HARD

6.02CARRY LABELS

CARRYCAPS

3 LABELS - FRONT

CARRYBLEND INFORMATION

READABLE PRINT,

VIRGIN PAPER0.91

CARRY LOGO

CARRY BATCH NO.

READABLE PRINT,

VIRGIN PAPERCARRY

REGULATORY REQUIREMENTS

4 GLUE FRONT ADHERE LABELSSTRONG

ADHESSIVENESS

AND FAST DRY

0.06

5 LIME JUICE BLEND SATISFY CUSTOMERGREEN, SWEET

AND SOUR8.5

TOTAL ITEM COST/BOTTLE: 16.2


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Projected Savings

Projected Volume

Majority of the saving will come from elimination of back labels.

Computation based on the priced of label per piece of Back labels and estimated totalvolume for Next Year

Savings on Glue usage

Computation based on the declared usage per bottle by production team during the Creation

of BOM (Bill of Material)


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Quality Cost: Quantity of labels wasted during the production related to back label application.

This occur during the production of Island Lime Juice.

Note: Wastages based from the material recon between Warehouse and Production Team on the current Year

SKU First Half of the Year

Back Label

Wastage Cost

(php)

200ml 46,487.13 19,893.00

375ml 37,323.42 8,779.0028,672.00

SKU 2nd half of the year

Back Label

Wastage Cost

(php)

200ml 13,889.50 21,352.00

375ml 18,625.92 23,065.00

44,417.00

Total 73,089.00

Projected Savings


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Total Saving = Cost of Quality + Cost of Production

Note: Total estimated saving will be came from the cost of the back labels that was eliminated and cost of quality that

was eliminated due to removal of back labels:

Total Saving = 73,089.00 + 1,841,692.51

Total Saving = 1,914,781.51 PhP

Total Savings -

Estimated


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After Function Analysis

FAST Diagram


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Conclusion &

Recommendation I recommend to our Production Manager to sponsor the project during the Management

Committee and discuss to our marketing department the impact of cost savings in ourproduct margin. Hopefully this will also justify the integration of labels.

The immediate implementation of this project will also simplify the process related to

label application in Island lime Juice, below are tangible and non-tangible benefits

involve in this project.

Tangible Benefits:

Saving on Labels and Glue worth: 1,914,781.51 Php

Non-Tangible Benefits:

Operation 5% Increase in O.E.E.

increase brought by less change-over time and faster shutdown period. This improvement will

result to one label station to be fined tune during change-over and 1 stationed to be cleaned

after the run compared. Previous production system uses two label station thus fine tuning is

longer during production and 2 label station to be cleaned during shutdown period. The

Computation based on an 8hrs run or 2200cs


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Conclusion &

Recommendation

Quality

2% Increase in Right First Time

Majority of the labels defect based from the inspection monitoring was missing back labels

brought by operational related issues like accumulation of glue on the pallet, this glue

accumulation may result to adherence of the succeeding labels on the pallet.

Eliminating back labels will also result to reduction of process related defect to almost 50%,

below are the types of defect that will be eliminated:

Eliminating 7 types of defect

A. Missing Back Labels

B. Peel-off Back Labels

C. Off-centering of Body and Back Labels

D. Double back Labels

E. Skewed back Labels

F. Inverted back LabelsG. Torn Back Labels


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Conclusion &

Recommendation

Importance of Project Sponsor

someone from the SLT (Senior Leadership Team)that will push the project during Management-Committee

Importrance of having a Timeline this will result to a bigger savings if properly executed

I also learned the following key points during the Project Implementation:

Maintenance Simplification Since Back station will no longer used on the operation , we can eliminate it from the CMMS

Spare parts inventory for Back label elimination can also be eliminated

Environment

This will also deliver reduction of waste on the land fill. Almost 2.2M pcs of back labels from

ILJ 200 and 375 for suceeding years of operation.

65,000 pcs of back labels per year were added as a land fill waste.

In effect we also contribute to less usage of paper in manufacturing industry.


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References

1. www.diageo.com

2. en.wikipedia.org/wiki/Renault

3. www.renault.com/EN4. Diageo Philippines Production Manual

5. Diageo Philippines Microsoft Business

Solution6. macro.lsu.edu/igert/minithesis_page.htm

Documents

Value Analysis and Value Engineering Industry Application