TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT
OF RESEARCH PROBLEMS
1.3 OBJECTIVES
OF THE STUDY
1.4 SIGNIFICANCE
OF THE STUDY
1.5 SCOPE
OF THE STUDY
1.6 RESEARCH
QUESTIONS
1.7 FORMULATION
OF RESEARCH HYPOTHESIS
1.8 HISTORICAL
BACKGROUND OF THE CASE STUDY
1.9 DEFINITION
OF TERMS
CHAPTER TWO
LITERATURE REVIEW
2.1 CONCEPTUAL FRAMEWORK
2.1.1 CONCEPT
OF VALUE ANALYSIS
2.1.2 CONCEPT
OF VALUE ENGINEERING
2.1.3
CONCEPT OF PRODUCT DESIGN
2.1.4
CONCEPT OF FUNCTION ANALYSIS
2.1.5 CONCEPT
AND MEASURES OF PROFITABILITY
2.1.6 THE FOCUS OF VALUE ANALYSIS
2.1.7 THE USE
OF VALUE ANALYSIS
2.1.8 DIFFUSION OF INNOVATION
2.2 THEORETICAL FRAMEWORK
2.3 EMPIRICAL REVIEW
2.4 GAP IN LITERATURE
CHAPTER THREE
METHODOLOGY
3.1 RESEARCH METHODOLOGY
3.2 RESEARCH METHOD USED
3.3 SOURCES OF DATA
3.4 DATA COLLECTION TOOLS
3.5 RESEARCH POPULATION AND SAMPLE SIZE
3.6 SAMPLING PROCEDURE EMPLOYED
3.7 STATISTICAL TECHNIQUES USED IN DATA
ANALYSIS
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
4.1 DATA PRESENTATION AND ANALYSIS
4.2 HYPOTHESIS TESTING
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATIONS
REFERENCES
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
Value Analysis/Value Engineering is a
systematic and organized procedural decision-making process. It has been used
in almost any kind of application. It helps people creatively generate
alternatives to secure essential functions at the greatest worth as opposed to
costs. This is referred to as value. It is also known as Value Analysis, Value
Management, Value Planning, and a host of other names.
As
organization seeks to maximize profitability, they have utilized various
business strategies and techniques to ensure that this objective is realized.
With the current competitive and fast pace dynamic environment, every
organization strive to maintain it customers based, and also gain competitive
advantage over its competitors by providing goods that are of value to the
customers. Value according to Miles (1989) is the lowest possible price that
can be paid for to provide a reliable function or services.
Over the
world, there is always a need to provide goods that are of values and also
capture the attention of the customers, and Nigeria is not an exception.
Organization can do this by revisiting the product designs of products offered
to the market. So there is a need for value engineering as a management tool
that aims at providing an improved product design that will not reduce the
value derived by the customers.
According
to West Virginia division of highway (2004), “Value engineering is the systematic
application of recognized technique by multi- discipline team that identifies
the function of a product or service, establishes a worth for that function;
generates alternative through the use of creative thinking, and provides the
needed functions, reliability at the lowest overall cost.” This approach
requires that in the process of minimizing cost, the required quality and
performance should not be sacrifice. Value engineering as a technique involves
the identification of new alternatives to product design at a reduced cost. So
organizational profitability has become the concern of researcher as there are
quite a number of study on value engineering, but not much work has be done
empirically on this topic in this part of the globe. So this study aims at
empirically ascertain value analysis and value engineering impact on
organizational profitability.
Value
Analysis and Value Engineering (VA/VE) has both primary and secondary
functions.
PRIMARY
FUNCTIONS
Value Analysis is a study of function, the function
of parts material or service is the function of parts material or service is
the job it does. Its frequently defined as “something” which makes an item work
or sell” it can be usually be defined with a verb and a noun viz.
Knife: Cut materials.
Thermometer:- indicates temperatures.
Defining function by using just two word, the
verb, the noun, represents the attempt to define more than one simple function
at one time and makes the function in addition to the primary or basic function
earlier mentioned.
SECONDARY
FUNCTION
Which are the creation of eye appeal to help
sell the product and certain added feature which will appeal to the buyer but
really add nothing to the accomplishment of the basic function except for the
advanced countries like those of the America and Europe, among others, the
concept of Value Analysis and Value Engineering had meant little or nothing to
the developing nation of the globe.
However, there has emerged a possible
recognition of it in the recent times. Therefore, some of the companies are
recording better mark ups on their sales and purchasing personnel through the
program are offering fair prices on procurement activities.
1.2 STATEMENT OF RESEARCH PROBLEMS
Since
organization needs to present products that are of value to the customer for
them to be profitable, every organization is in a need to achieve this. But the
problem here is that not all organization has what it takes to provide the
necessary product design that will culminate to value to the organization.
Lack of
innovation product design which is part of value engineering is lacking in
organization. Also inability to identify alternative to indentified function of
a product is a problem faced by most organization in their production process.
If there is no alternative to identified function, it will be difficult to
reduced cost without sacrificing the value to be derived by the customers.
Therefore cost reducing is an essential criterion of public limited companies
in Nigeria for been profitable and Value Engineering remains a technique for
achieving this goal of cost reduction and profitability in Public Limited
Companies.
1.3 OBJECTIVES OF THE STUDY
This study is undertaken in order to explore
the academic relationship between classroom theory and what is practically
obtainable in bottling company having chosen the project topic.
As assessment of the application of value
analysis and value engineering in cost reduction “(A case study of United Foam
Public Limited Company, Ilorin),
1. To
investigate those factors that are responsible for unnecessary cost of an item in an organization.
2. To identify the benefits that can be
derived from the implementation of effective value analysis programme in an
organization.
3. To investigate what should be the role of
purchasing in value analysis programme in an organization.
4. To identify those areas in which value
analysis is applicable; that well result into cost reduction to the overall
goal of organization.
5. To cause top management to realize that
value analysis should really be everybody business. In one sense, maximum
potential can be realized from a values analysis programme only if management
properly takes these potential resources.
1.4 SIGNIFICANCE OF THE STUDY
In view of the huge expenditure on purchase of
materials used in industries, it becomes imperative for the implementation of
value analysis techniques to reduced cost of production in industries. It is
the impact of this study to make a viable and importance rectification so as to
determine alternative ways of obtaining same quality materials or items but at
a reduced cost.
• It is also the significant of this
study to accuse consciousness to the benefits of effective value analysis
program in organizations.
• The project will also show how purchasing
as a member of value analysis team is involved in value analysis programme.
• This project is also aimed at
reviewing the way cost is being reduced by the use of value analysis techniques
in an organization.
• The study is also undertaken in partial
fulfillment of the National Board for Technical education and the Kwara State Polytechnic
Ilorin, for the award of HND in purchasing and supply.
• Finally,
it will remain as a data bank for future researchers.
1.5 SCOPE OF THE STUDY
This study is supposed to cover Unifoam
Industries, but as a result of the researcher being a student, faced with so
many work in school which involves lectures & studying for the final exams
and writing of this project at the same time and due to time constraints this
research work will be focusing on the very department in Unifaom company Ilorin“
that will make impact on the subject matter and these departments are as
follows: Purchasing production, Quality control, Accounting, Design and
Engineering Departments.
1.6 RESEARCH QUESTIONS
To achieve the objectives of the study, the
following research question are necessary, notable among them are;
1. Is value analysis an effective technique
in respect to cost reduction programme?
2. Does value analysis lead to a drastic
cost reduction in products and services in industries?
3. Does
purchasing play a vital role in value analysis programme?
4. Do those involved in product design;
have enough time to critically examine possible alternatives materials and processes?
5. What has firms benefited from the
application of value analysis programme?
1.7 FORMULATION OF RESEARCH HYPOTHESIS
Hypothesis represents an assumption which the
researcher would like to verify hypothesis norm ally comes before the research
is conducted.
Generally hypothesis may be stated in two ways.
- Null
Hypothesis (Ho)
- Alternative
Hypothesis (Hi)
1. Ho:
Value analysis is not an effective technique in respect to cost reduction
programme?
Hi: Value analysis is an effective technique in
respect to cost reduction programme.
2. Ho: Not every firm requires the
application of value analysis.
Hi: Every firm requires the application of value
.analysis
3. Ho:
There is no need for the application of value analysis in respect to cost
reduction in Unifoam companies.
Hi: There is need for the application of value
analysis in respect to cost reduction in Unifoam companies.
4. Ho:
The application of value analysis has not in any way benefited firms.
Hi: Firms has in no measure benefited a lot from the
application of value analysis programme.
5. Ho: Purchasing do not play a dual role
in value analysis.
Hi: Purchasing plays a vital role in value
analysis.
1.8 HISTORICAL BACKGROUND OF THE CASE STUDY
The United Foam Plc, Ilorin is located along
Asa-Dam New Yidi Road Ilorin, it was established in November 8th
1982 and commission on the 9th December, 1982 by the then executive
governor of Kwara State Alhaji Adamu Attah As the name implies the organization
manufactures foam products like mattress and cushions for the ultimate
consumer’s consumption.
The company is jointly owned by the Kwara State
government with 40% shares and the private individual comprising of the
foreigners and indigenes have the remaining 60% shares.
Initially, the company served it customers
throughout all the local government in Kwara State. However, it has extended it
marketing operation to other state of the federation, Kwara State being the
gate way. The present staff strength of the manufacturing organization stands
at five hundred and forty-three Despite the young age of the company compiled
with the present state of the economy in Nigeria, it has made itself one of the
leading and most reputable of foam product country today.
1.9 DEFINITION OF TERMS
Value
Analysis:- is simply the organized systematic and
continuous study of every cost elements in a part, material or service to
ensure that it fulfill its function at the lowest possible cost.
Value
engineering:- Has been used to refer to the design stage or
before the fact value Engineering approach is used for new products and applies
the same principle and techniques to pre-manufacturing stage such as concepts
development, Design and prototyping.
Value:- value is the relationship between what you
want, the functions and what is cost to get it.
Sourcing:- refers to a number of procurement practices,
aimed at findings, evaluating and engaging suppliers of goods and services.
Purchasing:- is an activity of acquiring goods or
services to accomplish the goals of an organization.
Specification:- exact statement of the particular needs to
be satisfied, or essential characteristics. That a customer requires in a
goods, material methods, process, service, system or work and which a vendor
must delivery.
Techniques:- A systematic procedure formula, or routine
by which a task is accomplished .
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