Value Analysis/Value Engineering Can Equal Cost Improvements
VAVE involves engaging an engineering team to identify design improvements in the finished product and related processes that can increase performance, efficiency and cost-effectiveness. VAVE requires a comprehensive audit of areas ranging from the embedded system that runs and displays the diagnostics to the housing, assembly, shipment, installation and other functions.
The goal is to optimize device operation as well as manufacturing, testing, logistics and support costs. Doing it right delivers competitive advantage and improved gross margins for the OEM. VAVE helps ensure reliable long-term device performance and assists healthcare organizations in meeting year-over-year cost reduction requirements to reduce the total cost of care delivery.
The VAVE process provides a way to identify and implement mid-course corrections once your product is in the market. It can optimize your product design, pinpoint failure points before they happen, minimize downtime, eliminate inefficiencies in areas ranging from testing to packaging and servicing, extend product life, and prune unnecessary costs. This, in turn, can help improve competitiveness and the ability to achieve the price reductions demanded in the healthcare marketplace.
Selecting the right VAVE partner is key to achieving these advantages. At AHEAD, our proprietary Forge production infrastructure supports VAVE processes by providing fast, accurate imaging, testing and configuration during manufacturing of embedded systems. Forge also can automate scripting for functional testing and store the information for easy customer access in Hatch™, a toolset offering 24/7/365 visibility of real-time engineering, manufacturing and supply chain information.
Most medical device manufacturers are familiar with the principles of design for manufacturing (DFM), a process utilized in the initial hardware development process to optimize product components and performance before production. But after launch, there’s another critical step that can trim the total cost of ownership by 5–10% annually by fine-tuning design elements that usually get short shrift in the rush to get to market.
Value analysis/value engineering (VAVE) involves engaging an engineering team to identify design improvements in the finished product and related processes that can increase performance, efficiency and cost-effectiveness. VAVE requires a comprehensive audit of areas ranging from the embedded system that runs and displays the diagnostics to the housing, assembly, shipment, installation and other functions.
VAVE in Action
Consider the case of a hematology analyzer, weighing in with price tags ranging from the low four figures to more than $100,000. The team engaged to perform a VAVE evaluation will examine every aspect of the product seeking ways to improve value to the OEM and the customer. The analysis will cover areas such as:
- The embedded system – Are the CPU, memory, hard drive and other components the best fit for the application? How do they rank in reliability compared to alternatives? Do they adhere to regulatory requirements? Have they been tested for compliance and validated? Are there competing components or newer options that will deliver better performance or lower cost? Addressing these issues can maximize uptime, system longevity and cost efficiencies.
- Packaging and unpacking – Is the unit overpackaged? Can the packaging be streamlined to reduce logistics costs? Is it a larger machine like a CT scanner that can benefit from adding wheels to the crate packaging to allow it to be rolled down a ramp by one person instead of needing three or four? All of these factors can reduce the cost of deployment and contribute to lower TCO.
- Cabling – Does the cabling scheme need to be simplified to reduce the time required to connect the embedded system to accessories such as barcode scanners, monitors and printers that come with their own cables? Would it be beneficial to create a cable harness with all cables bound together and color-coded to the appropriate ports for easier device setup? In some cases, this can save hours of installation time and thousands of dollars in labor costs per machine.
- Functional testing – How are you harvesting and validating firmware and other components of the embedded system for quality control and traceability purposes? Is it a manual process that takes hours of staff time and drives up your TCO? VAVE partners with the ability to write scripts that capture the information during production and flag validation problems can automate the procedure, again chipping away at product costs and helping improve OEM margins.
- Circuitry testing – Your software is already validated to work on your hardware, but are all the cables, lights, timers, and other circuitry elements working properly? Test fixtures built specifically for your device can simulate device operation on the production floor, reducing manual testing costs and failures in the field while also creating an electronic record verifying that all signals are being sent and received as designed.
- Serviceability – If a hard drive fails or needs upgrading to add capacity or next-generation capabilities, is there a way to quickly replace it without taking the machine offline? Device manufacturers rarely address this issue before launch because of time-to-market imperatives, but your VAVE partner can create removable drives that can be replaced in the field with hot-swappable units that eliminate the need to power down the machine. The strategy – which can also be used for other components in the embedded system – also significantly reduces support costs.
Even seemingly inconsequential components such as brackets deserve analysis for their long-term value to a hardware system. When hundreds of platforms are deployed, the failure of a small bracket can spiral into significant cost ramifications.
Overall, the value analysis/value engineering process provides a way to identify and implement mid-course corrections once your product is in the market. It can optimize your product design, pinpoint failure points before they happen, minimize downtime, eliminate inefficiencies in areas ranging from testing to packaging and servicing, extend product life, and prune unnecessary costs. This, in turn, can help improve competitiveness and the ability to achieve the price reductions demanded in the healthcare marketplace.
The dollar impact of the changes recommended by the VAVE partner is dependent on which recommendations you decide to implement, but typically device manufacturers can achieve 5% cost reductions in the first year after product launch and 10% by the second.
That’s why baking VAVE into your post-launch activities is so important. It’s an opportunity to perfect design and processes you didn’t have time for during upfront product development. Considering the intense competition among device companies and the intense price pressures in the healthcare space, VAVE is the do-over that can make the difference between a mediocre product and an exceptional one.
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Contributing Author: Roger Lam, VP of Engineering