Value Engineering

Value Engineering is a systematic method to improve the 'value' of goods or services by examining function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost without compromising essential quality or performance.

In procurement, value engineering involves collaborating with suppliers and internal stakeholders to:

• Analyze product specifications for potential over-design
• Identify alternative materials or components
• Optimize manufacturing processes
• Simplify designs to reduce complexity
• Standardize parts across different products

Strategic sourcing initiatives often incorporate value engineering workshops to identify cost reduction opportunities beyond simple price negotiation, fostering innovation and collaboration between buyers and suppliers to achieve mutual benefits.