EMPIRICAL REVIEW
An empirical review of related literature in manufacturing sector on the subject matter showed that most studies focus on the product, process design and product improvement. According to study carried out by Chougule and Kallurkar (2012), on selected components of Universal Testing Machine “observed that the unnecessary increase in cost is due to use of expensive material, complicated design, increased in variety of hardware items and thereby increasing the inventory. Therefore, Value Engineering is executed by implementing design modifications and change in materials of components. Value Engineering results in use of alternative less expensive and light material. VE is also applied as a tool for cost design (Nishimura, 2007), cost reduction and profit improvement (Yoshikawa et al., 2004). VE has lead to extensive studies on product design adopted in the manufacturing industry (Sharma et al., 2006). This includes the adoption of VE as part of the integrated system in achieving optimization in product design. “VE was integrated with Quality Function Deployment (QFD) and Failure Modes and Effects Analysis (FMEA) as a structured and targeted approach towards achieving quality, cost and reliability deployment objectives†(Chin et al., 2006). The results aid in better product design, quality and the ability of the development team to handle any conflicts that arise out of meeting customers’ needs and any inherent fuzziness in the system. This meets the needs of the customers and organization, besides providing customers with what they perceived as important (Prasad, 2008). “VE was also integrated with Technical Importance Ratings (TIRs), Customer Importance Ratings (CIRs) and value graphs. Product designers are able to prioritize the solutions for product improvement that actually meet the needs of the entire value chain, which includes customers, the company and suppliersâ€(Prasad, 2008). There are also studies that examined VE application in respect to management cost techniques in manufacturing organizations (Afonso et al., 2006; Yoshikawa et al., 2005). Ibusuki and Kaminiski (2007) identified several factors for VE’s successful integration; they are: “strategic cost planning, development of multifunctional teams, important function of finance, integration of cost planning with the company’s global strategy, and the use of tools and techniques that support VE.†Greenfield (2004) “describes a process for applying the value methodology to develop a new design concept rather than the traditional use of VE to optimize an existing design. VE techniques are iteratively inserted into the planning process to select a concept that delivers the optimum life-cycle cost.†Eneichiet (2014) in his study on value engineering and profit performance in manufacturing firms concluded that there is a significant relationship between profitability and cost reduction. He further stated that Value Engineering is a parallel and necessary process for good conceptual design.
2.4 GAP IN LITERATURE
The gap discovered in tehse literatures shows that there are limited studies that assess the profitability. Some of these literature mentioned the cost reduction like Nick Rich, and Mathias Holweg, Dipl. 2002 and many others whereas the major variables needed in this research work includes profitability.
Therefore, the study aims to provide empirical evidence in United Foam as it examines the impact of value analysis and value engineering on organization profitability.
Specifically, it aims to identify the following objectives;
1. To examine the impact of value analysis and value engineering programme to the attainment of organizational profitability objectives.
2. To investigate those factors that are responsible for unnecessary cost of an item in an organization.
3. To meet the partial requirement for the award of Higher National Diploma (HND) certificate awarded by Purchasing and Supply department, Institute of Finance and Management Studies, Kwara State Polytechnic.
4. To identify the benefits that can be derived from the implementation of effective value analysis programme in an 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.
