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Home arrow Defence arrow CII's Total Cost Management division organises seminar on "Value Engineering"
CII's Total Cost Management division organises seminar on "Value Engineering" Print E-mail
Wednesday, 21 October 2009
Bangalore: The Total Cost Management (TCM) division of the Confederation of Indian Industry (CII) organised a seminar on Value Engineering, with the theme ‘Cost Effectiveness through Value Engineering.’

Dr. R. Narayanaswamy, Professor, Dept of Finance & Control, IIM Bangalore, speaking about ensuring an effective cost management process, emphasised on proactive involvement of accountants in new product development and using multiple yardsticks (i.e. costs, benchmarks, customer satisfaction) rather than focusing exclusively on financial implications.

Defining value engineering, as the process which helps to design products that will meet customer needs at the lowest cost without compromising on the standards of quality, he cited examples of Sony Walkman, Tata Nano and Bharti Airtel in product innovation, cost innovation and strategy innovation respectively.

"The design and cost departments were distinctly different entities in the 90’s, but since then there has been a consensus between the teams in the process. The concept of Cross Functional Teams has come a long way in Indian industries to reap strong benefits," said Dr. Narayanaswamy.

Citing the management practices at BHEL Trichy, he said ", they used to transfer people from manufacturing and materials to the finance function. I think it brought about a huge change because the big problem was coordination between finance and purchase and that problem was solved by doing this."

Emphasising the need to shift focus from product costing to design costing, he presented a survey matrix on the degree of importance of design to both accountants & designers.

G.S. Narayana, Head Product Engineering, L & T Komatsu Ltd spoke about the cost savings done through value engineering. He spoke about how the company had saved lakhs of Rupees by material,design & process modifications. The company saved a lot of money by substitution of sheet metal components with fiber reinforced plastics, Casting weight reduction and making the counter weight scrap-less.

Dr. R. Narayanaswamy said that companies were putting in a lot of money into after-sales service and that they needed to pay more attention to earlier stages of product development. "Identifying activities which add value to the customer and quantifying the extent to which resources are interfaced with value or non-value added activities is essential," said A.N. Raman, Member, CII-TCM Working Group.

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