Vying for Value: A Supplier's Perspective on the Competitive Advantage of Value Engineering

Gregg Lowe

doi:10.4271/960010

1996-02-01

Vying for Value: A Supplier's Perspective on the Competitive Advantage of Value Engineering 960010

As with most consumer goods, automobiles have become increasingly dependent on semiconductor technology to deliver the features that end users want. From the first electronic engine controls in the 1970s to the latest antilock braking systems, CD players and theft protection devices, options most popular with consumers require integrated circuitry and computing power. In many cases -- antilock braking systems and air bags, for example -- consumer demand quickly transfers electronics-based systems from the options category onto the list of standard features.

In the past, a new electronic feature required new integrated circuit design and a separate box to house components. Today, though, integration at the component, sub-system and system levels allows automotive designers to combine functions, reducing the space required to house the electronics.

Because it allows several features to operate from the same components, integration often results in lower costs. At some point, though, advanced packaging, process complexity and die size can make highly integrated semiconductors actually more expensive than discrete components. Value Engineering (VE), a cooperative effort between semiconductor makers and automotive systems suppliers, seeks to find the “sweet spot,” where integration and cost meet in the best interest of the system.

This paper examines value engineering as a new frontier of competition within the automotive supply community. Suppliers using VE techniques will develop systems that hit the sweet spot, solving fundamental problems and addressing the unspoken care-abouts of tomorrow. They will reduce cycle times and increase the flexibility to respond to manufacturing change much later in the schedule than before.

Finally, this paper describes how the successful application of VE principals will require a new approach to total system design and dramatically affect the organization of sub-system teams. Increasing participation by suppliers, including semiconductor manufacturers, in a system's initial concept and design is a likely outcome of the VE approach.

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Vying for Value: A Supplier's Perspective on the Competitive Advantage of Value Engineering 960010

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