VAVEShort for Value Analysis / Value Engineering. The overall discipline of cutting cost by looking at what a product does. Value analysis is used on products already in production, value engineering during design.
Value IndexCost ÷ worth for a function. Above 1.0, you’re paying more than the function is worth. Above 2.0, it’s a strong target.
WorthThe lowest cost at which a function could still be done reliably. It’s the benchmark VE measures the real cost against.
Basic FunctionThe reason the product exists, such as “heat water” for a kettle. Take it away and the product has no purpose.
Secondary FunctionHow this particular design happens to work. This is where most of the cost you can remove is found.
FAST DiagramShort for Function Analysis System Technique. A diagram that lays out functions so that reading right answers “how?” and reading left answers “why?”, between two lines marking the scope of the study.
Function–Cost MatrixA table that shares every pound of product cost across the functions it pays for, showing where cost and worth don’t match.
Should-CostAn estimate of what a part ought to cost, built up from its material, cycle time, machine and labour rates, and a fair margin.
CleansheetA should-cost model where every layer of cost is shown openly, used to negotiate with suppliers based on facts.
LPPShort for Linear Performance Pricing. Plotting price against a cost driver, such as weight, for a family of similar parts to find the ones that are overpriced.
Target CostingMarket price minus the margin you need gives the cost you can afford. It’s set before design starts and then split across the parts of the product.
Design-to-CostTreating cost as a design requirement, taken as seriously as weight, performance or safety.
Kaizen CostingSmall, continuous cost reductions made while a product is in production. It follows on from target costing, which happens during design.
TeardownTaking a product apart in a structured way, whether it’s yours or a competitor’s, and costing each part to find facts and ideas.
BenchmarkingComparing cost, design, features and manufacturing with the best examples you can find.
DFMAShort for Design for Manufacture and Assembly. A method for designing with as few parts as possible, shaped so they’re easy to make and put together.
Buy-to-Fly RatioThe weight of raw material you buy ÷ the weight of material in the finished part. For titanium aerospace parts it can start at 8:1.
OEEShort for Overall Equipment Effectiveness: availability × performance × quality. It shows how well a machine is used, which affects the machine cost of every part.
TCOShort for Total Cost of Ownership. The purchase price plus the cost of energy, servicing, warranty and disposal over the product’s life.
PPAPShort for Production Part Approval Process. The approval every change to an automotive part must pass before it goes into production.
SKU RationalisationCutting product variants that make little money, which frees up stock, changeovers, quality checks and admin.
Best-Cost CountryA sourcing region chosen on the full cost of getting parts delivered, including risk, rather than on the lowest wages alone.
TRIZShort for Theory of Inventive Problem Solving. A method for getting round design conflicts, such as “stronger but lighter”, using 40 principles drawn from patents.
KanoA way of sorting customer requirements into must-haves, performance features, delighters, things customers don’t care about and things they dislike. It shows which features you can safely remove.
Pugh matrixA way of comparing ideas: score each one as better, worse or the same as the current design on each criterion.
Nothing found. Try typing fewer letters.
Try it
VE Cheat SheetLearn it properly
The VE Academy · free courseFree, narrated and interactive — with a Certificate of Completion.