Guide 08 of 10

Running a VE programme

A single study saves money once. To keep saving, companies run value engineering as an ongoing programme, with a savings funnel to track every idea, a few key measures and a regular review.

By Avinash Bhosale · Updated · 2 min read

The savings funnel · a typical round of 320 ideas

Ideas generated
320
Screened and ranked
128
Business case checked
54
Approved by the decision board
34
Implemented, savings in the accounts
24

Only about 1 in 13 ideas makes it all the way to real savings. That’s why the creative phase aims for as many ideas as possible, and why every stage of the funnel needs someone in charge, a named owner for each idea and a date. An idea nobody owns rarely goes anywhere.

The measures that matter

Funnel coverageThe share of product cost currently being studied. Aim for at least 60% on your main product lines.
Idea conversion rateIdeas implemented ÷ ideas generated. If this falls, you usually don’t have enough people developing the ideas, rather than a shortage of good ideas.
Cost transparencyThe share of your parts spend that has a should-cost estimate behind it. Aim for at least 80%.
Savings velocitySavings that actually reach the accounts each quarter, checked against the agreed starting cost.
Average paybackOne-off cost ÷ yearly savings. Keep the average under 12 months.
Reuse indexThe share of parts shared across your products. More sharing means bigger volumes and lower costs.
MonthlyReview the funnel. Every idea needs an owner, a stage and a date, or it gets dropped.
QuarterlyPlan the next round: which products to study, which teardowns to do, and updated savings targets.
AnnuallySet a cost-reduction plan for each product line, linked to its profit targets and platform plans.
ContinuouslyBuild skills: train and certify facilitators (VMA, CVS), and add what you learn to your design rules.

Try it

Savings Funnel Tracker

Learn it properly

Module 12 · Running a VE Programme

Free, narrated and interactive — with a Certificate of Completion.