Value Engineering in 8 Industries

Automotive & Electric Vehicles

Carmakers watch costs more closely than almost any other industry. Between 60% and 75% of a vehicle’s cost is in parts bought from suppliers, spread across thousands of parts and hundreds of suppliers, and customers expect prices to come down every year. Electric vehicles change the picture: the battery alone is 30–40% of an EV’s cost, so battery cells, pack design and power electronics are now where the biggest savings are.

Cost structure (typical share of unit cost)

Purchased BOM

~68%

Direct labour & assembly

~12%

Overhead & depreciation

~13%

Logistics & warranty

~7%

Highest-yield levers

Platform & module commonalitySupplier VAVE & gain-shareGiga-casting part integrationWiring-harness optimisationCell-to-pack battery designShould-cost negotiationsLightweightingVariant rationalisation

Consumer Products & FMCG

Huge volumes, thin margins and tough shelf prices mean a tenth of a penny per unit matters when you sell hundreds of millions. Most of the cost is in materials, packaging and the product recipe, and having too many product variants adds cost everywhere. VE here has to protect what the customer experiences, so any cost you take out should go unnoticed.

Cost structure (typical share of unit cost)

Materials & formulation

~45%

Packaging

~20%

Conversion & labour

~20%

Logistics

~15%

Highest-yield levers

Packaging light-weightingFormulation optimisationSKU rationalisationCube utilisationRecycled materialsLine-speed & yieldCo-manufacturing footprintPrice-pack architecture

Heavy Machinery & Construction / Agricultural Equipment

Low volumes, lots of variety and heavy steel. Most of the cost is in fabricated structures, castings, hydraulics and the powertrain. Cost control is hard because every order seems to be custom, so the biggest savings come from the product architecture: build products from standard modules and configure each order instead of engineering it from scratch. Every kilo of steel, every weld and every variant costs money.

Cost structure (typical share of unit cost)

Fabrications & castings

~35%

Powertrain & hydraulics

~30%

Assembly labour

~15%

Electricals, cab & other

~20%

Highest-yield levers

Fabrication→casting conversionWeld & plate-thickness optimisationModular design & configuratorsHydraulic system standardisationSafety-factor right-sizing via CAEBest-cost-country fabricationNesting & steel yieldService-parts value analysis

Home Appliances

Appliances are where VE is used most. Fridges, washing machines, air conditioners and hobs combine sheet metal, motors or compressors, plastics, foam and more and more electronics, and they sell at very tight retail prices. The companies that do best use platforms: one family of motors, one family of control boards and one cabinet design shared across many brands and price levels.

Cost structure (typical share of unit cost)

Motors / compressors & electricals

~30%

Sheet metal & plastics

~35%

Electronics & controls

~15%

Assembly, pack & logistics

~20%

Highest-yield levers

Motor / compressor platformingSheet-metal yield & gauge optimisationUniversal parts across brandsElectronics integration (one-board design)Insulation & foam optimisationTeardown benchmarking vs. Asian OEMsPackaging & cube optimisationEnergy-rating cost balance

Aerospace & Defence

A kilogram of aircraft can cost hundreds of pounds, certification can lock a design for decades, and with titanium buy-to-fly ratios of 8:1, most of the metal you buy ends up as swarf. VE has to work within what’s already certified: blanks closer to the final shape, different manufacturing processes and fewer assembly hours all save money without reopening type certificates. On new aircraft, 3D printing opens up new options.

Cost structure (typical share of unit cost)

Materials (Ti, Ni, composites)

~30%

Machining & fabrication

~25%

Assembly & integration labour

~25%

Test, cert & overhead

~20%

Highest-yield levers

Buy-to-fly reduction (near-net blanks)AM part consolidationAssembly-hour reduction & determinate assemblyTitanium chip reversionShould-cost on sole-source suppliersStandard fastener rationalisationComposite vs. metallic trade studiesObsolescence & LTB management

Electronics & High-Tech

Costs change faster here than in any other industry. Component prices fall every quarter, chips keep absorbing more functions so parts disappear, and contract manufacturers price assembly by the second. VE is a regular routine rather than a yearly event: go through the parts list every quarter, qualify alternative parts and review designs with your contract manufacturer.

Cost structure (typical share of unit cost)

Semiconductors & actives

~40%

Passives, PCB & mechanicals

~25%

Display / battery / modules

~20%

EMS assembly & test

~15%

Highest-yield levers

Silicon integration (SoC / SiP)PCB layer & area reductionAlternate-source qualificationQuarterly BOM cost scrubsDFT & test-time reductionEMS should-cost & quote levellingConnector & cable rationalisationReference-design adoption

Medical Devices

Every change has regulatory consequences: design history files, biocompatibility, sterilisation validation, and whether a new 510(k) or CE submission is needed. The approach that works is VE that plans around regulation: group changes into planned submissions, prefer changes that only need to be documented on file, and design cost out of the next generation using what you learned from tearing down the current one.

Cost structure (typical share of unit cost)

Materials & components

~35%

Conversion & cleanroom labour

~25%

Quality, regulatory & sterilisation

~20%

Packaging & logistics

~20%

Highest-yield levers

Resin & material substitution (with biocomp strategy)Sterile-packaging optimisationDesign for sterilisation methodComponent standardisation across familiesSupplier consolidation & dual sourcingAutomation of cleanroom assemblyNext-gen design-to-costInstrument reprocessing economics

Industrial Equipment & Energy

Motors, drives, transformers, switchgear, pumps, compressors, and solar and wind equipment. Copper, steel and electrical-grade laminations make up most of the cost, and efficiency regulations set minimum standards. VE finds the best balance of copper, iron and performance, uses the same frames across different power ratings, and looks at total cost of ownership, because customers are paying for a lifetime of energy use, not just the machine.

Cost structure (typical share of unit cost)

Copper, steel & magnetics

~40%

Fabrication & machining

~22%

Electronics & controls

~18%

Assembly, test & logistics

~20%

Highest-yield levers

Electromagnetic design optimisation (Cu ↔ Fe trade)Aluminium-for-copper windings where validFrame & platform standardisationRaw-material indexation & hedgingLamination nesting & yieldPower-electronics integrationDesign for field serviceTCO-based product positioning

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