CIPS L4M2 Chapter 3 (3.4)

Question 1

What are the two ways to regulate specifications?

Answer 1

• Standardisation - use of standardised products or service
• Value analyis and value engineering technique - ensure users receive the highest level of value and cost

Question 2

What are the three levels of Standardisation?

Answer 2

• Process standardisation - Standardising products, materials and componets allows a larger quanity of a product to be made at a time which reduces the cost of the manufacture. A significant benefit for a company is the move from a high unit cost environment to a lower unit cost environment of batch production
• Lean concept (services) - creating more more value for customers with fewer resources which is achieved by standardising processes

Question 3

What are the three levels of Standardisation?

Answer 3

• Product standardisation - a product or service with no variations. Product standardisation reduces costs, reduces the complexity of operations in terms of production processes for products and delivery processes for services e.g. Mc Donald and also improves quality

Question 4

What are the three levels of Standardisation?

Answer 4

• Parts standardisation - simplifying the range of parts or materials used. Use the zero-based approach - e.g. remove everything and only put back what are really required

Benefits include: Reduced costs, Increased flexibility, Freeing up of people

Question 5

What is Value analysis?

Answer 5

Value analysis is a systematic process of imporving the value of a product, service or project and is used to determine the value of each component used and find cost reduction opportunities by optimising the components used

Question 6

What is target costing?

Answer 6

Analysis of market price, volume and profit, from which a target production cost is delivered.

Target cost is = Sales price - profit

Question 7

What are the four (4) steps of the target costing process?

Answer 7

1. Decide on the selling price market will accept
2. Decide the minimum acceptable profit
3. Deduct profit from selling price to arrive at target cost
4. Project to work out how to reduce current actual costs to target level.

Question 8

What are the three (3) factors to ensure success in target costing?

Answer 8

• Targets must be valid - based on reliable financial data & costs
• Targets should be achievable
• Function requirements must be defined unambiguously & stated publicly - reduce risk of cost target being met by reducing quality

Question 9

What is the process for carrying out value analysis

Answer 9

• Gather information
• Carry our functional analysis - Functional Analysis (FA) Analysis of the relationship between product functions, their perceived value to the customer and their cost provision
  Primary functions - reason for existence

Secondary functions - things product can do in addition

Quality Functional deployment- Pugh analysis

Transform the voice of the customer into engineering characteristics for a product

• Be creative - having an abundance of ideas that are more than just superfical changes
• Evaluate - ORAPAPA: Opportunities, Risks, Alternative & improvements, Past experience, Analysis, People, Alignment & ethics
• Develop

Question 10

What is value engineering?

Answer 10

An approach used to optimize project life cycle costs, save time, increase profits, improve quality, expand market share, solve problems, and/or use resources more effectively - used for new products and services

Question 11

Explain the Kano model

Answer 11

The Kano model is a simple method of deciding which functions a new product or service should have. It identifies five (5) types of requirement:

• Attarctive requirement
• One-dimensional or performance requirements
• Mandatory requirements
• Indifferent requirements
• Reverse requirements