Boost Competitiveness with Value Engineering: A Step-by-Step Guide for OEM's

The modern electronics market places mounting pressures on Original Equipment Manufacturers (OEMs), including supply chain disruptions, escalating costs, and rising customer expectations. To remain competitive, OEMs must innovate not only in product design but also in cost management.

Value Engineering (VE) offers a proven, systematic approach to optimise product value by carefully balancing functionality, quality, and cost. This article provides a clear, step-by-step guide for OEMs to leverage VE effectively and bolster their market position.

What is Value Engineering and Why Does it Matter for OEMs?

Value Engineering is multi-disciplinary methodology focused on enhancing a product’s value, either by improving its function or reducing costs, without compromising quality.

Initially developed during World War II to address material shortages, VE has since evolved into an indispensable tool for OEMs due to its ability to promote smarter decision-making. It enables companies to adapt to shifting market demands, eliminate waste, and innovate cost-effectively. VE fosters cross-functional collaboration across the product lifecycle from design and supply chain management through manufacturing to quality control often involving close partnerships with Electronics Manufacturing Service (EMS) providers.

The Six Essential Steps of the Value Engineering Process

The VE process typically consists of six steps, and omitting any one of them can undermine the entire initiative.

1. Information Collecting

The process begins by collecting and analysing comprehensive data regarding the product and its lifecycle costs. This covers materials, labour, manufacturing processes, logistics, quality assurance, warranty, and compliance expenses. Techniques like Cost of Goods Sold (COGS) analysis and Pareto charts help identify key cost drivers and pinpoint areas ripe for reduction.

2. Creative Brainstorming

A cross-disciplinary team then brainstorms innovative ideas aimed at enhancing product value. This phase centres on function analysis or understanding what each component or process actually contributes to the product’s purpose. Ideas may include substituting materials with more cost-effective alternatives, redesigning components to simplify manufacturing, optimising packaging, improving supply chain efficiency, or integrating environmentally friendly solutions.

3. Evaluation

Each idea undergoes critical assessment for feasibility, benefits, risks, and potential impact on product quality and functionality. Tools such as weighted matrix analysis are used to prioritise the solutions that best balance cost savings with value enhancement.

4. Development

Promising ideas are further developed with detailed cost-benefit analyses and Return on Investment (ROI) calculations, ensuring that changes are both practical and financially justified before their implementation.

5. Presentation

The VE team compiles a comprehensive report outlining recommended changes, anticipated benefits, and implementation plans. This presentation helps secure stakeholder alignment and informed decision-making.

6. Implementation

The final step focuses on implementing the approved VE solutions. OEMs typically collaborate with EMS providers like Poland-based Assel to integrate modifications across manufacturing, procurement, prototyping, and New Product Introduction (NPI) processes. This partnership ensures cost reductions are achieved without compromising product quality or reliability.

Final Thoughts: How Value Engineering Boosts OEM Competitiveness

Value Engineering (VE) is not just about reducing costs, it is a strategic approach that helps OEMs stay competitive in a demanding electronics market. When applied effectively, VE streamlines costs, improves product quality, and drives innovation by encouraging smarter design and cross-functional collaboration. It also supports sustainability through efficient resource use and enhances supply chain resilience by identifying and addressing vulnerabilities.

To translate VE insights into real-world results, partnering with an experienced EMS provider is key. To turn product challenges into growth opportunities with the support of a trusted contract manufacturer, visit asselems.com.