GA 390 | Exploring and Using VAVE with Valorie Hendrix

So either we want to enhance quality or we want to leave quality alone. We don't want to compromise quality. We want to always make sure that what we are doing is going to improve the customer's quality standards towards the product or service.

Today, I'm excited to welcome Valerie Hendricks to the show. Now, Valerie, as you'll hear, has a really diverse background in continuous improvement, and she has most recently, recently sort of specialized in a particular aspect of continuous improvement called value analysis, value engineering. Sometimes we'll shorten it as V A Ve. Or back when I worked at my previous company before, Gambling Academy, we called it vave. So, but anyhow, it's a really powerful tool that is very, very applicable and very harmonious with all the things that we're trying to do with Lean and just continuous improvement in general. So during the episode, Valerie walks us through, like, what is it? And then gives us some examples of how it could be. And then we sort of just walk through some of the framework of how VAVE is done. So it's sort of, you know, telling some stories but also giving you some pretty good information. And Valerie has written a book on the topic as well, so she talks about that at the very end. So. But it's definitely not a commercial for her book or anything like that. So she did a great job providing a lot of value. So I think you're going to like the episode. Show notes can be found over@gembapodcast.com just look for episode 390. Again, gembapodcast.com and look for episode 390. Okay, enough from me. Let's get to the show. Valerie, welcome to the show. How are you?

I am well, thank you, Ron. I appreciate being a guest on today's podcast.

Yeah, well, thanks for coming on. I'm excited. So we were chatting a little bit before we hit record, and I have, you know, not a lot, but I have a little experience with the topic that we're going to explore today. And it's a topic that, as we were kind of chatting before that I don't think it's as popular probably as it should be because it's a very, very power approach to. Well, I'll let you explain it all, but, yeah, value analysis, value engineering, that's really kind of be the topic. And so, yeah, but I know you've listened to the show, Valerie, and we do like to kind of kick things off with our guests sharing a quote. So do you have one?

I actually have two today that go together and I'll explain why. So the first one is by Milton Friedman. The social responsibility of businesses is to increase its profits. The second one, businesses must be run at a profit, else they die. But when anyone tries to run a business solely for profits, then the business must die for it is no longer has a reason for existing. And that one was by Henry Ford.

Wow. Yeah. And it's this intense dichotomy, right. Running a company. Right. I know you have your own company, as I'm one of the owners here at Yama Academy. And it's just balance, right? Like, yeah, we've got to make money to keep the doors open. But if you obsess about that money and you go at it for the wrong reasons or just in more of a greedy, selfish manner, you can get in a lot of trouble. Is that kind of your take on it?

Yes, my take on it is actually that profits is very important. But without profits, we cannot be able to provide for our community, provide for our employees, and just help just the general public and community and have better business standards. So we must be able to look at our business and make sure that we are profitable so that we can help within, not just the organization, but outside of the organization as well.

Well, what do you think Ford was saying then? As far as it can also, it's a slippery slope. But what's the other perspective on it? Do you think there is one?

Yes. That if we look at profits too much that we're not going to just make our employees happy. If that's all we're worried about is our profits, we can take away from the advantages that employees provide as far as happiness and helping out with standards and capabilities.

Right, right, exactly. Now that's a good one. That's a good one. Well, hey, so Valerie, tell us a little bit about your background. Tell us how you first got involved in all this type of work that you're in and then. And then tell us about your consulting practice.

Sure, absolutely. So, like anyone in their 20s, I got my education with the business analysis Business business degree. And unfortunately I found out my senior year of college taking operations management class that I really fell in love with continuous improvement. You know, it took basically one chapter out of my operations book to basically fall in love with continuous improvement, lean and everything like that. So I didn't exactly start my career out in continuous improvement. I actually started out in accounting. And I. What happened was, is that it helped my career throughout starting out in accounting, northern accounting for about three years until the 2008 recession happened. And then when that happened, I started actually in value analysis value engineering because our organization needed different ways to reduce costs and also you're dealing with scarcity of materials. So we had to find different opportunities towards finding alternatives to those scarcities. So that's where value analysis value engineering came into my life as. And then from there with the same organization. After the recession started to pick up, so did production. So they actually moved me into quality control and then. And I got my Lean Six Sigma certification as well. And after some years I decided to branch off into my own consulting firm.

Nice, nice. What's the name of your consulting firm?

My consulting firm is Dynamic Empire Consulting.

Okay, and do you primarily kind of do value analysis value engineering or do you get into other stuff as well?

Yes, I do a combination of value analysis value engineering and as well as continuous improvement in quality management.

Got it, got it. Okay, well, hey, well, let's jump right in. So in case folks aren't familiar with the, with the topic, let's just at a really high level, what is value analysis value engineering?

It is basically a strategy to maximize your costs and into the. Of your product and service and to bring an understanding to basically your function of what your product or service does and provide a cost to those function, cost to those functions so they can understand where you're. Where there's non value added costs associated with the function.

Got it. And I think we're going to explore this later on in the episode. But it can be used for obviously for, you know, an environment where a widget is involved. Right. You for sure can do vave on that. But also, and I don't think a lot of people understand this, but even if you aren't making a widget, let's say you're in an office or you do service based work, V A V E will apply there as well. Is that right?

Absolutely. Yes, definitely. For the service world too.

Yeah. Because we're looking at cost and we're looking at functions. Right. Of things. So. Yeah, so. Very cool, very cool. All right. Now I don't know if it's true or not. I've never, I've read that it's not true and that it is true and. Or maybe there's some truth to it. But you, you've probably heard of the old legend of the. What was it like the Russian space pen or something like that? I don't know. And is that true? You know what I'm talking about. And like they spent all, supposedly somebody spent all this money on this fancy pen that would work in space, you know, because of whatever. And then it's like, well, y', all, why don't you just use a pencil? Right? It's like, I don't know if it's true or not, but it's a really, really cool story. Do you know what I'm talking about?

I think so. If you're talking about the ink that you can write upside down with. Is that what you're talking about?

Something like that, yeah. Then there's like, well, why don't you just use a pencil? Right? If you're. Yeah, yeah. So. So. All right, so. But how did you get into. I mean, so you kind of talked about it a little bit earlier when you talked about your, you know, in your previous job there. But talk. Talk a little bit more about the early part of your journey with. Do you call it V A V E? We used to call it vave. I don't know, maybe V A V probably is more appropriate. Is that what you call it?

Yes, we call it value analysis. V A V E. Yeah. So, yeah, yeah.

So we'll talk a little bit about your early part of, like, how you got started with it then. Maybe. Maybe an example. Do you remember the first time you actually employed it? Like, what was it? What was the product? What was the service that you were going after?

Okay, yeah. So this happened in a boat manufacturing organization. And again, you know, during the recession, we had a lot of difficulties with the type of material, especially with aluminum. Was very difficult for. For us to get. And of course, in operations, when we use thousands of pounds of aluminum on a weekly basis, it was difficult for us sometimes to get in. So one of the projects that we actually looked at was using a different type of aluminum. I think we were using a 1032 at the. @ the time. And we decided to look at maybe. And I can't exactly remember the other type of aluminum we were looking at, but it was a. Actually less expensive aluminum and is more accessible. So what our team basically did is we got all the information. What was really important was doing a voc Voice of the consumer to really determine what exactly the customers would want from our boats. And a main difference between these two aluminum types is the one that we're currently using did not stain, and the other one, when it got wet, it would create kind of watermarks on them. So we had to really determine if that was something that our customers really would be acceptable towards. And so we gathered the information and found out that in our more expensive boats, our customers didn't want to pay this price to have Streaky looking aluminum boats. But on our less expensive, let's say like a john boat, it was more acceptable. So we decided to, as a team, we decided to do some more functional analysis and also see, well, maybe we can remove some of these excess of aluminum parts within our boat, but still keep the structure, still keep the quality standard and you know, remove some of these excessive parts. And we're actually able to remove some of the parts making it less heavier, easier for the organization to actually manufacture and also, you know, reduce the cost overall.

Yeah. So like I remember back from when we used to practice it previous life of mine, you know, there was a, if I remember right, there was. It was almost like we talked about, value is almost like function over cost. Right. Like so taking what, what's the function of that part? Right. And like. Or to your point, like, oh yeah, you know, some writing utensil. What's the function? It's to make a mark on a piece of paper. Right. And you know, and then you, and then you start weighing the various ways of doing that function based on the cost of it. Right. And so now, you know, I suppose there's also a, again, like a sort of this back to your quote from the beginning of the, of the episode here. There's also a dichotomy, right. Like you can drive the cost so low that you're on the edge of the function. Right. Like, is there a balance that you've got to maintain between that cost and function relationship?

Yes. One of the things that we want to realize is that Vave does not hamper with quality. So either we want to enhance quality or we want to leave quality alone. We don't want to compromise quality. We want to always make sure that what we are doing is going to improve the customer's quality standards towards the product or service.

Yeah. So talk a little bit then about like, how do you do it? Now again, I remember I'm just going back to my memory bank. We were making these big pumps and valves and seals and whatnot, you know, pumping water and oil and that sort of thing. And we literally would just disassemble the product, right. Part by part and we would literally talk about like, what's the function of this particular part? And then by the end, you know, you had everything spread out on a table and you know that that sort of was one of the, you know, earlier phases of the project. Is that, is that how you go about it like when we're doing this Vave?

Yes, I think it would definitely depend on what you're actually going for. But let's say, for example, in a car you actually want to take those different functions together. Let's say we're talking about the transmission system. You want to remove that from everything else. And you want to analyze the transmission system separate from the engine system or the electrical wiring or, I don't know, the door paneling. So you want to take your systems and you absolutely want to just separate them and start working from there.

Yeah.

And then once we, once we have what we call a pre study and all this pre study is your information that's going to go prior into the job study and I can go in the job study here in a minute. But basically we want to take all the information that we need to know about the market, what the customer wants and everything. And then we're going to go into the job study where we have several different phases. And the first phase is going to be the information stage and that is definitely gathering up the information about, let's say we're going to talk about the transmission system. So in the transmission phase, it's going to be a lot like what we get in the pre study. But we're going to make sure that, you know, we also have standards towards safety and quality from our government and we're going to also have information on everything else. And then we're going to go move to the functional analysis. And the functional analysis is what you're just talking about earlier, which is the fast system, where it's a functional analysis system technique. And what this does is that we want to take all the components and give them a verb and noun activity. We want to make sure that those are in active and not passive. So when we talk about this, we're saying in a passive form is seek approval. We don't want to talk about that passiveness. We want to talk about the active approved procedures.

Why is that important?

You know, it's important when you look at the next step, when you go into the functional analysis, the how and why statements. And when we look at this, we're going to have a piece of paper. On the left side we're going to have the how. On the right side we're going to have the why. So on the half side we're going to be moving from the left to the right. And when we have all of those verb and nouns set up, we want to be able to put these in an order. So on the house side we have how the function is performed currently and not. Huh?

Yeah.

And then, then on the Y Side we are actually going to be moving from the right to the left. And then we're going to, then we're going to ask why do we perform these functions?

What if the answer is I don't know? You know, good question. Like, what do you do then?

You know, that is actually coming from your functional analysis of the verb and noun.

Mm.

So that, that's already at steps that you already have previously done.

Okay.

So for looking at, at your pencil example, and we're looking at our basic function, which is the main function, and that will go on the house side of makes marks.

Mm.

Well, how does it make marks? And then we can put in another functional analysis. How does it make marks?

It's lead is pressed against paper or something.

Yeah, yeah. Right. Lead press on paper.

Yeah.

And then we can keep moving all the way to the, the right of the side until we get to. Towards the Y. Why do we perform those functions? And why we would perform that function is because write ideas or communicate or draw. Yeah, yeah. Communicate ideas or draw picture. And so we can actually perform this analysis to really determine how it's like laid out. Like kind of if you look at a value streamline map, we can actually go through the process and determine exactly where the product is being produced. But this is also kind of the same way as far as your functional analysis report is that we can actually go from the, your main function of makes marks and we can actually follow that function to the main functions and figure out why we need to make those marks and to communicate idea.

Yeah. What's interesting about like that example there is, you know, you say, well, why. Why do you need to make marks? And it might even be like, we don't. Nobody looks at the marks, you know, so it's almost like in a way, sometimes these studies can. To your point of like looking at a value stream map is like, what's non value added? Like, well, that using the pencil right then and there in that moment is non value added. Why do we even do it? Nobody even looks at the marks. Right. And so I feel like these types of studies can go deeper than just the improving the writing utensil. It could be like challenging your, your process. Right. And making sure that, you know, our process is being streamlined, not just the, the, the writing utensil. Right.

Yes, yes, yes, absolutely. And then, you know, from there we can just take that, take those functions that are non value added and we can look at them and just really actually determine when we go back into the creative phase.

Yeah.

Which is the next that phase and we take a team and we can basically say, you know, this is the functionality map and this is where it moves to. Now we got all these functions that really don't align and here's the CAS value towards these functions that are non equivalent and provide non value added. Do we need these? How can they be replaced? What alternatives do we have so that we're not interrupting our main function? And then from there we go back into the evaluation study and we start developing an idea plans and just really brainstorming and thinking about what alternatives we can use. And then after that we go into the development stage where we look at all of the ideas and we actually start narrowing them down into realistic ideas and determining exactly what we need. So if we're looking at our pencil, well, can we use plastic instead of wood? Yeah, it's definitely a possibility. Okay, what does that cost? What is it going to take to develop that? What tools do we need to make that happen? What different suppliers do we need to make that determination? And we gather all that information to provide into the presentation stage. And this is where we need to have our steering committee actually make a decision on what the best alternative is to the organization. We have the costs, all the costs, the cost savings of, you know, going from maybe a, a wood stem to a plastic stem, for example, in our pencil. And then, you know, the machinery costs, the material costs, all the different costs associated, and we present it and then it's up to the steering committee. Now sometimes the steering committee can say no to all of these alternatives, which is perfectly fine. It does absolutely happen. So that's the great thing about having this, is that as long as we keep the information, we can go back to maybe the evaluation stage or the create a stage and set up either a different team or go back to the same team. Like, we didn't get approved to this. Let's go back to the drawing board and start all over again and get some new alternative ideas.

Got it, Got it. Very good, very good. So talk about the relationship between VA Ve and say, Lean. You know, most of the people listening to this podcast have a Lean background or Six Sigma traditional continuous improvement background. So talk about like the harmony between these, these, these approaches.

Yeah, I definitely think that they are harmonious between each other. Definitely. When I go into an organization, I actually want to start out with Vave first. And the reason is that a lot of organizations are actually looking for profit improvements. And especially when you're looking at US organizations, they are on a quarterly basis. So they need the Return on investment pretty quickly or otherwise. You know, a continuous improvement culture may not exist for very long. So I like to go with VAVE first and get a good understanding of where they need to define exactly where the cost savings need to occur. And that way we can start reducing costs and they can, the organization can actually start implementing a lean culture now because they now have the funds to actually increase their culture in other continuous improvements such as lean.

Now. What about. Okay, so someone's listening right now and they're like, yeah, we don't make widgets. We're a service based organization. Or you know, back to your accounting days, right? I'm an accountant and I sit in the office all day looking at spreadsheets, sheets and whatnot and quickbooks and whatever. Can VAVE be applied in a non manufacturing environment?

Yeah, absolutely. I have a friend, Brian Higgins, who actually does this for his consulting business and he looks at nothing but service industries and he does fairly well with that. So we can actually look at organizations and instead of looking at their functions, we can actually look at the organization itself. So if we can break down, let's say again, we go to accounting, there's different types of counties. We got cost accountants, we got your basic accountants, we got payroll. And so we can break down. It's actually what each and every individual or department of that accounting system does and really determine from there what their, their functions and go through the same steps and really determine where there needs to be changes and improvements towards them.

Yeah, I mean, reading in it comes down to like, are we adding value or are we not adding value? Is that excess of cost or, or you know, can we reduce that cost? And obviously keeping lean in mind, we're not trying to reduce headcount.

Right.

It's not about, you know, getting rid of people or anything like that. It's just reorienting maybe the work that people are doing. Right. To make sure they're maximizing their value to the enterprise. Right. And to the customer.

Right, right. Yeah, right. And we can look at this, you know, in the same way as flow. Can we, can this person actually take on more responsibility to help relieve somebody that maybe is working, you know, overtime?

Right, right. Well, and it's a perfect partner to respect for, for, for people. Right. I mean, people don't want to come and just do mindless work that they, they know is not adding value. Right. Like, that's just a crushing feeling. Right. When you just know that every day I got to go to work and do nonsense that it's not really Adding value, you know, and so I feel like when you do something like this, you can really, you know, respect the person and again, maximize their. Their. Their contribution to. To the world. Right. To the. To their company and to the customer and, And. And to the world in general. So. Good stuff. Well, hey, Valerie, so I believe. Correct me if I'm wrong, but you've written a book, haven't you, on. On this topic?

Yes, I've written a book about value analysis, value engineering. And the reason why I did is because I wanted to revamp V A ve. It seemed like it was very popular back in the 70s and 80s, but. But I think with popularity with Lean coming in the 90s, it kind of lost its luster. And I do see a lot of organizations who are actually needing vave. Yeah, vav. Because, you know, it's not just because of the inflation increasing, is also because of scarcity of materials. And so I see. VAV is a definite need. And so I did write a book. It's. It's not a very long book. I wrote it to be very efficient, easy read. It is called Streamlining Function and Value. How to Reduce Cost and Deliver Exceptional Value.

Got it. Got it. I want to pick it up. I want to read it. So we'll link to that in the show notes so folks can go to GembaPodcast.com and just look for episode 390 and we'll link to the book. If folks wanted to connect with you, Valerie, what's the best way? LinkedIn. Something like that.

Yes, they can visit me on LinkedIn. My name is spelled with an O, so it's. It rhymes with calorie, but it's V. Okay. V for Victor and Hendrix with an X. Like Jimi Hendrix.

Nice, Nice. You know what? I'm funny. I. I named this episode and I spelled your name wrong with an E. So I gotta go fix that now. So I apologize.

No worries.

But I like that calorie with a. With a V. That's good. All right. Well, hey, Valerie, it's been fun having you on. Maybe the last thing maybe we could close with is if somebody does want to learn a little bit more about vave. Of course, buy your book. Okay. But do you have any other practical tips for them on how they might want to kind of dip their toe into the vave water, so to speak?

You know, you need to be educated about how va ve process works. And that's why I written a book. It's a very short read, and so that's why I wrote it. I've seen organizations save 10 to 20% off of their costs. It's an investment. My book is not very much. So if you start working into it, you're gonna tenfold your investment into it. Very easy. And we're talking about in a couple of weeks. We're not talking about months or years, we're talking about weeks.

Nice, nice. Very good. Well, I look forward to reading it and I appreciate you coming on the show. Valerie, thanks.

Thank you, Ron, for having me.

You're welcome. Take care. Thanks for listening. Whether you've been on the continuous improvement journey for many years or perhaps you're just getting started, Gemba Academy is here to support you. And while we're best known for our more than 1500 Lean and Six Sigma teaching and virtual tour videos, we also have a team of experienced Lean and Six Sigma practitioners available for one on one coaching as well as a variety of Lean and Six Sigma certification options. To learn more and to schedule a demo, head on over to Gemba academy dot com.