Function Analysis in Value Analysis

When product costs are too high, the discussion often starts with individual components: which part is too expensive? Where can material be saved? Which supplier could offer a lower price?

These questions can be useful. However, they often fall short because they take the existing technical solution for granted.

Function Analysis starts earlier. Rather than asking first how an existing component can be made cheaper, it asks what task the product and its individual elements actually have to perform.

This creates a more solution-neutral view of the product and makes Function Analysis a central element of Value Analysis and Value Engineering.

What Is a Function?

A function describes what a product, an assembly or a component is meant to do or achieve.

A component, by contrast, is already a specific technical solution. A single component can perform several functions. Conversely, several components may be needed together to deliver a single function.

This is precisely why looking only at the component structure is often not enough for systematic product optimisation.

Function Analysis abstracts from the existing design and systematically examines:

Which functions must the product as a whole perform?
Which functions do individual assemblies or components perform?
Which functions are particularly relevant to the customer?
Which functions are absolutely necessary?
Which functions arise only from the existing technical solution?
How are the functions related to one another?

The result is a shared functional understanding of the product.

Why Does Function Analysis Help with Cost Optimisation?

In a purely component-based cost analysis, the underlying technical solution often remains untouched. The team then tries to make the existing design cheaper step by step.

Function Analysis widens the solution space.

Instead of only asking:

“How can we make this component cheaper?”

the team also asks:

“Which functions does this component perform – and how else could these functions be performed?”

This also brings to light solutions that do not result from optimising the existing individual part. Functions can be redistributed, combined or performed using a different technical principle.

The existing design is not automatically discarded as a result. It is complemented by an additional perspective.

Function Analysis as a Common Language in the Cross-Functional Team

Another important benefit lies in collaboration.

Development, procurement, production, product management, sales and controlling often view the same product from very different perspectives. Function Analysis creates a shared description of what the product has to achieve, independent of departmental boundaries.

This helps in particular with questions such as:

What does the customer actually expect?
Where are there technical requirements and where are there historical solutions?
Which functions require particularly high effort?
Which areas should be examined in more depth in the project?
Where is it worth looking for alternative technical solutions?

Function Analysis thus becomes not only an analytical tool but also an instrument for a shared understanding of the product.

How Does Function Analysis Typically Work?

The exact procedure depends on the product and the task at hand. In a Value Analysis project, the work typically comprises several steps:

1. Clarify the Object of Study and the System Boundary

First, the team defines which product, assembly, process or service is being examined and where the boundaries of the analysis lie.

2. Identify Functions

The team describes the tasks of the object under study and its relevant elements in as solution-neutral a way as possible.

3. Structure Functions

The identified functions are organised and their relationships to one another examined. This produces a transparent function structure.

4. Link Functions to Customer Requirements and Costs

Function Analysis delivers its particular value when it is not used in isolation. As the project progresses, the functions are linked to customer requirements, technical significance and function costs.

5. Derive Opportunity Areas

This analysis produces specific questions for further solution development. The creativity team then does not work randomly on the entire product but focuses on prioritised functions and cost hotspots.

Function Analysis and Function Cost Analysis Belong Together

Conventional cost accounting answers very well which component costs how much.

Function Cost Analysis adds a further question to this view:

What costs arise from performing a particular function?

To answer it, the product or manufacturing costs are allocated to the functions defined beforehand. This creates a link between customer value, function, technical solution and costs.

Function Analysis therefore provides the substantive basis for Function Cost Analysis.

Where Is Function Analysis Used?

The method is not only suitable for existing products. It can be used, among other things, for:

Product cost optimisation
Value Engineering in product development
Cost reduction projects
Variant and complexity analyses
New product development
Processes and services
Preparing systematic ideation workshops

The VDI describes Function Analysis as a central method of Value Analysis (VDI 2803 Part 1). The method is applied to products, processes and services across all industries.

Function Analysis at Value Coaching

In Value Coaching consulting projects, Function Analysis is part of a broader approach. It is not used as an isolated workshop technique but combined with customer requirements, competitor analysis, function costs, solution development and evaluation.

Documented reference projects on value-coaching.net show the use of Function Analysis and function-oriented approaches in, among others, cross-functional product cost and Value Engineering projects.

The aim is not to document as many functions as possible. What matters is a shared, solution-neutral understanding of which tasks must be performed and where relevant potential lies for the further project work.

In two documented projects, Function Analysis and function structuring in the team formed the basis for subsequently prioritising ideas using a function-cost analysis: in the motan project example: Function Analysis in mechanical engineering and in the Liebherr Hausgeräte project example: base unit of a refrigeration appliance.

Function Analysis: From the Existing Product to Its Actual Task