Procurement Glossary
Value analysis: Systematic method for cost optimization in Procurement
November 19, 2025
Value analysis is a structured method for systematically examining products, services or processes with the aim of fulfilling their functions at optimal cost. In procurement management, it enables purchasers to identify cost drivers and realize potential savings. Find out below what value analysis means, which methods are used and how you can use them strategically in Procurement .
Key Facts
- Systematic analysis of functions and costs to optimize the value-cost ratio
- Structured procedure in six phases: Preparation, information, creativity, evaluation, development and recommendation
- Application both for existing products and in the development phase of new solutions
- Interdisciplinary approach with teams from different specialist areas
- Typical cost savings of 10-30% with consistent application
Contents
Definition: Value analysis - basics, goals and benefits
Value analysis is a systematic method for function-oriented cost optimization that aims to maximize the value of a product or service.
Core elements of value analysis
Value analysis is based on the examination of functions and their costs. All components of a product or process are evaluated in terms of their necessity and cost efficiency.
- Functional analysis to identify necessary and superfluous properties
- Cost analysis to evaluate the effort for each function
- Value consideration as a ratio of benefit to cost
- Systematic search for alternatives and improvements
Value analysis vs. cost analysis
While a pure cost-benefit analysis focuses primarily on reducing costs, value analysis takes a holistic view of the relationship between function and costs. It enables both cost reductions and functional improvements while keeping costs the same.
Importance of value analysis in Procurement
In procurement management, value analysis supports strategic decisions on supplier selection and product optimization. It enables an objective evaluation of offers and creates transparency regarding cost drivers in the value chain.
Methods and procedures
The value analysis follows a structured work plan with defined phases and proven methods for systematic optimization.
Six-phase work plan
The standardized value analysis work plan is divided into successive phases that ensure a methodical approach.
- Preparation phase: Project definition and team composition
- Information phase: data collection and functional analysis
- Creativity phase: Finding ideas for alternative solutions
- Evaluation phase: Examination and evaluation of the solution approaches
- Development phase: Working out the best alternatives
- Recommendation phase: Presentation and implementation planning
Functional analysis techniques
Functional analysis forms the core of value analysis and uses special techniques for the structured recording of all product functions. Main and secondary functions are identified and their cost contribution determined.
Creativity methods
Various creativity techniques are used to generate ideas and develop alternative solutions. Should-costing and target-costing supplement the classic brainstorming methods with cost-oriented approaches.
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Important KPIs for value analyses
Measuring the success of value analysis projects requires specific key figures that capture both quantitative and qualitative improvements.
Cost savings and ROI
The key financial metrics measure the direct cost savings and return on investment of value analysis activities. Typical savings are between 10-30% of the original costs.
- Absolute cost savings in euros per project
- Relative savings as a percentage of initial costs
- ROI in Procurement in relation to project expenditure
- Amortization period of the investment in value analysis
Functional and quality indicators
In addition to cost savings, improvements in product functions and quality are important indicators of success. These key figures evaluate value creation beyond pure cost considerations.
Process and efficiency metrics
The efficiency of the value analysis itself is measured by process costs and throughput times. Short project lead times and low analysis costs in relation to the savings achieved demonstrate effective application of the method.
Risks, dependencies and countermeasures
When applying value analysis, various risks can arise that jeopardize the success of the project and require appropriate precautionary measures.
Methodological risks
Incomplete or incorrect functional analyses can lead to suboptimal results. The complexity of the method requires trained users and sufficient time for proper implementation.
- Superficial analysis of important functions
- Neglect of interactions between components
- Insufficient data quality as a basis for evaluation
Organizational challenges
Resistance to change and a lack of support from management can hinder the implementation of value analysis results. Interdisciplinary teams require effective coordination and clear communication.
Quality and functional risks
An excessive focus on costs can lead to a loss of quality or the loss of important product features. Total cost of ownership considerations help to avoid hidden follow-up costs and ensure balanced optimization.
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Practical example
An automotive supplier carried out a value analysis for a plastic component that accounted for 15% of the total cost of a vehicle seat. The interdisciplinary team analyzed all functions of the component and identified superfluous reinforcements and expensive material specifications. By changing the material and optimizing the design, 22% of the component costs could be saved without any loss of function.
- Functional analysis revealed three superfluous reinforcing ribs
- Material change from PA6 to PP reduced material costs by 18
- Optimized wall thicknesses reduced the component weight by 12
Current developments and effects
Value analysis is constantly evolving and integrating modern technologies and new valuation approaches into its methodology.
Digitalization of value analysis
Digital tools and software solutions are increasingly automating value analysis sub-processes and enabling more efficient data evaluation. Artificial intelligence supports pattern recognition in cost data and the identification of optimization potential.
- Automated cost analyses using AI-supported algorithms
- Digital collaboration platforms for interdisciplinary teams
- Predictive analytics for forecasting cost trends
Sustainability-oriented value analysis
Modern value analysis approaches integrate sustainability criteria into the evaluation and take into account the total cost of ownership over the entire product life cycle. Environmental costs and social factors are increasingly included in the value analysis.
Agile value analysis methods
Shorter development cycles require adapted value analysis processes that lead to results more quickly. Iterative approaches and continuous improvement supplement the classic phase structure with flexible elements.
Conclusion
Value analysis is a proven method for systematically optimizing the value-cost ratio in Procurement. Through structured functional analysis and creative solution finding, it enables significant cost savings with simultaneous quality assurance. Modern digital tools and sustainability-oriented approaches are continuously expanding the possible applications. For purchasing organizations, value analysis is a strategic instrument for achieving competitive advantages through intelligent cost optimization.
FAQ
What is the difference between value analysis and cost analysis?
Value analysis takes a holistic view of the relationship between function and cost, whereas a pure cost analysis focuses primarily on reducing costs. Value analysis can both reduce costs and improve functions while keeping costs the same.
How long does a typical value analysis take?
The duration varies between 3-12 months depending on the complexity of the object to be analyzed. Simple components can be analyzed in 6-8 weeks, while complex systems require several months. The preparation and information phase takes up around 40% of the total time.
What qualifications do value analysis moderators need?
Successful value analysis moderators require technical understanding, methodological competence and moderation skills. Certification in accordance with VDI 2800 or comparable training is recommended. Experience in project management and cost calculation is also advantageous.
When is a value analysis particularly useful?
Value analysis is particularly suitable for large quantities, complex products with many functions and when there is cost pressure. It also provides valuable insights for optimal solutions for new developments or prior to major investment decisions.
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