Government and industry are different — no question. In general terms, government’s role is to provide goods and services the private sector cannot.
Generally, these services are homeland security, military, health and welfare, and services unique to government, such as tax collection, protecting the environment, and national parks; as well as items that are vital but historically difficult to price in the private sector, such as roads and schools.
Private industry, of course, produces goods and services to generate a profit and reward its shareholders. However, in one way, government and industry are alike.
They both try to provide goods and services at the lowest total cost to the citizen or the customer — with industry seeking the competitive edge and government trying to save taxpayers’ dollars with programs like strategic sourcing.
The Office of Federal Procurement Policy (OFPP), part of the Office of Management Budget, issued on June 8, 2012, a proposed revision to OMB Circular No. A–131, which concerns value engineering.
Both government and industry have been awaiting the final posting of this circular in the Federal Register since then. What are we waiting for?
This month, I will take office as the president of SAVE International, the premier global professional society for value engineering (VE). I have been involved in VE for more than 16 years with TRW Automotive and currently with the Whirlpool Corp. as the global lead for Design for Value, which uses VE to improve and ensure optimum value of our products for our customers.
I have seen that government often leads the way in the application of new and visionary efforts, such as President Eisenhower’s building of the National Defense Highway System, NASA’s moon landing, and the work of the National Oceanic and Atmospheric Administration’s Mark DeMaria, who was noted recently in this paper for his decades of efforts to model the intensity and path of hurricanes to help communities and first responders. But in the case of value engineering, I see the government lagging behind industry.
During my 11 years at TRW Automotive, our value engineering process became the competitive edge that allowed the company to preserve hundreds of jobs and avoid bankruptcy — the fate of many competitors a few short years ago.
By 2007, TRW employed 78 full-time engineers in the global value engineering department, who collectively added $148 million annually to the company’s bottom line.
Whirlpool Corp. recognized the need to bring better value to its customers, and in 2008, I was asked to develop a global in-house VE process. The timing could not have been better, especially with the downturn in the appliance business in recent years, due greatly to the downturn in new housing starts.
Rather than creating a separate VE department like TRW, Whirlpool chose to train and mentor a global internal consulting team of certified value engineers who would work with their existing design and manufacturing teams in defining functions to generate ideas that can be developed and implemented by the existing engineering teams. Whirlpool knows VE has given it a competitive edge, as it has had a 400 percent rebound in its stock price in the last few years. VE is not the only factor for this rebound, but it has certainly contributed to the company’s success in an aggressive and highly competitive market.
So, why does this value-improving practice — developed at General Electric at the end of World War II, applied extensively throughout government into the 1990s, and made law in 1996 — meet this struggle in its application within agencies? Is it because there are so many practices available; or so much training mandated for the government professional; or a lack of a champion at the top of each agency?
The reasons are hard to pinpoint and vary from one agency to the next.
Value engineering can be successfully applied to information technology, management, procurement, products, processes and projects when led by a certified VE professional.
It forces a multidisciplinary team of specialists working in a workshop format to identify the functions of the problem in question, and brainstorm ways to solve that problem while providing all of the functions needed at the level of quality required. It is the only practice that forces innovation!
A recent article in this paper discussed a poll of government workers that states they feel less empowered to innovate. Congratulations to NASA for its top spot as most innovative agency!
Why not use VE to let those great bottled-up ideas find an outlet to improve agencies’ processes, projects and products? Make innovation a skill in your agency and use the practice that formalizes the effort: value engineering.
The federal government has many tools at its disposal, but from an industry perspective, VE gives you the biggest bang for your buck and keeps you innovating. Try it!
James D. Bolton is executive vice president of SAVE International and the Global Design for Value Lead, Global Product Organization, Whirlpool Corp. SAVE International is a society devoted to the advancement of value engineering or value methodology in the public and private sectors.