Value Analysis

Technique used by an industrial buyer to identify the least costly combination of raw materials or components required to produce a product, without any reduction in the quality of the finished good. Value analysis enables the buyer to identify unnecessary features or components that can be eliminated in order to reduce the cost, without any reduction in the performance quality of the finished product. For example, a baked goods company may determine through a value analysis that imitation vanilla extract can be used instead of natural vanilla without any loss of flavor or texture.

Process of trying to reduce product costs by substituting less costly materials, redesigning nonessential parts, and the like.