The added value calculation in a manufacturing supply chain. An application in an electric power meter supply chain (original) (raw)
Related papers
2014
The added value has become in a true measurement to evaluate the company’s performance. This added value has been approached to a different fields within the business management. In this paper we use a procedure to calculate the added value in each process of a power meter supply chain. This added value is very close to economic value added (EVA) concept, and is calculated by the weight and the added costs to the product in each process. This weight depends of three fundamental aspects to identify the bottleneck process. The procedure application allows identify the highest added value process matching with the bottleneck process (calibration process).
Value Determination of Supply Chain Initiatives
2011
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Analysis of Value-Creating and Supporting Component of the Value Chain in the Production Process
European Journal of Interdisciplinary Studies, 2023
This research focuses on the application of the Process Value Added (PVA) method in the environment of custom piece production at STS Prachatice a.s. The main objective was to identify the most profitable and most lossmaking processes, to evaluate the value added of individual production operations, to assess the potential for outsourcing certain processes, and to analyse the profitability of specific orders. The study uses a selection of 30 atypical orders from 2022, obtaining data on selling prices, production hours and costs associated with production and overhead. The analysis shows that manufacturing processes add the most value, while inspection processes are less profitable. Processes suitable for outsourcing were identified, especially when in-house capacity is not used. It was also found that the most profitable orders are those that combine high product uniqueness with efficient use of materials and production hours. The PVA methodology allowed to quantify the added value in the context of time and cost parameters and revealed that contracts with high time pool and unit costs have the most significant added value. PVA indices were established to better reflect the results achieved. The research findings have practical implications for the organization and efficiency of the production process at STS Prachatice, contribute to the development of business policy and procurement activities, and serve as innovative material for academic purposes. The study demonstrates that the PVA method is an effective tool for analysing and optimising business processes, enabling companies to better understand and manage process value-added in order to increase profitability and competitiveness. The implementation of this method in practice has shown concrete economic benefits and provided valuable information for further business policy and procurement solutions.
To Evaluate Cost Savings in a Supply Chain: Two Examples from Ericsson in the Telecom Industry
An accurate cost analysis is necessary to evaluate changes in a supply chain; this article shows how a rather simple framework can be used when evaluating changes in a supply chain. The framework is built on a Supply Chain Cost (SCC) model and customer service measurements, delivery precision and leadtime. Both suggested changes in a supply chain and already executed changes can be evaluated by the framework. Two different examples from the company Ericsson are presented to illustrate the framework, which is a 5 step analysis model. The existing, or pre-existing, supply chain is analysed, described and defined. The SCC and performance measures are measured and/or estimated. Improvements are designed and defined. The same measures as before are measured again. The measures from before and after the change of the supply chain are evaluated to decide if the changes are improvements or not. Cutting costs in one area of the supply chain can be a mistake if not the total supply chain is considered and the total SCC. Considering both the SCC part and customer service measures present a wider understanding of the change. It is shown that SCC can be used as a tool to identify cost savings and evaluate if a change project will, or has, resulted in the cost savings the project aims for. Rough standard costs measures should be avoided instead actual costs should be used as much as possible. The used framework hopefully stimulate to similar analyses in other companies with other supply chains.
Abstract The assumption that improving manufacturing operations and efficiency is a source of competitive advantage continues to be questioned. Manufacturing has progressively lost its role as value creator. This paper introduces a new key performance measurement that we refer to as the “Manu-facturing Value Added Coefficient” (MVACTM), which can be used to assess apparent performance measurement gaps associated with the value added of manufacturing. MVACTM is a tool to quantify how much value manufacturing assets contribute to the bottom line. This is not quantified using conventional reporting tools. The MVACTM method allows us to track value added by operational improvements in manufacturing across a company. The MVACTM method follows standard absorp-tion (explain this) and can be easily applied based on commonly available data from ERP systems. A MVACTM calculation can serve as a supplementary perspective (not clear) on product margin analysis. Managers can improve company performance when they do not perceive manufacturing as a cost generator (overhead cost) but instead integrate the cost of operational improvement into the a broader enterprise value added framework. We selected two business case studies demon-strate the analytical power of the proposed method.
Supply chain value creation methodology under BSC approach
Journal of Industrial Engineering International, 2014
The objective of this paper is proposing a developed balanced scorecard approach to measure supply chain performance with the aim of creating more value in manufacturing and business operations. The most important metrics have been selected based on experts' opinion acquired by in-depth interviews focused on creating more value for stakeholders. Using factor analysis method, a survey research has been used to categorize selected metrics into balanced scorecard perspectives. The result identifies the intensity of correlation between perspectives and cause-and-effect chains among them using statistical method based on a real case study in home appliance manufacturing industries.
Selection of Supply Chain Performance Measurement Frameworks in Electrical Supply Chains
Performance measurement plays an important role in today's competitive market due to its direct effect on supply chain's profitability. Many approaches have been applied for evaluating performance of firms, including financial, operational and balanced frameworks. Companies peruse to find the best fit performance measurement framework due to a variety of existing approaches. The main significance of performance framework selection is its important role in strategic decisions where many factors related to the companies' performance may be neglected. Due to the nature of electrical companies such as high uncertainty in demand, short life cycle of products and competitive market, they have to frequently assess their performance. A fit framework should be determined based on the characteristics of this competitive market. In this study, a multi criteria decision making (MCDM) approach is used to find a proper framework for performance evaluation in electrical companies. Analytical hierarchical process (AHP) has been applied to select the best performance measurement framework based on supply chain macro processes. Finally, performance metrics for the selected framework are determined..
Measuring Supply Chain Performance
2017
The purpose of this book is to measure and evaluate the supply chain performance of the Volta Aluminium Company and upon the results, make recommendations and suggestions to the management, which can assist also other companies in their decision-making. Once that actually, companies operate their business in an increasingly changeable and unpredictable enviroment, where competition assumes global scale, they need to look for new ideals, new tools and new methods. The proposed framework grounds on the Methodology of performance measuring systems, plying to the measurement of both tangible and intangible assets, and also measuring supply chain performance internally and externally. The framework developed enhance the use of a group of metrics across all organisations, this metrics are a fundamental part of a measuring system adapted to strategy, goals, key performance areas, process elements and activities, enabling evaluating defined goals, leading to decisions making and the impleme...
Measurement of Supply Chain Performance in Manufacturing
Journal of Physics: Conference Series, 2019
Supply chain management has been a major component of a company’s strategy to compete each other through the increasing of organizational productivity and profitability. This paper is useful to provide an application of supply chain performance assessment in the manufacturing industry as an effort to increase the company profitability. Performance assessment metrics of supply chain provides information in the position of the company achievement. That condition capable to provide good management by an overview of the company achievements to meet customer demand. There is no measurement of supply chain performance in good condition of the company. Company problem found and finally caused by the company unable to meet demand leads the loss of customer trust. The Performance of Activity (POA) model is capable to describe the real conditions of the company’s supply chain performance. Measure the supply chain performance using POA model. POA model have 7 dimensions of assessment, namely c...
Supply chain performance measurement and improvement system
Journal of Modelling in Management, 2018
Purpose: The purpose of this paper is to adopt a supply chain performance measurement (SCPM) framework as proposed by Dweiri and Khan (2012) to model a novel supply chain performance measurement indexing (SCPMI) system to measure and improve supply chain performance. Design/methodology/approach: The adopted SCPM framework developed by Dweiri and Khan (2012) is used to model a generic SCPMI framework aided by Analytic Hierarchy Process (AHP) method and inputs from industrial experts. To exemplify the applicability and efficiency of the generic SCPMI system, an automobile assembling company from an emerging economy was utilized. This SCMPI system is used to measure, improve and measure postimprovement supply chain performance (SCP) guided by DMAIC (Define, Measure, Analyze, Improve and Control) methodology. Findings: The study's initial measurement results showed an average SCP of the case company over a four month period as 82%. DMAIC methodology was utilized to identify inherent problems and proposed improvements. The post-improvement SCP measurement saw an improvement from an average of 82% to 83.82% over a four month period. Practical Implications: The proposed generic SCPMI framework aided by AHP-DMAIC has been successfully implemented in a case company. After implementation, managers and decision makers saw an improvement in their SCP. The proposed SCPMI system and results can be useful for benchmarking by manufacturing organizations for continuous SCP improvement. Originality: An original SCPMI framework proposed is general in nature and can be applied in any organization.