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Money talks while volume and value should run the show: An evaluation of financial parameters for decision making duringmanufacturing system acquisition
University West, Department of Engineering Science, Research Enviroment Production Technology West. Global Industrial Development, Scania CV AB, Södertälje. (PTW)ORCID iD: 0000-0002-0578-3804
2017 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Market economic values have for the last decades been given an increasing role with the establishment of financial institutes and global organisations with a capitalistic focus as a consequence. As a counter reaction, the concept of sustainable development has emerged complementing the economic focus with environmental and social aspects. However, there are still challenges on how to make balanced decisions based on all three view points and consequently the decision makers still primarily reside to the established tangible financial data. Within the industrial setting there is no difference. The manufacturing system design is based on multiple criteria and requirements, but commonly the final investment decision is primarily based on what can be financially justified. Longterm solutions probably lies in combining the tangible economy with the less tangible soft values that cannot be valued in monetary means. Therefore, to find this sweet spot, the purpose of this research is to in-depth investigate the world of economy, but from an engineers' point of view. A financial analysis is done to understand the economical components and how these are related to the manufacturing system. Furthermore, to connect cost with contributed value of the manufacturing system, a holistic business value chain analysis is done to ensure that less tangible aspects can be understood and utilised. The result of this research, highlights for example that sales volume has a larger impact on the manufacturing profitability, than that of the initial investment cost. Therefore, manufacturing systems should also be evaluated on the bases of how well it can meet the volatility in market demands. Another result presented is a portfolio of new graphical representation used as a support tool for investment decisions. Furthermore, to be able to invest in manufacturing systems that contribute to a more competitive company, the wider business value with manufacturing is discussed.

Place, publisher, year, edition, pages
Trollhättan: University West , 2017. , 55 p.
Series
Licentiate Thesis: University West
Keyword [en]
Value chain, Manufacturing system, Investment process, Economical decision support, Production
National Category
Computer Systems Communication Systems
Research subject
Production Technology
Identifiers
URN: urn:nbn:se:hv:diva-10696ISBN: 978-91-87531-52-1 (print)ISBN: 978-91-87531-51-4 (electronic)OAI: oai:DiVA.org:hv-10696DiVA: diva2:1073976
Supervisors
Available from: 2017-02-24 Created: 2017-02-14
List of papers
1. Consideration of market demand volatility risks, when making manufacturing system investments
Open this publication in new window or tab >>Consideration of market demand volatility risks, when making manufacturing system investments
2016 (English)In: Procedia CIRP, ISSN 2212-8271, E-ISSN 2212-8271, Vol. 40, 307-311 p.Article in journal (Refereed) Published
Abstract [en]

When investing in new manufacturing systems, many aspects must be taken into consideration to ensure a sustainable business. In respect to the financial aspect, both the one-off investment cost and the continuous operational cost must be analysed to ensure that the life-cycle cost perspective is appreciated. However, one detail in the cost analyses that is often overlooked is the composition of fixed and variable cost elements. These details are important to be able to better manage the risk of market demand volatility, and accordingly make appropriateinvestment decisions. This case study demonstrates that when there is a low risk for reduced market demand, investing in a manufacturing system with low variable cost is favourable. However, if there is a high risk for reduced market demand, the importance will instead be to have a low fixed cost, as this will be the dominant cost factor.

Place, publisher, year, edition, pages
Elsevier, 2016
Keyword
Manufacturing System; Sustainable; Investment; Finance; Case Study; Cost Analyses; Risk Management
National Category
Production Engineering, Human Work Science and Ergonomics
Research subject
Production Technology
Identifiers
urn:nbn:se:hv:diva-8791 (URN)10.1016/j.procir.2016.01.044 (DOI)2-s2.0-84966657934 (Scopus ID)
Conference
13th Global Conference on Sustainable Manufacturing, GCSM 2015; Binh Du'o'ng New City; Viet Nam; 16 September 2015 through 18 September 2015
Available from: 2016-01-11 Created: 2015-12-14 Last updated: 2017-02-14Bibliographically approved
2. Production support model to manage market demand volatility risks
Open this publication in new window or tab >>Production support model to manage market demand volatility risks
2016 (English)In: Procedia CIRP, ISSN 2212-8271, E-ISSN 2212-8271, Vol. 57C, 664-668 p.Article in journal (Refereed) Published
Abstract [en]

In the investment selection process during the design of new manufacturing systems, both the technical attributes and the expected financial performance need to be evaluated. To manage the financial risks with market volatility, it is important to understand the composition of fixed and variable cost factors in relation to the expected volume interval. The support model developed in this paper will in a simple and intuitive way visualise the effect on production cost due to changes in market demands. It can also be used to evaluate the volume sensitivity of existing manufacturing systems, even compare systems making different products.

Place, publisher, year, edition, pages
Elsevier, 2016
Keyword
Manufacturing System, Investment, Finance; Case Study, Cost Analyses, Risk Management
National Category
Computer Systems
Research subject
ENGINEERING, Computer engineering; Production Technology
Identifiers
urn:nbn:se:hv:diva-9933 (URN)10.1016/j.procir.2016.11.115 (DOI)
Conference
49th CIRP Conference on Manufacturing Systems (CIRP-CMS 2016) Stuttgart, Germany, May 25-27, 2016
Available from: 2016-09-22 Created: 2016-09-22 Last updated: 2017-02-14Bibliographically approved
3. Manufacturing System Design for Business Value, a Holistic Design Approach
Open this publication in new window or tab >>Manufacturing System Design for Business Value, a Holistic Design Approach
2016 (English)In: Procedia CIRP, ISSN 2212-8271, E-ISSN 2212-8271, Vol. 50, 659-664 p.Article in journal (Refereed) Published
Abstract [en]

When designing and developing manufacturing systems, many aspects need to be considered. Typically, the manufacturing design objectives are specified to achieve certain operational requirements around quality, capacity, cost etc. They are also specified withthe intention to ensure efficient processes related to manufacturing, such as maintenance, logistics, not to mention the main process of manufacturing the actual part. This study proposes that a wider company perspective should be considered during manufacturing system design, to achieve a greater business value. The manufacturing system should be designed to create value to other core business processes, such as product development, marketing, sales and services. This paper also presents examples on value perspectives to consider and how this approach can be implemented.

Place, publisher, year, edition, pages
Elsevier, 2016
Keyword
Process, manufacturing, design, business, value
National Category
Computer Systems Information Systems, Social aspects
Research subject
Production Technology
Identifiers
urn:nbn:se:hv:diva-9912 (URN)10.1016/j.procir.2016.04.140 (DOI)2-s2.0-84986571388 (Scopus ID)
Conference
26th CIRP Design Conference, Conference, Stockholm, June, 2016
Available from: 2016-09-15 Created: 2016-09-15 Last updated: 2017-02-14Bibliographically approved

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