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Consideration of market demand volatility risks, when making manufacturing system investments
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
School of Science and Technology, Örebro University.ORCID iD: 0000-0003-1408-2249
University West, Department of Engineering Science, Division of Manufacturing Processes. (PTW)ORCID iD: 0000-0002-0380-1386
2016 (English)In: Procedia CIRP, E-ISSN 2212-8271, Vol. 40, p. 307-311Article 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
2016. Vol. 40, p. 307-311
Keywords [en]
Manufacturing System; Sustainable; Investment; Finance; Case Study; Cost Analyses; Risk Management
National Category
Production Engineering, Human Work Science and Ergonomics
Research subject
Production Technology; ENGINEERING, Manufacturing and materials engineering
Identifiers
URN: urn:nbn:se:hv:diva-8791DOI: 10.1016/j.procir.2016.01.044ISI: 000379243200054Scopus ID: 2-s2.0-84966657934OAI: oai:DiVA.org:hv-8791DiVA, id: diva2:892926
Conference
13th Global Conference on Sustainable Manufacturing, GCSM 2015; Binh Du'o'ng New City; Vietnam; 16 September 2015 through 18 September 2015
Funder
Knowledge Foundation, 20110263Available from: 2016-01-11 Created: 2015-12-14 Last updated: 2024-09-04Bibliographically approved
In thesis
1. Money talks while volume and value should run the show: An evaluation of financial parameters for decision making duringmanufacturing system acquisition
Open this publication in new window or tab >>Money talks while volume and value should run the show: An evaluation of financial parameters for decision making duringmanufacturing system acquisition
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. p. 55
Series
Licentiate Thesis: University West ; 16
Keywords
Value chain, Manufacturing system, Investment process, Economical decision support, Production
National Category
Computer Systems Communication Systems
Research subject
Production Technology; ENGINEERING, Manufacturing and materials engineering
Identifiers
urn:nbn:se:hv:diva-10696 (URN)978-91-87531-52-1 (ISBN)978-91-87531-51-4 (ISBN)
Supervisors
Available from: 2017-02-24 Created: 2017-02-14 Last updated: 2019-12-05
2. Challenging the traditional manufacturing objectives: Designing manufacturing systems for both product manufacturing and value production
Open this publication in new window or tab >>Challenging the traditional manufacturing objectives: Designing manufacturing systems for both product manufacturing and value production
2022 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [sv]

Utformandet av nya tillverkningssystem och fabriker är ett komplext arbete med många intressenter. I grund och botten är det en värdekedja som är i fokus, dvs tillverkningen av en lönsam produkt. Denna värdekedja styr utvecklingsprojekten och kraven som ställs på tillverkningssystemet kretsar runt kostnad, produktkvalitet och önskad tillverkningsvolym. Dessa krav fokuserar på den betalande kunden, vilket kan vara företagets viktigaste intressent. Utöver den betalande kunden finns det dock många andra intressenter som inte beaktas i någon större utsträckning vid kravställandet av nya tillverkningssystem. Enskilda goda exempel går att finna där exempelvis storskalig tillverkning av en produkt till lägsta kostnad inte är det primära målet. Fokus ligger i stället på andra värdekedjor som skapar mervärde för nya intressenter till tillverkningssystemet. Denna forskning har i avsikt att utforska vilka intressenter som finns till ett tillverkningssystem, och vilket mervärde som det går att leverera till dessa. Frågor som ställs är vilka externa intressenter som finns, vilka interna intressenter som finns, vilket mervärde kan tillverkningssystemet leverera till dessa och hur kan man beakta dessa i utvecklingsprojekten av nya tillverkningssystem? En mer utforskande samhällsvetenskaplig metod har använts, där inspiration tagits från etnografiska och kvalitativa metoder. De nio åren som doktorandprojektet pågått har en långvarig, djup datainsamling och analys möjliggjorts. Forskningen har resulterat i ett teoretiskt ramverk runt ett mer holistiskt synsätt på tillverkningssystemets värdekedjor. Den betalande kundens värdekedja kvarstår som primär, men kompletterats med nya externa och interna intressenter. Enskilda goda exempel har identifierats i olika industrier som används för att exemplifiera applicerbarheten i praktiken. Forskningen adresserar även utmaningar i att förändra dagens arbetssätt. Den starka kulturen på kundfokus samt beslutsprocesser som är ekonomiskt dominerande, är två aspekter som befäster dagens arbetssätt. Med ett mer strategiskt fokus, inkluderande kravställning samt ledningens öppenhet för en bredare beslutsgrund, skapas förutsättningar att utforma tillverkningssystem som skapar större mervärde för flera.

Abstract [en]

The design of new manufacturing systems is a complex process involving many stakeholders. The production of a profitable product is the value chain that steers the development projects, and requirements are specified around cost, product quality and the desired production volume. These requirements focus on the paying customer. In addition to the customer, there are, however, many other stakeholders who are not considered to any great extent. Individual good examples can be found where the large-scale production at the lowest cost is not the primary goal. Instead, the focus is on other value chains that create added value for new stakeholders related to the manufacturing system. This research intends to explore the stakeholders of a manufacturing system and the added value that can be delivered to them. There is a focus on understanding the current practices for manufacturing system development, how requirements are specified and how decisions are made. An explorative social science approach was applied, where inspiration was taken from ethnographic and qualitative methods. Nine years of (interrupted) industrial PhD studies have enabled a long[1]term and deep data collection and analysis. The research resulted in a theoretical framework built around a more holistic approach to the value chains of the manufacturing system. The paying customer’s value chain remains primary but has been supplemented with new secondary external and internal stakeholders, and related value chains. Individual good examples have been identified in the industry that are used to exemplify the applicability of the theoretical framework in practice. The research also addresses challenges in changing today’s way of working. A strong culture of customer focus and financially dominant decision-making processes are two aspects that consolidate today's way of working. With a more strategic focus, including holistic requirements and the management’s openness to a broader decision basis, the conditions are created for designing manufacturing systems that contribute with greater added value for more stakeholders

Place, publisher, year, edition, pages
Trollhättan: University West, 2022. p. 188
Series
PhD Thesis: University West ; 48
Keywords
Manufacturing system, design, development, decision making, sustainability, value, Tillverkningssystem, produktionssystem, design, utveckling, beslutsstöd, hållbarhet, värde
National Category
Manufacturing, Surface and Joining Technology
Research subject
Production Technology
Identifiers
urn:nbn:se:hv:diva-18355 (URN)9789189325210 (ISBN)9789189325203 (ISBN)
Public defence
2022-06-10, F131, Gustava Melins gata, Trollhättan, 09:00 (English)
Opponent
Available from: 2022-05-13 Created: 2022-05-10 Last updated: 2022-06-02Bibliographically approved

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Johansson, AndersPejryd, LarsGustavsson Christiernin, Linn

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