ASSESSMENT OF PRODUCTION NETWORK SCENARIOS BASED ON ECONOMIC VALUE ADDED

Abstract

Rapidly changing global markets force companies to consciously evaluate and adapt their production network. A common method for the evaluation of production networks is static cost and capacity modelling based scenario creation. Currently used cost models do not fully consider comprehensive aspects of financial and cost accounting, which are essential for a holistic economic efficiency calculation. The approach presented in this paper seeks to help companies to systematically choose the most economic scenario. An economic value added (EVA) based assessment method is used to consider savings and expenses on both financial and cost accounting level, including a systematic derivation of adjustment costs for restructuring the network. The approach results in a method to transfer model based static cost calculations into an economic efficiency calculation and is illustrated by the application in a real business case.