CASH process

The CASH process was developed by cooperation between Canada, the USA and Sweden. In this method, hydrolysis occurs in two steps with dilute sulfuric acid at a temperature around 200 °C (pressure 8-25 bar) and the fermentation of sugars by yeast to ethanol. It has been shown that by using SO2 and dilute sulfuric acid in two steps, this increases the sugar and ethanol yield, since the amount of inhibitors such as furfural is decreased. The process was developed for raw materials such as sawdust and other residues from trees. The ethanol yield is about 30% of the energy in the raw material and there are also by-products, with up to 40% of the energy content in solid form (lignin), which can be used as biofuel. 

Sinfonia is replacing all of Unilever Latin America s local ERP systems for finance, supply chain and order-to-cash processes. For this to work, Unilever needed to extract data from a wide variety of systems, including SAP, Siebel, Manugistics, PeopleSoft and legacy apphcations. hi addition, the solution had to be adaptable to rapid and dramatic business changes. 

Supply chain management (the cash-to-cash process)... 

Ultimately, the process might be permanently shut down or given a major revamp. This marks the end of the project, H. If the process is shut down, working capital is recovered, and there may be salvage value, which would create a final cash inflow at the end of the project. 

The working capital includes the cost of inventories, such as raw materials, materials-in-process, products, etc as well as suppHes, accounts receivable less accounts payable, prepaid expenses, other cash needs such as payroll, and some start-up expenses, eg, materials and wages. Typical inventories can be taken as one month s supply of raw materials, products, and materials-in-process. The materials-in-process can be valued at one month s sales. Other operating cash can be estimated as the actual cash need for one month. 

Gash Flow Examples. Several hypothetical ventures are presented to illustrate cash flow analysis. Venture A exhibits a cash flow analysis. Venture A exhibits a cash flow pattern typical of process ventures. Other ventures are introduced for comparison and to provide additional insight into cash flow analysis. 

Any additional cash required to operate the process or business... 

The cost of capital may also be considered as the interest rate at which money can be invested instead of putting it at risk in a manufacturing process. Let us consider the process data listed in Table 9-4 and plotted in Fig. 9-10. If the cost oi capital is 10 percent, then the appropriate discounted-cash-flow curve in Fig. 9-10 is abcdef. Up to point e, or 8.49 years, the capital is at risk. Point e is the discounted breakeven point (DEEP). At this point, the manufacturing process... 

C. G. Sinclair [Chem. Process. E/ig., 47, 147 (1966)] has considered similar parameters to the (EMIP) and (IRP) based on a cumulative-discounted-cash-flow curve. 

This example is a simplified one. The cost of the working capital is assumed to be paid for in Y ear 0 and returned in Y ear 10. In practice, working capitalincreases with the production rate. Thus there may be an annual expenditure on working capital in a number of vears subsequent to Y ear 0. Except in loss-making years, this is usually treated as an expense of the process. In loss-making years the cash injection for working capital is included in the At for that year. 

When to Scrap an Existing Process Let us suppose that a company invests 50,000 in a manufacturing process that has positive net annual flows (after tax) Acp of 10,000 in each year. During the third year of operation, an alternative process becomes available. The new process would require an investment of 40,000 but would have positive net annual cash flows (after tax) of 20,000 in each year. The cost of capital is 10 percent, and it is estimated that a market will exist for the product for at least 6 more years. Should the company continue with the existing process (project H), or should it scrap project H and adopt the new process (project 1) ... 

Comparisons on the Basis of Capitalized Cost A machine in a process generates a positive net cash flow of 1000. Two alternatives are available machine L, costing 2000, requires replacement every 4 years, and machine M, costing 3000, requires replacement every 6 years. Neither machine has any scrap value. The cost of capital is 10 percent. Which machine is the more profitable to operate ... 

Figure 9-13 is a plot of Eq. (9-61) in the form of the number of years n required to reach a certain discounted-cash-flow rate of return (DCFRR) for a given payback period (PBP). The figure is a modification of plots previously published by A. G. Bates [Hydrocarbon Process., 45, 181-186 (March 1966)], C. Estrup [Br Chem. Eng., 16, 171 (February-March 1971)], and F. A. Holland and F. A. Watson [Process Eng. Eeon., 1, 293-299 (December 1976)]. 

Now that you have determined the likely savings in terms of annual process and waste-treatment operating costs associated with each option, consider the necessary investment required to implement each option. Investment can be assessed by looking at the payback period for each option that is, the time taken for a project to recover its financial outlay. A more detailed investment analysis may involve an assessment of the internal rate of return (IRR) and net present value (NPV) of the investment based on discounted cash flows. An analysis of investment risk allows you to rank the options identified. 

In addition to their historical use, cash flow statements are prepared as part of the budgeting process in order to identify the effects upon the cash facilities of the proposed activities for the period under review. A typical, simplified, statement would give the following information. 

The flow of cash is the life blood of any commercial organisation. The cash flows in a manufacturing company can be likened to the material flows in a process plant. 

C-D The cash-flow curve turns up at C, as the process comes on stream and income is generated from sales. The net cash flow is now positive but the cumulative amount remains negative until the investment is paid off, at point D. 

Finally, we are in the business to produce products and profits. Broadly, if a product is made in 3-4 reaction steps in the batch-manufacturing environment, the market value should be 10 times the materials. If market value is only twice the raw material cost, the project should be redefined or stopped. In a 10-step process, it is not uncommon that materials are 1/20 of the selling price. A comparison of a two reaction step product using discounted cash flow methods (11) showed that a process with a market value 4 times the materials was greatly preferred over one at 3 times materials. 

R D. Returning to our examples, The R D lab, contributes to the long term profitability of the firm (rather than the short term cash flow) by developing and perfecting products and processes. While controlling the costs of R D as a whole is important, the speed at which a specific analytical test can be completed is less important than the speed and success at which a project as a whole can be completed. This relates to the effectiveness of the lab at its overall mission. The ability of a R D lab to quickly and successfully develop products and/or processes and if necessary to protect them through patent actions, may ultimately impact the firm s market share and its profitability. 

Action refinement is about taking a large interaction with many parameters and breaking it into several steps with fewer and simpler parameters. For example, get cash(ATM, person, account, )breaks down to several steps, such as insert card(ATM pard) and enter amount(, )each of which identifies only a few parameters at a time. After the first step, the ATM system must remember whose card has been inserted so that when the later step happens, it knows which account to debit (see Figure 6.27). The association of Account x currently using ATM y is not needed at the more abstract level. Ultimately, the process can be taken down to individual keystrokes and mouse clicks. 

For the accumulated costs and resources devoted to the development of a new chemical entity (NCE) or new molecular entity (NME) to make sense financially, the commercial potential of the compound must be evaluated in a rigorous manner. Compounds whose expected financial performance does not warrant these high investment costs must be abandoned or out-licensed as soon as possible so as to direct resources toward more profitable endeavors. By operating effectively, a well-designed drug discovery and development process can focus its efforts to operate efficiently on the compounds that will maximize cash flow to the pharmaceutical firm. 

Figure 1.3 shows the expenses versus revenues for a company s investment in developing a new drug. Up until the clinical stage, the investment is substantial in the discovery and development processes. The largest cash demand is in the clinical trial stages, where hundreds and thousands of human subjects have to be recruited to test the drug. 

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