Value Planning

The first question targets an enhancement of supply chain management towards value chain management with integrated volumes and value planning. The second question is related to a specific industry type as basis to... 

The volume and value plan is the stable framework for value chain operations as formulated in the following definition. 

Value Planning-, detailing the requirements to plan monthly values consistent to the company profit and loss statement... 

In this work, value parameters matched with P L structures should be focused on the key cost and turnover blocks in the value chain excluding administrative and support costs or also financial results. Therefore, the intention of value planning is not to replace accurate profit and loss reporting but to focus on the key value parameters in the value chain influencing the company profitability ... 

A global value plan has to be calculated on the basis of the corporate base currency requiring all values measured in other currencies to be transformed into the basis currency applying exchange rate plans (Delf-mann/Alberts 2000) and also applying interest rates to discount period cash flows to a net present value of the tactical value plan (see also Eppen et al. 1989, p. 520 for an example in the automotive industry). 

Now, future inventory value planning as a specific chemical commodity value planning requirement reflecting the volatility of working capital and capital costs influenced by volatile raw material prices is described. 

R3 - Future inventory value planning inventory values are a crucial aspect in value planning on the one hand, inventory value leads to capital costs for the company. On the other hand, inventory value is capital employed influencing key value management indicators such as return on... 

Focus on supply volume planning to fulfil given demand, reach a feasible plan and minimize supply costs also using subjective penalties instead of actual cost parameters from controlling future-oriented profit-maximization according to profit and loss statement and inventory value planning not covered so far... 

Global models target to support strategic invest decisions and consequently follow also the requirements of value planning to have actual costs and turnover as decision basis as it is done in classical investment calculation including taxes... 

Value planning and the integration of company s profit and loss structure with supply chain management is not addressed often artificial penalty costs are applied in models to steer results instead of actual cost parameters from controlling... 

In the following an integrated global value chain planning model for chemical commodities supporting end-to-end value planning of volumes and values is developed to close the research gap. 

Value planning described in subchapter 5.3 consolidates all values in a consistent profit and loss statement view and maximizes global profit. In addition, value planning addresses the requirements of planning future inventory values across the value chain network. 

The planning objective is to plan global value chain volumes and values. Initially, the value planning model with the objective function to maximize global profit is presented. The objective function also includes a relaxation concept for hard constraints leading to potential plan infeasibility. The future-oriented inventory value planning concept based on volatile raw material prices is presented at the end of the subchapter. 

As postulated in value planning requirements, value planning results are structured by ... 

In order to reflect these lead times, the concept of a timestamp is introduced. Timestamp is used in computer science documenting the system time when a certain event or transaction occurs e.g. for logging events (N.N. 2007). In the context of future inventory value planning, the time-stamp marks the period, when the first raw material has reached a certain stage in the value chain network included into a specific product. In the example illustrated in fig. 57, the raw material is processed in the same period to be converted into product 1. Therefore, all four value chain steps indexed from one to four occur in the same period and have the same time-stamp one. Conversion into product 2, however, requires additional time caused by production lead times, safety inventory and/or transportation time, that the steps indexed with five and six have a time stamp of two. The timestamp reflects that the inventory value of product 2 is not based on the raw material costs from the same period but based on the raw material costs from the previous period in order to reflect the lead time. Consequently, value chain indices and timestamps are defined for all steps and can cover multiple periods reflecting that raw materials in a global complex multi-stage value chain network can take several months, until they are sold as part of a finished product to the market. 

Final aspects of value planning are production fixed costs. Production fixed costs are not planning-decision relevant but rather used in value planning to calculate the profit III. Hence, monthly production fixed costs per resource cPfpc are consolidated on the base currency in a postprocessing phase. 

Basis plan evaluation presents the optimization results of the provided test data the value plan and the sales, distribution, production and procurement... 

Solution times are sufficiently fast to be applied in tactical planning where no real time response times are required. Secondly, value results are presented. All value results are indexed focusing on comparing results and to ensure confidentiality of industry data. Initially, the value plan with total profits and single values in sales, distribution, production and procurement is analyzed. 

Basis for calculating capital costs on transit and local inventories are the planned product values. The model supports future inventory value planning based on the raw material price offers. Fig. 82 shows results of the inventory value planning. 

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