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Performance-based costing as decision support for development of discrete part production : Linking performance, production costs and sustainability

Windmark, Christina LU (2018)
Abstract (Swedish)
Svensk tillverkningsindustri bidrar till ca 16 % (Statistics Sweden 2016) av bruttonationalprodukten och medverkar till att ca 900 000 av landets invånare har en anställning (Produktion2030 2016), vilket gör sektorn till en viktig del av Sveriges välfärdssystem. Forskningen syftar främst till att ge industrin verktyg för att analysera och utvärdera produktion för resurseffektivare och lönsammare tillverkning som även minskar miljöbelastningen. Målet är att stödja beslutsfattare i industrin att aktivt generera den information och kunskaper som hjälper dem att fatta faktabaserade beslut.
I ett tillverkande företag behöver produktionen kontinuerligt förbättras och ändras för att bevara lönsamhet, anpassas för nya produkter och ändrad... (More)
Svensk tillverkningsindustri bidrar till ca 16 % (Statistics Sweden 2016) av bruttonationalprodukten och medverkar till att ca 900 000 av landets invånare har en anställning (Produktion2030 2016), vilket gör sektorn till en viktig del av Sveriges välfärdssystem. Forskningen syftar främst till att ge industrin verktyg för att analysera och utvärdera produktion för resurseffektivare och lönsammare tillverkning som även minskar miljöbelastningen. Målet är att stödja beslutsfattare i industrin att aktivt generera den information och kunskaper som hjälper dem att fatta faktabaserade beslut.
I ett tillverkande företag behöver produktionen kontinuerligt förbättras och ändras för att bevara lönsamhet, anpassas för nya produkter och ändrad efterfråga samt för att uppnå det legala och frivilliga krav som finns kring resursutnyttjande och hållbarhet. Genom att använda prestandaparametrar (prestandaparametrar är till för att mäta och utvärdera hur bra ett företag är på att använda sin tid och sina resurser) i en kostnadsmodell är det möjligt att simulera utvecklingsscenarier och koppla kostnader till resursanvändning.
Forskningen har bedrivits inom fyra olika utvecklingsområden för att underlätta beslut i tillverkande industri genom att använda prestandaparametrar. Det första området är utveckling av tillämpningar av en kostnadsmodell som knyter samman kostnads- och presentandaparametrar, där en metodik för att fördela kostnader på produktionsstörningar utvecklats. Denna metodik gör det möjligt att analysera befintliga produktionsutrustningar för få kunskap kring vad som orsakar problemet och vad problemet innebär för lönsamheten. Kostnadsmodellen för tillverkning har vidareutvecklats till att användas vid utvärdering av utrustningsinvesteringar. I de framtagna modellerna jämförs olika varianter av system med varandra för att hitta den lämpligaste utformningen utifrån olika förutsättningar. Modellerna är främst framtagna för att användas vid nyinvestering och för att bedöma lämpligast automationsnivå.
Det andra området är vidareutveckling av kostnadsmodellen för kostnadssättning av hantering och lagring av material internt på ett företag. Kostnadsmodellen för tillverkning övergår då till att bli en modell som kan hantera stora delar av ett helt produktionssystem.
Därefter har ett beslutsstöd för produktionslokalisering baserat på produktions-kostnader utarbetats för att stödja företag i produktionslokaliseringsprojekt. I detta beslutsstöd används modellen för att beräkna materialhanterings kostnader tillsamman med mer schematiska estimeringsverktyg för att bedöma kostnader för extern logistik, kvalitetssäkring, underhåll, försäljning, inköp, produktionsupp¬trampning, kunskap- och kompetensförsörjning samt de effekter som kan uppstå i befintlig verksamhet då delar av den förflyttas.
Till sist har ett konceptramverk för beslutsstöd för hållbar produktion utvecklats baserat på kostnadsmodellen. Mätbar prestanda från produktionsprocessen tillsammans mjukare data som t.ex. personaltillfredställelse, energikällors miljöpåverkan och hållbarheten på materialkällorna används för att skapa en omfattande hållbarhetsvärdering av en tillverkad produkt. Genom att använda prestandaparametrar har även oönskade aktiviteter i produktionen kopplats till koldioxidutsläpp via den energi eller det material som förbrukats.
Arbetet har främst bedrivits med hjälp av empiriska studier där observationer och intervjuer i industriella miljöer har genomförts. Totalt har sju olika tillverkningsföretag bidragit med omfattande empirisk data som använts för att genomföra kostnadsanalyser. De tillverkningsprocesser som studerats är främst skärande bearbetning (svarvning och fräsning), montering, svetsning och plåtformning. Anställda som bidragit med relevant information har haft befattningar från operatör/montör till VD och styrelsemedlemmar. Datainsamling har främst skett via intranäten på företagen gällande investeringar, saldon, omkostnader, tidsrapporteringar och kvalitetsrapporteringar. Detta har kontrollerats och jämförts med tidsstudier och intervjuer med relevant personal för att säkerställa att så korrekt information som möjligt används. Då information inte funnits tillgänglig har tidsstudier, observationer i verksamheten och intervjuer varit den primära informationskällan. Utöver empiriska studier har matematiska simuleringar och litteraturstudier används för att utveckla beslutsmodeller.
country, such as Sweden it is important to continuously increase productivity to counterbalance the high cost of labour, taxes and services. A trend, that has existed for several decades, is to relocate manufacturing to countries with lower costs, especially with lower labour costs. Production relocation often results in higher initial costs, which makes it essential to make the correct decision from the beginning.
To ensure that the production is in line with manufacturing strategy, performance measurements are commonly used. Measurements/indicators can also be used to make strategy more tangible, facilitating information and knowledge transfer. In other words, they can be used to inform co-workers about how the company is doing and how the system and processes respond to different actions. Interactive use of a performance measurement system and frequent analyses of indicators can be conducted to generate learning about actions leading to higher performance.
Recent movements within the industrial sector point towards increasing efforts to take responsibility for the environment. However, cost savings are one of the prominent drivers for sustainability improvements, together with governmental legislation, market advantages, and pressure from shareholders and stakeholders. Prominent obstacles for sustainability improvements have been found to be a lack of understanding and knowledge, unclear and fuzzy decision authorization, and lack of performance measurements are noticeable reported reasons.
The traditional cost method, involves direct material, direct labour, and overhead costs. When the costing method was implemented, a large proportion of the production cost consisted of labour costs, but as the equipment complexity and equipment costs increase the need for more detailed cost-models arises. One of the major goals in this thesis is to use knowledge of performance and capability in production operations to support decision on future developments and configurations. Therefore, it is important that the cost-model used captures as many aspects as possible and, especially performance parameters. The cost-model used in this thesis is a time-based technical performance-based cost-model for discrete part manufacturing, incorporating performance parameters such as cycle time, quality rate, process material waste, speed losses, availability losses, set-up times, and degree of capacity occupancy.
Research has been conducted within cost-conscious manufacturing addressing cost impact on production decisions such as production location, automation level, product cost consequences of alterative equipment resources, energy consumption, and sustainability. The aim of this thesis is to provide decision-makers with structures for information gathering from the production system in order to make sound short-term and long-term tactical and strategic decisions incorporating production performance. The research contribution can be divided into four parts: 1) Cost-model applications for specific analyses and decisions. 2) Cost model development, adding aspects of material handling and tied-up capital to develop the manufacturing cost-model into a production cost-model. 3) Support location decisions with a cost-based decision framework. 4) Support sustainable production using a production performance-based costing perspective.
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Abstract
In today’s global market, the industry is struggling every day to make the “correct decisions”. Decisions concerning production can range from smaller improvements to choice tool or equipment investments to relocation of entire production facilities. Increasing globalization leads to both opportunities and challenges, driving the need for fact-based decision-support including costs to be able to evaluate the cost outcome of different production development alternatives. For a high cost country, such as Sweden it is important to continuously increase productivity to counterbalance the high cost of labour, taxes and services. A trend, that has existed for several decades, is to relocate manufacturing to countries with lower costs, especially... (More)
In today’s global market, the industry is struggling every day to make the “correct decisions”. Decisions concerning production can range from smaller improvements to choice tool or equipment investments to relocation of entire production facilities. Increasing globalization leads to both opportunities and challenges, driving the need for fact-based decision-support including costs to be able to evaluate the cost outcome of different production development alternatives. For a high cost country, such as Sweden it is important to continuously increase productivity to counterbalance the high cost of labour, taxes and services. A trend, that has existed for several decades, is to relocate manufacturing to countries with lower costs, especially with lower labour costs. Production relocation often results in higher initial costs, which makes it essential to make the correct decision from the beginning.
To ensure that the production is in line with manufacturing strategy, performance measurements are commonly used. Measurements/indicators can also be used to make strategy more tangible, facilitating information and knowledge transfer. In other words, they can be used to inform co-workers about how the company is doing and how the system and processes respond to different actions. Interactive use of a performance measurement system and frequent analyses of indicators can be conducted to generate learning about actions leading to higher performance.
Recent movements within the industrial sector point towards increasing efforts to take responsibility for the environment. However, cost savings are one of the prominent drivers for sustainability improvements, together with governmental legislation, market advantages, and pressure from shareholders and stakeholders. Prominent obstacles for sustainability improvements have been found to be a lack of understanding and knowledge, unclear and fuzzy decision authorization, and lack of performance measurements are noticeable reported reasons.
The traditional cost method, involves direct material, direct labour, and overhead costs. When the costing method was implemented, a large proportion of the production cost consisted of labour costs, but as the equipment complexity and equipment costs increase the need for more detailed cost-models arises. One of the major goals in this thesis is to use knowledge of performance and capability in production operations to support decision on future developments and configurations. Therefore, it is important that the cost-model used captures as many aspects as possible and, especially performance parameters. The cost-model used in this thesis is a time-based technical performance-based cost-model for discrete part manufacturing, incorporating performance parameters such as cycle time, quality rate, process material waste, speed losses, availability losses, set-up times, and degree of capacity occupancy.
Research has been conducted within cost-conscious manufacturing addressing cost impact on production decisions such as production location, automation level, product cost consequences of alterative equipment resources, energy consumption, and sustainability. The aim of this thesis is to provide decision-makers with structures for information gathering from the production system in order to make sound short-term and long-term tactical and strategic decisions incorporating production performance. The research contribution can be divided into four parts: 1) Cost-model applications for specific analyses and decisions. 2) Cost model development, adding aspects of material handling and tied-up capital to develop the manufacturing cost-model into a production cost-model. 3) Support location decisions with a cost-based decision framework. 4) Support sustainable production using a production performance-based costing perspective.
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Please use this url to cite or link to this publication:
author
supervisor
opponent
  • Professor Bolmsjö, Gunnar, Linnaeus University, Växjö, Sweden
organization
alternative title
Prestandabaserad kostnadsberäkning som beslutsstöd för utveckling av diskret detaljproduktion : Ihopkopplingen av prestanda, produktionskostnad och hållbarhet
publishing date
type
Thesis
publication status
published
subject
keywords
Production cost, PERFORMANCE, decision support, manufacturing, production development, performance-based costing, sustainability, organizational learning, Production cost, Performance, Decision support, Manufacturing, Production development, performance-based costing, Sustainability, Organizational learning
pages
241 pages
publisher
Division of Production and Materials Engineering, Lund University,
defense location
M:B, M-building, Ole Römers väg 1, Lund University, Faculty of Engineering LTH.
defense date
2018-09-28 10:15
ISBN
978-91-7753-737-3
978-91-7753-736-6
language
English
LU publication?
yes
id
3ae3fbe6-66f5-4142-ab05-ea5a681bc5d9
date added to LUP
2018-07-20 10:35:58
date last changed
2018-11-21 21:40:48
@phdthesis{3ae3fbe6-66f5-4142-ab05-ea5a681bc5d9,
  abstract     = {In today’s global market, the industry is struggling every day to make the “correct decisions”. Decisions concerning production can range from smaller improvements to choice tool or equipment investments to relocation of entire production facilities. Increasing globalization leads to both opportunities and challenges, driving the need for fact-based decision-support including costs to be able to evaluate the cost outcome of different production development alternatives. For a high cost country, such as Sweden it is important to continuously increase productivity to counterbalance the high cost of labour, taxes and services. A trend, that has existed for several decades, is to relocate manufacturing to countries with lower costs, especially with lower labour costs. Production relocation often results in higher initial costs, which makes it essential to make the correct decision from the beginning.<br/>To ensure that the production is in line with manufacturing strategy, performance measurements are commonly used. Measurements/indicators can also be used to make strategy more tangible, facilitating information and knowledge transfer. In other words, they can be used to inform co-workers about how the company is doing and how the system and processes respond to different actions. Interactive use of a performance measurement system and frequent analyses of indicators can be conducted to generate learning about actions leading to higher performance.<br/>Recent movements within the industrial sector point towards increasing efforts to take responsibility for the environment. However, cost savings are one of the prominent drivers for sustainability improvements, together with governmental legislation, market advantages, and pressure from shareholders and stakeholders. Prominent obstacles for sustainability improvements have been found to be a lack of understanding and knowledge, unclear and fuzzy decision authorization, and lack of performance measurements are noticeable reported reasons. <br/>The traditional cost method, involves direct material, direct labour, and overhead costs. When the costing method was implemented, a large proportion of the production cost consisted of labour costs, but as the equipment complexity and equipment costs increase the need for more detailed cost-models arises. One of the major goals in this thesis is to use knowledge of performance and capability in production operations to support decision on future developments and configurations. Therefore, it is important that the cost-model used captures as many aspects as possible and, especially performance parameters. The cost-model used in this thesis is a time-based technical performance-based cost-model for discrete part manufacturing, incorporating performance parameters such as cycle time, quality rate, process material waste, speed losses, availability losses, set-up times, and degree of capacity occupancy. <br/>Research has been conducted within cost-conscious manufacturing addressing cost impact on production decisions such as production location, automation level, product cost consequences of alterative equipment resources, energy consumption, and sustainability. The aim of this thesis is to provide decision-makers with structures for information gathering from the production system in order to make sound short-term and long-term tactical and strategic decisions incorporating production performance. The research contribution can be divided into four parts: 1) Cost-model applications for specific analyses and decisions. 2) Cost model development, adding aspects of material handling and tied-up capital to develop the manufacturing cost-model into a production cost-model. 3) Support location decisions with a cost-based decision framework. 4) Support sustainable production using a production performance-based costing perspective.<br/>},
  author       = {Windmark, Christina},
  isbn         = {978-91-7753-737-3},
  keyword      = {Production cost,PERFORMANCE,decision support,manufacturing,production development,performance-based costing,sustainability,organizational learning,Production cost,Performance,Decision support,Manufacturing,Production development,performance-based costing,Sustainability,Organizational learning},
  language     = {eng},
  month        = {07},
  pages        = {241},
  publisher    = {Division of Production and Materials Engineering, Lund University,},
  school       = {Lund University},
  title        = {Performance-based costing as decision support for development of discrete part production : Linking performance, production costs and sustainability},
  year         = {2018},
}