Determination of an SCI's effect on costs and capital commitment

Abstract

Chapter 4 introduces the conceptual framework of the developed quantification approach that enables an individual roll-over of SCIs by respective players along the supply chain. Chapter 5 provides a determination model for the revenue contribution while the present chapter addresses the calculation of an SCI's impact on cost and capital commitment. The subsequently introduced model is based on a system dynamics-based simulation focusing in particular on inventory levels and associated logistics costs of a supply chain player (e.g., Shapiro, 2007: 240f.; Sterman, 2000). Accordingly, the approach is mainly suited to SCIs addressing the material flow of manufacturing companies. The simulation is embedded in the conceptual framework introduced in Chapter 4 that allows the combination of the supply chain perspective with that of a single player, as well as the consideration of the individual roll-over of SCIs on specific suppliers and customers. Consequently, the generated value within a supply chain is determined by the simulation of each player on an echelon and the extrapolation of the financial effects.