WIT Press


Value Chain Costing Analysis As An Approach To Evaluate Market Price Volatilities Due To Changing Energy Prices

Price

Free (open access)

Paper DOI

10.2495/SDP130441

Volume

173

Pages

9

Page Range

525 - 533

Published

2013

Size

116 kb

Author(s)

S. Albrecht, H. Krieg, M. Jäger

Abstract

The commercial availability of resources and preliminary products is of essential importance for the industry. One aim of manufacturing companies is to know about structural dependencies in the availability of resources along the entire value chain of their products and to also not only know about environmental impacts of a product but also to have information about the economic life cycle and the value chain. Life Cycle Costing (LCC) is a technique to evaluate the costs of a product over its entire life cycle. Existing approaches give no sufficient answer on how input price alterations in upstream processes influence the value chain costs of materials. But for decision makers, it is crucial to know e.g. at what oil price investments in new materials or the change of feedstock from fossil to renewable become profitable from a life cycle perspective. Therefore, a new approach is suggested, combining LCC and Life Cycle Assessment (LCA). LCA provides the fundamental basis (a functional system model with energy and mass flow balances of all upstream processes) which is enhanced with economic parameters. It basically combines most of the elements of Life Cycle Assessment, environmental Life Cycle Costing according to the method suggested by SETAC and Total Cost of Ownership avoiding restrictions of the respective methods. The paper will describe the procedure of modelling, an exemplary process model and combined static LCA and dynamic LCC results for insulation materials along the value chain of the product. The model is validated using alternating energy prices.

Keywords

energy costs, Life Cycle Engineering, supply chain risks, green procurement, Life Cycle Costing, price sensitivity