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such as child labour can be integrated in the analysis at they might entail risks of lost sales
due to reputation problems. Approaches that aim to assess environmental impacts along a
supply chain and minimise them are called “life-cycle based approaches” [45].
Nevertheless, it can be problematic to integrate non-financial effects in the model
because, in order to make consistent and repeatable decisions, all effects have to be
unified. In companies, money units often offer an understandable common ground. But
then the problem of the evaluation of non-financial effects arises. A possible solution can
be to develop a scoring model in which different non-financial effects are consolidated
to a correction factor for certain cost elements. For example, a company has set up a cost
model to shift production elements to suppliers. They have developed a tool in which
a standard negotiation cost is adapted to factors like cultural differences by a correction
factor based on past experience. Other solutions include multi-criteria decision making
or analytical hierarchy process [45].
3.3.3 Value driver systems
The basic idea of value driver systems is to examine the impacts of a certain topic –
here especially supply chain management – on the financial performance of a company.
To measure the financial performance of a company, several metrics such as return on
assets (ROA) or return on investment (ROI) can be used.
The first step is to break down the KPI into its elementary components. A classic
example is the Dupont-ROI-System. In the case of the ROA this means, for example, on
the first level that the ROA equals profit divided by capital employed. This has to be done
until manageable elements that are detailed enough to be influenced and to be found in
the managerial accounting system such as inventory or accounts receivables are reached.
Secondly, for each element the impact of the focal function – here supply chain
management – has to be examined. For example, the order-to-cash-cycle affects the time
to receive payment from a sale. By reducing this time, the accounts receivable and cash
assets can be reduced and thereby the capital employed can be reduced and the ROA
increased [11]. Thus, the drivers to impact the financial performance of a company
can be identified and even calculated, which is especially valuable to calculate goals for
certain metrics and evaluate the feasibility of initiatives in the focal field.