So now that we know what a value calculator is and what it does, let’s look at the components that go towards making it work.
- Parameters effectively the value drivers for the tool. That is, each parameter represents a box on your VDT.
- Baseline data populates a realistic, “current state” of the operations you are modelling. This data is effectively the value of the inputs that go inside the boxes on your VDT.
- The list of improvements change the value of the baseline data with the parameters. Changing these values reflects an improvement occurring within the operations.
- The value stream is a series of connected VDTs, each flowing into the next. These VDTs are effectively the engine that drives the calculation of the benefit.
- The benefits are the output of the VDTs. It could be expressed as an increase in profit, decrease in costs or increase in production.
- Dependency groups are groups of improvements whose outputs are somehow connected to each other. A dependency group applies a maximum, minimum, average or cumulative rule to a set of parameters. This means that the calculator can determine how a complex programme of improvements should interact with each other.
- The last component is the application of constraints to the benefits. As I have discussed previously, these constraints are built into the VDTs to limit an organisation’s ability to create value based on the reality of their operations.