Cost and Profit Distribution in Value Chains

The following two issues concerning Value Chain networks are addressed in this paper; firstly, the cost structure is studied and the cost factors leading to the highest overall cost improvement for the network are identified, secondly, the in-fluence of an increasing number of production stages with lower value added at each stage on the network profit is studied. This is an interesting question since looking at the past two decades research shows that from a company’s point of view the proportion of personnel costs and in-house production depth decreases whereby the costs of purchased parts increase. Therefore, looking at single com-panies within a Value Chain shows that the importance of personnel costs in com-parison to material costs decreases. However, in this paper we develop a cost model including a whole Value Chain network which shows that within the net-work the most important cost factor is personnel.