A "Value-Added" Metric
generating more value with less stuff, DuPont strives
to make itself more
It has even devised a metric called shareholder value added
per pound of production or SVA/lb. SVA is the
shareholder value created above the cost of capital, which typically
is 10 to 12 percent for corporations in the United States. On a
simplistic basis, shareholder value can be created with material
or knowledge or both, but SVA/lb. emphasizes only the addition of
knowledge: the higher the SVA/lb., the greater is the use of knowledge
intensity and the lower is the use of material intensity
to create value. Coupled with the more traditional financial measures
the SVA/lb. metric provides an indicator of the long-term sustainability
of different growth strategies.
DuPont has evaluated the SVA/lb. for all of its business units.
For example, DuPont Advanced Fiber Systems, which makes Kevlar®
and Nomex®have a goal to double SVA/lb. during the next
five years. One way that the business unit will accomplish this
is by bundling its products with services. For example, hazard assessments
for people who buy protective clothing to create revenue streams
that require no additional material resources (that is, increased
SVA with no additional lbs.).
According to DuPont, efforts to improve productivity, especially
in operations, invariably result in increased SVA/lb.; a decrease
in raw material and energy use; or the elimination of waste. Thats
how productivity connects to sustainable growth.
Four Goals -->>