business case analysis methodology

The Defense Acquisition Encyclopedia

Program Management

A Business Case Analysis (BCA) is a document that provides a best-value analysis that considers not only cost but other quantifiable and non-quantifiable factors supporting an investment decision. A BCA should aid the decision maker in making an informed product support strategy decision. It should be tailored to inform the Program Manager of the costs, benefits, and risk implications of the strategic alternatives being considered. It should reflect the appropriate level of analysis needed to provide a fair assessment of the proposed alternatives. This analysis can include but is not limited to performance, producibility, reliability, maintainability, and supportability enhancements.

Definition: A Business Case Analysis (BCA) is a s a structured methodology and document that aids decision-making by identifying and comparing alternatives by examining the mission and business impacts (both financial and non-financial), risks, and sensitivities. It is a Program Management tool used to evaluate potential business decisions for best-value determinations.

Purpose of a Business Case Analysis (BCA)

The purpose of a BCA is to provide decision-makers with the appropriate information to assess whether or not to make a decision. A BCA is a valuable tool that assists in refining the myriad of decisions to determine the best value strategy.  It follows an iterative process, conducted and updated as needed throughout the life cycle as program plans evolve and react to changes in the business and mission environment.

Why Use a Business Case Analysis (BCA)

A BCA is a powerful tool for two crucial reasons. The first is that the person making the report has to think about all the costs, risks, and benefits of making a choice. When making a choice, it’s easy to only think about what you want to happen instead of looking at every possible event. When people are pushed to think about the worst possible outcomes, they are likelier to make the right choice. The second reason to use business case analysis is that it makes it easy for a subject-matter expert to give useful information to stakeholders and put it in context. Without a full report from the expert, stakeholders might not realize how vital some costs, risks, or rewards are.

Business Case Analysis (BCA) Use

A Business Case Analysis is used for the following:

• Is used in the initial decision to invest in a project.
• Guides the decision to select among alternative approaches.
• Is used to validate any proposed scope, schedule, or budget changes during the course of the project.
• Should also be used to identify the various budget accounts and amounts affected by the various product support strategies.
• Should be a living document ‘ as project or organization changes occur they should be reflected in updates to the business case.
• Should be used to validate that planned benefits are realized at the completion of the project.
• Makes the team consider all of the costs, risks, and benefits of making a decision

Business Case Analysis (BCA) Report Content

As a minimum, a BCA should include:

• Executive Summary: An overview of the BCA
• Introduction: An introduction that defines what the case is about (the subject) and why (its purpose) it is necessary. The introduction presents the objectives addressed by the subject of the case.
• Methods and Assumptions: state the analysis methods and rationale that fixes the boundaries of the case (whose costs and benefits are examined over what time period). This section outlines the rules for deciding what belongs in the case and what does not, along with the important assumptions.
• Impacts: The business impacts are the financial and non-financial business impacts expected in one or more scenarios.
• Risk assessment: show how results depend on important assumptions (‘what if’) and the likelihood for other results to surface.
• Conclusions and Recommendations: specific actions based on business objectives and the analysis results.

Business Case Analysis (BCA) References

Guide: dod product support business case analysis (bca) guidebook – 28 feb 2014.

• Template: DoD Business Case Analysis

Performance-Based Logistics (PBL) BCA

DoD has promulgated the Guiding Principles for conducting a Performance-Based Logistics (PBL) BCA in USD(AT&L) Memorandum, Performance-Based Logistics (PBL) Business Case Analysis (BCA), 23 January 2004. OSD has issued guidance emphasizing the use of the Business Case Analysis as a fundamental tool to support PBL support strategic decisions.

Difference Between a Business Case and Business Case Analysis

They are the same regarding results, but a business case normally refers to the report, and business case analysis refers to the analysis.

AcqNotes Tutorial

Lessons Learned in Developing a Business Case Analysis (BCA)

As a program manager who needs to make a business case study for top management, there are a few essential things to remember. Here are some of the most important lessons:

• Know the Goals: Before you start the business case analysis, make sure you understand the company’s strategic goals and the proposed project’s specific goals. This will help you ensure your analysis aligns with the results you want and show senior leadership the possible value.
• Get people involved early: Include key partners from the start of the process to get their feedback and ensure their points of view are considered. Engaging partners early on builds support and helps find key success factors, possible risks, and other important factors that should be analyzed.
• Get enough information: Do a lot of studies and gather accurate information to back up your analysis. This includes financial data, market studies, customer feedback, and other useful information. Ensuring your data is correct and reliable will give your business case more weight.
• Clearly define assumptions: If you made any assumptions during the research, say so and explain them. Assumptions are a key part of making predictions and figuring out costs and rewards. Being open about your assumptions helps the people in charge understand your analysis and decide if it is true.
• List and measure the benefits: List and measure both the visible and invisible benefits of the planned project. Tangible benefits can be measured in terms of money, like how much they save, make, or improve efficiency. Some examples of intangible benefits are happier customers, a better image for the brand, and happier employees. Your business case will be stronger if you show all of the perks.
• Evaluate risks and ways to deal with them: Find and evaluate any possible risks with the project. Explain how likely risks will happen and how they might affect the company. Also, develop suitable mitigation strategies to show that you are taking a proactive approach to risk management and reduce the likelihood of bad things happening.
• Think about other options: Look into other solutions or ways of doing things and rate their viability and possible benefits. By comparing different options, senior leaders can make well-informed decisions and ensure that the planned initiative is the most effective and efficient way to meet organizational goals.
• Communicate clearly and briefly: Give your analysis in a clear, brief, and convincing way. Use visual guides, executive summaries, and other tools to help people understand your findings. Adjust the level of detail to your audience and focus on the key information senior leadership needs to make an informed choice.
• Be ready for questions: Think about what questions and worries senior leadership might have and be ready to answer them. Understand the business case analysis and the concepts it is based on so you can answer with confidence and knowledge. This shows your knowledge and builds your trustworthiness.
• Ask for feedback and keep making changes:  After presenting the business case analysis, ask top leadership and other stakeholders for feedback. Learn what they think and what worries them. Use this feedback as a chance to keep getting better, to improve your analysis, and to add useful information to future business cases.

AcqLinks and References:

• DoD Product Support Business Case Analysis (BCA) Guidebook – 28 Feb 2014

Updated: 4/1/2024

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What the Case Study Method Really Teaches

• Nitin Nohria

Seven meta-skills that stick even if the cases fade from memory.

It’s been 100 years since Harvard Business School began using the case study method. Beyond teaching specific subject matter, the case study method excels in instilling meta-skills in students. This article explains the importance of seven such skills: preparation, discernment, bias recognition, judgement, collaboration, curiosity, and self-confidence.

During my decade as dean of Harvard Business School, I spent hundreds of hours talking with our alumni. To enliven these conversations, I relied on a favorite question: “What was the most important thing you learned from your time in our MBA program?”

• Nitin Nohria is the George F. Baker Jr. and Distinguished Service University Professor. He served as the 10th dean of Harvard Business School, from 2010 to 2020.

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5 Benefits of Learning Through the Case Study Method

• 28 Nov 2023

While several factors make HBS Online unique —including a global Community and real-world outcomes —active learning through the case study method rises to the top.

In a 2023 City Square Associates survey, 74 percent of HBS Online learners who also took a course from another provider said HBS Online’s case method and real-world examples were better by comparison.

Here’s a primer on the case method, five benefits you could gain, and how to experience it for yourself.

Access your free e-book today.

What Is the Harvard Business School Case Study Method?

The case study method , or case method , is a learning technique in which you’re presented with a real-world business challenge and asked how you’d solve it. After working through it yourself and with peers, you’re told how the scenario played out.

HBS pioneered the case method in 1922. Shortly before, in 1921, the first case was written.

“How do you go into an ambiguous situation and get to the bottom of it?” says HBS Professor Jan Rivkin, former senior associate dean and chair of HBS's master of business administration (MBA) program, in a video about the case method . “That skill—the skill of figuring out a course of inquiry to choose a course of action—that skill is as relevant today as it was in 1921.”

Originally developed for the in-person MBA classroom, HBS Online adapted the case method into an engaging, interactive online learning experience in 2014.

In HBS Online courses , you learn about each case from the business professional who experienced it. After reviewing their videos, you’re prompted to take their perspective and explain how you’d handle their situation.

You then get to read peers’ responses, “star” them, and comment to further the discussion. Afterward, you learn how the professional handled it and their key takeaways.

HBS Online’s adaptation of the case method incorporates the famed HBS “cold call,” in which you’re called on at random to make a decision without time to prepare.

“Learning came to life!” said Sheneka Balogun , chief administration officer and chief of staff at LeMoyne-Owen College, of her experience taking the Credential of Readiness (CORe) program . “The videos from the professors, the interactive cold calls where you were randomly selected to participate, and the case studies that enhanced and often captured the essence of objectives and learning goals were all embedded in each module. This made learning fun, engaging, and student-friendly.”

If you’re considering taking a course that leverages the case study method, here are five benefits you could experience.

5 Benefits of Learning Through Case Studies

1. take new perspectives.

The case method prompts you to consider a scenario from another person’s perspective. To work through the situation and come up with a solution, you must consider their circumstances, limitations, risk tolerance, stakeholders, resources, and potential consequences to assess how to respond.

Taking on new perspectives not only can help you navigate your own challenges but also others’. Putting yourself in someone else’s situation to understand their motivations and needs can go a long way when collaborating with stakeholders.

2. Hone Your Decision-Making Skills

Another skill you can build is the ability to make decisions effectively . The case study method forces you to use limited information to decide how to handle a problem—just like in the real world.

Throughout your career, you’ll need to make difficult decisions with incomplete or imperfect information—and sometimes, you won’t feel qualified to do so. Learning through the case method allows you to practice this skill in a low-stakes environment. When facing a real challenge, you’ll be better prepared to think quickly, collaborate with others, and present and defend your solution.

3. Become More Open-Minded

As you collaborate with peers on responses, it becomes clear that not everyone solves problems the same way. Exposing yourself to various approaches and perspectives can help you become a more open-minded professional.

When you’re part of a diverse group of learners from around the world, your experiences, cultures, and backgrounds contribute to a range of opinions on each case.

On the HBS Online course platform, you’re prompted to view and comment on others’ responses, and discussion is encouraged. This practice of considering others’ perspectives can make you more receptive in your career.

“You’d be surprised at how much you can learn from your peers,” said Ratnaditya Jonnalagadda , a software engineer who took CORe.

In addition to interacting with peers in the course platform, Jonnalagadda was part of the HBS Online Community , where he networked with other professionals and continued discussions sparked by course content.

“You get to understand your peers better, and students share examples of businesses implementing a concept from a module you just learned,” Jonnalagadda said. “It’s a very good way to cement the concepts in one's mind.”

4. Enhance Your Curiosity

One byproduct of taking on different perspectives is that it enables you to picture yourself in various roles, industries, and business functions.

“Each case offers an opportunity for students to see what resonates with them, what excites them, what bores them, which role they could imagine inhabiting in their careers,” says former HBS Dean Nitin Nohria in the Harvard Business Review . “Cases stimulate curiosity about the range of opportunities in the world and the many ways that students can make a difference as leaders.”

Through the case method, you can “try on” roles you may not have considered and feel more prepared to change or advance your career .

5. Build Your Self-Confidence

Finally, learning through the case study method can build your confidence. Each time you assume a business leader’s perspective, aim to solve a new challenge, and express and defend your opinions and decisions to peers, you prepare to do the same in your career.

According to a 2022 City Square Associates survey , 84 percent of HBS Online learners report feeling more confident making business decisions after taking a course.

“Self-confidence is difficult to teach or coach, but the case study method seems to instill it in people,” Nohria says in the Harvard Business Review . “There may well be other ways of learning these meta-skills, such as the repeated experience gained through practice or guidance from a gifted coach. However, under the direction of a masterful teacher, the case method can engage students and help them develop powerful meta-skills like no other form of teaching.”

How to Experience the Case Study Method

If the case method seems like a good fit for your learning style, experience it for yourself by taking an HBS Online course. Offerings span seven subject areas, including:

• Business essentials
• Leadership and management
• Entrepreneurship and innovation
• Finance and accounting
• Business in society

No matter which course or credential program you choose, you’ll examine case studies from real business professionals, work through their challenges alongside peers, and gain valuable insights to apply to your career.

Are you interested in discovering how HBS Online can help advance your career? Explore our course catalog and download our free guide —complete with interactive workbook sections—to determine if online learning is right for you and which course to take.

About the Author

What is the Case Study Method?

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Overview dropdown down, celebrating 100 years of the case method at hbs.

The 2021-2022 academic year marks the 100-year anniversary of the introduction of the case method at Harvard Business School. Today, the HBS case method is employed in the HBS MBA program, in Executive Education programs, and in dozens of other business schools around the world. As Dean Srikant Datar's says, the case method has withstood the test of time.

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How Cases Unfold In the Classroom

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Most programs begin with registration, followed by an opening session and a dinner. If your travel plans necessitate late arrival, please be sure to notify us so that alternate registration arrangements can be made for you. Please note the following about registration:

HBS campus programs – Registration takes place in the Chao Center.

India programs – Registration takes place outside the classroom.

Other off-campus programs – Registration takes place in the designated facility.

What happens in class if nobody talks? Dropdown down

Professors are here to push everyone to learn, but not to embarrass anyone. If the class is quiet, they'll often ask a participant with experience in the industry in which the case is set to speak first. This is done well in advance so that person can come to class prepared to share. Trust the process. The more open you are, the more willing you’ll be to engage, and the more alive the classroom will become.

Does everyone take part in "role-playing"? Dropdown down

Professors often encourage participants to take opposing sides and then debate the issues, often taking the perspective of the case protagonists or key decision makers in the case.

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How to Write a Great Business Case

Explore more.

• Case Teaching

C ase studies are powerful teaching tools. “When you have a good case, and students who are well prepared to learn and to teach each other, you get some magical moments that students will never forget,” says James L. Heskett, UPS Foundation Professor of Business Logistics, emeritus, at Harvard Business School (HBS). “They will remember the lessons they learn in that class discussion and apply them 20 years later.”

Yet, for many educators who want to pen their own case, the act of writing a great business case seldom comes easily or naturally. For starters, it’s time consuming. Case writers can spend substantial time visiting companies, securing a willing site, conducting interviews, observing operations, collecting data, reviewing notes, writing the case, revising the narrative, ensuring that teaching points come through, and then getting executives to approve the finished product.

The question, then, becomes: Where do you begin? How do you approach case writing? How do you decide which company to use as the subject of the case? And what distinguishes a well-written case from a mediocre one?

We asked three expert HBS case writers—who collectively have written and supported hundreds of cases—to share their insights on how to write a great business case study that will inspire passionate classroom discussion and transmit key educational concepts.

Insights from James L. Heskett

UPS Foundation Professor of Business Logistics, Emeritus, Harvard Business School

Keep your eyes open for a great business issue.

“I’m always on the prowl for new case material. Whenever I’m reading or consulting, I look for interesting people doing interesting things and facing interesting challenges. For instance, I was reading a magazine and came across a story about how Shouldice Hospital treated patients undergoing surgery to fix inguinal hernias—how patients would get up from the operating table and walk away on the arm of the surgeon.

6 QUALITIES OF GREAT CASE WRITERS

Comfort with ambiguity, since cases may have more than one “right” answer

Command of the topic or subject at hand

Ability to relate to the case protagonists

Enthusiasm for the case teaching method

Capacity for finding the drama in a business situation and making it feel personal to students

Build relationships with executives.

“When writing a case, it’s helpful to start as high in the organization as possible. It helps assure mid-level managers that they can share the information you need with an outsider. It also helps when it comes to getting the case cleared for use. Serving on corporate boards can help in building relationships with senior executives, but there are other ways to make those connections. For instance, you can approach speakers at business conferences if you think their presentations could form the basis for a good business case. If you want to write about a company where you don’t have any personal connections, you can always check with your colleagues to see if any of them have a personal relationship with the CEO or sit on a board where they could introduce you to the right person who would be able to facilitate the case. My colleagues and I make a lot of these introductions for each other.”

“If you make the case into a crossword puzzle that takes five hours to solve, it’s not really fair to the students and will most likely cause them to lose focus.” James L. Heskett

Skip the curveballs and focus on key issues.

“Cases don’t have to be obvious. As a pedagogical objective, you might want students to look beyond a superficial issue to say this is the underlying topic that we need to address, and these are the questions we need to pose. Still, I think it’s unhelpful if cases contain real curveballs where ‘unlocking’ the case depends on finding some small piece of information hidden in an exhibit. Give students a break! They may have to read and digest three cases per day, so they probably won’t be able to devote more than a couple of hours to each one. If you make the case into a crossword puzzle that takes five hours to solve, it’s not really fair to the students and will most likely cause them to lose focus.”

Build a discussion plan while writing the case.

“In case method teaching, the teacher is not in complete control. Students teach each other and learn from each other. On any given day, there will likely be somebody in the room who knows more about the company featured in the case than the professor does. So a professor can’t walk into the classroom and expect to impose a lesson plan that goes in a strict linear way from A to B to C to D. The case ought to be written to allow students to jump from A to D and then come back later to B if that’s how the discussion plays out. At the same time, the case should be structured so that the instructor can collect student comments on a board, organizing them as a coherent set of related ideas, and then deliver a 5-to-10-minute summary that communicates whatever essential concepts the case has covered. This summation can be a very powerful teaching and learning experience.”

Focus on quality over quantity.

“Cases don’t have to be too long. Some good cases are only two or three pages. Students may give more scrutiny to these brief cases than they would a 20-page case.”

Advice from Benson P. Shapiro

Malcolm P. McNair Professor of Marketing, Emeritus, Harvard Business School

Take out the chaff in advance.

“You don’t want students to spend too much time separating the wheat from the chaff. If a case has 12 pages of text and 10 pages of exhibits, even the smartest MBA students will likely lose interest. Writers who try to capture a situation from every angle and in every detail end up with sprawling narratives that usually do not make a good case. When writing cases, you need to set good, strong boundaries. Avoid superfluous, flowery, or poetic material that may contain interesting anecdotes or factoids, but that could distract readers from the case’s core topics. Include only those important and useful details that can help students make decisions and understand key issues that the case explores.”

Work in layers and metaphors—subtly.

“The best cases work on multiple levels. A case should focus on a specific situation—for example, whether or not to introduce a certain product. But it should also serve as a metaphor for broader issues in the background: How do we think about introducing new products? Are we introducing enough products? Are new product introductions a source of competitive advantage in our industry? How should we organize and manage new product development? You want the case to encourage students to think broadly about the various cultural, financial, and strategic impacts that managerial decisions have on a company.”

“Writers who try to capture a situation from every angle and in every detail end up with sprawling narratives that usually do not make a good case.” Benson P. Shapiro

Encourage emotional engagement.

“Case writing is an interesting literary form—it needs to be very engaging, but also educational. Great cases revolve around points of contention on which intelligent people can hold different points of view: What should you do? Why? How do you get it done? Ideally, students should have to choose between two very attractive alternatives or two terrible alternatives. The best cases involve questions that get students emotionally engaged so that they really care about choices and outcomes. When you see students physically leaning forward and following what their peers are saying, you know that they have a visceral feel for the importance of the subject. When you hear them debating after class— You were out in left field! You missed what was really important here! —that’s how you can tell you succeeded in developing a great case.”

Lessons from Carin-Isabel Knoop

Executive Director of the Case Research & Writing Group, Harvard Business School

Don’t forget the classroom component.

“Cases are deliberately incomplete documents. What a case writer leaves out of a case is often just as important as what he or she puts into it. Cases are designed to be completed through classroom instruction and discussion. While drafting the case, try to develop the classroom process in parallel. Work on the assignment questions and classroom content. Keep in mind that the case should be able to adapt to your classroom and course needs.”

Hone your elevator pitch.

“Before getting started, always have clear, succinct learning objectives in mind. Don’t start developing the case until you are able to summarize these objectives in less than five minutes.”

Case writing is a relationship, not a transaction.

When choosing a case site, be clear with executives that you are developing a teaching tool and that you will require their time and candor—and eventually their data. Put them at ease, and manage the authorization process, right from the start. Indicate that quotes will be cleared before publication and there will be time for individual review. During the creation process, ask their advice. This creates a process of engagement and helps bring home that this is a pedagogical tool, not gotcha journalism. At HBS, we oftentimes invite someone from the company to attend class. Finally, once the case is done, stay in touch with your case protagonists. They will move to other organizations and spread the good word about their experience with case writing.

Invite disagreement in case discussions.

“The case study method is based on participant-centered learning. The students all start from the same base of 11 (or however many) pages in the case, but they bring different knowledge and experiences into the classroom. So they can take the same facts and disagree about what course of action to pursue. We want students to behave like decision makers, and it can be painful to make decisions. Some critics deride the case teaching method as being unrealistic, but someone who just lectures about marketing doesn’t help students realize how difficult it is to choose between two plausible options to meet the same marketing objectives. For students, a big part of the education process is learning from discussions with classmates who think differently and advocate for different solutions. Witnessing a robust case discussion reminds us of the potential for collective learning to emerge from contrasting views.”

“Faculty don’t just write cases for teaching purposes, they write them to learn.” Carin-Isabel Knoop

The Case Writing Process Is a Worthy Effort

Researching, writing, and publishing cases is well worth the time and effort. “The case research and writing process is important for faculty development,” Knoop adds. “While developing field cases, faculty go to site visits and meet with decision makers. The case writing process helps connect scholars to practitioners and practitioners to the academic world. Faculty case writers get to explore and test how their academic theories work in practice. So faculty don’t just write cases for teaching purposes, they write them to learn. The case method is an integral part of faculty development.”

There’s another big bonus to becoming a case writer, especially for younger educators. “Young business instructors face a credibility gap with their students,” says Heskett. “It’s not uncommon to have MBA students in a class who have more experience than the instructor on a particular subject. Once you go into the field and write a case, you will know more about that subject than anyone else in the class. A primary way for professors to establish their credibility on a topic is to have written the case the class is discussing that day.”

James L. Heskett is UPS Foundation Professor of Business Logistics, emeritus, at Harvard Business School. He completed his Ph.D. at the Graduate School of Business, Stanford University, and has been a faculty member at The Ohio State University as well as president of Logistics Systems, Inc. Since 2000, he has authored a blog on Harvard Business School’s Working Knowledge website .

Benson P. Shapiro is the Malcolm P. McNair Professor of Marketing, emeritus, at Harvard Business School where he taught full time from 1970 to 1997. Since 1997, Shapiro has concentrated his professional time on consulting, giving speeches, serving on boards, and writing. He continues to teach at Harvard and has taught in many executive programs and has chaired the Sustainable Marketing Leadership for Mid-Sized Firms Program.

Carin-Isabel Knoop is the executive director of the Case Research & Writing Group at Harvard Business School. She is also coauthor of Compassionate Management of Mental Health in the Modern Workplace .

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What Is Business Case Analysis (BCA)?

Last Updated: Oct 15, 2019 by Thomas Bush Filed Under: Business

Business case analysis is a tool used to evaluate potential business decisions. It’s often used in the corporate world where project managers and other front-line employees need to convince company stakeholders for their support. The project manager , who is responsible for conducting the analysis, assesses the costs, risks, and benefits of a decision using their specialist knowledge. Then, company stakeholders review the analysis (in the form of a report) to determine whether or not they should approve the decision.

This valuable business analysis tool may sound daunting, but is surprisingly easy to use. In this article, we’ll walk you through the basics of business case analysis, discussing its key features, potential uses, and much more.

Key Features of Business Case Analysis

The basic purpose of a business case analysis is to assess a decision or action. In business terms, the most important criteria for this purpose are costs, risks, and benefits. In other words, a business case analysis report should answer three basic questions:

• Costs: What are the costs of making this decision?
• Risks: What are the risks of making this decision?
• Benefits: What are the expected benefits of making this decision?

Ultimately, the goal of answering these questions is to assess whether or not to make the decision. If the expected benefits of the decision significantly outweigh the costs and risks, the decision should be made. If, however, the costs and risks outweigh the benefits, an alternative should be considered.

Business case analysis usually has a financial focus, whereby costs, risks, and benefits are compared in dollar terms. However, business case analysis can also use other quantitative or qualitative lenses . For example, the costs of a decision might be measured in time (instead of dollars). Similarly, the risks or benefits of a decision might be measured in changes to brand value, customer satisfaction, or even legal status. When business case analysis does not focus on financial impacts, it’s important to look for objective ways to compare these upsides and downsides, so that stakeholders can make an informed choice.

Business Case Analysis vs Business Case

You may be wondering what the difference is between a business case analysis and a business case. The truth is that both of these terms refer to the same business analysis tool . The difference is that business case usually refers to the report itself, whereas business case analysis refers to the overall approach to analysis.

Why Use Business Case Analysis

There are two powerful reasons to use business case analysis. The first is that it forces the individual creating the report to consider all of the costs, risks, and benefits of making a decision. When making a decision, it’s easy to focus on the desired results instead of realistically evaluating every possible outcome. When forced to think about exceptional or undesired outcomes, there’s a greater chance the correct decision will be made.

The second reason to use business case analysis is that it allows a subject-matter expert (in most cases, the product manager) to easily transfer and contextualize relevant knowledge to stakeholders. Without a comprehensive report from the expert, stakeholders may not see the significance of certain costs, risks, or benefits.

When to Use Business Case Analysis

Business case analysis is most often used in large companies where the project manager needs approval from stakeholders. In small and medium-sized companies, the project manager is usually the primary stakeholder, so there is no need for external approval.

With that said, it can still be beneficial to conduct business case analysis even in smaller companies. This is because it forces the decision-maker to consider all possibilities, as mentioned above.

Business Case Analysis for Comparing Actions

So far, we’ve discussed using business case analysis to evaluate a single decision. However, business case analysis can also be an extremely effective way to compare two or more courses of action. Once again, this is partially because conducting business case analysis forces you to consider a number of possibilities. While two courses of action may have the same expected benefits, they may have different risks or costs, making it much easier to decide which one to pursue.

Structuring Your Business Case

Like most types of business analysis , business case analysis is usually presented in the form of a written report (the business case). While there are no set rules for this kind of report, here is a simple structure that includes the basic elements:

• Executive Summary: Like other corporate reports, a business case analysis report should begin with an executive summary. This section should summarize the results of the analysis and give appropriate recommendations regarding the decision in question.
• Introduction: The main purpose of the introduction is to provide context for the report. It should discuss what is being analyzed and why (in other words, the objectives of the analysis)
• Methods (Optional): Optionally, the report can include a section discussing methodology. If included, this section should discuss the approaches used to analyze the potential outcomes of the decision.
• Expected Outcomes: A crucial part of the report is the outcomes section. This section should discuss the expected outcomes — in particular, costs and benefits — of the business decision.
• Risk Assessment: Similarly important is the risk assessment section . Here, the report should discuss potential negative outcomes that may result if certain assumptions (leading to the expected outcomes) are not met. 
• Conclusion: The report should close with a conclusion. This section should summarize the findings of the report and provide appropriate recommendations with those findings in mind.

Final Thoughts

Business case analysis is a decision-making tool whereby reports — called business cases — are created to discuss the costs, risks, and benefits of a given decision. Often employed in large companies, this type of analysis allows for knowledgeable project managers to evaluate decisions in a way that stakeholders can understand.

The business case itself should include an executive summary, introduction, expected outcomes, risks, and a conclusion. It may also include other sections, such as methodology. Most important, however, is an objective analysis of the positive and negative outcomes of the decision itself.

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How to Write a Business Case: Examples, Templates, and Checklists

By Joe Weller | April 24, 2019 (updated February 26, 2023)

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This article presents expert tips on how to write a business case. We also provide a checklist to prepare for, write, and present a business case, along with free, easy-to-use Word and PowerPoint business case templates.

Included on this page, you'll find details on how to write a business case , sections to include in your business case , a business case checklist , and business case presentation examples .

What Is a Business Case?

A business case is a formal, structured document; an informal, short document; or a verbal exchange that defines the benefits of an initiative or project.

In addition, a business case forecasts the costs, benefits, and risks of an initiative, so decision makers — and even the project initiators — can decide whether a project is worthwhile and why to choose one approach over similar strategies.

Jim Maholic has over 20 years of experience with IT strategy and business case development, including two stints as a CIO, two management positions with the Big Four consulting firms, and leadership positions at several technology companies.

He describes a business case in this way: “A business case is the full story that explains the ROI for a capital project. It begins with a statement of a business problem, then explores how we can solve it or what the value of solving it is. For example, ‘Our revenues aren’t rising as fast as they should,’ or ‘Inventory isn't turning over as fast as it should,’ or ‘Costs are too high.’ That's where the business case starts.

“Then, we find out how big this problem is. We talk to people in the company and find out what they think the value of solving the problem is. All this information is packaged into a story that says, ‘Here's the problem. Here's the value of solving the problem. Here's what it costs in hardware, software, or whatever. Here are the benefits. And here’s the whole story.’”

Business Cases Explain Why You Should Invest

A business case explains why stakeholders should invest in a project. The purpose of a business case contrasts with that of a project proposal , which provides a high-level outline of what you want to initiate and its benefits to the company, or that of a project plan , which explains how you execute a project. You should create your business case during the earliest stages of project planning .

A business case can also become a key document for a project manager when planning, creating milestones, and evaluating progress.

Other names and uses for business cases are financial justification, cost-benefit analysis (CBA) , total cost of ownership (TCO) analysis , and return on investment (ROI) analysis . Nonprofits and government entities sometimes refer to business cases as case statements .

What Is Business Case Analysis (BCA)?

A business case analysis (BCA) looks not only at lowest costs, but also at technical value and other nonquantitative factors in what is known as a best-value analysis . The BCA addresses the triple constraints of time, money, and scope, and it can include measures such as performance, reliability, viability, and supportability.

Although business case analysis is used interchangeably with business case , some experts consider the analysis to be part of the business case as a whole.

What Is a Business Case Used For?

A business case helps a company or an organization prepare for new ventures or changes. This document is a crucial building block of project success and underpins the foundations of  senior-level involvement and strong planning. Business cases summarize the benefits of an endeavor, clarifying a project’s business value to help stakeholders make decisions.

A good business case should focus less on the technology, domain knowledge, or specific deliverables and more on the users of a product and the goals of a project. In the same vein, a project manager should focus not only on creating output, but also on delivering value. An initiative can offer many types of value, including contributing to strategic aims, increasing efficiency, and supporting compliance. Insufficient attention to the details of a business case and the accompanying research can lead to poor project results.

Business cases usually describe these items:

• A business problem or opportunity
• Possible solutions and their benefits and disadvantages (sometimes known as disbenefits )
• Risks associated with the main solution
• Implementation timeline
• Consequences for implementing a solution and for retaining the status quo
• Resources required for the initiative or project

Advantages of a Business Case

A business case may seem like just another document destined for the shelf or the shredder, but it can offer real advantages:

• All stakeholders have similar expectations concerning the value and benefits of an initiative to an organization.
• You can convert a business case into a project plan with milestones. You increase the chances of a project’s success with planning.
• A business case becomes a gauge for determining whether an endeavor continues to offer value during execution and after a team produces a deliverable.
• Project planners can more easily establish objectives and goals.
• You can more easily discern success.
• Teams apply the right resources more efficiently.

Who Prepares a Business Case?

You might think that business cases are the purview of financial officers and accountants. In fact, people who have direct knowledge of processes and teams should be responsible for creating these documents.

Some pundits say that the individual who advocates change must enact the change, so anyone in any role could assume the responsibilities for producing a business case. This includes consultants, line managers, or IT managers. In some organizations, the project sponsor or project manager may guide the preparation of the business case and include input from relevant departments and SMEs.

When Do You Need a Business Case?

It’s no longer enough to complete a project and present a deliverable. In an economy that often seems as unstable as it was in 2008, stakeholders want to see that a deliverable creates value and benefits for an organization. This is particularly true for complex projects or those that  require justification for enlisting external resources. Public sector projects frequently need business cases.

What's in a Business Case?

A business case outlines for a decision maker the benefits and business value of a proposed initiative. The term business case frequently refers to a written document that is submitted for review or presented at a meeting, but can also apply to an informal, spoken proposal.

What Should Be in a Business Case?

A well-written business case flows logically from presenting a problem or opportunity through the advantages and disadvantages of solutions to describing the recommended solution. When you require great detail, you can chunk text into sub-sections so that the content is easier to scan, as well as faster and less overwhelming to read. Following are the common sections of a business case in sequential order:

• Executive summary
• Problem statement
• Analysis and financial details
• Recommendation

Many organizations have pre-established templates for writing business cases. If your organization doesn’t, search online for free, easy-to-use business case templates for construction business cases, one-page business cases, and more. Depending on the narrative needs of the business case, it can contain many possible sections:

• Preface: A preface may indicate the intended audience and any related documents.
• Table of Contents: If your document is delivered as a PDF file, consider hyperlinking your table of contents to the appropriate sections.
• What is the problem?
• What do you believe is the value of solving the problem?
• How much are you asking for?
• When will we start seeing benefits?

     “I’ve had some presentations that don't get beyond that first page,” Maholic muses.

• Description of the Product or Service: When proposing a new object or concept, detail what the deliverable is and how it works.
• A Problem Statement or Mission Statement: By describing the problem or the mission of the organization, you can contextualize the proposed initiative.
• Business Drivers for the Initiative: Indicate what benefits will contribute to the strategic aims of the organization.
• Finance Section: Explain how much the project will cost and whether it is affordable. Detail the cash flow. Describe the expenses to execute (or not execute) the project in a cost comparison against forecasted benefits. Conduct a sensitivity analysis , a technique for determining how the different values of an independent variable affect a dependent variable.
• Financial and nonfinancial benefits
• Quality improvements
• Cost savings through efficiencies
• Added revenue
• Competitiveness
• Improved customer services
• Options: What are the possible solutions to the problem? Usually, you narrow this list to 3 to 5 viable choices. Frequently, you include a “do nothing” option and a benchmark option. Some organizations require the do-nothing option; others require it only if the do-nothing option is a legitimate possibility. Quantify the benefits of each potential solution. Also, outline the risks, issues, and interdependencies for each solution.
• What is required?
• How is it done?
• Who does what?
• When will things happen?
• Assessments or Analysis: Your analysis should list assumptions and consider cash flow and costs. Describe the risks of the project and the plans to deal with them. Also, discuss how you will leverage opportunities. Describe the context of your undertaking using PESTLE (political, economic, sociological, technological, legal, and environmental) analysis.
• Project Approach: Detail the organization of the project, including governance and accountability, roles and responsibilities, and the schedule of progress reporting. Describe the purchasing strategy for completing the endeavor. Will you lease equipment? Rent office space? Hire contractors or employees?
• Recommendation and Next Steps: Note the recommended solution and immediate required action.
• Appendix: Add supporting documentation here, such as spreadsheets, charts, or drawings.

Considerations for Executive Presentations

The sections that comprise a business case may vary depending on your house style and the type of initiative. Jim Maholic says, “I package my business cases this way: I set up a one-hour meeting, so I have maybe 20 slides, but 10 to 15 slides are plenty. In reality, I might have 100 slides, but I add those in an appendix.” You may have credible supporting information, but you don’t want to bore your audience of decision makers by slogging through each slide.

“They might allocate an hour, but honestly, you're going to get their attention for 10 to 15 minutes, and then they'll start checking email and stuff,” Maholic adds. “You really have to be crisp in how you do this and know where you're going.

“Start with, ‘We have this problem,’ followed by, ‘Here are the people that we talked to who validated that this is a problem. They offered ideas about solving this problem, so we could see this substantial benefit,’” he notes.

“What matters in an executive meeting is that I answer the main questions: What is the problem? What is the cost of not solving it? What are the benefits of solving it? And when do we see the benefits? You may address additional questions later in the meeting or after the meeting, on an individual, offline basis,” Maholic says.

Business Case Templates

Using templates, you can more easily create business cases because you can focus on your research and fill in the blanks. The following free, downloadable templates are customizable for your organization’s needs.

Business Case Presentation Template

You can lengthen this short PowerPoint presentation template to accommodate more detail. The business case presentation template includes spaces for describing the following elements: the project name, the executive summary, the project description, the financials, the recommended solution, the assumptions and dependencies, the options, and the benefits.

‌ Download Business Case Presentation Template - PowerPoint

Simple Business Case Template

A simple business case template serves a small project or a small organization. It can cover extensive details if necessary. It includes spaces for describing the following elements of the case: the title, the executive summary, the business objective, the target users, the financials and costs, the assumptions and dependencies, the implementation strategy, the required resources, and the project governance and reporting.

Download Simple Business Case Template

Word | PDF  | Smartsheet

Healthcare Business Case Template

A healthcare business case template helps you explain the current setup and how the proposed solution can create improvements. It provides space for a one-page executive summary, context for the problem or opportunity, a description of the current situation, an explanation of the proposed changes, and details of how the changes can affect your organization and any other entities.

Download Healthcare Business Case Template

Word | Google Docs

New Product Business Case Template

A new product business case template explores the business landscape for a new product or service. In addition to the meta information, such as the title, the author, and the executive summary, the template includes space to describe the current mission statement, the proposed product or service, the marketing strategy, an analysis of competitors, SWOT analysis , an overview of the implementation plan, and financial details.

Download New Product Business Case Template

Preparing to Write the Business Case

You can expedite your business process by understanding business case structure and using a template. In addition, having the correct perspective and following best practices can contribute to your success.

Why Are You Doing the Project?

Before you start researching and writing, understand why you want to initiate a project. The goal of a project is to solve problems. What is a problem? A problem prevents your organization from achieving its full potential. To begin, determine what problem the project is trying to solve.

Projects have deliverables, whether tangible or intangible. Think of an outcome as the result created by the deliverables. Benefits represent quantifiable improvements derived from an outcome. When a customer or team member can leverage these benefits, they become advantages.

Do Your Business Case Research

To start, review the mission statement(s) for the organization or the project. Identify the sources of data for your business case. One way to encourage the acceptance of your proposal is to discuss your rough estimates of the costs and resources with a project sponsor or customer before you embark on the business case. This helps you and the sponsor understand each other’s expectations and lessens the chance of sticker shock during the executive presentation. Then interview the people who conduct the day-to-day work and get their perspective on problems and possible solutions.

Do the Business Case Math

You must consider whether the returns justify the request. “If we're asking for $3 million, we've got to show that the project benefits far exceed that amount,” asserts Maholic. “With returns of $10, $15, or $20 million, you're going to get their attention. If you say the benefits are $300 million, they're going to think you've fallen off the truck somewhere, because that's not realistic. On the other hand, if you show benefits of $3.5 million for a cost of $3 million, that's probably not going to beat the projected return of any other project that comes across their desk.”

Consider Who the Business Case Is For

Whether the business case comes in document form or as a presentation, the project sponsor and key stakeholders will study it. Consider the key audience for each section of your document and write with that audience in mind.

The most convincing arguments for projects are those that your team can initiate and wrap up within six months, as well as produce considerable quantifiable results. Especially when big money is on the table, your proposal will compete with others from different departments. “No company has all the money it wants to invest in everything — it has to prioritize. The business case helps evaluate what the return will be for each of the projects that comes across the board's desk for approval,” explains Maholic.

Furthermore, a business case presents estimates. A business case should be built on sound research, but no one has a lock on certitude. “I think first-time business case writers in particular get caught up in building some great story. But seasoned executives get requests all the time, and they're not buffaloed by clever-sounding words or fancy spreadsheets,” Maholic cautions.

“Your ideas have to be rooted in something sensible, not just, ‘I bet we can raise revenues by 15 percent,’” he explains. Grand plans may be possible, but the key, according to Maholic, is to help decision makers understand how it is possible.

How Do You Write a Business Case?

When you have the main questions in mind and a sense of the required sections and format, you can begin to write. Consider limiting the number of authors to ensure an effective writing effort that’s consistent in style and voice. Then follow these tips:

• Concisely cover the core content with enough detail, so stakeholders can make an informed decision.
• Compare options, so decision makers understand the landscape.
• Be clear, concise, and captivating.
• Avoid jargon as much as possible.
• Demonstrate the value of the project to the business by creating a credible and accurate argument.
• Clearly describe the landscape for the initiative, including its dependencies. Enumerating these dependencies is crucial because contextual changes can alter the project parameters or eliminate the need for the project altogether.
• Focus on the business and the business value rather than the knowledge domain covered by the intended project deliverable.

How Do You Know You Have Enough Detail?

You determine the length of your business cases according to the scope and complexity of your proposed endeavour. A complex project means a long business case; a small, short project means a short business case.

However, Maholic cautions against adding too much detail — conciseness can be a challenge. “You may take 4 to 6 weeks to create a business. You might talk to 50 or 100 people. There's this gnawing urge in some people to show everything they've collected in the executive presentation. Look how hard we worked. Look how smart I am . That's just awful.

“You have enough data and slides when you can answer those 4 or 5 basic questions. There may be 100 other slides, but those are supporting detail,” he says.

Common Mistakes in Writing Business Cases

You can strengthen your business case by avoiding common mistakes:

• Forget What Your White Papers Say: Maholic finds that when salespeople create cases for customers, they frequently rely on the benefits outlined in a product’s white papers. He notes, “Saying your product cuts costs by Y percent is a great place to start, but it has to be balanced by what's in front of you regarding a particular customer.” He continues, “As a salesperson, you may say that your product can increase revenue by 5 percent. That may be true for past customers, but this particular customer may have three straight years of declining revenues. It's silly to say that a product is going to both arrest a decline and bump up revenue by 5 percent. You have to think things through. That’s the analysis part. You can't just mouth off.”
• Spreadsheets Are not the Main Show: "Too often, I think, people hear business case , and they jump right to building a spreadsheet,” Maholic says. “They're eager to build the mother of all spreadsheets and show how smart they are by demonstrating the mother of all spreadsheets. While certainly spreadsheets are necessary to show the math, the spreadsheet is only a small part of the solution. Spreadsheets don't really articulate the problem or indicate who you talked to or what you analyzed to get to that solution,” he adds.
• Arguments Do not Equal More Money: Sometimes, people believe that a strong case justifies a more generous price tag. Not so, says Maholic: “As a decision maker, having a better business case doesn't mean I'm going to roll over and say, ‘Sure, you can charge me an extra million dollars.’ A good business case means the project has the value to go forward. Now, we're going to start negotiating and I'm still going to work to get the best price I can. People who've done business cases before know that. But people who are new to them don't completely understand that.”
• Remember That It’s About Value, Not About Toys: For startups, the coolness factor of the technology or product may carry some weight, but for most organizations, a business case must focus on the business value without getting lost in the domain knowledge and technical details. Maholic explains: “Nobody at the executive level cares what the throughput ratio is of this process or that stack. What they want to know is, ‘Do I get revenue more quickly? Do I cut costs more deeply? Tell me what the value of doing X is, and then you can go off and buy whatever toys you want to in order to do X.’”

Steps to Produce a Business Case

Your organization may have a tribal understanding of the best process for creating a business case. Some employees may advocate for following the Ds , which refer to the steps to produce a business case. The Ds can include as many as six steps, but generally focus on these four:

• Discover your problem or opportunity.
• Design your solutions and alternatives.
• Develop the details that describe the pros and cons of each potential solution.
• Deploy the business case.

Some advocates add the Define step to the beginning of the process and the Deliver step to the end. For best results, create your business case in the following order:

• Determine your problem or opportunity.
• Research the context for your proposal as appropriate: When developing a new product, your research may focus on the market; when acquiring new training or software, you may review current internal processes; and when making a new purchase, you may interview dozens of team members who use current tools and procedures.
• Compare alternative approaches and recommend the most appropriate strategy.
• Gather supporting data and evidence for the recommended approach.
• Write the business case.
• Write the executive summary.
• Edit your business case draft.
• Present your business case to either the final authority or the personnel who will be instrumental in implementing the case plan.

‌ Download Business Case Process Checklist  

The Business Case in Project Development

Contrary to what you might imagine, the business case can be a living document. Starting with the review process, stakeholders may reject, cancel, postpone, accept, or adjust the business case. To some extent, the business case becomes the guidebook for your initiative. Stakeholders and the project manager should refer to the business case throughout the lifecycle of the project to ensure that efforts (and intentions) remain on track.

What Are the Features of a Project Business Case?

A well-considered business case offers the following characteristics: an easy-to-understand description of the business value of the initiative and the immediate benefits of the project, including details of the positive impact on organizational strategy.

How Do You Analyze a Business Case?

In university-level business schools, business case studies (or case studies) function as teaching tools to help students use their analytic skills. Case studies describe a company and how it employs a solution. Following is the suggested approach for students analyzing a case:

• Review the case in detail. Identify the key issues.
• Determine 2 to 5 essential problems.
• Look for solutions to those problems.
• Describe your recommended solution.

What Is a Full Business Case?

A business case is a structured, detailed document that presents the justification for the commitment of financial and other resources to an endeavor. Business cases help you gain the support of management and other stakeholders, as well as approval for projects and programs.

What Is a Business Case in Project Management?

An approved business case can have a long life. Although the project sponsor ultimately owns the business case, it is the project manager who uses the business case as the guidebook for expectations and dependencies. In addition, the business case becomes an important document in an organization’s project portfolio management process. During this process, a company balances its resources with its strategic objectives to determine the livelihood of all the projects it undertakes.

History and Origins of Business Cases

The formal business case has its roots in 19th-century Europe, particularly with the work of French-Italian engineer-economist Jules Dupuit. His contribution included statistical tools to identify, measure, and value the benefits beyond merely determining the lowest bidder. Specifically, Dupuit is credited with inventing what he called the benefit-cost analysis . Today, professionals recognize the value of business cases outside of public works and government. Both nonprofit and for-profit organizations regularly use business cases.

Resources and Examples for Creating Your Business Case

If you’re new to business cases, you don’t have to start empty-handed. We offer resources to help you begin writing. Please see the following examples and templates:

• Here’s an example of a business case in a classic document format . This particular business case argues against a capital investment.
• This example presents three business cases for one higher education department . The  presentation comes in a slide format.
• In this article, Jim Maholic offers a template for creating your business case .

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• The beginner’s guide to writing an effe ...

The beginner’s guide to writing an effective business case

Nearly every project needs to be approved—whether that means getting the simple go-ahead from your team or gaining the support of an executive stakeholder. You may be familiar with using a project plan or project charter to propose a new initiative and get the green light for a project. But if your proposed project represents a significant business investment, you may need to build a business case.

If you’ve never written a business case, we’re here to help. With a few resources and a little planning, you can write a business case that will help you get the resources and support you need to manage a successful project.

What is a business case?

A business case is a document that explains the value or benefits your company will gain if you pursue a significant business investment or initiative. This initiative can be anything from the messaging for a new product or feature launch, a proposal to increase spend on a current initiative, or a significant investment with a new agency or contractor—to name a few. A compelling business case will outline the expected benefits of this significant investment decision. Key stakeholders will use the business case you provide to determine whether or not to move forward with an initiative.

If you’ve never created a business case, it may sound similar to other early project planning documentation. Here’s how it stacks up:

The difference between a business case and business plan

A  business case  is a proposal for a new strategy or large initiative. It should outline the business needs and benefits your company will receive from pursuing this opportunity.

A  business plan , on the other hand, is an outline for a totally new business. Typically, you’d draft a business plan to map out your business strategy, your mission and vision statements, and how you’re planning on getting there. There may be a case where you create a business plan for an already-existing business, but you’d only do so if you’re trying to take your business in a significantly new direction.

Business case vs. executive summary

Business case vs. project charter.

If you need to create an elevator pitch for your project but you don’t quite need the full business case treatment, you might need a project charter. Much like a business case, a project charter outlines key details of an initiative. Specifically, a project charter will cover three main elements of your project: project objectives, project scope, and key project stakeholders. Your management team will then use the project charter to approve further project development.

Do you need a business case?

Not every project needs a business case—or even a project charter. Plan to build a business case only for initiatives or investments that will require significant business resources. If you’re working on a smaller initiative, consider creating a project charter to pitch your project idea to relevant stakeholders.

Even if you don’t need to pitch your project to any stakeholders, you should be ready to answer basic questions about your proposed project, like:

What is this project’s purpose?

Why are we working on this project?

How does this project connect to organizational goals and objectives?

Which metrics will we use to measure the success of the project ?

Who is working on this project?

When is this project going to be completed?

5 steps for creating and pitching a business case

Your business case shouldn’t just include key facts and figures—it should also tell a story of why pursuing a particular investment or initiative is a good idea for your business. When in doubt, avoid jargon and be brief—but always focus on communicating the value of the project. If this is your first time creating a business case, don’t worry. Follow these five steps to create a solid one.

1. Gather input

You don’t have to write a business case on your own. Instead, make sure appropriate team members and stakeholders are contributing to the relevant sections. For example, the IT team should be involved in any tooling and timeline decisions, while the finance team should review any budget and risk management sections. If you’re creating a business case to propose a new initiative, product line, or customer persona, make sure you also consult subject matter experts.

2. Plan to write your business case out of order

Some of the first things that appear in your business case—like your executive summary—should actually be drafted last, when you have all of the resources and information to make an informed suggestion. Your executive summary will present all of your findings and make a recommendation for the business based on a variety of factors. By gathering all of those details first—like project purpose, financial information, and project risk—you can ensure your executive summary has all of the relevant information.

3. Build your business case incrementally

A business case describes a significant investment for your company. Similarly, simply writing a business case is a significant investment of your time. Not every initiative is right for your business—so make sure you’re checking your work with stakeholders as you go. You don’t want to sink hours and weeks into this document only for it to be rejected by executive stakeholders right off the bat.

Consider doing a “soft launch” with an outline of your business case to your project sponsor or an executive stakeholder you have a good relationship with to confirm this initiative is something you should pursue. Then, as you build the different sections of your business case, check back in with your key stakeholders to confirm there are no deal-breakers.

4. Refine the document

As you create sections of your business case, you may need to go back and refine other sections. For example, once you’ve finished doing a cost-benefit analysis with your financial team, make sure you update any budget-related project risks.

Before presenting your business case, do a final read through with key stakeholders to look for any sections that can be further refined. At this stage, you’ll also want to write the executive summary that goes at the top of the document. Depending on the length of your business case, your executive summary should be one to two pages long.

5. Present the business case

The final step is to actually present your business case. Start with a quick elevator pitch that answers the what, why, and how of your proposal. Think of this presentation as your chance to explain the current business need, how your proposal addresses the need, and what the business benefits are. Make sure to address any risks or concerns you think your audience would have.

Don’t go through your business case page by page. Instead, share the document with stakeholders before the presentation so they have a chance to read through it ahead of time. Then, after your presentation, share the document again so stakeholders can dig into details.

A business case checklist

Start with the why.

The first section of the business case is your chance to make a compelling argument about the new project. Make sure you draft an argument that appeals to your audience’s interests and needs. Despite being the first section in your business case, this should be the last section you write. In addition to including the  traditional elements of an executive summary , make sure you answer:

What business problem is your project solving?  This is your chance to explain why your project is important and why executive stakeholders should consider pursuing this opportunity.

What is your business objective ?  What happens at the end of a successful project? How will you measure success—and what does a successful project mean for your business?

How does this business case fit into your overall company business strategy plan?  Make sure your proposed business case is connected to important  company goals . The initiative proposed in your business case should move the needle towards your company's  vision statement .

Outline financials and the return on investment

At this point in your business case, you should outline the project finance fundamentals. Don’t expect to create this section on your own—you should draft this in partnership with your company’s finance team. In particular, this section should answer:

How much will this project cost?  Even if the initiative is completely new to your company, do some research to estimate the project costs.

What does each individual component of the project cost?  In addition to estimating the total overall cost, break down the different project costs. For example, you might have project costs for new tools and resources, competitive intelligence resourcing, agency costs, etc.

What is the expected return on investment (ROI)?  You’ve talked about the costs—now talk about how your company will benefit from this initiative. Make sure to explain how you calculated the ROI, too.

How will this project impact cash flow?  Cash flow is the amount of money being transferred into and out of your business. Significant investments are going to cost a lot of money, so they’ll negatively impact cash flow—but you should also expect a high ROI, which will positively impact cash flow.

What is the sensitivity analysis?  Sensitivity analysis is a summary of how uncertain your numbers are. There will be a variety of variables that impact your business case. Make sure to explain what those variables are, and how that could impact your projections.

Preview project details

Your business case is proposing a new initiative. In addition to the financial risks, take some time to preview project details. For example, your business case should include:

Your  project objectives  and  key project deliverables .  What will happen at the end of the project? What are you expecting to create or deliver once the project is over?

Your  project plan .  A project plan is a blueprint of the key elements your team needs to accomplish in order to successfully achieve your project goals.

The  project scope .  What are the boundaries of your project? What exact goals, deliverables, and deadlines will you be working towards?

A list of relevant  project stakeholders .  Who are the important project stakeholders and key decision makers for this work? This can include the members of the project team that would be working on this initiative, executive stakeholders who would sponsor the project, and any external stakeholders who might be involved.

A general  project roadmap  in a Gantt-chart like view.  At this stage in the process, you don’t need to provide a detailed project timeline, but you should outline a general sense of when each project stage will happen in relation to the others. To do this, create a project roadmap in  Gantt-chart like software . Make sure to include any important  project milestones  in your roadmap as well.

Any important project dependencies.  Is there anything that would get in the way of this project getting started? Does this work rely on any other work that’s currently in flight?

Discuss project risks

Once you’ve outlined the financial impact and important project details, make sure you include any potential project risks. If you haven’t already, create a  project risk management plan  for your business case. Project risk management isn’t the process of eliminating risk—instead, it’s about identifying, analyzing, and proactively responding to any potential project risks. Clearly defining each project risk and how that risk might impact your project can best equip you and the project team to manage and avoid those risks.

In the risk section of your business case, include:

A risk analysis of any potential project risks.  What is the risk? How likely is it to happen? What is the priority level of this risk?

What, if any, assumptions you are making.  In project risk management, assumptions are anything you think will be true about the project, without those details being guaranteed facts. Basing project decisions around an assumption can open your project up to risk. Make sure you ratify every project assumption to avoid jeopardizing project success.

Any comparable alternatives in the market.  If you’re writing a business case to pitch a new product or angle in the market, evaluate anything that already exists. Could the alternative impact your financial assessment or project success?

Develop an action plan

In the final section of your business case, outline how you will turn this business case into an actionable project. This section should answer questions like:

How will decisions be made?  Who is responsible for the project? Who is the project sponsor? If you haven’t already, consider creating a  RACI chart  to outline project responsibilities.

How will progress be measured and reported?  Not every project stakeholder needs to be notified of every project change. Outline key parts of your project communication plan , as well as how you’ll communicate  project status updates .

What is the next course of action?  If the management team ratifies this business case, what next steps will you take to put this into action?

Bring your business case to life

You’ve built a solid business case and it’s been ratified—congratulations! The next step is to bring your business case to life. It can be intimidating to  initiate large-scale change , and implementing your business case is no exception.

If you haven’t already, make sure you have a  project management tool  in place to manage and organize your new initiative. With a central source of truth to track who’s doing what by when, share status updates, and keep project stakeholders in the loop, you can turn a great business case into a successful project.

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How to Write a Business Case (Template Included)

Table of Contents

What is a business case, how to write a business case, business case template, watch our business case training video, key elements of a business case, how projectmanager helps with your business case.

A business case is a project management document that explains how the benefits of a project overweigh its costs and why it should be executed. Business cases are prepared during the project initiation phase and their purpose is to include all the project’s objectives, costs and benefits to convince stakeholders of its value.

A business case is an important project document to prove to your client, customer or stakeholder that the project proposal you’re pitching is a sound investment. Below, we illustrate the steps to writing one that will sway them.

The need for a business case is that it collects the financial appraisal, proposal, strategy and marketing plan in one document and offers a full look at how the project will benefit the organization. Once your business case is approved by the project stakeholders, you can begin the project planning phase.

Projects fail without having a solid business case to rest on, as this project document is the base for the project charter and project plan. But if a project business case is not anchored to reality, and doesn’t address a need that aligns with the larger business objectives of the organization, then it is irrelevant.

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Use this free Business Case Template for Word to manage your projects better.

The research you’ll need to create a strong business case is the why, what, how and who of your project. This must be clearly communicated. The elements of your business case will address the why but in greater detail. Think of the business case as a document that is created during the project initiation phase but will be used as a reference throughout the project life cycle.

Whether you’re starting a new project or mid-way through one, take time to write up a business case to justify the project expenditure by identifying the business benefits your project will deliver and that your stakeholders are most interested in reaping from the work. The following four steps will show you how to write a business case.

Step 1: Identify the Business Problem

Projects aren’t created for projects’ sake. They should always be aligned with business goals . Usually, they’re initiated to solve a specific business problem or create a business opportunity.

You should “Lead with the need.” Your first job is to figure out what that problem or opportunity is, describe it, find out where it comes from and then address the time frame needed to deal with it.

This can be a simple statement but is best articulated with some research into the economic climate and the competitive landscape to justify the timing of the project.

Step 2: Identify the Alternative Solutions

How do you know whether the project you’re undertaking is the best possible solution to the problem defined above? Naturally, prioritizing projects is hard, and the path to success is not paved with unfounded assumptions.

One way to narrow down the focus to make the right solution clear is to follow these six steps (after the relevant research, of course):

• Note the alternative solutions.
• For each solution, quantify its benefits.
• Also, forecast the costs involved in each solution.
• Then figure out its feasibility .
• Discern the risks and issues associated with each solution.
• Finally, document all this in your business case.

Step 3: Recommend a Preferred Solution

You’ll next need to rank the solutions, but before doing that it’s best to set up criteria, maybe have a scoring mechanism such as a decision matrix to help you prioritize the solutions to best choose the right one.

Some methodologies you can apply include:

• Depending on the solution’s cost and benefit , give it a score of 1-10.
• Base your score on what’s important to you.
• Add more complexity to your ranking to cover all bases.

Regardless of your approach, once you’ve added up your numbers, the best solution to your problem will become evident. Again, you’ll want to have this process also documented in your business case.

Step 4: Describe the Implementation Approach

So, you’ve identified your business problem or opportunity and how to reach it, now you have to convince your stakeholders that you’re right and have the best way to implement a process to achieve your goals. That’s why documentation is so important; it offers a practical path to solve the core problem you identified.

Now, it’s not just an exercise to appease senior leadership. Who knows what you might uncover in the research you put into exploring the underlying problem and determining alternative solutions? You might save the organization millions with an alternate solution than the one initially proposed. When you put in the work on a strong business case, you’re able to get your sponsors or organizational leadership on board with you and have a clear vision as to how to ensure the delivery of the business benefits they expect.

Our business case template for Word is the perfect tool to start writing a business case. It has 9 key business case areas you can customize as needed. Download the template for free and follow the steps below to create a great business case for all your projects.

One of the key steps to starting a business case is to have a business case checklist. The following is a detailed outline to follow when developing your business case. You can choose which of these elements are the most relevant to your project stakeholders and add them to our business case template. Then once your business case is approved, start managing your projects with a robust project management software such as ProjectManager.

1. Executive Summary

The executive summary is a short version of each section of your business case. It’s used to give stakeholders a quick overview of your project.

2. Project Definition

This section is meant to provide general information about your projects, such as the business objectives that will be achieved and the project plan outline.

3. Vision, Goals and Objectives

First, you have to figure out what you’re trying to do and what is the problem you want to solve. You’ll need to define your project vision, goals and objectives. This will help you shape your project scope and identify project deliverables.

4. Project Scope

The project scope determines all the tasks and deliverables that will be executed in your project to reach your business objectives.

5. Background Information

Here you can provide a context for your project, explaining the problem that it’s meant to solve, and how it aligns with your organization’s vision and strategic plan.

6. Success Criteria and Stakeholder Requirements

Depending on what kind of project you’re working on, the quality requirements will differ, but they are critical to the project’s success. Collect all of them, figure out what determines if you’ve successfully met them and report on the results .

7. Project Plan

It’s time to create the project plan. Figure out the tasks you’ll have to take to get the project done. You can use a work breakdown structure template  to make sure you are through. Once you have all the tasks collected, estimate how long it will take to complete each one.

Project management software makes creating a project plan significantly easier. ProjectManager can upload your work breakdown structure template and all your tasks are populated in our tool. You can organize them according to your production cycle with our kanban board view, or use our Gantt chart view to create a project schedule.

8. Project Budget

Your budget is an estimate of everything in your project plan and what it will cost to complete the project over the scheduled time allotted.

9. Project Schedule

Make a timeline for the project by estimating how long it will take to get each task completed. For a more impactful project schedule , use a tool to make a Gantt chart, and print it out. This will provide that extra flourish of data visualization and skill that Excel sheets lack.

10. Project Governance

Project governance refers to all the project management rules and procedures that apply to your project. For example, it defines the roles and responsibilities of the project team members and the framework for decision-making.

11. Communication Plan

Have milestones for check-ins and status updates, as well as determine how stakeholders will stay aware of the progress over the project life cycle.

12. Progress Reports

Have a plan in place to monitor and track your progress during the project to compare planned to actual progress. There are project tracking tools that can help you monitor progress and performance.

Again, using a project management tool improves your ability to see what’s happening in your project. ProjectManager has tracking tools like dashboards and status reports that give you a high-level view and more detail, respectively. Unlike light-weight apps that make you set up a dashboard, ours is embedded in the tool. Better still, our cloud-based software gives you real-time data for more insightful decision-making. Also, get reports on more than just status updates, but timesheets, workload, portfolio status and much more, all with just one click. Then filter the reports and share them with stakeholders to keep them updated.

13. Financial Appraisal

This is a very important section of your business case because this is where you explain how the financial benefits outweigh the project costs . Compare the financial costs and benefits of your project. You can do this by doing a sensitivity analysis and a cost-benefit analysis.

14. Market Assessment

Research your market, competitors and industry, to find opportunities and threats

15. Competitor Analysis

Identify direct and indirect competitors and do an assessment of their products, strengths, competitive advantages and their business strategy.

16. SWOT Analysis

A SWOT analysis helps you identify your organization’s strengths, weaknesses, opportunities and threats. The strengths and weaknesses are internal, while the opportunities and threats are external.

17. Marketing Strategy

Describe your product, distribution channels, pricing, target customers among other aspects of your marketing plan or strategy.

18. Risk Assessment

There are many risk categories that can impact your project. The first step to mitigating them is to identify and analyze the risks associated with your project activities.

ProjectManager , an award-winning project management software, can collect and assemble all the various data you’ll be collecting, and then easily share it both with your team and project sponsors.

Once you have a spreadsheet with all your tasks listed, you can import it into our software. Then it’s instantly populated into a Gantt chart . Simply set the duration for each of the tasks, add any dependencies, and your project is now spread across a timeline. You can set milestones, but there is so much more you can do.

You have a project plan now, and from the online Gantt chart, you can assign team members to tasks. Then they can comment directly on the tasks they’re working on, adding as many documents and images as needed, fostering a collaborative environment. You can track their progress and change task durations as needed by dragging and dropping the start and end dates.

But that’s only a taste of what ProjectManager offers. We have kanban boards that visualize your workflow and a real-time dashboard that tracks six project metrics for the most accurate view of your project possible.

Try ProjectManager and see for yourself with this 30-day free trial .

If you want more business case advice, take a moment to watch Jennifer Bridges, PMP, in this short training video. She explains the steps you have to take in order to write a good business case.

Here’s a screenshot for your reference.

Transcription:

Today we’re talking about how to write a business case. Well, over the past few years, we’ve seen the market, or maybe organizations, companies or even projects, move away from doing business cases. But, these days, companies, organizations, and those same projects are scrutinizing the investments and they’re really seeking a rate of return.

So now, think of the business case as your opportunity to package your project, your idea, your opportunity, and show what it means and what the benefits are and how other people can benefit.

We want to take a look today to see what’s in the business case and how to write one. I want to be clear that when you look for information on a business case, it’s not a briefcase.

Someone called the other day and they were confused because they were looking for something, and they kept pulling up briefcases. That’s not what we’re talking about today. What we’re talking about are business cases, and they include information about your strategies, about your goals. It is your business proposal. It has your business outline, your business strategy, and even your marketing plan.

Why Do You Need a Business Case?

And so, why is that so important today? Again, companies are seeking not only their project managers but their team members to have a better understanding of business and more of an idea business acumen. So this business case provides the justification for the proposed business change or plan. It outlines the allocation of capital that you may be seeking and the resources required to implement it. Then, it can be an action plan . It may just serve as a unified vision. And then it also provides the decision-makers with different options.

So let’s look more at the steps required to put these business cases together. There are four main steps. One, you want to research your market. Really look at what’s out there, where are the needs, where are the gaps that you can serve? Look at your competition. How are they approaching this, and how can you maybe provide some other alternatives?

You want to compare and finalize different approaches that you can use to go to market. Then you compile that data and you present strategies, your goals and other options to be considered.

And then you literally document it.

So what does the document look like? Well, there are templates out there today. The components vary, but these are the common ones. And then these are what I consider essential. So there’s the executive summary. This is just a summary of your company, what your management team may look like, a summary of your product and service and your market.

The business description gives a little bit more history about your company and the mission statement and really what your company is about and how this product or service fits in.

Then, you outline the details of the product or service that you’re looking to either expand or roll out or implement. You may even include in their patents may be that you have pending or other trademarks.

Then, you want to identify and lay out your marketing strategy. Like, how are you gonna take this to your customers? Are you going to have a brick-and-mortar store? Are you gonna do this online? And, what are your plans to take it to market?

You also want to include detailed information about your competitor analysis. How are they doing things? And, how are you planning on, I guess, beating your competition?

You also want to look at and identify your SWOT. And the SWOT is your strength. What are the strengths that you have in going to market? And where are the weaknesses? Maybe some of your gaps. And further, where are your opportunities and maybe threats that you need to plan for? Then the overview of the operation includes operational information like your production, even human resources, information about the day-to-day operations of your company.

And then, your financial plan includes your profit statement, your profit and loss, any of your financials, any collateral that you may have, and any kind of investments that you may be seeking.

So these are the components of your business case. This is why it’s so important. And if you need a tool that can help you manage and track this process, then sign up for our software now at ProjectManager .

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• Read and analyze the case. Each case is a 10-20 page document written from the viewpoint of a real person leading a real organization. In addition to background information on the situation, each case ends in a key decision to be made. Your job is to sift through the information, incomplete by design, and decide what you would do.
• Discuss the case. Each morning, you’ll bring your ideas to a small team of classmates from diverse professional backgrounds, your discussion group, to share your findings and listen to theirs. Together, you begin to see the case from different perspectives, better preparing you for class.
• Engage in class. Be prepared to change the way you think as you debate with classmates the best path forward for this organization. The highly engaged conversation is facilitated by the faculty member, but it’s driven by your classmates’ comments and experiences. HBS brings together amazingly talented people from diverse backgrounds and puts that experience front and center. Students do the majority of the talking (and lots of active listening), and your job is to better understand the decision at hand, what you would do in the case protagonist’s shoes, and why. You will not leave a class thinking about the case the same way you thought about it coming in! In addition to learning more about many businesses, in the case method you will develop communication, listening, analysis, and leadership skills. It is a truly dynamic and immersive learning environment.
• Reflect. The case method prepares you to be in leadership positions where you will face time-sensitive decisions with limited information. Reflecting on each class discussion will prepare you to face these situations in your future roles.

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Business Analysis Methodology | What is it and is it ‘real’?

Is there such as a thing as a ‘Business Analysis Methodology’?

Although there is no single name for a Business Analysis Methodology the generic term ‘Business Analysis Methodology’ refers to the method (rules, principles and processes) that you apply to implement the Business Analysis activities within your project or organisation. The term, methodology is about describing the underlying principles or rules to follow when applying process, techniques and activities.

• Plan Driven Approach (Traditional / Waterfall) – the plan driven approach is primarily focused on planning most of the activities and deliverables is done in the initial stage of the project / initiative. The goal is to try and remove any uncertainty of what will be delivered and aim to plan and execute the plan in a sequential / linear way. The main disadvantage with the plan driven approach is that by the time an outcome is delivered the requirements may have changed.
• Change Driven Approach (Agile) – the change driven approach is on the other hand not concerned with a lot of upfront planning and thrives on delivering on an iterative and incremental basis. Change is continuously introduced as a result of each iteration and although each iteration is carefully managed and controlled, change is welcomed and part of delivering a relevant and customer focused end result. The type of methodology is sometimes confused with being uncontrolled and completely open and undefined before work is started. Although a lot of flexibility is allowed for with this methodology it requires significant planning, designing, building and testing on an iterative and continuous basis whilst adhering to time and budget constraints.

Where does Business Analysis fit into these methodologies?

Each project will adopt a methodology and it will most likely be a Waterfall based or an Agile based methodology although sometimes organisations tries out hybrids of these two by combining principles to form a third type of methodology. This will not be elaborated on here but is just mentioned to provide that perspective to the reader when considering their own organisation’s methodology that is being followed. Regardless of which fundamental methodology is followed, the Business Analysis approach is developed within the framework of that methodology. Business Analysis techniques and tools selected within the Business Analysis Approach are adopted to suit the methodology requirements. For example, if you are a Business Analyst on a project which follows the Agile methodology, you will most likely not be delivering business requirements in the format of business requirement documents but rather use the format of user stories instead. So the Business Analysis activities are very much affected by which fundamental project methodology is chosen for a project.

So where does this leave the ‘Business Analysis Methodology’?

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Manufacturing synergies in the redesign of multi-business supply chains through linear programming to meet the evolution of demand

• Open access
• Published: 28 May 2024

Cite this article

You have full access to this open access article

• Nicolas Anich   ORCID: orcid.org/0000-0002-1787-0489 1 &
• Manuel Mateo-Doll   ORCID: orcid.org/0000-0002-3975-9116 2  

Nowadays, many companies have several plants as a result of acquisitions or mergers, i.e. horizontal integration. A similar situation occurs with groups of companies which maintain their original brands but have centralized their manufacturing operations. This leads to the same kind of product being manufactured in different plants or under different brand names. In the context of a methodology for the redesign of supply chains, this tool evaluates the synergistic manufacturing in the chains and the minimum costs. The presented linear programs analyse how a better assignment of products to plants can be achieved in terms of costs, according to the resources used, while simultaneously improving the synergistic indicators. Two optimization models are proposed: the first, to obtain the best configuration at a given time, and the second, to manage the manufacturing of car models during several years. The case study is set in the automotive sector, using data from a group of companies with several brands. The application shows that the various plants have common resources, and synergies are feasible. This is justified after evaluating the costs, according to the resources needed. The new assignment of car models to plants takes these synergies into account and the new resource requirements are defined, also considering synergies. In the case study the best decisions in cost for some synergy levels in 10 years are determined. The results show that good synergy levels can be achieved with acceptable increases in costs.

Avoid common mistakes on your manuscript.

1 Introduction

Supply chain management (SCM) involves all the activities required to meet customers’ needs, considering processes such as procurement, manufacturing, warehousing, distribution and reverse logistics (Holweg and Helo 2014 ). These processes must usually be carried out by two or more companies, which means links via flows of information, materials and financial resources (Simatupang and Sridharan 2002 ; Zhang et al. 2023 ). All the links in the supply chain (SC) concerning the companies directly or indirectly involved in satisfying a customer request must be defined beforehand. This is part of a broader concept called supply chain design (SCD) or supply chain configuration (Klibi et al. 2010 ).

However, the design of these chains must be subject to the definitions of each business, and each business evolves. This in turn will influence the strategies, configuration typologies and associated risks, as well as their evaluation in terms of efficiency and effectiveness.

The great dilemma that arises is how to reach the optimal trade-off in the capacity needed to maintain a sustainable advantage, without having a high degree of complexity (i.e. many flows or processes). A sustainable advantage can be achieved with the introduction of new products, which must respond to current needs, such as those arising from climate change. Moreover, the different agents in a chain must be aligned with the objectives and there must be a high degree of collaboration between them (Chopra and Meindl 2016 ) for the correct synchronization between consecutive stages.

To achieve this, companies or supply chains can benefit by finding synergies. Currently a company may have different channels with the clients or have different plants producing the same product under different brand names. In this context, we want to develop a tool that seeks maximum efficiency regarding costs and resources in this complex situation, due to the changes in the environment (Nagurneya and Qiang 2012 ). The key is to discover parallelisms in the processes.

Synergistic chains are highly adaptable, flexible, and evolutionary (Zhang et al. 2018 ). In a risk context, if more alternatives are available, the search for the best one takes priority and the flows in the chain can be altered at any time.

Complexity, both in static and dynamic terms, implies structure, topology and links, which are represented in the horizontal components and the vertical stages of the system. It must provide enough flexibility in case of risks. One solution that can be developed in the chains or businesses is a synergistic configuration, to mitigate risks and operate efficiently. An example of what we understand as synergistic configuration is shown in Fig.  1 . For three kinds of clients (A, B, C), there are synergies in manufacturing (between stages 2 and 3 concerning clients A and B) and in distribution (between the 5th stage in chain B and the 6th stage in chain C).

Example of synergistic chains (A, B, C) for three kinds of clients (C1, C2, C3) and synergies in manufacturing and distribution

On the other hand, most of the works on SCD, especially those related to risks, face problems in a single chain. However, there is little research into the impact of risks in multi-business chains and, especially, in synergistic chains and their configurations (only 3 out of 43 papers in the last 10 years, approximately: Cho 2014 ; Varacca and Soregaroli 2016 ; Zhu et al. 2016 ).

First, Cho ( 2014 ) refers to mergers, but the perspective is based on economic values. Varacca and Soregaroli ( 2016 ) describe the best management practices and coordination mechanisms implemented by actors throughout the supply chain, but limited to the food industry. Finally, Zhu et al. ( 2016 ) deal with the implications of upstream and/or downstream horizontal mergers; once again, they are using economic values. As we can see, none of them explicitly considers the operative information.

Therefore, we will propose the introduction of synergy for both the strategic and operative levels, and in this work we will try to answer the following questions:

RQ1. Which dimensions, levels and impacts may synergies have within SC?

RQ2. Does the exiting literature meet the manager needs in terms of synergies in redesign?

RQ3. Is there any useful research proposal to meet synergy in the manufacturing?

RQ4. Are there any optimization tools in SCD that consider synergy indicators?

Our case study is based on car manufacturing. Currently, the companies are facing an important number of decisions, as they must renew their lines and adapt them to new, environment-friendly, models.

This paper is organized as follows. The basis for Synergistic Chains and configuration factors is given in Sect.  2 . Section  3 introduces the synergy for manufacturing in the supply chains. Section  4 develops the evaluation tools to a group of car manufacturers, in a case of 3 brands, specifically with two linear programs for short term and long term, respectively. Section  5 provides the results and a discussion on the results. Finally, Sect.  6 contains the conclusions and suggests some future research work.

2 Synergistic supply chains and considered factors in SCD

2.1 vertical integration and horizontal merger.

Synergy refers to the ability of two or more companies that, by working together, generate greater value than they would by working separately (Yu and Wong 2014 ). The synergies understood as working together or combining different features look for maximized results. To achieve a high degree of integration in systems or processes, integration can be performed by vertical and/or horizontal synergies (Andreou et al. 2012 ).

A horizontal merger can be seen as a consolidation of two companies, processes or events at one level within a supply chain with multilevel decentralization (Cho 2014 ). Integration can be considered when two agents, offering similar or compatible products or services, are combined under a single owner (Avinadav et al. 2017 ). The motivation for a horizontal merger is primarily to consolidate market power after the merger (and/or some expected benefits as a result of operational synergy), to reduce the effect of uncertainty in demand and to increase capacity.

The operational synergy seeks cost efficiency, which can be obtained by economies of scale, improved manufacturing processes or increased sales. Additionally, the concentration of the flow into several individual chains with a high rate of complementarity is shown as a mitigating effect when facing uncertainty in demand. The new inventory levels in the synergistic chain, in contrast to those in the individual chains, mean lower risk levels than in the individually-addressed chain risk. A smoothing effect occurs, as opposed to addressing the risk separately, which can amplify the effect. The merged flows demonstrate how the duplicity strategy in the system is applied, although coordination also leads to higher costs (Nagurneya and Qiang 2012 ). Physical integration results in a merger of links in upstream or downstream directions, with the aim of reducing risk, improving efficiency and economic incentives (Luco and Marshall 2021 ).

In vertical integration strategies the objective is to reduce complexity, which means looking for alternatives in order to reduce the stages and links in physical terms. As a consequence, the product can arrive quicker to the customer and the associated risks are reduced. This requires innovation capacities and relationships in these inter-organizational and multidisciplinary supply chains (Abiru 1988 ). Synergic links between agents in the network are extended to integration and coordination, which permits the development of virtual links whose purpose is to obtain a high degree of cooperation and synchronization throughout the upstream and downstream limits in the organization. This results in a more compact chain, leading to better performance for each participant and the chain as a whole. One of the clearest consequences achieved by the physical or virtual vertical synergies is a decrease in the bullwhip effect (Zhang and Burke 2011 ).

Nowadays companies have multiple businesses, types of products, network members and/or distribution channels, which involve a high degree of complexity. Therefore, the success of synergy is imperative for managing this diversity.

2.2 Synergistic factors in the configuration of multiple supply chains

Generally, researchers have contributed to the understanding of supply chain management and operations, focusing on topologies (Gansterer and Hartl 2020 ). Currently, the discussion revolves around synergies and problems in integrating operations (Kumar and Rodrigues 2020 ). Complementarily, companies make decisions on the design of the supply chains using mergers, objective of which is to obtain market synergies. Horizontal and vertical mergers have been the focus of research into efficiency, diversification, strategic realignment, information exchange, financial synergy and managerial synergy (Zhu et al. 2016 ).

However, such mergers and their relationship with the complexity and effects on the design of the supply chain have received very little attention in the literature (Rezaee 2018 ). It is necessary to identify the relevant literature describing the SC, particularly the manufacturing phase, which addresses concepts, tools, decisions and relevant elements for the design process. Papers published in approximately the last 10 years were sought in the Scopus database with the expressions “Supply Chain”, “Synergy” and “Manufacture”. The set of papers are classified according to the 10 different configuration factors, i.e. 10 different kinds of decisions for the SCD (Chopra and Meindl 2016 ):

Topological network features Some structural capabilities assume common parts of the chains in more than one business (Stéphane et al. 2019 ).

Links and integration In practice, two consecutive steps in a supply chain are considered as one, because the same agent is the responsible (Tigga et al. 2021 ; Shang 2022 ).

Transportation The objective is transport sharing for different businesses (no references found).

Structure of reverse flow logistics The sustainable synergistic chain is considered when reverse and direct flows use the same transport (Hofmann and Visagie 2020 ).

Inventory The location of inventory is basic for synergies (no references found).

Suppliers The same suppliers for different businesses are another form of synergy (Jain et al. 2014 ).

Product and mix design Modularity is the key in this field (Wang et al. 2022 ).

Manufacturing The same or similar processes are the fundamentals of synergy in manufacturing (Kumar et al. 2016 ; Zhou et al. 2020 ).

Strategic and business aspects Some long-term decisions are necessary to put synergies into practice (Wang et al. 2015 ; Ji et al. 2017 ; Durowoju et al. 2021 ).

Structure and capacity of the provisioning network This refers to the decisions on capacity that affect the economic results (Nagurneya and Qiang 2012 ; Zhao et al. 2023 ).

Basic factors are considered in items 1 and 2. The rest are related with: transport to the customer (Item 3); planning of the tactical level (Items 4 and 10); inbound and outbound distribution (Item 5); procurement (Item 6); product design, which conditions the manufacturing input (Item 7); its output (Item 8); and the strategic level (Item 9).

Although among these, there are studies that address synergies considering these 10 kinds of decisions, their impacts are generally limited to operational or financial benefits. These studies cover complementarities to tactical or strategic aspects, very biased from a supply chain design. Additionally, a few studies deal with the concept of supply chain redesign, especially the reconfiguration of manufacturing processes in multi-business and synergistic scenarios. If we focus in the main aspects considered in our research questions, the analysis can be centred in the design or redesign decisions; the single or multiple considered business; and the possible horizontal or vertical synergies. Table 1 shows the 10 closest researches to our proposal: from Melo et al. ( 2012 ) to Zhao et al. ( 2023 ). All of them provide a model for a real case. Only one (Correia et al. 2013 ) deals with these issues, but it focusses on optimization by considering the strategic and financial, but not operative, decisions.

In our case study, we will analyse a particular horizontal synergy between different car brands. The dynamic vision deals with the changes to optimize the whole set of brands.

The reviewed works have been developed with a partial view, often intuitive or with strong interference in the economic aspect. They lack a multidimensional integrative view of the supply chain design. Their effects are often applied at a single level in the SC and there is no structural development of some concepts (sustainability, robustness).

Concluding with the summarised results in Table  1 , little attention has been paid to the multi-business supply chains, when today many companies have been forced to multi-channel as a form of adaptation. There are no works that refer directly to the impact of synergies applied to the configuration of a supply chain and its different levels. So, the answer to RQ2 is negative. Therefore, we believe there is an urgent need to develop a tool which will be an extension of the methodology for redesigning the SC evaluating synergies in a network for multiple businesses.

2.3 Structure: levels, stages and synergistic sources in a set of Supply Chains

The degrees of integration can be given at the usual levels: strategic, tactical and operational.

Operational level. From an operational point of view, some stages are considered:

Procurement . A company acquires packages from tiers to manufacture products with shared common complementary characteristics (synergy between products) and this could affect the final choice of resources. Synergy between products and/or resources in supplier selection will determine cost, lead time and reliability in the input of manufacturing (Yu and Wong 2014 ). This is beyond the scope of this case study.

Manufacturing . For plants, the modular production network shows complementary manufacturing capacity, for example in a set of plants. This leads to lower transaction costs, economies of scale and a lower risk for network agents. For products, synergies in modularity are based on the design of common products and parts. This is shown in the complementarity of stages, based on synergistic sources such as processes and resources (Kim and Chhajed 2000 ). Manufacturing input and output is evaluated in connection with this synergy. Seen all these literature references, there are not available tools and the answer is negative to RQ3.

Distribution . In the inbound, the negotiation protocol between buyers and suppliers or manufacturers will affect the delivery methods. At this stage, synergistic sources are the origin of products, the common flow of products between businesses, the complementarity of resources (equipment, personnel) and the processes in inbound logistics. This case study refers to cars that are not distributed through warehouses. Therefore, this dimension will not be analysed. On the other hand, in distribution, outbound is the selection, preparation, consolidation and/or distribution of orders. A set of orders implies a quantity of products obtained according to destination and customer type. In a distribution centre, different inventory processes make up this outflow (picking and post-picking), depending on the characteristics of each product and business. The compatibility of the flow between businesses is just one of the synergistic sources.

Delivery . Different modes and types of transport appear, depending on the volumes, distance, times, number of delivery points, system constraints and characteristics of the products in the transfer of the goods. Seeking synergistic components involves compatibility between products, the definition of truck resources, the service, delivery time and characteristics of the fleet. Transport of cars to clients is not evaluated.

Tactical level. The planning phase tries to anticipate changes in supply, demand and/or market circumstances. For Chopra and Meindl ( 2016 ), the objective of planning is to maximize the supply chain gross margin generated during a planning horizon in which demand is projected. We evaluate the type of product and its variations as a synergistic source, as well as variables of demand. Synergies are taken into account in the supply or distribution agreements prior to reality, in order to anticipate changes in supply, demand and/or market trends.

Strategic level. All the factors of change in the environment, which can affect the redefinition of the business of a company, are considered. The first challenge of a company is to determine the business for competing, which will be influenced by and have an influence on the environment. Synergies are taken into account in the strategic issues like offer, segmentation, differentiations, risks and resilience.

This (the three different levels, the stages included in each and the synergistic sources) is reflected in Fig.  2 . So, RQ1 is answered.

Structure levels, stages in the levels and associated synergistic sources in set of supply chains

Once seen the synergistic factors and the key importance of manufacturing, we propose a 3-step redesign process of the manufacturing in several supply chains with synergistic elements in their structure.

3 Methodology for redesigning multiple supply chains based on synergistic manufacturing

Section  3.1 presents the 3-phase redesign of the manufacturing for supply chains with synergistic elements. The second step looks for the definition of products to be assigned in every plant at a given time and the third step, the products to be assigned in every plant at a long term. For the second and third steps, it is necessary to have an a priori solution with synergistic architecture. This is achieved with MESHAV, the first step, which is explained in Sect.  3.2 .

3.1 Scheme for redesign of supply chains based on structural manufacturing synergies

Given multiple channels, a set of supply chains is a network of organizations and processes in which several companies participate in delivering final products to different customers (Ivanov et al. 2017 ). In this multi-business network, dynamic and structural synergies are evaluated, modelled and optimized in different phases (Mateo and Anich 2023 ). To do so, the reconfiguration of multi-business chains is immersed in a REDNURS methodology (REdesign Network Under Risk and Synergy), with information, analysis and decision-making performed through different steps (Anich and Mateo 2022 ).

The modelling and solution stage of our redesign problem (see Fig.  3 ) begins in Phase 1, for which MESHAV is suitable for evaluating and measuring the synergistic capacity (among businesses) of the current or initial design. Additionally, it supports decision-making in the reconfiguration of networks, through mergers and/or integrations. This will allow an a priori solution to be obtained at a strategic level, based on structural synergistic measurement (Mateo and Anich 2023 ).

3-phases redesign of the manufacturing in supply chains based on structural synergies

However, this methodology requires implementation phases, the main characteristic of which consists of two tactical phases. Phase 2 assigns the workload to each plant based on their capacities, taking advantage of the synergies defined in Phase 1 (Fig.  3 ). Therefore, the objective function allows operating with more efficient costs, based on capacities and synergies. Phase 3 allows planning optimized operative costs based on long-term capacities and synergy levels, given different scenarios of uncertainty (Fig.  3 ). So, the answer to RQ4 is affirmative if the proposed methodology here is implemented.

3.2 MESHAV methodology (Methodology Evaluation of Synergies Horizontally and Vertically)

A general methodology for the redesign of SC is based on the fundamentals of the SCOR Model. MESHAV is composed of 7 steps, as described in Anich and Mateo ( 2021a ).

The first steps are to define: (1) the object of the SC, the environmental analysis and formulation of objectives; (2) the existing SC, as an a priori design, at several levels (macro, meso and micro) and (3) the model of SCM and the strategic coherence of the SC (reality versus objectives).

The customers and possible demand scenarios are studied later (4). Risks in the supply chain are then identified and evaluated (5) by determining current and latent threats (Anich and Mateo 2021b ). The analysis of the redesigned chain’s final state (6), using optimization if possible, includes the synergic SC explained here.

Finally, the objective fulfilment is evaluated (7); if the requirements and objectives fixed in (1) are not satisfied, the loop points to (5), either to change the risk detection and mitigation policies or (1) to change the objectives. Most of the factors presented in Sect.  2 are considered in (6) (topological features, structure and capacity, product and mix design, inventory and suppliers). Evaluations are made calculating the values of appropriate indicators.

This paper focusses on step 6. The starting point is the result of the five previously applied steps. To determine the degree of synergies in this key step, and similar to the proposal focussing on the distribution stages of the SC, 9 types of decisions relating to the three main levels of decision (strategic, tactical and operational) are established:

At the operational level procurement, manufacturing input and output, inbound and outbound distribution and transport to the customer.

At the tactical level planning should be evaluated.

At the strategic level strategy and dealing with risk are included.

A value between 0 and 1 is given to each of these decisions and then the 9 values are added. This can be studied as a whole or for each decision. As a whole, if the sum is 4.5 or lower (less than a mean of 0.50 for the 9 values), the chains are not considered very synergistic; if it is 6.75 or higher (the highest quarter of values), they are considered very synergistic.

For an intermediate score, a more detailed analysis must determine which stages may be common. For further analysis, we consider simulation as the most suitable tool for obtaining dynamic information and evaluating the vertical synergies, i.e. strong relations between consecutive stages, while mathematical optimization is suitable for evaluating horizontal synergies, i.e. relations of different chains at a certain stage.

This evaluation will allow recognition of the degrees of horizontal or structural synergies of the different configuration elements making up the supply chain, based on the complementarity of the synergistic sources at any stage (here, in the manufacturing stage). It is below applied to the case study. The disadvantage is that the vertical component is not considered. But in future studies it must be studied in depth to determine the total synergistic factor, as this plays a role.

4 Description of the case

4.1 introduction to the case.

The SC to be evaluated corresponds to a set of different car manufacturers managed by an international corporation. This group sells cars under different brand names. Given the demand of a set of m vehicle models d i (i = 1,…,m) which are sold under b different brands (h = 1,…,b), each one with models \({{\varvec{h}}}_{{\varvec{h}}}\) ; there is a set of n manufacturing plants (j = 1,…,n) and a total of p lines among all the plants (l = 1,…,p). There are l j assembly lines in the plant j . Initially, each line in a plant j is manufacturing one car model i (see Table  2 for a subset of the general problem with 4 plants and only 12 lines, which includes the brand for each model). A model i requires a certain single resource r from a set of q kinds of resources (r = 1,…,q). Table 3 shows which resources are needed to manufacture each model i . Some Boolean parameters are defined:

mp i,j (mp i,j  ∈  {0,1}) takes value 1 if currently or initially model i is manufactured in the plant j and 0, otherwise.

ml i,l (mp i,j  ∈  {0,1}) takes value 1 if currently or initially model i is manufactured in the line l and 0, otherwise.

mr i,r (mr i,r  ∈  {0,1}) takes value 1 if model i requires resource r to be manufactured and 0, otherwise.

In this case: b  = 3; m  = 12; n  = 4; l 1  = 4; l 2  = 3; l 3  = 2; l 4  = 4; q  = 3 (values adapted from Laiho 2020 ).

Figure  4 reflects graphically the link between resources (R1, R2, R3), plants (P1, P2, P3, P4) and car models (from 1 to 12, of brands B1, B2, B3). Additionally, Table  4 includes the annual units in demand D i (in thousands) and the unit manufacturing time ut i (in hours). Table 5 shows the direct cost per manufacturing hour in each plant j , hc j .

Relation between the resources (R), the plants (P) and the 12 models of the 3 brands (B)

Some relations between the defined variables are:

Finally, plants can work during regular working hours, as well as using overtime, the cost of which is considered twice that of a normal working hour.

4.2 Synergy evaluation in manufacturing

The synergy evaluation can be performed on the input or the output in manufacturing.

The manufacturing input is evaluated through MIE1 h,r,t (manufacturing input evaluation for brand h and resource r in time t ) and MIE2 h,j,t (manufacturing input evaluation for brand h and plant j in time t ). MIE1 h,r,t is computed as the quotient between the annual manufacturing time ( d i ·ut i ) for any model i of brand h manufactured given a resource r divided by the annual manufacturing time for all the car models of brand h manufactured at least with minpr plants with resource r :

It is performed similarly for MIE2 h,j,t but using the demand for any model i of brand h manufactured in a plant p in time t and at least with minmp plants available for car models of brand h :

The output manufacturing is evaluated through MOE h,j (manufacturing output evaluation for brand h and plant j ). MOE h,j* is computed as the quotient between the number of car models which can be manufactured according to the resources in the referent plant j divided by the total number of car models:

4.3 Evaluating synergy in SCs with MESHAV to detect the need of re-design

In this case, the evaluation has led to the following results:

Procurement . The set of suppliers is nearly the same for all the manufacturing plants. Very few parts are provided by other suppliers. Score 1  = 1.

Manufacturing input . The most frequent resource and the manufacturing plant for most of the car models in a brand are taken as referents for synergy (see Table  6 ). Score 2  = 0.62.

Manufacturing output . The study is performed again for each brand and its associated SC. The plant where most of the car models are manufactured is taken as a referent for synergy (see Table  7 ). In this case, 5 car models need resource 1 (5/12 = 0.4167); 11 car models need resources 1 and 2 (11/12 = 0.9167). Therefore, Score 3  = 0.75.

Inbound and outbound . We consider that the commercial networks are independent at this stage. Score 4  = Score 5  = 0.

Transport . As the commercial networks are independent, there is no possible synergy. Score 6  = 0 for all of them.

Planning . The ratio of brands and car models per plant is computed and weighted according to the cost. The result is 0.55 for brands and 0.28 for car models. Score 7  = 0.42 (the mean of both values).

Strategy . According to the objective of minimizing the global direct costs, the value is the complementary of the overtime cost over the sum of the normal and overtime costs. This last value is currently 0.0925. Score 8  = 0.91.

Risk . According to the available information, the risks are associated with manufacturing in overtime. This value is obtained as the complementary of the overtime over the sum of normal and overtime (all of them in manufacturing hours): currently 0.0798. Score 9  = 0.92.

In this case, inbound and outbound distribution is not present. The number of values will be 7 instead of 9. If we add the values, the result is 4.62 out of 7. Taking into account the synergy indicator, the results would confirm that these chains have a high probability of being considered synergistic: [0–1.75] is Not synergistic;]1.75–3,5] is Low probability of synergistic;]3,5–5,25] is High probability of synergistic;]5,25–7] is Synergistic. If the value in a stage is greater than 50% of the sum of values (given the complement in the synergic sources), a stage has a high probability of being synergic. The final score is between 3.5 and 5.25 (second best quarter), and a more detailed analysis, using simulation or optimization, is recommended. Therefore, in the following subsection the analysis is complemented with an optimization of costs to improve the use of synergies in the manufacturing plants. Figure  5 shows graphically the meso-structure, a priori solution with synergistic architecture.

A priori solution with synergistic architecture (Meso Structure)

4.4 Model 1 for the minimum short term cost

The model presented here is applied to this case. Nevertheless, in a general case the brands would be each of the chains and the car models would be the different products or kinds of products. The Boolean parameters are referred to in the initial situation, before redesign. In this case, the car group was worried only about the capacity at each plant and the necessary resources, key aspects in the change towards hybrid and electric models. The set of constraints is associated with capacity, from (4) to (8), and resources, (9) and (10).

b : number of involved car brands.

m : number of vehicle models (as sum of those from all the brands).

n : number of manufacturing plants.

p : number of the total assembly lines (as sum of those in all the plants).

q : number of the different resources.

h : index for the brands ( h  =  1, …, b ).

i : index for the car models ( i  =  1, …, m ).

j : index for the manufacturing plants ( j  =  1, …, n ).

l : index for the assembly lines ( l  =  1, …, p ).

r : index for the resources ( r  =  1, …, q ).

h h : number of car models in the brand h ( h  =  1, …, b ).

l j : number of lines in the plant j ( j  =  1, …, n ).

mp i,j  ∈ {0,1}: Boolean variable that equals 1 if the model i is initially manufactured in plant j ( ∀i, ∀j ).

mr i,r  ∈ {0,1}: Boolean variable that equals 1 if the model i is manufactured with resource r ( ∀i, ∀r ).

pr j,r  ∈ {0,1}: Boolean variable that equals 1 if the plant j initially has the resource r ( ∀j, ∀r ).

ls l,j  ∈ {0,1}: Boolean variable that equals 1 if there is the line l in the plant j ( ∀l, ∀j ).

d i : annual demand of model i [thousands of units/year] ( ∀i ).

c j : annual capacity of assembly in plant j [thousands of units/year] ( ∀i ).

ec j : annual additional capacity in overtime in plant j [thousands of units/year] ( ∀i ).

dcost i,j : direct cost to produce model i in plant j [€/unit] ( ∀i, ∀j ).

decost i,j : direct cost to produce in overtime model i in plant j [€/unit] ( ∀i, ∀j ).

icost j,r : introduction cost of the resource r in the plant j [€/investment] ( ∀j, ∀r ).

acost i : adaptation cost in a line to manufacture model i [€/investment] ( ∀i ).

v i,j : number of annual vehicles of model i manufactured in plant j [thousands of units/year] ( ∀i, ∀j ).

ev i,j : number of annual vehicles of model i in overtime capacity in plant j [thousands of units/year] ( ∀i, ∀j ).

am i,j  ∈ {0,1} Boolean variable that equals 1 if the plant j adapts one of the lines to manufacture model i ( ∀i, ∀j ).

nr j,r  ∈ {0,1} Boolean variable that equals 1 if the plant j introduces the resource r ( ∀j, ∀r ).

x i,j  ∈ {0,1}: Boolean variable that equals 1 if the model i should finally be manufactured in plant j ( ∀i, ∀j ).

Equation ( 6 ) presents the objective function. The aim is to minimize the costs associated with production in normal and overtime hours and investments in the introduction of a new resource in a plant and in the corresponding lines. Equation ( 7 ) is necessary to meet the demand. Equations ( 8 ) and ( 9 ) determine the production in normal time and overtime, respectively. Equation ( 10 ) indicates whether an adaptation is required in a line and Eq. ( 11 ) gives the final availability of a plant for a certain model. Equation ( 12 ) indicates whether a resource is necessary in a plant and, once introduced, Eq. ( 13 ) fits the production with the capacity. Equation ( 14 ) obtains the final assignment of car models to plants. Finally, Eq. ( 15 ) is equal to the number of available lines. Constraints ( 16 ) and ( 17 ) mean that the variables are Boolean, and constraints ( 18 ) that the rest of the variables are non-negative.

This model is useful for illustrating how optimization can be implemented, but more sources could be considered and this would add new variables and constraints.

4.5 Model 2 for the maximum long term synergy

First, the value m will include all the car models (included the new ones). So, a new parameter m 0 only counts the initial ones. Two new parameters ( max_am , max_nr ) define the maximum annual number of line adaptations to start the manufacturing of a model and new resources in any plant, respectively. The values of synergy per year t are calculated: the manufacturing input through MIE1 h,r,t and MIE2 h,j,t and the manufacturing output through MOE h,j,t . The new parameters (the three last ones) and variables (also the seven last ones) must be defined.

New parameters

m 0 : number of initial vehicle models.

z : number of time periods (in years).

t : index for the time ( t  =  1, …, z ).

max_am : maximum number of line adaptations per year.

max_nr : maximum number of new resources in any plant per year.

mp i,j,0  ∈ {0,1}: Boolean variable that equals 1 if the model i is initially manufactured in plant j ( ∀i, ∀j ).

mb i,h  ∈ {0,1}: Boolean variable that equals 1 if the model i has the brand h ( ∀i, ∀h ).

pr j,r,0  ∈ {0,1}: Boolean variable that equals 1 if the plant j has initially the resource r in year t ( ∀j, ∀r ).

d i,t : annual demand of model i in year t [thousands of units/year] ( ∀i , ∀t ).

c j,t : annual capacity of assembly in plant j in year t [thousands of units/year] ( ∀i , ∀t ).

ec j,t : annual additional capacity in overtime in plant j in year t [thousands of units/year] ( ∀j , ∀t ).

ut i : manufacturing unit time of model i [h/unit] ( ∀i ).

minpr : minimum number of plants to have a resource for a synergistic network.

minmp : minimum number of plants to manufacture a model for a synergistic network.

min_syn : minimum level of synergy to be achieved.

New variables:

v i,j,t : number of annual vehicles of model i manufactured in plant j in year t [thousands of units/year] ( ∀i, ∀j , ∀t ).

ev i,j,t : number of annual vehicles of model i in overtime capacity in plant j in year t [thousands of units/year] ( ∀i, ∀ , ∀t j ).

am i,j,t  ∈ {0,1} Boolean variable that equals 1 if the plant j adapts one of the lines to manufacture model i in year t ( ∀i, ∀j , ∀t ).

nr j,r,t  ∈ {0,1} Boolean variable that equals 1 if the plant j introduces the resource r in year t ( ∀j, ∀r , ∀t ).

x i,j,t  ∈ {0,1}: Boolean variable that equals 1 if the model i should finally be manufactured in plant j in year t ( ∀i, ∀j , ∀t ).

mp i,j,t  ∈ {0,1}: Boolean variable that equals 1 if the model i is manufactured in plant j in year t ( ∀i, ∀j, ∀t ).

pr j,r,t  ∈ {0,1}: Boolean variable that equals 1 if the plant j has the resource r in year t ( ∀j, ∀r, ∀t ).

\({MIE1}_{h,r,t}\) : manufacturing input evaluation for brand h and resource r in year t ( ∀j, ∀r, ∀t ).

\({MIE1}_{h,r,t}\) : manufacturing input evaluation for brand h and resource r in year t ( ∀h, ∀r, ∀t ).

\({MIE2}_{h,r,t}\) : manufacturing input evaluation for brand h and plant j in year t ( ∀h, ∀j, ∀t ).

\({MOE}_{h,r,t}\) : manufacturing output evaluation for brand h and plant j in year t ( ∀h, ∀j, ∀t ).

\({tot\_mie1}_{t}\) : total manufacturing input evaluation for any resource in year t ( ∀t ).

\({tot\_mie2}_{t}\) : total manufacturing input evaluation for any plant in year t ( ∀t ).

\({tot\_moe}_{t}\) : total manufacturing output evaluation for any plant in year t ( ∀t ).

Equation ( 19 ) presents the objective function including the new dimension of time. Equations ( 7 )–( 15 ) are converted into Eqs. ( 20 )–( 28 ) when they are used for different years in the time horizon. Equation ( 29 ) updates the car models assigned to a plant in a given year and Eq. ( 30 ), similarly for the new resources assigned to plants. Equations ( 31 ) and ( 32 ) limit the number of annual line adaptations to manufacture car models and new resources assigned to plants, respectively. The synergy on the input or the output in manufacturing can be adapted to calculate the evaluation each period t (in this case, each year) through the constraints ( 33 )–( 35 ). The values of synergy per year t ( \({tot\_mie1}_{t}\) , \({tot\_mie2}_{t}\) , \({tot\_moe}_{t}\) ) are calculated adding the values of all the brands, considered the resource reference ( \({refr}_{h,r}\) ) and plant reference ( \({refr}_{h,p}\) ) per brand h in constraints ( 36 )–( 38 ). Constraints ( 16 ) and ( 17 ) are updated to ( 39 ) and ( 40 ); constraints ( 41 ) and ( 42 ) now are the non-negative variables.

5 Experimental results of the two models

In a general situation, considering several stages and agents per stage, tools such as metaheuristics or even simulation would be useful. In this case linear programming can be used, as there are few manufacturing elements to focus on. As the model is linear, the IBM ILOG CPLEX solver (Optimization Studio v.12.8) is the tool used to find the optimal solution for this case study. The optimum result is obtained in a few seconds.

5.1 Computational experiments

A total of 3 experiments have been carried out based on the case study described in the previous Section:

Experiment 1 Using Model 1, determine the minimum cost to be achieved only considering the initial demand. Minimum levels of synergy are not fixed.

Experiment 2 Using Model 2, determine the minimum cost to be achieved considering the evolution of the demand in 10 years. Minimum levels of synergy can be or not fixed. There is a maximum of one adaptation per year.

Experiment 3 Using Model 2, determine the minimum cost to be achieved considering the evolution of the demand in 10 years. Minimum levels of synergy can be or not fixed. There is a maximum of two adaptations per year.

The solutions will be evaluated through the following indicators, obtained as a result of the optimization procedure:

\(Cpn\) Cost associated with production in normal hours (for all the vehicle models and years)

\(Cpo\) Costs associated with production overtime hours (for all the vehicle models and years)

\(Cinr\) Cost associated with investment in new resources (for all the plants and years)

\(Cila\) Cost associated with investment in the line adaption (for all the plants and years)

\({MIE1}_{t}\) Manufacturing input evaluation of available resources in the year t

\({MIE2}_{t}\) Manufacturing input evaluation of prepared plants in the year t

\({MOE}_{t}\) Manufacturing output evaluation in the year t

\(Tnr\) Total of new resources introduced in all the years

\(Tal\) Total of adaptation lines in all the years

\(Time\) CPU time (in seconds).

5.2 Demand scenarios

30 scenarios for the demand evolution, that we call instances, have been tested. We consider the 12 initial car models, on which the different demand evolutions are developed, and the possible introduction of 4 new ones. The horizon for planning is 10 years and the increase or decrease respect to the previous year is constant for any year. The different patterns of demand evolution (with maximum of 2% per year and with minimum of − 2% per year) are grouped initially in 5 kinds (1, 2a, 2b, 3a, 3b) and shown in Table  8 .

The columns show the following values for each kind of scenarios:

\(\Delta d\) number of initial vehicle models with increasing demand

\(\nabla d\) number of initial vehicle models with decreasing demand

\(=d\) number of initial vehicle models with no variation in the demand

\(G\_d\) global trend of demand evolution considering all the initial vehicle models ( \(\Delta d,\nabla d,=d\) for increasing, decreasing and stable demand, respectively)

\(Brands\) indicates if all the brands follow the same trend or not ( \(yes, \, no\) )

\(Random\) indicates if all the yearly demand evolution of each model has been created randomly or not ( \(yes, \, no\) )

For the next experiments, 4 new car models start their manufacturing during this time horizon, which will be called car models 13 to 16. The information about its brand, its necessary resource, the first year when it must be manufactured and the annual demand that year is given in Table  9 .

Additionally, the information about the manufacturing capacity is given in Table  10 in normal and overtime hours in each plant (in thousands of units per year) and the costs: dcost i,j  =  hc j ·ut i ( ∀i, ∀j ); decost i,j  = 2· dcost i,j ( ∀i, ∀j ); icost j,r  = 50,000,000 ( ∀j, ∀r ); acost i  = 10,000,000 ( ∀i) . In the reality, these last two values are not the same for any model, plant or resource.

The results have been obtained with IBM CLPEX 12.6 on an Intel Core i7 1.80 GHz and 16GB RAM.

5.3 Analysis for the minimum short term cost (Model 1)

After introducing the data provided in model 1, the best distribution of manufacturing to minimize costs, after solving the linear program, is given in Table  11 , without introducing new assembly lines.

The new value would be 0.65 for the Manufacturing Input Evaluation, while it remains the same for Manufacturing Output Evaluation. For the planning, the new score is the same. Regarding strategy, the value is now 0.075 (Score = 0.93). The risk is nearly the same, as the value is currently 0.0783 (Score = 0.92). If we add the values, the result is now 4.67.

The result is €1,936.56 million, of which €1,600.52 million corresponds to manufacturing in normal time ( \(Cpn\) ) and €226 million in overtime ( \(Cpo\) ). An investment is needed in resource 2 in plant 4, which will make this plant more flexible as it will have resources 1 and 2. This supposes €50 million spent for new resources ( \(Cinr\) ). Finally, the result shows that 6 lines can also be positive for flexibility: 3 in plant 1, for car models 4, 9 and 10; and 1 in the rest of the plants for model 6 in plant 2, model 7 in plant 3 and model 2 in plant 4. The 6 adaptations suppose €60 million more ( \(Cila\) ).

5.4 Analysis for the minimum long term cost given a minimum synergy (Model 2)

The number of maximum line adaptation per year is 1 and the number of new resources per year are limited to 1 in both cases. We consider that the number of available lines now are 17: l 1  = 5; l 2  = 4; l 3  = 3; l 4  = 5. Moreover, the capacity in normal hours has been increased in 25% to meet the demand of the current and new car models.

Table 12 indicates how many times the solutions are found for the 30 instances, given the synergy values of 0 (synergy must not be reached), 0.6, 0.7, 0.8 and 0.9, after 10 or 5 years and with a maximum of 1-line or 2-line adaptation per year. The values minpr and minmp are fixed to 2 in all the experiments.

The above tables show the mean results, after introducing the described instances in Model 2. The synergy will be given by a value, between 0 and 1, that must be fulfilled by the three indicators (MIE1, MIE2 and MOE). The evaluation is done in the year t for the given synergy. No solution could be found for synergies of 0.8 and 0.9 if they are required in year 5, and for 0.7 only one instance remains without solution.

5.4.1 Experiment 2: maximum of one adaptation per year

For experiment 2, Table  13 shows each of the 4 costs included in the objective function and the total cost. On the other hand, Table  14 includes each of the 3 indicators for synergy, the total number of line adaptations and new resources for the 10 years and the CPU time for resolution.

According to the results in Table  13 , the cost (in thousands) increases from 17,596 to 17,732 in the more constrained case (synergy value of 0.7 in the year 5), which represents an increase of 0.77%. This value is very similar if the synergy value is 0.9 in the year 10, with an increase of 0.63% respect to omit synergies.

In Table  14 , the mean number of line adaptations increases from 7.76 to 9.93 in the case of synergy value 0.9 in the year 10, which represents an increase of 27.89%. On the other hand, for new resources the increase is very important if the synergy value is 0.9 for the year 10, with nearly 2 respect to omit synergies.

5.4.2 Experiment 3: maximum of two adaptations per year

For experiment 3, similarly to experiment 2, Table  15 shows the 4 partial costs in the objective function and the total cost and Table  16 , the 3 indicators for synergy, the total number of line adaptations and new resources for the 10 years and the CPU time for resolution.

In Table  15 , the total cost (in thousands) is lower now than the one in Experiment 2. increases from 17,398 to 17,508 in the more constrained case (synergy value of 0.9 in year 5), which represents an increase of 0.63%. Respect to Table  16 , the mean number of line adaptations increases from 10.1 to 11.4 in the case of synergy value 0.9 in the year 5, which represents an increase of 10.84%. On the other hand, for new resources the increase is very important if the synergy value is higher than 0.8 for the year 5, with more than 2 respect to omit synergies. Even the worst result in the experiment 3 improves the best one in the experiment 2.

5.5 Managerial insights

Many multi-business companies must face continuously many risks. Most of the design methodologies in literature are not prepared for the need for flexibility in SC in the currently uncertain environment, a situation which our proposal attempts to solve. It leads to this tool for SCD considering synergies at operative and tactical levels, with Model 1 and strategic level, with Model 2. This new component for the methodology (useful in step 6) measures, manages and configures each SC based on complementarities within each business.

The MESHAV methodology has been applied to a car manufacturing group. Adding the values, the result of the synergic factor is 4.62, which places the presented case in the set of chains with high probabilities of synergy, at the operative level for Source, Manufacturing inbound and Manufacturing outbound. This defines the configuration according to the synergic capacity of the network. Nevertheless, should the value obtained not show a high level of synergy, the network must be reconfigured to increase the value, via analysis of scenarios.

As has been mentioned, the group of these 3 brands has made an effort to unify the set of suppliers and using the same kind of resources points to a high degree of synergy in Manufacturing inbound. The referent plant for each brand, combined with the different resources, also contributes to intensifying the synergies. These a priori values are confirmed in the optimization, with necessary changes of vehicle models in the assembly lines of several plants.

The results, according to the initial situation, are supported by the lower costs obtained from Model 1 (in the tactical and operative levels). It leads to manufacturing 89% of cars in the normal work time, and the remaining 11% in overtime. This means that the indicator for the synergic factor is improved marginally to 4.67. Moreover, there is an influence, at a strategic level, in the risk and strategy stages.

For 10 years and given 12 initial car models and 4 new car models, the number of line adaptations go between 7 and 10. For the more constrained situation (a single adaptation per year and the highest synergy level, 0.9) the mean value of total line adaptations is 9.93. Referred to the required resources, the number of resource introduction in plants goes between 0 and 2. For the more constrained situation (a single adaptation per year and the highest synergy levels) the mean value of total new resources is around 2.

If more line adaptations per year are allowed, this has positive results, as the total cost may decrease. The higher adaptation costs, compared with the single adaptation per year, are compensated with a better assignment of car models to plants. The investment on new resources are similar in both situations: one or two limited adaptations per year. So, given the relations between the four costs, most line adaptations are convenient.

To evaluate the trade-off between costs and more flexibility, shown by synergies, managers can consider the cost optimization without prefixed synergy levels as a reference. The greater availability of resources and the greater number of plants adapted for more car models implies an increase of cost, but normally very limited compared with the manufacturing direct costs (less than 1% in this case study).

If companies have a higher budget for changes in plants, the annual number of line adaptations may be increased to 2 (as in the experiment 3) or higher values. If more flexibility is required for a synergistic network, it can be introduced in the Model 2 through the minimum number of plants to have a resource and the minimum number of plants to manufacture a model. Both values are 2 in our experiments.

6 Conclusions

Companies, as a way to adapt to uncertainties, have turned into multi-business companies. However, these changes require strategic coherence with the management of the different businesses. Therefore, the reconfiguration of the chain, as a way of adapting, resorts to changes in the network configuration factors (like topologies or inventories). This often involves mergers and integrations of processes in a network, necessarily multilevel (strategic, tactical and operational). Synergy has a multidimensional effect. However, there is no unanimity as to the scope and components involved in synergy. We propose a useful tool (in the context of a methodology) that addresses some aspects of the complementarity of multi-business chains.

From a more pragmatic perspective, the synergistic effects show the complementarity of the synergistic sources (resources, processes, flows, clients, risks, consequences) in different stages and levels. We feel that the classical typology-based approaches are not sufficiently detailed guides for the SC redesign. Additionally, the position of each element within the chain or the strategic guidelines themselves are often ignored in order to achieve a good solution. Our proposed synergistic index of complementarity between two or more chains allows their degree of symbiosis to be established. This results in a multi-channel chain configuration. An initial synergistic structure can also be optimized, based on operation research tools (simulation or mathematical programming), to obtain other possible alternatives.

This work contributes to classifying the theoretical field related to redesign and synergies. The definition of the dimensions and levels are used to conceptualize the configuration of the supply chain and its associated synergies. It allows for an a priori solution of a synergistic architecture to be obtained. The practical implications will lead to decisions about the convenience of managing individual chains or migrating to multi-business chains, based on synergies, with the aim being to enhance sustainability for the whole network.

An adaption of a methodology previously developed for synergies in distribution is applied to manufacturing in an automotive group with different brands. To redesign a global SC, with the synergies between each brand considered independently (in the example), 7 of the 9 types of decisions are under evaluation. The degree of synergy is determined and then it is applied to a case in the car manufacturing industry, with 3 brands, 4 plants and 12 car models. The first five results show a potential degree of high synergy.

The use of synergy indicators, like MIE1, MIE2 and MOE, can establish synergy levels and this leads to new assignments of car models to plants. The results provided may be useful for managers to evaluate the trade-off between costs and synergies (i.e. more flexibility and less risk to face uncertainties).

For future research we need to develop techniques for measuring dynamic or vertical synergies, as a complement to the horizontal synergy evaluated here. Therefore, the total synergic factor of the network should be better determined. The vertical synergy requires much more data and from different agents in the chain. We need to describe a set of possible vertical synergies, the necessary data to evaluate them and the algorithm to decide if a synergy is promising for the efficiency of the chains and the whole network. Once made, it will be inserted within the supply chain redesign methodology. One relationship to be further analysed is the combined and conflicting effects of synergies with regard to risks. The dynamics in the chain, through the flows, are beneficially affected because of synergy, achieving better resilience and lower vulnerability. However, in a static aspect, less redundancy can be related to more vulnerability. Therefore, this effect requires further investigation in the decision-making of the conceptual model.

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Anich, N., Mateo-Doll, M. Manufacturing synergies in the redesign of multi-business supply chains through linear programming to meet the evolution of demand. Cent Eur J Oper Res (2024). https://doi.org/10.1007/s10100-024-00918-z

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