Everyone wants to cut costs. No one wants to spend unnecessarily. When budgets are tight, software and software projects are an easy place to cut. Staff positions like Industrial Engineers are sometimes easier to cut or redeploy than production jobs. I suggest that following this reasoning to eliminate simulation projects is often short-sighted and may end up costing much more than it saves. Here are a few reasons why it may make sense to increase your simulation work now.
1) Minimize your spending. Cash is tight. You cannot afford to waste a single dollar. But how do you really know what is a good investment? Simulate to ensure that you really need what you are purchasing. A frequent result of simulations intended to justify purchases is to find that the purchases are NOT justified and in fact the objectives can be met using existing equipment better. A simulation may save hundreds of times its cost with immediate payback.
2) Optimize use of what you have. Could you use a reduction in cost? Would it be useful to improve customer satisfaction? I assume that your answer would always be yes, but even more so in difficult times. But how can you get better, particularly with minimal investment? Simulation is a proven way to find bottlenecks and identify often low-cost opportunities to improve your operation.
3) Control change. In a down economy you are often using your facilities in new and creative ways – perhaps running lean or producing products in new ways or in new places. But how do you know these new and creative endeavors will actually work? How do you know they will not cost you even more than you save? Simulation helps you discover hidden interactions that can cause big problems. Different is not always better. Simulate first to avoid costly mistakes.
4) Retain/improve your talent pool. Some people who might otherwise be laid off may have the skills to be part of a simulation SWAT team. By letting them participate in simulation projects, they will likely achieve enough cost reduction and productivity improvements that they more than pay for themselves. As an added bonus, the team will learn much about your systems, the people, and communication – knowledge which will improve their value and contributions long after the project is complete.
5) Reduce risk. You are often forced to make changes. How do you know they are the right changes? Will a little more, a little less, or a different approach yield better results? How do you measure? A strength of simulation is its ability to objectively assess various approaches and configurations. Substitute objective criteria for a “best guess”, and, in turn, reduce the risk associated with those changes. In a down economy it is more important than ever that you don’t make mistakes.
In summary, rather than thinking of the cost of simulation, you should think of what the investment in simulation today will save you today, tomorrow and every day following. Simulation is not a cost, it is an investment that may return one of the best ROIs available in a tough economy.
Dave Sturrock
VP Products – Simio LLC
Tags: budget, economy, management, simio, simulation software, strategic
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