Simulation and Strategic Management

Guest article from Marco Ribeiro

Corporations everywhere today face the huge challenge of surviving and growing in an extremely competitive environment. Markets are shaped and reshaped due to constant innovation, customer demands and fierce competition. All these forces demand that corporations continuously reinvent themselves trying to maintain competitive advantages that differentiate them from the competition.

Strategic planning in such an environment is a difficult challenge that corporations must overcome successfully. Corporate strategic planning deals with such complex issues as:

    * Understanding the market and its future trends – understand suppliers, competition, their competitive advantages and market positioning. Know the future trends that will shape the market.
    * Future resource allocation – how the corporation’s resources should be organized in order to maintain an efficient operation.
    * Scope of operations -in which businesses should the corporation operate, which ones should be dropped out
    * Diversification of the corporation’s business – should the corporation focus its operations in a small and related set of businesses or should it look to diversify to heterogeneous businesses
    * Future structure of the company – draw the boundaries of the corporation and determine how these boundaries will affect relationships with suppliers and customers

The strategy defined will address all these issues in detail and determine the future direction of the corporation.

Can we use simulation to support the strategic planning process?
Yes, we can. As Thomas Davenport and Jeanne Harris describe in their book: Competing on Analytics: The new Science of Winning, we will see an increasing demand and use of analytical technologies supporting corporation’s decision-making processes.

Simulation can play an important role by helping managers create models of their markets and processes and “toy” with them in order to get a deeper understanding. We can also use simulation to support such efforts as portfolio analysis and management, helping managers determine how to most effectively manage and configure their product life cycle. We can build models of processes and determine the most efficient configuration. Simulation is a valuable tool to test scenarios and make better business decisions.

Marco Ribeiro
LinkedIn Profile

Simulation in Healthcare

Over the years, I have had several occasions to use medical facilities for myself and my family. Some visits were routine, such as for a diagnostic tests or images. Others were for much more critical visits to an emergency department. As my visits spanned many facilities and many time periods, I observed a dramatic difference in the service provided. In the case of bad service I just had to wonder “Didn’t anyone ever study this operation? Did anyone ever simulate it?”

Simulation can bring significant benefits to healthcare, just as it does in other types of systems. Some of those benefits come from the simulation’s ability to:
• Account for variability in human behavior
• Account for variability in demand
• Capture complexities and interdependencies
• Capture system performance over a period of time
• Support continuous process improvement and evaluation of new scenarios
• Provide an objective basis for evaluating policies and strategies

Here are a few possible applications to illustrate how simulation is often used in the healthcare industry:

New Facility Design – Evaluate design to assure that present and future objectives will be met. Reduce capital costs by “running” the facility under various scenarios and identifying excess capacity . Reduce operating costs by supporting lean and six sigma analyses. Increase throughput through process flow optimization and identification of bottlenecks and capacity constraints.

Emergency Department (ED) – Decrease LOS (Length of Stay) and LWBS (Leave Without Being Seen) yielding higher patient satisfaction. Improve staff efficiency and improve room and resource utilization resulting in lower costs.

Outpatient Lab and Surgery – Determine optimal staff and resource allocation. Balance scheduled demand with the often-critical unscheduled demand. Decrease lab and diagnostic turn-around time. Identify non-value-added and redundant processes.

Ambulance Service – Evaluate operational scenarios for both road and air-based vehicles. Evaluate new technology to determine their effect on the entire system. Pre-plan dynamic utilization-based response guidelines to optimize performance during major ED demand periods.

Vaccine Distribution – Evaluate regional material stocking strategies, distribution strategies, and staffing.

Often the benefits from these studies are reported in the millions of dollars so they are well worth the undertaking.

One source of additional information is the Society for Simulation in Healthcare which is having their annual conference in January. Another source is the Society for Health Systems which offers the latest in process analytics, tools, techniques and methodologies for performance improvement.

Dave Sturrock
VP Products – Simio LLC

Simulation and Disaster Management

While the last couple months have been pretty dry where I live here in the Northeastern part of the U.S., in the Southeastern part several severe hurricanes have already hit and it looks like more are coming. While every severe storm can have serious consequences, often the major difference between a severe storm and an outright disaster is the level of preparation.

Of course weather is just one of many potential causes of disasters. We have all seen floods, fires, earthquakes, and other disasters around the world that have been made much worse through inadequate planning and poor execution. Simulation can play a major role in preparing communities to avoid or at least reduce the impact of such disasters.

More accurate weather prediction is due in part to simulation. Combining advanced detection technology with sophisticated simulations has allowed us to become much better at predicting storm paths and severity. This allows for improved warnings and appropriate responses.

Simulation use in evacuation planning has a very high potential, but is not used as much as it could be. Communities should be able to examine various scenarios and evaluate the best ways to move people to safety, well before a dangerous situation actually occurs.

First-responder rescue efforts can also be pre-planned and evaluated. Where should various types of equipment be stored? How can it be moved? Who will staff it? What procedures should be used for various types of disasters?

As for relief scenarios, they too could be planned ahead of time with the assistance of simulation. What equipment and supplies should be stockpiled and where? How can it be quickly relocated? Who will staff it? The logistics of a large scale disaster-relief effort, including health care provisions, security at all levels, and even communications, (all of which often involve multi-organization coordination) is a great opportunity to showcase the true benefits of using simulation.

Large corporations and other organizations can also do their own simulation-based planning. Contingency plans for various scenarios can minimize the impact of a local or regional event and help ensure that a single event does not cripple the entire organization.

Louisiana State University has a relatively new center for disaster management and has organized a conference November 16-18 dealing with some of these issues.

Be Prepared” is a motto that anyone planning for a disaster should live by; Simulation helps make that a bit easier.

Dave Sturrock
VP Products – Simio LLC

Making the Date

It is rarely pleasant to miss a deadline, and sometimes it can be downright career-limiting. Last week, we talked about some problems that contribute to missed project dates. Now let’s explore some solutions.

Step 1 – Objectives and Specifications

We have already covered the importance of project objectives and specifications. Of course setting those objectives requires knowing your stakeholders and getting their involvement. In this and other articles I use the term stakeholders to represent the set of people who care about this project. It could be your customers, your manager, people who work in the systems being modeled, or others.

Step 2 – Creating a Project Plan

When creating a project plan, two adages come to mind.

“Expect the Best; Plan for the Worst”

I think it is fine to be an optimist and hope, maybe even expect, that things will go well. But I don’t count on it. I don’t base my plan on optimistic assumptions. I like to start with what seems to be a reasonable estimate, then double it to account for all the things that I know will go wrong. This may seem like “padding” but the objective is to determine an achievable schedule. I have seldom, if ever, found what seems up front to be a “reasonable” schedule to actually be achievable in the end due to the large number of unknowns in a typical project.

Of course you can always spend more time up front studying the problem to reduce the risk to an acceptable level and possibly improve the accuracy of your estimates. But by that time the project has often become irrelevant because the decisions have already been made. Time estimates are always a guess and always wrong, so find a method that works for you and move on.

“Under Promise, Over Deliver”

To me this means be conservative. I try to avoid over-committing and, when possible, avoid sharing my optimistic intentions. For example, while I may have every expectation of creating a compelling 3D animation, I might only guarantee 2D animation or simple 3D animation. Or while I might intend to model some secondary applications so that I might explore some potential system improvements, I would not guarantee that in the project specifications.

In fact, my project specifications usually include three categories:
Guaranteed Deliverables – No matter what happens, the project is not considered done without them.
Likely Deliverables – I intend to complete these, but if things go poorly, they may be cut. Often the stakeholders do not even know this list exists, depending on their tolerance for flexibility.
Wish List – In the rare instance when the project goes exceptionally well, I implement tasks from this list. This list never makes it to a public project plan.

This approach provides me some flexibility to:
a) Avoid disappointing the stakeholders in case the project goes poorly, and
b) Retain the opportunity to delight the stakeholders if the project goes well.

What Comes Next?
These first two steps are just the start of a project. In future articles I will discuss prioritization, agility, communication and many other topics that contribute to making the date and making a successful project.

Until next time, Happy Modeling!

Dave Sturrock
VP Products – Simio LLC

Missing the Date – Arriving Late to the Party

How many times have you shown up late to an event? Perhaps something came up at the last minute. Perhaps you encountered road construction. Or maybe you just failed to think ahead. Sometimes it all works out. But sometimes you miss something important – like your sister’s wedding vows or your child’s big performance.

In an earlier article, we talked about the importance of project planning and management. Although there are many aspects to success, let’s concentrate on the completion date for the next few minutes. A project that produces results after the decision is made has little value. And a project running over budget due to lateness may be cancelled before completion. Success requires appropriate attention to completion dates.

Late projects are a chronic problem in all types of software development. Let’s start by exploring some of the causes of lateness.

Expectations – Planning the Journey

In software development the constraints of Date, Resources, Features, and Quality are well known. You can specify or mandate any one, two, or possibly even three of those factors, but if you try to mandate all four, you will almost certainly fail. For example, I can say I want all features completed with high quality, in 90 days, but then I have to be prepared to allocate resources as necessary. Or if I want it done with a maximum of 3 people, then I must be prepared to slide the date or other constraints. These same aspects apply to most simulation projects – perhaps substituting the word Comprehensiveness for Features and the phrase Validation/ Verification for Quality.

Since many projects start off in an urgent, budget-constrained status, management often tries to mandate all four constraints. But can I really specify all four constraints (e.g. all features completed with high quality, in 90 days, with a maximum of 3 people)? NO – not unless I have started with a very loose schedule (unlikely with an urgent project). I have generally found that attempting to do so will just mean that I will have no idea, until near the end, by how much each of the constraints will be missed. Note I said “by how much”, not “if”. As the anticipation of missing the date approaches, the pressure will increase at all levels to “cut corners”. Then, to save the viability of the project there is often a last-minute attempt to add resources to “save the date”, but that attempt is usually too late to have much impact.

Road Construction Next Million Miles

Assuming that we have reasonable expectations up front, what are some of the other problems that can hijack the schedule?

Objectives – Poor project objectives, as we discussed last week, is a huge potential problem. If you start with a missing or inadequate functional specification and a poor understanding of project, it is unlikely that you can develop a realistic project plan.

Optimism – I like to be guided by Murphy’s adage “Anything that can go wrong, will.” Many people think that it is safe to base their project estimates on “reasonable” effort estimates. But “reasonable” often becomes highly optimistic when adjusted by real world situations.

Stakeholder Involvement – First of all, you need to know who your “customers” are. If you are working for a large organization it might be difficult to determine who all the people are who have a stake in your project. If you are a consultant, this may be a bit easier. But after you identify them, the stakeholders must be involved. If they are not involved then you may be missing the important resources and information, and your project priority may suffer.

Skills – We are all smart, resourceful people. We all like to believe that we know, or can quickly learn, whatever we need to know to complete the project. But quite often there are many things we don’t know. And even more dangerous, there are things that we don’t even know that we don’t know.

Of course there are many other areas where you could go wrong – I’ll talk about them in future blogs. For now, maybe give some thought to these concepts and in a future blog we will talk about dealing with this first set of pitfalls.

Happy modeling!

Dave Sturrock
VP Products – Simio LLC

On My Honor

On my honor, I will do my best
to do my duty to God and my country;
To obey the Scout Law;
To help other people at all times;
To keep myself physically strong, mentally awake,
and morally straight.
Boy Scouts of America – Scout Oath

I haven’t really thought about those words in a few decades, but it’s funny how they came back to me in an instant. If you were ever a Scout, you probably repeated those words hundreds of times, like I did. These are certainly admirable words to live by. But what does that have to do with simulation?

On my honor – Make a commitment. Then take it seriously. Or in the words of Jedi Master Yoda “Do, or do not. There is no ‘try.’
I will do my best – Is “good enough” really good enough? What would happen if you really did your personal best?
To do my duty – A somewhat outdated concept, that each of us has intrinsic responsibilities and obligations. Or is it?
To self and company – OK, I took some liberties here. But when considering your specific project commitments, also consider the big picture of what the company (or your stakeholders) really need. And it should never be far from your mind, what do you and your family need?
To help other people – A team who works together can accomplish so much more than the sum of the individuals.
To keep myself physically strong – Keep a good balance in your life. Personal fitness takes time, but can return so much.
To keep myself mentally alert – Some types of wisdom require time to develop, but sometimes “wisdom” can be as simple as thinking things through objectively, along with careful attention to detail.
To keep myself morally straight – There is no substitute for personal integrity. Sometimes you have to make difficult choices to keep your integrity, but it is always easier to keep than to restore after it has been lost.

These concepts are valuable in your professional life as well as in your personal life. Think about them from time to time while doing your next project.

Dave Sturrock
VP Products, Simio LLC

The Magic Formula for Success

Many people new to simulation rightfully inquire how they can be successful. This first article will identify some of the issues associated with simulation projects. Later articles will explore these and other issues in greater detail.

So, to get started, here are five of the more important issues that should be considered.

Project Objectives – “Model this” is not a good objective. “Prove this” is not much better. A clear objective is essential to a meaningful project. Hopefully it would include the phrases “evaluate …” and “as measured by …”.

Know Yourself – What are your strengths and weaknesses? How about those of any other team members who will be involved? Be honest. Then come up with a plan to capitalize on the strengths and overcome the weaknesses.

Domain, Tool & Process Knowledge – It is not enough to be proficient in a simulation tool. Nor is it enough to have comprehensive domain knowledge of what is being modeled. While having project participants with both of those skills is a prerequisite to success, you also need to know how to conduct a simulation project and deliver validated, valuable results.

Project Planning and Management – A project that produces results after the decision is made has little value. And an over budget project may be cancelled before completion. You must pay appropriate attention to completion dates and project costs.

Team/Reviews – Even though “No man is an island”, too often simulation projects are conducted by a single person with little or no team interaction. Find a way to get others involved.

Look for five more success factors next time. Future articles will discuss these and others in more detail.?

Dave Sturrock
VP Products – Simio LLC