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Optimization- it’s role in enterprise profitability. Simon Bragg European Research Director ARC Advisory Group. Co-operation. Management By. Coercion. Command. Evolution Of Management Initiatives. Focus. Business Partners. Collaboration. E-Business Initiatives. Suppliers. - PowerPoint PPT Presentation
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E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s1
Optimization-it’s role in enterprise
profitability
Optimization-it’s role in enterprise
profitability
Simon BraggEuropean Research Director
ARC Advisory Group
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s2
Quality
Evolution Of Management Initiatives
Focus
Time2000+80s
Business ProcessRe-engineering
Department
Corporation
Business Partners
ERP Implementation
Supply ChainMgmt
E-BusinessInitiatives
Collaboration
90s
Company
Suppliers
Coercion
Command
Co-operationManagement By
Challenge is to manage, organize & control, ever greater numbers of people, who are increasingly distant
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s3
Management Initiatives Command
Issue Quality BPR ERP
PainVariable
Product/serviceRight Sizing
Organizational incompetence
Metric Six SigmaAdministrative
CostEarnings per
ShareChange SOP’s Back Office Corporate
IT Soln Automation PackagesEnterprise Software
GuruDeming, ISO
9000Hammer &
ChampyAndersens, SAP
Slogan Right First TimeDon’t
automate, obliterate
Staple yourself to an order
HeroGuys in white
coatsChange agents
Board level sponsor
Period 1990 1992 1995Optimisation not a key management issue
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s4
Management Initiatives Coerce
Issue ERP Supply Chain E-Biz
PainOrganizational incompetence
Stock outs, lead time
Dot com threat
MetricEarnings per
ShareOn time in full Market Cap
Change Corporate PlanningProcurement &
Ordering
IT SolnEnterprise Software
Packaged optimisers
Java
GuruAndersens,
SAPSupply Chain
CouncilNegroponte
SloganStaple yourself
to an orderSupply Chains
competeInternet changes
everything
HeroBoard level
sponsorOps Research VC’s Geeks
Period 1995 1998 1999
In SCM, Optimization becomes management issue
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s5
Management Initiatives Co-operation
Issue E-Biz Collaboration
Optimize
Pain Dot com Threat Outsourcing GlobalisationMetric Market Cap GAAP Profits Profits
ChangeProcurement &
OrderingBusiness Partners
Slick processes
IT Soln JavaStandards using XML
Component Standards
Guru Financial Analyst RosettaNet?To be
announced
SloganInternet changes
everythingWe’re
partnersMore from Less
Hero VC’s & GeeksIndustry consortia
Ops Research?
Period 1999 2001 ?2004+
In SCM, Optimization becomes management issue
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s6
Evolution/adoption optimisation?
1
4
7
10
1970 1980 1990 2000 2010
Operator decision
Heuristics
Optimize
Log (computing power)
Computing power enables optimisation
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s7
Enablers for management initiatives?
Integration
Focus
Time2000+80s
Process Design
90s
Optimization
Clean Data
Sensible Processes
Enables Optimization
The technology enablers for optimization to occur are in place.
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s8
Appropriate techniques
Improvement Strategy depends on the issue
External Internal
Change The
Process
Optimize The
Process
Focus
Forecasting/Data Mining
Optimization
Collaboration Simulation
Action
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s9
Mathematical Programming Applications
Manufacturing/Distribution Product Design Product Launch Planning/Scheduling
Services
Asset Liability Mgt Lease Arrangements Risk/Return
All Sectors Pricing Location of sites Product Mix
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s10
The Supermarket or the Bazaar?
Production Planning and Information
ABC
ABC
Price ListCTP Engine
Applies: Airlines, Hotels, Car Rental, Process industry, where high proportion of fixed assets
Suppliers
Design
Support
CustomersEnterprise
Applications
Competitors
No Application
supports Pricing
Higher price= greater profits
Lower price = greater volume
~4% increase in revenue
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s11
Optimization: Next Steps?
1
4
7
10
1970 1980 1990 2000 2010
Operator decision
Heuristics
Optimize
Robust Optimization
Log (computing power)
The computing power will soon arrive to enable more sophisticated optimizations
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s12
Conclusions
The enabling technologies are in place
The number of potential applications are just limited by your imagination
Optimization could unleash the next wave of value creation
E n t e r p r i s e a n d A u t o m a t i o n A d v i s o r y S e r v i c e s f o r I n d u s t r y E x e c u t i v e s13
Thank You
sbragg@arcweb.com
Presentation available
at www.arcweb.com
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