The Videocast we recorded with Supply Chain Digest on Multi-Objective Optimization is available on-demand.
In this Videocast, we take you through a case study that we also include in our instructors material.
For more information on multi-objective optimization, see this interview.
Michael Schrage’s book, Serious Play: How The World’s Best Companies Simulate to Innovate to Win, is worth a read as a general business book, but also very applicable to supply chain network design.
The book is about the prototypes an organization builds to help make decisions. And, a network design model is a prototype of the supply chain. So, many of the lessons apply directly to the supply chain team. And, when you read the book, it makes you wonder why a company wouldn’t want a model of their supply chain.
One of his key insights breaks a myth that it is a good team that creates a good prototype. Instead, he argues that it is a good prototype that creates the good team and leads to discussion and insight. He goes further to say that what is interesting about prototypes is not the model themselves, but what the models teach us about the organization.
Using a network design model as an example, he would ask questions like who gets to build the model, who gets to see the model, who gets to make suggestions, when do people get to see the model, do customers get to see the model, or do suppliers? All these are good questions for a team building a supply chain model.
The book is full of different ideas you can apply to your modeling efforts. Here are a few I pulled out:
- “Waste as Thrift” (pg 100-101). Once you have a model in place, it is relatively inexpensive to test ideas. If you don’t “waste” scenarios, you are really risking wasting real money when you implement an idea without testing it.
- “Bigger Isn’t Better (pg 131-137). The object of the prototype or model isn’t to be as complex as reality. Instead, the model needs to be understood by those who need to make decisions.
- “The act of designing the model…is essential to understanding their use” (pg 168). He argues that their is value in putting the model together. We see this as well and think it is well worth your time to understand some of the underlying math.
- It is important to create “conflict” with the model (pg 173). The “conflict” is to set up the model to expose important trade-offs like cost versus service. In network design, multi-objective optimization is great at bringing out those trade-offs.
- “A prototype should be an invitation to play” (pg 208). A great way to get value from a model is to play with it try new things and see if you can come with some counter-intuitive solutions that change everyone’s thinking.
After our post on nine topics you can cover with network design, some folks reminded us of a few more and we added to the list.
- Project Management. We cover project management in the context of network design. But, if you wanted to cover it in more detail, you could use this as a launching point
- Net Present Value (NPV) or Return-on-Investment or Financial Analysis. We have an exercise on calculating the NPV for an investment in new facilities. Future suppl chain leaders will need to know how to do financial analysis. Justifying the opening and closing of facilities is a big one. But, many others things will have to investigated. For example, should you add racks to your warehouse, should you invest in your fleet, should you buy more fork trucks, or should you replace aging equipment?
- Microsoft Access, Excel Pivot Tables, and Tableau. Network design gives you a chance to teach students how to deal with large data sets. This includes just working with the data as well as reporting on it. An import skill is to be able summarize large data sets.
- Change management and Organizational Behavior. When you make major changes in the supply chain, it personally impacts a lot of different people. It is important to understand how different people may react to the change and how to manage this change in an organization.
If you think of new ones, please let us know.