You may already recognize computer simulation as a powerful business analytic tool for evaluating your fulfillment operations. Many multichannel retailers have used simulation analysis to improve system design, increase operational efficiency, and reduce operational costs in the fulfillment center.
However, even with these benefits, computer simulation analysis is not as widely applied as one might expect. Some organizations mistakenly assume that the single benefit of a simulation analysis is the end model and results it provides. In truth, all aspects of the modeling process can benefit an organization.
Consider these points:
Data collection enhances knowledge of the business.
Data collection can be one of the most worthwhile activities of a computer simulation project. Gathering data forces project members to comprehend the many organizational details that drive the business, which can lead them to early recognition of business improvement opportunities. Other benefits of data collection include the use of simulation software statistical modules to gain further insights into the business data, as well as the ability to reuse the data within other types of business analysis.
Designing the model provides insight into systems design and operation.
When the simulation model is based on existing systems, project members develop a better understanding of the current business processes. This enhanced understanding can lead to opportunities for system improvements. When designing models of new systems, questions about the operational logic of the design often expose issues that could otherwise be overlooked. This enhanced understanding can lead to avoiding problems further down the road in the design process.
Simulation allows for natural system randomness.
Traditional analysis focuses on broad averages. Computer simulation is able to model a system with realistic randomness using programmed statistical distributions. This functionality enables the simulation model to more accurately represent the system, exposing opportunities and issues not apparent through more traditional analysis.
Simulation provides clear view of system component interactions.
The key to managing any system is understanding the complex interactions between the systems many components. Computer simulation is a superior tool for identifying these complex interactions due to the inherent requirements that the output of one model component becomes the input to the next. This feature leads to improved system knowledge and a better understanding of how to manage and optimize the system as a whole.
Simulation offers the potential for optimizing system parameters.
Most simulation packages offer a module that uses search routines to optimize system parameters within user-defined constraints. Through this process the project team can identify reasonably optimal solutions not already apparent, leading to new design concepts and/or reduced operational costs for the organization.
Simulation what-if scenarios illuminate alternatives.
The simulation model provides an excellent tool for performing what-if scenarios against base model results. The scenario changes might be as simple as changing the system parameters within the model, or might involve programming changes to process logic. This type of analysis is beneficial in evaluating alternatives before committing to large capital expenditures and/or rigid equipment installations.
Simulation enables sensitivity analysis.
Most retail operations executives would like to know what system parameters have the biggest impact on overall system performance. A computer simulation model is an ideal method for performing this type of sensitivity analysis. By evaluating the results of various model scenarios in which key parameters are changed, those parameters having the greatest impact on system performance can be identified. Sharing this knowledge with managers and the workforce will allow a more focused approach to system monitoring and control.
Improved animation leads to broader acceptance.
Improvements in model animation have proven extremely helpful in visually presenting the model and its results to the management and the workforce of a company using computer simulation. These animation improvements allow associates to better understand the design concepts being presented and to ask more informed questions, leading to improved system design and broader design acceptance. This feature also proves helpful in debugging programming logic.
Simulation model can be modified and re-used, saving time and money in the future.
At a later time the model can be updated with new data and/or logic to provide answers to the latest system questions. Using existing models for new simulation analysis saves significant time in exploiting these opportunities.
Selectively and properly applied, computer simulation is a powerful analytic tool which can provide improved solutions over more traditional analysis, resulting in improved system design, reduced business costs, and increased operational efficiency. The key to deciding upon a computer simulation analysis is to weigh the costs of the analysis against all of the benefits mentioned above, or the true value of computer simulation.