Opturion has carried out several strategic optimisation projects where we look at choices or decisions that our customers could make that are generally irreversible, such as buying equipment or premises, entering into contracts or looking at new operating models.
Typically, these decisions are supported by complicated spreadsheets that can be prone to simplification or error. At Opturion, we use detailed models of the business and understand how each decision or option impacts customer service, compliance and cost.
In essence, we use the model of the business to see how it behaves over a long period, anything from a few months to 20 years or more and a forecast of demand over that period, such as transport requirements or production. We then vary the choices or options to determine the customer, compliance and cost outcomes. The optimiser then chooses the best option and corresponding cost or budget.
A reasonably typical problem is the location and sizing of resources, such as factories, distribution centres or transport fleets. There are trade-offs between economies of scale, lead times, and transport costs that interact. The unit cost of production is too simplistic. For example, for a manufacturer considering offshoring, locating all possible production capacity offshore may be attractive whilst locally making short lead time products for the domestic market. But that can leave the minimal domestic capacity grossly underutilised and extremely expensive. A better solution is moving some production offshore while keeping the minimal domestic facility at full capacity and maximum efficiency. Similar considerations apply to the size, location and operation of a network of distribution centres.