How A Simulation Became a Practical Sales Tool

Business modeling to simulation is often viewed as an approach that is limited solely to “academic” analysis with little real-world usefulness.  The potential of modeling to simulation in business, however, can extend well into actual daily use across an enterprise with powerful results.

A Real-World Problem

An international firm was introducing a new turnkey subscription-based training program that included hardware, software, and educational content.  The program involved certain one-time fees and ongoing subscriptions with price adjustment based on quantity, type, and term of the contract.

The product would be sold by the independent sales teams across three separate businesses and around the World. Project executives mandated that sales personnel must provide a preliminary quotation to the customer in the field that was reliably consistent across all sales representatives and would ensure an acceptable profit.

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How Dynamic Forecasting Reduced Risk in a Project with Long Development to Launch Timeline

Certain projects simply take more time than others to development and launch. Injection molded plastic medical device products, for example, can easily take a year or longer to bring to market. These long development times are due to the processes related to designing and testing the safety and efficacy of the device, and to ensure that reliable Six-Sigma production results can be achieved in the final product before investing in costly molds.

In such cases of long lead-times, product and market management must be able to regularly update plans based on market dynamics and when the product will be available for launch. Dynamic forecasting can enable regular adjustments to plans which are critical in achieving desired project outcomes.

A Real-World Problem

An international leader of medical devices embarked on a new injection molded product that would replace one of its flagship lines.  A 2-year development schedule made the timing of production conversion from legacy to new product both critical and challenging. A key objective was to ensure adequate inventory of the new product at launch while avoiding excessive inventory of the older product.

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How “Rolling the Dice” Ensured Profitable Pricing

dice-25637_960_720Pricing decisions may be straightforward if they can be based on reliable market information such as competitive pricing and your known costs. Often, however, decisions are complex due to uncertainty. In these cases of uncertainty, methods that embrace uncertainty to better estimate results (e.g. the Monte Carlo method) can be employed as discussed in the real-world example below.

A Real-World Problem

Leadership mandated an after-sale support program that would help ensure high product reliability.  The challenge was that the customer base had been established in prior years and that each customer instance was different. In some instances, customers had a large number of products with both high and low use while in other instances customers had a low number of products. This use distribution made a “fixed” price offering difficult. The goal was to price the service such that overall program profitability was achieved even if some number of individual participating customers generated a loss.

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