Imagine you are assigned to a team that will start and run a new venture for your company. You and your team are entrusted with funding to obtain a facility, manufacture products, hire employees, and market and sell your products. You and your team must decide everything from product pricing, to taking loans for improvements and paying expenses as you work toward the goal of building equity and net worth.
You make mistakes along your journey and in doing so learn firsthand why “cash is king” and how your venture can be profitable while tottering on the brink of bankruptcy. And while you and your team benefit from these valuable business experiences, you are never in danger of financial ruin or suffering the many other life-changing pitfalls of running a business.
Welcome to the world of simulation business training.
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 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.
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.