Simulation Use Cases

Since simulation provides a way to make inventory planning realistic, it is useful in every stage of your service journey. Whether you are crawling, walking or running with a best-in-class optimization solution, simulation brings unmatched value to you. Below are some use cases where simulation has brought value to our customers.

Planning System Implementation

When implementing a planning system, it is necessary to fine tune it to closely resemble your reality. Simulation is essential for running scenarios so you can calibrate targets and adjust your planning system to ensure success.

Structuring and Managing PBL Contracts

In a Performance-based Logistics (PBL) contract, your customer is buying a certain level of service, with a incentive and penalty structure tied to performance. How can you evaluate the financial impact of the stocking policy in place against the contract terms? Simulation helps you with such an evaluation, and in deciding how to price such contracts.

Impact of Budget Cuts

While service is important, inventory is often under financial scrutiny and planners are often tasked with reducing inventory levels. Inventory reduction has a significant and long-lasting impact on service. More importantly, given the current inventory levels, you may not even be able to achieve the desired reduction within a planned timeframe. A realistic evaluation of the impact of inventory reduction is only possible with simulation. At PTC's LiveWorx 2017 conference, Philips Healthcare presented their use of SimAcumen Insight simulations to negotiate budget reductions.

Offering an SLA

The converse of the Budget Cut use case is the creation of a new Service Level Agreement (SLA). Here a planner needs to analyze the impact of changing stocking policy to determine the point in time at which the new SLA can be appropriately served. Only simulation can provide a realistic answer to this question!

Supplier Performance

Organizations often cover up for their supplier’s lack of performance by stocking more. Instead, there should be an incentive/penalty structure that works for both parties. Simulation provides a realistic quantitative picture of the impact of supplier performance on service levels, so you can negotiate with your supplier!

Planning System Selection

You need a best-in-class system that achieves your service level goals at the lowest cost. When selecting such a system, simulation helps your objectively evaluate candidate systems to ensure that the selected system works for you.

Handling Supply Chain Disruptions

Well-managed supply chains are able to absorb the typical variability that is experienced in demand, supply and lead times while maintaining service level objectives. When unforeseen events cause large-scale disruptions, even the best-in-class supply chains struggle to evaluate the impact, let alone effectively mitigate it. Be it volcanic ash disrupting flight routes or COVID-19 causing shutdowns, supply chain theory does not provide a solution to manage the compounding impact of such disruptions. By modeling these disruptions within simulations, planners are able to assess their impact and develop and test mitigation strategies. See how SimAcumen’s simulations provided unparalleled value to Thermo Fisher Scientific in managing their supply chain through disruptions caused by COVID-19.

IoT and Predictive Analytics

The deluge of sensor data in the IoT age makes it possible for predicitive analytics to prognosticate equipment failures before they occur, which can result in vastly reduced equipment downtime. Service parts planners can leverage these impending failure signals to improve service levels while simultaneously reducing inventory levels. How can planners make this idea work in the face of mostly accurate, but sometimes inaccurate failure signals and high lead times? Simulation is the answer! The use of service supply chain simulation in leveraging predictive analytics for supply planning was presented at PTC's LiveWorx 2019 conference.

Differentiated Service by Demand Priority

We often come across different service goals for different demand priorities, to be served from a single stockpile. While theoretical planning models do not support evaluation of service levels by demand priority, such an evaluation can be obtained with simulation! Thus, with the help of simulation, service planners can fine tune planning system to achieve the differentiated service level goals.