In it’s 80 year history computer simulation and optimization has changed a lot.
For the first twenty years after Jon Von Neumann and Stanislaw Ulam developed their Monte Carlo method in the 1940s, few businesses found easy ways to integrate this new method into their strategic and operational plans.
By the 1960s things were a little brighter and, backed by IBM hardware and software, large corporations like Boeing, General Dynamics, Raytheon, and Exxon began investing in specialized simulation teams. For the next twenty years simulation for high level and long-term decisions remained important for big business, yet simulation continued to suffer from two significant drawbacks:
With time, though, these challenges would be largely overcome.
By the end of the century, simulation was established as a necessary part of any strategic planning exercise. Companies like Boeing built organizational models and simulated everything from the future trajectory of the corporation as a whole to the design, development, and lifespan of a part on one of their jets. They optimized the geographic placement of their factories and the machining specifications for their parts produced there; indeed, designing an aircraft without computer simulation and optimization is almost unthinkable.
Yet even Boeing didn’t have the computing power or expertise to simulate and optimize the operations of those plants.
Now, in 2020, that’s changing.
Today simulation and optimization are entering the operational sphere.
Corporations in a variety of domains – aerospace, mining, manufacturing, defense, logistics, utilities, and transport – are embracing operational simulation and optimization in their daily, even their hourly operations.
There are three reasons for this.
Industry already understands the impact of simulation on strategy and organizational design. They’ve seen the way that planning the optimal location of a factory or the structure of a logistics chain can positively impact revenues. That same impact can be expected as simulation is extended to operations, whether those simulations are for the next month, week, or even hour.
When you bring simulation and optimization to a new area of a business the potential gains are significant. At Cosmo Tech, for example, we’ve seen major manufacturing clients use simulation to optimize operations and experience 10-30% improvements in production. Almost incredible, such gains are not unusual when a company adopts simulation for their operations for the first time.
The computing power available to software vendors and to their enterprise customers is something that we’ve never seen before. Today the cloud offers essentially limitless opportunities to run the most demanding simulations of the most complex operational systems. The cloud means that these simulations can be run from almost anywhere, and this means that everyone from the boardroom to the factory floor can benefit from the powerful optimization that simulation can bring.
In 2020 industry is in the early stages of a fourth Industrial Revolution, what is often referred to as Industry 4.0. There’s the rise of artificial intelligence, nanotechnology, quantum computing and biotechnology. There are all of the possibilities that come from connecting billions of people online. There is the entirely unprecedented computing power available to industry, much of it mobile or in the cloud.
And there is complex systems simulation, a technology that will revolutionize the way that operations are optimized and generate the sorts of double-digit returns on investment in data that will truly transform industry.
Simulation and optimization delivers a truly 360° perspective and offers manufacturers the ability to make operational and strategic decisions in a truly systemic way. It elevates investments in artificial intelligence and machine learning and helps manufacturers move beyond silos, unlock savings, avoid unforeseen costs, and all while planning for a future where they can accelerate and succeed.
As we enter the post-COVID-19 recovery phase we are convinced that this simulation and optimization of operations and strategy will be a key lever for manufacturing success. As Bob Zukis, CEO of the Digital Directors Network, wrote recently in Forbes, this recovery era will be rich with ‘blue oceans’ ready to be exploited by those businesses that are able to “reconfigure their cost base and labor mix with automation, supply chain redesigns and reroutings” – and what better way to choose the optimal redesign, rerouting, cost and labor mix than simulation?
We are excited to see that the simulations that have for years helped design and plan industrial enterprise systems are now being extended to operations. The opportunities – social, economic, financial, organizational, even environmental – are just so enticing that it cannot be long before operational simulation and optimization evolves from something embraced by early adopters to standard operating procedure for industry across the board.