Decision Yield and Other Disruptive Metrics
Blog: Apriso Blog
In this final blog on agility and why you should consider becoming an agilist to survive the new completion (of the continuous mention) of the application of enterprise decision management systems (EDMS) from Taylor and Raden cited in the first blog, I turn to the metric of agility and a new ROI metric of decision yield. After-all, shouldn’t we be focused on the return to the business of new investments in a platform for supporting agility? The answer is a resounding “yes” since decisions have cost implications regardless of whether or not a decision is made. A quick study on opportunity costs reminds us of the cost implications of NOT making a decision or when faced with several paths to decide upon.
Building Enterprise Decision Management Systems
In previous posts you learned about the characteristics and types of decision making and that the first question that often arises is how to compare these decisions equally. Also that Taylor and Raden describe five dimensions of decision yield that you should consider when building an EDMS. These dimensions, when reviewed, will also permit you to determine which decisions should be automated and which demand a more “personal touch” since the impact or cost may be significant. It is important to be able manage all five aspects since leaving one behind could have unintended consequences and defeat the entire process all together. A unified platform within your operational and planning environment with a single source of data permits reaching all aspects and diminishes the opportunity for weak decision making under disciplined conditions. Let us take a brief look at these dimensions and see how they might be considered in the Production Control, Logistics Planning and Optimization and Supply Chain Optimization space.
The Need for Speed
The culture of an organization determines the second dimension of decision making in that of Speed. Decision making is such an import asset, as we have discussed, that companies invest heavily into this critical task. While it may not be perceived as an asset, we have covered the fact that agility relies on the speed of not only making the decision but also to the time at which the impact is realized through a change in behavior or process. The speed can also be determined as to which decisions, perhaps those annoying operational ones, can be automated through business rules or information systems. The best system being a single platform with a unified data model and seamless integration of data and artifacts.
The third dimension of decision yield is all about the precision of the decision; how targeted is the decision and impact? Dimensional quality of production is highly influenced by the tools and skill of operations; higher tolerances demand precise tools and skills to realize the proper yield. So is true in decision making where a tight tolerance on the desired impact or outcome demands a complete set of data in full context to make the “best” decisions. Siloed systems and pockets of information and expertise will not yield a precise decision.
Consistency of Decision Making
Our fourth dimension is the consistency of decisions made over time. Operational facilities strive to be consistent in the quality and performance of their products as these aspects build brands, the holy grail of marketing and market share. Being able to make consistent decisions across your organization will ultimately dictate the speed at which your entire company progresses in its market. This scope is not only within a single facility, but also across divisions, business units and the entire company as a whole. Strategic decision making is usually held very tight to a select few; the process is rigid and very formal. It is easier to keep this type of decision making consistent. However, how can you ensure that operational decisions at the low business process level are consistent? A methodology for making such decisions built upon a unified model of operations brings huge progress to these often-overlooked gems of operations.
The final dimension of decision yield is perhaps the most difficult to figure out since it too is also rooted in your company’s culture. The cost of making a decision, like all costs in operations, can be hard or soft. The ones we can measure, time, frequency and dollarization, companies tend to focus on all the time. Lean thinking and processes are focused on removing these “wastes.” Soft costs are often overlooked since they are not easily quantified or even seen in daily operations. An example might be the cost in not making a decision at all or making a different decision. This is the case so often when provided accurate data, a different decision is made and the outcome is very different. The costs that need to be considered quickly become overwhelming in today’s complex supply chain since speed to market and agility are now premium characteristics of the leaders in today’s markets.
I have written about agilibility and decision yield and how they might make you an agilist in your own realm. There may be other metrics to describe the new operational world and supply chain we find ourselves in. The time is now to think differently since it is a matter of survival. Amazon has shown the world how to achieve this, but for manufacturers and producers it is not as easy as the asset counts are high, the people component is varied and technology is racing ahead of them all.
This blog is the final in a series of four on Planning and Optimization. Get caught up with “Agilibility– Are you an Agilist?” “Knowledge May Imply Power, but Action Rules the Day” and “Treat Operational Decision Making as a Corporate Asset.”
Are you looking to become an Agilist or increase your supply chain velocity and agility? Reach out the DELMIA Operations Consulting Team at Dassault Systems to see how we have changed company’s ability to respond to disruptions and change.