Using Simulation as a Strategic Sales Tool

Recent articles on the successful modification of distribution processes at Vans and Rexam illustrate the supply chain's impact on operations and customer satisfaction. Vans, for instance, has optimized its distribution-resource-planning process in order to direct-ship customized shoe orders (Information Week, September 2004). In order to deliver what customers need, when they need it, Rexam has adopted the demand-driven supply chain (Business Week, September 2004). Industries worldwide are realizing that the next generation of supply chain management requires the flexibility to adapt to changing market conditions, effective business strategy, and the technology to implement an efficient process across supply, production, transportation, distribution and customer delivery components.

From healthcare to retail to transportation, the complexities of designing an efficient system exist across industries. And while developing these processes is challenging, communicating the benefits of the design or proposed upgrades can be an equally difficult step. Simulation modeling provides an effective tool to sell and validate such complex concepts. It allows stakeholders to visualize, understand, and gain quantifiable data to support a major capital investment. As proven by our case study on automating the Federal Reserve Bank, simulation modeling can play a key role in communicating system design and gaining approval for prominent contracts.

AAI client Productivity Systems International, Inc. (PSI) - an independent engineering and consulting firm specializing in the design and implementation of integrated material storage, handling and control systems - used a simulation model to help the Federal Reserve Bank of New York (New York Fed) understand the benefits of automating its storage and distribution processes. One of the 12 regional Federal Reserve Banks in the country, the new operations center of the New York Fed is a complex facility for receiving, sorting, storing, processing, and distributing cash. Increased activity required the bank to implement a more efficient method to support processing equipment that detects counterfeit bills, to sort and circulate money, and securely store the reserves. With a zero tolerance for failure, PSI proposed an automated system - a solution that would increase storage capacity and automate manual processes while eliminating errors and security risks.

PSI used AAI's simulation modeling solution to validate the automated storage and distribution process to the bank's Board of Governors. Through simulation, PSI was able to:

• Demonstrate the new operation process
• Validate staffing and resource requirements
• Illustrate the scalability of the design and its ability to handle the bank's growing demands
• Identify opportunities to reduce cost
• Communicate how the new design would integrate with security procedures

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