My university major is management science, and my undergraduate majors include statistics, operations research, simulation computing, etc. I have been working in the society for thirty years. Although I worked as an IT consultant most of the time, I mostly used addition, subtraction, multiplication and division. The data science learned in universities was just a dragon-slaying skill, and there was basically no use for it.
I only occasionally find some data science opportunities in enterprise management software. For example, I mentioned in the article "Market Opportunities for Enterprise Digital Intelligence Software | Is OLAP a Business Application or a Technology Platform?" that the SAP strategic performance management software in 2000 actually had a system dynamics model.
SimulationIt is an application of data science in business management. It is a decision support science in an uncertain environment.
For example, in the so-called "newsboy problem", the number of newspapers that a newspaper vendor wants to purchase the next day is a decision-making factor: if you buy too much, no one will buy expired newspapers, which will cause overstocking losses; if you buy less, you will lose opportunities in sales revenue and profits. In the newsboy's decision-making model, there are random variables - uncertain demand, and decision variables - purchase quantity. The final decision-making goal is to maximize the target profit for a day or a period of time.
Use software to simulate demand in uncertain environments. Many factors will affect demand, such as natural conditions (weather, temperature), social events, etc. The probability of occurrence of these complex uncertain events, as well as the interaction between events, can be used to support decision-making through simulation tools.
Simulation technology is widely used in engineering development (CAE) in the field of computer service design. Engineers simulate real-world events in a computer-generated environment to evaluate, optimize, and compare product designs; engineers can observe how models and systems interact to predict performance, defects, stress, and product life. Common modeling products include machinery, electrical systems, chemical reactions, thermal energy, weather, etc. Design simulation software vendors can provide libraries for simulating industry-specific scenarios, such as construction, aviation, road and pedestrian traffic, circuits, fluid dynamics, etc.
When we enlarge the simulation of the micro world to production lines and factories, to organizational interactions and business processes, and even to society and the world, from micro to meso to macro, many business use cases for simulation are provided:
By the way, there is a type of software called "business simulation" that does not involve data technology, such as scenario simulations of email document processing and interpersonal relationships between companies. It is also called serious gaming and is used for leadership assessment, leadership development, etc., and isSoftware in the field of human resources, does not belong to the scope of this article.
In addition to industrial simulation applications in the field of PLM, few people discuss commercial simulation applications in domestic management circles, enterprise informatization and digital transformation circles. Here are some manufacturers with a certain status in the industry:AnyLogic，Lanner/WITNESS，FlexSim。
AnyLogic originated from a scientific research project of the St. Petersburg State Technical University in Russia in the 1990s. In 2000, it launched an enterprise-level application software that includes business simulation, performance analysis, random system behavior, optimization and visualization. It is characterized by supporting three mainstream simulation technologies: the system dynamics method suitable for macro social environment simulation, the discrete event method suitable for meso-level business process simulation, and the agent based method suitable for organizational behavior simulation. Especially good at the latter. A simulation project can use one method or a combination of methods:
After 20 years of development, Anylogic has developed into a general enterprise-level simulation software based on Java technology. It has also launched the simulation cloud service Anylogic Cloud, and anyLogistix, which is specially optimized for logistics and supply chain simulation in combination with the CPLEX optimization engine.
Whether as general software or cloud services, Anylogic can be embedded in business applications in many scenarios to complete business simulation functions, including: marketing and competitive environment, social and ecosystem dynamics, pedestrian dynamics and road traffic, asset equipment and IT system operation and maintenance, enterprise business processes and organizational dynamics, etc. It is widely used in healthcare, manufacturing, supply chain and logistics, retail, national defense, aerospace, banking, insurance and other industries.
Anylogic’s direct customers are often scientists from consulting companies. The name of Boston Consulting Group (BCG) is ranked first on the client list of AnyLogic’s official website (https://the.anylogic.company):
AnyLogic provides extremely rich application cases, here are a few interesting examples:
- Simulate the interactive relationship between medical KOLs, doctors, medical representatives, and patients, predict new drug sales and drug prescription promotion factors, and optimize marketing investment strategies
- Based on factors such as population distribution, user behavior, government supervision and mobile communication technology development, to help mobile communication companies decide on the timing of 5G introduction and service coverage areas
- Help airlines formulate ticket pricing strategies and marketing strategies based on passenger behavior characteristics and user experience feedback, changes in social travel patterns, and competitor strategies
- At a large construction site, predict the amount of equipment and time required for earthmoving work based on information such as road and access conditions, truck loading capacity, unloading times, etc.
- In complex discrete manufacturing environments such as shipbuilding and aircraft assembly, optimize product design, improve production efficiency, and formulate risk response strategies based on worker skills, equipment, materials, etc.
- In labor-intensive service industries such as finance, call centers, and postal services, optimize personnel resource allocation based on business processes and service level agreements.
- 精神病患者送进社区医院、精神病院、拘禁所、居家、放任不管等选择，会对患者康复、社会道德和社会安全造成什么影响？
- Study how to reduce the rate of caesarean section by evaluating the interactive behavior of parturients, obstetricians, midwifery nurses, doctors, and medical insurance institutions.
Another simulation software is WITNES, which specializes in discrete event simulation and predictive simulation. The company that produces this software is called Lanner. Its predecessor was the operations research research institution of AT&T's British IT services division. The company was established through management acquisition in the mid-1990s. Like AnyLogic, it has experienced the evolution of productization, cloud platforms, and cloud services. In early 2019, Lanner was acquired by Royal Haskoning DHV, a Dutch construction and engineering consulting company that is committed to digital transformation.
The Simulation Group (TSG), an Australian advanced analytics consulting company, uses WITNESS simulation tools to carry out simulation analysis of supply chain optimization for mining companies and liquefied natural gas (LNG) companies. In August 2019, TSG was acquired by Boston Consulting and merged into its artificial intelligence consulting department.
What problem does TSG solve? The international LNG industry chain includes extraction, liquefaction, sales and transportation, heavy gasification, and retail. Since there are multiple supply sources around the world, the supply chain management of liquefied gas producers and traders is very complex. It needs to maximize shipping utilization while reducing total operational risks caused by weather, production reliability and other factors to achieve on-time delivery of products. Therefore, LPG manufacturers need to mathematically model factors such as multiple production units, regional weather, production reliability, evaporation and transportation conditions to support their decisions, such as: How to optimize fleet transportation plans? When capacity differences arise, should you charter a ship or buy a new one? How to configure the configuration of liquefaction terminal and receiving terminal? How to measure evaporation losses in delivery schedules?
Simulation software is the application of mathematics in management science. Foreign simulation software has long entered domestic university classrooms, academic institutions and enterprises, but it is very popular and quiet. It is no wonder that after the college entrance examination every year, on the Internet and in society, everyone can see more Chinese test papers, but not many people spray math test papers. Compared with foreign countries, China's business management and management consulting are still largely a world of liberal arts students rather than science students.
The threshold for starting a business in this type of software is relatively high, and there are also simulation software companies in China. A few years ago, I met Professor Lu from Tongji University who started a commercial simulation software called SIMOE. From the function of the software, I guess its principle should be based on the agent method. For example, he once cooperated with a consulting company to simulate business processes for a logistics company and optimize store staffing:
It is said that Professor Lu’s company has already successfully raised funds and entered the domestic logistics, pharmaceutical marketing and other fields. Foreign commercial simulation software has a strong academic background, but is actually quite niche and has not received much attention from the capital market. In the era of digitalization to digital intelligence, do you think there will be a market for simulation software in China?
Machine-translated from the Chinese original 商业仿真｜ 最理科生的企业管理软件 (published 2022-06-24). WeChat original ↗