David F. Carr of Forbes Magazine recently wrote an article based on an interview with Steve Sashihara, the author of the new book called "The Optimization Edge: Reinventing Decision Making to Optimize all of Your Company's Assets".
The article does a great job of explaining how firms need to embed mathematical optimization deep into their organizations to really take advantage of their investment in IT and data.
"One of his [Steve Shashihara] most interesting arguments is that a great deal of the effort spent on information gathering and analysis is wasted — or, at least, used sub-optimally — when it’s used to feed business intelligence systems that produce reports that ultimately wind up with being fed into spreadsheets and PowerPoint slides. Managers then sit around in a conference room listening to presentations and debating what the data means and what decisions should be made about it — when, in many cases, good software could make the decision itself."
The article mentions that IBM and IBM's ILOG CPLEX have the ability to address the need for more automated optimization. This article confirms the value we've seen in Optimization:
- A U.S. Bank reduced its outstanding cash balance by $2B by optimizing the replenishment of ATMs
- Netherlands Railway reduced cost by $30M USD and captured $57M USD by using optimization to improve efficiency and improve customer service
- Indeval, Mexico's Central Security Depository, clears $250B a day with optimization, saving $240M in interest payments
- MillerCoors used optimization to help with their $750M in savings from the merger of the two organizations
- Mars and Wrigley talked about the value of optimization and supply chain modeling, savings $10M just in the initial modeling, and much more with detailed modeling
And the list could go on. We are finding that firms who push optimization deep into their organizations see significant returns on their investment.
As a complement to the Forbes article, we have just released a short educational video to explain the value of mathematical optimization to business leaders. Click here for a link to that video.