The Simulation ROI

With the current drive to lower cost and increase efficiency, companies have been looking for different and improved methods to achieve their competitive edge. Through the years, many methodologies were used to try to improve the current process flow, yet everyone struggled to achieve a good implementation. One of the key problems that faced the industry was the validation of the proposed solution and how it affects the rest of the operation.

Today’s process improvement procedures include the use of the tested methods used in Lean manufacturing concepts. Those methods work great if implemented and transitioned into properly, otherwise chaos and inefficiencies can ruin the existing operation. Only proper planning can prevent a disaster and create a scenario that spells success in the long run. Simulation technology has evolved exponentially in the last few years in order to provide a better interface for model creation. Moreover, the accuracy of the simulated models is in the upward of 98% of real world scenario, which renders simulation technology a key step to avoid unforeseen problems. The key to the success of simulation is its ability to include the time aspect into the model of constraints, therefore rendering a correct view into the inter-process interaction that can not be achieved with static models.

Today’s leading simulation tools also include tie-in into the Lean manufacturing concepts, therefore allowing engineers to study and analyze the best scenarios to apply lean technology into the process environment. Moreover, the transition plan can be tested and analyzed to minimize the impact on current production schedules and achieve optimum efficiencies during an otherwise hectic phase. Tying the simulation with existing CAD data and running before and after scenarios provide the perfect presentation environment to help educate and introduce the change to everyone involved in the operation.

Simulation tools are used to minimize risk and maximize the efficiency of any process based environment. On the other hand, simulation tools seem to introduce a cost related to building models that effectively relate to the real world environment.

Today’s new generation of simulation tools include new and improved interfaces that simplify the model creation through graphical interface and eliminate the need for most of the coding that was required in older tools. Moreover, new simulation tools provide an interface that directly communicates with the simulation engine, therefore eliminating the key hurdle that faced the simulation industry in the past. It should be noted, that without using simulation tools, process engineers must create, using other tools, a static view of the new environment and perform analysis using static tools that do not provide enough insight into the operation. With that in mind, the need for documentation lends itself into building the simulation models, which are used as future communication tools and flow documentation that contain far more information than traditional methods.

Improving a process flow starts by creating a replica of the existing line. The model is then simulated, and validated to prove that its behavior and results are comparable to existing data. Some simulation tools, such as Simcad Pro, contain internal validation tool that make sure that every part and every flow is accounted for. With the model built, the simulator can now play the “what if” game and to identify the best improvement that provide the most benefit to the operation. Of course, performing the same “what if” scenarios on the actual line is not only expensive and inefficient, but it interrupts the process flow and reduces the revenue stream for the company.

Every process flow, no matter how archaic or improved, can benefit from the re-arrangement and application of a lean or six sigma initiative. The simulated model can not only provide guidance to which area to address first, but also to provide an insight on how to transition to the new flow. A classic example is travel time in any process flow. Expanding this common problem further, an operation that contains “excessive” resource or part travel incurs additional cost through the non-value added time to the total product lead time.

A resource that travel the floor to move parts or bins from one location to another 30% of the time cost the company 30% of salaries, benefits and intangibles without generating a return. Moreover, each product is taking longer to be produced resulting in increased inventory on the production floor, and therefore more money is tied in into the operation which can be otherwise freed up to either improve cash flow or implement process improvement. The following table provides a comparison,

The total savings in such an implementation is $9500.00 off the bottom line inventory cost. This amount was tied up in in-production inventory used mainly to keep production flowing. In addition, eliminating a $2.25/hour per person, in a 200 employee factory equals $3600.00 per shift compounded over a year (340 days) $1,224,000.00 per year per shift. Add to that the reduced lead time, which increases the production throughput by 46% using the same equipment, resources, and schedules; Bottom line, one less production shift. Are those results achievable? Definitely!

The key is to all that improvement is that the solution is achieved without having to take a risk in performing the change. All scenarios would have been analyzed and tested before the rollout, hence creating a successful implementation every time. With that in mind, the simulated model can be used to provide predictive insight on the loading of the operation using interconnection between tracking systems (ERP, MRP, and the like) and the simulation tool (like Simcad Pro). By incorporating current process loading along with future production schedules, the simulation environment provides a look into the future of the line detailing resource requirement, projected lead time, potential bottlenecks, and most of all optimized production schedules.

For simulation technology to work effectively, and to produce positive results, all projects must be performed as “goal oriented” projects, were the simulation model is designed to optimize a section of the flow. After optimization is complete, it should be plugged into the overall model to see the effect of the change on the overall flow in order to avoid shifting the problem downstream.

It is recommended that since it is simple to experiment with different scenarios when a potential solution is found, best, average, and worst case scenarios should be simulated in order to build confidence in the viability of the solution. There is no need for process flow engineers to take an uncalculated risk in determining the best flow for an operation.

Simulation technologies not only provide a “Risk Management and Reduction” environment, but a view into the intricate details of the operation that helps in identifying optimum solutions that maximizes the overall bottom line. Companies in all sectors, from manufacturing and automation to healthcare and banking are utilizing simulation technologies effectively and with impressive results. With the interfaces of new tools into simulation software, the future of this technology is brighter and more promising then ever. By passing the use of simulation is becoming a liability to companies that are faced by fierce competition for production cost and lead time.

By
Hosni Adra
Product Manager/Partner
CreateASoft, Inc.
 

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