How OR Drives Success at P

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  josephmartins02/14/08 Report as spam
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  OR lovin'

  It's nice to see OR get some love from mainstream media. P&G is certainly not the first to place OR front-and-center in decision making, but I'm glad its use of OR gets the attention of journalists.
  
  Let OR run the ball to the 5, and let experience take it home.
  
  This almost makes all those student loan payments worthwhile.

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  steven.alker02/14/08 Report as spam
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  RE: How OR Drives Success at P

  Fascinating and about time that the OR people came out of the closet.
  
  I had the pleasure of working for a pioneer of OR who was a member of the Institute of Linear Programming back in 1980. Hugh Walton devised an analogue LP system for optimising corporate models. His first success was with English China Clays where he effectively rescued their ailing operation by optimising the production of various clay pits and other resources to meet the global demand for their finished products. His results were published in the Financial Times as early as 1974.
  
  The beauty of the analogue approach was that it was interactive and an intelligent operator could examine the implications of optimal and sub-optimal solutions. Often, the sub-optimal solutions were more acceptable for political, strategic or even personal executive reasons ? optimising corporate profit in a private company by getting rid of the Chairman?s Yacht or Rolls Royce was often unacceptable.
  
  Digital methods at the time, though ultimately much more accurate were incapable of producing results in real time and investigating the interplay between resources and constraints during the optimisation process. Getting sub-optimal interim results took all week!
  
  I have recently started to revive the practice of optimisation in small business marketing as current mathematical models running on a PC are only now capable of producing the interactivity which Hugh?s analogue monsters would.
  
  By the way, this was a timely and brilliantly written article which will hopefully awaken the SMEA sector to the possibilities. May I have your permission, to publish it on MarketingProfs ? www.marketingprofs.com as a topic on the forum?
  
  Steve Alker
  Stevea on www.marketingprofs.com and www.salesvisiononline.com

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  n-solis02/19/08 Report as spam
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  BNET Reprint Info

  Hey, Steve--
  
  If you want to link to the article, go right ahead. You'll find all the information you need for full-text reprints on this page: http://www.cnetnetworks.com/editorial/permissions.html.
  
  Best,
  Nicole Solis
  Managing Editor, BNET

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  Francois Grobler07/09/08 Report as spam
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  OR in the mining industry

  Any tips on the application of OR in the mining industry? We are still struggling to get clients to bite on quantitative modelling (e.g. Monte Carlo Risk Analysis). How do you convince a client that he needs this and that it's not just a "nice to have"...

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  behmkj@...02/14/08 Report as spam
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  RE: How OR Drives Success at P

  good article,good working model.

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  hema_kadali02/14/08 Report as spam
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  RE: How OR Drives Success at P

  A great article on OR analytivs

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  phil01dav02/14/08 Report as spam
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  RE: How OR Drives Success at P

  Operation research is the concept of the future, though it has been effectively deployed to enhance competitiveness as read from the P&G case, its full capabilities would remain evolving for a long time.

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  phil01dav02/14/08 Report as spam
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  RE: How OR Drives Success at P

  Policy/Standards and OR
  I would be very interested to understand if OR has been used for IT policy/standards to determine:
  * best fit
  * cost of implementation
  * value add
  Has OR been used in P&G in this aspect at all?
  gneal

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  Agoma02/15/08 Report as spam
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  RE: How OR Drives Success at P

  P&G has demonstrated a clear understanding of Modern supply Chain principles which aims at optimizing efficiences and reducing cost along their value chain from point of sourcing to delivering their product to the customer rather than focussing on functional boundaries..
  Thats why rather than accepting conventional wisdom that a new warehouse would lead to more Inventory and higher costs they evaluated the Impact along their entire supply chain and discovered that overall inpact would be better placement of Inventory at the right place and time, reduced inventories and lower cost. No doubt the use of sophisticated data processing systems have helped them in their valuation of their supply chains giving the number of products they have and the quantum of activities generated regularly in their business.

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  chf@...02/15/08 Report as spam
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  OR is smart, but ...

  all this is sure impressive, and there's no way one can model complex and ill-structured decision processes for decision support purposes without the help of operations research ; but however powerful OR tools may have become, it happens that quite often they can't model THE WHOLE of the decision process ; some (at least tiny) part of this process is still handled by the human decision maker ...
  therefore, it may be that some interest should be kept for knowledge-based systems (e.g. expert-systems) which aim at modelling expertise, modelling the way (obvioulsy good) decision-makers process information until they reach their final decision.
  e.g; : when a customs agent scans a container, he looks for specific signs of specific risks, and probably OR could handled that complexity at a given time, but what about updating the model when signs of a risk change, when a new risk emerges ? and wouldn't it be faster / easier / reliable to have the agent "think aloud" using then some kind of verbal protocol analysis ?

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  rich@...02/19/08 Report as spam
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  Agree with OR is smart, BUT...

  Nice article, but I agree with this comment about the limits of OR: these techniques are indeed very powerful, but are conditioned on some important assumptions - time and/or space problem bounds, high quality real-time data, and most important of all - little if any disruptive (e.g., non-linear) changes. (And as they say in financial prospectuses, past performance is not guarantee of future results.) All of this means that the utility of OR is primarily confined to tactical and operations support.
  
  However, strategy is the basic source of sustainable competitive advantage (per Michael Porter). So what about decisions about re-architecting supply chains (which Wal-Mart wants to do now that competitors have finally replicated their ground-breaking methods and technology) or other decisions over medium and long-term intervals? High quality data is not available, certainly not in the precise quantitative forms demanded by OR. Disruptive events become increasing likely. And adaptive behaviors by individuals and organizations, nations, etc need to be factored into the mix.
  This domain calls for other kinds of techniques, including scenario planning, system dynamics, Monte Carlo methods, complex adaptive systems, and game theory. And, as per chf, explicit methodologies to support decision-making processes, not just complex models. (see www.decpath.com for a more detailed discussion of these issues)

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  Analytics4Me02/19/08 Report as spam
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  What is OR?

  It's possible that you may be defining "OR" or "Analytics" a bit too narrowly - it is much more than linear programming methods, which I completely agree have limited scope if you use them in purely textbook (non-industrial strength) problems.
  
  Our shop utilizes a very robust suite of tools - linear, non-linear, decision analysis, dynamic simulation, monte carlo simulation, fundamental and advanced statistical analyses, etc. We believe strongly that a good analytics practictioner can't have too many quality tools in their toolbelts, because at the end of the day you are helping a decision-maker make the best decision possible in light of quantitative and qualitative contraints and uncertainties. It's the role of a seasoned analytics professional to choose the right tool for the job -- and THAT's what makes this work so facinating!
  
  -Glenn Wegryn
  
  PS Thanks to Andy and Jake for a great article on OR/Analytics, and thanks also to the readers for your comments, too.

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  jeffrey.s.davis02/20/08 Report as spam
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  Re:

  Great follow-up comment, Glenn. One question we didn't have room to address in the article: How does a small or midsize company take advantage of all these slick OR tools? Or is OR by definition a practice that ideally requires big scale?
  
  Jeff Davis
  Executive editor, BNET

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  Analytics4Me02/20/08 Report as spam
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  Analytics for Small & Medium businesses

  Thanks Jeff. Good question. Small and medium-size companies can leverage several external sources to get started, such as:
  - analytic consultancies, specializing in end-to-end analysis;
  - larger software vendors who have an on-staff consulting capability (while, of course they are attempting to sell their software, piloting for a reasonable fee lets you try before buying and better understand the capabilities the analytic software can bring);
  - a number of universities with quant departments are always looking for businesses to consult with and give their grad students real-life experience on business problem solving.
  
  As a business develops a better understanding of analytics capability, it may warrant investing in an on-staff analytics resource -- preferably someone who is already within the company who understands the operations and culture of the company. The resource's time could be split between in-house analysis; developing improved data streams for analysis, and coordinating additional analytical work from any of the above sources.
  
  - Glenn

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  boboye02/15/08 Report as spam
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  RE: How OR Drives Success at P

  This piece is thought provoking. I have bookmarked. I also shar it with several of my team mates here at Deloitte Nigeria.
  
  Mobola

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  phardin1@...02/15/08 Report as spam
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  RE: How OR Drives Success at P

  Great article. I am going to use as a good example to my Principles of Marketing students.

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  jgrmathews02/15/08 Report as spam
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  RE: How OR Drives Success at P

  Re hOW or Drives Success. Like the person above, I have been looking for something current to 'spice up' a forthcoming workshop on Organisational monitoring - this is most useful. Giles Mathews

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  nolens.volens02/26/08 Report as spam
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  OR seems closed-door for new job seekers

  As a Master's student in OR background, I completely agree with this article! I believe in the strength of OR and would love to continue pursue it as my career. Although I've heard the saying "the industry is short on people who can deploy OR and frame it in a business context" several times, I'm starting to find it hard to believe when I begin to look for a job in OR field. Most of the jobs out there labeled "supply chain" need little of the OR techniques described in the article but just a strong sense of common sense. But that's not at all what I'm looking for. I'm looking for a technical job as described in Wegryn's analytics team. The kind of stuff that they are doing sounds really exciting! After reading this article, I feel stimulated knowing that there are actually jobs out there that I like! I guess I've been looking in a wrong direction... Any suggestion?
  Thanks a lot for the great article!

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  indizyne06/27/08 Report as spam
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  Reply to your question

  I would suggest you open up your search a bnit. Not many recruiters are familiar with this field and capture the job title in different ways. Look into the roles that talk about either analytics, analysis, optimization or similar themes. However, chances are mostly l;arge firms would be lloking for people as the software systems can be pretty pricey

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  AppliedOR07/08/08 Report as spam
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  RE: OR seems closed-door for new job seekers

  I would agree with the previous reply, and add that a large number of companies likely won't have a department or job title with the formal name of "operations research." More than likely, OR skills will be present in a number of areas such as IT, Finance, or Operations, but these jobs may entail other duties as well.
  
  When looking for jobs outside of the consulting sector, it's important to remember that these companies aren't in business to explore operations research projects. The people, the projects, and the tools are a significant investment that some companies will make, but most will not without a well defined ROI. Also, most companies may not have good technical career paths for OR professionals, so the continuity of OR skills is difficult for some to maintain. More often than not, companies will depend upon outside consultants for OR expertise, and use their internal people for maintenance and support.
  
  Based on my experience, there's a strong need for analytic skills, but this may not always involve cutting edge OR methods. To build or be a part of these teams, you must be willing to perform basic analytics, and identify and communicate opportunities for more advanced modeling. Since OR projects aren't always high priority, I wouldn't expect to have a long career of multiple projects with one company.

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  Rajiur02/27/08 Report as spam
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  RE: How OR Drives Success at P

  As an Academic in Industrial Engineering and Management department in a university I completely agree with the article. Inaddition to that, I belive that OR has the potential to improve the standard of living in devloping countries by helping the efficient utilization of limited resources. So this type of article is very much helpfull to the professionals in devloping countries as well. Thank you for sharing a very good and informative write up. Wish you all the best....
  
  Rajiur

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  AppliedOR03/07/08 Report as spam
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  Gaining Acceptance

  This article is good example of an OR department with established credibility.
  
  One question I?ve struggled with in the corporate world is how to position OR within the company and market the techniques throughout the business. Most OR professionals would like to stay focused on analytical tasks, but you have to make a significant effort to market your skills throughout the organization. That mixed role is difficult for the typical OR personality.
  
  Most OR projects are not small efforts ? requiring analysts, IT professionals, and business experts. Such projects need approval and support from upper management. Until you?ve established the value of OR, it seems best to focus on smaller efforts that provide some return on investment.
  
  I think many companies are looking for individuals who can market and build these departments from the ground up, rather than the pure analyst. That?s been my experience in companies without a strong OR history. Any comments?

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  joji.aguila@...03/18/08 Report as spam
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  RE: How OR Drives Success at P

  I'm a huge believer of OR, currently I'm taking my MBA and struggling to learn or re-learn linear programming- I know, just one of those basics. But I want to really understand it and use it in my decision making thought processes. Wish me luck!

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  Eisner03/26/08 Report as spam
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  How Cornell Operations Research Graduates Have Helped P

  Procter and Gamble has avidly recruited Cornell Operations Research graduates for many years. To learn more about the relationship, which goes back to a 1923 Cornell Industrial Engineering graduate named Alan Mogesen, see http://www.orie.cornell.edu/orie/news/news/profile.cfm?id=31623