How we helped a client save $50,000 with a small custom software solution

A case study for running simulations

In the world of business, making decisions can often be challenging, especially when there are conflicting opinions among key stakeholders. Such was the case for one of our wholesaler clients who found themselves at a crossroads regarding the expansion of their laboratory. The dilemma centered around whether to hire more personnel or invest in an expensive machine. In this blog post, we'll delve into the process we undertook to arrive at a cost-effective solution using a computer simulation program.

Understanding the Dilemma: Our client, a wholesaler with a factory involved in bottling and bagging pesticides, fertilizers, and seeds, also had a laboratory that required expansion. The laboratory primarily dealt with soil measurement, a process comprising several steps, like:

  • drying
  • grinding
  • pH measurement
  • carbonate measurement
  • bonding measurement
  • nitrate measurement

These measurements add up into a finished "complete measurement". When they had this, they could call the client that they're ready and what they should do with the results.

The Clash of Perspectives: Within the leadership and employee ranks, there was a disagreement between those advocating for hiring additional personnel and those favoring the purchase of an expensive machine. The machine promised to significantly boost the speed of the complete measurement process, performing at a rate 60 times faster than a human. However, the owner raised a valid point, expressing skepticism that any individual could truly be 60 times faster than another.

The Power of Simulation: To objectively assess the most effective approach, we proposed the development of a simulation program. This program would model the entire soil measurement process, taking into account various factors such as the frequency of sample receipt, drying times, minimum and maximum durations for each step, and more. By inputting these data into the simulation program, we could gain valuable insights into the resource requirements and limitations of each process.

Executing the Simulation: With the simulation program in place, we proceeded to create the necessary resources, including people, storages, and queues, and paired them with their respective process limitations. For example, a pH measurement required one person, while the bonding measurement necessitated the presence of distilled water, which had to be prepared by a designated person. We then simulated a 30-day work period to gauge the output: the count of "completed measurements."

Comparing Alternatives: To compare the hiring of additional personnel versus investing in the expensive machine, we ran the simulation program with different scenarios. We started by adding one more person to the team, recorded the result after 30 days, and continued this process with incremental additions. Additionally, we created an alternate version in which we simulated the last step with the presence of the new machine. After another 30-day simulation, we compared the outcomes of the alternative version with the previous setup.

The Surprising Revelation: The simulation results revealed a clear trend. The approach involving the hiring of additional personnel consistently produced a higher number of completed measurements compared to the scenario with the new machine. Despite management's initial inclination to invest in the machine, they couldn't argue with the hard data. The simulation ultimately saved them a substantial $50,000, a fraction of the cost they would have incurred otherwise.

The Importance of Validation: This case study serves as a reminder that exploring and validating alternative options can yield significant cost savings and better outcomes. While intuition and gut feelings are valuable, having the opportunity to back them up with concrete evidence can make a world of difference. The power of simulation allowed us to navigate conflicting opinions and arrive at a data-driven decision that proved beneficial for our client.

Conclusion: The experience with our wholesaler client highlights the importance of leveraging computer simulation programs to explore multiple possibilities before making critical business decisions. By objectively evaluating the impact of different approaches, we can avoid costly mistakes and find the most effective solution. So, the next time you find yourself at a crossroads, consider investing in simulations to validate your ideas and pave the way for success.