Success Dynamics

Success Dynamics
An Application of System Dynamics to Corporate
Success Logic
L k Schmid,
Lukas
S h id Katrin
K t i Hügel
Hü l & M
Marcell Loher
L h
Lisbon, 13
Lisbon
13. July 2010
24th European Conference on Operational Research
1
Motivation
2
Motivation
ƒ O
Opinion:
i i
I t iti can nott be
Intuition
b the
th „only“
l “ iinstrument
t
t for
f decision
d i i
support within strategic management
ƒ Idea: An explicit learning and experimentation environment
concerning the corporate success could improve decision making
ƒ Intention: Development of a practical concept for building a system
dynamics model of the corporate success logic
3
Concept
The following
Th
f ll i steps
t
are a resultlt off a research
h project
j t with
ith 4 iindustrial
d ti l
companies from Switzerland (>50 workshops):
1. Company analysis
→
Briefing
2. Qualitative modeling
→
Shared understanding
3. Quantitative modeling →
4 Scenario
4.
S
analysis
→
Simulation environment
S
Strategy
insights
4
Concept
The following
Th
f ll i steps
t
are a resultlt off a research
h project
j t with
ith 4 iindustrial
d ti l
companies from Switzerland (>50 workshops):
1. Company analysis
→
Briefing
2. Qualitative modeling
→
Shared understanding
3. Quantitative modeling →
4 Scenario
4.
S
analysis
→
Simulation environment
S
Strategy
insights
5
Concept
The following
Th
f ll i steps
t
are a resultlt off a research
h project
j t with
ith 4 iindustrial
d ti l
companies from Switzerland (>50 workshops):
1. Company analysis
→
Briefing
2. Qualitative modeling
→
Shared understanding
3. Quantitative modeling →
4 Scenario
4.
S
analysis
→
Simulation environment
S
Strategy
insights
6
Question to the management board
How do you think
looks the logic of
your corporate success?
7
Causal-loop Diagram (CLD)
EBIT [$/q]
+
Customers
[nbr]
Product revenue
[$/q]
+
+
+
Inquiries
[nbr/q]
[
/q]
+
Products sold
[pc/a]
+
+
Costs of material
[$/q]
[$
q]
Product price
[$/pc]
Success rate
[%]
+
Customer value
[…]
8
Causal-loop Diagram (CLD)
Umlaufvermoegen
[CHF]
+
Gesamtvermoegen
[CHF]
+
+
Abschreibungen
[CHF/a]
Anlagevermoegen
[CHF]
-EBIT [CHF/a]
- -
<Technologiecenter
[]>
<Investition in
F&E [CHF/a]>
++
Betriebskosten
[CHF/a]
+
-
<Qualitaet
Komponentenlager
[]>
+
Trsp.Kosten
[CHF/a]
+
+
Kooperationen
[]
+
+
Anfragen
[Anz/a]
+
Absatz
[Stk/a] +
+
Materialkosten
[CHF/a]
Marge [%]
+
+
Trsp.Stueckkosten
[CHF/Stk]
Anlagenstueckkosten
[CHF/Stk]
+
+ +
Peripheriestuekkosten
+
[CHF/Stk]
+
rel.
Waehrung []
externe
Komponenten
+ [CHF/Stk]
+
Rohmaterialpreis
[CHF/kg]
+
+
<rel.
Waehrung []>
Trefferquote
[%]
+
+
+
+
Offertenqualitaet
[]
+
Montagezeit
[d]
Anlagen im
Betrieb [Anz]
<Kunden
[Anz]>
+
+
Kundenservice
[]
+
+
Kundenspez.
Vorfertigung [d]
+
-
Produktqualitaet
+
[]
Praeventive
Maintenance []
+
Qualitaet
Komponentenlager
[]
<Produktqualitaet
[]>
Mitarbeiter
Kundendienst/Service
[Anz]
Mitarbeitermotivation
[]
+
Qualitaet +
+ Mitarbeiter
+ []
+
Personalkosten++
[CHF/a] +
+
+
+ +
Mitarbeiter
Admin [Anz]
Mitarbeiter
Verkauf [Anz]
Fluktuationsrate
[Anz/a]
-
Assesments
[]
Investition in
F&E [CHF/a]
Hemmungen
der Kunden []
Serviceleistungen
[CHF/a]+
+
Technologieführerschaft <Produktqualitaet
<Feedback
[]
[]>
Servicemitarbeiter
+
+
Reaktionsgeschwindigkeit
[]>
[]
Bestellabwicklung
+
Know-how
[d]
Lieferzeit+
Servicemitarbeiter
[d]
+
[]
+
Qualitaet
+
Testlauf [d]
Forecast []
Produktionszeit
Komponenten [d]
Feedback
Servicemitarbeiter
[]
+
<Schulung von
Kundenmitarbeitern
[]>
Ersatzteilgeschaeft
[CHF/a]
-+
+
Liefertreue
[%]
+
Image []
++
+
Produktinnovation
+ []
+
Marktkenntnis
[]
Schulung von
Kundenmitarbeitern
[]
<Druckguss-Prozess
Know-how []>
Beziehungsnetz
[]
Kundennutzen
[]
+
+ +
-
Druckguss-Prozess
Know-how+[]
+
+
+
kritische Know-how
Know how
Träger []
+
-
<Fluktuationsrate
[Anz/a]>
Technologiecenter
[]
neue
Anwendungen/neue
Maerkte []
Markentreue
+
[]
rel. Preis []
+
+
Skills-Management
[]
+
Konkurrenzpreis
[CHF/Stk]
Montagekosten
[CHF/Stk]
Eigenfertigung
ML
+ [CHF/Stk]
Produktionssteigerung
der Kunden []
<Mitarbeiter
Verkauf [Anz]>
+
Herstellstueckkosten
H
t ll t
kk t
[CHF/Stk]
+
+
Engineeringkosten
[CHF/Stk]
Materialstueckkosten
[CHF/Stk]
+
+
Substitution von
anderen
Werkstoffen []
Kunden [Anz]
Preis
[CHF/Stk]
+
+
+
Substitution von
Leichtmetallen []
+
Marktvolumen[Anz/a] +
-
+
Produktlebenszeiten
[a]
Produktemix
[]
Energiepreise
[]
+
Preis
Rohaluminium
[CHF/kg]
+
Zyklizitaet
Business []
betrieblicher
Umsatz [CHF/a]
+
+
Lagerkosten
[CHF/a]
+
Verunsicherung
der Endkunden []
ROI [%]
+
Mitarbeiter
Anwend.technik
[Anz]
Investition in
Weiterbildung
[CHF/a]
Mitarbeiter
Konstruktion/Entwicklung
[Anz]
Fuehrungsqualitaet
[]
Mitarbeiter
Montage [Anz]
9
Concept
The following
Th
f ll i steps
t
are a resultlt off a research
h project
j t with
ith 4 iindustrial
d ti l
companies from Switzerland (>50 workshops):
1. Company analysis
→
Briefing
2. Qualitative modeling
→
Shared understanding
3. Quantitative modeling →
4 Scenario
4.
S
analysis
→
Simulation environment
S
Strategy
insights
10
Generic Backbone
Cash
flow
Reputation
Network
Balance
sheet
Income
statement
Customers
Employers
Production
Employers
qualification
Innovations
11
Generic Backbone
12
Stock-and-flow Diagram (SFD)
13
Simulation
[$/q]
i.e. Revenue
[[a]]
2002
2004
2006
2008
2010
14
Concept
The following
Th
f ll i steps
t
are a resultlt off a research
h project
j t with
ith 4 iindustrial
d ti l
companies from Switzerland (>50 workshops):
1. Company analysis
→
Briefing
2. Qualitative modeling
→
Shared understanding
3. Quantitative modeling →
4 Scenario
4.
S
analysis
→
Simulation environment
S
Strategy
insights
15
Cockpit
16
Analysis
[$/q]
i.e. Revenue
[[a]]
2002
2004
2006
2008
2010
17
Concept
The following
Th
f ll i steps
t
are a resultlt off a research
h project
j t with
ith 4 iindustrial
d ti l
companies from Switzerland (>50 workshops):
1. Company analysis
→
Briefing
2. Qualitative modeling
→
Shared understanding
3. Quantitative modeling →
4 Scenario
4.
S
analysis
→
Simulation environment
S
Strategy
insights
18
Benefits
ƒ
Development of a shared understanding (unité de doctrine) within
the management
g
board ((modeling
g process))
ƒ
Helpful as an instrument for communication and reflection
because of the holistic illustration
ƒ
Consideration of soft factors and feedback loops in addition to
classical management accounting
ƒ
Potential
o e a to
o beco
become
e a use
useful
u tool
oo for
o sstrategic
a eg c p
planning
a
ga
and
d risk
s
management
19
Summary & Outlook
Achievements:
ƒ 4 individual simulation models of corporate success logic using the
system dynamics methodology
ƒ Derivation of a rudimental generic backbone for the quantitative model
ƒ Suggestion of a practical concept leading to a learning and
experimentation environment for strategic management
Needs:
N
d
ƒ Further development of the generic back bone
ƒ Advanced concepts for making implicit knowledge explicit (feedback
loops, policies, soft factors)
ƒ Reduction of barriers for simulation and experimentation (user
i t
interaction)
ti )
20
Thanks to
Managementt Boards
M
B
d
- Buhler Diecast AG
- Telsonic AG
- Benninger Guss AG
- Kelag AG
Project
P
j t Funding
F di
- Confederation’s innovation
promotion agency
g
y ((CTI))
- FHS St.Gallen
- University of St.Gallen
Research Core Team
- Prof.
Prof Marcel Loher (FHS-IMS)
(FHS IMS)
- Dr. Katrin Hügel (FHS-IMS)
- Prof.
o Roland
o a d Waibel
a be ((FHS-IFU)
S U)
Informatics Support
- Urs Frei (FHS-IMS)
Scientific Support
- Prof. Markus Schwaninger (UNISG-IfB)
21