Why Enterprise Simulation Is a Game-Changer You Can't Afford to Ignore

I want to discuss the idea of simulation modeling at scale (at the enterprise level), which I believe is a current trend for many reasons. I plan to explore this in a trio of blog posts. In this post, I will provide a high-level overview of why implementing such an idea is intrinsically valuable and desirable. The second post will discuss why this approach maximizes the ROI of incorporating simulation modeling into a business's core system-thinking repository. Lastly, we will explore how this concept could be considered a core capability of Digital Twinning at an enterprise scale.

To better explain why Enterprise Simulation is such an interesting trend, I first need to give you a visual representation of both terms: Enterprise and Simulation. As we continue, I want you to keep these illustrations in mind, and the idea will start to make a lot more sense.

• Enterprise: In the context of a business, "enterprise" refers to a large organization or corporation that operates on a significant scale, often with complex structures, multiple departments, and diverse operations. We can visualize this as a successful business that has key elements (think of them as nodes) distributed geographically, connected through various relationships. Consider how this graph of nodes and edges has been created over time. A restaurant chain might start with its first location and then replicate that successful business model in different locations, modifying each new branch to adapt to constraints or opportunities in the new environment. This process continues until you end up with hundreds of interconnected nodes, or perhaps hubs that support several of these nodes. For example, you might start with Restaurant X, open franchises in 10 more locations, and now need a corporate office node for all operations, along with other nodes like raw food suppliers that support the core units of your business (the restaurant nodes). To be clear, mega enterprises might have different graphs of nodes for different aspects of their business. For example, Amazon has a graph of data centers, a graph of fulfillment centers, a graph of last-mile delivery operations, and so on.

  
  

• Simulation: Discrete Event Simulation (DES) (including both process-centric and agent-based modeling) is a method used to represent and analyze the behavior of a system as a sequence of events in time. In this type of simulation, the state of the system changes at specific points when an event occurs. At its core, it is a simulation engine that can execute the next few steps of an operation (for example, the next X events or the next X time units) based on some set rules. As it executes these events, new horizons open up, and it keeps moving forward, looking into the future (prospection). Even with identical initial conditions, things will diverge into different horizons, and alternative paths will emerge. Intuitively, we can sense that exploring all these paths is very computationally expensive. However, this is where another core aspect of simulation modeling comes in: abstraction. Abstraction is the art of cutting down all the unnecessary factors that won’t affect the main (or most impactful) elements of the system—essentially, trimming the system and its behavior to its core as much as possible. This solves the problem of computational limits and allows us to "cheat" time (and the ever-expanding entropy) to move forward faster than reality. And as you guessed it, knowing what will happen in the future is the magical information that separates winners from losers!

Just imagine how great it would be to combine these two ideas and reap the benefits of simulation modeling at an enterprise scale! If you have already built models for one node of your business (a warehouse, fulfillment center, branch, office, parking lot, etc.) or have started thinking about bringing simulation modeling to your organization, I hope you are now considering scaling the benefits of simulation modeling across your entire enterprise. In the second blog, I will share our past experiences in implementing this idea, which will be beneficial for any executive on the verge of making decisions about future investments in simulation modeling. You will see why the concept of Enterprise Simulation actually makes a lot of business sense and, if done right, has the potential to maximize your ROI from incorporating simulation modeling into your business.

If you are ready to learn how we can help, please schedule a call or fill out the request for more information form on our Contact page. We will be more than happy to share our experience with you and tailor an advisory solution based on your strategic plans.