Medical Device Company
The Issue You Tackled
The company faces total loss of sales for a consumer medical device – very well known amongst the 100,000 users and doctors – with the ending of a patent in 2010. It has developed a replacement product, but faces the challenge of migrating patients and doctors from the existing brand, which will have to happen very fast. What kind of marketing and sales effort should be made, over what period of time, with what likely results?
What You Actually Did
The project started with a one-day workshop with the four person management team, mapping the resources involved – patients, doctors, specialists, sales force – estimating key numbers and causal relationships. The second step was a three week modeling effort between one expert and two key executives. The third and last step involved a half-day workshop reviewing and confirming results, and testing strategy options.
The project resulted in several benefits to the company. An initial idea – to capture patients via a website proved impossible because usage would be too low, and their engagement with the new brand limited. Direct sales effort and marketing to doctors would not work, because the medical condition was too rare to engage their interest.
The solution was to involve specialists in the routine training-updates that doctors have to undertake, then follow up with sales calls to those specific doctors who had attended the training. This would require five times the previously estimated cost and effort, but deliver attractive results. Current sales volume, worth €1 million in annual profits, would disappear with the loss of the current product. Pre-existing plans would fail to rebuild more than half this profit over three years, and lose most of the market to competitors. The revised strategy, though costly, would more than recover the existing profits in two years, due to the better profit margin on the new product.
State Planning in Sarawak
|Name||State Planning in Sarawak|
|Client||Sarawak State Planning Unit|
The Issue You Tackled
The Centre for Operational Research & Applied Statistics at the University of Salford was awarded a contract during 2003-2005 to offer a more scientific basis on which to formulate future economic and social policy in Sarawak, East Malaysia. The direct project clients were members of the State Planning Unit (SPU). The State, on the northern coast of Borneo, was a former British colony which joined the federated nation of Malaysia in 1963. The purpose of the model was to help government officials manage a change from a predominantly resource based economy to a knowledge based one.
What You Actually Did
A team consisting of a project director, scientific director, development economist and two research assistants gradually secured the information needed to construct the model. A prototype model derived from a high-level map was developed quickly at an early stage in the project. Regular presentations were made as the model was developed, culminating in a special conference of senior State government officials and the modeling team when the final report was presented. The final model consisted of 15 sectors and around 450 equations and mappings. A microworld was constructed around the model to aid its use by non-technical officers. The primary aim was to elevate the standard of modeling used by State Government officials.
Malaysia as a whole is a planned economy which needs a more scientific basis for constructing their 5-yearly plans. The need to improve, substantially, the education system, involving fewer school drop-outs and more significant progression to higher education, particularly in the sciences, were strong features of model runs. Also, there was emphasis on the State incubating R&D schemes which would absorb the increased numbers of scientifically skilled graduates. Perhaps an over-riding conclusion was that we had exposed and convinced government officials as to the merits of SD as a methodology in this sphere of application.
It is difficult to place a monetary value on its impact. However, the potential benefits to the economy as a whole arising from enhancements to the education system and the incubation of successful enterprise are considerable. The project implanted an awareness and knowledge of SD in Sarawak and in Malaysia more widely – the Borneo Post carried a headline “Government to introduce System Dynamics model” explaining the project and its outcomes.
Supply Chain Options in Pharmaceuticals
|Client||Anonymous pharmaceutical company|
|Authors/Consultants||Jones L (Ventana Systems UK)|
A global pharmaceuticals company wanted to evaluate future supply-chain options for a group of drug products.
In a series of workshops held with knowledgeable personnel over a six week period, the team (comprising the modeller and all workshop attendees) developed a simple simulation to help understand the likely implications of organisational change involving a significant capital investment. The model centred on several aspects of the change, including co-location of a number of pharmaceutical production facilities and the possible impact of changes in the structure of the organisation on the ability of the supply chain to satisfy future customer demand while reducing overall stock levels. It had been thought that a simulation of the possible impact of moving from the AS-IS to the TO-BE organisation would help the decision-makers but that the traditional simulation approach used by the organisation would not be able to report in time for a major decision point in the investment project. The model’s results were reviewed at each stage and amendments made to reflect feedback from participants. Final scenario runs included sensitivity analysis and presented the possible performance range of selected Key Performance Indicators.
The model was able to demonstrate the likely improvement in performance between the AS-IS and the TO-BE scenarios, both in stock reduction and in the reducing manufacturing cycle times and the conclusions were presented to senior decision-makers during their next meeting on the subject.
The work was completed in a short period of time and was vital to the correct investment of many millions of dollars that would not have been evident from conventional analysis. The success was due to an effective synergy between the client and modeller; the former having the relevant expert knowledge and enthusiasm, the latter having considerable experience of pharmaceutical industry modelling.
For more information on this case, please contact Lee Jones at Ventana Systems UK.
The Official Website
strategydynamics.com is the official website in which you can become a member and get familiar with the services.
The Issue You Tackled
INCOSE is the International Council on Systems Engineering (SE) representing an interdisciplinary field that focuses on how complex projects should be designed and managed. INCOSE UK, like its counterparts in other countries, has grown strongly over recent years, as the benefits of professional systems engineering have become clear. Although the organization had a well-written strategy document, it needed to turn this into a clear and quantified set of outcomes, and an equally clear set of actions that would lead to these outcomes.
What You Actually Did
The members of INCOSE UK’s Board had already produced a rough causal map of how they believed their organization worked – how skilled SEs were developed, why members joined, what impact their professional work had made and so on. They were interviewed to get identify what objectives they felt INCOSE UK should have, of what scale, and over what time.
They were then asked to estimate key indicators of the organization’s state and how this was developing over time. This included, for example, the number of significant projects on which SE is applied, the number of qualified practitioners, the number of organizations who adopted formal SE methods, and so on.
Lastly, they were asked to estimate the rate at which these features of the SE field in the UK could potentially develop, and what factors would bring about that progress.
Two rounds of team meetings compared and distilled these estimates into an integrated, quantified map of how the INCOSE UK ‘system’ has worked and might be developed.
The INCOSE UK system diagram, agreed by the Board, displayed a quantified picture of how the organization might develop systems engineering in the UK. This included a detailed, time-phased action plan to increase the visibility of SE, to grow demand for SE work, to encourage education and training of SE professionals, and to grow INCOSE membership and activity. Note that a working system dynamics simulation model was not regarded as necessary for INCOSE UK to have high confidence in the conclusions and recommendations of the study. Since INCOSE is a professional membership organization, rather than a commercial firm, the project’s value will show up in the achievement of the aims included in the strategic plan, in particular in terms of visibility, impact and growth of the profession. As at end-2009, indicators of all these factors are running well ahead of expectations.
|Client||UK local authorities|
|Authors/Consultants||Swanson J (Sdgworld; Steer Davies Gleave)|
The Urban Dynamic Model (UDM) is a simulation of how transport interacts with population, employment and land-use over long periods of time, typically ten years or more. It was developed to help understand how transport could contribute to economic regeneration by improving the ability of employers to recruit a workforce and their access to customers and suppliers, and by improving access to employment opportunities. For example, the vicious circle of congestion is familiar to us all but is almost impossible to capture in traditional models. In short, the cycle includes improved transport which reduces travel time, making businesses easier to access for customers, generating increased employment, leading to more transport activity and increased congestion.
The UDM was developed over a number of years, beginning with a fairly simple model built in 2000. This was used in one of a series of large scale transport studies commissioned by the government at the time. Its role at that time was to test the regeneration claims being made for a proposed by-pass that would have passed through an area of outstanding natural beauty. Models of this type must be able to represent the spatial characteristics of the study area, usually using a zone structure, and the road and public transport links connecting the zones together. Other applications followed, and then in 2005 we were commissioned by the Department for transport to carry out a study into the impact of transport on business location decisions. Current guidance from the Department for Transport emphasises the wider role of transport in supporting the economy, but also points to the need for reducing carbon dioxide emissions.
The UDM is generic, and has been applied widely in the UK with local authorities. Conclusions vary from one application to another, but some of the findings we have reported include measures to generate employment can appear to have a significant effect if examined very locally, but we often find that some employment is transferred from elsewhere, and the net effect can be less than might first appear, city centres remain the best locations for many types of employer because they provide the best access to a workforce and bring ‘agglomeration’ benefits that employers enjoy by being clustered together. Studies of major programmes of transport investment typically involve expenditure of tens or hundreds of millions of pounds. The measured benefits are usually expressed in money, and expressing both the social and economic impacts of investment and can also run to hundreds of millions of pounds.
|For more information on this case, please contact John Swanson at Sdgworld, or see this link.|
Climate Change and Energy
|Client||National Commission on Energy Policy, Environmental Defense Fund, WAI|
|Authors/Consultants||Bassi AM, Yudken JS|
Four industries – iron and steel, aluminum, paper and pulp, and chemicals – account for nearly half of the energy consumed by U.S. manufacturing industries and over 10 percent of total U.S. energy consumption, making them highly vulnerable to volatile energy prices. Millennium Institute and High Road Strategies collaborated on three connected study commissioned by the National Commission on Energy Policy, the Environmental Defense Fund and AFL-CIO Working for America Institute (WAI) and developed with support from industry association organizations, to examine how increased energy prices associated with comprehensive and mandatory cap-and-trade climate policy proposals currently being considered by the U.S. Congress would affect the competitiveness of these industries in the long term. The studies also examined the industries’ capabilities and opportunities to mitigate adverse cost impacts and improve their economic performance under different climate policy scenarios.
In short, the findings strongly suggest that over the long-run, technologies are available to enable energy-intensive industries to achieve sufficient efficiency gains to offset and manage the additional energy costs arising from a climate policy. However, the authors also strongly believe that the industries analyzed will need additional measures that both mitigate these cost impacts in the short-to-medium term, and policies that encourage and facilitate the transition of energy-reliant companies to a low-carbon future, while enhancing their competitiveness in global markets.
Findings of these studies being circulated starting from Aril 2009 are substantially contributing to the debate on the introduction of climate regulations, both in the US and abroad.
|Yudken J.S. and Bassi A.M. (2009). Climate change and US Competitiveness. Issues in Science and Technology, Fall Issue.|
|Bassi A.M. and Yudken J.S. (2009). Potential challenges faced by the U.S. chemicals industry under a carbon policy. Sustainability 1: 592-611. Special issue on Energy Policy and Sustainability.|
|Yudken J.S. and Bassi J.S. (2009). Climate policy and energy-intensive manufacturing: the competitiveness impacts of the American energy and security act of 2009. High Road Strategies and Millennium Institute, February 2010, Washington DC, USA. Prepared for the Environmental Defense Fund (EDF).|
Energy Policy Analysis in Mauritius
|Client||Ministry of Renewable Energy and Public Utilities, Mauritius|
|Authors/Consultants||Bassi AM, Bainac K, Bokhoree C, Deenapanray P|
Under the leadership of the Ministry of Renewable Energy and Public Utilities of the Republic of Mauritius and with support from UNDP, the Millennium Institute (MI) has carried out an assignment on supporting formulation and evaluation of Mauritius’ longer term energy policy framework. The goal of this project is to empower the Ministry of Renewable Energy and Public Utilities, and the Government of Mauritius, with a flexible, integrated, dynamic and user-friendly uniquely customized simulation model that allows for the evaluation of energy policy proposals to make informed decisions on longer term policy planning. This model was jointly developed with a team of experts, including representatives from Ministry of Public Infrastructure, Land Transport and Shipping, the Central Electricity Board (CEB), the Electrical Services Division (ESD), the Mauritius Sugar Industry Research Institute (MSIRI), the Central Statistics Office (CSO), the Maurice Ile Durable (MID) Fund, the University of Technology Mauritius (UTM).
Because of its flexibility and ease of use, in addition to its integrated and dynamic nature, the Mauritius Model allows for a cross sectoral analysis of the impacts of the energy policy provisions, with simulations running from 1990 to 2025. This is important when operating in such a rapidly changing environment and volatile time. The project included continuous group modeling sessions and daily exchanges with key stakeholders, to end with a two-day workshop and with a presentation to the Deputy Prime Minister of the Republic of Mauritius.
Results of the analysis proved to be of considerable value to the Ministry of Renewable Energy and Public Utilities, and led to an update of the longer-term energy policy document later approved. The utilization of an integrated, cross sectoral, national development model also served to bring together several ministries, the private sector and universities to jointly analyze results, both opportunities and challenges, arising from the implementation of the energy strategy.
More information on this case can be found in Bassi A.M. (2009). Systems modeling of long term energy policy, Mauritius. Prepared for the Ministry of Renewable Energy and Public Utilities, Republic of Mauritius, and UNDP Country Office Mauritius and Seychelles, Port Louis.
Health and Social Care Policy in the UK
|Authors/Consultants||Wolstenholme E, Monk D, McKelvie D, Smith G|
In 2000, the British government initiated a National Health Services (NHS) program aimed at improving the quality of health care services. This long range program included hiring new employees, providing more facilities in the form of intermediate care centers and beds, and access to diagnostics and treatment. This ambitious program sought to minimize delayed hospital discharges, provide reliable patient care and select appropriate sites for investment.
System dynamics modeling was used to increase policy makers knowledge about the issue at hand and the impact of proposed changes on behavior over time. Similar to many simulation studies, the categories of data required by the model did not completely match the categories of data stored by the client organizations. In system dynamics, simulations are checked against reference data to ensure that model behavior matches observed behavior as closely as possible. The model revealed an absence of data critical to the joint planning of the hospital discharge process.
The first model, a delayed discharge model, showed how reducing length of stay and delays could reduce delayed discharge cases and provide more bed capacity. Overall the model showed how to achieve as sustainable high quality and cheaper health services. Success in implementation of the delayed discharge model invited local health communities to develop similar models, tailored to local issues. The national discharge model was modified to study the impact of commissioning decisions (buying services) and capacity planning.
Spatial Planning in Indonesia
|Client||Ministry of Human Settlements and Regional Infrastructures Development, Indonesia|
|Authors/Consultants||Radianti J, Tasrif M, Rostiana E|
In pioneering spatial planning management for metropolitan cities, the Ministry of Human Settlements and Regional Infrastructures Development of the Republic of Indonesia, started a project to build a computer simulation on spatial planning. The pilot project was situated in Semarang, the capital city of Central Java, Indonesia.
The aim of the project was to understand the impact of metropolitan growth and spatial planning on essential indicators of urban life such as economic growth, land usages and industry development. The impact of population growth was the central focus in this project. Population growth was explored to predict to which extent additional facilities such as lands for industry development and transportation infrastructure were needed.
The model showed that almost all policies directed at raising economic growth also increased the population number. The conclusion of the project is that any policy in the field of spatial planning should anticipate effects on the population sector and mitigate planning accordingly.
Monetary Policy in Colombia
|Client||Central Bank of Colombia|
|Authors/Consultants||Fernando Arenas and Franz Hamann|
The Pontificia Universidad Javeriana (Columbia) and the Central Bank of Colombia cooperated in an effort to recast the bank’s MTM (Mechanism of Transmission Model) into a system dynamics model. This joint effort represents an application of system dynamics to macroeconomics.
There are three options for a central bank to achieve its monetary goals: controlling the base money growth, inflation targeting and implementing a fixed exchange rate regime. The monetary policy of the Central Bank of Colombia (Banco de la República) is directed at keeping inflation to a minimum. This strategy consists, basically, of controlling the interest rate in such a way, that the inflation forecast be aligned with the inflation target.
After simulating the system dynamics model for shocks to the inflation target and monetary policy, the pattern of performance of the variables in the SD model, was quite similar to that of the MTM. The only difference occurred in a downward jump of depreciation in the first year of the simulation. This performance makes a noticeable difference between the SD and MTM results when shocks are applied to food supply, nominal depreciation, and risk premium. In spite of the differences, the TREND function seems to be an appropriate way to capture adaptive expectations in this model.
The Central Bank of Colombia concluded that the system dynamics model is similar the MTM model in important respects. The bank continues to support efforts to build a comprehensive system dynamics model supporting its monetary policies.