USING PROCESS SIMULATION TO MINIMIZE THE RISK:

Now that we have explained how to take a firm to the highest and most appropriate
level of the supply chain maturity model, and how to track the savings
from that model and the SCOR� model to financial statements, we are prepared
to consider how to make sure the potential savings are real before engaging in
what could be a high-risk transformation process. In this chapter, we will introduce
the idea of using computer-based simulations to test business improvement
changes before implementation and will suggest ways in which simulations
can be used to help optimize processes and supply chains before
encountering risk in the possible outcomes. Simulation will be explored and
defined as a logical business implementation tool, with the inherent techniques
explained along with numerous examples of how firms are getting the most
benefit from the tool.
SIMULATION DEFINED
In essence, simulation provides a �virtual test bench� for process improvement,
as it is a technique that focuses on quantitative measures that could result from
various potential actions. It provides a representation of the process actions in
a manner that is transparent to the business user, thereby generating a prediction
of potential business performance � should the process, rules, and parameters

be adopted or altered in practice. It provides a means of testing alternative
solutions and outcomes before actually engaging in the introduction of the
changed processing.
As we explore simulation, we will explain how it is used to gain value, its
role within a business process management suite, and how it can be applied to
business intelligence and management of the enterprise, through analysis of the
resulting metrics. Additionally, we will show how optimization efforts can be
applied with simulation to approach true process optimization in an automated
manner. This level of optimization, implemented within business process management
� enables the extended enterprise to more effectively manage its endto-
end supply chain and supporting business processes.