The Optimization Edge: Reinventing Decision Making to Maximize All Your Company's Assets - Hardcover

Sashihara, Stephen

Hardcover

ISBN 10: 0071746579 ISBN 13: 9780071746571

Verlag: McGraw-Hill Professional, 2011

Inhaltsangabe

Why downsize when you can OPTIMIZE?

"At McDonald’s our focus has always been on providing maximum value to customers through ‘optimal’ quality and tight cost management, which is why Optimization has become such a pivotal concept for us. Steve Sashihara’s book brings the concept to life.”
—Kenneth M. Koziol, Corp. Senior Vice President, Innovation and Design, McDonald’s Corp.

“Steve Sashihara convincingly demonstrates how the application of advanced quantitative techniques can significantly improve day-to-day decision making, which is what we have done at Quad/Graphics.”
—Dave Blais, Executive Vice President, Quad/Graphics

“The Optimization Edge is a powerful book that will change the way organizations make decisions and manage their assets.”
—Frances Hesselbein, President and CEO, Leader to Leader Institute; Recipient, Presidential Medal of Freedom

“At UPS, the ‘optimization edge’ has given us a competitive advantage. It enables us to solve problems of great complexity seamlessly and with increased velocity, resulting in smarter decisions and ultimately bringing greater value to our customers.”
—Chuck Holland, Vice President of Industrial Engineering, UPS

About the Book:

In these challenging economic times, more and more companies have turned to “cut-back management” to ensure their survival. But how do some manage to outshine their competitors—and even grow—during downturns? How does Google outsearch the other search engines? How does McDonald’s McClobber the competition? More important, how can you increase your company’s profits without downsizing?

The answer is Asset Optimization.

This groundbreaking approach to decision making utilizes the latest advances in mathematics and computer software. Optimization expert Steve Sashihara shows you how to squeeze every ounce of value from your company, even under “perfect storm” conditions. You’ll learn how to:

• Drive up your company’s value—even in a downturn
• Re-allocate your resources—for maximum performance
• Streamline your company—and stay ahead of the competition
• Optimize your assets—for long-term growth

A proven, practical, and workable alternative to “corporate anorexia,” Optimization is your best option for dealing head-on with marketplace volatility and resource scarcity.

This step-by-step guide offers concrete, ready-to- use tools drawn from decades of superior business practices—the best-kept secrets of global successes such as Amazon, Google, Marriott, McDonald’s, Intel, SAS, and UPS. You’ll learn what Optimization is, what best practices you can immediately put to use, how to use Optimization to speed up and improve decision making, and how to integrate Optimization into your organization’s culture.

If you want to thrive in any economy—and grow your company in the future—forget about downsizing. Get The Optimization Edge.

Über diesen Titel

Über die Autorin bzw. den Autor

Steve Sashihara is president and CEO of Princeton Consultants Incorporated (www.princeton.com), which helps clients optimize their assets through a unique blend of information technology and management consulting. Steve is a member of the Institute for Operations Research and the Management Sciences (INFORMS) Roundtable and a director of the Association of Management Consulting Firms (AMCF), where he has served in various leadership roles, including cochairman. He is a graduate of Princeton University.

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THE OPTIMIZATION EDGE

Reinventing Decision Making to Maximize All Your Company's Assets

By STEVE SASHIHARA

The McGraw-Hill Companies, Inc.

Copyright © 2011 Princeton Consultants, Inc.
All rights reserved.

ISBN: 978-0-07-174657-1

Contents

PREFACE
ACKNOWLEDGMENTS
PART 1 OPTIMIZATION AS A COMPETITIVE ADVANTAGE
CHAPTER 1 THE WINNERS AND THE ALSO-RANS
CHAPTER 2 OPTIMIZATION: FROM CAVE TO CUBICLE
CHAPTER 3 OPTIMIZATION IN ACTION
PART 2 PUTTING OPTIMIZATION TO WORK
CHAPTER 4 OPTIMIZATION: PROMISE AND REALITY
CHAPTER 5 READY, SET, OPTIMIZE
CHAPTER 6 READY, SET, EXECUTE
PART 3 THE OPTIMIZED WORLD OF TOMORROW
CHAPTER 7 THE CHALLENGES AHEAD
NOTES
INDEX

Excerpt

CHAPTER 1

THE WINNERS AND THE ALSO-RANS

Why do some companies become industry leaders, while others never rise to thetop? For example:

• McDonald's versus Roy Rogers

• Walmart versus Kmart

• Marriott versus Howard Johnson's

• Google versus Yahoo!

• UPS versus Airborne Express

• Amazon versus Borders

What has McDonald's discovered about cooking burgers and fries that has eludedRoy Rogers? Why are Walmart's aisles bustling with customers, while at Kmarteven Blue Light Specials can't fill the stores? Why, after more than 50 years asclose competitors, did HoJo become history and Marriott a megachain? Why doesGoogle appear on the verge of putting Yahoo! into the dustbin of history? Whenyou must get a package delivered on time, why do you dial up the "tightest shipin the shipping business" instead of Airborne Express? And why has Amazonmanaged to leave a host of venerable, already established booksellers at thestarting gate?

Theories abound about the drivers of industry dominance: strategy, leadership,sticking to the knitting, customer centricity—the list goes on and on.While these theories may go far in explaining why some companies rise to thetop, they just do not go far enough.

Take McDonald's. Underlying the Big Macs, Egg McMuffins, french fries, and nowfirst-rate coffee, there is a hidden advantage: McDonald's remarkableconsistency. Visit just about any McDonald's restaurant: from burgers tobathrooms, from coffee to counter service, you know what to expect and you getit. Or look at Walmart. Not too long ago, the pundits were predicting the demiseof the general merchandise stores that had become part of the post-World War IIbusiness landscape. Indeed, Montgomery Ward, Sears, J.C. Penney, Kmart, andothers have either fallen off the charts or appear to be hemorrhaginguncontrollably. Walmart, on the other hand, weathered the most recent economicdownturn quite handily, remaining profitable while so many others in itsindustry were gasping for air.

In yet another industry, consider Google. It certainly did not invent theInternet search engine. In fact, Google was a relatively late bloomer thatsuddenly burst on the scene in 1998, two or three years after a host of othersearch engines—Lycos, AltaVista, InfoSeek, and Yahoo!—were alreadyup and running. And then there is Amazon. It has left every other online mall inits wake, with revenues more than double that of its closest rival.

How do you account for the difference between these stars and the also-rans? Isthere a common denominator that differentiates them from other companies? Thereare undoubtedly a number of reasons for their stellar performance, but one thathas largely gone unnoticed is this: these companies possess an uncannyability to make complex decisions faster, more accurately, and moreconsistently than their competition.

Optimizing Decision Making: The Competitive Edge

In today's fiercely competitive world, the notions of long-term strategy andenduring competitive advantage seem like quaint anachronisms, part of thedetritus of the 1980s and 1990s. Now, "strategy on the run" and tacticaladvantage rule the day. McDonald's, Walmart, Marriott, Google, UPS, Amazon, andmany others have demonstrated that competitive advantage comes from tight focusand riveting attention on making optimal decisions that squeeze every ounce ofvalue from the assets under management. As we will see, Optimization is adecision-making process and a set of related tools that employ mathematics,algorithms, and computer software not only to sort and organize data, but to usethat data to make recommendations faster and better than humans can.

The McDominator

McDonald's vaunted mastery of consistent, cost-conscious quality is a tribute toits laserlike focus on hundreds of microdecisions made by employees every day,all over the world: when to turn hamburgers and dump old coffee; how often tofry a new batch of chicken McNuggets and how many to fry; how many times a dayto clean bathrooms. These decisions have been translated into rules that governthe behavior of McDonald's employees. The rules are deceptively easy to follow,but many factors have to be considered in order to make the right decisions foreach individual restaurant: location, season, weather, day of week, time of day,customer preferences, projected volume, and on and on. Then just the rightbalance must be struck between turning hamburgers and turning a profit. MickeyD's learned early on that the best way to ensure the quality of its decisionswas to introduce Optimization and build a strong culture to support it. Itobviously worked: in 2008, when the U.S. stock market lost two-thirds of itsvalue, McDonald's was one of only two companies among the Dow Industrials whosestock actually gained value. Which was the other? You guessed it:Walmart—another big user of Optimization.

Everyday High Profits at Walmart

Walmart supplies a wide array of decent goods, all at reasonable prices. Howdoes the megachain do it? Volume buying helps, but it is not the realdifferentiator. What makes Walmart unique is its command of logistics. Itcontinually deconstructs its entire supply chain, from supplier to distributioncenters to customers, and treats each link as a decision point, asking a batteryof microquestions: Where and how much to buy and at what price? Where to routegoods? How to resupply and reorder? It optimizes assets all along the supplychain, decision by decision. Its obsession with squeezing value from every linkin the chain has enabled it to develop smart rules for making decisionsand managing its business.

Take air conditioners, a relatively mundane product in today's hightech world.Many of Walmart's competitors, like Kmart, tend to use simple rules to regulatetheir stock: "In the summer, make sure that every store has lots of airconditioners" or "Stockpile air conditioners for our mid-August sale." NotWalmart, where the management of air conditioners and every other asset isguided by optimization decisions, which employ smart rules, such as: "Inthe summer, track the weather; find out where heat waves are predicted; and beprepared at a moment's notice to redirect air conditioner shipments to the areaswith highest demand."

As a result of its optimization prowess, Walmart—which was originallycreated by Sam Walton to serve rural areas too small for Kmart to botherabout—has driven Kmart...

Details zur Ausgabe

• Verlag: McGraw-Hill Professional
• Erscheinungsdatum: 2011
• Sprache: Englisch
• ISBN 10: 0071746579
• ISBN 13: 9780071746571
• Einband: Gebundene Ausgabe
• Auflage: 1
• Anzahl der Seiten: 288
• Kontakt zum Hersteller: McGraw-Hill Education; https://www.mheducation.co.in/; ; Via Verdi, 8; Assago Milano; 20090; Italien