The Edelman competition is being held at a new INFORMS conference, "Optimizing the Extended Enterprise in the New Economy," which takes place at the Hyatt Regency La Jolla in San Diego from May 20 – 22. Information about the conference is at http://www2.informs.org/Conf/Practice2001/
A synopsis of the top entries follows:
U.S. Army: "Reinventing Army Recruiting," United States Army Recruiting Command, Program Analysis and Evaluation Directorate: Lt. Colonel James A. Knowles, Colonel Greg H. Parlier, Lt. Colonel Gregory Hoscheit, Lt. Colonel Rick Ayer, Major Robert Fancher, Mr. Kevin Lyman. "Imminent catastrophic failure" was the mantra, as manpower shortfalls were becoming a binding constraint on the Army's ability to support national security strategy. The multidisciplinary team combined production-forecasting expertise and resource allocation methodologies, augmented by marketing and market research techniques, to develop a new, comprehensive strategic recruiting plan that reinvented Army recruiting for the next decade.
Benefits: The plan resulted in the organization better supporting national security obligations by increasing fiscal year 2000 military recruiting production by 17.5%. This eliminated the forecasted 17,500 manpower deficit and provided an estimated efficiency savings of $204 million out of $1 billion program (20% savings). The new strategy is continuing to pave the way for successful Army recruiting.
NBC: "Optimization Systems Increase Net Income and Productivity at NBC;" GE Corporate Research and Development: Srinivas Bollapragada, Hong Cheng, Mary Phillips, Marc Garbiras; National Broadcasting Company Michael Scholes, Timothy Gibbs, Mark Humphreville. Over the past five years, the team installed an advertising sales plan generation system and an inventory snapshot system. The goals were saving "good inventory" – the best air time for programming and commercials – while meeting customer requirements; increasing revenues through better inventory management and pricing; increased productivity; being "first to market" by responding more quickly to advertising agencies; "reading" the market better; and increasing customer satisfaction.
Benefits: These systems increased NBC revenues by at least $50 million a year. To date, these systems were used to generate plans and manage inventory worth more than $7 billion. The net gains obtained using these systems over a multi-year period are over $200 million.
The Jan de Wit Lírios Company, Brazil: "Optimization of the Production Planning and Trade of Lily Flowers." Universidade de São Paulo (USP) - José Vicente Caixeta-Filho; Interativa S/C Ltda., - Jan Maarten van Swaay-Neto; Wagemaker Consultoria Ltda. - Antonio de Pádua Wagemaker. The team developed and implemented a model to aid in the decision-making process associated with production planning and trade for Brazil's largest producer of lily varieties sold both as cut flowers and potted plants.
Benefits: The results for 2000 demonstrate a 26% increase in revenues over 1999. Impacts measured from the implementation of the recommended system are an increase in sales of 14.8% for pots of lilies and 29.3% for bundles of lilies; costs reduced from 87.7% to 84.5% of sales; income from operations increased 60%; and return on owner equity improved from 15.1% to 22.5%.
OnStar: "A Multi-Method Modeling Approach for Creating New Business Models: The OnStar Case;" General Motors -Vince Barabba, Nick Pudar; OnStar - Chet Huber, Fred Cooke, Jim Smith; Colorado College - Mark Paich. A multi-method modeling approach was used in the creation of the General Motors (GM) OnStar communications business. During 1997, a team was charged with the task of developing strategic options for OnStar, GM's onboard communications system that enables crash detection, navigation, and mobile Internet services. The modeling approach affected crucial decisions such as OnStar factory installation, alliances with content providers, alliances with other car OEMs, pricing, and marketing.
Benefits: OnStar is now the dominant player in the emerging telematics industry and is estimated, by investment banks, to be worth between $4-$12 billion.
Merrill Lynch: "Pricing Analysis for Merrill Lynch Integrated Choice;" Merrill Lynch U.S. Private Client Group: Stuart Altschuler, Donna Batavia, Jeff Bennett, Russ Labe, Bonnie Liao, Raj Nigam, Je Oh. In early 1999, Merrill Lynch and other full-service financial service firms were under relentless assault. The advent of electronic trading and the commoditization of trading threatened the very core of Merrill Lynch's value proposition — to provide advice and guidance through a financial consultant. In response, management decided to create a new offering to provide investors with more choices. A team developed two models to evaluate different combinations of product structures and prices. The models showed that revenue at risk to Merrill Lynch ranged from $200 million to $1 billion. The resulting Integrated Choice strategy enabled Merrill Lynch to take the marketplace initiative, changed the financial services landscape, and mitigated the revenue risk.
Benefits: As of year-end 2000, client assets reached $83 billion in the new offer, net new assets totaled $22 billion and incremental revenue from fees and margin interest reached $80 million.
Samsung: "SLIM: Short Cycle Time and Low Inventory in Manufacturing;" Leachman & Associates: Robert C. Leachman, Jeenyoung Kang, Vincent Lin; Samsung Electronics Co., Ltd.: J.W. Kim, Young-In Kim. SLIM is a set of scheduling systems that manages the product flow times in semiconductor manufacturing. Since 1996, Samsung has progressively applied SLIM at its worldwide semiconductor manufacturing facilities. The system features automated on-line scheduling of the entire semiconductor manufacturing process, as well as off-line applications in planning target cycle times, output schedules, and qualifications and additions of processing equipment.
Benefits: DRAM cycle times were reduced from 80 to 30 days, resulting in sales revenue gain of more than $100 million in 1998.
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