Quote Simulation

A global enterprise in automotive and financial service industries requires complex quote functionality to achieve the following requirements:

  • Various surveys to understand how equipments will be used to dynamically change the pricing.
  • Leasing and loan interests calculation rules may change every week for marketing, competition and profitability purposes.
  • Equipment residual value will depend on configuration components and usages.
  • Different financial rules are applied accumulated weekly, means the new rules are built on top of all previous rules.
  • Sales can provide different options and different equipment configurations to simulate pricing, loan and leasing payments.
  • Precision quotation may require special trained call centre agents house, and need to provide real-time quotation automatically.

Solution was built to make sure the complex business logic can be represented as a decision graph and a decision matrix while all variables can be configured and extended to compute the residual value, interest rate variations and dynamic pricing. Visualisation application was provided for the planner to manage the business rules using inter-changable decision graph and decision matrix. Web-based application was built for sales to fill in surveys, configure product and simulate the options to generate quotes integrated in SAP CRM. As the result, one planner can manage the complex decision graph/matrix and adjust the rules weekly which released the workload of over a major call centre agents. With the real-time simulation, sales can work with customer to explore different purchasing options and simulate the payment options, which is a huge improvement for customer experiences from hours of waiting for human calculation to instant precise quotation. The attributes for the business rules can be continuously extended and adjusted to fit the new market demands.

Cost Estimation

A global manufacturing company in chemical industry requires cost estimation for various customised specifications to make sure the profitability can be matched with the planned goal.

  • Customer specifications and pricing may vary dramatically from regions, markets and industries.
  • Estimated quotation needs to consider operation cost, production routing, material cost, recipe, inventory, pricing strategy and competitive analysis.
  • Cost estimations with experienced based computation were all done in various Excel worksheets.
  • Empirical formulas and calculations are varied with different product lines and different specifications.
  • Complex business rules with numerous empirical decision graphs with complicated data dependency in estimation costs.
  • Need to explore similar case from historical estimations as well as similar BOMs, sales orders and production orders.
  • Cost estimation needs to be compared with multiple versions visually.

Solution was provided to model the business logic with decision rules which can adaptively adjust user interface inputs to control the cost estimation. With the need to have manual override, the control can be switched-on to manually override the business logic for any input which can automatically alert the business users. The logic can be explained to key users to reverse the input or control the changes. Process was designed to work with multiple organisations from sales, engineering, research labs, purchasing and planning departments. The application provides the user interfaces to support the transactions cross departments and the automatic estimation logic control to support rapid estimation.

Pricing Adjustment

A global manufacturing company in chemical industry requires pricing adjustment when raw material prices fluctuates to manage the profitability with competitive edge.

  • Standard price lists and non-standard prices may require adjustment when there are material fluctuations.
  • Several international standardisations need to be supported.
  • Normalisation of several international standardisations.
  • Need to estimate which price list will be impacted by which material.
  • Need to support collaborative adjustments between cost center and sales team.
  • Need to support the version control for different price adjustments.

Solution was provided to establish the collaborative pricing adjustment processes cross departments. Standard price lists and non-standard price lists can be managed with different business logics and adjustment processes. The adjustments can be considered from different cost fluctuation, customer relationship, market competition and profitability goals. The adjusted price lists with multi-level approvals can be directly integrated into SAP ERP for further processes. International standards can be defined and managed along with material knowledge base, test specification normalisation, and lab testing standardisation.

Profitability Simulation

A global manufacturing company requires profitability simulations to monitor and manage the profitability projection through scenario simulations for global operations.

  • Need to have an overview of global probability projections based on actual sales volumes.
  • Need to simulate different business scenarios for future events for impact projection.
  • Need to break down the cost and profitability from different aspects.
  • Need to simulate multiple scenarios for comparisons of impact assessments.
  • Need to integrate pricing adjustment with profitability simulation for overall considerations.

A solution was provided to allow the profitability simulation in one view with real-time simulation of actual data from detail level to management level. Users can rapidly change the parameters for future events to visualise the impacts in cost structure as well as profitability, hence providing the assessment of profitability impacts for different possible scenarios as well as the sensitivity of simulation parameters.

Contract Valuation

A global heavy equipment and machinery company requires long-term contract valuation to reduce the risk of losing long-term profitability and possible action to trigger contract change.

  • Require the complex service contract with time-span over decades and components over tens of thousands components and service items.
  • Require regular contract valuation to minimise the risk of losing profitability in the long-run.
  • Need to be able to assess and compute the event triggered extra costs to occur in the future.
  • Need to simulate the future events based on current events to calculate the risk of losing profitability.
  • Need to compute the expected values based on the known equipment lifecycle and various conditions to project overall contract values.

A solution was designed to conduct event-based contract lifecycle valuation considering the probabilistic future events as a valuation tree to compute the expected value of a contract. The estimation can provide the alerts to a contract which fall into the high risk in losing profit in the long-run, hence, can trigger follow-up actions for negotiation of contract adjustment. The similar concept was later applied to design customer longitudinal profiling for enterprises where core business includes insurance, healthcare, retirement and investments.

Incentive Performance

A global insurance company requires the incentive performance management to manage the effectiveness of their of field sales.

  • Incentive plans are designed based on goals defined monthly, quarterly and yearly.
  • The incentive plans are managed from headquarter to regional offices, estimated several thousands plans per month for several hundred offices.
  • The planner of regional office needs to design their own incentive plan based on the goal and pre-defined KPI.
  • Field sales needs to receive immediately acknowledge of rewards to improve incentive and individual activity planning.
  • The incentive calculation needs to be done automatically and integrated to payment systems.
  • The effectiveness of the incentive programs should be tracked and measured for performance improvements.
  • KPI are changing depending on market needs, but system cannot support the flexible KPI design and monitoring.

A solution is designed to support individual planners to create and design the incentive plans for their own organisation unit. They have the flexibility to create own formula, look-up tables and design different incentive rewards. When a plan is designed, the planner can project the potential cost based on realistic historical information as simulation data for an upper and lower bounds. Once the plan is activated based on specified period of dates, the actual data and calculation can be monitored through application, also the field sales can receive approximately real-time response for their rewarded incentives for qualified plans. Over thousands of plans can be executed every month to assure the business goal is aligned with the actual revenues.

Scenario Simulation

A global OEM manufacturing company needs to have the project based pipeline management for their quotation system.

  • OEM manufacturing has brand-dependent business processes and scenarios.
  • Each brand has a set of opportunities through different phases from new product initiative to mass production.
  • The composition of all the opportunities at different stages form a pipeline portfolio.
  • Need to manage the quotation lifecycle with constantly changing brand-specific business rules.
  • Need to provide the collaborative capabilities for precision estimation cross departments.
  • Need to estimate and analyse the cost structure based on past quotations and probabilities of order conversions and preparation of production planning.

A solution was designed to provide the quote lifecycle management with version control and change managements. The application can provide user-self-defined formula, empirical data, and various business logic provided by the brand owner. The pipeline mangement can support management to monitor the possible revenue for short to mid-term planning.

Customer Profiling

A global enterprise with insurance, healthcare, retirement home and investment groups needs to manage the longitudinal customer valuation for preventive and protective precision care.

  • Need to have a centralised customer precision profiling from different customer engagements.
  • Need to have a population health assessment capabilities to project individual’s health conditions and risk for preventive medicine.
  • Need to have the capabilities to integrate with external platforms for flexible data models.
  • Need to have the integration capabilities from social interaction, behaviour, activity, bio-signal, expo some, epigenome, micro biome, metabolome, proteome, transcriptome and genome.
  • Need to have life stage modelling to project and estimate the individual profiles from various aspects.
  • Need to have the behaviour model to capture and estimate the change trend of decision making preferences.
  • Need to integrate with data mining and machine learning algorithms for data exploration and automatic model construction for both case based or non-parametric time series modelling.

A solution is designed to provide a framework that can continuously grow the integration using cube’s rapid data binding capabilities from various data sources in distributed environments. The normalised data model into the cube environment where can be easily integrated to a coherent environment to conduct advanced data pattern detection and quantitative modelling. The explored and identified models can be adaptive adjusted using various learning mechanism to optimise its precision with new information. The framework will take years to finalise the detail data integration and data normalisation, however, the cube design plays crucial roles to make sure the heterogeneous data models can be used within the framework homogeneously. This is an on-going design and development solution.

Complex Pricing

A global leasing company requires the complex pricing based on the complex structure of contracts. Most of their customers are global enterprise with headquarter and offices in different continentals and countries. There are various contracts signed for different regional companies as well as the headquarters. Each contract has its own pricing, available services and applicable conditions. When individual customer requests a quote, it is challenging for the company’s sales departments and the call centre to provide the accurate quote by considering all the qualified contracts and the variations of same services under various applicable conditions. Through years of using legacy system, the company realises there are too many human errors made during the quotation phase either the qualified service were not correctly quoted or the exceptions rules were not managed properly, which leads to violation of contract agreement, hence, loss of revenue.

A solution was developed to allow the relationship models among contracts from the same enterprise but different business units. Business rules can be defined to specify the inheritance characteristics of services and exception rules required during a quote. Those business rules can be modelled and validated in application to make sure every quote is checked against thousands of rules to complete remove the human errors. The simulation capabilities can also provide the impacts analysis for both cost and valuation of contracts.

Collaborative Planning

A global hi-tech manufacturing company requires an improved solution for collaborative planning among sales, production planning, outsourcing, purchasing and inventory departments. Although the manufacturing factories work well with full utilisation rate, many high profit orders were missed out due to lacking of collaborative planning. CEO requested the team to improve the decision optimisation based on the profitability and not only the KPIs of each department and each factory. There are many decisions that need to make at the level of profitability projection to determine which orders should be executed and which orders should be outsourced to external partners.

A solution was designed to improve their as-is planning. Without the actual quantitatively analysis to simulate different scenarios, their as-is planning cannot reveal the profit loss or compare the profitability for different decisions. The accurate estimation for different scenarios requires precision of modelling from industrial engineering as well as the sales forecasting, production planning, purchasing, and inventory. By modelling the dependencies among different departments by the planners themselves, the collaborative planning can provide a different views for future events and the portfolio selections for production planning. However, the collaboration requires progressive implementations to gain supports from some departments to extend to others step by step.

Progress Forecasting

A global transformation project requires thousands of consultants and developers to work from different regions and timezones. There are several levels of actual progress collections and conversion to project management office report weekly. The dividing strategy however neglected the end-to-end dependency cross components, departments and business units. Consequently, silo effects dominate the whole project team members. The worst situation is that PMO failed to understand the dependency and sequence in the is large transformation implementation. The parallel silo implementation without knowing the impacts creates significant overhead for any small variations from central components. Although many man-powers are used to analyse the data, the information gets lost during many manual conversions, hence, misled the top management without knowing the actual situation.

A solution is designed to connect the dependencies cross modules. Such a dependency can estimate the potential impacts for project management office to understand the sequence and priority of work tasks and potential risk impacts which easily lead to many hidden resource waste. The dependency with cost function to estimate the redundant and repeated resources works can further estimate the delay. Furthermore, the wasting of resource time due to improper planning can be detected even not completely accurate, can provide the trend in cost increasing – envision the extra budgets penalty for a right decision-making, yet not aware of the impacts.

The similar approach can be used for sales forecasting. For a global automotive company, they face a similar challenge to obtain the accurate sales forecasting from hundreds of regional offices. Lacking the management tool, even the data are collected, there is no way to rapidly consolidate the data, manage the update/changes, and compare with actual data to identify the root-cause of gaps. The failure of accurate forecasting causes the inventory issue as well as the supply chain issue. The solution is focusing on connectivity cross offices and departments. Once the connectivities and dependencies are built, the estimation and forecasting can be managed to continuously improve the precision of projection.

Complex Disbursement

A global mobile manufacturing company faces a challenges to work with their service providers globally. Due to the dynamic market changing, there are constantly negotiations with every service provider for the spare part pricing and service fee for different types of models. Considering the frequent changing contracts, the service department requires large amount of manpower’s just to check the services delivered, part used, and how the pricing is agreed during different period of time for different agreements. Even through there is a system available for the process, the IT development of the business rules can never match the changes by the service contracts. At the end, systematised approach failed to provide the needs from the service department, and have to return to manual processing.

A solution was designed to first allow the contract department to define and build their own contract rules freely. The business logic then can be activated for a contract at a specific time period. Once the rules can be defined by the contract planner, the rules can be calculated automatically for every service order delivered by each service provider. Based on the pre-defined delivery rule, the disbursement process can be automated, and the contract planner can focus more on the negotiation for spare part optimisation or reduce the inventory for high cost part.