5 steps of developing and evaluating simulations

Frederic Dufour / May 22 , 2016

With the data collected by PlanningForce, companies are able to build themselves a company memory. This data is used to optimize decision making as alternative scenarios are tested in order to select the one best suited to your company.

Scenario testing is made up of 5 stages.

Phase 1 is the analysis of the current data system. This analysis organizes information and facilitates comparisons and investigations. Supplementary analyses can provide links between PlanningForce’s data system and other systems already present. The results are then categorized according to priority.

Phase 2 is the development of What-if scenarios. This phase consists of listing potential events that bear both positive and negative effects. These are then stored and organized based on their probability, and the consequences that they could subject the company to. There are two categories of events: those that the company is forced to endure and those that it seeks to provoke, but which remain uncertain.

Phase 3 carries out the simulations. Thanks to the scenarios carried out in the second phase, a SWOT analysis is performed in order to identify potential threats and valuable opportunities. This phase, the company then carries out the simulations, enabling the evaluation of potential consequences. A simulation is built on the basis of a true copy (called a “clone”) of the current state of the system. The current state of the system is the most up-to-date in terms of data and planning.

Phase 4 identifies and plans the implementation of performance improvement and risk reduction strategies. In the analysis and simulation functions, the business manager will find the indicators and tools that will enable him or her to think about the different strategies that will improve the company’s performance while reducing the negative consequences of the hazards that punctuate the life of the company. An array of strategies can be implemented. As the implementation of most of these strategies has costs, deadlines and requirements in terms of the availability of certain key resources in the organization, they should be ranked in order of importance and their execution should be realistically planned. Correlations may also exist between strategies, whether they are carried out in parallel or in a phased manner.

Phase 5 monitors the performance of strategies once they have been implemented. While the value of implementing a strategy can be measured according to the estimate of its marginal contribution to the firm’s results, it is necessary to take a cautious approach when it comes to assessing the actual effectiveness of a strategy.

By formally setting up a unit that will be in charge of leading a cycle of strategic and tactical decisions, the company is equipped with a powerful steering tool that will help it to make the most of its potential while preventing the risks it could face.