What can O.R. do for you?
How to start using O.R.
How O.R. shapes the world around us
What can O.R. do for you?
For over 70 years, Operational Research (O.R.) has improved decision making in a wide range of applications. But O.R. isn't 'yesterday's news': practitioners continue to develop techniques that benefit those organisations and leaders who know how to apply them effectively
As the business world has become more complex, problems tougher to solve using gut-feel alone and computers become increasingly powerful, O.R. continues to develop new techniques to guide decision making.
O.R. consistently delivers significant value – strategic to tactical, top-line to bottom-line – to the organisations and executives who use it. Organisations worldwide in business, the military, health care, and the public sector are realising powerful benefits from O.R., including:
- Business insight Providing quantitative and business insight into complex problems
- Business performance Improving business performance by embedding model-driven intelligence into an organisation’s information systems to improve decision making
- Cost reduction Finding new opportunities to decrease cost or investment
- Decision making Assessing the likely outcomes of decision alternatives and uncovering better alternatives
- Forecasting Providing a better basis for more accurate forecasting and planning
- Improved scheduling Efficiently scheduling staff, equipment, events, and more
- Planning Applying quantitative techniques to support operations, tactical planning, and strategic planning
- Pricing Dynamically pricing products and services
- Productivity Helping organisations find ways to make processes and people more productive
- Profits Increasing revenue or return on investment; increasing market share
- Quality Improving quality as well as quantifying and balancing qualitative considerations
- Recovery Gaining greater control and
- Resources Gaining greater utilisation from limited equipment, facilities, money, and personnel
- Risk Measuring risk quantitatively and uncovering factors critical to managing and reducing risk
- Throughput Increasing speed or throughput and decreasing delays
Answering the challenges you face today
Organisations and the world in which they operate continue to become more complex. Huge numbers of choices and relentless time pressures and margin pressures make the decisions you face more daunting and more difficult. Meanwhile, new enterprise applications and software are generating massive amounts of data – and it can seem like an overwhelming task to turn that data into insight and answers.
But all that data and the availability of more and cheaper computing power are creating an important opportunity for decision makers – one O.R. is ideally designed to help you take advantage of. O.R. professionals thrive on challenges that involve large numbers of variables, complex systems, and significant risks.
As a result, O.R. can help today’s executives with many of the specific challenges they face, such as:
- Deciding where to invest capital in order to grow
- Getting more value out of ERP, CRM, and other software systems
- Figuring out the best way to run a call centre
- Locating a warehouse or depot to deliver materials over shorter distances at reduced cost
- Forecasting sales for a new kind of product that has never been marketed before
- Solving complex scheduling problems
- Planning for a potential terrorist attack
- Deciding when to discount, and how much
- Getting more cycles out of manufacturing equipment
- Optimising a portfolio of investments, whether it contains financial securities or pharmaceutical product inventory
- Deciding how large a budget to devote to Internet v traditional sales
- Planting crops in the face of uncertainty about weather and consumer demand
- Speeding up response time, whether selling a product or responding to a 999 call
How to start using O.R.
And the sooner you make O.R. part of your decision-making processes, the more far-reaching the benefits can be.
Recognising the opportunity
How to identify your real opportunity, and how an O.R. professional can help you do that, too.
Begin with a general review of your organisation, its departments, and its processes. Look for difficult decisions that could benefit from the analysis of large amounts of data – like where to locate a new plant or how to make a manufacturing process more efficient. Look for complex processes that are being performed manually or with outdated systems. Look for important decisions that are made every day that might benefit from real-time data driven insight.
Are you gaining the most from your supply chain, logistics, or manufacturing processes? The way you deliver your services, set your prices, or evaluate your portfolio? These are all areas where O.R. can help you make significant improvements.
Inside your organisation: You may find employees with O.R. training in one or more departments – engineering, R&D, IT, scheduling, planning, logistics, pricing, etc. If you don't, consider hiring an O.R. professional and adding him or her to the mix, or even creating a new department.
Outside your organisation: There are many qualified O.R. professionals offering their services as independent consultants or members of consulting firms. There are also companies delivering O.R. solutions like optimisation software and services.
Inside and outside: Combining both internal and external resources has its advantages. You can leverage external specialties beyond your own resources, while building solution and system expertise internally for long-term support after the outside resources are gone.
Working with an O.R. professional
Tips for evaluating a resource, structuring the engagement, and setting up projects to succeed.
Working with internal resources
If you decide to start an operational research department in your organisation, get the most out of it.
- Organisation chart: Let the O.R. function report to an executive who is an O.R. enthusiast. Place O.R. where it’s able to serve the range of clients you want — organisation-wide or within a part of the organisation.
- Project mix: Naturally you want the O.R. team to work on those applications that offer the most potential to benefit the organisation. If your top-priority projects are developing major systems with "O.R. inside", these require significant time and cost. However, don’t overlook O.R. as an important resource for quick-turn-around work under tight deadlines; with specialized O.R. software, giving advantageous support quickly is practical.
- Finding more opportunities: Include your operational research director in executive group meetings so that you may explore ways different parts of your organisation might take advantage of O.R. expertise.
- Staffing your department: You can recruit operational research staff from various sources.
- Contact The OR Society at firstname.lastname@example.org to place recruitment advertising in Inside O.R. - The Society's monthly magazine which is available to all Society members.
- Different universities train O.R. professionals in different places. At some business schools, O.R. is called 'management science'. Contact your local university or consult a list of universities with operational research or management science departments by going to our sister site: http://www.learnaboutor.co.uk/careers_university/postgraduate.htm
- Several professional recruiters have staff who specialise in the placement of O.R. professionals.
- If you're already working with O.R. consultants, ask them to recommend others who might join your organisation full–time.
Working with external resources
You will find O.R. expertise at small, one-person firms, at medium-sized firms, and at large consulting firms. Larger consulting firms usually offer at least some O.R. specialists. Also, O.R. professors in universities and business schools often accept consulting assignments.
When you evaluate candidates, consider examining their:
- Experience in your industry, shown by references from previous clients
- Experience working with specific challenges similar to yours
- General experience in O.R. practice
- Degrees earned and the institutions that granted their degrees
As would be true of hiring any consultants, when you hire O.R. consultants try to agree up front on a clear statement of the assignment. Also arrange to give the consultants the support they require in access to people, cooperation, and tangible resources. Great results usually come from a true team effort between members of the organisation and the consultants.
Structuring an engagement
The four basic phases of typical O.R. engagements are described below.
Step 1: Assessment (1 day to 1 month)
Start by calling in an O.R. professional to assess how O.R. might help you address your challenge or opportunity. Depending on the subject matter, you may accomplish this step with a conversation or an assessment study.
Step 2: Quick-turn-around analysis (1 day to 2 months)
If you and the O.R. professional agree to proceed, the next steps are determined by the nature of the assignment. Some examples:
- Critiquing technical material or evaluating a software package with "O.R. inside": The O.R. professional performs the work and reports results.
- Advanced analysis for a one-time, critical decision: The professional prepares and interprets an advanced analysis, in ongoing interaction with you and others who either furnish input or participate in the decision.
- Preparing for system development to improve recurring decisions: The professional designs an information system with "O.R. inside" to identify preferred choices on demand.
Step 3: Prototyping – for system development only
(1 month to 3 months)
A development team (including O.R. professionals, software engineers, and operations staff as required) is assembled. The team constructs, tests, and refines a system prototype while interacting frequently with prospective users. The O.R. professional also recommends changes in processes and procedures necessary for effective system performance.
Step 4: Implementation – for system development only (1 month to 1 year)
The development team works with management and users to develop the system, install the system, train operators, revise processes and procedures, provide for maintenance and future upgrades, and measure benefits.
Key consulting agreement elements
When you begin working with O.R. consultants, ordinarily you will create a formal consulting agreement. Examples of contents:
- Clear description of the assignment
- Consultant and client responsibilities
- Deliverable materials – content, format, level of detail
- Schedule for both the consultants and the organisation, including project milestones
- Project risks (if any) agreed upon by the client and the consultant
- Change-control procedure
How O.R. shapes the world around us
A collection of examples of how O.R. is inside just about everything we do (even though we can't see it).
O.R. inside Formula 1 (includes a video)
O.R. inside English Football
O.R. inside Football Fixtures
O.R. inside one-day cricket
O.R. inside new sports stadiums
O.R. inside your low cost airline
O.R. Inside aircraft scheduling
O.R. inside your local factory (includes a video)
O.R. inside your shopping
O.R. inside your pint of milk
O.R. inside satnav
O.R. inside your car (your healthcare, your post office...)
O.R. inside your pension
O.R. inside your pay packet
O.R. inside your gas supply
O.R. inside your carbon footprint measurement
O.R. inside your telephone tariff
O.R. inside your 999 call
O.R. inside your doctor's surgery
Why there needs to be more O.R. inside performance measures