Identifying cost reduction and performance improvement opportunities through simulation

During difficult economic times, companies have few positive cost reducing options that simultaneously improve operational performance. This paper addresses how Deloitte Consulting partnered with Simio LLC to model multiple process improvement opportunities for a HVAC manufacturer in order to reduce the facility's operating costs. Through the use of simulation, the team was able to determine the impact of reducing the cost burden for the HVAC company by minimizing WIP inventory, eliminating over-time labor and increasing throughput. Four separate improvement opportunities were modeled independently and conjointly to provide insight into the size of the savings opportunities as well as to enable the prioritization of those efforts.