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Don’t Let “Optimization” Become a Buzzword

In the business and supply chain world, buzzwords are a dime a dozen.  These words tend to sound wonderful on paper, but they often mean absolutely nothing in reality.  Even worse, overuse of these buzzwords can lead to a nullification of their meaning as well as a general misunderstanding of practices.  Unfortunately, according to industry expert Dr. Michael Watson, our beloved term “optimization” is becoming one of these buzzwords.  It seems that one possible reason for this is that optimization is too often confused with analytics.  Watson acknowledges that he understands the confusion and explains what the difference really is: First, analytics is a term that is used loosely.  In a previous SCDigest column, I suggested that it is better to think about analytics as a field composed of descriptive analytics (for reporting and understanding the business), predictive analytics (for forecasting and projecting what might happen), and prescriptive analytics (suggesting what should happen, using optimization technology).  Second, optimization is often loosely used to mean that you are improving something.  If we use optimization in this context, it can mean almost anything.  We want to give optimization a more precise definition so you can see the possibilities for using this technology to help your business and to help you evaluate solutions.  Optimization in general refers to using mathematics to model your business and then finding the best methods for your particular scenario.  Watson notes that optimization “is most often associated with linear or integer programming.”  Clearly, optimization is more than just making things better.  The case seems to be that individuals often say “optimizing” when what they actually mean is “improving.”  According to Watson, it should be treated as the individually rich field that it is.  Optimization is truly a field and not just a word, and over-using the term is a sure fire way to create an ineffective buzzword. Optimization should also not be limited.  Watson gives the example of using a network design tool to locate facilities in the name of “optimization.”  Doing something like this and being satisfied leads to many missed opportunities.  Truthfully, optimization can help in areas of scheduling you production line and workforce as well as strategically organizing the items in your warehouse.  True optimization—meaning doing more than simply improving on one area—can lead to up to a 30% reduction in transport costs.  Furthermore, as Watson notes, “optimization can also be embedded in your real-time systems.”  Optimization engines can assign orders to proper locations, and optimization can also help rebalance a plant if say a machine malfunctions or breaks entirely. Buzzwords simply do not do anyone any good.  Optimization is a positive thing when it comes to supply chain management, and diminishing the meaning of the word is in fact detrimental to success.  Remember, optimization is an entire field, so don’t use it as a go-to term.  Optimization is not the same as making improvements.   Also, remember not to confuse optimization with analytics.  As Watson stresses, don’t let optimization become a buzzword, because it may mean missing out on opportunities.

About Anne Grybowski

Profile photo of Anne Grybowski
Anne is a former staff writer for CAI's Accelerating IT Success, with a degree in Media Studies from Penn State University.

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