OR – Operations Research

  • Most improvement projects do not need much more than common business sense and basic maths and statistics skills to find good solutions – but some do
  • OR aims to find optimal solutions to complex management problems when there’s a clear objective and a large number of variables and choices involved – it’s the cream of management sciences, employing a mix of creative and analytical thinking, applied maths, statistics and computer modelling
  • OR has its roots in WW2 when Professors Patrick Blackett and Charles Goodeve helped design new bombing and depth-charge patterns to maximise the chances of destroying the enemy’s factories and U-boats
  • After WW2, OR was adopted first by the steel (BISRA – British Iron and Steel Research Association) and coal (NCB – National Coal Board) industries, and later by many other large organisations in most sectors
  • Peace-time OR achieved considerable success in many areas including :
    • Production and inventory control to maximise output volumes, minimise cost, reduce queues and remove bottlenecks
    • Deciding when best to replace expensive capital equipment
    • Routing and scheduling of delivery vehicles to minimise costs and maximise service levels
    • Rostering staff, in retail stores and prisons for example, to reduce costs and accommodate the need to balance home versus working lives
    • Forecasting shipping freight markets to time when and for how long to charter very large iron ore carriers and so minimise transport costs – we saved ‘tens of millions’ for British Steel in the 70s doing just this
    • Optimising blast furnace burdens, using linear programming, to decide the best mix of various iron ores and coke to maximise output and minimise costs
    • Simulating the operation of major new capital investments – new steelworks, new ports to import iron ore or new warehouses and cold stores for instance – to determine best layouts and capacities of equipment and services before incurring any serious capital costs
  • OR still has much to offer but its focus on practical solutions to big management problems has either become lost in a fog of academia or a multitude of apps
  • Either way,  it’s no longer appreciated by most managers when it should still be in the fast lane of the productivity improvement highway, especially given most improvement potential lies with the mix of resources and methods used, not the individual input resources themselves

 

 

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