Growth series: Optimize your operating model

Digital twins provide enlightening simulations

One tactic that leading companies are adopting to optimize their business models is the use of “digital twin” technology to examine possible efficiencies throughout the product and service life cycle.

The technology takes a company’s existing data and creates a model to show how its supply chain cost to serve metric evolves over time. This creates a nearly real-time simulation (or “twin”) with all the unique attributes of your business.

Using the twin, leadership can examine the impact of possible strategic actions.

“How do I want to look at this scenario differently?” said Scott McGurl, National Managing Principal, Strategy for Grant Thornton. “If I had made a decision differently, what would have been the impact? How am I going to factor that into my decision-making process going forward? It gives you a real-time way to model out your organization in a lot of different ways.”

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Consider scalability of operations

The events of the past couple years also reinforce the need to include an analysis of operations and operating models in due diligence efforts.

Limiting due diligence examination to financial factors may prevent insight into key factors that aren’t easily seen in a financial analysis. What’s the condition of property, plant and equipment? Does the inventory on the balance sheet exist, and can you be sure none of it is obsolete?

“Look at the supply chain, HR and IT operating models and think: Are those operations scalable? Or are there deficiencies that exist in those operations?” Eaton said.

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Knowledge and courage are required

From identifying the three key elements of growth to exploring human capital objectives to analyzing supply chain considerations, this series has endeavored to provide a comprehensive look at how organizations can drive growth while preserving profit margins.

Even in difficult economic times, growth is all around us in the business environment. Those who learn how to cultivate it and have the courage to follow through with it will reap rewards for themselves, their people and their customers.

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