According to Dr. Michael Watson of IBM, during a video interview with Supply Chain Digest editor Dan Gilmore, the multi-objective capability is about being able to optimize across two or more objectives at the same time.

"Executives have long known when they are making decisions in the supply chain, it's not just cost, it's not just service, it's not just capital investment, it's a combination of all these things that drives their decisions," Watson said. "What we are now able to do with some innovative mathematical optimization techniques is to analyze these different objectives all at the same time."

Watson said that as the result of this new technology, optimization software can now automatically build a trade-off curve that shows how different objectives play off against each other (see graphic in the bottom half of this article).

"In the past, companies had to pick a few points and kind of manually build this type of curve," Watson said. "Now we can automatically build the curve. It provides some additional benefits beyond just understanding the trade-offs between different objectives. It also gives you some idea of the range of the span. Does one objective, for instance, range from $10 million to $50 million, or does it range from $25 million to just $25.2 million? That gives me some insight. The shape of the curve also gives me some insight."

He said for example these trade-off curves can allow companies to see areas where there might be a big step jump between one part of the curve and an adjacent part, or easily identify where there might be an exponential type rise say in an objective such as cost as it approaches a 100% service level.

In the end, it will make for better and more informed decisions in the supply chain, Watson said.

The innovation is first being rolled out in IBM's network optimization tool, but should soon also appear in Big Blue's inventory optimization and factory scheduling software, as well as its market- leading optimization tool kit, CPLEX, which is embedded in many other supply chain planning software solutions from other vendors and used by individual companies to solve specialized supply chain optimization problems.

 

Watch Full Video Interview

 

 

 

What are the Applications?

Watson said there are many potential uses, but the most obvious is better understanding the cost versus service trade-off.

He said a recent customer, for example, wanted to better understand how logistics costs traded off versus the percent of customers within 200 miles of DCs in various network options, which was the company's service target.