Conceptualizing an OIS as the enterprise’s “master plan assures the marketing-mix modeling applications are enhancing the maximally profitable forecast supported by the optimally feasible and sustainable supply chain.

“If you know where you are on the response function, you control everything.”

Dominique Hanssens, Bud Knapp Professor of Marketing, UCLA Anderson School of Management

“I am very supportive of integrating response curves into the planning, budgeting, and supply chain problems we discussed.” 

Len Lodish, Samuel R. Harrell Professor Emertius; Professor of Marketing
Vice Dean, Wharton West; Senior Director, Global Consulting Practicum

Alan, I’m glad that you contacted Gary Lilien and Len Lodish.  They are among the most accomplished quantitative modelers in marketing.”

Philip Kotler, S.C. Johnson & Son Professor of International Marketing, Kellogg School of Management, Northwestern University

As was made clear in Why OIS Works, there are a set of criteria or factors that must be present in a planning model for the result to be truly optimal.  So, since an OIS model is the only one which observes all the criteria, it is the only one which yields a truly optimal planning result.

Thus,  unavoidably, all of the traditional planning models (e.g.,Financial Planning and Analysis (FP&A), Sales and Operations Planning (S&OP), marketing-mix modeling (MMM) and supply chain design SCD) yield sub-optimal results.  See Comparison of Planning Models’ Optimality; also, see Practitioner schema which illustrates the same point by vendor and not application.  That is the bad news.

The GOOD NEWS, however is that when an ODDP  is deployed as the enterprise’s “master plan,” it assures all these planning applications, as well as others, are executing against the maximally profitable forecast and the optimally sustainable and feasible supply chain required to make and fulfill the new forecast.  Thus, they are all executing to a maximally profitable enterprise “master plan.”

The essential modeling innovation that makes an optimized DDP possible is the relaxation of the fixed forecast assumption explicit in supply chain network design modeling software.  This is accomplished by introducing into the model ENTERPRISE response functions.

Fortunately, paraphrasing Glenn Sabin, Office Managing Principal of ZS Associates’ office in Princeton, N.J., these enterprise response functions are not “new science.”  They are simply extensions to the response function capabilities developed over the last decade or so for marketing mix modeling and sales resource optimization. See Enterprise Response Functions for a brief description of how they are developed.

The difference is these jointly developed sales and marketing enterprise-wide OIS response functions solve two problems that have, traditionally, compromised marketing-mixing modeling and sales resource optimization results, assuring the enterprise-wide ROI of total sales and marketing expenditures were sub-optimal:

1) the objective functions  have been contribution margin and not true profit.  Thus, the results were financially sub-optimal, necessarily

2) there was no quantitatively rigorous way to assure, operationally, the results were feasible.  Thus, the results were, operationally sub-optimal, necessarily.

For a description of the product, INSIGHT Enterprise Optimizer which creates an OIS, see IEO Description on the INSIGHT web site: How to Maximize corporate profitability.

NEXT STEP: GET A FREE OIS PROPOSAL  NOW!

  1. Call Jeff Karrenbauer, President, INSIGHT, 703.956.1423 or 703.999.1259 (cell)
  • Jeff will describe how an operational activity-based calibration model will be built of last year’s income statement.
  • It will show how much revenue and profit was “left on the table” because total sales and marketing expenditures were not maximized.

2. He will schedule a meeting (web or on site) to describe the process in more detail.

  • He will also get a feeling for the complexities of your business.

3. In discussions with his partners, he will develop a FREE proposal.

FINALLY, ACCEPT JEFF’s PROPOSAL

  • And, get to work implementing OIS’s unique financial and operational modeling analytics to maximize both your sales and marketing ROI and your profit.