How to Simulate Business With KPI

Business simulation is now commonly used in businesses whenever they hold trainings or make an analysis about their processes and performance. Here, there are two bases namely numeric and scenario. In the former, this is generally done in the form of business simulation games wherein the trainee will be given a situation that is similar to the environment he is in. He will need to make the right decisions in order to pass the game. On the other hand, numeric based simulations will mimic the entire company or just a specific organization unit or process. The learner will have to input numbers or pull dialers and levers. The result of the simulation will be shown through graphs and reports. Usually this approach is utilized in order to develop and train intelligence and knowledge for business. There are learning objectives here such as strategic thinking, market and financial analyses, teamwork, leadership and operations. Now, the question is: how do you simulate business with KPI?

There are three processes involved when you want to simulate business with KPI or key performance indicators. The first one is to construct your business model, which you will use to describe the processes of your company or the system for the simulation. Next is to perform the actual simulation process. Generally, you will need to make use of a good application that will allow you to implement the model. Lastly, you will need to examine and optimize the results. This is where you will draw the conclusions based upon the output. You will be assisted here in the entire procedure of decision making.

A number of companies are not quite convinced that this procedure is useful. This is because they do not know the advantages and the benefits that they will gain when they perform business simulation through the KPIs. First is the fact that they will be able to manage the changes. Since they are operating a company, they will be facing a lot of challenges and risks that will put them to test. Some may prove to be difficult and almost impossible to get out of especially when one is not thoroughly prepared. But when you are able to handle change you can also deal with the to-be processes in your business. Another is that one can save from the implementation costs. If you will be utilizing expensive systems, you must be guaranteed that they will work for you. Otherwise, you will just waste your money instead of investing it to other resources. When you simulate business with KPI, you are able to validate the design for your plans and thus, you can implement strategies that are cost effective and successful in the end.

One thing that you have to remember though is that you will need to have key performance indicators first. You will be the one to define them so make sure that you choose relevant ones that you can apply for the simulation and evaluation processes. After simulating, you can now optimize your business performance so that you will be able to generate more sales and become profitable and productive.