[Start Here] Anaplan Optimizer

In this series, we will teach you what Optimizer is, how it can help your organization solve complex business challenges, and when to use it.

We will approach this in 2 steps:

• Where to start with Optimizer? (this article)
• How to setup Optimizer – hands-on exercises
  • For territory assignment
  • For transportation
  • And more

What is optimization?

Large organizations are faced with complex and multi-dimensional business planning situations. Ongoing changes in the business and macro-environment compound these challenges. When it comes to achieving business objectives within constraints, there are always tradeoff decisions. Business leaders need the ability to properly evaluate these planning scenarios and make the right decisions quickly and accurately.

Many common business problems are, at their core, problems of resource allocation across targets, e.g. allocation to different locations, to specific machines or to varied time slots. Often each specific decision incurs costs which vary in predictable, but complex ways.  In addition, the availability of resources may be limited, creating intersecting hard constraints to the allocation. Deciding how to best make choices as problems grow becomes impossible without assistance, and sometimes finding any plan which satisfies the constraints can be time consuming and seemingly impossible.  

Numerous business domain areas can benefit from improved allocation and scheduling.  For example:

• Supply chain: Choosing which vendors should supply what stores and facilities
• Stock allocation: Distribution of materials across machines or production lines
• Scheduling: Allocating limited and constrained staff across time-varying service demands
• Financial planning: Moving investments optimally into opportunities having expected risks and returns.
• Advertising: Allocating marketing dollars to target different markets and product lines
• Sales quotas: Allocate quota targets across sales reps by product and/or location selected to optimize high level sales objectives
• Transportation routing: For a multi-location trip, deciding what order of destinations minimizes total travel cost
• Production planning: Deciding how to sequence manufacturing actions where transitioning from one task to another incurs known but order-influenced costs.

In most of these situations, each allocation choice has a range of possible values, but those choices involve tradeoffs which ripple through the problem, invalidating other decisions. To achieve a global optimum, and save the most money, the final allocations must be carefully synchronized.

Optimization is the collection of techniques developed to solve problems like this in large-scale, production business environments.  Each of these examples can be distilled into a standard form. This form includes a target value to maximize (or minimize) and a collection of constrained variable choices which affect the result but with varying costs.

What is Optimizer?

Anaplan Optimizer is designed to efficiently solve problems like those outlined above. It offers one of the  fastest optimization solutions, powered by a world-class linear-programming engine from Gurobi. This engine can determine the best solution to massively complex problems with multiple constraints, all accessible from inside your Anaplan model. 

Optimizer can coordinate the selection of precise values which efficiently solve business allocation and scheduling problems. Once configured, it provides planners with an objective and systematic way to consider all possible options, identify the right solution and direct the business toward the best path.

How does Optimizer work?

Complex systems of variables and constraints arising in business can frequently be encoded as linear equations.  In this situation, techniques under the umbrella of linear programming can automatically discover what scenarios result in optimal outcomes. Essentially, the Anaplan Optimizer efficiently searches the space of possible values, pinpointing those that deliver the true optimum. The Optimizer can then also be used to compare various assumptions side-by-side to see how they would have affected the resulting optimum.

You can define objectives, such as revenue, profit maximization, or cost reduction, and then set multiple variables or constraints to guide the planning process. As discussed, Optimizer will determine preferred outcomes for many complex questions, from staffing to capitalization, inventory, and much more.

Who is it for?

Optimizer can be useful to any Anaplan model builder.  Having a mathematical mindset and familiarity with business optimization will be helpful but is not required. The Optimizer is form-based and accessible as an action in the Anaplan modeling interface. In general, an optimization perspective aligns well with Anaplan solution architecture thinking and with the structures of existing Anaplan data.

Use case examples

Project portfolio optimization: Optimizer prioritizes projects requiring capital investment.

1. Goals
   • Prioritize the projects you work on
   • Optimize resources and investment by specific projects
   • Maximize cash flow
2. Variables and constraints to consider
   • Project start time
   • Duration of project
   • Capital requirements
   • Cost
   • People resources
   • Technical restrictions

Inventory management: It determines exactly how much inventory to have at each location to meet the customer’s required service levels.

1. Goals

   • Save money by identifying opportunities to limit inventories without affecting service levels
   • Lower cost by breaking down safety stock inventory into components by risk mitigation drivers

2. Variables and constraints to consider

   • Total replenishment cycle time
   • Delivery performance
   • Customer Service Level Requirements by ABC Ranking
   • Maximum capacity by plant
   • Production run rate
   • Production cost per unit by plant

Territory optimization: Optimizer systematically recommends accounts for assignment to sales representatives.

1. Goals

   • Increase revenue and account quantity coverage
   • Spend less time on operational overhead and planning time
   • Achieve higher quality sales rep portfolios

2. Variables and constraints to consider

   • Max number of accounts per sales rep
   • One account can only be assigned to one sales rep
   • Account-to-sales-rep match
   • Maximum book size per sales rep
   • Minimum number of accounts per sales rep

Where to start with optimizer?

While everyone can use the resources on this page, Optimizer is a premium service offered by Anaplan; to verify if Optimizer is enabled on your workspace, go to the Model Settings tab (the one with the gear ⚙ icon) and choose Actions from the menu list. The Actions list will appear in the main panel, click on New Action. In the dropdown menu Optimizer must appear in the list of available actions.

If you don't see Optimizer from your Action menu, contact your Anaplan Account team as you won’t be able to do the training exercises until the feature is turned on in your system.

As additional resources, we encourage you to look at Anapedia and we are very pleased to announce our On-Demand e-learning course, go check it out!

Now that we have a better understanding of what Optimizer can do, we can move on to some hands-on practice.

Found this content useful? Let us know in the comments below.

Contributing authors: Marty Betz, Michael Henderson, Pam Pervenanze, and Thibaud Raucoul.