Decision-Analytic Approaches to Operational Decision Making: Application and Observation

Decision analysis (DA) and the rich set of tools devel­ oped by researchers in decision making under uncertainty show great potential to penetrate the technological content of the products and services delivered by firms in a variety of industries as well as the business processes used to deliver those products and services to market. In this paper I describe work in progress at Sun Microsystems in the application of decision-analytic methods to Operational Decision Making (ODM) in its World­ Wide Operations (WWOPS) Business Management group. Working with members of product engineering, marketing, and sales, operations planners from \VWOPS have begun to use a decision-analytic framework called SCRAM (Supply Commu· nication/ Risk Assessment and Management) to structure and solve problems in product planning, tracking, and transition. Concepts such as information value provide a powerful method of managing huge information sets and thereby enable managers to focus attention on factors that matter most for their business. Finally, our process-oriented introduction of decision-analytic methods to Sun managers has led to a focused effort to develop decision support software based on methods from decision-mak­ ing under uncertainty. 1.0 Operational Decision Making at Sun Microsystems Sun Microsystems, Inc., is a large, established provider of technology products such as workstations, servers , prin t­ ers, and computer storage devices, with annual revenues of nearly $7 billion dollars. Balancing supply and demand for Sun's products is difficult given the overall volatility of the technology marketplace, complex dynamics and uncertainties in customer preference, and extremely short product lifetimes� less than 18 months for most technol­ ogy products. In such a fast-paced business environment, an efficient, intelligent execution capability is critical to long-term business health. The wing of the company charged with building and maintaining overall execution capability is called World-Wide Operations (WWOPS), an or�anization comprising several lar ge groups such as Sup­ plier Management, Manufacturing, Logistics, Product Engineering, and Business Management. WWOPS Business Management is responsible for longer­ term business planning related to the design, manufactura­ bility, and delivery to market of Sun's products. It is not a tactical or logistics organization. Rather, it works with other groups such as Engineering, Marketing, and Sales to gather and manage assets to support introduction of new products, end-of-life transitions for older products, and