I am often asked by my fellow Lean and Six Sigma practitioners about when to use simulation on their projects. It is a point of confusion, because simulation is powerful, but it is certainly not the only tool in a Lean Sigma toolbox. So how do you know when to use simulation? The first question I always ask is this:

Are you looking back or are you looking forward?

The other data-oriented tool that I rely on heavily is Excel, which is usually the alternative to simulation that Lean Sigma practitioners are considering. This question of “looking back or forward” tells you a lot about where you are in a project cycle, as well as which tool is the most appropriate.

For example, in a DMAIC project cycle, you start out by defining and measuring your existing process. You are conducting an MSA, measuring the process performance over time, and plotting control charts to understand the variability. In all of these cases, you are looking at current state or historical performance (aka. Looking back), which Excel (or Minitab or SAS) is ideally suited for.

In contrast, once you have progressed to the Analyze or Improve phases, you are looking forward. Now you are designing the future state process, piloting a few ideas, testing scenarios, and looking for ways to reduce implementation risk. This is when I find simulation to be the most valuable, because it is a virtual platform to quickly test a variety of capacity and demand scenarios, process changes, and crazy ideas all in a risk-free environment.

For these reasons, the question of “Are you looking back or looking forward?” is the first question I ask when deciding whether simulation is the right tool for a particular situation. What is yours? Please share your experience with us.