Inflation, expensive energy, interest rates and optimization
Global warming, biodiversity and our survival should occupy our brightest minds but the short term masks the long term as often.
Optimization can help this long term: Christopher Columbus, global warming and mathematical optimization. But when I wrote this article two years ago, we were in another emergency: Covid19. And so I responded with Covid19 and optimization.
The Covid emergency has passed and for the short term the challenges are threefold (Inflation, expensive energy and high interest rates) and once again optimization, i.e. doing more with less, helps.
1) Inflation
Everything costs more and there too, optimizing, ie doing more with less, makes it possible to remain profitable. For a very simple example, the ROI of the simple zoo and bus story increases like inflation. If inflation is 6% the gain increases from 100 to 106 Euros.
Equivalent example in the company: How to take 300 employees with buses of 40 and 30 places which cost respectively 500 and 400 Euros?
2) Expensive energy.
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How to produce 3000 Mega Watt with 400 MegaWatt and 300 MegaWatt plants that cost 5 and 4.
Minimizing costs by reducing route routes or by better organizing production according to energy prices can make it possible to pass this difficult stage. Example: Field Services Smart Scheduling for 仲量联行
Going from 2.8 to 4 visits per day means increasing productivity by more than 40%.
3) Interest rates are rising, cash is no longer free.
You have to arbitrate and optimization helps here again.
Small example:
The company needs 300 thousand Euros and sees two banks: one offers loans of 40 thousand Euros for 5000 Euros, the other loans of 30 thousand Euros and invoices 4000 Euros. What to do ?
More generally, the higher the rates, the faster the cases described in AI, optimization and finance are justified.
NB: The same IBM business partner DecisionBrain built the 2 examples ( VIVETIC and JLL )