Supply chain wide optimization...Optimization Program . 4 The express business: A very complex one Network reconfigurations Regulations Highly volatile demand Tight service requirements

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2

Supply chain wide optimization

at TNT Express

Organization & problem

Chris Goossens Managing Director Global Networks & Operations TNT Express

3

Global

Optimization

Program

4

The express business:

A very complex one

Network

reconfigurations

Regulations

Highly volatile

demand

Tight service

requirements

My ambition

5

Better

service

Unit cost

reduction Better & faster

fact-based decision making

6

GO-Program

Cumulative savings

from 2008-2011:

€ 207 mln

Communities

of Practice

GO-

Academy

Optimization

solutions

7


at TNT Express

Approach & Methodology:

DELTA supply chain Hein Fleuren

Full Professor Tilburg University & ORTEC

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Explanation supply

chain TNT Express

Receiver Sender

Aalborg, Denmark

Bilbao, Spain

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Explanation supply

chain TNT Express

Receiver Sender

Aalborg, Denmark

Bilbao, Spain

Explanation supply

chain TNT Express

Aalborg, Denmark

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Bilbao, Spain

Receiver Sender

Aalborg, Denmark

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Explanation supply

chain TNT Express

Vitoria, Spain

Receiver Sender

Aalborg, Denmark

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Explanation supply

chain TNT Express

Bilbao, Spain

Receiver Sender

Aalborg, Denmark

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Explanation supply

chain TNT Express

Bilbao, Spain

Receiver Sender

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European

Air Network

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DELTA Model

Mixed Integer

Programming master

model in AIMMS*

Pickup- & delivery

cost for integral

supply chain effect

Generation

of paths and

composite variables

* Based on model of Armacost, Barnhart & Ware 2002

PUD time

PUD time

Depot arrival Depot departure

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Scenario examples

(on randomized data)

1. Low

Cost 95%

2. Medium

Cost 79%

3. High

Cost 72%

4. Extreme

Cost 62%

Service impact

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Final result after

management decision

TLL

TKU HEL

ARN ORB

VST

SVG

OSL

GOT

BLL

MMX

BFS

DUB

ORK

SNN

STN

CWL

EMA

MME

EDI

LPL

BCN

VIT

MAD

VGO

OPO

LIS

SVQ

VLC

ZAZ

LIN

CIA

BLQ

CTA

LYS

TLS

BSL

GVA

RNS

MRS

GDN

WAW

KTW NUE

MUC

ERF

TXL

PRG

BRQ

VIE

BUD

LJU

IST

ATH

OTP

SOF PSR

TSF

HAJ

BOD

CDG

Airport closure

New airport

Unchanged airport

X

X

X X

X

X

X

X

X

X X

X

X

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A little story

Development

of tools: In COP

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Meet 3 times

per year

Country B

representative

O.R.

Consultant

Country A

representative

COP

lead

Country D

representative

WFP

representative

Country C

representative

University

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Explanation of our

Road Networks

Turin 07:00 pm Piacenza 11:00 pm Bologna 03:00 am Florence 06:00 am Route: > > >

Florence 06:00 am

Bologna 03:00 am

Turin 07:00 pm Piacenza 11:00 pm

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Explanation of our

Road Networks


Turin Piacenza Bologna Florence Path: > > >

Florence 06:00 am

Bologna 03:00 am


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Explanation of our

Road Networks



Turin 07:00 pm Piacenza 11:00 pm Piacenza 06:00 am Turin 10:00 am Tour: > > >

Florence 06:00 am

Bologna 03:00 am


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Explanation of our

Road Networks



Turin 07:00 pm Piacenza 11:00 pm Piacenza 06:00 am Turin 10:00 am Tour: > > >

Turin 07:00 pm Piacenza 11:00 pm Movement: >

Florence 06:00 am

Bologna 03:00 am


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What is the best

network?

Once a week:

Low cost, low service

Each day:

High cost, high service

= =

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The hub and spoke

alternative

Each day: low cost, high service

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Early TRANS in Italy

Volume information Italian network

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Screenshot Service

Capability Analyzer

Old situation from Barcelona New situation from Barcelona

Fastest route takes 1 day

Fastest route takes 2 days

Per origin-

destination small

branch & bound on

feasible routes

Takes existing

movements

Example possible routes from

one origin to one destination

Route #Hub Dep.T. Arr.T. Rank

1 08:00 pm 06:00 am 1

1 08:00 pm 07:00 am 2

2 09:00 pm 08:00 am 3

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The ROUTE module

in TRANS

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TRANS:

Load not

arriving at …

destinations

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TRANS:

Resolving

under-utilized

linehauls

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Other modules in

TRANS

TRANS Modules

Service

Capability

Analyzer

Routing Tour

Generation

Optimal

Routing

Movement

Heuristic

Shortest

path

Branch &

Bound

Set

Partitioning MIP* Heuristic*

* Meuffels, I., Fleuren, H., Cruijssen, F. & Van Dam, E., 2010

Enriching the tactical network design of express carriers with fleet scheduling characteristics

Flexible Services and Manufacturing Journal, 22(1-2), pp. 3-35

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Difficulties in TRANS

implementation

Data quality

Functional requirements for

so many countries

Getting people to use tools

Work groups with IT-department

Adaptors

Extensive data checks on entrance

COPs

Early involvement senior management

Gradual development

Involvement via COPs

GO-Academy

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General benefits of

TRANS

Development & deployment cost 2.5 M€

Cumulative savings 48 M€

CO2 reduction 44 Mkg

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at TNT Express

TRANS in Italy Davide Chiotti

Domestic Network Director Italy TNT Express

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at TNT Express

GO-Academy Marco Hendriks

Director Strategic Operations TNT Express

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GO-Academy

Effect and impact

• Optimization principles

• Overcome resistance to change

• Network of talented staff

GO-game

• Understanding fact-based analysis

• Managing expectations

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Outline of

GO-Academy

Module Name Topics

1 Introduction module Customers and their supply chains

2 Strategic optimization Infrastructure design (DELTA)

3 Networks & PUD Planning in Networks and PUD (TRANS & SHORTREC)

4 Hubs & depots Bottleneck theory, mechanization principles

5 Implementation Change management techniques

6 Graduation Presenting for impact, elevator pitches

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Benefits of

GO-Academy

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at TNT Express

Results & conclusions Chris Goossens Managing Director Global Networks & Operations TNT Express

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“A successful tool is one that was used to do

something undreamt of by its author” Stephen C. Johnson

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CO2 emission reduction of 283 Million kg (1,000 trucks 7 times around the earth)

Super sector leader transportation category

of Dow Jones Sustainability index

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Challenges Convince people to trust & implement

Fact-based analysis might differ from people expectations

Benefit tracking & changing business environment

Lessons learned Act as a team & we will overcome them

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Transportability Even to other organizations

World Food Programme

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Impact & value (2008 – 2011)

GO Subprogram Accumulated Savings

Networks 48 M€

PUD / Warehouse 27 M€

Supply Chain 132 M€

Total 207 M€

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Thank you

48

Q&A

Organization


Approach

Hein Fleuren Full Professor Tilburg University & ORTEC

Experience of a user

Davide Chiotti Domestic Network Director Italy TNT Express

GO-Academy

Marco Hendriks Director Strategic Operations TNT Express

Conclusion


Documents

Supply chain wide optimization...Optimization Program . 4 The express business: A very complex one Network reconfigurations Regulations Highly volatile demand Tight service requirements