The analytics A to Z of A to B in express delivery

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TNT Express is a global leader in B2B express delivery. In its quest to achieve the perfect balance between the two conflicting core goals of high cost efficiency and high customer service, over the last ten years the company has made a deep commitment to Supply Chain Optimization. ORTEC has partnered with TNT Express at every step on a journey that has not only delivered huge savings, but also achieved a fundamental culture change throughout the organization.

Express delivery is a volatile and competitive sector. To succeed you need to have a network that’s robust, agile and able to absorb demand fluctuations effectively. And will remain that way for years to come, even when you don’t know exactly what those years will bring.

Vision and collaboration

Back in 2005, key top managers at TNT Express had the vision to see how quantitative methods could drive the company’s increased competitiveness. They set up a pilot operations research (OR) project aimed at optimizing their Italian road network. By rescheduling vehicles and reassigning packages, asset utilization increased and transportation costs decreased 6.4%.

This initial success paved the way for the global optimization (GO) program, a close collaboration between TNT Express, Tilburg University and ORTEC. GO has succeeded in improving decision-making throughout the company and at each point in its supply chain. The key to this success was starting simple then following the maturity level of the business to gradually apply increasingly advanced optimization methods. This maturity growth was stimulated and accelerated from the start through the use of tools, consulting support and education programs.

Quick through the curve

Put simply, this maturation process involves three stages: first descriptive analytics of current performance, followed by predictive analytics that reveal what’s going to happen, and finally prescriptive analytics that identify what the business needs to do to maximize value and minimize costs.

That a company like TNT Express — that delivers 4.7 million packages to over 200 countries via some 2,600 facilities, 30,000 road vehicles, 50 aircraft and 77,000 employees — could negotiate such a maturity curve so quickly is no mean feat. Even for a company specialized in express delivery, that’s fast. It required three interrelated elements: technology, awareness and people.

The key driver making those three elements come together so successfully has been a senior management team at TNT Express who believed in OR and created buy-in throughout the business. Principally by investing in people via the company’s GO academy, where over a period of two years employees learn the principles of OR and how to implement them in their work.

Embedding the values

Hundreds of TNT Express employees at all company levels have now been through the GO academy, including the high potentials who will supply the next generation of business decision-makers. These people not only understand and maximize the technology’s benefits, but act as internal ambassadors for OR, further raising awareness deep within local business units.

In parallel with the investment in people, ORTEC has partnered TNT Express to develop increasingly sophisticated tools that began by simply helping tweak performance in local networks to models today that cover all aspects of TNT’s global network.

Critical to the credibility of OR within the company has been the ability of ORTEC’s consultants to grasp company needs at the tactical and strategic level, and deliver solutions that provide real added value exactly where business priorities need it.

The bottom line

As a result, since 2005 OR has delivered cost savings of over €207 million (and counting), and improved decision-making across the company. TNT Express now has a suite of optimization solutions that help operating units to optimize their package delivery by road and air. While the GO academy continues to help embed OR within the company’s core values.

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