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TNT Express Supply Chain-Wide Optimization Report

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Updated: May 2nd, 2020

Value of the Article to the Business Community

The article Supply Chain –Wide Optimization at TNT Express Interfaces by Fleuren et al. is important to the business sector. It shows an example of the application of an operation research project based on how it has worked for the management of TNT Express. TNT Express aspired to have a cost-effective and customer-satisfying supply chain. Initially, the design seemed rather difficult to attain.

Globalization has led to a tough competition among companies. Operation research provides a leeway through which organizations can earn a competitive advantage over their competitors. The application of operation research project in TNT Express has helped the organization to develop a moneymaking and customer-satisfying supply chain.

The article is important for the business community because managerial roles have become intricate. Irrespective of whether it is a manufacturing company or service delivery business, the available resources must be used efficiently. The future is vague. Hence, decisions should no longer be made through the trial-and-error method.

Application of scientific techniques is important in decision-making processes for an organization that intends to make the future look more certain. Quantitative method is a scientific approach that helps companies to resolve difficult challenge in an economical and precise way as exhibited in the case of TNT Express article.

Quantitative methods involve using past information to evaluate actions that are much beneficial to the organization. Experts have noted that scientific approaches are important for managers because they assist them to make accurate managerial decisions. Under project management, quantitative methods assist a company to accomplish a given goal within a specific period through the creation of key network models. TNT Express used past data to develop subprograms for various levels of the delivery process.

These subprograms were prepared at different degrees of maturity with the various levels in mind. Thus, they had different optimization complexities. It also designed dashboards to assess the actual performance and available optimization opportunities. The business community can borrow a leaf from how TNT Express utilized quantitative methods in project management in an effort to apply them in their organizations.

The article not only provides the benefits of the various subprograms that are applied by TNT Express, but also explains various deployment challenges in relation to the execution of the subprograms. According to the article, employees take time before they can understand new programs. Retrieving information is also strenuous because of the vast source.

Moreover, some of the collected data may be incomplete or too comprehensive. The implication is that the retrieval process will increase the time needed before the important data is collected. This information is of importance to the business community because it creates awareness of some challenges that it may face when deciding to use quantitative methods in project management.

This article provides a comprehensive understanding of how the business community can apply operations research to help in predicting potential business challenges. It explains optimization as a quantitative method that can work effectively in project management. The application of a quantitative method should be done in steps according to the maturity level of an organization. Otherwise, a wrong application procedure may result in opposition from users.

The techniques should only be advanced once people have acclimatized to the existing techniques. The article has significant information on organizations that have complex problems and are oblivious on how they can solve them. Moreover, since quantitative techniques are transportable, they can be used in any other company that seeks to optimize its activities.

The Value of the Article with respect to the Course

Operations research is quickly becoming a vital tool for managers in the currently competitive market. Application of scientific techniques in decision-making has gained ground in most companies. Organizations use quantitative methods in resolving complex problems quickly and accurately. Students of business and economics should have adequate information on how mathematics and statistics are applied for them to succeed as leaders of multinational organizations.

Technological advancement has led to an increased use of computers, which have software such as EXCEL and SAP that need the application of scientific knowledge. Students should be endowed with knowledge of how to create models that reveal and address managerial issues.

Quantitative techniques allow a student to examine the various elements of a company by applying techniques of mathematical statistics to understand performance and/or gain better degree of system regulation. By applying scientific techniques, the company is best placed to create and execute an optimal resolution.

Fleuren et al. write a comprehensive work on how a company applied quantitative techniques to improve its performance (16). TNT Express had a challenge of not being cost-effective. It did not satisfy its customers. It realized that to achieve its goals and hence maintain a competitive advantage, it had to utilize quantitative methods. It began its project by optimizing its distribution network in Italy. The successful trial program encouraged it to initiate an international global optimization (GO) project.

The GO project was meant to inform clients how they could upgrade and establish a universal optimization language. The program was divided into subprograms to fasten its implementation. Through TNT Express, students can learn how to apply quantitative methods in various sectors of the organization to ensure improved performance.

The article presents various models such as network models that are used in quantitative techniques. A network model helps students to note that any project entails organizing, preparing, and regulating various interconnected activities with inadequate resources (Stevenson 100). Therefore, students who opt to be future managers must have a brilliant understanding of how to organize the system so that it can fully utilize the available resources.

It is important for students to familiarize themselves with the various models that can help them as potential managers to achieve the goals of an institution using limited resources. For instance, with the aim of providing cost-effective and quality services to its clients, TNT Express decided to reduce the number of pickups that deliver items to its customers.

This reduction was done by considering the minimum number of pickups that could be used to provide high-standard service. Thus, the article is of great value to students because it shows practical applications of quantitative techniques in decision-making while at the same time identifying the existing setbacks. It brings the theory learnt in class to practice (Fleuren et al. 15).

Students can compare the challenges experienced by TNT Express in the implementation of the quantitative techniques with their literature and device the appropriate solutions. Consequently, this information helps them (students) to modify the various models used by TNT Express to fit within the organization without the setbacks.

Nonetheless, if the attempt fails, they stand a better chance to tackle the challenges. Fleuren et al. provide a precise but detailed understanding of the application of quantitative methods in project management and decision-making (16). The use of a multinational company such as TNT Express to illustrate the application of quantitative methods enhances the understanding (Stevenson 109).

Summary of Supply Chain-Wide Optimization at TNT Express

Fleuren et al. focus on the utilization of operations research (OR) in decision-making processes (15). The article uses TNT Express, a multinational company, to express the importance of using OR in solving complex issues in an organization.

The article explains how the company utilized quantitative techniques to make important decisions, which helped it to save about £207 million within 7 years. Moreover, the company was also able to reduce its CO2 emission because of the witnessed reduction of the number of pickups that were used in the delivery process.

TNT Express is a conglomerate that deals with the delivery of packages from one client to another around the world. It has branches in over 200 nations. The industry is competitive. To maintain control of the market, the article advises one to be flexible to adapt to the volatile market. The company has to be cost-effective whilst providing high-quality services to its customers.

However, the nature of its service delivery has made it complex to accomplish the goal. Once the packages are amassed, they are moved to depots and hubs. The company refers to the delivery and assembling of items in the depots as pickup and delivery (PUD). Besides, it refers the movement between the depots as a network process. Considering the different activities that are performed during these two processes, accomplishing the primary goal becomes intricate.

Hence, the company has to create a supply chain model that can optimize the two contrasting goals. Such goals are only achievable through an operation research (OR) project. At the onset, the company intended to increase business activities, which would enhance its competitiveness in the long term. It further discovered that using quantitative techniques could speed up its growth. The first project was conducted in Italy where it sought to optimize the local transport network.

The successful venture inspired the introduction of a global optimization (GO) program. Optimization of activities became a prime goal for the company. Hence, the organization created Communities of Practice (CoPs) as an initiative, which was made up of experts who taught employees the best practices and optimization programs. It also had a GO academy, which informed the employees the doctrines of optimization (Fleuren et al. 17).

Essentially, GO was aimed at enhancing decision-making processes in the company. To resolve the problems in the various sectors of the organization, namely the network process, PUD, and the supply chain, leaders prepared subprograms with different models and techniques to resolve optimization setbacks in every area. The subprograms comprised TRANS, SHORTEC, and DELTA. TRANS subprogram was to deal with network optimization. It was meant to upgrade the service delivery routes.

TNT Express had a huge network. Thus, it would not have been prudent to apply a combined approach to determine the routes and tours. The company divided the optimization challenge into smaller problems and developed modules for every issue (Stevenson 101).

It established a module to determine the fastest route, an itinerary component, which allocated packages to various routes, and a movement heuristic module, which was used to create new movement paths. Furthermore, a tour generation and optimal path module assisted in making movement more efficient. The optimal path module was incorporated to tackle tactical service network design problems. The company applied mixed-integer programming to create a restricted amount of paths.

To assess the implementation, TNT Express initially chose to use spreadsheets. However, considering its wide network, it resorted to discussing the progress through CoPs. This subprogram helped the company to examine over 15 road networks. Within three years of application, it had saved about £ 48 million. Furthermore, it reduced workload among employees by offering them a chance to perfect on their services.

The second subprogram, namely Tactical Planning Pickup and Delivery (SHORTEC), was generated to handle the optimization problem in PUD. The main challenge in the PUD was to reduce the cost of PUD whilst offering high-quality service. It was clear from an operational view that to sustain consistency in the PUD, it was important to avoid distractions when collecting and loading packages.

This plan helped in reducing workload and inaccuracies. Nonetheless, it was difficult to maintain consistency of similar rounds because of volume vacillations. Thus, the application of quantitative techniques was vital. One of the ways of ensuring that the rounds were strong to handle the ‘volume flux’ was through the µ-zone, which comprised a number of customer visits and time taken to attend to customers in a particular area.

Moreover, to ensure that the PUD round was practical and cost-effective, the company used domestic algorithms to compute and optimize the rounds. Implementation of SHORTEC was initially strenuous because of the high number of depots. Fortunately, it introduced a standardized implementation plan, which worked perfectly. The module has worked effectively in most countries. By 2011, six percent of all depots in Europe had been optimized, thus leading to savings of about £25million as noted by Fleuren et al. (13).

Thirdly, the company utilized the DELTA, which focused on optimizing the supply chain. One of the aims of the optimization process was to reduce aircrafts in the supply chain as a way of reducing the cost of transportation.

It sought to promote road transport, rather than air transport because it was cheaper and environment-friendly. The module used hub time windows to determine the arrival and departure. This model has proved essential when evaluating air network optimization. At the time of drafting the article, the company had closed down 12 airports, thus saving a high cost.

Furthermore, Fleuren et al. observe that TNT Express established GO academy, which was to impart knowledge to employees concerning the application of various quantitative techniques (17). The academy encountered a number challenges. It was time-consuming. Employees took time to comprehend general optimization principles. Besides, they were resistant to the principles.

Thus, the academy embarked on teaching them how to use optimization without necessarily being mathematicians. The GO academy imparted not only optimization skills but also interpersonal skills. Currently, the academy has succeeded impressively in cutting cost and enhancing networking. Employees now use a similar language, namely cut off time and µ-zone.

The quantitative techniques that are applied in the TNT organization are transferable. They can be applied by other organizations that are not necessarily in the same industry. Fleuren et al. confirm that they conducted the application of quantitative technique on World Food Program (WFP), which served more than 90 million individuals from poor states (18). They applied SHORTEC in Liberia where the organization had been supplying food to more than 2000 schools. Consequently, the organization saved about 10 percent of the transportation cost.

Works Cited

Fleuren, Hein, Chris Goossens, Marco Hendriks, Marie-Christine Lombard, Ineke Meuffels, John Poppelaars. “Supply Chain–Wide Optimization at TNT Express.” Interfaces 43.1(2013): 5-20. Print.

Stevenson, William. Operations Management. New York, NY: McGraw-Hill Irwin, 2009. Print.

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