brief description of TNT supply chain

1. TNT Supply Chain
Submitted by:
UPASANA SHAH (ROLL NO. 51)
SUPPLY CHAIN MANAGEMENT
COURSE COORDINATOR: PROF NITIN SETH
EPGDIB 2017-18, SEMESTER 2

2. Supply Chain Management
Supply chain management encompasses the planning and management of all
activities involved in sourcing and procurement, conversion, and all logistics
management activities. Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries, third party service
providers, and customers. In essence, supply chain management integrates supply
and demand management within and across companies.
(Council of Supply Chain Management Professionals, 2017)

3. Simple supply chain
(diagrammatic representation)

4. Elements Of Supply Chain Management

5. Logistics Supply Chain Management
Logistics management activities typically include inbound and
outbound transportation management, fleet management,
warehousing, materials handling, order fulfillment, logistics
network design, inventory management, supply/demand
planning, and management of third party logistics services
providers. To varying degrees, the logistics function also
includes sourcing and procurement, production planning and
scheduling, packaging and assembly, and customer service. It
is involved in all levels of planning and execution--strategic,
operational and tactical. Logistics management is an integrating
function, which coordinates and optimizes all logistics activities,
as well as integrates logistics activities with other functions
including marketing, sales manufacturing, finance, and
information technology.
(Council of Supply Chain Management Professionals, 2017)

6. A Logistical Supply Chain
UPSTREAM DOWNSTREAM
1- Manufacturing Unit 2- Haulage
3- Transportation (air/road/sea) 4- Cargo Terminal
5- Distribution Hub 6- Retailer
7- Consumer

7. Logistics Overview
Antoine-Henri, Baron Jomini a Swiss Army officer used the
term ‘logistique’ from which ‘logistics’ is derived in the 19th
Century speaking of military operations (Wikipedia, n.d.).
The application of logistics dates back to the reign of
Alexander. In his book Donald W. Engels comments
“Unlike some of his historians, Alexander himself was
deeply aware of the importance of military intelligence and
securing adequate provisions for his army”. He goes on to
add that “The success of Alexander’s expedition, the
longest military campaign ever undertaken, was in no small
part due to his meticulous attention to the provisioning of
his army”. (Engels, 1978)

8. Logistics Overview contd/-
The logistics industry can be divided into 3 broad categories:-
Today the logistics is fast paced and
developing science, well, some call it
art as well. Some of its most pertinent
challenges are reduction of
transportation costs, last mile delivery
costs and time.
Some of the most interesting
technological advances in logistics are:-
•Introduction of robotics
•Introduction of self-driving trucks
•Virtual logistics where control panels
will be located with employees several
miles away from the activity hubs to
control the work flow
•E-commerce changing the world of
logistics
•Introduction of apps and cloud based
platforms

9. TNT Overview
TNT started out as Thomas Nationwide Transport in 1946 by Ken Thomas, in Sydney, Australia.
•In 1967 it merged with Alltrans, another freight company founded in 1950 by Sir Peter Abeles & George Rockey (both Hungarian
immigrants). (TNT)
•This merger made TNT the largest player in Australia with 50% of the transport carrying field. Its turnover was expected to reach
AUD 545 million, next to its immediate competitor Mayne Nickless at AUD 528 million. (The Canberra Times, 1967)
•The company was on an expansion mode. By 1980 the company had established its presence in over 180 countries and its focus
was Europe. It was the first to buy its own aircraft and an overnight dedicated fleet with pan – Europe operations.
•In 1992, TNT Skypak and TNT Mailfast combined with the Dutch postal giant KPN PTT Nederland (Koninklijke Staatsbedrijf der
Posterijen, Telegrafie en Telefonie Nederland) (Wikipedia). It was named TNT Express NV and got listed independently on the
Euronext stock exchange. TNT’s activities outside express, mail and logistics were sold off. In 1996 TNT moved its headquarters to
Hoofddorp, The Netherlands.
• In 1998, TNT also opened its European Express Centre at Liège, Belgium.
Also called Eurohub, its major expansion was announced in 2004. Another
road hub and depot opened up in Duiven, the Netherlands. (TNT)
• It also launched a project called Liege ExtraFit (LEF) to strengthen
efficiency and productivity of the Liège hub by pumping in millions of euros.
The project, is still ongoing and expected to be completed by mid-2017.
• On 25th
May 2016, FedEx acquired TNT at a price of $4.8 billion to gain
market share in Europe, competing with UPS & DHL. The merger will
finally come through in 2020. (Forbes, 2015) & (TNT)

10. TNT Supply Chain
Adopted from: (Fleuren, et al., 2015)
•Every week TNT used to deliver 4.7 million packages to over 200 countries,
using a network of more than 2,600 facilities, a fleet of about 30,000 road vehicles
and 50 aircraft, and a workforce of 77,000.
•The highly volatile and robust market demands that any courier company such
as TNT maintain cost efficiencies and customer satisfaction at the same time,
which is a difficult balance to strike.
•Consolidation is key for TNT, where it may not be cost effective to deliver smaller
packages and those to remote locations.
•TNT delivers a next day delivery service at 9 am, 10am and 12pm
•After collection from shippers the packages are sent to sorting depots. This is
called pickup & delivery (PUD).
•Packages are collected for from depots into larger sorting hubs.
•The process of collection from depots to hubs is called network process.
•At pickup cutoff the package must be available at origin depot for further process
•PUD process includes assigning customer pickups to a particular depot, deciding
on the number of
vehicles required, and determining when the vehicles will visit the customer
for collection or delivery.
TNT aircraft fleet
Source: (Lennane, 2013)

11. TNT Supply Chain contd/-
TNT’s supply chain – diagrammatic
representation
Source: (Fleuren, et al., 2015)

12. TNT Supply Chain contd/-
TNT truck fleet
Source: (Trailer MAGAZINE, 2015)

13. TNT Supply Chain contd/-
TNT’s State-of-the-art Sorting hub in Sydney, NSW, Australia
Source:(PostalandParcel
TechnologyInternational,
2015)

14. TNT Supply Chain contd/-
• For packages failing to me meet road transport, air routing must be used. It starts with assigning depots to airport based on 2
criteria a) best service – latest arrival, earliest departure; b) lowest cost i.e. shortest distance between depot and airport. This
calculates number of runs between airport and depot.
• Next, based on a mix integer analysis the model calculates
o aircraft carrying capacity. It balances the number of incoming and outgoing aircraft per aircraft type at each location.
The aircraft that can be used are restricted by a minimum and maximum number per aircraft type and the aircraft
operating characteristics, such as maximum flying range, effective speed, cargo capacity, and landing restrictions.
o Airport capacity – landing and take off times, closing times and if there is a restricting on TNT aircraft multiple
stoppages
o For the airhub, sorting window, departure and arrival of aircraft and runway capacity.
• TNT thereby instead of controlling number of aircraft landing and taking off,
controlled departures of their packages across time is done. TNT also
calculated a minimum or maximum number of aircraft per type, which may
be used in the European Air Network, to cope with restrictions on fleet
availability.
• After this the impact of the above programming on PUD and network is
calculated. This model determines the optimal ‘wave structure of every
depot’. Wave is a set of rounds that start and end at the same time at the
depot. For e.g. if packages of the same vicinity arrive at different times, it
required more multiple deliveries and increases average run-time between
stops and distance. Also for collection the same principle applies.

15. TNT Supply Chain contd/-
• DELTA therefore calculates the optimum wave pattern for every depot to balance wave rounds based on distance and time and
extra miles to be driven.
• Finally DELTA determines total cost and service KPIs for the entire supply chain for management to make decisions.
Challenges of the DELTA model
 Had to be set up across TNT’s 650 depots, 90 hubs, and 150000 origin-destination combinations and a short time frame.
 Training of staff for using the model correctly and efficiently
 Incorporating enough detail for the functioning, yet not overloading the model with too much detail so it takes more time
processing. Many staff wanted to work the older way, hence insisted on as much detail as possible.
 Staff were not convinced of the models success as it omitted quite a few bits of extraneous detail. They had to be explained with
different scenarios to prove efficacy of the model.
 Gathering data for 1 hub could be a monumental task, TNT had to gather data for all its hubs in Europe within 8 weeks.
 Data existed in multiple systems and had to brought into 1 system. This was partially solved by
introducing GO data management which involved sanitizing data and introducing business rules.
 Different working styles and infrastructure in different countries in Europe. TNT Express uses loose-
loaded trucks in Italy, pallets in France, and cages in the European road network. The other issue is
objectively tracking results. Mostly managers who meet their targets get a decreased budget in the
subsequent year. This affects the quality of the results, given managerial bonuses are decided on
meeting budget targets. Therefore a benefits tracking system that uses three levels of savings to
monitor the benefits: identified expected savings, agreed savings, and implemented (realized)
savings.
 Finally all decision makers, stake holders and staff was convinced and the model was adopted as a
part of TNT’s Vision 2015

16. TNT Supply Chain contd/-
Analysis
•This model of TNT is based on the principles of the milk run. Delivering to the highest number of consumers in the shortest
possible time and most cost-effective manner. The principle is higher utilization of the trucks / aircraft and reduction of the cargo at
the hub is akin to the milk run.
 Fixation of weight and volume of suppliers in a particular region – is similar to the selection of the depots and hubs which are
near to each other and the hub.
 The model runs on latest arrival and earlier departure which is similar to last in first out in the milk-run to ensure full utilization of
capacity.
 Milk run parameters such as weight, volume, distance, requirement and delivery frequency apply here as well as the system
(DELTA) calculates these parameters as well to select whether the parcel is for better for road delivery or by air.
 The selection of the vehicles and routing is done similar to the milk run. No. of trips,
distance, frequency of trips and any restrictions are determinants in fixing the
vehicles that will be used for transport, their route, start and end time of trip, drivers,
fueling and anticipating any obstacles.
 The system is dynamic and clearly adjusts according to demand – supply, the very
principle milk run also follows.
 The risks are also similar. Unavailability of receiver thereby causing a repeat run,
difficulty in objectively tracking the actual cost savings, the necessity of empty runs,
calculation errors in pickups and network (picking 1 parcel too many or too little
number of parcels), error in judging whether to send by air or road.

17. Analysis contd/-
•One of the disadvantages I envisaged was that everything was too time based and specific too the last second. Which means a
second’s loss or delay could disrupt the entire supply chain. There is also room for other contingencies such as breakdown of
vehicles / obstacles on the road or air / delay due to bad weather conditions etc. Each contingency means a change of the entire
schedule and readjusting of the algorithm. Where the process could be changed in ‘pockets’ or causes the whole run to be
rescheduled, would be a question.
TNT Supply Chain contd/-
TNT’s CARRYBOY, Container and Bike
fleets
Sources:-
CARRYBOY FLEET - (CARRYBOY®, n.d.)
CONTAINER FLEET - (Bigwheels.my, 2014)
BIKE FLEET - (Cuthbert, 2011)

18. The results:-
•GO subprogram cost saving; these savings were 207 million euros over the period
2008–2011: 132 million euros from the supply chain Subprogram (DELTA), 48 million euros from the networks subprogram
(SHORTREC), and 27 million euros from the PUD subprogram (TRANS). The GO program also enabled TNT to reduce CO2
emissions by 283 million kilograms—the CO2 equivalent of 1,000 trucks traveling around the world
seven times. (Fleuren, et al., 2015)
•TNT decided to close down operations in 12 airports and consolidate into 1 after the GO programme (figure below). TNT also
eliminated 3 expensive A300 aircraft.
TNT Supply Chain contd/-
Source:(Fleuren,etal.,2015)

19. TNT Supply Chain contd/-
The results contd/-
•TNT created a GO Academy, a staff college training staff on efficiency and
optimization that has various modules, case studies and certification programmes.
Employees built strong relationships with each other; they also feel more
empowered to ask for support from colleagues in other operating units or even in
other parts of the world. Employees now use the same business language and
have the same understanding of definitions and terminology.
•The above lessons are applicable and transportable to any organization that
wants to apply and embed OR on a large scale. TNT used this technology for the
World Food Programme in Ethiopia and feeding school children in Liberia.
(Fleuren, et al., 2015)
•The GO Programme won TNT the prestigious the 2012 Franz Edelman Award for
Achievement in Operations Research and the Management Sciences. Along with
TNT Express, the 2012 finalists included Carlson Hotels, The Centers for Disease
Control, Greek shipping management firm Danaos Corporation, Hewlett-Packard
and Intel. So what put TNT Express over the top? According to Andy Boyd, TNT’s
operations research was embedded into the organization. (Horner, n.d.)
Source: (LT ARENA, n.d.)

20. Customer:
•National Health Services Blood and Transplant (NHSBT) in Britain is a Special Health Authority dedicated to saving and improving
lives through a wide range of services. NHSBT was seeking a transport partner that could respond quickly to demands and provide a
consistent and reliable service.
Challenge:
•Supply of blood, organs, tissues and medication to hospitals at very short notice and efficient delivery time, ensuring product
qualities are preserved.
Solutions offered by TNT
•Next day delivery
•NHSBT and TNT work in tandem, both are equally engaged in the process and updated on time lines and planning.
•On-demand customized same day delivery 24/7/365
•Dedicated hospital response team and service levels
•Specialized training to relevant staff
TNT Customer’s Story
Results
•Fast response times Source: (NHS Blood & Transplant, n.d.)
•Service flexibility
•Improved efficiency through advanced planning and customer feedback
•Improved service levels through customized solutions
•TNT is a trusted partner who ensures timeliness and knows how to handle different cargo as per
specific needs
•TNT has introduced a clear pricing structure and can get cost gains because of advanced planning.
“It is imperative that NHSBT partners with a supplier who we can trust and who is able to respond
quickly to our demands. Consistent and reliable service levels give us peace of mind and complements
our own transport service to ensure hospitals and their patients get the life transforming blood or organs
they need. Together we help save and improve lives.” - Ged Caswell National Resource Planning
Manager, NHS Blood and Transplant
(TNT, n.d.)

21. • FedEx Corp acquired TNT Express NV for $ 4.8 billion on 25th May
2016. It was the biggest merger in parcel delivery history. FedEx and
TNT Express believe that the customers of the combined companies
will enjoy access to a considerably enhanced, integrated global
network. This network will benefit from the combined strength of
TNT Express' strong European road platform and Liege hub and
FedEx’s strength in other regions globally, including North America
and Asia. (FedEx, 2016)
• TNT Express shares got de-listed on the Euronext Exchange on 4th
July 2016. Last day of trading was 1st July 2016. (TNT Express NV,
2016)
• TNT Express unit’s systems were cyberattacked on 28th June 2017
jointly reported by FedEx and TNT. There was no data breach but
systems were significantly affected and the losses could be
‘material’. (Schlangenstein, 2017). Customers had no idea of where
their parcels were and TNT the carrier’s call centres had no
response. ABC news reported “Issue 'handled poorly by TNT'”.
(Perrott, 2017)
Source: (TNT, 2016)
New Logos
Latest News from TNT

22. Latest News from TNT contd/-Analysing from a supply chain point of view, we go back to the GO programme.
As we saw, the entire programme is based on data modelling, prediction,
algorithms and econometrics. Such a cyberattack could mean several things:-
•An entire systems shut down either by the virus or for preventive purposes by
TNT’s IT team.
•Sensitive data could be hacked
•Company’s confidential files could be hacked
•The entire supply chain would be stopped if it is controlled by computer (as in
the case of GO programme it is)
•All work will be needed to be done manually, which means preparing schedules,
coordinating, planning and routing which was done with help of GPS.
•Deliveries and pick-ups could be delayed and the entire supply chain from there
on.
•TNT and FedEx systems that are linked would be affected thereby affecting
FedEx activities as well.
•Ground time of aircraft would increase, trucks would be halted which means
increased costs.
•Irate customers as they don’t receive shipments would give rise to incessant
calls which might not be efficiently handled at current staffing levels.
•Losses could run into millions.
•The after effects would be long-lasting too, to get operations back online. Clear-
up backlogs, sort between urgent and non-urgent cargo.

23. ConclusionIt’s predicted that, due to an ageing population, there will be 22% less drivers
and warehouse staff available on the labour market in Europe by 2020 – all
having to deliver the same or more volumes of goods that they do today.” (TNT ,
n.d.). Self driving trucks might one day be the answer. It is clear therefore that
supply chain and operations research will go hand-in-hand and will be an ever
evolving field. The best way is to customize the research within your
organization and keep employees engaged in the process. Optimization of the
supply chain needs to be an ongoing process. Everything is getting increasingly
automated. Despite its risks, automation and dependence on cyber systems
increases. These are therefore logistics jobs of the future. Supply chain
predictability, real-time analytics, green supply chain, virtual supply chain,
remote controlled systems, data analytics will be the new supply chain jobs of
the future.
Some surprising supply chain predictions. 1) Jobs and industries will move to
secondary cities. It’s a bid good bye to the top cities of the world like New York,
Chicago, London, Paris, Tokyo, Mumbai and Sydney. Secondary cities will
witness a marked rise in business and immigrants supporting the business. This
will give rise to newer supply chains. 2) Africa holds plenty of promise for supply
chain leaders. As a supply base, its material and human wealth await only
better infrastructure to engage. All of this portends business growth. 3) Supply
chains will not be about cars and technology. It will be embedded arts in
science. Creativity and imagination will be the buzz world and the mother of
Innovation. The future will be as we make it. (O'Marah, 2017)

24.  Bigwheels.my. (2014, July 23). TNT WORLDWIDE’S ‘BORDERLESS TRANSPORTATION SOLUTION. Retrieved from
http://www.bigwheels.my: http://www.bigwheels.my/2014/07/tnt-worldwides-borderless-transportation-solution/
 CARRYBOY®. (n.d.). CARRYBOY® Fleet. Retrieved from www.fleetcarryboy.com: http://www.fleetcarryboy.com/Cargobox-
CBM/
 Council of Supply Chain Management Professionals. (2017). CSCMP Supply Chain Management Definitions and Glossary.
Retrieved from http://cscmp.org:
http://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms/CSCMP/Educate/SCM_Definitions_and_Gloss
ary_of_Terms.aspx?hkey=60879588-f65f-4ab5-8c4b-6878815ef921
 Cuthbert, J. (2011, June 5). TNT Express receives SA8000 certification in Saudi. (ITP Digital Media Inc. ) Retrieved from
http://www.arabiansupplychain.com: http://www.arabiansupplychain.com/article-6159-tnt-express-receives-sa8000-
certification-in-saudi/
 Engels, D. W. (1978). Alexander the Great and the Logistics of the Macedonian Army. University of California Press.
Retrieved from https://books.google.com.br/books?id=OiMWqRokCZ4C&printsec=frontcover&hl=pt-
BR&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false
 FedEx. (2016, August 21). FedEx Acquisition of TNT. Retrieved from fedex.com: http://investors.fedex.com/news-and-
events/Acquisition-of-TNT/default.aspx
 Fleuren, H., Goossens, C., Hendriks, M., Lombard, M.-C., Meuffels, I., & Poppelaars, J. (2015, February 3). Supply Chain–
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 Forbes. (2015, April 8). Why TNT Acquisition Is A Good Deal For FedEx. Retrieved from
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 Horner, P. (n.d.). Netherlands-based delivery company delivers the goods to capture 2012 Edelman Award. Retrieved from
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Super-Bowl-of-O.R.
Bibliography

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26. Bibliography
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