Case Study-United States Postal Service

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Case Study-United States Postal Service

  1. 1. Optimizing Highway Transportation at the United States Postal Service<br />
  2. 2. Introduction<br />Video<br /><ul><li>USPS Cutting Back to 6 Days/Week?
  3. 3. Home Page
  4. 4. Going Postal</li></li></ul><li>Introduction<br /><ul><li>Delivers over 200 billion items per year
  5. 5. Deliver via air and highway
  6. 6. 36,496 total retail and delivery facilities
  7. 7. 218,684 vehicles
  8. 8. 599 processing facilities
  9. 9. 584 million pieces is the average volume per day
  10. 10. 1,258,025 total work hours
  11. 11. For the past few years operating expenses have been more than revenue which has resulted in a net loss
  12. 12. Thus, USPS needs to cut costs!!</li></li></ul><li>Introduction<br /><ul><li>Transportation costs are largely made up of air and highway transportation
  13. 13. In 2009, transportation expenses decreased 13.4%
  14. 14. In 2009 highway transportation expenses were $3,044 million which decreased 13% from 2008 (mostly due to lower fuel prices)
  15. 15. June 1st, 2009-the General Services Administration (GSA) purchased $210 million worth of fuel efficient vehicles from Chrysler, Ford, and GM using money from the ARRA
  16. 16. USPS replaced over 6,500 vehicles from its current fleet with more fuel efficient models
  17. 17. A 1% increase in fuel and natural gas costs would result in a $22 million increase in fuel expenses</li></li></ul><li>Background<br /><ul><li>Delivers more than 200 billion pieces of mail each year
  18. 18. Different types
  19. 19. Letters
  20. 20. Flats
  21. 21. Parcels
  22. 22. Periodicals
  23. 23. Different levels of service
  24. 24. Priority
  25. 25. First Class (overnight, 2-day, and 3-day)
  26. 26. Standard</li></li></ul><li>Accommodating Various Options<br /><ul><li>Multiple transportation networks
  27. 27. Bulk Mail Centers (BMCs)
  28. 28. Service Transfer Centers (STCs): consolidates mail into aggregate volumes
  29. 29. Processing & Distribution Centers (P&DCs)
  30. 30. Priority Mail Processing Centers (PMPCs)
  31. 31. Air Mail Centers (AMCs)
  32. 32. Each transportation network designed to serve a particular purpose. However, since they do not work isolated from each other, significant overlapping and redundancies exist.</li></li></ul><li>The map shows the general location of a sample of MBCs, STCs, and P&DCs within the USPS transportation network in the northeastern section of the United States. <br />Image taken from actual article<br />
  33. 33. Highway Corridor Analytic Program<br /><ul><li>A model that helps to solve the vehicle-routing problems with pickups and deliveries by utilizing mixed-integer programming.
  34. 34. Highly flexible for application across a wide range of components
  35. 35. The objective is optimize the existing transportation network by identifying opportunities to modify transportation and reduce costs</li></li></ul><li>Problem Statement<br /><ul><li>The USPS delivers more than 200 billion items per year.
  36. 36. It is essential to the service and financial goals of USPS to deliver these items in a timely and efficient manner.
  37. 37. The transportation network of the USPS is large and complex so the planning process for transportation is extremely important and also very challenging.
  38. 38. The Highway Corridor Analytic Program (HCAP) develops ways to make scheduling and routing of transportation more efficient while maintaining on-time delivery—ultimately saving money. </li></li></ul><li><ul><li>HCAP solves vehicle-routing problem with pickups and deliveries model.
  39. 39. Facilities - locations
  40. 40. Deliveries – items to be transported
  41. 41. Represented by volume of mail to be transported
  42. 42. Trips
  43. 43. Legs
  44. 44. Assignment Constraints
  45. 45. Capacity constraints
  46. 46. Minimum Cost</li></ul>METHODOLOGY<br />
  47. 47. METHODOLOGY<br /><ul><li>Optimal Solution
  48. 48. Commercial Routing Software
  49. 49. Routing-specific Software Libraries
  50. 50. Heuristic Approaches
  51. 51. Optimization Software Libraries</li></li></ul><li>METHODOLOGY<br /><ul><li>Evaluation of Alternatives
  52. 52. Solution time
  53. 53. Optimality
  54. 54. Expandability
  55. 55. Flexibility</li></li></ul><li>
  56. 56. RESULTS<br /><ul><li>Once fully tested and developed, the HCAP was deployed to analysts
  57. 57. Used to identify cost saving opportunities
  58. 58. Robustness of model allowed for varied application
  59. 59. Varied applicability allowed for model to be tailored to unique needs for different regions</li></li></ul><li>USPS & IBM<br /><ul><li>Many different scenarios have been run and implemented in various parts of operations across the country
  60. 60. IBM & USPS worked together with model for implementation in Pacific area
  61. 61. Savings have been approximately $3.7 million annually to date
  62. 62. Represents 24% of the transportation costs that were able to be saved</li></li></ul><li>Implementation<br /><ul><li>Implemented at an STC in Midwest
  63. 63. Resulted in annual savings of $1.3 million to date
  64. 64. Also used in Eastern U.S. operations
  65. 65. Adopted for local transport at a P&DC in North Carolina
  66. 66. Also for STC transport in Pennsylvania
  67. 67. These efforts resulted in $400,000 in annual savings</li></li></ul><li>Conclusion<br /><ul><li>By adopting this model to assess the efficiency of the USPS transportation network, the firm was able to see dramatic savings
  68. 68. Even with potentially high development costs, it is clear to see that a firm such as USPS can greatly benefit from optimizing their networks to eliminate inefficiencies</li></li></ul><li><ul><li>Organization
  69. 69. Helpful diagrams
  70. 70. Helpful headings and titles
  71. 71. Presentation
  72. 72. Professional
  73. 73. Diagrams could have been better
  74. 74. 12 pages is good length
  75. 75. Subject Content
  76. 76. Good, but
  77. 77. Repetitive
  78. 78. Lacked detail
  79. 79. Subject Matter
  80. 80. Interesting
  81. 81. Overall Article
  82. 82. Good article</li></ul>CRITIQUE<br />

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