TNT Express has implemented efficiencies that have saved the company more than $260 million while simultaneously reducing their carbon footprint by 283,000 metric tons. AIMMS and operations research brought them this optimization success.

The Challenge
Headquartered in The Netherlands, TNT Express works with the largest express road and air network in Europe. Worldwide, it operates 2,600 hubs and depots, flies 50 aircraft and runs 30,000 road vehicles. They deliver 4.7 million parcels, documents and pieces of freight weekly to more than 200 countries, all while maintaining strict service requirements.

Until 2005, TNT Express’ decision-making for its complex logistical operations did not utilize mathematical support. But competitive challenges convinced company leaders that in order to remain relevant and effective, they had to take a more fact-based and analysis-driven approach to decision-making.

From 2005 they began to use tailor-made AIMMS-based models to solve corporate challenges, but the 2008 worldwide financial crisis further amplified their immediate need for targeted and advanced optimization.

The Solution
TNT’s decision to fully embrace Operations Research as a corporate solution helped them to quickly build an A-Team of project managers, including Marco Hendriks, TNT’s own Director of Strategic Operations & Infrastructure, his staff, Hein Fleuren, Professor of Operations Research at Tilburg University and multiple ORTEC business and technology consultants.

The team started with basic data analysis compiled from separate commercial, financial and operations systems, and began to analyze local management data. That was a relatively easy job to do in AIMMS. Based on the insights from this initial analysis, they identified and implemented changes that led to an immediate cost reduction of 6.4%.

This early success led directly to the development of the TNT Express Global Optimization (GO) Program, which is a two-year training program for managers to learn how to apply the principles of optimization to their daily operations.

From this concept acceptance and program implementation, and with 60 million data elements analyzed within AIMMS models, came the overall optimization of TNT’s parcel and freight flows in Europe. End-to-end operational supply chain costs and services are now quickly and easily considered to produce the most efficient distribution network possible.

The Benefits
Beyond TNT’s obvious financial and emissions accomplishments, TNT has succeeded in creating an environment of optimization with the creation of the GO Academy. Since the launch of this program in 2007 as a two-year management development program, more than 200 managers have been or are now learning about supply chain strategies and strategic optimization, and applying optimization techniques across TNT’s networks and operations.

TNT also embedded optimization further into the business through the establishment of their Communities of Practice (COPs). COPs meet three times a year to discuss specific topics and define an agreed approach from which ORTEC, the central GO team and Tilburg University can develop a common solution and tools for deployment. Together with the GO Academy, these Communities of Practice have become the most important cornerstones of the entire GO program.

TNT’s tremendous advances in site location planning, truck routing, fleet management and staff scheduling also led them to win the internationally renowned Franz Edelman Award in 2012. To learn more about this achievement for TNT, read the press release.

To watch TNT Express’ Managing Director of Global Networks and Operations Chris Goossens accept the 2012 Franz Edelman award, click below: