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Network Design Successfully Transferred to Purolator’s Montreal Operations How applied operations research at Purolator is delivering $800,000 in direct savings
W ith the global economic downturn and plummeting volumes, all courier and package delivery organizations are under mounting pressure to ensure opera- tional efficiency and reduce costs. Reports of double digit percentage volume reductions year on year and job losses are becoming alarmingly commonplace. In these challenging economic times, Purolator Courier Ltd. (Purolator), Canada’s largest courier company is a beacon of hope and has attained impressive efficiency improve- ments and substantial cost savings through applied operations research. It has Canada’s most extensive national network and support- ing infrastructure, and employs more than 12,500 people. Purolator handles 275 million packages annually. After building a new state-of-the-art automated hub sorting facility in Montreal, Purolator focused on the inbound logistics as an area that could achieve efficiency improve- ments. With over 80,000 conveyable packages processed daily in the Montreal hub, it was important that the inbound volumes were planned at appropriate levels throughout the shift. The new automated Montreal Hub was the enabler that allowed the inbound and out- bound networks to be redesigned through added capacity and streamlining sorting. Purolator’s Network Design Team, with a network optimization tool from Jeppesen, were the enablers that allowed the operational stakeholders to fulfill an efficient new network design by providing alternatives based on cost, service and sustainability. Richard Weiner, Senior Manager of Network Engineering at Purolator, wanted a better match between route schedules and hub operations: “We needed to see the effects of optimizing vehicle routes and crew sched- ules in concert with providing a designed hub inward sorting profile. We weren’t just look- ing for cost savings in the inbound network;
we needed to ensure the new Montreal Hub received freight the way they could process it the best. To do this, we needed to approach the project with a comprehensive change man- agement and stakeholder engagement plan.” The Montreal project had a Lean Six Sigma business process goal to keep the sorting vol- umes steady throughout the hub to improve productivity and reduce the costs of the cus- tomer bulk pick up network. Purolator also wanted enhanced visibility of the network.
would accurately model our operations. We ultimately selected PlanOp–a cutting edge distribution and logistics modeling tool produced by Jeppesen. The software is com- prehensive and is backed up by a whole team of expert consultants who really understand freight pick up and delivery operations, and optimization”. Using PlanOp, Purolator created a baseline of the Montreal operations. Data collection for the creation of the baseline was one of the key
Using Jeppesen’s network optimization tool, Purolator optimized existing baseline routes and improved driver shift and vehicle schedules.
To enable Purolator to meet its project goals, they realized that they had to find a new net- work modeling software solution. Previous attempts to model and optimize vehicle routes, crew schedules and hub operations had deliv- ered unacceptable results that were not readily transferrable to operations. Richard Weiner describes the search: “We hunted extensively for a software solution that provided accurate modeling, scenario planning, and ‘what if’ analysis. As our dis- tribution network is large and complex, we needed to be certain that the solution selected
challenges and the most time and labour inten- sive aspect of the project. It involved gathering data from the existing Purolator Montreal routes and placing it into PlanOp to get a clear picture of the current costs. The Network Engineering team worked closely with their Operations colleagues and Jeppesen’s PlanOp consultants to refine and perfect the baseline. It was critical that the baseline was an accu- rate reflection of the Montreal bulk customer pick up operations for a number of reasons. The baseline enabled Purolator to measure savings and compare costs once the network
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