NOVEMBER 1, 2013

After 10 years of research and development, United Parcel Service is officially launching an automated system that uses algorithms to devise optimal routes for its drivers, reports The Wall Street Journal (Oct. 31, 2013). It says the new tool will slash fuel consumption and costs, and support the creation of new services. UPS’ CIO said that the company believes that its on-road integrated optimization and navigation program—dubbed Orion—is the world’s largest operations research project. Ten thousand of its 55,000 drivers will be on the Orion system this year, and it will be fully deployed by 2017.

The effort involved a team of 500 workers. The computer scientists in the group have written an algorithm with 1,000 pages of code. It’s the largest technology project at UPS, which invests $1 billion a year in technology. First, the company had to install GPS sensors to track its drivers and vehicles, a technology known as telematics. That effort already has avoided about 100 million minutes of engine idling. UPS then devised its own mapping system, which includes about 250 million delivery points, a database that is updated continually.

The company’s operations research group devised algorithms that calculate the best route for each driver on a given day. In 2008, those calculations could take hours to perform. Now, they are done in 8 seconds.

The payoff on the investment will be measured in a variety of ways. The company stands to save $50 million a year if every driver can simply reduce the length of his or her route by one mile a day. That will help UPS reduce fuel consumption and environmental impact, while allowing drivers to make more deliveries per day. This year, technology will help the company save 1.5 million gallons of fuel and reduce CO2 emissions by 14,000 metric cubic tons.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

OCTOBER 26, 2013

Dennis Gray suspected that workers in his pest-control company were spending too much time on personal issues during the workday. So the general manager of Accurid Pest Solutions in Virginia quietly installed a piece of GPS tracking software on the company-issued smartphones of its 18 drivers. The software allowed Gray to log onto his computer to see a map displaying the location and movement of his staff. One employee, he discovered, was visiting the same address a few times a week for a few hours during the workday. At that point, Gray told the driver he was being tracked.

“Blue-collar workers have always been kept on a tight leash,” writes The Wall Street Journal (Oct.23, 2013), “but there is a new level of surveillance available to bosses these days. Thanks to mobile devices and inexpensive monitoring software, managers can now know where workers are, eavesdrop on their phone calls, tell if a truck driver is wearing his seat belt and intervene if he is tailgating”.

A 2012 report found that 37% of companies that send employees out on service calls track the real time location of workers via their hand held devices or vehicles. High tech monitoring feels like a violation of privacy to some workers, but employers say such measures improve workplace safety and productivity while also helping to reduce theft, protect secrets and investigate harassment or discrimination claims. No federal statutes restrict the use of GPS by employers, nor force them to disclose whether they are using it.

Companies that keep quiet about tracking efforts may miss out on the benefits of deterrence. A recent study of NCR’s theft-monitoring software used in 392 restaurants found a 22% reduction in server theft after the software was installed and staffers were told about it. Drink sales, meanwhile, rose 10%. Being watched, researchers found, made waitstaff work harder.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.