The finalists for the competition, sponsored by the Institute for Operations Research and the Management Sciences (INFORMS®), include:
CSX Transportation, with the University of Dayton, for “CSX Railway Cashes in on Optimized Equipment Distribution.”
The Problem: CSX railway allocates thousands of empty railcars to customers each day. The challenge of car allocation is difficult because of the volume of information involved and the number of car allocations to be made. In the past, CSX used a sequential, heuristic “single car” expert system that helped to automate decisions, but led to car assignments with high empty miles and low service. Weekly optimization helped provide a “network view” but static solutions quickly became outdated as situations changed and decisions surrounding previously allocated cars could not be revisited. As a result, opportunities for improved car distribution were lost.
The O.R. Solution: CSX Railroad implemented the U.S. rail industry’s first real-time, deeply integrated Dynamic Car Planner (DCP) equipment distribution system. DCP is continuously updated with new customer orders and available cars, allowing automated revisions of previous decisions as the new information becomes available. Real time information is necessary because the conditions on CSX are constantly changing. Deep systems integration is essential in order to automate the communication of updated decisions to the field. Real time information and deep integration allow the global perspective of OR modeling to be seamlessly integrated into the decision making sequence and field communication process for the disposition of each individual car and customer order.
The Value: Customer satisfaction survey responses for the car order process have steadily increased and are now at all time highs. CSX estimates it saves over $50 million per year from the DCP system from reduced fuel, crew and car depreciation costs as a result of lower empty repositioning miles. CSX has also reduced the manpower required to manage railcar distribution, saving an additional $1 million per year. Over the last 11 years, CSX has saved over $561 million, and anticipates saving more in the future. Additionally, the car fleet required to support CSX’s business is smaller because it is allocated more efficiently, allowing CSX to avoid $1.4 billion in capital expenditure on additional railcars over that time. The smaller asset base allows for improved return on assets and reduced congestion on the CSX rail network. Considering both expense reduction and capital avoidance, CSX has saved approximately $2 billion with DCP.
The six 2009 Franz Edelman finalists are:
- CSX Transportation
- HP for “Analytics for Product Portfolio Management.”
- IBM for “Analytics-Driven Solutions for Increased Sales Force Productivity.”
- Marriott International for “Group Pricing Optimizer.”
- Norske Skog for “Norske Skog Benefits as Operations Research Plays a 'Pivotal' Role in the Battle for Improved Profitability.”
- Zara for “Zara Uses Operations Research to Reengineer Its Global Distribution Process.”
This is the 38th year of the prestigious Franz Edelman Competition. The winner will be announced at a special awards banquet on April 27 at Applying Science to the Art of Business: the 2008 INFORMS Conference on OR/MS Practice.
Additional information about the 2009 Edelman Competition can be found online here. Additional information about the INFORMS Phoenix conference is here.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.
###