- UPS is expected to complete an upgrade to its on-road integrated navigation and optimization technology known as ORION in July, said chief information and engineering officer Juan Perez. during the company’s investor day this week.
- The upgrade, called “dynamic ORION,” allowed the company to reduce driver routes by an average of two to four miles per driver, Perez said, adding that the original ORION implementation resulted in a eight mile reduction per driver. The new system is already in use by 97% of the van fleet that uses ORION.
- “The new features present our drivers with re-optimized routes based on changing conditions and provide them with step-by-step instructions to reduce excess miles,” he said.
Logistics companies are more interested in route planning as packages flow through their networks. The increases in volume prompted them to find the most efficient way to get them delivered to their final destination. For UPS, it’s a job that has lasted for decades.
UPS tested its ORION algorithm between 2003 and 2009, with pilot tests carried out on eight sites between 2010 and 2011, according to the company.
The rollout dynamic routing upgrade began rolling out in the fall of last year, between September and October, according to Matthew O’Connor, a spokesperson for UPS.
In previous versions of ORION, drivers’ routes were downloaded to their handhelds – known as the delivery information acquisition device – before they left the facility for the day. Now, dynamic routing allows these routes to be automatically updated throughout the day.
“So if we have a pickup request coming in, you don’t need to have a supervisor call the driver to say, ‘Hey, can you please include this pickup'”, O’Connor said. Dynamic Routing will automatically add pickup and modify the route to include it in the most efficient way possible.
Amazon is also looking for upgrades to its routing algorithm and is using a contest and the $ 100,000 prize promise to get outside help. Amazon specifically wants to find a way for the algorithms to retrieve the knowledge gained from a delivery driver, such as where to park and how best to avoid traffic in particular neighborhoods.
“Cities in particular are becoming more and more complex to operate,” Matthias Winkenbach, director of the Megacity Logistics Lab at the Massachusetts Institute of Technology, said in February of the Amazon competition. “They are more and more crowded, more and more dense, it becomes more and more difficult to deliver goods efficiently in the city.” Amazon has partnered with MIT for the competition.
Cost savings are one of the main reasons companies turn to route planning tools: driving less means less fuel. But companies often promote the investment by emphasizing its advantages in terms of sustainability.
“It naturally follows that if you decrease the number of kilometers, you decrease the amount of fuel burned and therefore carbon. The incentives are perfectly aligned when it comes to cost savings and greening,” Neil Menzies, managing director of LEK Consulting, said earlier this year.
But planning considerations for UPS go beyond the last mile routing offered by ORION. UPS also strives to achieve efficiencies before packages reach delivery trucks, with its network planning tools and harmonized business analysis tool. The analytics tool connects multiple data sources and allows it to see how packages flow through its facilities, O’Connor said.
“It basically allowed us to create a digital twin of real-time parcel flow,” he said.
The tool examines variables such as the size, type and final location of the package. And, like the routing performed by ORION, it determines the most efficient way to travel from point A to point B through the UPS facilities.
Perez noted that the benefits of this type of routing were evident when the country was hit by a severe winter storm in February.
“[Network Planning Tools] helped us minimize grid disruption by applying advanced analytics to help us route volume around affected areas, adapt to changes in volume and ensure we deliver capacity where it is ultimately needed, ”said he declared.
If the roads are impassable, the system will redirect packages through the network to avoid those areas, O’Connor explained.
UPS plans to make more upgrades to its network planning tools platform later this year with enhanced movement and planning optimization capabilities.
The logistics company strives to optimize the efficiency of its network at a time of increasing demand. He expects the average daily volume to increase by almost 20% between 2020 and 2023, CEO Carol Tomé said this week.
“We expect global demand for small-plan services to exceed industry capacity over the next several years,” Tomé said.
She described other efforts, including investments in automation and weekend delivery that “add capacity without adding capital investment.” Using data analytics to reduce kilometers driven also seems to be an integral part of this strategy.