Model Of Efficiency And Customer Satisfaction example essay topic

Canadian Pacific Railway Development This article was about the Canadian Pacific Railway. For over 100 years, the railway has practiced a tonnage based shipping model. Trains were to wait in their yards until there were enough shipments to justify a train journey from one point to another. The result of this method was that very few trains traveled, and that the trains that did travel were never on a regular schedule. This resulted in much inefficiency for the company. Some of the issues were trains were sitting in yards with half full loads for days, yard workers having inconsistent shifts and sometimes sitting around in case a train might leave that day, and most importantly, customers were uncertain of delivery times for their goods.

The "efficient" movement model resulted in poor customer satisfaction and a rather large set of excess equipment such as train cars, locomotives, and workers. As a result, the profit of the Canadian Pacific Railway (CPR) was very low and the company decided it was time for a new model. CPR hired Multi Modal Applied Systems to help them formulate a solution. This solution was to have the guiding goals of more consistent train schedules, and higher customer service. The new approach was based on a small stepladder of models, which built off each other to form the final product. The first model was the block approach.

A block was a group of cars with the same departure point and destination. The model worked to find how blocks of cars could be easily combined and separated in yards so that the most blocks possible, were moving at all times towards their final destination. Previously, trains had stopped at many or all yards along their long journey. Now, with the blocking model, some yards were bypassed and others were used with varying frequencies to help balance the workload of the yards and to make for more efficient paths for the blocks to travel on. This model had constraints based on the distance a block would travel compared to its shortest possible path, the busyness of yards, and the maximum length that a train could be. This model was worked on and reworked on a weekly basis, as new shipments were created, and thus each week a block would travel the most efficient path it could without over extending any other set of blocks.

Outside or on top of the block model was the train model. Trains had to have at least one locomotive and a crew. They had to be scheduled in routes that allowed them to pick up new blocks when they reached their destination, and thus keep the train loaded to at a reasonable level at all times. By working with the block model, the train model allowed for the most efficient train engine possible to do the job. Smaller engines were used for smaller trips, and larger engines were used on only the biggest trips. Also, the number of stops and starts were minimized, as this allowed for a more efficient use of fuel.

By not stopping in all yards, a train could save fuel and thus lower costs. Another benefit of not stopping in many yards was that a train would have a faster travel time from point to point. This allowed for faster shipments, but it also allowed for a train to go slower and be more fuel-efficient if it did not need to rush to be on time. Thus, through the train system, fuel and crews were made more efficient.

Lastly, the model was applied to a day of the week and seasonality model. Since shipments can be ordered in as little as two weeks time, the model needed to be able to predict how different days, weeks, and months should be scheduled. This model was created with the history of the past few years, but it could be weighted so that more recent months, weeks, or days affect the prediction more. This was the last and biggest encompassing model to help set the schedules and once those were in place, allowed for the scheduling of crews, cars, locomotives, and maintenance, in a timely and predictable fashion.

The outcome of this was a model of efficiency and customer satisfaction. Millions of dollars were saved year after year, and excess supplies were paired down. The CPR was able to lower its number of cars, engines, and crews, because the trains were now traveling more efficiently and with a consistency that allowed for them to remove equipment which had before, simply had to sit and wait for usage. The number of starts a train had to make was lowered, the average speed and thus fuel used by a train was lowered, and the expected times of regular routes was lowered when compared to their time of travel before the remodel.

The CPR came out of this new model with a leaner, more profitable operation, and has been using and refining the models ever since. The CPR model is a great example of how the old way of doing business is being surpassed by new approaches. Technology, and programs that run models in particular are becoming more and more valuable in raising efficiency without lowering customer service. In fact, as is the case with this company, customer satisfaction was actually increased at the same time that the company was more efficient. The multiple models used by CPR could be applied to any type of point-to-point transport such as UPS, FedEx, and even the US postal system. Also of great value is the fact that CPR and Multimodal understood that they could not encompass so many constraints and variables in a single model.

They had to build models into models, and have an overlying theme of what they wanted to accomplish. It would have been and probably still is impossible to have one great model that answers all their problems in one instance. This way, things are started with small manageable models, and then they are built into the bigger picture, thus allowing for the whole to be as adjustable as any one of its parts. This article is also a very good example of how a company must be flexible if it is to continue doing business in the most efficient and profitable way possible. CPR had been running by its old method for 120 years, and was still somewhat profitable. They had to choose to make an expensive leap, to a new approach, to see if they would succeed, which ultimately they did.

CPR had tried improving on the old model, by purchasing more trains and car and crews, but that did not fix their problems or increase their profits. It was a good example of how, giving more power or energy to an already broken model, will not fix the model. CPR had to instead, create a new model and start their business on the correct path to higher profits and better efficiency. I think that CPR is a company that lots of long time businesses should take a look at. It took a hundred year old industry, and turned it into a modern day business. It took nothing for granted and created the best possible company it could.

Instead of simply looking to get bigger by buying out competitors, or do what it had done before, it looked at the whole picture, and restructured to become a better business. The models are helpful and educational, but the bigger moral of the story, is that stagnant businesses have a low chance of continued high efficiency and profitability. They must adapt new technology and methods to continue their success and further their growth. In terms of our class, this article talks about many models and aspects of using models that was have learned. There are linear problems that have constraints and need to be minimized such as time, and number of starts for a train. There are models of time schedules for projects to be done, such as a train journey correlating to a project, and each stop as a step in the project.

The models in this paper were put through seasonality and a day of the week forecasting, both which are concepts discussed, and used in our class. Finally, larger then any one chapter in our book was CPR's understanding that sometimes, one model does not solve all the problems. They could not and probably will not be able to find one all encompassing model to work out their train and shipment schedules. They needed to use many different types of models, each with its own constraints, and goals, working in harmony to create a large system that would work efficiently and quickly. I think this lesson is the most important one for our class, as usually people who learn about many models approach a problem, in search of the which model will solve this. It needs to be understood, that sometimes there is no simple answer, and that a large problem may need to be seen as the sum of a bunch of small problems.

And some of the problems may have conflicting solutions. CPR has the conflict of shipping smaller less efficient trains with the counter or making customers happy but not being as profitable. These types of conflicts can and do come up in businesses of all types, and it is finding this balance that makes a good leader of the company. CPR did not have that balance before, and was simply a train efficient company that lagged in customer satisfaction and actually in efficiency. By finding that balance, CPR was able to created a better company for itself and its customers.

That, along with using and knowing how and when to use models, was very important to my selection of this article as one of the best for our class.

Bibliography

Interfaces: Vol 34. No. 1, Jan 2004. pp 5-14.