Throw Out Those Pushpins

 
 
By Larry Dignan  |  Posted 2004-08-25 Email Print this article Print
 
 
 
 
 
 
 


Throw Out Those Pushpins

The industrial rollout offers more of a challenge, but Waste Management executives are confident after recent successes. Nevertheless, theres a reason Masterson was using pushpins to route his drivers only two years ago. Thats because previous attempts to use routing software didnt work.

USA Waste had an application called STARs and tried to roll it out to the newly merged company, but the software failed. It wasnt linked with the companys other systems, offered limited visualization and couldnt account for factors such as road construction and driver availability.

After STARs flopped, district managers were on their own. In early 2002, Masterson installed route optimization software for the Delaware district. But the application, bought from a software company led by former employees of a Waste Management rival, struggled with optimizing dense areas, sent drivers down one-way streets and illegal roads, and couldnt design residential routes with pickups on the right side of the street.

In early 2003, Waste Management was determined to succeed with WasteRoute, but needed solid data. Sahoo first took Waste Managements customer database and mapped it to streets and locations with information purchased from Navtech, a mapping company. But Waste Management lacked billing information for all of its customers. In its residential business, Waste Management is often billed by homeowner associations and municipalities to pick up waste from a neighborhood. One billing address could represent hundreds of homes. The company filled in the gaps with municipal street information.

To verify data, Waste Management drivers fanned out with Nextel phones that can capture the coordinates of any spot on Earth and relay it by satellite to the companys databases. Drivers simply pressed a button whenever they passed a new address. The process confirmed the location of commercial and residential sites, and allowed IIT to cluster addresses. "We had to validate the data and see it on a map or it wouldnt have worked," says Sahoo.

Also entered into WasteRoute were the type and size of waste containers—larger ones for commercial, smaller for residential—and estimated time to serve based on driver input.

Once the data was entered and functional, Schmidt and the managers set about selling the system to drivers. "Its human nature to worry about change," she says.

To alleviate drivers first concerns, Waste Management made it clear that WasteRoute would not eliminate their jobs. The system was cutting routes, but reallocating drivers and trucks. Any job losses would occur through attrition, according to Popov. Waste Management started the project with 19,600 routes and plans to end the year with 15,000. For its purposes, Waste Management considers routes and drivers to be synonymous.

Masterson also had to sell the system on the front lines. One 18-year veteran told Masterson he would quit if he had to go through a route change. Masterson walked the driver through the changes verbally and on a map. He even brought the drivers wife into the loop.

After the drivers were convinced that the change was for the better, Schmidt began to show them computer demonstrations. As she recalls: "It was a great feeling when I heard, Thats pretty cool, can I see my route?"

Waste Management Base Case

Headquarters: 1001 Fannin, Suite 4000, Houston, TX 77002

Phone: (713) 512-6200

Business: Collects, recycles and disposes of trash. Also converts trash and waste to energy.

Chief Information Officer: Lynn M. Caddell

Vice President of Logistics: Alex Popov

Financials in 2003: Net income of $630 million on $11.57 billion in sales.

Challenge: Increase efficiency by implementing companywide information systems.

Baseline Goals:

  • Save $44 million in annual costs by end of 2004, by improving trash collection routes.

  • Increase annual cash flow from operations by $648 million in 2008 through route efficiency gains, from $1.93 billion in 2003.

  • Increase operating profits as a percentage of sales to 15.6% in 2005, from 13% in 2003.



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    Business Editor
    ldignan@ziffdavisenterprise.com
    Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
     
     
     
     
     
     
     

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