Operations Research Management Science - Edelman Award Competition

<BODY bgcolor="#ffffff" link="cc0000" vlink="cc0000" text="#000000"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br>   <table border=0 cellspacing=0 cellpadding=0 width=480><tr valign=top> <td width=10><img src="../cleardot.gif" width=1 height=1 hspace=4 border=0></td> <td width=470> <FONT face="verdana, arial, helvetica" SIZE=2><B><I><A HREF="../../ORMS.shtml" TARGET="_top">OR/MS Today</A> - June 2002</I></B></font><BR> <hr size="1"> <img src="cleardot.gif" width=1 height=1 vspace=4 border=0><br> <font face="times new roman, times"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>Edelman Award Competition</B></FONT><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <FONT SIZE="+2"><B>Repaired For Takeoff</B></FONT><BR> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <FONT SIZE="+1"><I>Continental Airlines teams up with CALEB Technologies to bounce back from 9/11, earn Edelman honors</I></FONT><BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>By Peter Horner</B></FONT><br> <hr size="1"> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br>    Seven years ago, Anna White, director of Crew Technology at Houston-based Continental Airlines, set out to find a viable solution to a problem that has plagued the commercial airline industry since the advent of foul weather. How can an airline quickly and efficiently get its flight crews in place to fly following a major disruption to operations? The goal: to help Continental return to normal operations as soon as possible following a disruption and save the company millions of dollars in the process.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> About that same time, University of Texas-Austin professor Gang Yu launched CALEB Technologies with the intent of creating a company that would use OR-based tools and techniques to "make an impact on the industries that CALEB served" while "proving ourselves helpful to clients as well as the general public." The goal: "to become the world's leading provider of optimized business solutions" for just the sort of complex operational problems facing Continental.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Continental eventually crossed paths with CALEB, a fortuitous meeting in terms of both timing and collaboration. In the third quarter of 2000, Continental implemented CALEB's breakthrough decision-support system, CrewSolver, which could generate feasible and near-optimal crew recovery solutions in a matter of minutes. Three months later, on New Year's Eve, a massive snowstorm closed Continental's New Jersey hub. Thanks to CrewSolver, Continental recovered in record time, saving the airline several million dollars. The success story was repeated that spring when flooding closed Continental's hometown hub in Houston.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Ironically, the ultimate test for CrewSolver started on a beautiful, sunny day in New York City last fall. The terrorist attacks of Sept. 11 left Continental and every other U.S. airline facing a worst-case disruption scenario beyond anyone's imagination: the grounding of all commercial aviation in the United States. A day after the airspace ban was lifted, Continental was flying a complete new schedule, well ahead of its competitors. Before the year was out, CrewSolver had saved Continental $40 million in recovery costs, most of it attributable to its post-Sept. 11 performance.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> On May 6 of this year, White, Yu and Continental CIO Janet Wejman presented Continental's remarkable "recovery" story  "A New Era for Crew Recovery at Continental Airlines"  before a panel of judges at the INFORMS Practice Meeting in Montreal. As one of six finalists for the annual Franz Edelman Award for Achievement in Operations Research and the Management Sciences, Continental was competing in the "Super Bowl" of OR/MS against a worthy field that ranged from French automaker PSA Peugeot Citroen to U.S. candymaker Mars, Inc. A day later, the Continental team presented an encore performance, this time for all the world to see as the 2002 winners of the coveted Edelman Award. Hours later, they flew home, capping an extraordinary experience none of them will likely forget.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "When we started all of this seven years ago, we had a vision," White says. "We thought we could make a contribution to the company, but I had no idea it would be such a major contribution  and so timely. It's especially rewarding winning the Edelman because it demonstrates that a group outside the airline industry has recognized the fact that this product brings real value to Continental."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> CIO Wejman, who led the Continental delegation in Montreal, reflects upper management's enthusiasm for high-tech solutions to complex operational problems at Continental, an enthusiasm that extends all the way up to Chairman and CEO Gordon Bethune and President Larry Kellner.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "The airline industry has long understood the value and impact of operations research, and we're proud to be leading the way," says Wejman, noting that Continental was the first airline to adopt the cutting-edge recovery tools. "Larry Kellner and Gordon Bethune understand the value of technology at the airline, and they have been great supporters of our efforts throughout my tenure."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In fact, Bethune and Kellner both appeared via videotape to boost Continental's Edelman campaign. Bethune told the judges that CrewSolver gives Continental "a competitive edge" by helping the airline get the right crews with the right planes back in the air during abnormal operations. "It optimizes not only our performance, but it makes sure we provide the highest levels of customer satisfaction. Technology is wonderful when it gives you an edge. CrewSolver really hit a home run."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Added Kellner: "From a technology perspective, [CrewSolver] was a key advance for the company. We like to do projects that make good business sense and benefit our employees. ... By applying advanced optimization techniques to real-time business problems, we achieved our objectives. ... The flexibility of the tool could not have been tested more than it was by events of Sept. 11. ...Crew Solver passed the test with flying colors."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> The story of Continental's recovery from Sept. 11 is documented in the <A HREF="../orms-2-02/frcooksb.html" TARGET="_top">February issue of <I>OR/MS Today</I></A> [2]. Suffice to say that CrewSolver resolved about 1,600 disrupted pairings  Continental's entire fleet of 737s and MD 80s and corresponding flight crews  in 17 minutes. When the nation's commercial airlines resumed flying three days after the attack, Continental experienced fewer delays and flight cancellations than its competitors. Continental's quick and efficient recovery was not lost on its customers, who returned faster and in greater numbers than did the competition's customers. The software also allowed Continental to examine "what-if" scenarios, which led to the temporary grounding of its DC-10s while flying a reduced schedule in the weeks following the terrorist attacks. <BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> While the events of Sept. 11 put the spotlight on recovery management systems, minor and major disruptions are a common  and costly  occurrences in the airline industry. Thanks to intense competition that keeps fares grounded at historically low levels, all major U.S. airlines operate on razor-thin profit margins. If an airline's operations are interrupted for any reason, the carrier immediately starts losing money. Unfortunately, like the bumper sticker says, "Sh#! Happens!" Weather turns bad. Mechanical problems arise. Crewmembers call in sick. Gates become unavailable.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In the wake of 9/11, airlines can now add security concerns to the list of potential (and costly) delays. How many times have airports been shut down in recent months because a dog sniffed suspicious luggage or a misguided college football fan ran the wrong way to catch a flight to a game? Closing an airport for several hours can cost an airline millions of dollars, more if the airport serves as the carrier's hub.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Airlines spend a lot of time and money devising near-optimal flight operations only to watch as unforeseen circumstances make their carefully crafted plans fly out the window the minute they're completed. Since disruptions are a given and all airlines lose money during irregular operations, the name of the game, according to Wejman, is getting back to regular operations as quickly and efficiently as possible.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Easier said than done. The recovery problem involves many individual considerations  crew, aircraft, passengers, maintenance  that are coupled in complex ways. Decisions made about one set of players impact others. The problem is made more complex by factors beyond the airline's control such as the weather, and airport and airspace capacity. Myriad government regulations, contractual obligations and business rules expand the problem's variables exponentially to the point of near intractability. If all of that wasn't enough to make a computer code writer's head spin, the problem demands near-instant solutions in order to be effective [1].<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> When Continental Airlines first began exploring high-tech answers to the crew recovery problem several years ago, White figured the airline could purchase an off-the-shelf product to handle major disruptions and have it deployed in six months. She figured wrong.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "There was nothing out there that met our needs," she says. She visited other domestic and international airlines, and it turned out they were in the same boat. "The existing software was based on prevailing crew-paring techniques, but once you applied individual crew legalities to the pairings, you ended up with a suboptimal solution," she says. (A crew pairing is an optimized matching of pilots and flight attendants for a series of flights that start and end at a hub. The pairing can comprise up to four days' worth of flights. Continental classifies its crew pairings by the type of aircraft in its fleet  747s, MD80s and DC10s [2].)<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "We didn't want to optimize our existing pairings to make them better," White adds. "We wanted to optimize the return of our crew members to regular operations as quickly as possible."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In other words, when facing disruptions, how can an airline repair its crew pairings in a timely fashion in order to minimize recovery costs, cover all remaining scheduled flights with qualified crew and keep the original assignments as much as possible while obeying all relevant rules, regulations and contractual obligations? Remember, as White and Wejman reminded the Edelman audience many times, the goal is to return to normal operations as quickly as possible because all airlines lose money during irregular operations.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> The recovery problem wasn't new; it just hadn't been adequately solved until Continental hooked up with CALEB. Sabre Decision Technologies, for example, a subsidiary of AMR (the parent company of American Airlines) and the largest OR group in the world, attempted to solve the disruption dilemma several times but never succeeded, according to former SDT chief Tom Cook. In an ironic twist, Cook, the president-elect of INFORMS, was named chairman and CEO of CALEB upon Yu's retirement earlier this year [1].<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> CALEB succeeded where others had failed by first clearly understanding the problem from the airline's perspective, and then cleverly modeling and decomposing the problem through the classification of constraints and the prioritization of objectives so that it could be quickly solved and executed [1]. With "OR Inside," CrewSolver allows Continental to search through millions of possibilities for the best overall crew solution in a matter of minutes. And since it is plugged into the airline's information system and runs 24/7, the CrewSolver optimization model is always current.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "If you don't have real-time solutions to the airline crew recovery problem, it's useless," says Yu, who was joined by Michael Arguello, Mark Gao Song and Sandra M. McCowan of CALEB in the successful partnership with Continental. "If you build a plan that can't be executed smoothly, the plan is useless. Airlines are facing a very dynamic world, especially now with all of the security concerns.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "Operations research is at the core of all of this; it's what creates real value," Yu continues. "If you just build an information system with databases and a pretty interface, you can only achieve a fraction of what you can do with operations research. With OR, we can really help airlines manage their manpower and save tens of millions of dollars. That's the value of OR. That's the future of OR."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In presenting the first-place prize to Continental, Donald R. Smith of Monmouth University, chair of the Edelman Committee, noted that, "One of the strengths of a vital company is its ability to prepare for the unexpected. Continental's use of operations research techniques in crisis management helped it recover from terrorist attack and earn the commendation of our judges. This is an example of OR responding in real time to dramatic changes in operating conditions."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Since the Edelman Award recognizes work that has had a positive impact on the performance of the client organization, the judges look for documented earnings or cost-savings attributable to the nominated project. In the case of Continental, the $40 million that CrewSolver saved the airline during four major interruptions in 2001 is huge when you consider that the airline reported a net loss of $95 million on all operations for the year.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> "As CIO, I can tell you that no other single application in my six-year tenure at Continental has saved the company more money than CrewSolver," says Wejman, adding that the software solution saved the company another $5 million in the first quarter of 2002 during normal operations.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In his videotaped remarks, Continental's Kellner noted that the benefits of CrewSolver go beyond dollars and cents. "The improvement to our operations from a passenger perspective is the most important benefit. In addition, it fits seamlessly into our operation and our overall strategy of dealing with interruptions. As we look to the future and an ever-changing environment, we always remember how important it is to remain competitive. ...Thanks to these technological advances, which make full advantage of operations research, the future for crews and passengers is brighter than ever."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <CENTER><TABLE BORDER="0" CELLSPACING="0" CELLPADDING="1" BGCOLOR="#990000" width=440> <TR ALIGN="Center" VALIGN="Middle"> <TD><IMG SRC="../cleardot.gif" VSPACE=1 BORDER=0 HEIGHT=1 WIDTH=1> <TABLE BORDER="0" CELLSPACING="0" CELLPADDING="6" BGCOLOR="#FFFFFF" width=436> <TR ALIGN="Left" VALIGN="Top"> <TD> <CENTER><font color="#990000" size="3" face="verdana, arial, helvetica"><B>Edelman Recognizes Outstanding Achievement</B></font></CENTER><BR> <font size="2" face="verdana, arial, helvetica"> The Franz Edelman Award for Achievement in Operations Research and the Management Sciences is named in honor of the late Franz Edelman, the "quintessential practitioner" of OR/MS during his 30-year career at RCA.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Jointly sponsored by INFORMS and CPMS, the Practice Section of INFORMS, the $15,000 Edelman competition recognizes "outstanding implemented work that has had a significant, positive impact on the performance of the client organization." The award was first presented in 1972.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> After a careful screening of all nominations, the Edelman Award Committee invites a handful of finalists to make formal presentations at the INFORMS Practice Meeting where the winner is crowned.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Along with Continental Airlines, French automaker PSA Peugeot Citroen and U.S. food giant Mars, Inc., this year's list of finalists included Rhenania (a German catalog house), Schindler Elevator Corporation and Syngenta Seeds (an agribusiness).<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Donald R. Smith of Monmouth University chaired this year's Edelman Award Committee and served on a panel of judges along with Peter C. Bell of the Richard Ivey School of Business at the University of Western Ontario, Joseph Discenza of SmartCrane, H. Newton Garber of Garber Associates, Stephen C. Graves of MIT, Terry P. Harrison of Pennsylvania State University, Russell P. Labe of Merrill Lynch U.S. Private Client Group, Tom Spencer of the New Jersey Institute of Technology and Steve Strauss of AT&T. </TD> </TR> </TABLE> <IMG SRC="../cleardot.gif" VSPACE=1 BORDER=0 HEIGHT=1 WIDTH=1> </TD> </TR> </TABLE> </CENTER> <BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>References</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <OL> <font size=1> <LI> Horner, Peter, 2002, <A HREF="../orms-2-02/frcook.html" TARGET="_top">"Looking Out for No. 1," <I>OR/MS Today,</I> February, Vol. 29, No. 1, pgs. 28-33</A>. <LI> Horner, Peter, 2002, <A HREF="../orms-2-02/frcooksb.html" TARGET="_top">"How Continental Landed on Its Feet," <I>OR/MS Today,</I> February, Vol. 29, No. 1, pgs. 30-31</A>. </font> </OL> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><I>Peter Horner is the editor of OR/MS Today.</i><BR>  <img src="../cleardot.gif" width=1 height=1 vspace=5 border=0><br>  <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <font face="verdana, arial, helvetica" size="1"> <CENTER><script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script></CENTER><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <LI> <A HREF="tocfr.html" Target="_top"><I>Table of Contents</I></A><br> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <LI> <A HREF="../../ORMS.shtml" TARGET="_top"><I>OR/MS Today</I> Home Page</A><br>  <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <b><i>OR/MS Today</i></b> copyright � 2002 by <A HREF="http://www.informs.org/" target="_new">the Institute for Operations Research and the Management Sciences</a>. All rights reserved.<br> <img src="../cleardot.gif" width=1 height=1 vspace=3 border=0><br> <img src="../bargrey.gif" width=468 height=1 border=0 alt=" "><br> <b>Lionheart Publishing, Inc.</b><br> 506 Roswell Rd., Suite 220, Marietta, GA 30060 USA<br> Phone: 770-431-0867 | Fax: 770-432-6969<br> E-mail: <a href="mailto:lpi@lionhrtpub.com">lpi@lionhrtpub.com</a><br> URL: <A HREF="http://www.lionhrtpub.com" target="_top">http://www.lionhrtpub.com</A><br> <img src="../cleardot.gif" width=1 height=1 vspace=3 border=0><br> <img src="../bargrey.gif" width=468 height=1 border=0 alt=" "><br> Web Site � Copyright 2002 by Lionheart Publishing, Inc. All rights reserved. </td></tr></table> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> </BODY>