Strategic MS/OR News        Volume 1, Number 3, September, 2000

from Strategic Management Science, Incorporated
    visit us at StrategicManagementScience.COM

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In this issue:

Mergers found to improve hospital efficiency -- but not by very much
Merck-Medco Managed Care has used MS/OR and statistics to help process 80,000 prescriptions weekly and support direct-mail marketing

Dart Transit expects to save $2.2 million annually and increase driver satisfaction using fuel and route optimization 
Salt Lake Olympic Games Organizing Committee will use PROMODEL simulations to help plan winter games
First Union Home Equity Bank using ILOG optimization software for personal loans
Carmen Systems lands British Airways and Aeroméxico contracts

Interfaces special issue highlights firms that have made a strategic commitment to sustainable operations
Daniel H. Wagner Associates announces new version of their Retirement Spending Planner

Internet revolutionizing application of transportation optimization models
JB Hunt Logistics leading player in formation of global logistics alliance

Expense Reduction Analysts could provide business model for MS/OR "Lone Rangers"
Knowledge Management Tools can help competitive edge according to CIO Magazine
Cap Gemini Ernst & Young and Talus Solutions form strategic alliance in North America to expand service offerings

Ford Motor using revenue management to boost the bottom line (by $3 billion)
Eddie Bauer Selects Technology Strategy Inc.'s Pricing4Profit revenue management software
Revenue management reaches apartment leasing:  expected to add 4-6% to rental revenues
Cautionary story on revenue management in Fortune on-line

Sabre announces strategic cost cutting initiative expected to result in savings of $100 Million in 2001
Sabre to acquire GetThere, Inc.

Executives are bullish on the strategic importance of MS/OR

BootCamp4MBA.COM launched to provide quantitative preparation courses for students entering business programs

People News

Thomas M. Cook Joins Talus Solutions Board of Directors
Polo Ralph Lauren Appoints Global Logistics Chief

Worth a visit on the www
Project Management Humor

Investment section
Editorial: MS/OR and the wireless web

Mergers found to improve hospital efficiency -- but not by very much

The integration era in US health care in the early 1990s spawned a wave of hospital mergers, creating networks of hospitals, insurers, and physician groups.  A study by J. Harris, H.H. Ozgen, and Y. Ozcan of Virginia Commonwealth University has examined whether this spate of mergers has increased hospital organizational performance.

The authors used DEA to assess the technical performance of 20 hospitals created from the merger of 41 previous facilities.  Data on the pre-merger year, merger year and post-merger year were examined using both a constant returns-to-scale and a variable returns-to-scale model.

The results;  of the 20 hospitals studied, 13 (65%) had efficiency scores that stayed the same or improved in the merger year and the same number in the post merger year.  On average efficiency scores rose from 0.8621 pre-merger to 0.8942 in the year of the merger and then to 0.8897 post-merger.  The differences, however, are not statistically significant.

More in Journal of the Operational Research Society, 51, 7 (July 2000) pp 801-811

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Merck-Medco (M-M), a leading US pharmacy-benefit manager, works with health plan providers to deliver quality cost effective prescription drug care.  M-M launched an Internet site in 1998 and the site now services 20% of the firm's customer transactions including 80,000 prescriptions/week yielding $8,500,000 in revenues.

Merckmedco.com supports various strategic initiatives at M-M with the goal of making the site a one-stop best-in-class, shopping service and convenience center.  M-M's Information Research Group has developed scoring models to predict which members are more likely to respond to a particular promotion, and a forecasting tool to predict future www growth for business planning purposes.

Full story in OR/MS Today, August 2000, on-line at http://www.lionhrtpub.com/ORMS/orms-8-00/ecommerce.html

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Dart Transit Company is a full service dry van carrier with independent owner operators.  With Texas based affiliate Fleetline, Dart provides shippers and independent operators with regional and long haul, air freight, local cartage, intermodal, brokerage, logistics, warehousing, truck repair and truck sales.  Dart will implement Logistic.com’s OptiStop® fuel and routing optimization tool and expects to cut at least a cent and a half per mile from fuel costs or approximately $1,000 annually for each of its 2,200  tractors.  Dart will use OptiStop to generate optimal routes and fueling stop recommendations allowing management to make business decisions based on qualified, comprehensive data analysis.

“We are always looking for ways to keep our drivers happy and streamline operating costs,” said David Oren, executive vice president for Dart. “OptiStop is impressive because it serves both of those functions considerably and simultaneously. OptiStop will also reduce the operating costs of our contractors, making them more profitable business partners.”

“As fuel prices rise, it is increasingly difficult for freight carriers to contain fueling expenses,” said George Abernathy, vice president, transport provider sales, Logistics.com. “OptiStop gives clear and rapid return on investment and contributes directly and significantly to a company’s bottom line. We are pleased that Dart will be utilizing this solution.”

OptiStop considers fuel prices, driver amenities, out-of-route miles, state taxes, miles on toll roads and on-time deliveries when computing the optimal route. It recommends where to buy fuel but also how much to buy at each stop. OptiStop also considers the price of fuel in the final delivery area so that trucks will not be stranded in high cost areas with low fuel levels.

More at http://www.logistics.com/static/static3-1.asp

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With about 570 days to go before the opening ceremonies of the Salt Lake City Olympic Games, the Organizing Committee (SLOC) will use simulation studies to evaluate a variety of issues, including spectator flow, emergency planning, and transportation systems.

PROMODEL, a division of Quest One Decision Sciences based in Orem, Utah will initially provide modeling for the venues in the Park City area, E Center, downtown Salt Lake City and the Snowbasin Ski Area.

"For example, the Snowbasin Interactive Transit Simulation model tested a variety of scenarios involving different numbers of buses, numbers of spectators, travel distance from park and ride lots, weather conditions and security checks. The study showed how the optimal number of buses, managed and scheduled appropriately, can reduce spectator waiting times at parking areas and security entrances, resulting in quicker venue access for increased capacity.

“PROMODEL’s technology allows the Organizing Committee to view the impact of real-life changes in a risk-free environment by testing and evaluating new ideas in our logistical plans,” said Grant Thomas, SLOC senior vice president of venues. “The animation gives us an insightful look and valuable feedback before we go into a live, operational mode at the venues."

SLOC news releases are available at www.saltlake2002.com.

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First Union Home Equity Bank using ILOG optimization software for personal loans

First Union Loan Arranger embeds ILOG Solver optimization software allowing loan requests to be considered based on the individual customer's needs on a case-by-case basis within seconds. The optimization capability can offer alternatives if the requested loan product or amount isn't available, such as a counter offer or an entirely different product.

"Customers applying for loans want immediate decisions, but they also want to know that their requests have received careful consideration," said Chris Oddleifson, president of First Union Home Equity Bank. Mortgage brokers, meanwhile, want technology that maximizes the potential and speed of finding the right loan products for their customers. The ability to offer instant, tailored loans online to customers, enabled by ILOG technology, is unprecedented in our industry, and we're excited by the prospects."

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Carmen Systems lands British Airways and Aeroméxico contracts

Carmen Systems AB, founded in Sweden, in 1994, by entrepreneurs who acquired the operations research division of Volvo Data, is a provider of crew management solutions for the airline industry. Carmen's founders strongly believed in the idea of combining the most distinguished mathematical methods with high-tech software development and expects consistent and significant growth over the next five years.  

Aeroméxico,  the leading airline in Mexico, has ordered Carmen's system for the planning of its aircraft fleet and maintenance crew scheduling.

British Airways, has ordered Carmen's Internet based Crew Rostering system for its Gatwick-based operation. The system will be equipped with preferential bidding allowing crewmembers to input their desired work schedules from any Internet device.

"Carmen Systems is a vital partner for us. Their expertise in flight operations and their powerful products are extremely important tools that help us achieve our high standards of cost-efficiency, reliability and caring for our crews’ quality of life", says David Cliffe, General Manager Manpower Planning at British Airways

Carmen Systems:  http://www.carmen.se/company/index.htm

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Although "sustainable operations" are not easily defined at the firm level, a number of articles in this special issue of Interfaces describe the efforts of major global firms (and some lesser know ones) to improve their environmental performance.

AT&T 's matrix system has produced systematic improvements in the firm's environmental performance.

Shape, Inc., one of the last remaining videocassette manufacturers in the USA developed the Global Zero cassette that is "cost effective to manufacture, offers consumer advantages, is 100-percent recyclable, and has the potential for closed-loop material usage."

Interface Inc., the world's leader in commercial carpet tile manufacture and a major manufacturer of carpet, interior fabrics, flooring materials and specialty chemicals, has made a strategic commitment to sustainability.  With top management support, Interface has shown that a well-designed employee incentive plan can motivate employees to implement sustainable policies.

Scandic Hotels was on the verge of collapse in the early 1990s when new CEO Roland Nilsson turned the company around by introducing decentralized management and sustainable development.

Walden Paddlers, Inc.  produced a light, strong, inexpensive kayak  with superior performance characteristics made from 100-percent-recycled plastic.  This is the only such kayak on the market and helped retain Walden's market leadership.

Xerox's environmental strategy is to become a waste free  company.  Implementation of an end-of-life equipment takeback program led to savings of $80MM+ in Europe in 1997.  

Interfaces  Special issue: Sustainable Business, 30, 3, (May-June 2000).

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Daniel H. Wagner Associates announces new version of their Retirement Spending Planner

The new version, R$P2000, is ready for shipping. The earlier version, R$P, first appeared in November 1998 and was the first commercially available software to incorporate simulation modeling into retirement planning. R$P used simulation to allow wealth advisors to assess the uncertainty in portfolio returns and incorporate uncertainty into their financial planning decisions. 

New features include a  number of implementation improvements plus provision for inputs for each wage earner in a couple, savings and contributions: profit sharing, 401k, traditional and Roth IRAs, and other tax exempt investments with equity and fixed income components, returns, volatilities and correlations.  The automation of two major sensitivity tests: portfolio composition (equity percentage), and spending variations. Schedules for Federal tax exemptions and deductions, separate inflation rate for Social Security Income.

The user chooses whether to show probability densities or cumulative distribution functions, and can select a new chart showing a time history of wealth percentiles.

For a simplified on-line demonstration, go to www.wagner.com/technologies/mathfinance/monte_carlo.html

More at:  http://www.wagner.com/technologies/mathfinance/rspdoc.html

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Logistics.com, Inc. (www.logistics.com), has launched its QuoteShip Exchange™ nationally. This online transportation spot bidding and procurement tool now forms part of Logistics.com's Digital Transportation Marketplace. The exchange automates and facilitates the traditional spot quote process between shippers and transportation providers and is currently available for air and ocean freight transportation. Ground transportation will be added next month.

More than 1,400 Boston-area shippers and 200 transportation providers are currently signed-on to the QuoteShip Exchange. The national rollout will focus on the West Coast first, with the rest of the United States following soon after.

The Hub Group, Inc., the largest intermodal transportation management company in North America will implement Logistic.com’s Strategic Profitability Analysis™ yield management tool.  Hub Group, is the first third-party logistics provider to license this tool and the first company to employ it across all modes of transportation. SPA will enable Hub Group to better determine the yield opportunity on specific traffic patterns while simultaneously improving pricing response time.

"SPA is a tremendous tool to help us provide our customers with real-time pricing on the Web," said Don Maltby, President of Hub Online. "The SPA product will provide us with the ability to evaluate our network, while also positioning our company to respond to customers quickly and effectively with market and lane-specific pricing."

Hub Group, Inc. provides comprehensive intermodal, truckload, railcar, air freight, international and related logistics and distribution services, through a network of over 30 offices throughout the United States, Canada, Europe and Mexico and had 1999 sales of $1.3 billion.

Logistics.com will employ webMethods’ B2Bi technologies (webMethods.com).to enhance its Digital Transportation Marketplace™. The result will make the DTM one of the most complete and easiest to integrate sources of logistics solutions for any company that seeking to improve the buying or selling of transportation services.

The combination of the webMethods B2B infrastructure technologies allows Logistics’ customers to expose the minute-by-minute fluctuations in capacities that are available from the worldwide carrier community across all modes of transport, including air, land and ocean. The needs of the buyer can then be efficiently matched for real-time, supply chain business decisions and planning.

“As a growing number of transportation exchanges continue to surface, it is critical that a leading marketplace platform like Logistics.com’s DTM provides buyers and sellers with a cost-effective, efficient B2Bi solution that enables seamless, secure connections with business partners over the Internet,” said Phillip Merrick, president and CEO of webMethods. “By integrating global logistics activities, Logistics.com will provide international visibility into suppliers’ systems, providing shippers with the information to make faster sourcing decisions, reduce lead time for transaction communication and improve forecasting for business conducted continuously across time zones around the world.”

More at http://www.logistics.com/static/static3-1.asp

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Transplace.com (www.transplace.com), a new Internet-based global logistics alliance has been formed by six of the largest United States-based transportation companies including J.B. Hunt Transport Services. Transplace.com, which began operations on July 1, offers a web-enabled platform to bring together shippers and carriers worldwide.  Since its announcement three months ago, Transplace.com's procurement membership has grown to 1,500 carriers, representing 220,000 tractors, 800,000 trailers and millions of tires.  Transplace.com is expected to generate $800 million in transportation logistics revenue over the next year.

IBM Global Services will provide consulting services, web hosting and systems integration for Transplace.com's procurement system. 

"Transplace.com represents the kind of e-marketplaces that is fundamentally transforming businesses and markets around the world," said Karl D. Salnoske, vice president of e-procurement services for IBM Global Services.  

Transplace.com's vision is to be The supermarket for transportation solutions.

More at http://www.transplace.com/html/transplace.com_updates_its_pro.html

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Expense Reduction Analysts could provide business model for MS/OR "Lone Rangers".

If we believe published numbers on MS/OR practitioners, there are a large number of "lone rangers" out there: people trained in MS/OR operating very small consulting companies, often with only themselves as the single employee.

Established in 1983, Expense Reduction Analysts (ERA) advertise as "the world’s leading specialists in the reduction of overheads on essential items such as stationery, printing, couriers, freight, distribution, insurance, bank fees, and many, many more products and services to all types of private and public sector organizations." 

ERA operates a global franchise network in the UK, Australia, Canada, Europe and New Zealand using a "no risk" arrangement whereby ERA tries to reduce costs and increase value on business expenses, without any reduction in quality and service.  ERA claims to be able to create significant savings for their clients by reducing office overhead by 20%.

How does this relate to MS/OR? 
ERA franchisees work on a contingency fee or ‘No Risk’ payment scheme.  The typical fee charged is 50% of the cost savings to the client over the first 18 months…. and ERA is the one that calculates the savings.

ERA  advertises that "Our fees are charged only if we are able to reduce business costs in the areas we target. As professional analysts, we work unobtrusively, with our own teams, doing most of our work from our premises and using our own resources, not our clients'."   Customers seem to appreciate this billing approach.

 "We were willing to give Expense Reduction Analysts the opportunity, knowing there would be no cost to us if they could not effect savings. We were pleasantly surprised with the success of their recommendations." - Lotus

 "We were pleasantly surprised with the savings found by Expense Reduction Analysts and we are now working closely on other areas. We have found Expense Reduction Analysts approach to be both professional and consultative and would have no problem in recommending the service to any interested clients or firms." - KPMG

The success of ERA suggests that MS/OR lone rangers might benefit in two areas.  Establishing a group of "franchised" MS/OR lone practitioners could lead to benefits in terms of marketing, training, and mutual assistance and support, while moving to a "no risk" contingency fee basis could prove to be a business generating marketing move.  

More information on ERA at http://www.expense-reduction.net/

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Knowledge Management Tools can help competitive edge
(CIO Magazine Supplement)

The right knowledge management (KM) technologies can dramatically increase your competitive edge says CIO Magazine.

The article provides a table, in which data mining, business/competitive intelligence software, and www-based training feature as methods to better understand the KM tools available to help exploit core competencies.

The article argues that not all companies will need the same KM infrastructure and use the same KM tools. Industry or company's core competencies guide key KM technology choices. 

Article on-line at: Knowledge Management: Collaborating for a Competitive Edge

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Cap Gemini Ernst & Young and Talus Solutions form strategic alliance in North America to expand service offerings

Talus Solutions, Inc. and Cap Gemini Ernst & Young (CGE&Y), have announced a strategic alliance to offer CGE&Y and Talus Solutions clients pricing and revenue management solutions. Talus will provide the core pricing and revenue management capabilities while CGE&Y will offer strategic consulting, integration services and technology-enabled business process design. Together, the companies plan to offer price optimization technology aimed at enabling businesses to grow revenues.

The three-year alliance covers North America (USA and Canada) only. CGE&Y will participate in and contribute to product strategy and development of Talus Solutions application suite, introduce Talus Solutions and its pricing and revenue management solutions to its network of clients, and provide additional implementation resources for Talus Solutions pricing and revenue management software.

"Talus Solutions brings a unique solution to our current suite of products and services, enabling us to offer pricing and revenue management technologies to our clients, particularly those that are focused on growth and manage price across multiple channels including the Internet" said Paul Cole, global leader for CRM, Cap Gemini Ernst & Young.

Cap Gemini Ernst & Young
Talus Solutions, Inc.

Full press release at:  http://www.talussolutions.com/newsroom/pressreleases/press_cgey.html

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Ford Motor using Revenue Management to boost the bottom line (article in CFO Magazine August 2000)

"Ford Motor Co. has quietly been enjoying a huge surge in profitability, one which rival General Motors must surely envy. Between 1995 and 1999, U.S. vehicle sales rose just 6 percent, from 3.9 million units to 4.1 million units. But revenue was up 25 percent, and pretax profits (including financing profits at Ford Credit) soared 250 percent, from about $3 billion to $7.5 billion. Of that $4.5 billion growth, Ford's Lloyd Hansen, controller for global marketing and sales, estimates that about $3 billion came from a series of revenue management initiatives.

"Ford's ability to make so much more money without making many more vehicles is, as Donaldson, Lufkin & Jenrette analyst Wendy Needham notes, "stunning." Much of it can be attributed to product-mix improvement. Low-margin vehicles have been phased out, and customers have been enticed to move up to option-laden models that pack a bigger profit punch.

"That's where revenue management comes in: understanding the profit potential of each model and how much to spend to market it requires lots of data and analysis. Which combinations of features do consumers most want? How much will it cost to produce them? How much should they cost? What are the vehicle preferences of buyers in different regions? How would rebates, low-interest financing, and volume discounts affect sales versus profits?

"The principles embedded in the RM software have guided Ford's actions for about two years, and by capturing them in a software package they can more easily be made part of the daily routine at Ford. But he adds that key changes in business processes, such as rewarding sales teams for focusing on profits rather than number of units sold, and analyzing customers' preferences (Ford has managed to boost sales of vehicles ranging from pickup trucks to police cars by offering a more appealing mix of features, at prices within a customer's reach but with plenty of profit built in for Ford), have played a vital role.

"Analysts agree that revenue management is just beginning to reveal its potential. "It's like clickstream analysis [of Web-site traffic]," says Mark Smith of Meta Group Inc. "One day it's an obscure niche product, the next day it's hot." Talus is, by most rights, the market leader, although Technology Strategy Inc. (www.grossprofit.com), of Cambridge, Mass., is big in the retail space and Maxager Technology Inc. (www.maxager.com), of San Rafael, Calif., is a force in manufacturing.

"Even as these and other companies gear up for battle, however, new players threaten to change the rules of engagement. Austin, Tex.-based Zilliant Inc. (www.zilliant.com), for example, concentrates on "E-pricing," helping online retailers decide how much to charge. CEO Marvin Newell promises that his company will "make revenue management per se obsolete." He argues that by concentrating on how much to charge for perishable inventory such as airline seats or cars, companies miss the bigger picture, which requires a focus on customer behavior, preferably in real time. With Zilliant's technology, he says, companies can adjust Web prices instantly based on consumer response, competitors' prices, and other factors. In theory, he says, the prices of goods and services could vary moment to moment, like stock prices.

"We won't see that kind of perfect market in our lifetime," says Newell, "but one thing is clear: the way companies think about price is changing."

Full article CFO Magazine August 2000

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Eddie Bauer Selects Technology Strategy Inc.'s Pricing4Profit revenue management software

Specialist retailer Eddie Bauer (www.eddiebauer.com), with 520 stores in North America, has selected Pricing4Profit to help  manage markdowns and improve gross margin. A pilot will focus on Eddie Bauer’s Outerwear division and be fully implemented by the Fall 2000 season.

TSI (www.grossprofit.com) was founded in 1984 in Cambridge, Massachusetts and is staffed by a team of mathematicians, physicists and retail professionals. Pricing4Profit uses custom mathematical models to automatically determine the optimal timing and depth of price changes that will drive incremental sales and maximize gross margin on a style-by-style basis. 

“Eddie Bauer selected Pricing4Profit because of TSI’s specialized data-handling capabilities, world-class analytical team and retail-specific expertise,” said Janice Sears, Vice President of Merchandise Planning and Allocation at Eddie Bauer. “We are very excited that we will soon be able to supplement our merchandising intuition with an empirical understanding of consumer demand and price elasticity generated by TSI’s Pricing4Profit solution. We expect to significantly improve gross margin, reduce our markdown budget, and clear merchandise more efficiently.”

“TSI is thrilled to add Eddie Bauer to our rapidly growing list of leading retailer clients. The Eddie Bauer organization has a keen understanding of the value that can be created by marrying merchandising intuition with mathematical precision, and we are excited to be their partner in this effort,” said Scott Friend, President and CEO of TSI.

Other TSI retail customers include: Macy’s West, Gap Inc., JC Penney, Best Buy, Gymboree Corporation, Thriftys (a division of Canadian retailer Dylex), The TJX Companies, Ross Stores and Ann Taylor. 

An article in Chain Store Age with the title "You do the Math" describing childrens' apparel retailer Gymboree's use of revenue management and its perceived benefits appears on line at: 
http://www.chainstoreage.com/archive/story_detail.htm?Mode=mag&StoryID=2000%5C2000%2D07%2D01%5F19%2Ehtml. In the article it is claimed that "Gymboree's return was seven times what it spent on the markdown algorithm".

Full press release at: http://www.grossprofit.com/pages/pr_eddie%20bauer.html

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Archstone Communities (NYSE:ASN) is a leading property owner and developer with a total market capitalization of $5.7 billion, representing 77,146 units in 250 communities, in markets that include 31 of the USA's 50 largest metropolitan markets.  Archstone has worked with Talus Solutions to develop a software solution to establish revenue managed leasing rates that will maximize profits, and will begin testing this month with plans for broad-scale use in 2001.

Lease Rent Optimizer™ is said to enable property managers 

"to precisely forecast and analyze market demand and unit availability as well as set leasing agreements based on dynamically measured consumer demand. The software also takes into account customer preferences, market conditions, competitive behavior and company-specific capacity and revenue goals. Through utilization of Lease Rent Optimizer, Archstone will now be able to more successfully synchronize market demand and capacity to drive optimal allocation of its apartments for maximum profitability and heightened customer satisfaction.

Based on analysis to date, typical increases in annual revenue as a result of using Lease Rent Optimizer are estimated at 4% to 6%. Archstone would gain at least $28 million in annual incremental revenue if results are consistent with estimates. Archstone customers reap benefits from the system as well. Prospective apartment residents gain reliable availability of housing that meets their specific needs and desires."

"Working with Talus Solutions to implement Lease Rent Optimizer further supports Archstone’s position to lead the industry in innovative management and customer value," said R. Scot Sellers, chairman and chief executive officer of Archstone. "This improves our ability to rent the right apartment to the right customer at the right time for the right price."

In addition to a software licensing model, Talus Solutions will offers Lease Rent Optimizer in an application service provider environment for other interested companies. 

Archstone Communities  http://www.archstonecommunities.com 

The full press release is at: http://www.talussolutions.com/newsroom/pressreleases/press_archstone.html

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Cautionary story on revenue management in Fortune on-line

Arguing that "buying and selling on the Net is getting seriously weird" as revenue management puts power in the hands of sellers, this article suggests that we can expect "buyers to strike back with surprises of their own, maybe even with political surprises, because some of this is going to make people mad".

The article goes on:  "Today, if you shop at Macy's, Gymboree, T.J. Maxx, Ann Taylor, or any of several other retail chains, you may well be paying a price that came from large-scale computer models created by Ph.D. mathematicians and physicists."

Although traditional retailers generally can't re-price merchandise more than once a day, Web prices can be reset for every customer, and each transaction is private:  no one knows what others are paying.  These models make sense for anything perishable, which is more products that you might image. 

"Just think what you could do. As TSI President Scott Friend says, "If a consumer orders a computer with components A and B, I may know that he's also likely to want component F, so I can charge a premium for F." In other words, you change the price during the transaction. You can see why people might get mad about this, though it's only what merchants have done since the dawn of time." 

The article concludes:  "Bigger, better yield management technology gives sellers breathing room. They need it, and I suspect soon they'll all be using it."

Full article at http://library.northernlight.com/LH20000629020000568.html?cb=13&sc=0#doc

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Sabre Announces Strategic Cost Cutting Initiative Expected to Result in Savings of $100 Million in 2001

Sabre Holdings Corporation has initiated a company-wide cost-cutting program to improve efficiencies and flatten the organization.

"This initiative is an important and integral part of implementing our strategy and ensuring that we maintain our leadership position as the premier technology company for the travel and transportation industries," said William J. Hannigan, chairman, president and chief executive officer of Sabre. "These actions will enable us to put more responsibility, accountability and resources into our business units, which will help us respond faster to the needs of our customers. The markets we serve are growing and transitioning rapidly. We believe that these changes will allow us to better align ourselves in the marketplace."

The plan will include the elimination of approximately 1200 positions from the  current workforce of approximately 10,500 people.  To cover the costs of the program, the company expects to take a charge of approximately $20 million in the third quarter of this year.

Sabre has redefined its market focus to the electronic travel marketing and distribution channel, as well as IT services.

"We are also shifting our strategy in IT services to meet the increasing demand for sophisticated value-added services," Hannigan said. "We are pursuing a business model in IT that will allow us to leverage our strengths in the software application, reservations hosting and Web hosting areas. We will no longer go it alone for facility management opportunities. We will instead partner with complementary IT firms to bid for such contracts, emphasizing the scalability and standardization of our industry-leading IT software and ASP solutions.

News release at http://ir.stockmaster.com/wc/form/P1?template=ir/TSG/view_article2&Symbol=TSG&first=&ArticleID=SM-TSG-20000828b

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Sabre to Acquire GetThere, Inc.

in an all cash tender offer for all outstanding shares of GetThere common stock at $17.75 per share, or $757 million. The acquisition will bring together two top players in the online business-to-business corporate travel channel and the business-to-consumer e-commerce channel for airlines, travel suppliers and travel agencies.

The new Sabre company will operate under the GetThere name and will be based in Menlo Park, California.

"This acquisition will establish Sabre as the category leader in the fast growing online corporate and supplier Web site space," said William J. Hannigan, chairman, president and chief executive officer of Sabre. "Together, we will bring expanded benefits to customers, suppliers and shareholders. Our combined technology and expertise will enable us to offer the broadest range of services and content, and to create enhanced revenue- generating opportunities in a rapidly changing marketplace."

The acquisition will bring together customers representing some $28 billion in travel and entertainment spending, including Boeing, Chevron, Cisco Systems, Citicorp, Dell, General Electric, Lucent, Nike and Nortel.  These companies have already reduced their travel expenses by up to 30 percent through the implementation of tools from Sabre and GetThere.

Sabre is at http://www.sabre.com
GetThere can be found on the Web at http://www.GetThere.com

News release at: http://ir.stockmaster.com/wc/form/P1?template=ir/TSG/view_article2&Symbol=TSG&first=&ArticleID=SM-TSG-20000828a

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BootCamp4MBA.COM launched to provide quantitative preparation courses for students entering business programs

Strategic Management Science, Inc. has launched BootCamp4MBA.COM to provide premium quality, web-based courses specifically designed for students preparing to enter an MBA or undergraduate business program.  BootCamp4MBA.COM now offers a basic business math review course and an introductory probability course with others in preparation.

If you would like to develop a course for BootCamp4MBA.COM, contact tutor@BootCamp4MBA.COM

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Executives are bullish on the strategic importance of MS/OR

"The single most valuable resource a company has is the information it stores," says Roland Hoelscher, CEO and president of Arcplan Inc., "and how this information, whether in terms of human capital or application technology, is used to give value to the customer."

"In the new economy, knowledge is the only real competitive advantage," says Luc Pinard, senior vice president, CGI.

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People News  

Thomas M. Cook Joins Talus Solutions Board of Directors

Talus Solutions, Inc. has announced the appointment of Thomas M. Cook, chief executive officer of TCI, an international consulting company specializing in transportation information technology and decision support, to its board of directors.

During his 17-year career with AMR Corporation, Cook held a number of senior executive positions with American Airlines and founded American Airlines Decision Technologies, which later became Sabre Decision Technologies.

"Tom Cook has played an integral role in shaping pricing and revenue management technology in the travel and transportation industries," said Tom Madison, president and chief executive officer, Talus Solutions, Inc. "We are honored that Tom has accepted a position on our board of directors and look forward to his significant contribution."

Cook is past president of The Institute of Management Sciences as well as the Airline Group of the International Federation of Operations Research Societies (AGIFORS).  

"As a long-time advocate and participant in the pricing and revenue management market, I am very pleased to have the opportunity to work with Talus Solutions," said Cook. "Clearly an industry leader, Talus Solutions has impressed me with their commitment to maintain their leadership position in the travel, transport and hospitality industries while successfully expanding into a variety of new markets."

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Polo Ralph Lauren Appoints Global Logistics Chief

Polo Ralph Lauren Corporation (NYSE:RL) has announced  that Russ LoCurto has been named senior vice president of global logistics, effective September 7, 2000. Mr LoCurto will be responsible for distribution, transportation, purchasing, telecommunications, facilities management and maintenance, and for the development and implementation of an integrated supply chain management solution for the company. 

"I am pleased that Russ has accepted this important position with Polo to focus on our supply chain. We believe that this is a vital area of opportunity to decrease expenses and improve inventory turns. With his leadership and experience, Russ will play a key role in developing efficiencies in our supply chain to successfully service both our retail and wholesale operations," said Roger Farah, president and CEO of Polo Ralph Lauren

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Worth a visit on the www

Vehicle Routing Software Survey (information provided by vendors) in OR/MS Today is available on-line at  http://www.lionhrtpub.com/ORMSS/surveys/Vehicle_Routing/vrss.html

Cap Gemini now has synopses of 84 MS/OR case studies on-line at http://www.capgemini.co.uk/or/casestudies/index.htm.  A great site for students.

An article in Hospitality Technology Magazine describes the Opryland Hotel in Nashville's implementation of revenue management.  On line at: http://www.htmagazine.com/archive/MayJune2000/MayJune2000_8.shtml

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Investment section

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Project Management Humor

For a UK version of a "project management course" visit:  http://www.project-training-uk.freeserve.co.uk/  The site also includes links to other locations for more project management "truths"

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Editorial section

You are invited to submit an editorial or comments to be included here.   mailto:newsed@strategicmanagementscience.com

MS/OR and the wireless Internet

As you read this, venture capitalists are funding the startup of applications on the wireless Internet. While we can only speculate as to what will emerge as the mega-brands of this new world, it is clear that this infrastructure provides a "target-rich" environment for MS/OR.  Some MS/OR opportunities are pretty obvious.  For example, the wireless web will appear in luxury automobiles next year, suggesting a raft of applications aimed at the motorist.  These include shortest routes, hotel, restaurant, event, entertainment, and parking availabilities and reservations, and (revenue managed) prices.

Other wireless-web applications will be a surprise: hopefully MS/OR people will be a part of creating this new technology, both the obvious and the surprising.

We think that Strategic MS/OR News would be of great educational benefit to students in business schools and MS/OR programs.  We have, therefore, set up a very special subscription rate for students. (Details)

Peter C. Bell 
Comments on this editorial:  mailto:PBell@Ivey.uwo.ca

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