SILOG News 1

In recent years, as in many other countries, systems and databases for sorting mail at Canada Post have steadily grown in size. Changes in any one location have entailed ever more manual modifications further down the line – with the consequential risk of errors. For some time, Canada Post has been working with a new IT architecture and solution from Siemens. Consistent address data and comprehensive, rule-based sort-plan management help to master the complexity.

Automation for post, courier, express and parcel services

www.siemens.com/logistics

SILOG NewsIssue 01/2013

Previously, the sorting system at Canada Post was characterised by heterogeneous, single solutions: a collection of various production-specific systems for address data and sort-plan management scattered across the country made it difficult to sort and distribute mail efficiently. Each time a sort plan was changed somewhere in the country, modifications had to be made by

Contents

01 IT architects at work Canada Post makes big changes to its nationwide sorting concept

02 New opportunities Postal automation remains a good partner for its customers

03 System speaks Hindi India Post merges letter centres and speeds things up

06 Innovation lab Taking a broader view reveals some surprising solutions

08 Equipped for peak times Czech Post installs the cross belt sorter

A new IT basis for Canada Post’s nationwide sorting concept

Sort plans adjusted automatically

hand at numerous other points to re-har-monise the network – an obvious barrier to efficiency. Of course, the fact that new address data had to be painstakingly en-tered on site into each single solution was also a problem, and there was no centra-lised address entry system for the coun-try’s sorting centres. >> Page 4

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Every mail piece is scanned automatically, and the digital image is transferred to the recognition software. In fact, the software is so flexible and intelligent that it can be adapted to recognise numerous languages and characters.

In India, not only English-language ad-dresses can be recognised, but also Hindi postcodes as well as 2-D codes that can contain postcodes. Only on rare occasions must video-coding personnel help out with deciphering the information on the mail pieces.

In any case, if the overall context does not work, even the best machines are not able

Editorial

Change means opportunity

When something works well, we are reluctant to give it up. We often go on the defensive in the face of the new. But change always brings with it great opportunities.

The plans of the Managing Board at Siemens to divest the mail, parcel and baggage sorting systems business came as a great surprise to many, not least because our markets both in the airports and parcels sectors had been producing pleasing growth figures. The CEP and Postal Logistics business has long played a leading role in the processing and sorting of mail and parcels. Many of our customers still know engineers and project managers from the time when today’s unit was under different ownership. Then, as now, our highly dedicated employees are the foundation of our business, striving to deliver the best solutions for our customers.

The intention of the Siemens’ Managing Board to sell in no way changes our mu-tual business relationship or our future-proof technologies and solutions. Our partnership is based on vast experience, considerable expertise and a wealth of successful projects that we have jointly realised – and which we will continue to pursue with you.

I hope you enjoy reading this issue of SILOG News. Sincerely yours,

Torsten Caesar

Dr Torsten Caesar, Head of CP (CEP and Postal Logistics)

Ernst’s words also make clear that the highly specialised market with all its individual requirements – where practi-cally no postal or CEP service provider is like the next – needs the kind of flexible structures the CP (CEP and Postal Logis-tics) segment has to offer. In his opinion, this is the only way that technology and customer needs can be brought together to develop the best-possible solutions.

Integrated automation and IT

The implicit strength of the solutions lies in the policy of automation pursued by developers and engineers right from the start. The fact that a random pile of parcels can today untangle itself “on its own” and proceed in single file to the sort-ing machines can be attributed not only to technology, but also to the skill of the developers who came up with the right combination of technologies. Another outstanding example is the fingerprint technology, which allows the unambigu-ous identification of items based on pho-tographs and makes the generation and printing of barcodes on letters and parcels a thing of the past.

Smart information technology

IT is of steadily growing importance. In fact, IT is the driver of innovation for the Trust-Ebox, the automation solution for reverse hybrid mail. Above all, it sees to it that optimum security and speed are guaranteed when transmitting content – topics that are increasingly the focus of the business world and society.

“Our success is founded on these engi-neering achievements and the know-how of our employees,” Jörg Ernst stresses. He concludes with the words, “Our solid

partnership is the foundation of our col-laboration.”

Siemens plans divestment of Logistics and Airport Solutions

“Our solid partnership will remain intact” The news in the business press and daily newspapers in November 2012 spread quickly: Siemens is planning to divest the business unit Logistics and Airport Solu-tions (LAS). Two things are clear, according to the unit’s CEO, Jörg Ernst: “Our efforts are still totally focused on our customers’ requirements. That means we will con-tinue to provide them with our innovative and excellent products and our reliable services.”

Logistics and Airport Solutions

The mid-single-digit profitable Siemens logistics business with revenue of approximately €900 million and around 3,600 employ-ees is active in favourable markets with promising growth dynamics, in particular in parcel and baggage handling. The Managing Board af-firms that “whilst favourable market conditions, innovative strength and good profit results of Siemens’ logistics activities,” it is convinced “that a different ownership structure can better tap the business’s full potential.” (From the Siemens press release dated 28.11.2012)

In the past, postal employees in several small mail sorting centres in the big city of Delhi had the task of sorting mail manually according to postcodes. Now, India Post has equipped both Delhi and Kolkata each with a letter and a restmail sorting machine from Siemens to process the machinable mail volume. The new centres can handle one million letters and pieces of rest mail per day; that makes 35,000 letters and 20,000 pieces of rest-mail – such as flats, magazines and small parcels – per hour. In Delhi, around 500 employees work in three shifts around the clock to ensure that people receive their mail on time.

According to India Post, the consolida-tion of the sorting systems in Delhi has led to a sharp rise in the quality of postal processes and services. The institution proudly emphasises that, in comparison with the previous systems – installed in 1993 in Mumbai and 1996 in Chennai – the new generation of sorting machines in Delhi and Kolkata achieve a new level of quality. The machines can read ad-dresses automatically and transport mail to the corresponding stacker/bin without human intervention. Where manual sort-ing required two-pass sorting, now only one pass is needed to get the job done.

The integrated reading and video coding system is at the heart of this solution.

to achieve maximum output. Therefore, for a sorting machine to operate efficient-ly, it is also important that the postal and transport flows in a country are analysed and incorporated into sorting and logistic plans, which is exactly what Siemens did in India. Preparatory work for the read-ing system is also required. For this, more than 1,300,000 addresses, mostly in Delhi and Kolkata, but also in cities, towns and villages across India, were gathered for entry into the postal address directory needed to perform automatic sorting.

India Post stresses that processing times have been cut dramatically thanks to the new systems. And there’s another fac-tor that has a considerable effect on the working climate: motivation levels among employees have risen – along with pro-ductivity. <<

Jörg Ernst, President and CEO of Business Unit Logistics and Airport Solutions at Siemens AG

India Post’s new Integrated Reading and Video Coding Machine

Letter and restmail sorting machines in New Delhi and Kolkata

Reading system also recognises Hindi postcodes New Delhi Television calls it a milestone in postal automation: A new generation of letter and restmail sorting systems has been installed in both Delhi and Kolkata, thus merging the many letter centres scattered across both cities into one sorting centre each. For the reading software a particular challenge was learning to decipher Hindi postcodes as well as the 2-D codes that can also contain a recipient’s postcode.

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for all addresses and delivery informa-tion, thus removing the need to enter data at sort-code level. That means that all connected address-recognition and letter-sorting systems in the country ac-cess the same database. In the same way, nationwide sorting strategy planners can draw on this information pool, and individual sort plans are based on this consistent data.

The postal system, which had evolved over time, was hitting its limits as a result of the increasing demands of postal cus-tomers, for example for faster delivery or variable tariffs for major customers. Jörg Schiemann, head of IT at Logistics and Airport Solutions, points out that “tra-ditional address and sort management concepts are scarcely capable of keeping pace with the new trend.” Furthermore, IT specialists are struggling to cope with

> > Continued: Sort plans adjusted automatically

increasing amounts of data because to-day far more mail attributes than merely the address are being analysed and stored. This development brings with it a reduc-tion in data quality, which makes it increas-ingly difficult to safeguard the consistency of data across the country.

Canada Post wanted to put an end to this situation. For this reason it decided, at the end of the last decade, to optimise tradi-tional postal service and cost structures with the aid of an IT solution.

Central and automated

Logistics and Airport Solutions’ IT solu-tion – the modular, cross-network tool known as Address Data and Sort Plan Management (ADM-SPM) – unites all the features that Canada Post was looking for. The solution uses a central database

The other important element of the new IT solution is the comprehensive network-ing of sorting and distribution centres, which allows them to be controlled centrally. Until now, Canada’s individual, generally highly automated centres have operated relatively independently of one another. Two points highlight the advan-tages of using a common data pool and centralised control. Firstly, data and ad-dress changes now only need to be made once and at one location. Secondly, modi-fications to an inward mail sort plan no longer trigger a whole string of changes further down the line, since the outward sort plans are adjusted automatically. This capability is based on a sophisticated cata-logue of rules that uses “if-then” analyses to automatically sequence changes in the system.

Pre-configured modules speed things up The ADM-SPM system consists of a series of pre-configured software modules that can be adapted to suit the specific require-ments of a postal company. Implementa-tion of the solution at Canada Post was the culmination of an intensive specifica-tion phase in which nationwide address structures, distribution processes and all detailed functions were analysed, defined

and finally imported into the new IT solu-tion. Only then could the configuration of the production network and address structures begin. The team transferred the data – addresses, delivery information, structures and delivery points – from the existing Canada Post databases via specific interfaces. Jörg Schiemann: “Today there are no addresses in the system that have not been assigned a delivery point.”

This characteristic is the prerequisite for planning the sorting strategy. In addition, sort codes are assigned to the delivery points, a step that is necessary for com-munication between the recognition system and the sorting machine. The sort codes are generated on the basis of con-sistent information from the database and pre-defined rules, which are aggregated in the background. Thanks to the import of delivery structure data, the individual

delivery points are able to transfer data immediately to their carriers and post offices. “This delivery plan process takes place automatically in ADM-SPM,” Schie-mann emphasises, “but it can be modified at any time.”

The Contract Management module

The Contract Management module deter-mines the mail stream between all points

in the distribution chain – both between the different sorting centres as well as be-tween the sorting centres and the delivery offices – as determined by the national sort plan and the defined structure of the nationwide mail stream. Jörg Schiemann: “This function is extremely important for the coordination of the mail stream within the branches of the network.” Another useful feature is the generation of alterna-tive sorting scenarios – for example if the number of mail streams increases sud-denly or new postal products need to be distributed.

In this process, the sort planner combines the outward and inward mail stream data and uses it as a basis for developing the most efficient sorting concept – taking into account machine availability, specific postal products and closing times.

The interaction between delivery plan-ning, contract management and sort planning is mapped in a tree structure that branches right down to the last delivery point. “In this way, each address finds its delivery point – and vice versa,” Schiemann explains. This means that the sort codes of every single delivery point derive from the trunk to each branch of the sorting tree.

Consistent networking is important to enable possible planning adjustments, occurring for example at a lower planning level – for example, address changes or altered delivery routes – to be taken into account in the overall system. According to Schiemann, “In many cases, the adjust-ment can be integrated into a higher planning level entirely without additional intervention by an operator.” For example, if an inward sort plan is changed at a sort-ing centre, the outward sort plans in all other sorting centres are adjusted auto-matically. For Canada Post, this advantage has a profound effect: it no longer has to bother about the complex coordination of different sorting centres.

The Generate & Transfer module

The next step is simply to link the ADM-SPM system with the address recognition system and the sorting machines. This is performed by the Generate & Transfer

module. It also distributes the processed address data and sort plans via the net-work to the connected systems.

Three-step IT architecture

The foundation that permits sort plan-ning and control to be centralised and automated is based on three-step IT architecture. For this purpose, a central database server for the common consis-tent data repository (Oracle) and an ap-plication server for the ADM-SPM system are located at Canada Post headquarters in Ottawa. Linked to these are the clients at headquarters and the individual sort-ing centres, which are administered via the ADM-SPM User Management module – in accordance with pre-defined access regulations and guidelines. Windows servers act as the hardware platform.

After an almost two-year conception and implementation phase, the system has been operating successfully since 2011. “Our intelligent, rules-based IT solution for address data and sort plan manage-ment is the central administrative tool at Canada Post today,” says Jörg Schiemann, who stresses that “it delivers the consis-tency and reliable planning of a highly developed postal network which, at the same time, is flexible enough to integrate new functions and services.” <<

User interface of Canada Post’s address data management system

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Fingerprint technology has been used ef-fectively in flats sorting for some time now. It was only when this useful idea landed on the innovation platform – and was looked at from a different perspec-tive – that it evolved further. The “third dimension” quickly came into play. As part of a foray into airport security, it was tested in passenger scanning devices, but finally ended up back in its familiar envi-ronment, this time one level higher. To-day, Siemens postal solutions also uses fingerprint technology for 3-D recogni-tion in parcel sorting.

This classic recognition system found its way indirectly into a completely new ap-plication field. Cameras are now used to perform 3-D scans of parcels with the goal of recognising their unique characteristics and allowing them to be clearly identified. Fingerprint for parcels can therefore sup-plement the bar-code identification meth-od within the sorting process and may even replace it in the future.

One of the tasks of innovation manage-ment is continuous product improvement. Frank Wehking, Head of Innovation and New Business, takes things one step fur-ther: “I’m interested in anything that goes beyond the boundaries of our core busi-ness. We look at neighbouring fields and ask ourselves whether any of the technol-ogies we employ can be put to new uses there.” Similarly, technical deployment scenarios from quite unrelated disciplines can generate new applications in our own area of business, as the example of pat-tern recognition shows.

One’s own technology is seen with new eyes – as was the case in postal automa-tion. The trend toward digital communica-tion is unbroken: e-mail and text messages are being used more and more. The inno-vation team at Siemens thought about in-corporating the – albeit declining but still significant – paper mail sector into this en-vironment. What about accessing paper mail at any time via the Internet using mo-bile phones or computers?

The answer to this question is Trust-Ebox. This automation solution allows the recipi-ent to decide whether to have the mail piece opened, scanned and displayed on a screen, to have it delivered unopened, or to have it directly recycled. This technolo-gy has an enormous impact on reducing physical delivery volumes. The user choos-es what to read in electronic form, thereby saving time, and postal service providers can lower costs.

In order to come up with such impressive innovations, it is important to collect and systematically develop ideas. This process is furthered by the ideas network, Spin, which started last year at Siemens. Prior

The Spin ideas platform facilitates the systematic development of ideas

Managing innovation successfully Daily business activities offer a wealth of innovative potential. But how can promising ideas be recognised and put into prac-tice? Logistics and Airport Solutions has introduced the Spin ideas platform to aid this process.

to Spin there was only the classic company improvements and suggestions scheme. “People often held back their ideas,” inno-vation head Wehking observed, “because they were thinking too much in terms of patents.” For Wehking it was clear: “We needed a solution that would encourage and reward the contribution of ideas at an early stage.”

The decisive factor, of course, is that good ideas originate in the first place. The inten-sive search for ideas begins with a cam-paign initiated by an innovation or product manager, who also acts as a sponsor dur-ing the campaign. This person observes a specific priority area, that is, a field of ac-tivity and potentially interesting applica-tion areas. Once an idea has been posted, it is rated and commented on by the com-munity of participating employees. Then comes the moment of truth: will the idea be rated “hot” – or not? This decision lies with the community or with the sponsor, who has specific knowledge of the market in the targeted sector. The sponsor subse-quently finances the deep dive, a thorough examination of the idea. This produces only two possible outcomes: either the idea is feasible or it isn’t. If it is – the ideal situation – at the minimum a rough busi-ness is put together. <<

tions from other sectors to the require-ments in our fields, or collecting ideas from outside our sphere of activity that complement our own solutions. The two methods for unloading parcels developed by our engineers are good examples of solutions that would probably not have come about without “Open innovation” and Rapid Innovation Management. These solutions have given us access to signifi-cant markets.

Is innovation being fuelled by discussion on the Internet?

Wehking: Yes, it certainly is! A steadily growing proportion of our staff is getting involved in the online discussion, making suggestions, commenting on and rating ideas. In contrast, only a handful of peo-ple contribute to conventional company improvement and suggestion schemes. Nonetheless, we consider both to be equally important, and they are inten-sively used in conjunction with each oth-er. In this way, we are boosting the inno-vative climate within the company.

What kind of experiences have you had so far?

Wehking: After three-and-a-half years of Rapid Innovation Management and a little over one year of the Spin ideas platform, we have made considerable progress. We have achieved successes, yet we have also come to a standstill in one or two areas. But that’s part of such a simplified ap-proach. Incidentally, it is not just a ques-

Interview with Frank Wehking

Birth of an innovation

Which innovation management trends are you seeing in your field?

Wehking: We are intent on making a thor-ough, systematic and collaborative effort to generate innovative business ideas and realise them as quickly as possible. With this in mind, we are focusing on our four core operating areas: mail, parcel, bag-gage and air freight automation. We are also turning our attention to neighbour-ing fields and markets – and we are also looking at quite unrelated areas. In the process we make use of Rapid Innovation Management, a procedure we developed ourselves aimed at simplifying processes and speeding up procedures. The objec-tive is to realise within six to nine months the implementation of promising ideas.

What does the term “Open innovation” mean in this context?

Wehking: We see “Open innovation” as a means of either adjusting existing solu-

Frank Wehking is Head of Innovation Management and New Business at Siemens Logistics and Airport Solutions

Semi-automatic parcel unloading – a solution that would probably not have come about without corres-ponding innovation management

tion of establishing this method with the staff to ensure it gets used. Executive man-agement has to embrace the idea too – and make the necessary funds available to allow us to pursue our projects. Proven success stories are an essential argument here.

What are you working on at the mo-ment?

Wehking: Without revealing too many de-tails, we are currently transferring our rec-ognition technology into neighbouring fields. This process is an enabler that lets us gain a foothold, also with hardware, in areas in which we are currently not yet ac-tive. The parcel environment, too, is an area of activity where we want to employ innovations and unconventional ideas to improve the performance of parcel cen-tres. <<

Open innovation

The term refers to the opening-up of the innovation process by organiza-tions and the active strategic use by the outside world to enlarge the in-novation potential. This takes place with Web 2.0 so that communica-tion between locations around the world is possible.

Rapid Innovation Management – RIM

RIM is an innovation management system at LAS with simplified pro-cesses. It is the direct responsibility of management. Thanks to the sim-plified processes, a decision is made on the future of promising ideas within six to nine months.

Spin

Spin is an innovation tool that offers a platform to exchange ideas – and which allows an idea network to form.

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Published by Siemens AG Infrastructure & Cities SectorMobility and Logistics DivisionLogistics and Airport SolutionsBücklestr. 1-578467 Konstanz · GermanyTel. +49 (0)7531-86-01

Editor-in-chief Insa Sigl, Siemens AG, Konstanzlasnews.mobility@siemens.com

Responsible for content Dr. Gerhard Ehlker, Siemens AG, Konstanz © Siemens AG 2013 · Printed in Germany

The information in this newsletter merely contains general descriptions and performance features, which may not always be applicable in the de-scribed form in an actual application or which may change as a result of further development of the products. The desired performance features shall only be binding if they have been expressly agreed in the conclusion of contract.

Czech Post installs cross belt sorter

Always on time

From there they are transported onto the carrier belt of the sorter. At this point, two multi-angle camera systems spring into action and scan the parcels for barcodes. These barcodes, which are applied when parcels are handed in at post offices, con-tain information about the destination and help determine the subsequent transport path the individual parcels will take. In ac-cordance with the read result and the cur-rent sort plan, the carriers then transport the parcels to the corresponding chutes. For the sorting process a total of 80 chutes are available, which are assigned to sorting destinations depending on the sort plan. Because of the cramped conditions at the Prague site, the chutes are spiral-shaped. At the horizontal chute outlets, postal em-ployees remove the parcels and place them in the waiting cage trolleys. These wheeled containers are transported further by railor truck. “The parcels can then reach theirdestinations in time, whether for a birth-day, anniversary or Christmas,” says Bläsche,who is confident that the project will be brought to a successful conclusion by the autumn of this year. <<

The bottleneck that has become increas-ingly tight year by year will soon be a thing of the past. In January 2013, Czech Post and Siemens signed an agreement for the renewal and extension of the auto-mated parcel sorting facility at the Prague centre, which handles the largest number of parcels in the Czech Republic. This deal marks the continuation of over 20 years of collaboration between the two compa-nies.

“The fact that in the face of stiff competi-tion Czech Post decided to go with Siemens is most certainly due to the superb team-work demonstrated by our colleagues in Constance, Nuremberg and Prague,” ex-plains Didi Bläsche, Senior Sales Manager from Siemens Logistics and Airport Solu-tions. The high proportion of components supplied by subcontractors in the Czech Republic was also a decisive factor in the calculation process.

The cross belt sorter now being installed in Prague consists of five induction lines that convey the incoming parcels – fed in by operating personnel – to the induction.

At Christmas time in particular, the Prague sorting centre is scarcely able to handle the flood of parcels that are supposed to reach their destinations on time. A new cross belt sorter with five induction lines, now being installed by Siemens, should help alleviate the situation.

At the forefront with Siemens

Since 1991, Czech Post has been us-ing sorting facilities, reader software, address data and sort plan manage-ment systems and statistics software from Siemens. Until the signing of a new framework agreement in 2009, the four sorting centres run by Czech Post operated a total of six Integrated Reading and Video Coding Machines (IRV), five Final Sorting Machines and one Culler Facer Canceller. Modelled on western European postal services, Czech Post is now introducing a uni-form machine type, the IRV 3000, in the automated mail sorting centres. The new nationwide governing con-cept was developed by Siemens. Quality control is by means of several hundred quality test letters – QTL and GeoQTL – which are evaluated daily with the aid of a QTS (Quality Test System).