Freight Technology Assessment Tool

1. Freight Technology Assessment Tool

2. Agenda • Background • Freight Technology Assessment Tool • Methodology • Processes • Performance Measures • Technology Benefits & Costs • Output • Applying FTAT – Motor Carrier Efficiency Study • Questions

3. Background – Why DOT? • Creation of Public Private Partnerships – Government is a facilitator or convener of groups of stakeholders • Ability to provide research and development funding (seed money) • Neutral party with interest in success of overall transportation network • Government Participation • Highway systems are at capacity today in many urban areas • Freight forecasted to double by Year 2020 • Promotion of new technologies to increase the efficient flow of freight.

4. Manufacturer’s Factory Distribution Center Time = 0 160 hours 100 % Target Of Opportunity Using Freight Technologies Shipment awaiting information exchanges to take place 80 % 60 % Percent of 160 Hour Duration Shipment awaiting physical state change, such as shipment consolidation 40 % 20 % Shipment is in movement 0 % Data are based on preliminary qualitative findings collected during baseline activities along the target supply chain. Background – Opportunity

5. Background – Goals • Reduce congestion – Promote the exchange of information between public and private organizations. • Improve efficiency – Projects that promote timely and useful information exchange between supply chain partners. • Enhance safety and security – Projects that ensure that critical information is captured and disseminated to the appropriate facilities and organizations.

6. Freight Technology Assessment Tool • Developed in 2004-2005 for FHWA • Project Objective: Provide a tool that allows the users to evaluate the effects of deploying a technology. • Utilizes a qualitative and a quantitative approach • Qualitative analysis: Rating the technology’s effects on a set of predefined performance metrics • Quantitative analysis: benefit cost analysis based on a set of pre-defined cost drivers

7. Freight Technology Assessment ToolFTAT

8. FTAT Methodology • Input • Define the supply-chain • Performance metrics • Cost drivers • The technologies or best practices • The technology effect for each performance metric • The benefits and costs for each technology • Output • The benefit/cost ratio, plus other financial measures, are computed for each technology • The technologies score

9. FTAT Methodology

10. FTAT Methodology

11. FTAT Processes • Defining and mapping the supply-chain • Option 1: Define new processes. • Option 2: Select supply-chain processes (SCOR processes) • Supply Chain partners are defined on a geographical map and processes are defined/selected for each partner • SC Partner (level 1 view) – describes the various entities participating in the supply chain (ie company, facility, organizational unit) • Process – Defined at two levels (levels 2 and 3). They represent the activities and transactions that each partner performs to move goods through the supply chain. Level 3 is a decomposition of Level 2. • The “as is” cost for each process and the process “as is” cost driver

12. FTAT Processes – Supply Chain Level 1 Level 2 Level 3

13. FTAT Processes

14. FTAT Processes

15. FTAT Cost Drivers • A characteristic that drives the changes in cost level • Example: Order Processing • Cost Drivers: Number of Orders & Time per Order • Uses of Cost drivers: Compute process improvement component of a certain technology

16. FTAT Cost Drivers

17. FTAT Performance Measures • Seven performance attributes • Reliability • Responsiveness • Flexibility • Cost • Asset Management • Safety • Security

18. FTAT Performance Measures • Each performance attribute includes a set of performance metrics, for example • Transportation lead time • Order fulfillment lead time • % shipments received damage free • % schedules changed within lead time • Shipment Security • % shipments visible/traceable during transportation • Cash to cash cycle time

19. FTAT Performance Measures

20. FTAT Technologies • Costs of technology are the total amount of money invested to realize, implement, and sustain a supply chain technology • Benefits of a technology are the positive monetary gains on the supply chain, including: • Cost savings resulting from improving processes • Cost savings resulting from eliminating processes • Reduction or elimination of miscellaneous costs such as customs fees, pilferage, etc.

21. FTAT Technologies

22. FTAT Technologies

23. FTAT Technologies

24. FTAT Technologies

25. FTAT Technologies

26. FTAT Analysis • Quality Function Deployment - QFD is a qualitative analysis technique that can be utilized to motivate organizations to focus on their most critical needs. It is a methodology for taking the input of numerous stakeholders and using that information to drive the decision making process. • Benefit Cost Analysis - a quantitative analysis technique that evaluates the monetary benefits of a set of technology projects versus their associated costs (NPV, BCR, IRR, etc.).

27. FTAT Analysis

28. FTAT Output

29. Applying FTAT Motor Carrier Efficiency Study • MCES – Directed by SAFETEA-LU Section 5503 • Major Study Components: • Identify high-priority motor carrier inefficiencies • Examine the application of wireless technology to provide needed capabilities • Perform hypothetical benefit-cost analysis • Progress to Date: • Defined supply chain segments • Identified process-specific inefficiencies • Captured data to define effects of inefficiencies • Will use FTAT to Perform Preliminary B/C Analyses • 10 “Scenarios” • Various trucking operations and trip types

30. Applying FTATMotor Carrier Efficiency Study

31. Applying FTATMotor Carrier Efficiency Study Level 2 Process Depiction

32. Applying FTATMotor Carrier Efficiency Study Level 2 Allocation of Inefficiencies

33. Applying FTAT – Motor Carrier Efficiency Study Specific Inefficiency Effects

34. Applying FTATMotor Carrier Efficiency Study Level 3 Subprocess Depiction

35. Applying FTATMotor Carrier Efficiency Study 1. Input specific data regarding current activity results, duration, and costs Using FTAT: 2. Identify likely individual changes to activity results, duration, and costs, at the subprocess level 5. Examine changes to overall “bottom line, including performance enhancements and costs 4. Execute calculations within FTAT 3. Input anticipated implementation and use costs for technology and process changes

36. Applying FTATMotor Carrier Efficiency Study The MCES FTAT Analysis Results Will: • Clarify Opportunities • Better define specific sources of inefficiencies • Quantify and qualify potential benefits • Enhance Knowledge • Consolidate information from multiple sources • Provide numerical evidence • Facilitate Decision-Making • Provide means for comparative analysis • Provide basis for selecting Phase II pilot projects

37. Questions/Discussion

38. User Guide

39. Contact Information • Randy Butler – FHWA • randy.butler@dot.gov • 202.366.9215 • Paul Belella – Delcan • pbelella@delcan.com • 703.752.6060 X 104 • Nathan Rychlik – Productivity Apex, Inc. • nrychlik@productivityapex.com • 407.384.0800