Electronic Freight Management

1
Electronic Freight Management
IFTWG Ft. Lauderdale, FL November 16, 2008
2
Agenda

• Overview of technology David Williams
• Performance metrics used to measure success
  David Williams
• Cost/Benefit analysis for adoption and
  implementation Diane Newton
• Methodology to move to commercialization David
  Williams

3
Overview of EFM Technology
4
The Challenge
Freight volumes will continue to grow Capacity
expansion has not kept pace
Maximize efficient use of existing capacity
5
Opportunity for Improvement
Manufacturers Factory
Distribution Center
Time in Hours 96
100
Target Of Opportunity Using Freight Technologies
Shipment awaiting information exchanges to take
place
80
60
Shipment awaiting physical state change, such as
shipment consolidation
40
20
Shipment is in movement
0
6
Shipment Coordination Today

• Integrated solutions are only available in closed
  systems
• Manual Inputs are required to support sharing of
  data

In-House
IT
Partner A
Partner C
TODAY
Partner B
Internet
7
EFM Key Points Web Services (WS) and
Service-Oriented Architecture (SOA)

• Enter data once, use many times
• SOA WS enable integration of legacy systems
  from multiple supply chain partners
• Minimize data entry
• Focus on Information Sharing
• Subscription and notification
• Not a logistics management or ERP system
• Focus on making near real time information
  available to all supply chain partners

8
EFM Key Points Data Standards

• Standardized Messages
• Based on UBL v2.0
• Advance Ship Notice, Dispatch Advice, Receipt
  Advice, Transportation Status
• Secure Data Sharing
• SSL and Digital Certificates
• Role-based security
• Open Architecture
• Built with open-source products
• Web Services available for re-use

9
EFM Shipment Coordination

• An Open Information Sharing System with a secure
  exchange of data to support decision making

Web Service EFM Reply Received Cargo
Web Service EFM Request
Web Service EFM Reply Arrived Location
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How?
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Evolution of EFM
Current
Future
Completed
Web Services Arch. Data Standards
International

• EFM Package
• Industry Outreach
• Adoption Strategy
• Industry Focus
• DEMDACO
• - Initial adoption in Kansas City, MO

End-to-End Manifesting
Functionality
Deployments Driven by Adoption Strategies Partner
ing with KC SmartPort
Identity Management
Electronic Supply Chain Manifest Test (OHare
JFK)
CEFM Field Demonstration Test (HKG Columbus)
Biometric Test (OHare)
1999
2002
2006-8
2008-10
2008-9
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Performance Metrics Used to Measure Success
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Potential Metrics

• Reduced Labor Cost
• Better scheduling of part-time labor based on
  better visibility
• Demurrage Payments Asset Utilization
• Track container turn-around time and container
  free time
• Reduce/eliminate demurrage payments and possibly
  negotiate better rates with carriers
• Outbound Order Fulfillment
• Reduce number of outbound shipments (and their
  cost) with better visibility of arrival dates and
  sequencing of inbound orders

14
Potential DEMDACO Metrics

• Container Capacity Utilization
• Measuring space utilized in each shipment allows
  better management of sourcing network, thus
  maximizing capacity utilization and minimizing
  inbound shipping costs
• Better Inbound Shipment Information
• EFM will provide up-to-date information on all
  shipments, reducing analyst time
• EFM will provide visibility to additional data
  (Customs Entry Number), providing better access
  to historical shipment information

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Cost/benefit Analysis for Adoption and
Implementation
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EFM Performance Metrics

• Productivity
• Amount of manual data entry
• Amount of time spent on missing or incorrect EDI
• Administrative labor
• Number of manual data exchanges
• Service quality
• Level of effort to research and report on
  priority shipments
• Time of access to data for downstream partners
• Data availability and quality
• Frequency of data updates
• Data accuracy
• Data timeliness
• Data availability

The focus for Columbus was on assessing the
impact of newly automated, real-time information
exchanged on a many-to-many basis
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Matrix of CEFM Benefits
Total Savings of 5.94/shipment
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Broad Industry Benefits from Freight Visibility
Technologies

• Productivity
• 20-30 reduction in transportation costs (Viking
  Logistics)
• 50 reduction in administrative costs (Sunoco)
• 20 reduction in safety stock inventory (Dow)
• Service Quality
• 50 reduction in time to solve in transit
  problems (Dow)
• 90 improvement in delivery time reliability
  (Dow)
• Data Quality and Availability
• 30 improvement in data timeliness (2006 Stanford
  study)
• Companies using visibility technologies report
  data accuracy over 90 (2007 Aberdeen survey)

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Business Benefits of EFM Technologies

• Small and medium size companies may stand to
  achieve more benefits from visibility
  technologies like EFM
• More than twice as many small companies found
  benefits gt 100,000 than had no savings or a
  loss. (Aberdeen 2008)
• Automated data exchange (ex. Web services)
  produce higher levels of benefits. For companies
  with savings
• 58 have automated data with suppliers
• 39 have automated data with logistics providers
• 35 use automated data exchange with their
  warehouses
• (Aberdeen 2008)
• EFM enables management by exception
• Greatest financial value leverages visibility
  information
• identify and eliminate root causes of delays
• rapidly respond to negative changes
• (Aberdeen 2008)

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Conclusions

• EFM technologies enable many-to-many
  communications
• EFM technologies use the Internet for easier
  connectivity with new supply chain partners.
• XML as used in EFM is easier, less costly to
  implement, and more accurate than EDI.
• Integration of multiple-partner supply chain
  automated data with back office transportation
  management systems creates actionable
  intelligence to manage supply chain.

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Methodology to Move to Commercialization
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Gaining Industry Adoption

• Focus on a Package that can be easily
  re-deployed in multiple locations
• Several deployment methods
• Full integration into legacy environment
• Partial integration, partial hosted environment
• USDOT seed adoption with small deployments

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Identifying Potential Adoption Partners

• Work with industry trade group/association
• USDOT Issued Request for Information
• Select adoption partners based on RFI responses
• Reach out and integrate with other
  complimentary programs

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Where are we today?

• Kansas City SmartPort
• Leading the charge for adoption in Kansas City
• Initial Deployment Location (DEMDACO)
• Integration with several complimentary on-going
  programs
• Trade Data Exchange
• Cross-Town Improvement Project (C-TIP)
• Sensor Net
• DEMDACO implementation operational in Feb 09

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Future Adoption Locations

• Goal is for small-scale USDOT involvement in
  deployment
• Use DOT funding to seed implementation and
  growth of EFM
• Need strong Supply Chain owner
• Commitment from ALL participants in SC
• Pre-defined requirements package
• Identify Business Processes
• Identify data sharing (methods, messages,
  content, examples, )
• Looking for partners willing to integrate
  directly into existing/legacy systems
• DOT focus on implementing the package at new
  adoption locations