FHWA Office of Freight Management Freight Technology Assessment Tool

FHWA Office of Freight Management

Freight Technology Assessment ToolFreight Technology Assessment Tool


AgendaAgenda

• Background • Freight Technology Assessment Tool

• Methodology• Processes• Performance Measures• Technology Benefits & Costs• Output

• Applying FTAT – Motor Carrier Efficiency Study

• Questions


Background – Why DOT?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.


Background – OpportunityBackground – Opportunity

Time = Time = 00

160 hours160 hours

Manufacturer’s Manufacturer’s FactoryFactory

Distribution Distribution CenterCenter

Shipment is in movementShipment is in movement

Shipment awaiting physical state Shipment awaiting physical state change, such as shipment change, such as shipment consolidationconsolidation

Shipment awaiting Shipment awaiting information exchanges to information exchanges to take placetake place

0 %0 %

20 %20 %

40 %40 %

60 %60 %

80 %80 %

100 %100 %Target

Of Opportunity

UsingFreight

Technologies

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Data are based on preliminary qualitative findings collected during baseline activities along the target supply chain.


Background – GoalsBackground – 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.


Freight Technology Assessment Tool 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


Freight Technology Assessment Tool

FTAT


FTAT MethodologyFTAT MethodologyFTAT MethodologyFTAT 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


FTAT MethodologyFTAT MethodologyFTAT MethodologyFTAT Methodology


Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)

Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers

(2) Input benefits of the technology, and “To Be” cost

drivers

Performance Measures(Industry Standard Performance

Metrics aligned with business processes)

Cost Drivers(Generate a list of cost

drivers based on defined business process map)

Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &

Security(2) Quantitative Financial output: Net Present

Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio

Technology Selection(Select a technology to

rate/evaluate)

Business Process Mapping(Define your Business

Processes)Qulaitative Analysis

Technology Evaluator (User)

Expert Panel

Quantitative Analysis

FTAT MethodologyMethodology


FTAT ProcessesFTAT 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


Level 1

Level 2

Level 3

FTAT Processes – Supply Chain






FTAT Cost DriversFTAT 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


FTAT Cost DriversFTAT Cost Drivers


FTAT Performance MeasuresFTAT Performance Measures

• Seven performance attributes• Reliability• Responsiveness• Flexibility• Cost• Asset Management• Safety• Security



• 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




FTAT TechnologiesFTAT 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.












FTAT AnalysisFTAT 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.).


FTAT AnalysisFTAT Analysis


FTAT OutputFTAT Output


Applying FTAT Motor Carrier Efficiency Study

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


Applying FTATMotor Carrier Efficiency Study





Level 2 Process DepictionLevel 2 Process Depiction




Level 2 Allocation of Level 2 Allocation of InefficienciesInefficiencies


Applying FTAT – Motor Carrier Efficiency Study

Applying FTAT – Motor Carrier Efficiency Study

Specific Inefficiency Specific Inefficiency EffectsEffects




Level 3 Subprocess Level 3 Subprocess DepictionDepiction




Using FTAT:Using FTAT:1.1. Input specific data Input specific data

regarding current regarding current activity results, activity results, duration, and costsduration, and costs

2.2. Identify likely Identify likely individual changes individual changes to activity results, to activity results, duration, and costs, duration, and costs, at the subprocess at the subprocess levellevel

3.3. Input anticipated Input anticipated implementation and implementation and use costs for use costs for technology and technology and process changesprocess changes

4.4. Execute Execute calculations within calculations within FTATFTAT

5.5. Examine changes to Examine changes to overall “bottom line, overall “bottom line, including including performance performance enhancements and enhancements and costscosts




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


Questions/DiscussionQuestions/Discussion


User GuideUser Guide


Contact InformationContact Information

• Randy Butler – FHWA • [email protected] • 202.366.9215

• Paul Belella – Delcan• [email protected]• 703.752.6060 X 104

• Nathan Rychlik – Productivity Apex, Inc.• [email protected] • 407.384.0800

Documents

FHWA Office of Freight Management Freight Technology Assessment Tool