1. FHWA Office of Freight Management Freight Technology Assessment Tool

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

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

5. FHWA Office of Freight Management 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. FHWA Office of Freight Management 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. FHWA Office of Freight Management Freight Technology Assessment Tool FTAT

8. FHWA Office of Freight Management 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. FHWA Office of Freight Management FTAT Methodology

10. FHWA Office of Freight Management Methodology FTAT Methodology

11. FHWA Office of Freight Management 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. FHWA Office of Freight Management Level 1 Level 2 Level 3 FTAT Processes – Supply Chain

13. FHWA Office of Freight Management FTAT Processes

14. FHWA Office of Freight Management FTAT Processes

15. FHWA Office of Freight Management 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. FHWA Office of Freight Management FTAT Cost Drivers

17. FHWA Office of Freight Management FTAT Performance Measures Seven performance attributes Reliability Responsiveness Flexibility Cost Asset Management Safety Security

18. FHWA Office of Freight Management 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. FHWA Office of Freight Management FTAT Performance Measures

20. FHWA Office of Freight Management 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. FHWA Office of Freight Management FTAT Technologies

22. FHWA Office of Freight Management FTAT Technologies

23. FHWA Office of Freight Management FTAT Technologies

24. FHWA Office of Freight Management FTAT Technologies

25. FHWA Office of Freight Management FTAT Technologies

26. FHWA Office of Freight Management 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. FHWA Office of Freight Management FTAT Analysis

28. FHWA Office of Freight Management FTAT Output

29. FHWA Office of Freight Management 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. FHWA Office of Freight Management Applying FTAT Motor Carrier Efficiency Study

31. FHWA Office of Freight Management Applying FTAT Motor Carrier Efficiency Study Level 2 Process Depiction

32. FHWA Office of Freight Management Applying FTAT Motor Carrier Efficiency Study Level 2 Allocation of Inefficiencies

33. FHWA Office of Freight Management Applying FTAT – Motor Carrier Efficiency Study Specific Inefficiency Effects

34. FHWA Office of Freight Management Applying FTAT Motor Carrier Efficiency Study Level 3 Subprocess Depiction

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

36. FHWA Office of Freight Management Applying FTAT Motor 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. FHWA Office of Freight Management Questions/Discussion

38. FHWA Office of Freight Management User Guide

39. FHWA Office of Freight Management 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