Benefit

Potential cost savings of up to $13,500 annually were realized through implementation of an Electronic Freight Management System for various drayage services.

FHWA researchers assessed electronic freight management systems to optimize drayage operations for intermodal carriers in the United States


June 2012
Nationwide


Summary Information

This document examined the ability of Electronic Freight Management (EFM) to improve information transfer between EFM partners and systems. As a follow up to the Columbus EFM evaluation in 2007, several additional pilot studies were conducted across the United States to assess the cost-effectiveness of EFM in terms of business process cost savings. Each EFM system was implemented in such a way to facilitate continued use of the technology once the pilot concluded. The overall goal was to demonstrate a positive return on investment (ROI) for the supply chain "anchor" companies responsible for implementing EFM within their supply chain infrastructure. Federal contractors and integrators provided a common framework to assist supply chain partners to facilitate development of custom EFM packages. Case studies were conducted to evaluate the impacts of EFM on a variety of supply chain partners. The online EFM system www.efm-saic.com allows all partners throughout the supply chain to access real-time information throughout the freight transportation cycle. Example findings are detailed below.

METHODOLOGY
The EFM implementation case studies were intended to examine the degree to which the EFM applications can improve the operational efficiency within intermodal supply chains. Each case study documented the cost-effectiveness, long-term viability, and sustainability of the EFM package, as it was modified and implemented within the supply chain.

Each case study documented the environment into which the EFM package was being deployed, captured the implementation parameters that were put into place to successfully operate the package, and assessed the benefits in terms of business process cost savings to assess the return on investment to the participating organizations. The tables below show some of the realized and potential cost savings that some of the study participants (DEMDACO, Express Systems Intermodal, Interdom-Agmark, and WorldWide ISCS) found with respect to their use of the EFM package.

FINDINGS

Table 1. Summary of Potential Cost Savings DEMDACO
Business Process As-Is Cost To-Be Costs Potential Cost Savings
PO Generation Total annual process cost = $3,750 Total annual process cost = $3,750 None = the use of the EFM package simplified the process for checking status by including PO data within the message. The process for creating and submitting a PO were unchanged, therefore no cost savings.
PO Shipment Total annual process cost = $57,200 Total annual process cost = $51,200 Annual savings of 10% ($6,000)
(Future)
Status Total annual process cost = $234 Total annual process cost = $26 Annual savings of 89% ($208)
(Realized)
Outbound Order Shipment: Warehouse Management Total annual process cost = $6,000 Total annual process cost = $2,100 Annual savings of 65% ($3,900)
(Future)
Outbound Order Shipment: Customer ServiceTotal annual process cost = $11,084/yearTotal annual process cost = $9,976Annual savings of 10% ($1,100)
(Realized)

Table 2. Summary of Potential Cost Savings Express Systems Intermodal (ESI)
Business Process As-Is Cost To-Be Costs Potential Cost Savings
Container Availability ESI Total Annual Cost = $0 ESI Total Annual Cost = $0 ESI = $0
Container Status ESI Total Annual Cost = $4,212 ESI Total Annual Cost = $4,000 ESI = $212 (5%)
Dray Invoice ESI Total Annual Cost = $3,692 ESI Total Annual Cost = $74 ESI = $3,618 (98%)

Table 3. Summary of Potential Cost Savings Interdom-Agmark

Business Process As-Is Cost To-Be Costs Potential Cost Savings
Order Interdom Annual Cost = $3,600
Agmark Annual Cost = $600
Interdom Annual Cost = $360
Agmark Annual Cost = $600
Interdom = $3,240 (90%)
Agmark = $0
Status Interdom Annual Cost = $3,120
Agmark Annual Cost = $500
Interdom Annual Cost = $1,560
Agmark Annual Cost = $500
Interdom = $1,560 (50%)
Agmark = $0

Table 4. Summary of Potential Cost Savings Worldwide ISCS
Business Process As-Is Cost To-Be Costs Potential Cost Savings
Transportation Status -
WorldWide ISCS
2010: $6,500
2011 (6 months): $3,250
Pilot (3 months): $1,625
2010: $2,167
2011 (6 months): $1,083
Pilot (3 months): $542
2010: $4333 (66.7%)
2011 (6 months): $2167 (66.7%)
Pilot (3 months): $1083 (66.7%)
Transportation Status -
Griffin Pipe Products Co. (savings of a customer of WorldWide due to the EFM project)
2010: $15,281
2011 (6 months): $5,962
Pilot (3 months): $2,981
2010: $1,698
2011 (6 months): $662
Pilot (3 months): $13
2010: $13,583 (88.9%)
2011 (6 months): $5,300 (88.9%)
Pilot (3 months): $2968 (99.5%)

This report, dated June 2012, conveys the value that publically accessible electronic freight management systems can add to the optimization of intermodal freight operations. These findings along with the benefits provide a valuable resource to those considering the implementation of advanced technology for the optimization of intermodal freight logistics.

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Source

Electronic Freight Management Case Studies: A Summary of Results

Author: Newton, Diane (SAIC); Jim Cassady (SAIC); Al Hovde (SAIC); Ron Schaefer (SAIC); Al Veile (SAIC); and Bob Fredman (Battelle)

Published By: U.S. DOT Federal Highway Administration

Source Date: June 2012

Other Reference Number: FHWA-JPO-12-069

URL: https://rosap.ntl.bts.gov/view/dot/4036

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Goal Areas

Efficiency

Typical Deployment Locations

Statewide

Keywords

drayage, intermodal freight, logistics, optimization, electronic freight management

Benefit ID: 2014-00929