Benefit

A case study of one Electronic Freight Management system shows a 5 percent savings in container status tracking and 98 percent savings in dray invoicing.

FHWA researchers assessed electronic freight management systems to improve the productivity and efficiency of intermodal carriers in the United States.


June 2012
Statewide; Illinois; United States


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

Analyses of the EFM system were conducted as part of an initiative to see how the system improves data and message transmissions between supply chain partners. The EFM implementation case studies contained in the EFM Case Studies document examine the degree to which the EFM applications can improve the operational efficiency within intermodal supply chains. Each case study documents the cost-effectiveness, long-term viability, and sustainability of the EFM package, as it was modified and implemented within the supply chain. The case studies also detail the environment into which the EFM package was being deployed, capturing the implementation parameters that were put in place to operate the package successfully, and assess implementation benefits in terms of business process cost savings and return on investment to the participating organizations.

In the execution of the EFM case study, U.S. DOT researchers sought to demonstrate the application of the EFM package on a mobile device in addition to automating manual activities typically completed from a desktop. The mobile phone application offered Express Systems Intermodal (ESI) customers direct access to container tracking via their smart phones. This would have productivity advantages over the existing access methods by reducing the amount of time necessary to access the desired data, and increasing the availability of the information. With respect to the automation of the invoicing process, the research team sought to automate a previously manual exchange between ESI and one of their dray carriers.

Prior to creating the message schemas and implementing the web services which exchanged the supply chain information among partners, researchers and ESI first documented the supply chain process used by ESI to determine where the EFM package could add value:

1) First, they documented the ESI technical environment and defined the business problems that EFM implementation could address or provide opportunity for.
2) They then mapped and documented ESI’s technical environment (all information technologies and communications that support order placement, fulfillment, and delivery, and the processes by which these communications are completed).
3) Once the supply chain process was laid out, they identified which communication methods were the best candidates for replacement or supplementation by the EFM package.

One unique goal of the ESI EFM case study was to demonstrate the use of EFM web services to communicate supply chain data to a mobile device; this goal drove the decision to use the package to provide container availability and status to a mobile device. The decision to automate the invoicing process too was driven strictly by the fact that it was the most manual process between ESI and their dray provider and therefore provided the opportunity for improved efficiencies as a result of the EFM package implementation.

FINDINGS

The realized quantitative savings came to ESI as a result of streamlining the process by which they view, match and approve invoices from their dray carrier. The benefits to the container status process are more theoretical in nature, but could be increased if more of ESI customers were interested in using the mobile phone application.
  • With respect to container availability, ESI did not anticipate any benefits within their organization, as the as-is cost to book equipment online was already negligible.
  • With respect to container status, ESI did estimate an approximate reduction of 5 percent in the number of inquiries they would have to respond to via telephone or email as a result of providing this status via a mobile phone application.
  • The deployment of the EFM package has significantly reduced the time it takes ESI to review and approve dray invoices. Essentially, the use of the EFM package was able to demonstrate an auto-match of the invoice numbers from the weekly spreadsheet to the data within ESI’s Logistics Order Tracking System (LOTS) system, completely eliminating the 2 hours of time previously spent doing this manually each week, and significantly reducing the 1 hour of time spent to coordinate between accounts payable and operational staff at ESI to resolve questions on invoices with missing or incorrect data. With the EFM package, these questions are directly provided to operational staff, who can provide the missing information to accounts payable before they realize they even need it.

Table 1 summarizes the savings to ESI as a result of implementing the EFM package.

Table 1. Potential Cost Savings
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%)

Additional Qualitative Benefits:
  • Eliminated re-keying and manual matching of data that currently exists in ESI’s operational system for invoices.
  • Automatic matching of dray invoice data eliminates the need for phone calls and emails between Accounts Payable (A/P) staff and operational staff, who are located in different offices in different time zones. This can cause an interruption in the overall processing of invoices while waiting for a response to an email or voicemail with questions regarding an invoice.
    • The use of the EFM package allows invoices with missing or incorrect data to be transferred directly to operational staff for review and resolution. This allows operational staff to push the data required to resolve problematic invoices as opposed to waiting for a request from A/P.
  • Both the container availability and container status Android application offer a competitive advantage to securing new customers, as it offers an additional way to interact and complete transactions ‘on-the-fly’ and at all hours.
  • Although the savings to ESI with respect to the container status application were small, eliminating some manual responses to status inquiries does free up some operational labor within ESI, which can be re-directed to other types of customer inquiries thereby improving the overall efficiency of these staff.
  • For customers, the container status application may not save time or dollars, per se, but it would significantly improve the ease of use with regards to obtaining status. While status is offered on ESI’s website, requesting and checking this from a mobile device requires the navigation of several web screens which can be cumbersome when performed on a phone versus a computer. By comparison, mobile phone applications bring back data faster and presents in a size and format more appropriate when viewed on a smaller screen. Also, the availability of status from a phone application may allow them to track more shipments (or the same number of shipments more frequently) given a user-friendly application would provide quick and easy access to status information. Therefore, ESI customers could be more proactive in tracking shipments.
This report, dated June 2012, includes many more details of the case studies and 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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Typical Deployment Locations

Statewide

Keywords

dray, operations, freight, intermodal, implementation, logistics

Benefit ID: 2014-00918