FHWA Office of Freight Management Freight Technology Assessment Tool
FHWA Office of Freight Management
Freight Technology Assessment ToolFreight Technology Assessment Tool
FHWA Office of Freight Management
AgendaAgenda
• Background • Freight Technology Assessment Tool
• Methodology• Processes• Performance Measures• Technology Benefits & Costs• Output
• Applying FTAT – Motor Carrier Efficiency Study
• Questions
FHWA Office of Freight Management
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.
FHWA Office of Freight Management
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.
FHWA Office of Freight Management
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.
FHWA Office of Freight Management
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
FHWA Office of Freight Management
Freight Technology Assessment Tool
FTAT
FHWA Office of Freight Management
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
FHWA Office of Freight Management
FTAT MethodologyFTAT MethodologyFTAT MethodologyFTAT Methodology
FHWA Office of Freight Management
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
FHWA Office of Freight Management
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
FHWA Office of Freight Management
Level 1
Level 2
Level 3
FTAT Processes – Supply Chain
FHWA Office of Freight Management
FTAT ProcessesFTAT Processes
FHWA Office of Freight Management
FTAT ProcessesFTAT Processes
FHWA Office of Freight Management
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
FHWA Office of Freight Management
FTAT Cost DriversFTAT Cost Drivers
FHWA Office of Freight Management
FTAT Performance MeasuresFTAT Performance Measures
• Seven performance attributes• Reliability• Responsiveness• Flexibility• Cost• Asset Management• Safety• Security
FHWA Office of Freight Management
FTAT Performance MeasuresFTAT 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
FHWA Office of Freight Management
FTAT Performance MeasuresFTAT Performance Measures
FHWA Office of Freight Management
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.
FHWA Office of Freight Management
FTAT TechnologiesFTAT Technologies
FHWA Office of Freight Management
FTAT TechnologiesFTAT Technologies
FHWA Office of Freight Management
FTAT TechnologiesFTAT Technologies
FHWA Office of Freight Management
FTAT TechnologiesFTAT Technologies
FHWA Office of Freight Management
FTAT TechnologiesFTAT Technologies
FHWA Office of Freight Management
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.).
FHWA Office of Freight Management
FTAT AnalysisFTAT Analysis
FHWA Office of Freight Management
FTAT OutputFTAT Output
FHWA Office of Freight Management
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
FHWA Office of Freight Management
Applying FTATMotor Carrier Efficiency Study
Applying FTATMotor Carrier Efficiency Study
FHWA Office of Freight Management
Applying FTATMotor Carrier Efficiency Study
Applying FTATMotor Carrier Efficiency Study
Level 2 Process DepictionLevel 2 Process Depiction
FHWA Office of Freight Management
Applying FTATMotor Carrier Efficiency Study
Applying FTATMotor Carrier Efficiency Study
Level 2 Allocation of Level 2 Allocation of InefficienciesInefficiencies
FHWA Office of Freight Management
Applying FTAT – Motor Carrier Efficiency Study
Applying FTAT – Motor Carrier Efficiency Study
Specific Inefficiency Specific Inefficiency EffectsEffects
FHWA Office of Freight Management
Applying FTATMotor Carrier Efficiency Study
Applying FTATMotor Carrier Efficiency Study
Level 3 Subprocess Level 3 Subprocess DepictionDepiction
FHWA Office of Freight Management
Applying FTATMotor Carrier Efficiency Study
Applying FTATMotor Carrier Efficiency Study
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
FHWA Office of Freight Management
Applying FTATMotor Carrier Efficiency Study
Applying FTATMotor 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
FHWA Office of Freight Management
Questions/DiscussionQuestions/Discussion
FHWA Office of Freight Management
User GuideUser Guide
FHWA Office of Freight Management
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