C2.3 overcoming the challenges of multi modal services k. sherman

www.i-cargo.eu

Intelligent Cargo in Efficient and SustainableGlobal Logistics Operations

Overcoming the challenges of using

multi-modal services ---

iCargo Training Series-Zaragoza-23.10.2013

http://www.i-cargo.eu/

iCargo Training Series: Overcoming the challenges of using multi-modal services www.i-cargo.eu

Ken ShermanVice President - IntelliTrans

Overcoming the Challenges of Using Multi-Modal Services

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iCargo Training Seminar - ECITL 23 October, 2013 - Zaragoza



1. Introduction2. What are Multi-Modal Services?3. What are the Benefits of Multi-Modal Services?4. What are the Challenges of Using Multi-Modal

Services?5. Overcoming the Challenges6. Conclusion

Table of Contents

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iCargo is a large-scale integrating project co-funded by the European Commission within the FP7 Information and Communication Technologies Work Programme. iCargo involves representatives of the main stakeholders in the areas of research and technological development, logistics companies, shippers and public authorities. The 29 partners coming from 13 countries are coordinated by the Research and Innovation Hub of ATOS Spain.

iCargo will design and implement a decentralized ICT infrastructure allowing real world objects, new planning services including CO2 calculation capabilities and existing systems to co-exist and efficiently co-operate at an affordable cost for logistics stakeholders.

The iCargo project aims at supporting new logistics services that: ₋ Synchronize vehicle movements and logistics operations across various modes and actors

to lower CO2 emissions₋ Adapt to changing conditions through dynamic planning methods involving intelligent

cargo, vehicle and infrastructure systems and ₋ Combine services, resources and information from different stakeholders, taking part in

an open freight management ecosystem.




What Are Multi-Modal Services?

• The use of multiple modes to move an order from its original shipper / origin to its ultimate consignee / destination.

• Provision of the physical distribution, transportation, and warehousing activities throughout that move.

• Support activities required:– Selection.– Booking.– Tracking.– Payment.– Analysis.

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What Are Multi-Modal Services? continued

• In general, customers want:– Suppliers that make it easy to do business.– High degree of quality…no product damage.– High service reliability…on-time delivery.– Lowest possible cost.

• Customer transportation departments:– Often have performance reviews weighted towards risk mitigation

and not rewards for excellence.– Often have challenges attracting and retaining personnel.– Often are measured on cost year-over-year metrics.

• This combination leads to many shipments moving over the road vs. lower cost, more environmentally friendly modes.



What Are The Benefits of Multi-Modal Services?

• Lower transportation cost.– Lower line-haul per tonne.– Lower bunker (fuel) charges.– Avoiding road taxes.

• Lower carbon emissions.– Reduced CO2 / tonne by a factor of 2X to 4X.

• Reduced traffic congestion.– Indirect contribution to saving €B in overall European fuel spend

and lost productivity.

• Increased revenue for involved carriers.– Awarded business that otherwise would have gone to OTR carriers.



Challenges of Using Multi-Modal Services

• The factors that are most important to many shippers are unfortunately risks today of using multi-modal transport:– Ease of doing business:

• Complexity:– Multiple bookings by several suppliers.– Option Evaluation & Booking.– Tracking.– Paying.

– Service reliability & predictability:• Longer transit times.• More variable transit times.• Most opportunities for things to go wrong.

– Risk of damage• Increased handling.

• Use of truck is driven by a combination of these risk factors and the how typical transportation departments are managed.



Overcoming Complexity Challenges

• Booking a multi-modal transport needs to be as easy as booking a truck.

• Truck can typically be done in a single step.• Multi-modal transport could require many steps:– Origin to Port.– Port to Port.– Port to RDC.– RDC to Destination.

• Not only are there multiple reservations to be made, the timing must be laid out for each.



Simplification of Booking

• Evaluate possible transport options.

• Filter by desired criteria.

• Sort results by CO2, cost, or transit time.

• View “leg” details.• Quick booking.

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Simplification of Booking - Continued

• Direct access from route evaluation screen.

• Pre-population of information.

• Easy entry of additional information.

• Use templates for repetitive bookings.

• Dynamically update future legs of trip.

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Simplification of Tracking

• Present exceptions proactively.

• Configurable definitions and results.

• Automated delivery.

• Easily distributed.



Simplification of Tracking - Continued

• Search by any parameter:– Shipment.– Status.– Calculated values.

• Configurable by customer.

• Look-ups for valid parameter values.

• Current leg and prior legs.

• Templates for repetitive use.




• Users may not know multi-modal routes.

• Maps can provide faster insight to current status than text-based results.

• Ability to switch to text-based results on the fly for details.

• Color-code display for alert conditions.

• Plot current location and route.




• Proof of Delivery (POD) is a critical message.

• Needs to be obtained 100% of the time.– Performance reporting.– Payment triggering.

• Many carriers can provide via EDI.

• However, many carriers have challenges reporting.

• iCargo ecosystem enables reporting.

• ePOD application available for carriers to ease data provision.



Simplification of Payment - Pricing

• “List” price publication.

• “Contract” price availability.

• Flexible rate types.• All-in or by carrier /

leg rates.• Effective periods.• Multiple bunker /

fuel surcharges.• Transparency is key.



Simplification of Payment - Auditing

• Electronic invoice receipt from carriers.

• Manual entry of invoices.

• Matching logic – shipments to invoices.

• Tolerance management.

• Resolution update.• Trigger actual

payment.



Longer Transit Times

• In general, the multi-modal transport will have a longer transit time.

• In many markets, this can be managed with proper distribution planning.– MTI / MTO product planning.– Inventory planning.– Forward deployment.

• Even markets with challenging order patterns can have some customers / lanes that can handle longer transit times.

• Another, often larger concern, is the variability of transit time, not the mean.



Transit Time Variation

• Safety stock and re-order point calculations need to take into account at least the following:– Variability in transit time vs. planned.– Variability in demand vs. planned.– Losses throughout the distribution chain.– Confidence level.

• The combination of a longer transit time and higher variability has a compounded effect on safety stock level for a given demand level.

• Very few organizations calculate safety stocks solely based upon statistical principles.

• Fear of the unknown leads to safety stocks being set with a confidence level of greater than 6Sigma.



Overcoming Transit Time Concerns

• Acknowledge the challenge.– Dismissive approaches do not get the business.

• Provide accurate and complete data.– Hiding results leads to fear factor, distorting calculations and results

in default to truck.

• Properly handle data exclusions.– Some trips should be excluded from analytics, but handle

appropriately.

• Support required calculations.– Become involved in the solution.

• Drive Root Cause Corrective Action (RCCA) or equivalent for continuous improvement.



Overcoming Transit Time Concerns - Continued

• Data completion services.– Data must be accurate, complete, and timely.– Make sure every trip has required data elements before considering complete.– Enables proper alerting & reporting.– Enables accurate analytics.

• Exception management services.– Delayed shipments.– Late shipments.– Out-of-route shipments.– Mode-specific issues.

• Systemic issue improvement.– Common-cause analytics.– Continuous improvement initiatives.



Defect Opportunity Management

• Addition of each leg adds 4 opportunities for things to go wrong (delays, losses, damage):– During storage prior to next leg.– During pick-up of that leg.– During transit.– During delivery for that leg.

• Clear handling and storage instructions must be communicated at least three times:– During service establishment.– At dispatch of shipment from origin.– With packing slip/BOL for that shipment.

• Automation of instruction delivery can reduce burden of 2nd and 3rd communications.



LSP Engagement

• Logistics Service Providers (LSPs), or carriers, may be reluctant to participate in the network:– Price and service discovery.– Intermediation.– Disintermediation.– eBusiness ownership.

• Over-the-road hauliers may view this as cannibalizing their business.

• Yet another system / service / channel to market to support.



Driving LSP Engagement

• iCargo ecosystem simplifies the ability to publish:– Routes.– Rates.– Booking confirmation.– Status updates.

• The iCargo ecosystem can support traditional and multi-modal transport plans.

• Engaging in the ecosystem can result in a significant net reduction in costs to support eBusiness…hub effect.



Driving LSP Engagement - Continued

• Need to support multiple methods of publication.– EDI.– Uploads.– Manual Updates.

• LSP can update / create:– Schedules.– Rates.– Confirmations.– Status updates.

• Capacity constraints / outages can be communicated.

• Enable mass updates for ease-of-use.

The enclosed is IntelliTrans & TransCore proprietary & confidential information – do not distribute.25



iCargo Initiatives Supported

• Carbon footprint reduction:– Up-front calculation before mode selection.– Embedded or called from iCargo ecosystem.

• This is integrated with “best route” selection, allowing a shipper to easily balance cost, transit time, and environmental impact.– Trip plans can be loaded in the system and / or called from the iCargo

ecosystem.

• By facilitating booking & tracking across all modes and LSPs, traditional barriers to utilization of lower cost / lower carbon footprint modes are reduced.– Bookings can be communicated via traditional techniques or through

the iCargo ecosystem.

The enclosed is IntelliTrans & TransCore proprietary & confidential information – do not distribute.26



Conclusion

• There are numerous obstacles to driving growth of multi-modal transport today:– Complex shipment execution process.– Long and variable transit times with low visibility.– Complicated freight payment process.– Party engagement.

• The iCargo ecosystem and its partners provide the right combination of people, process, and technology to enable successful utilization of multi-modal transport.

• Utilization of multi-modal transport will have many benefits, including but not limited to:– Reduced carbon footprint.– Reduced per-tonne transportation cost.– Reduced congestion.

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Ken ShermanVice President - IntelliTrans

Thank You

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iCargo Training Seminar - ECITL 23 October, 2013 - Zaragoza


www.i-cargo.eu


Credits:

Presented by: Ken ShermanVicepresident, [email protected]

Material: Ken Sherman

