michael wolfe 1.212, introduction to its, lecture 11 massachusetts institute of technology march 17,...

Michael Wolfe

1.212, Introduction to ITS, Lecture 11

Massachusetts Institute of Technology

March 17, 2003

CVO & Intermodal Freight:CVO & Intermodal Freight:

ITS Benefits for BusinessITS Benefits for Business

Courtesy of Michael Wolfe. Used with permission.

Making Sense at the Intersection ofMaking Sense at the Intersection of

Supply Chain Systems

Freight Operations

Tracking & Monitoring Technologies

Business Economics

Security

Objectives and OutlineObjectives and Outline

Put CVO in context Major challenge of Intransit Visibility Key technologies Business benefits for freight operations Intermodal freight security Technology trend that will change best practices Looking ahead to Dynamic Flow Control

Putting CVO in ContextPutting CVO in Context

The Big Picture on CVO & FreightThe Big Picture on CVO & Freight

CVO Technologies

Supply Chain Integration

Intermodal Freight

Efficiency & Effectiveness

Enhance

Enables

Evolution of CVOEvolution of CVO

Traditional ITSA approach– Emphasis on public-private interfaces

» Electronic credentialing» Regional automated oversize/overweight permitting

Transitional IFTWG approach– Emphasis on intermodal freight

» Enhance fleet operations» Improve customer service

Emerging CWG approach– Emphasis on security balanced with efficiency

Supply Chain IntegrationSupply Chain Integration

Major trend knits together shipper, carrier, and receiver information systems & business processes

– Competition & financial incentives drive it– New information & communication technologies

make it feasible

Inefficiency anywhere in the supply chain affects everyone in the supply chain

Try replacing “inefficiency” with “vulnerability”

The Really Big PictureThe Really Big Picture

CVO Technologies

Supply Chain

Integration

Intermodal Freight

Efficiency & Effectiveness

Enhance

Enables

Deregulation set the stage to exploit IT

CVO Also Feeds Intransit VisibilityCVO Also Feeds Intransit Visibility

CVO Technologies

Supply Chain Integration

Intermodal Freight

Efficiency & Effectiveness

Enhance

Enables

ITV

Quality data on status of goods & equipment in trans. pipeline

•Accuracy

•Timeliness

•Completeness

•Security

The ITV ChallengeThe ITV Challenge

ITV is a Long-term ChallengeITV is a Long-term Challenge

Laments and complaints– Operators: “Where’s my equipment?”– Customers: “Where’s my stuff?”

Nested freight relationships hinder data quality– Every shipment is a chain of transactions

Nested Freight RelationshipsConveyance

Container

Pallet

Multipack

Part

Every shipment is a chain of nested

transactions that should be transparent

All rights reserved. May be reproduced with credit to the North River Consulting Group.

(Courtesy of Michael Wolfe.)

Modern Stack Train LoaderModern Stack Train Loader

(Courtesy of Michael Wolfe.)

Clifford MaerskClifford Maersk6600 TEU, 24.5 Knots, 19996600 TEU, 24.5 Knots, 1999

(Courtesy of Michael Wolfe.)

Loading Chassis for Drayage and LinehaulLoading Chassis for Drayage and Linehaul

(Courtesy of Michael Wolfe.)

The Dromedary DraymanThe Dromedary Drayman

(Courtesy of Michael Wolfe.)

Focus on Automatic Identification Focus on Automatic Identification Technologies (AIT)Technologies (AIT)

CVO-Related TechnologiesCVO-Related Technologies

AIT– Source data automation

Data exchange– EDI and Internet

Data integration

Automated Identification TechnologiesAutomated Identification Technologies

– Bar code» Linear and 2D

– Contact technologies» E.g., Smart cards, mag stripes, laser optical

– Non-contact technologies» E.g., Radio frequency, digital video

The Macro Trend in Freight ID is The Macro Trend in Freight ID is Towards Automatic SurveillanceTowards Automatic Surveillance

RFID tag readers, 1995

Location tracking, 1988

Two-way digital comm., 1988

Cell phones, >1985

Pay phones, ~1930’s

Telegraphs, >1844

Auto ID TechnologiesConveyance•Bar code & 2D labels•RF tags, DSRC•GPS capability

Container•Bar code & 2D labels•Optical cards, tags, labels•RF tags

Pallet •Bar code & 2D labels •Optical cards, tags •RF tags

Multipack •Bar code, 2D labels •Optical cards, tags •Embedded RF tags

Part •Bar code, 2D

label •Inscribed part # •Embedded RF tags(Courtesy of Michael Wolfe.)

“License plate” identifiers on the freight linked in multiple data bases– Customer data bases hold contents information– Carriers track equipment location– Transaction confirmations passed via EDI or

internet

Best Practices in Freight ID TodayBest Practices in Freight ID Today

Specifics vary by market niche – Barcodes-and-databases

» Retail and resupply

– “Dumb” RFID tags and smart networks» Railroads, few container operators

– Satellite transponders and smart networks» Long haul truckers

Best Practices by NicheBest Practices by Niche

Retail and resupply

Railroads, few container operators

Long-haul truckers

Approaches to Location TrackingApproaches to Location Tracking

Choke point or signpost reports– Fixed readers– Short range communications– Tag must pass close to a reader

Mobile reporting– Long-range communications– Location identification– Can include 2 way digital communications

Tagging vs. TrackingConveyance•Bar code & 2D labels•RF tags, DSRC•GPS capability

Container•Bar code & 2D labels•Optical cards, tags, labels•RF tags

Pallet •Bar code & 2D labels •Optical cards, tags •RF tags

Multipack •Bar code, 2D labels •Optical cards, tags •Embedded RF tags

Part •Bar code, 2D

label •Inscribed part # •Embedded RF tags(Courtesy of Michael Wolfe.)

Benefits of Real-Time Location Benefits of Real-Time Location Tracking and Status ReportingTracking and Status Reporting

Approaches to Location TrackingApproaches to Location Tracking

Choke point or signpost reports– Fixed readers– Short range communications– Tag must pass close to a reader

Mobile reporting– Long-range communications– Location identification– Can include 2 way digital communications

Uses of Real -Time Location TrackingUses of Real -Time Location Tracking

Role Play: – You’re the chief planner in a major

transportation company– The CEO has to give a speech about real-time

location tracking Your job is to outline the key benefits

– Notes

Value of Real -Time Location TrackingValue of Real -Time Location Tracking

1. Efficiency and productivity

2. Service quality

3. Shipment and service integrity

1. Efficiency and Productivity1. Efficiency and Productivity

Reduce errors, wasted effort, and re-work– Save process and cycle time– Save labor hours

Optimize assignment of equipment and people– Improve quality of life for operators

Optimize across functional areas– Operations, maintenance, labor relations

Reduce slack capacity and inventory

2. Service Quality2. Service Quality

Improve reliability– Better schedule adherence

Increase operational flexibility– Advance warning of disruptions – More ability to respond to priority changes– Ability to divert shipments en route

Improve user and customer confidence

3. Shipment and Service Integrity3. Shipment and Service Integrity

Better cargo security Less theft of services Mitigate some losses in progress Enhance safety Reduce insurance premiums

More Excerpts from the More Excerpts from the AIT Business Benefits ModelAIT Business Benefits Model

AIT Capabilities, Benefits, and UsersAIT Capabilities, Benefits, and Users

AIT capabilities, properly implemented, yield business benefits

Benefit matrices vary among classes of users– What does the benefit matrix look

like for major sets of AIT users?Types of Users

Capabilities

Benefits

– What specific capabilities drive the realization of benefits?

AIT Capabilities, Benefits, and UsersAIT Capabilities, Benefits, and Users

The North River AIT

Business Benefit Model™

includes all three dimensions

Types of Users

Capabilities

Benefits

Dimension 1:Dimension 1:

Five Capabilities Produce BenefitsFive Capabilities Produce Benefits

1. Read an RFID tag--or other device– recording an implicit transaction

2. Carry detailed data on a read/write tag

3. Record sensor input data on the r/w tag– such as temperature, load/empty,door open

4. Mobile location determination

5. Long range communication

Dimension 2:Dimension 2:

Three Types of Business BenefitsThree Types of Business Benefits

1. Efficiency and productivity

2. Service quality

3. Shipment and service integrity

The North River AIT Business Benefit Matrix The North River AIT Business Benefit Matrix ™™

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

AIT Benefits Vary by User AIT Benefits Vary by User

AIT benefits are not uniform across types of industries, nor within industries

There are typical patterns within industries, especially within segments– Sophisticated vs. less sophisticated firms

Applying the Model to Different Applying the Model to Different Types of IndustryTypes of Industry

– Shippers» Manufacturers, distributors, retailers

– Transportation carriers» Container operators, air freight, railroads, truckers

– Transportation-based service providers include» Refuse haulers, cement delivery, package delivery

Dimension 3:Dimension 3:The Type or Class of UserThe Type or Class of User

TRANSPORTATION-BASED SERVICE PROVIDERS

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD

LOCATION

DATA

5. LONG RANGE

COMMS.

TRANSPORTATION CARRIERS

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD

LOCATION

DATA

5. LONG RANGE

COMMS.

SHIPPERS

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

Intermodal Freight and SecurityIntermodal Freight and Security

Three Views of Supply Chain SecurityThree Views of Supply Chain Security

Containerization magnifies security risks Security measures threaten efficiency Supply chain tools can improve security

while improving efficiency

Technology can support both goals

when well conceived and well executed!

Requirements for Supply Chain Security Requirements for Supply Chain Security

Assured integrity of conveyance loading and documentation

Significantly reduced risk of tampering in transit

Accurate, complete, and timely information about shipments

Improve Visibility and ControlImprove Visibility and Control

This is the most common recommendation to improve both security and productivity

There are major institutional and technical challenges

Visibility Discussion is ConfusingVisibility Discussion is Confusing

Visibility of what? – Visibility of items and assets

By what means?– Event-driven data and integrated systems

In what timeframes? – Timeliness keyed to needs

From what sources?– Data from shippers, carriers, and third parties

Technology Developments That Will Technology Developments That Will Change Best Business PracticesChange Best Business Practices

What Will Change the Business Model What Will Change the Business Model for Supply Chain Management?for Supply Chain Management?

Powerful, long-term trend in information technology will move us beyond ‘license plate’ barcodes-and-databases

Continuing improvement in form, function, integration, reliability, and cost of information technology components

Key Developments to WatchKey Developments to Watch

Cheaper real-time ID and tracking Auto-networking tags Multi-mode readers “Productizing” of system integration Effective hybridization

Cheaper real-time ID and tracking

CheaperCheaper Real-Time Tracking Real-Time Tracking

Better technology and growing volume produce dramatic cost improvements– GPS and other GLS– Low Earth Orbit satcom– Dual mode commo with satcom backup– Phone location technologies

Prime new applications will start with tracking untethered trailers and chassis

Cost Trend in Cost Trend in Real-time Transportation MonitoringReal-time Transportation Monitoring

-Qualcomm truck system, ~$2500

-Vantage trailer tracking, ~$700

-SkyBitz location monitor, ~$400

-E-911 cell phones, ?

These are illustrative examplesCosts are negotiable--volume is a big factorMonthly communication costs are also importantThe capabilities are very different

If Supply Chains are to be. . .If Supply Chains are to be. . .

Speedy

Nimble

Precise

Secure

...then cheaper real-time tracking and monitoring will play an increasingly important and--

eventually--ubiquitous role

Looking Ahead to Looking Ahead to Dynamic Flow ControlDynamic Flow Control

Looking AheadLooking Ahead

Exploiting multiple technologies for Dynamic Flow Control– ITS/CVO– Supply Chain Integration

ITV is necessary but not sufficient

Moving Beyond ITVMoving Beyond ITV

Carrier Mgrs Worldwide

Transport Asset Status

Inventory Mgrs

Flow Control

Processors

Worldwide Stock

PostureVisibility: -Assets -Capacity Thresholds -Performance Assess.

Moving Beyond ITV:Moving Beyond ITV:Dynamic Distribution Flow ControlDynamic Distribution Flow Control

Carrier Mgrs Worldwide

Transport Asset Status

Network Mgrs

Transport Network

Condition

Inventory Mgrs

Flow Control

Processors

Worldwide Stock

PostureVisibility: -Assets -Capacity Thresholds -Performance Assess.

Options: -Courses of Action -Feasibility Estimates

Feedback Mechanisms

Five Elements of Dynamic Flow Five Elements of Dynamic Flow ControlControl

1. Near real-time stock posture data

2. Near real-time transport asset status data

3. Near real-time transportation network condition data

4. Powerful analytic capabilities

– Threshold capability monitors

– Supply chain performance monitors

– Near-optimal alternative generators

– Course of action feasibility estimators

5. Timely ability to affect or control operation

For More InformationFor More Information

Papers by Mike Wolfe– “Trends in Freight Identification Technology”

– “Freight Transportation Security and Productivity”*

– “Technology to Enhance Freight Transportation Security and Productivity”*

www.itsa.org. – Jump to CVO and Intermodal Application pages– Links to other sites

*www.ops.fhwa.dot.gov/freight/transportation_security.htm

Thank you for your attention

Mike Wolfe

Backup Slides:Backup Slides:--Capabilities That Produce BenefitsCapabilities That Produce Benefits--Benefit Matrices by Type of UserBenefit Matrices by Type of User

Capabilities that Produce BenefitsCapabilities that Produce Benefits

1. Read an RFID tag--or other device– recording an implicit transaction

2. Carry detailed data on a read/write tag

3. Record sensor input data on the r/w tag– such as temperature, load/empty,door open

4. Mobile location determination

5. Long range communication

Confirm the Passing of a Tag: Confirm the Passing of a Tag: The Simplest ApplicationThe Simplest Application

RFID Tags & Other AIT

Readers Capture

Event Data

On Board

User Sites

Enterprise Systems

Capability #1Read a Tag

Delivers Accurate &

Timely Data!

Adding Detailed Shipment Data:Adding Detailed Shipment Data:The DoD ApplicationThe DoD Application

Active Data-Rich RFID

Readers Capture

Event Data

On Board

User Sites

Enterprise Systems

Capability #2Carry Data

Details Available When Needed

Shipment Specific Data

Collecting Data During Shipment:Collecting Data During Shipment:Adding Richness and ValueAdding Richness and Value

Active Data-Rich Tags

Sensor & Device Data

GPS Location Data

Readers Capture

Event Data

On Board

User Sites

Enterprise Systems

Capability #3Temp, Doors, More

Capability #4Record Lat/Long Data

Sensor & Device Data Capability #3Temp, Doors, More

Capturing the DataCapturing the DataThat was Collected During ShipmentThat was Collected During Shipment

Active Data-Rich Tags

GPS Location Data

Sensors & Devices

Audit Trails for Users

On Board

User SitesEvent Data

from Readers

Store on Board, Download at Destination

A Classic Analytic Tool

Long Range Communication:Long Range Communication:Access Anywhere, Any TimeAccess Anywhere, Any Time

Optional Active Data-Rich Tags

Location Data

Sensors & DevicesOn Board

Event Data from

Readers

User Sites

Wide Area Communication

Capability #5Long Range Comms.

Optional Active Data-Rich Tags

Event Data from

Readers

Long Range CommunicationsLong Range CommunicationsEnables Real-Time ResponseEnables Real-Time Response

GPS or GLS Location Data

Sensors & DevicesOn Board

Wide Area Communication

Proactive

User Sites

Event-Driven Commo & Real-Time Response

Audit Trails for Users

Analytic

Applying the Model to Different Applying the Model to Different Types of IndustryTypes of Industry

– Shippers» Manufacturers, distributors, retailers

– Transportation carriers» Container operators, air freight, railroads, truckers

– Transportation-based service providers include» Refuse haulers, cement delivery, package delivery

Dimension 3:Dimension 3:The Type or Class of UserThe Type or Class of User

TRANSPORTATION-BASED SERVICE PROVIDERS

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD

LOCATION

DATA

5. LONG RANGE

COMMS.

TRANSPORTATION CARRIERS

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD

LOCATION

DATA

5. LONG RANGE

COMMS.

SHIPPERS

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

3. ADD SENSOR

DATA

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

Only inspecializedapplications

Only inspecializedapplications

Only inspecializedapplications

3. ADD SENSOR

DATA

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

Only inspecializedapplications

Only inspecializedapplications

Only inspecializedapplications

3. ADD SENSOR

DATA

No Only inspecializedapplications

Major source ofbenefits

4. ADD MOBILE

LOCATION

DATA

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

Only inspecializedapplications

Only inspecializedapplications

Only inspecializedapplications

3. ADD SENSOR

DATA

No Only inspecializedapplications

Major source ofbenefits

4. ADD MOBILE

LOCATION

DATA

Yes, whencombined with #3to develop audit

trails for diversion,damage, spoilage

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

Only inspecializedapplications

Only inspecializedapplications

Only inspecializedapplications

3. ADD SENSOR

DATA

No Only inspecializedapplications

Major source ofbenefits

4. ADD MOBILE

LOCATION

DATA

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #3to develop audit

trails for diversion,damage, spoilage

5. LONG RANGE

COMMS.

Benefit Matrix for Typical ShippersBenefit Matrix for Typical ShippersEFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

Only inspecializedapplications

Only inspecializedapplications

Only inspecializedapplications

3. ADD SENSOR

DATA

No Only inspecializedapplications

Major source ofbenefits

4. ADD MOBILE

LOCATION

DATA

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #3to develop audit

trails for diversion,damage, spoilage

5. LONG RANGE

COMMS.High payoff in

integratedsystems

High payoff inintegratedsystems

Can enable real-time response

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Yes, in closedloop systems

Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

Not for carrier’soperations

Not for carrier’soperations

Not for carrier’soperations

3. ADD SENSOR

DATA

Yes, formechanical

sensors

Yes, from earlywarning of mech.

failures

Major source ofbenefits

4. ADD MOBILE

LOCATION

DATA

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #3to develop audit

trails for diversion,damage, spoilage

5. LONG RANGE

COMMS.High payoff in

integratedsystems

High payoff inintegratedsystems

Can enable real-time response

Benefit Matrix for Typical Transportation CarriersBenefit Matrix for Typical Transportation CarriersGray Shading Shows Differences with ShippersGray Shading Shows Differences with Shippers

Benefit Matrix for Typical Trans.-based Service ProvidersBenefit Matrix for Typical Trans.-based Service Providers Gray Shading Shows Differences with Transportation CarriersGray Shading Shows Differences with Transportation Carriers

EFFICIENCY SERVICE

QUALITY

SHIPMENT

INTEGRITY

1. READ TAG Someapplications

Modestimprovement

Modestimprovement

2. CARRY

DETAIL DATA

No No No

3. ADD SENSOR

DATA

Yes Unlikely, givenlimited vehicleservice areas

Major source ofbenefits

4. ADD MOBILE

LOCATION

DATA

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #5

and the data isfed to optimization

programs

Yes, whencombined with #3to develop audit

trails for diversion,damage, spoilage

5. LONG RANGE

COMMS.High payoff in

integratedsystems

High payoff inintegratedsystems

Can enable real-time response