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The Cost/Value of Perfect Information. A Technology Case for the Rail Industry. Shipper ’ s Issues. Need more efficient use of shipper/carrier infrastructure & assets Inventory/working capital costs Incur unnecessarily high costs for use of cars (private car owners)

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The cost value of perfect information

The Cost/Value of Perfect Information

A Technology Case for the Rail Industry

Shipper s issues
Shipper’s Issues

  • Need more efficient use of shipper/carrier infrastructure & assets

    • Inventory/working capital costs

    • Incur unnecessarily high costs for use of cars (private car owners)

    • Staff to make sure supply chain continues to move effectively

  • Back office inefficiencies

    • Lack of ability to resolve accounts payable transactions

    • Inability to accrue & book expenses in proper period

    • Information delivery from railroads (i.e. paper)

Shipper s goals
Shipper’s Goals

Clean, easily accessible data which allows:

  • Supply chain improvements

  • Efficient electronic transactions

  • Closer management of assets

  • Quicker resolution & payment of obligations

  • Data standards

    …where both parties benefit

So what’s the problem?

Rail technology advantages
Rail Technology Advantages

  • E-billing

  • Electronic scheduling

  • Rail Car Tracking (CLM)

Rail technology disadvantages
Rail Technology Disadvantages

  • E-billing

    • Inaccurate billings

    • Excess charges in conflict with the CLM data (below)

  • Electronic scheduling

    • Inconsistent availability

    • Inconsistent car flow (both RR-owned and shipper-owned)

  • Rail Car Tracking (CLM)

    • Inaccurate car locator messages

    • Incomplete tracking data

    • High cost/value multiple

Age of information sharing
Age of Information Sharing

  • Technology has allowed the railroads to reap mostly one-sided benefits

  • While offering some tracking in the public eye (see the websites of the Big 4) the back office is inconsistent or non-existent

  • Partnership between shipper and shipping mode can work to the benefit of both—technology can make it happen

  • Shippers need a common solution across carriers that fosters true logistics visibility

Car locations the info key
Car Locations—The Info Key

  • Tracking technology has improved

    • RFID

    • Advanced Bar Code

    • Satellite/GPS

  • Little of this technology is implemented outside of the railroad tracking its own assets

Demand better data
Demand Better Data

  • Shippers should be able to demand better information on car location

  • If shippers don’t demand it now, the Department of Homeland Security may demand it later at a much higher price

  • Accurate tracking is the key to better billing, better asset tracking, and better scheduling

Improving car location tracking
Improving Car Location Tracking

  • Satellite

    • Highest cost, most accurate, most detailed, on-demand

  • RFID

    • Middle-tier cost, very accurate, relies on infrastructure improvements and standards, fixed demand, active or passive

  • Bar Code

    • Lower-tier cost, fairly accurate, relies on infrastructure improvements and standards, fixed demand, passive

Better clm data improves
Better CLM Data Improves

  • E-Billing

    • More accurate locations and times for freight bills & location-based accessorial charges

    • More timely information for accurate accrual accounting

  • Electronic Scheduling

    • More accurate ETA information for scheduling car delivery/pickup

    • Improved track utilization through location analysis trends

Rumor mill
Rumor Mill

  • Is CLM Data really that bad? If so, why?

    • Only about 30% of CLM data comes from the AEI tags—the rest comes from train constructs

    • Inconsistent location identification—abbreviations, old names, misspellings

    • Time delay—hours to days as data weaves its way to/from RAILINC

The clm technologies
The CLM Technologies

  • Satellite/GPS

    • PRO: Cost has come down in the past 5 –7 years as increased satellite sharing and utilization has become important

    • PRO: Partnerships with ground-based systems for communication (e.g. cell towers)

    • CON: Still not cost-effective for all assets—even the railroads typically use it only for high value assets

The clm technologies1
The CLM Technologies

  • RFID

    • PRO: Cost has come down drastically over the past 3 years—thanks to Wal-Mart and the DoD

    • PRO: Increased utilization on toll roads and other modes of freight transports has worked out most of the “bugs”

    • PRO/CON: Requires better standards to gain “economies of scale”

    • CON: Current value of data from AEI tags affected significantly by maintenance of readers

The clm technologies2
The CLM Technologies

  • Advanced Barcode

    • PRO: Since the last attempt (ACI in the 60’s and 70’s) technology has improved

    • PRO: Cost of implementation, repair, and redundancy has come down significantly over last 10 years

    • CON: Dirt and Frost/Ice on both readers and code plates

    • CON: Passive only system (ID only)

Debunking the myths
Debunking the Myths

  • The Railroad Industry spent $250 Million in the early 90s for AEI and it hasn’t helped

    • Did they get the ROI expected? Ask BNSF, whose internal use has contributed directly to the bottom line and drives their R&D budget

  • Sharing information dilutes the competitive advantage of technology

    • By sharing the information with customers, they get better tracking

    • By sharing the information with competitors, better track utilization and more accurate cross-system billings occur

Everybody wins
Everybody Wins

  • Who is everybody?

    • Railroads

      • Get their money quicker

      • Make customers (shippers) happy

    • Shippers

      • Get better data on assets

      • Get better data on liabilities

      • Get better data on product location

    • Other stakeholders (DOT, DHS, etc.)

      • Get info that has not been available previously

      • Better information for negotiations (ROW, Security, etc.)