Columbus Electronic Freight Management

Evaluation

Achieving Business Benefits with EFM Technologies
Notice

The U.S. Department of Transportation (USDOT) provides high‐quality

information to serve Government, industry, and the public in a manner that

promotes public understanding. Standards and policies are used to ensure and

maximize the quality, objectivity, utility, and integrity of itsinformation. USDOT

periodically reviews quality issues and adjustsits programs and processesto

ensure continuous quality improvement.
Columbus Electronic Freight Management

Evaluation  

Achieving Business Benefits with EFM Technologies

Submitted to:

Ms. Kate Hartman

United States Department of Transportation  

ITS Joint Program Office

Research and Innovative Technology Administration

Submitted by:

Science ApplicationsInternational Corporation

March 2009

   iii
   iv

TABLE OF CONTENTS

Introduction........................................................................................................................................1

The Role of the EFM Program...............................................................................................................1

The Centrality of Supply Chain Visibility...............................................................................................2

BusinessImprovement Goalsfor Supply Chain Managers.................................................................6

Industry Approachesto Supply Chain Improvement Goals................................................................6

Goals of the EFM Program....................................................................................................................8

Electronic Freight Management Technologies .................................................................................10

Visibility Technologiesin Industry ......................................................................................................10

Connectivity and Collaboration Networks...................................................................................11

Service Oriented Architecture (SOA) and Web Services..............................................................12

CEFM Deployment Test Technology..................................................................................................13

Creating and Using Actionable Supply Chain Intelligence ................................................................14

Benefits Realized by Deploying EFM Technology Improvements ....................................................17

Broad Industry Benefits ......................................................................................................................17

Productivity Improvement............................................................................................................18

Improved Service Quality..............................................................................................................19

Qualitative Benefitsin Industry..........................................................................................................21

Productivity Improvement............................................................................................................21

Improved Service Quality..............................................................................................................21

Improved Shipment Integrity .......................................................................................................22

Benefits Delivered by the EFM Program............................................................................................23

Anticipated Benefits of Kansas City Adoption of EFM ......................................................................25

Productivity Improvement............................................................................................................25

Improved Service Quality..............................................................................................................26

Improved Data Availability and Quality.......................................................................................26

Conclusions and Summary of the Business Benefits ........................................................................28

Resultsin the EFM Program ...............................................................................................................29

Conclusions..........................................................................................................................................30
Achieving Business Benefits with EFM Technologies     1

                                                      

INTRODUCTION

Freight transportation is big business: it consumed 10.1 % of US GDP and about 60% of total

logistics costs in 2007.  Financially, transportation accounted for about $848 billion of the

$1.357 trillion spent for total logistics. 1

   

Although freight traffic has dropped as a result of the worldwide recession and previous traffic

forecasts for 2020 are being scaled back, freight volume growth will still increase the stress on

the US transportation network.  This stress is likely to continue and traditional investments in

port, terminal, highway and rail infrastructure will likely continue to struggle to keep up.  

Effective innovation in information technology (IT) may be the most important tool for the

private and public sectors to respond to capacity constraints and congestion.  Both sectors have

been investigating and implementing new IT applications to help manage freight

transportation, improve supply chain management, enhance productivity and mitigate

congestion; that is the essence of applying Intelligent Transportation Systems (ITS) to freight

transportation.  

With that in mind USDOT worked closely with the freight industry through a collaborative body

called the Intermodal Freight Technology Working Group (IFTWG), operating as a committee

within the Intermodal Association of North America (IANA).  Together the USDOT and industry

helped develop the Electronic Freight Management (EFM) initiative to address data‐related

problems inherent in complex supply chains with simultaneous connectivity needed among

multiple partners.  Many‐to‐many data relationships are a key characteristic of EFM, and

hopefully will help advance the state‐of‐the‐art to replace the more costly and incomplete one‐

to‐one relationships that now exist.  EFM has already provided strong evidence that it enables

significant improvements in supply chain visibility, productivity and effectiveness through

simultaneous data sharing.    In fact, the USDOT Research and Innovative Technology

Administration (RITA) and Federal Highway Administration (FHWA) have identified EFM as a

major initiative because its success would reach beyond freight system efficiencies to help

mitigate congestion and support growing freight transportation.   

THE ROLE OF THE EFM PROGRAM

A crucial role for IT is providing status information about supply chain events – improving

supply chain visibility.  Over the last decade, USDOT and the public‐private IFTWG have done

important work related to improving visibility of freight transportation operations.  

That freight community learned that complex, intertwined global supply chains contribute two

challenges for IT in improving supply chain visibility: first, a mix of one‐to‐one, one‐to‐many and

many‐to‐many data transfer needs; and second, the need to exchange and translate

information in multiple formats, including crude forms such as email.  Uneven communications

among supply chain partners often degrades data quality—its accuracy, timeliness and

completeness.  Poor data quality increases operating costs and can disrupt shipments with

1 Council of Supply Chain Management Professionals, 19th Annual State of Logistics Report, June 18, 2008

www.cscmp.org/memberonly/state.asp Available to CSCMP membersforfree orto non‐membersfor $395.  
Achieving Business Benefits with EFM Technologies     2

delays and lost goods.  Happily, the converse is also true: improved data quality enhances

efficiency and supply chain agility in responding to fuel and other economic impacts.

Acting on these accumulated lessons, USDOT’s ITS program created the EFM initiative.  EFM

approaches freight transportation and supply chain issues from the demand‐side, enabling

benefits of supply chain visibility improvements for the shippers that are freight

transportation’s customers.   

USDOT’s EFM Program 

 Promotes and evaluates innovative e-business concepts, enabling process coordination and 

information sharing for supply chain freight partners through public-private collaboration. 

 Non-proprietary open network architectural specification using Universal Business Language 

(UBL) standards, publicly-available web services, and a Service-Oriented Architecture (SOA) to 

support business process coordination and secure real-time data exchange specific to the freight 

transportation industry (called the Freight Information Highway or FIH). 

 A successful 2007 deployment test in Columbus (CEFM), which implemented FIH components 

and 21 web services to support a Limited Brands (LB) international truck-air-truck supply chain. 

THE CENTRALITY OF SUPPLY CHAIN VISIBILITY

Importance of Industry Surveys 

Numerous industry surveys provide a wide view 

of industry’s opinion of the problem and the 

scope of current solutions. 

 Aberdeen conducts numerous surveys 

each related to supply chain visibility. Their 

surveys typically represent about 350 

respondents. 

 Capgemini and two university participants 

conduct an annual survey that had 1069 

respondents in 2008. 

 Logistics Management conducts annual 

survey of supply chain software use with 

422 responses in the 2008 survey. 

The notion of “supply chain visibility” has drawn increasing attention from all public and private

sectors as a means of improving supply chain efficiency. The scope of poor supply chain

visibility has been well documented by survey organizations such as Capgemini, Aberdeen

Group, and others over the last 5 years. Some of

the research, particularly by MIT and Stanford,

focuses on using improved supply chain visibility

to mitigate supply chain disruptions and

unanticipated events. These studies agree that

either poor data quality or poor data sharing can

delay shipments, disrupt assembly lines, and

stress inventories.

Visibility remains such a problem in large part

because in a global supply chain environment,

there are many supply chain partners that must

connect to provide timely, accurate and

complete data.  However, even one‐to‐one

exchanges fall short on data quality. In a 2007 Aberdeen survey, only 13% of firms reported

being satisfied with the efficiency of their supply chain event data collection.2

  The sheer

number of supply chain partners and the requirements for collaboration are key elements of

the problem. As we noted earlier, the two important challenges which can impede the

achievement of supply chain visibility are the mix of data transfer needs and the multiple

                                                      

2 Aberdeen Research Group, “A View from Above: Global Supply Chain Visibility in a World Gone Flat,” www.aberdeen.com, September

2007.  Thisreport was updated in September 2008.  
Achieving Business Benefits with EFM Technologies     3

format translations so often required. Another important reason visibility remains a problem is

data timeliness. Fewer than 25% of companies have daily or more frequent visibility data. In

Capgemini’s 2006 survey, almost one‐third of companies said they used email as their primary

means of data exchange with partners.3 EFM technologies can help with all of these actions.

Capturing high quality supply chain visibility data is a critical challenge, but it is not sufficient to

fix visibility problems.  Industry literature and our own analysis lead to an important conclusion:

visibility itself isn’t enough; information must become actionable intelligence and companies

must use the intelligence to improve operations.  As Aberdeen pointed out, financial value

comes from using visibility information to identify and eliminate causes of delay and other

supply chain issues. 4

Industry studies help explain the size of the data quality problem, for example:  

 Data quality problems cost US industry $600 billion

per year.5

                                                      

 US organizations spend $15 billion per year

manually keying data from forms; for a mid‐to‐

large sized company, this is about $8,000 per day.

In addition, manual entry introduces a 2 to 4%

error rate.6

 Manual data entry introduces a 0.1 to 2.3% error

rate in clinical studies.7   

 Most companies have data quality problems.  An

industry survey found only 16% of respondents

reported data accuracy greater than 91%.8  

As we’ve described, the problem of supply chain visibility

is complex; solving it is likely to require several tools. The challenge, however, begins with the

ability of the supply chain partners to collect and distribute operational data. EFM technologies

can facilitate the execution of this crucial first step by building the collaborative

communications infrastructure that these real‐time, paperless exchanges require. Although

technologies such as Electronic Data Interchange (EDI), Enterprise Resource Planning (ERP)

software, email, carrier and 3PL tracking systems etc. exist, in many cases they are expensive or

difficult to implement, thus not readily available for everyone who would like to use them. EFM

Informed Action Needed 

Dr. Lawrence Lapide, research director at 

the MIT Center for Transportation and 

Logistics and head of its Supply Chain 

2020 project, contends that visibility is 

not, and never was, the real issue. What 

matters is what one does about 

things—conditions, events, trends—

that have become visible. At the end of 

the day, informed action trumps 

information alone. 

Source: A. Van Bodegraven and K. 

Ackerman, DC Velocity, “Whatever 

Happened to Visibility?” 

http://www.dcvelocity.com/viewpoints/?ar

ticle_id=82, August 2006. 

3 Capgemini, Georgia Southern University and the University of Tennessee in partnership with Oracle and Intel, 15th Annual Report – Year

2006 Report on Trends and Issuesin Logistics and Transportation, “The Power of O3: Optimized Strategy Planning and Execution,”

http://www.capgemini.com/resources/thought_leadership/the_power_of_o3_optimized_strategy_planning_and_execution/, 2006. 4 Aberdeen, “A View from Above...” 2007. 5 Data Warehouse Institute, “DataQuality and the Bottom Line: Achieving Business Successthrough a Commitment to High Quality

Data,” http://www.tdwi.org/display.aspx?id=6045, 2002.   6 Pacific Crest Securities and Harvey Spencer Associates, 2000.  Several papers by Adobe referenced the Harvey Spencer 2000 study but

no originalsource could be found.  See www.adobe.com/products/livecycle/pdfs/95009142_lc_barcoded_sb_ue.pdf 7 “Measuring Outcomes of Clinical Connectivity Trial: Investigating Data Entry Errorsin the Electronic Primary Care Research Network.”

March‐April 2007 http://www.jabfm.org/cgi/reprint/20/2/151    8 Aberdeen, “A View from Above...” 2007.
Achieving Business Benefits with EFM Technologies     4

technologies can benefit companies of varying sizes and levels of technical sophistication by

providing them the means to track cargo, connect with new and existing shipping partners, and

expedite the paperwork process.  

The Columbus EFM deployment test featured an independent evaluation that examined quantified

and non‐quantifiable benefitsthat would result from implementation of EFM for allshipmentsin the

hostsupply chain.9

  A CEFM evaluation report documented the results, which are summarized in this

report along with benefitsfound in industry surveys, articles, and reports.  Table 1 below is a

summary of benefitsinformation contained later in thisreport.

                                                      

9 SAIC and North River Consulting Group, “CEFM Final Evaluation Report,” sponsored by USDOT Research and Innovative Technology

Administration, June 2008.  http://www.itsdocs.fhwa.dot.gov/JPODOCS//REPTS_TE/14442.htm
Achieving Business Benefits with EFM Technologies 

Table 1. Comparison of CEFM Benefits and Documented Industry Benefitsfrom Visibility Technol

Benefits EFM Function

CEFM Industry

Productivity:

Booking, Tendering, On‐

Demand Status Reports(Personnel Productivity)

 Reduced manufacturer data entry by 75%

 Reduced forwarder data entry labor by 50‐65%

 Increased # shipments/week processed by Customs

broker by 18%

 Reduced processing effort by 8‐1

 Large firms place a high importan

tendering ofshipments

 78% of companies are able to eas

needed for decision‐making.

Robust XML messageswith automated data forvisibility

 Improved data accuracy at CFS by 25%  44% of Aberdeen survey respond

online visibility into trade docume36% are planning to enhance the

Automated messaging toreduce information

exchange effort

 10% improvement in data availability on warehouse floor

(specifically, ASN); allows betterstaff planning and

forecasting of workload

Data quality and availability:

Frequency of data updates  Nearreal‐time data for all partners, eliminating rekeying  44% of Aberdeen survey respond

online visibility into trade docum

Data accuracy  Improved data accuracy at CFS by 25%  50% pershipmentsavingsin adm

from improved visibility and impfrom reduced manual data entry

Data timeliness  Data received by supply chain partners 6‐72 hourssooner  Increased timeliness ofshipping 

####
Achieving Business Benefits with EFM Technologies 6

BUSINESS IMPROVEMENT GOALS FOR SUPPLY CHAIN MANAGERS

The potent mixture of globalization, deregulation and advancesin information technology has had

two large impacts.  First,supply chain efficiency and effectivenessimproved significantly over two

decades, dropping logistics costsfrom 16 percent of US GDP to aslow as 8 percent.10  Second,supply

chain managers and theirseniors continue to push for continuousimprovements, their appetites

whetted by past achievements and multiplied by increasing external pressuressuch asfuel volatility,

security compliance requirements and financial upheaval.

INDUSTRY APPROACHES TO SUPPLY CHAIN IMPROVEMENT GOALS

Corporate successis measured in financial terms,such as Return on Investment (ROI) and operating

margins.  Other measuresrelate to competitive standing (marketshare) and the loyalty of good

customers—the ability to attract and retain the most profitable accounts and relationships.  The role

of the supply chain and its managersisto support and contribute to those corporate goals.   

Figure 1. Connections among Corporate Goals, Supply Chain Capabilities and EFM Technologies

                                                      

10 Capgemini, Georgia Southern University and the University of Tennessee, The 2007 Supply Chain Playbook – 16th Annual Trends and

Issuesin Logistics and Supply Chain Management, “The Logistics Playbook,” 2007.  

http://www.us.capgemini.com/industries/ind_tl.asp?IndID=19
Achieving Business Benefits with EFM Technologies 7

Supply chain managerssupport corporate goalsin three business domains under their control:

Productivity, Service Quality, and Shipment Integrity, which most managers also know to be the

major areasto achieve supply chain efficiencies and business benefits.  EFM proved that data quality

isthe foundation forsupply chain performance improvements; its components are data accuracy,

timeliness, and completeness.  Data availability, making quality data accessible to users, begins with

connectivity—effective, robust one‐to‐one, one‐to‐many and many‐to‐many connections among

supply chain partners, customers and public agencies.  Connectivity enables collaboration, which

includes processintegration across partnerships,such as planning, forecasting and monitoring

shipments.  The top foundation layer in Figure 1 representsthe critical leverage point: the

conversion of available data into “actionable intelligence,” information that can be and is used to

control and improve supply chain operations and results.   

All three layersin the foundation are necessary ingredientsfor producing excellentsupply chain

businessresults.  Each of the three layers offers opportunitiesto enhance performance and deliver

benefitssuch as greater productivity and shipment quality. The impacts of the EFM test in Columbus

(CEFM) were primarily in the data availability layer of the foundation.  EFM and related IT toolsfocus

on data connectivity and collaboration, but they also reach down and up: the core features of EFM

help improve data quality, especially in terms of accuracy and timeliness.  And looking above, EFM

enablessupply chain managersto convert data into useful information and then use it to enhance

operational performance.   

EFM and related technologies are significant contributorsto enhanced visibility and that makes

visibility an important facet of any story about the business benefits of EFM. There are few public

reports or case studies of visibility improvementsthat describe realized monetized benefits, but

there are many confident reports about visibility and data improvement projectsthat describe non‐

monetized and qualitative indicators.

When evaluating EFM, we looked particularly for metricsrelated to or affected by data management

and visibility systems. Table 2 showsthe primary metrics clusters we gleaned from the literature:

two relate to benefit columnsin Figure 1 and one relatesto the foundation layers of data quality and

availability.   

Table 2. Metrics Most Related to Benefits of Data Management and Visibility Systems

Productivity Service Quality DataQuality & Availability:

Transportation costs;

transportation efficiency*

On‐time delivery* Frequency of data updates

Personnel productivity* % ofshipments expedited; time to

resolve transit problems

Data accuracy

Asset utilization* Lead time reliability Data timeliness  

Inventory days ofsupply Variation in order cycle time*

End‐to‐end cycle time* % of ordersshipped on schedule

Supply chain costs as % of revenue

(10)

% of orders not in stock

Administrative costs

* High visibility/high data accuracy firms use these metrics much more than low visibility firms.
Achieving Business Benefits with EFM Technologies 8

Simply using the six “starred” metricsis an indicator ofsupply chain sophistication.  Capgemini’s

latest annualsupply chain survey divided respondentsinto “high visibility” or “low visibility” groups.  

The high visibility/high data accuracy firmsreported much more use of the starred metricsthan the

low visibility firms.    

Data availability metrics offer insightsinto which firms are technology leaders, followers or laggards,

and which firms have the greatest potential benefitsto achieve from successful technology

innovation.  Other indicators of leading, lagging and benefit potential are methods of data exchange

(such as web services, EDI, fax or voice) and sophistication ofsupport tools(such as optimization

models orspreadsheets).

GOALS OF THE EFM PROGRAM

The core features of EFM provide a platform to exchange information among trading partners on a

many‐to‐many basis over the web.  The main goal of the USDOT EFM program isto enable greater

supply chain productivity and service quality by improving the quality and availability ofsupply chain

information without the deployment of private, proprietary services.  The firststep in assessing the

achievement of this goal wasthe execution of the six‐month CEFM deployment test.

Specific goals of the CEFM test included:

 Automate business interactions among multiple partners along a single international

supply chain.

 Provide shipment status and documentation in near real‐time.

 Improve data accuracy of information associated with freight management.

 Utilize standardized electronic data definitions and formats, especially those which

businesses already have in place.

 Maintain confidentiality of partner data while allowing authorized partners to have

access to sensitive business data.

 Demonstrate the ability to support small, medium and large businesses with non‐

proprietary tools using the Internet and standardized electronic information.

Following the completion of the CEFM test, the nextstep in the EFM program isthe execution of the

first EFM case study, which istaking place with a smallsupply chain based in Kansas City, MO. This

case study involves a small‐scale deployment and short‐term use of the EFM core features. The case

study went live on February 27, 2009.  

In thistest, the case study participants and deployment team will conduct a self‐evaluation; the case

study’ssupply chain owner hasspecific productivity and service quality goalsto achieve through

their use of EFM. The case study will look closely at the impact of improved data availability on some

of the productivity and service quality metricsthat they already collect,so there will be good

“before” baseline data. The concept with the EFM case study in Kansas City isto focus on a small but
Achieving Business Benefits with EFM Technologies 9

                                                      

effective number of metrics, particularly productivity measuresin the warehouse.  Industry partners,

developers and case study sponsors have vetted these metrics.11

11 Battelle (D. Williams) and EDS – an HP company (Matt Gatewood), email to Diane Newton re: Kansas City Performance Metrics,

October 2008.
Achieving Business Benefits with EFM Technologies 10

                                                      

ELECTRONIC FREIGHT MANAGEMENT TECHNOLOGIES

EFM and other visibility technologiesinclude three functional capabilities:

 Connectivity with supply chain partners to obtain needed data

 Collaboration of business processes with partners

 Creation and use of actionable intelligence to improve the supply chain

EFM technologies move connectivity beyond phone calls, faxes and even EDI toward automated

computer‐to‐computer information exchange.  Technologiestransform collaboration from the

simple linkage ofsystemstoward integrated business processes.  Technologiesthat create

actionable intelligence go beyond the creation of pretty charts and screen layouts and towards

accessible toolsthat transform data into decision support information for both normal operations

and unplanned disruptions, large and small.   

EFM and visibility technologies provide the data and analysis capabilitiesforsupply chain visibility,

productivity and effectiveness. We created the table at the right from Capgemini’s 15th and 16th

Annual Reports on Trends and Issuesin

Logistics and Supply Chain Management,

each of which drew on more than 1100

respondents.(12, 13)While the table shows a

sharp year‐on‐year decline, in 2007 more

than 15% of respondentsstill managed

theirsupply chains with manual processes

including spreadsheets. The table also

showsthe penetration ofsome

automated supply chain tools.  

In itsJune 2005 survey of 200 logistics

personnel in Fortune 500 companies, eyefortransport reported that almost all respondents

identified better technologies asthe principal way to overcome majorsupply chain issues.14   The top

three issues, each with more than 70% support, were data integration, lack of visibility, and lack of

collaboration with partners.  

Primary Tools in Domestic Logistics 

 2006 2007 

Manual/spreadsheets 25.0% 15.2% 

Third party providers 23.3% 5.8% 

In-house developed software 18.2% 27.5% 

Best of breed commercial software 14.8% 20.6% 

Commercial software in ERP 14.2% 29.1% 

Note: These were the primary responses and do not add up to 

100%. Respondents may or may not have been using the same 

definitions in their answers in each year. 

VISIBILITY TECHNOLOGIES IN INDUSTRY

Increasingly complex globalsupply chains have about 60 data sources within and especially outside

the company.15 The objective, of course, isto have near‐real‐time information from each source

entered once and in a timely mannerso that all concerned parties can maintain accurate visibility,

whether end‐to‐end or just those segments of  particular interest. Integrating all of the information

12 Capgemini, Georgia Southern University and the University of Tennessee in partnership with Oracle and Intel, 15th Annual Report  

(2006) “The Power of O3: Optimized Strategy Planning and Execution,”

http://www.capgemini.com/resources/thought_leadership/the_power_of_o3_optimized_strategy_planning_and_execution/, 2006. 13 Capgemini, et. al, “The Logistics Playbook,” 2007.    14 eyefortransport, “Fortune 500 Companies Views on the Supply Chain Landscape,”

http://events.eyefortransport.com/reportstore.shtml, July 2005. 15 Capgemini, et. Al, “The Power of O3,” 2006.
Achieving Business Benefits with EFM Technologies 11

                                                      

at the right time is not easy. An adaptive globalsupply chain isimpossible without the accessto

accurate, timely and complete supply chain data.   Thisrequires electronic connectivity among

supply chain partners and an ability to pull together and translate all of the data into usable

information.  

Connectivity in a supply chain may involve one‐to‐one communications between partners,say a

shipper and itsfreight forwarder. Given multiple suppliers,service providers, and even customers,

many‐to‐many communicationsis even more important and more difficult. Most companies,

particularly large established shippers and most transportation carriers use EDI to exchange data. EDI

istypically a batch process between two partnersin an industry‐accepted standard format.  There

are also many value added networks(VAN) that act as gateways. The advantage isthat a partner

need only communicate with the VAN which then sendsthe transaction on to itsintended

recipient(s). A disadvantage of the VAN isthe transaction fee.  VAN service is certainly cheaper than

establishing individual one‐to‐one EDI interfaces, but can still represent a meaningful operating cost

to a user. One of the words we often saw associated with EDI in industry literature was “expensive.”  

Large companies may send EDI every hour or two and would usually batch together multiple EDI

transactions, but thisfrequency may not be sufficient for rapid decision‐making across a global

supply chain.

Connectivity and Collaboration Networks

Enter the web or the Internet: connectivity and collaboration became easier and less expensive for

companies.  The Internet revolutionized electronic communications and made it much easier for

relatively unsophisticated partiesto communicate. Although email is part of the

“manual/spreadsheet” category in the Capgemini table above, almost all companies use it to

transfer virtually for free documentsthey used to send by regular mail or courier.  In addition, a

company wanting to receive supply chain data can provide a web portal that allows partnersto input

or view data with nothing more than an Internet browser.   

Most companieslack the size or ability to create their own collaboration network, but there are a

growing number of companiesthat provide web‐based supply chain connectivity and collaboration

tools. Often these third parties have networksto interconnect many shippers and other partners. An

advantage of a network isthe ability to add new partners quickly and easily, offering immediate

connection with multiple partnersto new users.  

There are other examples of partner collaboration networks. Some, including GT Nexus, ClearTrack,

GXS, and Descartes, are software and supply chain service providersthat claim thousands of

customers which are potentialsupply chain partners.  Electrolux is an example of a shipper that

established its own network to tie in itssupply chain partners.  Electrolux has a supply chain

collaboration network that uses commercialsoftware from Axway. Recently, Electrolux

acknowledged that collaboration for improving processesis hard.16 Their network tiesits partners

together by supporting multiple standards and communications protocols, rather than  forcing

partnersto adapt to a single standard

16 Electrolux, Supply Chain Television Channel webinar on supply chain collaboration, September 25, 2008.
Achieving Business Benefits with EFM Technologies 12

or protocol.  The

Electrolux network

functions as a translator or

gateway. They also offer

WebEDI for partnersthat

don’t have traditional EDI.

Six Examples of Supply Chain Communications Networks 

 GT Nexus, formed by the ocean carrier industry, maintains a 

communications network that connects 15,000 potential trading 

partners. 

 Descartes Global Logistics Network is a multi-modal network of 

transportation providers and their customers to facilitate information 

exchange. 

 Elemica, formed by a group of chemical industry companies, 

operates a global network & exchange for industry best practices. 

Connected solution with 1800 partners. 

 ClearTrack Information Network operates a Global Network for 

consumer retailers and connects more than 1000 manufacturers, 

transportation carriers, forwarders, and 3PLs 

 Electrolux operates a collaboration network that allows all of its 

trading partners to communicate with Electrolux either via EDI or 

WebEDI. Axway provided the software solutions. 

 GXS Trading Grid supports all EDI and XML standards worldwide 

and provides B2B e-commerce globally for the consumer and retail 

goods industry. The Trading Grid also includes a web portal on line 

version that provides transaction visibility. 

GT Nexus’ underlying

network infrastructure

communicates over the

web, connecting partners

with each other and with

GT Nexus, using on‐

demand supply chain

software. GT Nexus

reports about 15,000

companies on its network

and supports many

different formatsto

facilitate data communications among the customers.  The network involves minimalset‐up costs

and maximum flexibility which helps new customersto start quickly and cost effectively.

Service Oriented Architecture (SOA) and Web Services

EFM and some other logistics applications use both Web Services and SOA to take advantage of the

power of the Internet and XML for data exchange:   

A Web Service is a reusable computer application (like a subroutine) that transfers data via

standard data and communicationsformats over the Internet.  Web Services are self‐

describing componentsthat client applications can recognize by look‐up in a registry.   

Service Oriented Architecture (SOA) is a software architecture approach where the basic

elements of design and development are applicationsthat communicate with each other

through Web Services.  The ultimate goal of the SOA isto facilitate information exchange.  

Open architecture and Web Services allow supply chain partnersto automate daily business

interactions and streamline business processes by facilitating cross‐agency messaging and by

containing a Yellow Pages‐like function thatstandardizesthe directories of information on Web

Services(listing their capabilities, location, input requirements, and expected output orservice

performed). Because direct partner connections via Web Services use the Internet, there is no

transaction or network fee asthere is when EDI is provided through a VAN. Collaboration networks

described above charge a subscription fee or a lower per unit communications cost than VANs.

Many transportation companies now offer Web Services connectivity to their customers.  Examples

include Yellow Freight, UPS, and FedEx. The Web Services make it easier to get connected, which

produceslaborsavings.
Achieving Business Benefits with EFM Technologies 13

SOA architecture enablesthe integration of best practice processes within a supply chain. Standards‐

based SOA allows easier expansion of process and data integration throughout the supply chain.  

Using SOA,staff within a company can view multiple databasessimultaneously. SOA holdsthe pieces

together and delivers a consolidated view of the supply chain. It enables a total view of the supply

chain by making it easier for partnersto provide data and then

making that data more accessible to the user.   Future of SOA 

Going forward, SOA will be 

the prime enabler for supply 

chain leaders to achieve their 

sought-after competitive 

advantages. 

Capgemini, 2006 

SOA‐enabled systems allow end usersto pick the parts—or

services—they need from among all installed systems and to

assemble them into a business processthat meetsspecific

requirements. It enablesit without major integration efforts and the

time and cost they entail.

Dow Chemical uses SOA and a Web Services‐based portal to pull together and distribute their

visibility information.  A third party, Savi Technology, hoststhe portal for them. The system does

automated filtering and allows management by exception.   

CEFM DEPLOYMENT TEST TECHNOLOGY

CEFM Vital Stats 

 6 month deployment test 

 LB air cargo supply chain with 13 

partners 

 871 completed consignments (10% of 

total volume on this route) 

 21 pieces of shipment information 

provided via: 

o 2 points of manual entry (PO 

booking and tendering) 

o 18 automated status messages 

o 3 on-demand reports 

As noted earlier, one of the goals of the USDOT EFM program isto accelerate the deployment and

use of high payoff electronic technologiesto improve freight efficiency. The core architecture in EFM

includes SOA and Web Services. The CEFM deployment

test integrated multiple partners and networks using SOA

and Web Services while exchanging and sharing data,

maintaining security of the information exchanges, and

protecting the integrity of individual partnersystems.  

The tested supply chain included trading relationships

among thirteen partnersincluding four manufacturers

and two freight forwarders; transport was primarily by air

from China to Columbus, Ohio. The key aspects of the

CEFM test were:

 Data was entered once and used many times.  

 Information sharing was in near real‐time,

based on when data entered partners’ back‐office systems.  

 Implementation of data standards – secure exchanges over an open architecture using

XML messages written per Universal Business Language (UBL) schemas.

 Trading partner access to status reports via the Web – one partner integrated CEFM

data into its back office system.

CEFM used 21 Web Servicesto obtain,store, and automatically send and receive shipmentstatus

information among supply chain partners;stored the data separately; and then exchanged the data

with other trading partners. These Web Services provided a simplified means of communicating and

sharing shipment information.
Achieving Business Benefits with EFM Technologies 14

Building upon the success of the CEFM deployment test, DOT and the EFM integration contractors

began working with Demdaco on the first EFM case study in Kansas City; a small importer and

warehouse operator, Demdaco’s business goal in applying EFM to their operation isto improve

visibility of inbound ocean containershipments. The objective isto have complete statusinformation

in one place and to display most of the data on a web portalso thatsmall and medium size partners

will need little technology to participate. The several‐month deployment will be bolstered by

coordination with several other improvement initiativesin Kansas City.

CREATING AND USING ACTIONABLE SUPPLY CHAIN INTELLIGENCE

Even accurate real‐time information is of limited value to a supply chain user until that information is

applied to manage the supply chain. In order to apply the information, it is asimportant to integrate

supply chain information with back office systems asit isto automate input from external partners.  

This beginsto create actionable intelligence – and it reduces data errors associated with re‐keying.   

Here are some examples of the use of actionable supply chain intelligence:

 View shipments by exception and provide alerts for action

 Track shipments and provide tracking data to customers  

 Divert in‐transit shipments to higher priority destinations

 Provide advanced customs clearance (import and export) data

 Provide alerts about data quality problems and notify users to investigate

 Provide dashboards of status information and operating statistics based on company‐

defined performance measurement

Visibility software pullstogether information from allsupply chain partnersinto one place and

provides a mechanism to share information. This enables partiesto a shipment to see “all the spokes

in the wheel.” Some software products have capabilitiesthat provide the ability to look up multiple

pickups and drops, and examine and develop distribution strategies. Software vendors provide tools

for analyzing the data, generating reports, and highlighting exception information.

The types ofsoftware that can create and use actionable intelligence from visibility data include

Transportation Management (TMS) and Global Trade Management (GTM)systems.  Asshown

earlier, over a quarter ofsurveyed companies, particularly the largershippers, develop their own

transportation managementsoftware. Increasingly, companies are using on‐demand software over

the web or SaaS (software as a service).  In fact, many TMS providers are transitioning to SaaS.  SaaS

supplierstend to have the kind of SOA and Web Services‐oriented networks and infrastructure

which make for easier data exchanges.  SaaS could be particularly useful to small and mid‐sized

companies because it requires only an Internet browser.  In conversations with the authors,

Aberdeen indicated that only a small percentage ofsmall and mid‐sized companies use visibility

software. This may reflect a potential market for on‐demand services. However, the point here is not

the superiority of a particularsoftware business model; the point isthat actionable intelligence

requiresintegrated logisticssoftware.   
Achieving Business Benefits with EFM Technologies 15

The 2008 Logistics Management Survey of 422 respondentsfound that one‐third of respondents(or

141 respondents) are planning to add an on‐demand application in the coming year.17 A contributor

to the analysis of the survey results estimated that one third of the TMS market isfor on‐demand.

One software supplier wrote recently that on‐demand projects were the fastest growing segment of

its businessfor large and mid‐sized shippers as well as 3PLs.18

Legacy System Integration 

Some companies are also examining the 

use of legacy software what has been 

integrated through an automation process 

that does not require writing code or 

changes to existing systems....This 

[solution] provides a seamless flow of 

information by connecting the data and 

information from all the key supply chain 

elements. 

14.3% of domestic and 18.8% of 

international respondents use this solution 

(1069 total respondents) 

Capgemini, 2008 

As a specific industry example of actionable intelligence, Dow Chemical isintegrating its visibility

capability with its back office systems. Dow’ssystem picks out problemsrelated to high hazard

shipments and links directly to the chemical industry’sreporting system, CHEMTREC. In addition,

Dow expectsto allow their customersto tap theirsystem and track the location and status of

shipments. Also, Sterling Commerce reported on an

August 2008 survey of over 400 logistics professionals

thatslightly more than half automatically check

quantities and dates of advance shipments and

commitments against purchase orders.19  They also

wrote that a majority ofshippers currently track

shipmentsthrough carriers’ websites. Respondents

identified ad hoc reporting as an important feature of

software.  Interestingly however, only one‐third of

respondentssaid theirsupply chain solution was “top

notch” and one‐fourth said their reporting capabilities

were inadequate.

By design, CEFM was primarily a data exchange system

and not a TMS.  CEFM was not intended to provide

more sophisticated TMS functionality aside from a supply chain eventsreport about each shipment.  

However, usersin the CEFM Deployment Test reported substantial opportunitiesfor taking action

based on CEFM data even asthey acknowledged that the test only dealt with about 10% of

shipmentsin a parallel testing environment that kept data on remaining shipmentsseparate in

existing systems and processes.  CEFM used Web Servicesto exchange statusinformation among

partners and extracted information from partners’ in‐house developed software or visibility systems.  

One CEFM partner integrated CEFM data directly into their back office systems.  That partner found

numerous usesfor acting on CEFM data.  Even though other partners did not integrate, CEFM users

identified opportunitiesincluding use of advanced information to plan and forecast arrival of

shipments at downstream locations. The test evaluatorsfound integration is crucial in order to

achieve the full benefits of reduced data entry and increased data quality. Capgemini’s 2008 survey

(17th Annual) reinforced that finding when, for the first time, it highlighted the wide use of legacy

software that isintegrated through an automated process as a transportation tool.20  It isthis

integration that yields actionable intelligence.

                                                      

17 Logistics Management, 6th Annual Supply Chain Software Survey, http://www.logisticsmgmt.com/article/CA6549320.html, April 2008. 18 Harrington, Lisa, Inbound Logistics, “Ground Tactics: Optimizing Transportation Networks,”

http://www.inboundlogistics.com/articles/features/0908_feature01.shtml, September 2008. 19 “A Study on Inventory Visibility Among Logistics Professionals,” conducted by Reed BusinessInformation on behalf of Logistics

Management,sponsored by Sterling Commerce available at: http://www.scmr.com/contents/pdf/SterlingCommerce.pdf, August 2008. 20 Ibid.  
Achieving Business Benefits with EFM Technologies 16

                                                                                                                                                                              

In the EFM case study in Kansas City, Demdaco will conduct back office integration of the supply

chain data into itssystem and will use EFM for managing all of itsshipments; reports will be available

through the EFM user interface to aid all of the partnersin taking actions.

####
Achieving Business Benefits with EFM Technologies 17

                                                      

BENEFITS REALIZED BY DEPLOYING EFM TECHNOLOGY IMPROVEMENTS

BROAD INDUSTRY BENEFITS

Industry literature reviews and evaluator experience in successful electronic freight management

technology implementationsshow that quantifying visibility improvement is difficult but important.

Quantification is a key factor in many companies’ decision to adopt new supply chain technology.   

In its September 2007 Aberdeen report A View from Above: Global Supply Chain Visibility in a World

Gone Flat, Aberdeen Group included a chart on some 38 companiesthat responded to the survey

with dollar benefits gained through the use ofsupply chain visibility software.21 The September 2008

Aberdeen report Beyond Visibility: Driving Supply Chain Responsiveness22 included an expanded

survey response from a total of 349 companies.  Of these, 101 companies partially or fully estimated

the economic impact ofsupply chain visibility technology.  Aberdeen also dug deeper into their

expanded survey, looking for additional benefitsinformation.  Responding to SAIC and North River

requests, Aberdeen completed a second September 2008 report, Supply Chain Visibility Software

Benefits.

23

The box at the right highlights an important finding:

the benefits of visibility software grow and become

more apparent as users’ gain familiarity and

experience with theirsystem.  

We adapted some of the Aberdeen data, collapsing

categoriesto produce Table 3, which showsthe relationship between reported benefits and

company size, expressed in revenue.  In analyzing the Aberdeen data, we drew several points about

the relationships among size of firm and achievement of benefits:

Companies that have been using a supply 

chain visibility improvement initiative for more 

than two years are more likely to achieve the 

large quantity benefits than all other companies. 

Aberdeen Group, September 2008 

 46% of smaller firms report benefits of greater than $100,000.

 More than twice as many smaller firms report meaningful benefits (>$100,000) than

report no payoff or loss.

 Almost as many smaller firms report significant benefits (>$500,000) as report no payoff

or a loss.

 Twice as many large firms report significant benefits (>$500,000) as report no payoff or

a loss from a visibility software project.

 Half of the firms that reported measuring benefits were large firms with revenues

greater than $2.5 Billion, although only 42% of the 349 companies in the overall survey

were large firms.

21 Aberdeen, “A View from Above...”2007 22 Aberdeen Research Group, “Beyond Visibility: Driving Supply Chain Responsiveness,”

http://www.aberdeen.com/summary/report/benchmark/5300‐RA‐supply‐chain‐responsiveness.asp, September 2008.  The survey used

in thisreport wasthe basisforthe analysisfor SAIC and North River noted in #24. 23 Aberdeen Research Group, Analysisfor SAIC and North River Consulting Group, “Supply Chain Visibility Software Benefits,” based on

Aberdeen’s August‐September 2008 survey.
Achieving Business Benefits with EFM Technologies 18

Table 3. Visibility Benefits by Size of Company

Annual Revenue

Benefits/Costs

Reported

<$50‐$250

million

$250 ‐ $2,500

million

$2.5 ‐ >$5

billion

Breakeven or

Negative Results 5% 5% 14%

Lessthan USD

$100,000 9% 2% 0%

USD $100,001‐

$500,000 8% 4% 6%

USD $500,001‐$3

million 3% 8% 10%

More than USD $3

million 1% 4% 19%

  Source:  Adapted from Aberdeen Group, September 2008

 For the 23% with more than $3 million in benefits (23 companies), 56% (13 companies)

are large companies with

revenues greater than $5

billion.

Aberdeen analyzed the difference

between domestic and global

supply chains. Notsurprisingly,

most firmsreporting benefits

greater than $3 million had global

supply chains; and most firms

reporting lessthan $250,000 had

domestic supply chains. This

survey response of 101 companies

isthe largest reporting of

quantified benefitsthat we found

in our research and showsthat

companies do benefit from

implementation and use of

visibility technologies.  

The box at the right providesseveral examples of how respondents achieved benefitsfrom the

technologies.

Next we look beyond the Aberdeen surveysfor

specific examples of benefits at individual companies,

then shift to the benefits documented in the EFM

program.  Taken together we believe these industry

and EFM benefitsshow the efficacy of well‐

implemented visibility software.   

Productivity Improvement

A key to improving productivity is having up‐to‐date

information about orders and status at each step in

the supply chain.  Visibility technologies help provide

that information and reduce costs.  Enhanced

information can be used in arranging the

transportation with carriers and in managing the

shipment asit movesfrom origin to destination.  

Efficiency savingsto firmsthat use visibility

technologies derive from the use of actionable intelligence provided by or developed from improved

data quality and availability.  EFM and visibility technologiesfacilitate the knowledge of what is

coming and when it will arrive.  Minor adjustmentsin an individualshipment unit’sschedule can

save the firm money.  When the supply chain isreliable and there is accurate information about

How Benefits Were Quantified 

 Cycle time improvements and quality 

exception reporting (small metals 

manufacturer, benefits not disclosed) 

 Cost savings and service 

improvements (mid-market North 

American food & beverage company, 

$500K-$1 M) 

 Reduction in inventory, obsolescence 

and better manufacturing asset 

utilization (large North American 

pharmaceutical manufacturer, > $3M) 

 Improved in stock, reduced costs, 

reduced transportation costs (large 

North American retailer, > $3M) 

Aberdeen Group, September 2008 
Achieving Business Benefits with EFM Technologies 19

                                                      

anticipated arrival, firms can reduce safety stocks and inventories.  Near real‐time information

improvesthe synchronization of the supply chain.24   

There are importantsavingsin the administrative costs ofsupply chain partnersthroughout the

chain.  Clearly, activities and processes with manual data preparation and analysistake longer and

are likely to have more errorsthan processes using automated data.  Visibility technologies create

value asthey automate the creation and transfer of data along the supply chain from one partner to

another.  

Improved Service Quality

While more speed might be most important in some cases, greater delivery time reliability is usually

at the core of improved service quality‐ delivering the product when the customer needsit and

when it has been promised.  Unpredictably late shipments can cause downstream problemssuch as

lostsales and unhappy customers.  One measure in this area isthe extent of expedited shipping,

which is a supplier’sresponse to unreliable or late shipments.  Expedited shipping may achieve the

delivery schedule, but at increased cost.  Some Capgemini and Aberdeen surveys differentiate

between on‐time performance by top performing firms and average firms, and the top firms have

percentages comparable to those in the table.  Variability is also an important aspect of cycle time

and Chemlogix found reductions, although it did not report a percentage improvement.   

Table 4 shows examples of quantified benefitsfound in the literature.  

24 Capgemini, “The Logistics Playbook,” 2007.
Achieving Business Benefits with EFM Technologies 20

Table 4. Quantified Benefitsin Industry from Visibility Technologies

Productivity

Reduced Transportation Costs  20‐30% improvement (Viking Logistics)1

 30% reduction (Infor)2

 Reduced expediting ofshipments 75% (Distribution Group)3

 Reduced cost/parcel by 14% (Lifeway)4

Reduced Administrative Costs  Reduced processing effort by 8‐15% (Accenture)5

 Reduced transportation overhead 10‐30% (SCD)6

 Reduced costs of manual data capture and entry 10‐15% (Dow)7

 20% faster response to rate evaluations  (Globalink)8

 Reduced administrative costs by 50% (Sunoco)9

Improvementsin Inventory and Shipping  Increased shipment consolidation by 5‐25% (SCD and Chemlogix)10

 Reduced safety stock inventory by 20% (Dow)

 Reduced inventory levels 25‐60% (Viking Logistics)

 Improved transportation controls and reporting by 2‐5% (Chemlogix)

Service Quality

 Reduction in time to resolve in transit problems by 50% (Dow)

 Improvementsin delivery performance by 16‐18% (Viking Logistics)

 Improved reliability of delivery time to 90% (Dow)

 Improved on time delivery performance from 94% to 97% (P&G)

 Improved cycle time by 10‐50% (Distribution Group)

ShipmentIntegrity11

 Visibility costsavings(7%)

 Increase in on‐time deliveries(12%)

 Increase in accessto supply chain data (50%)

 Increased timeliness ofshipping information (30%).    1 Viking Logistics, “Principles of Supply Chain Management,” undated white paper available at Logistics HQpage on Viking website.

http://www.viking‐logistics.com/uploads/Princples%20of%20Supply%20Chain%20Management.doc 2 Infor Solutions Webinar October 22, 2008 Inforreported 30% reduction in transportation coststhrough use oftransportation planning

software product. 3 Distribution Group, “Developing an Effective Business Case for a WMS,”

http://viewer.bitpipe.com/viewer/viewDocument.do?accessId=8518384  2005. 4 “Transportation Management Systems Give Shippers Powerto Make Smarter Trucking Choices” by Amy Zuckerman, January 3, 2008, World

Trade Magazine. The article described the use oftransportation managementsystemby LifeWay, a Nashville TN publisherthatreduced cost

per parcel by 14%. http://www.worldtrademag‐digital.com/worldtrademag/200801/?pg=34 5 Accenture, with Rolls Royce, Diageo, Ernst and Young, Capgemini, Shell and AT&T, “Building the Business Case for e‐Procurement and ROI”

available at: http://www.buyitnet.org/Best_Practice_Guidelines/e‐Procurement/docs/building%20the%20business%20case%20‐%20ROI.pdf,

2002.

6 “Where isthe ROI in Transportation Management Systems?”  Supply Chain Digest June 15, 2008.  Article by the editorialstaff notesthat

users have found transportation overhead reductions of 10 to 30%. 7 Goodman, Russell, “Dow’sInnovative Waysto Cut Shipments of Dangerous Goods,” Global Logistics and Supply Chain Strategies,

http://www.supplychainbrain.com/content/industry‐verticals/chemicals‐energy/single‐article‐page/article/dows‐innovative‐ways‐to‐cut‐

shipments‐of‐dangerous‐goods/, December 2006. 8 Manufacturing and LogisticsIT Magazine, “Global Link Logistics Boosts Productivity by 50% with Management Dynamics Solution,”

http://www.logisticsit.com/absolutenm/templates/article‐supplychain.aspx?articleid=3824&zoneid=5, May 8, 2008. 9 Murphy, Jean C., “Sunoco’s Shipping ProcessInside its Plant Goesfrom Manual to HighlyOptimized,” Global Logistics and Supply Chain

Strategies, http://www.supplychainbrain.com/content/industry‐verticals/chemicals‐energy/single‐article‐page/article/sunocos‐shipping‐

process‐inside‐its‐plants‐goes‐from‐manual‐to‐highly‐optimized/, September 2004. 10 Skinner, Michael, Chemlogix White Paper “The Time has Come:  Visibility into the Transportation Processis now affordable and soon to be

expected.”  2007  http://www.chemlogix.com/.  Benefits and improvementsincluded inventory and shipping costs, improved shipment

consolidation by 5‐25% and improved transportation controls by 2‐5%.   11 Peleg‐Gillai, Barchi, Bhat, Gauri, and Sept, Leslie, Stanford University, “Innovatorsin Supply Chain Security: Better Security Drives Business

Value,” published by the Manufacturing Institute, http://www‐

03.ibm.com/procurement/proweb.nsf/objectdocswebview/fileinnovation+in+supply+chain+security+‐

+better+security+drives+business+value+july+2006/$file/innovators+in+supply+chain+security+‐

+better+security+drives+business+value+july+2006.pdf, July 2006.
Achieving Business Benefits with EFM Technologies 21

QUALITATIVE BENEFITS IN INDUSTRY

Real-time data => Better Management 

Rising transportation costs can be 

stemmed by leveraging information. 

Real-time data can enable better 

management decisions as conditions 

change. Real-time information, visible 

across the supply chain, synchronizes 

and coordinates critical supply chain 

activities. 

Capgemini, 2007 

In computing a project’s ROI, the consulting firm Business

Objectslooks beyond comparing quantified direct and

indirect benefitsto total cost of ownership.  Especially

when costs exceed quantified benefits, Business Objects

recommends consideration of intangible or qualitative

benefits before deciding against a project.25 Higher

customersatisfaction and loyalty are among the most

important qualitative benefits.  Other examples are

improved operational flexibility to implement

postponementstrategies and improved back office

flexibility to respond to new regulatory requirements,such as Customs’ mandate for more detailed

shipment information prior to container loading.  We examine qualitative benefits with the same

categories of benefits used earlier for quantitative benefits.

Productivity Improvement

We found interesting industry discussions of unanticipated or unpredictable performance benefits

from visibility and other data improvements.  Software and network provider GT Nexus and

consultant Business Objects both noted dynamic allocation of inbound inventory and better

warehouse capacity planning as useful qualitative benefits.(26, 27)  They also identified an

unanticipated productivity improvement from visibility technologies:  cross docking increased when

distribution centers had and used more precise and up‐to‐date knowledge of when shipments will

arrive and when they need to be shipped out to customers.  Increased cross docking reduced

temporary shipmentstorage and re‐handling.

Dow Chemical reported that a qualitative benefit of visibility software is better management of

inventories and production.  Stanford noted that the right tools “tremendously improve visibility and

timeliness of information” to detect data inaccuracies earlier.  Stanford also noted that automation

can eliminate processsteps, reduce the time it takesto perform remaining tasks and make it

possible for lower‐skilled workersto perform higher‐level tasks.  GT Nexus explained that visibility

technologies can provide a better understanding of total landed costs.   

Improved Service Quality

High quality customerservice supports customer retention and growth.  GT Nexus and Business

Objectsidentified two qualitative and unanticipated service improvementsfrom visibility

technologies:

                                                      

25 Mark Ritacco and Astrid Carver, Business Objects.  “The Business Value of BusinessIntelligence:  A Framework for Measuring the

Benefits of BusinessIntelligence”  http://businessobjects.com/  2007. 26 GT Nexus(benefits: increased cross‐docking, dynamic allocation of inbound inventory, better warehouse capacity planning, and more

effective back order prioritization. GT Nexus White Paper: GT Nexus White Paper, “Global Sourcing: Elusive Profits, Expensive Mistakes,”

register online to receive a pdf copy at:

http://www.gtnexus.com/press_room/resource_library_form.php?doc=white_papers/global_sourcing_landed_costs_wp.pdf, 2007.   27 Mark Ritacco and Astrid Carver, Business Objects.  “The Business Value of BusinessIntelligence:  A Framework for Measuring the

Benefits of BusinessIntelligence”  http://businessobjects.com/  2007.
Achieving Business Benefits with EFM Technologies 22

                                                      

 More effective back order prioritization.  Knowing what shipments will arrive when

allows better planning of deliveries to customers.

 Better responses to new customs/trade requirements such as the so‐called 10+2

information that will be required by Customs and Border Protection (CBP) for import

shipments starting in 2009 (identification of the overseas origin, U.S. destination, and

contents of a shipment).  Automatically available end‐to‐end supply chain data can help

satisfy enhanced customs requirements.  Many commercial visibility software packages

include such compliance support capabilities and the vendors provide updates as

requirements change.

Other documented service improvementsinclude:

 Higher customer confidence (Dow Chemical).

 Greater flexibility, allowing implementation of postponement strategies (consultant

Boston Logistics).28  

 Reduction in out‐of‐stock conditions (Proctor and Gamble)  

 Eliminated manual track and trace of orders, reducing costs and the opportunity for

errors while helping increase delivery reliability and customer satisfaction (Proctor and

Gamble).   

 Reduction in alerts for late pick ups or deliveries (Chemlogix).   

These qualitative service improvementsreflect agile supply chainsthat adapt quickly and easily to

customer needs and supply chain disruptions.  Appropriate technologies,such as Web Services and

SOA,speed the reconfiguration of applications and processes when changes occur.  Agile supply

chains also provide timely exception reports and facilitate corrective actions.  

Improved Shipment Integrity

Shipment integrity includesloss and damage, theft, and cargo security.  While not the subject of

most industry research or the CEFM deployment test, visibility software can improve shipment

integrity.  If you improve end‐to‐end shipment visibility, then there isless opportunity forshipments

to be delayed en route with greater exposure to theft and othersecurity threats.  And ifsomething

goes wrong, improved visibility may enable a supply chain manager to learn about the problem and

take corrective action sooner.  Some visibility software solutionsinclude exception alertsto warn of

late shipments and other problems. In a recent conference presentation, Dow described elimination

or early detection of product theft by using supply chain visibility technologies.

In a June 2008 report, Gartnersaid thatsome software vendors were enhancing their productsto

support the 10+2 information requirement for 2009. Visibility software and enhanced supply chain

data cannot guarantee compliance with 10+2, but automated data makesit more likely and easier to

accomplish.  Gartner noted that withoutsoftware with 10+2 capability, mostshippers won’t have

28 Boston Logistics, Economic Development Research Group, and Cambridge Systematics “Guide toQuantifying Economic Impacts of

Federal Investmentsin Large‐scale Freight Transportation Projects.”  August 2006.  Appendix A, “Integrating Supply Chain Benefitsinto

Economic Analysis” contains detailed information on transportation cost and inventory reductions.

http://www.dot.gov/freight/guide061018/.
Achieving Business Benefits with EFM Technologies 23

                                                      

mechanismsin place to capture the data, organize it, and provide it to CBP in the required time

frame.29 Maintaining the shipment integrity helps assure high quality customerservice and saves

money through better management of the supply chain.

BENEFITS DELIVERED BY THE EFM PROGRAM

The Columbus EFM deployment test featured an independent evaluation that examined quantified

and non‐quantifiable benefitsthat would result from implementation of EFM for allshipmentsin the

hostsupply chain.30  A CEFM evaluation report documented the results, which are summarized in

thissection. The final pages of thissection compare the broad industry and CEFM findings and then

describe benefits anticipated in the Kansas City EFM case study.

Based on test data and Chinese, Hong Kong, and U.S. labor rates and discussions with the Columbus

partners, we quantified the laborsavingsthat could accrue to each partner as a result of improved

information from EFM.  We computed daily savingsfor CEFM identified for the particular partners.  

While the quantified savings accrued primarily to the individualsupply chain partners, we made a

key assumption that a derivative benefit could accrue to the shipper orsupply chain owner through

the long‐term use of EFM technologies: it isin the supply chain owner’sinterest for its partnersto

become more efficient. For example, more efficient manufacturers and freight forwarders may be

able to reduce their ratesto the shipper.

We interviewed each supply chain partner to gauge CEFM user reactions and their insights about the

impact of CEFM if it were fully implemented and integrated with existing operating management

systems.  Most of the conversations centered on higher‐levelsupply chain productivity categories

such as cycle time, transit time, and schedule adherence.  Usersseemed confident that CEFM data, if

integrated with transportation management capabilities, would improve the higher‐level business

metrics.   

Table 5 summarizesthe benefit findings of the CEFM deployment test and validatesthem with

information from the industry studies of EFM‐type ofsolutions.  We believe the table shows how

CEFM filled current information and visibility gapsthat have been identified by otherstudies and

surveys. Thistable helpsto interpret the level of benefitsthat can be achieved by different types of

partners along differentsupply chains – like smaller, less automated partners, or partners without

visibility over othersupply chain members.  

29 Klappich, Dwight, “US Customs 10+2 Legislation Will Drive FurtherIT Spending forImporters”  Gartner, Inc.  

http://mediaproducts.gartner.com:80/reprints/log‐net/156651.html  June 5, 2008 30 CEFM Final Evaluation Report, June 2008.
Achieving Business Benefits with EFM Technologies

Table 5. CEFM Benefits
Achieving Business Benefits with EFM Technologies 25

i. Capgemini Survey Results, The Logistics Playbook, Page 16, 2007.  

ii. Aberdeen, Beyond Visibility...Figure 3, page 8, September 2008.

iii. Dow Chemical conference presentation and conversation with authors, October 2008

iv. Aberdeen, A View from Above... p. 6, September 2007.

v. Delta Apparel logistics manager in “Some Shippers Willing to Walk the Portal Talk,” Marine Digest, March 2002

vi. Capgemini Survey Results, The Logistics Playbook, Page 7 (Table 2), 2007.

vii. Capgemini Survey Results, Supply Chain Playbook, Plan, Play, Profit, p. 14, 2008.

viii. Gordon Heisler,  “Global Logistics and Supply Chain Strategies,” September 2004.

ANTICIPATED BENEFITS OF KANSAS CITY ADOPTION OF EFM 

As described earlier, the Kansas City team’s priority is measuring the impact of EFM’simproved data

quality and availability on operational productivity and service quality. Their goal isto monetize

operational metrics and calculate EFM’s ROI for the case study supply chain.  The Kansas City case

study will use EFM for allshipments during the several month deployment, a combination of

coverage and duration thatshould make it easier to assess EFM effects. The Kansas City team also

has a significant advantage since most case study metrics are collected now in the normal course of

business; this willsimplify baseline identification and EFM impact assessment.   

The collection and use of these metricsisimportant asthe USDOT executesthe Kansas City and

future EFM case studies. These case studies and the benefits documented from them seek to

validate the benefitsidentified in the CEFM deployment test and those documented in frequently

prepared surveyssuch asthose generated by Aberdeen and Capgemini.

Productivity Improvement

Five of the nine metrics are quantitative measures of productivity, all of which willsupport ROI

calculations.   

 Faster asset turn time: EFM’s more timely, accurate and available data on inbound

containers and containers already available for processing should help warehouse

management to increase efficiency in planning, unstuffing and returning containers to

the ocean carrier.  

 Lower demurrage payments: The team expects the improved quality and availability of

visibility data from EFM to help reduce demurrage payments to carriers.  Faster turn

time achieved with better information will lead to better use of allowed free time and

lower demurrage payments.

 Less management labor to monitor inbound shipments:  Currently, managers check on

inbound status when they become aware of in transit problems. EFM may provide three

benefits in this area:

o Improving the efficiency with which managementstaff obtainsin transitstatus;  

o Reducing management labor‐hoursto resolve problem shipments.  EFM’s near real‐

time status data for allshipmentsshould allow quicker identification of and response

to in‐transit issues; and

o Providing additional data such asthe Customs Entry Number, which will allow better

accessto historicalshipment information.
Achieving Business Benefits with EFM Technologies 26

 Lower warehouse labor costs:  The lack of reliable estimated time of arrival (ETA)

information for inbound containers leads to over‐ and under‐staffing of the warehouse

with part‐time labor.  If EFM provides significantly better ETA information, managers will

improve the match of labor resources and workload  

 Better container capacity utilization:  EFM’s better visibility into operations at the origin

may enable managers to increase container cube utilization, reducing transportation

costs.  This is the only new metric for the case study   

In addition to these quantitative metrics, there will also be qualitative indicatorsin the areas of

service quality and data availability/quality.  

Improved Service Quality

 Better inbound lead time reliability:  In addition to supporting labor efficiency, delivery

reliability is an important indicator of service quality in its own right.   

 More optimal outbound order fulfillment:  To the degree EFM helps improve reliability

of container ETAs, it would also enable warehouse managers to better optimize

outbound shipments to their customers. In the long‐term, this could result in reduced

outbound shipment costs.

Improved Data Availability and Quality

 Improved accuracy of inbound shipment information:  Currently, when a purchase order

includes several containers that are loaded at the same time, the PO system requires

each container to have a unique estimated receipt date. These estimates seldom match

the actual arrival dates and may be several days off.  Improved data accuracy would

support several of the quantitative benefits.

 Improved frequency of data updates:  Near real‐time updates would be much faster

than visiting web sites or making phone calls.

o Better accessto data:  EFM in Kansas City will have a web portalso that less

automated supply chain partners may provide and receive data more quickly,

efficiently and accurately than before.

o Improved use of EFM data:  EFM in Kansas City will provide accessto canned and ad

hoc reports, improving users’ accessto archived shipment data. The reports would

supplement EFM’s current automated status and on‐demand reports and enable

better forecasting,such asshipment planning.  

The Kansas City EFM case study hasthe potential to realize indirect benefitsfrom other freight

technology projectsin the region.  DOT supportsthe coordination of these efforts:

 Kansas City Trade Data Exchange (TDE):  Like EFM, the TDE seeks to provide actionable

knowledge to a variety of supply chain partners, including government entities like DOT

and CBP. A key part of this initiative’s five‐layer architecture includes the automated

transmission of shipping documentation, expected to accelerate transit time.
Achieving Business Benefits with EFM Technologies 27

 Kansas City Cross‐Town Improvement Project (C‐TIP):  This project aims to improve

information exchanges among private and public stakeholders involved in truck travel in

the Kansas City region. A software development effort, C‐TIP includes the development

of four applications designed to reduce freight congestion, provide real‐time traffic

information, improve equipment utilization and better support intermodal transfer

planning.

####
Achieving Business Benefits with EFM Technologies 28

                                                      

CONCLUSIONS AND SUMMARY OF THE BUSINESS BENEFITS  

While the Internet makesit much easier forsophisticated and unsophisticated firms and agenciesto

communicate, glaring gapsremain in supply chain related data quality—itstimeliness, accuracy and

completeness—and data availability.   For example, lessthan half the firmsin a large industry survey

update even half of theirsupply chain data in a very generous definition of “near real‐time:” 24

hours or less.31  Further, data update performance is worse near the beginning of the supply chain

than near the end.

Still,some companies have found profitsin

providing supply chain connectivity and

collaboration tools. Some third parties have

established networksto interconnect partners.

An advantage of a network isthe ability to add

new partners quickly and easily.  Joining can mean immediate connection with multiple partners.  

There are software and supply chain service providers who claim thousands of customers who are

potentialsupply chain partners.  Service‐oriented architecture and Web services also can

interconnect partners.  

“Effective supply chain management is based on a 

firm's ability to know the ‘what-where-when-and 

how’ of the flow of goods in real-time. This is the 

fundamental value created by visibility.” 

Capgemini, 2008 

Based on case studies and industry research, we believe effective implementation of these

technologies yieldssignificant quantitative and qualitative benefits.

The data from the September 2008 Aberdeen survey showed that 23% of those reporting benefits

claimed more than $3 million ofsupply chain business benefits.32  Aberdeen also reported that

experience with a project makes a significant difference: firmsreport the greatest benefits on

projects underway for more than two years.  Aberdeen’s data also support other conclusionsthat

directly support the business case for EFM and other visibility technologies:  

 Small and medium size companies may stand to achieve more benefits from visibility

technologies like EFM – more than twice as many of these companies report benefits

exceeding $100,000 compared to those reporting breakeven or a loss.

 Automated means of data exchange (Web Services, EDI) contribute to a higher level of

payback. Of companies that achieved financial savings through visibility technology:

o 58% use automated means of data exchange with theirsuppliers

o 39% use automated means of data exchange with their logistics providers

o 35% use automated means of data exchange with their warehouses

How industry quantified the savings as a result of visibility technologiesisstrikingly similar to the

quantified metrics planned for in the EFM case study in Kansas City, including:

 Asset utilization

 Amount of penalties/demurrage

 Labor costs

31 Capgemini, The Logistics Playbook, 2007. 32 Aberdeen Research Group, Analysisfor SAIC and North River Consulting Group, “Supply Chain Visibility Software Benefits,” based on

Aberdeen’s August‐September 2008 survey.
Achieving Business Benefits with EFM Technologies 29

RESULTS IN THE EFM PROGRAM

The independent evaluation of the Columbus EFM (CEFM) deployment test documented meaningful

dollar benefits, asreflected in Table 6.  After computing individualsavings, we normalized them

based on the number ofshipmentsthat moved through the supply chain during the six month test

period. This allowed usto calculate a total per‐shipment laborsavings of $5.94.   

Since thissavings pershipment total used Chinese (10.4% of the totalsavings) and Hong Kong (9.6%

of the total) labor rates, we believe EFM savings pershipment would be higher forsupply chainsthat

originate in higher labor cost areas,such as Europe, the US or Japan.  

Table 6. CEFM Quantitative Benefits

Partner Metric Shipment

Activity

Quantitative

Benefit Savings Per day Savings PerShipment

Manufacturer Productivity

Book

consignment

(Chinese labor

rates)

75% reduction in

data entry

$27 $0.61

Forwarder

Productivity

Shipment pre‐

alert (Hong Kong

labor).

Daily status

report (U.S.

labor).

Airline status

research (U.S.

labor).

65% reduction in

laborfor

forwarder in HK.

50% reduction in

laborfor

forwarder in

Columbus.

$187 $4.61

Customs Broker Data

quality/availability

Customs

processing

(US labor)

18%

improvement in

weekly

shipments

processed by the

Customs Broker

Not determined

CFS Data quality/

availability

Errorresearch

Error correction

(U.S. Labor)

6% reduction in

errors at

warehouse or

$4/error.

Reduction of EDI

errors and time

to correct them;

savings of

$3/error

$40 $0.92

Shipper Service Quality

Research of

priority

shipments

(U.S. Labor)

$11/day saved

monitoring

priority

shipments

$11 $0.25

Total: $259 $5.94

Source:  Adapted from CEFM Final Evaluation Report, May 2008
Achieving Business Benefits with EFM Technologies 30

CONCLUSIONS

 There is a need for EFM and other visibility technologies. Much of the literature we

reviewed, especially annual surveys, reveal a gap in integration between supply chain

partners. Although there has been progress over the last few years, many small and

medium size companies still rely on fragmented, manual processes. Integration among

multiple partners through EFM or other networks can directly impact the key supply

chain business goal areas (productivity, service quality, shipment integrity). As

Capgemini states in their 2008 survey, it is important to look at what ‘major players’ are

doing that is significantly different from everyone else. Two of the key traits of major

players are integration with their partners and greater visibility, both benefits of these

technologies.

 Data quality and availability provide the foundation to achieve core supply chain

business goals. Connectivity – one‐to‐one, many‐to‐many, and every variation in

between – enables collaboration. Collaboration builds on connectivity and enables

process integration which directly benefits all of the partners. EFM and related IT tools

focus on data connectivity and collaboration by helping to improve data quality,

especially in terms of accuracy and timeliness.  Well‐conceived and effectively employed

EFM tools enable supply chain managers to convert data into useful information and

then use it to enhance operational performance.   

 EFM and other visibility technologies offer deployment options for partners of varying

technical sophistication and enable many‐to‐many communications that reduces or

eliminates manual data entry and re‐keying. The range of technology solutions ensures

there is a visibility tool that meets the needs of small, medium or large companies

across a broad range of technical maturity. EDI can be expensive and complex to deploy,

but larger companies may find it worthwhile. Web Services and SOA‐based solutions can

be deployed quickly, are easy to implement, and often rely on XML, which even ‘non‐

techies’ can work with and understand. Web Services are also compatible with EDI,

making it a good solution for small companies looking to connect with their larger

partners that may use EDI and for companies looking to quickly connect with multiple

partners, some of whom may not use EDI. We found numerous web‐based networks of

commercial software providers that have hundreds or thousands of potential supply

chain partners already interfaced with the network.  This helps to add new partners to

an automated supply chain information exchange.

 EFM and other visibility technologies provide lasting benefits, benefits which also impact

companies’ response to increasing regulatory requirements. As Aberdeen illustrated,

the level of cost savings from visibility technologies increases the longer the solution is

in place: they noted a marked increase after two years of a technology deployment.

Another lasting benefit is the ease with which companies can respond to changing

regulatory requirements, such as the upcoming Customs 10+2 rule. Many companies

will not be able to provide the needed data on their own. The technologies discussed in

this report can help provide this visibility without sacrificing operational efficiency in the

process.
Achieving Business Benefits with EFM Technologies 31

The bottom line of thisreport is broad industry research and reports and CEFM evaluation results

reinforce each other and support the conclusion that EFM technologies and the EFM program can

deliversignificant business benefits.
Achieving Business Benefits with EFM Technologies 32

1. Report No.

FHWA‐HOP‐09‐053

2. Government Accession No. 3. Recipient’s Catalog No.

4. Title and Subtitle        Columbus Electronic Freight Management Evaluation –

Achieving Business Benefits with EFM Technologies

5. Report Date

March 2009

    6. Performing Organization Code

7. Authors

K. Troup (North River), D. Newton (SAIC), M. Wolfe (North River) and R. Schaefer(SAIC)

8. Performing Organization Report No.

   

10. Work Unit No. (TRAIS) 9. Performing Organization Name and Address

Science ApplicationsInternational Corporation (SAIC)

Attn: Mark Carter

1710 SAIC Drive

M/S T1‐12‐3

McLean, VA  22102

11. Contract or Grant No.

DTFH61‐02‐C‐00061

13. Type of Report and Period

Covered

Evaluation Report May 2007‐March

2008

12. Sponsoring Agency Name and Address

United States Department of Transportation

ITS Joint Program Office

Research and Innovative Technology Administration

1200 New Jersey Ave. SE

Washington, D.C. 20590

14. Sponsoring Agency Code

HOIT‐1

15. Supplementary Notes

Ms. Kate Hartman, Task Manager

16. Abstract   Effective innovation in information technology (IT) may be the most important tool for the private and public sectors

to respond to internationalsupply chain capacity constraints and congestion.  Electronic Freight Management (EFM) technologies

are modern toolsthat, when well‐implemented, offer dramatic improvementsin the mix of one‐to‐one, one‐to‐many and many‐

to‐many data transfer needs of complex supply chains.  They enhance the speed,reliability and accessibility of data transfers and

translations.  The technologiesinclude one‐time data entry; architectures and tools enabling near‐real‐time dissemination and

exchange of data; varying degrees of integration with Enterprise Resource Planning (ERP) and legacy systems; and web‐based

servicesfor near‐real‐time accessto actionable information.  In 2007, as part of its Electronic Freight Management (EFM) program

initiative, USDOT conducted an EFM deploymenttest in Columbus, OH with partnersfrom a Limited Brands air cargo supply chain

originating in China; an evaluation was completed and documented.  Successfulsupply chain deployments of EFM technologies are

delivering benefits along with more efficiency and better customerservice.  EFM and related visibility technologies provide lasting

benefits.  Major users of these technologiesreport better integration with their partners and greatersupply chain visibility.  This

report presentsresultsfrom many industry surveys and case studies as documented in the literature.  With those as a backdrop,

thisreportsummarizesthe quantitative and qualitative benefitsfound during the Columbus EFM (CEFM) test.  

17. Key Words

Electronic Freight Manifest, Electronic Freight Management, Electronic Supply Chain

Manifest, Intermodal Freight, Field Operational Test,  Inland Port , Information

Technology, Intelligent Transportation Systems, ITS, Cargo Visibility, Logistics

Operations, Freight Transportation, Freight Information Highway

18. Distribution Statement

No restrictions.  

19. Security Classified. (of thisreport)

Unclassified

20. Security Classified. (of this page)

Unclassified

21. No of Pages

36

22. Price

N/A
Achieving Business Benefits with EFM Technologies 33

US Department of Transportation

Research and Innovative Technology Administration

Federal Highway Administration

Intelligent Transportation Systems Office

Office of Freight Management and Operations

1200 New Jersey Avenue, SE

Washington DC

Phone: 800‐853‐1351 or 202‐366‐0408

Fax: 202‐366‐3225

Web site: www.ops.fhwa.dot.gov/freight

March 2009

FHWA‐HOP‐09‐053  

EDL 1449500-853-1351