An Electronic Freight Management system used to reduce inventory backorders, increase shipping container utilization, and facilitate customs paperwork had a benefit-to-cost ratio ranging from 2.75 to 3.64.
A Kansas City importer's experience with Electronic Freight Management (EFM)
With improved visibility and better information regarding expected arrival times the importer planned to reduce backorders and limit costs associated with shipping partial orders when incoming shipments were available to fulfill these orders. During the project, the company found that more accurate shipment arrival time information was able to improve decisions regarding the labor requirements needed to load and unload cargo. In addition, with the availability of real-time information on the status of individual shipments, the importer was able to better monitor shipping container space utilization at the origin and partners along the entire supply chain were able to more easily identify sources of potential delay and make adjustments to improve turnaround times of shipping assets (cargo containers, etc.).
Although rigorous evaluation was not feasible due to the limited test period, the following benefits were reported.
- The importer estimated that better incoming inventory receipt information through EFM can reduce backorders by 30 percent.
- The importer expected to increase its shipping container space utilization by nearly 4 percent through the use of EFM.
- The importer estimated that they will be able to reduce 10+2 filing fees by 50 percent with the data elements provided by EFM.
Benefit-to-cost for out-sourced EFM IT operations = 2.75
Benefit-to-cost for in-house EFM IT operations = 3.64
The analysis considered a lifespan of five years for the technology evaluated.
Published By: Battelle and HDS
Source Date: 24 June 2009URL: http://projects.battelle.org/fih/Files/KansasCity_EFM_CaseStudy.pdf
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