An Analysis of the Port of Tacoma s Collaborative Intermodal Optimization e-business Strategy

Transcription

1 An Analysis of the Port of Tacoma s Collaborative Intermodal Optimization e-business Strategy Analysis Team Shea Tanabe-Hines - Lisa McClary - Gene Yelden - Frank Davidson - Ken Johnson

2 Port of Tacoma

3 Introduction Fall 2001 Port of Tacoma initiated a program to evaluate potential for e-business opportunities. Extensive list of initiatives 18 total Rank in tiers of priority Port chose to adopt 6 in the initial phase 75% of container traffic through Port is considered Intermodal Coordination and scheduling of container traffic is of paramount importance Collaborative Intermodal Optimization (CIO) was chosen as the top e-business priority

4 CIO Primary Objectives Reduce rail congestion for container and industry customers Produce faster more reliable intermodal cycle times to the Midwest and East Coast Leverage improved intermodal service to create new product offerings (e.g. with service guarantees) Partner with BNSF (Burlington Northern Santa Fe Railroad) and Port of Seattle to build superior Pacific Northwest block trains and intermodal service that provides a competitive advantage over Port of Vancouver

5 Organization Background 1918 Port of Tacoma established Started with 240 acres Currently Port has 2,400 acres Used for shipping activities, warehousing, distributing and manufacturing Seven Lines of Business (LOB) domestic ocean carriers, economic development, industrial and commercial real estate, intermodal transportation, international container carriers at leased terminals, port operated terminals and specialty cargo In Pierce county over 28,000 related jobs Statewide 101,000 Nearly $73 million in revenue in 2002

6 E-Commerce Business Model Port is source of information for all participants Electronic relationships are active with CIO and both Carriers (customers) and Railroads (business units) Payments flow from carriers to railroads and then to the Port CIO is supported by the Port Eventually become a Whole of Enterprise model

7 Atomic Business Model Collaborative Intermodal Operation (CIO) Main Line Railroads (BNSF, UP) & Tacoma Municipal Beltline $ Port Intermodal I Tenants (Maersk, K-Line, Evergreen, Hyundai) I Collaborative Intermodal Operation (CIO) Port of Tacoma $ Legend Electronic Relationship Service Supplier I Flow of Information Primary Relationship Firm of Interest Customer $ Flow of Money BNSF = Burlington Northern Santa Fe UP = Union Pacific

8 E-Commerce Value Creation Strategies

9 Goals Achieve/maintain critical mass of customers to maintain/decrease fixed port service costs. X Commitment/buy-in from all railroads, carriers, and the Port of Tacoma (Stakeholders) Capitalize on built-in customer base and network effect potential Strategies Build design team utilizing a cross-functional approach for direct participants as well as bringing in outside players for a broad view of possibilities

10 Transformation Goals To drastically reduce congestion, attract new customers, accommodate future port growth as well as reducing manual communication, processes and cycle times Strategy Business Process Reengineering Acquire IT infrastructure to facilitate CIO

11 Goals Creation of intermodal planning tool Develop collaborative technology Redesign of processes including intermodal work processes, operational reporting relationships, data flows and information exchange Create Operations Control Center (OCC) Strategies Initially attain forecasted potential benefits of CIO system involving all key participants Utilize new flow of data for revision of processes and potential innovation of new solutions to problems Y

12 E-Commerce Cost and Revenue Models

13 Economies of Scale Demand Port of Tacoma has a relatively fixed user base Must involve key participants to ensure positive network response Technology must be scalable, expandable and innovative to ensure value added not just mirroring Supply CIO system is focused on lowering cost and improving efficiency Leverage recent technology development Participant buy-in would mean potential immediate volume increase

14 Demand Economies of Scope CIO system can constantly collect data New digital assets could help with planning, identifying needs and potential new services Pinpoint areas of restraint (bottlenecks) Supply Potential for new customizable solutions to individual user problems Use of CIO system could foster support for further e-business initiatives New knowledge from implementation can be leveraged Planning experience software development hardware assets New processes and technologies may transfer to other Port projects

15 Demand Switching Costs Key participants involved in design and execution of new tools Supply High investment by all parties Favorable perception of the CIO system CIO system is foundation for future Reduce congestion, improve planning and decision making, streamline communication and processes Next phase of initiatives should compliment first phase Recruiting and training of employees needed to support system

16 Transaction Costs Demand CIO system provides customers with 24/7 access to information, in real-time, allowing increased performance efficiency Central logistics system will greatly reduce costs incurred by customer optimize exchanges Supply Leverage technology implemented in 2000 (Central Point of Coordination) Tier 1 and 2 initiatives lay foundation for Redesign of organizational structures Reconfiguration of value propositions

17 Five Steps for E-Commerce Success

18 Revenue Models and Pricing Strategies The Port employs a very traditional and competitive revenue model and pricing strategy.

19 Redefine Competitive Advantage Efficient and Effective CIO system Working with customers and business units all on e-business initiatives Capitalize on e-business initiatives that automate, streamline and communicate processes better than all others Strive to become the shipping channel of choice in the Pacific Northwest Use e-business techniques to offer cutting edge tools to customers and business units

20 Rethink Business Strategy The Accenture study and e-business initiatives are important first steps All participants must realize this is just a first step Do not lose sight of what is going on around and in the industry Technological advances happen daily Monitoring and planning should be daily occurrences

21 Re-examine Business and Revenue Models Research and review new services for users of the Port Look for new or less significant users Cutting edge or experimental business models Designing potentially disruptive offerings that appeal to new markets

22 Re-engineer the Organization and Web site CIO system is just the beginning Further embrace Web services Self contained business functions that operate over the Internet enabling disparate systems to interact Implement customer Premier Pages Customizable to specific users Design web presence to be accessible to countries around the Pacific rim Mirrored sites in native languages

23 Re-invent Customer Service Look to new and untapped areas of the market What are other Ports doing New services to build on total experience and increase loyalty (switching costs) Continue customer/user involvement in design and execution of projects Give customers access to data from new processes Further potential for innovations beneficial to all

24 Assessments

25 Evaluation The most important e-business initiative is the Collaborative Intermodal Operation (CIO). The CIO initiative seems to be a success, resulting in the establishment of a solid foundation to grow other e- Business activities. For the year 2002, the year the CIO was implemented, the Port s total revenues increased by almost 19% Value of international traffic shipped through the Port increased by over 22% some of these gains may be attributed to increased efficiency due to the initiative

26 Recommendations Focus on establishing and developing customer relationships to capitalize on the ability to provide an enhanced customer experience. Continue to invest in, and capitalize on, the Port s ability to be a good corporate citizen through community education and involvement.

27 Recommendations Revise current 1st generation Web site to take advantage of new opportunities presented by e Commerce methods and models As additional e-business initiatives are implemented help transform Web site to 2 nd or 3 rd generation site Eventually, move to a 4 th or 5 th generation site with personalization and customization (e.g. Premier Pages )

28 Managerial Implications Realize that the implementation of the CIO and subsequent initiatives detailed in the Accenture report are just the beginning. An ongoing effort to develop a sustainable competitive advantage with the Port s partners will be required. Management must continue to oversee further implementation of the e-business initiatives outlined as well as new opportunities as they present themselves Leadership and management need to realize that many of the e-business initiatives are taking them through business process reengineering (BPR).

29 Select References Port of Tacoma ebusiness Strategy: Project Acceptance: Steps 1, 2 and Accenture Report to The Port of Tacoma. 16 August Port of Tacoma: About Us. In Port of Tacoma Website [online]. Tacoma WA. [cited 1 August 2003] Available from World Wide Web: < sub=17>. Port of Tacoma Annual Report In Port of Tacoma Website [online]. Tacoma WA. [cited 1 August 2003] Available from World Wide Web: < Weill, P. and Vitale, M.R Place to Space. Harvard Business School Press. Boston MA. Lee, C.S. (2001), An Analytical Framework for Evaluating E-Commerce Business Models and Strategies, Internet Research: Electronic Networking Applications and Policy. 11 (4).

30 Questions