D7.4 - v1.1 Alignment of the value case of involved...

EUROPEAN COMMISSION MOVE HORIZON2020 – Research and Innovation Action

Smart Supply Chain Oriented Rail Freight Services

GA No. 636071

Deliverable No. D7.4

Deliverable Title Alignment of the value case of involved stakeholders

Document ID

Smart-Rail-D7.4-v1.0

Dissemination level Public

Main Author Susana Val – Zaragoza Logistics Center

Issue date

31-07-2016

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BD rail services

Disclaimer and acknowledgement

This project has received funding from the European Union's Horizon 2020 Programme Research and Innovation action under grant agreement No 636071

Disclaimer

This document reflects the views of the author(s) and does not necessarily reflect the views or policy of the European Commission. Whilst efforts have been made to ensure the accuracy and completeness of this document, the Smart-Rail consortium shall not be liable for any errors or omissions, however caused.

Smart-Rail consortium

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Document information

Additional author(s) and contributing partners

Name Organisation

Maria Teresa De la Cruz Eliz Zaragoza Logistic Center

Milos Milenkovic Zaragoza Logistic Center

Maria Rodrigues Panteia

Arnaud Burgess Panteia

Chris Wensink Panteia

Adriaan Roest Crollius Panteia

Tina Laparidou Panteia

Joris Tenhagen Seacon

Niels Besseling Seacon

Philipp Stoebke TankMatch

Elmar Ockenfels Ederlog

Kristiana Chakarova ITC

Petko Dimitrov ITC

Oleh Shchuryk ECG

Document Change Log

Version Date Comments

v0.1 First draft of document

v0.x Revised version based on the comments of reviewer(s)

v1.0 First final version, approved by Executive Board, (will be) submitted to EC.

Document Distribution Log

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Version Date Distributed to

v0.1 16/05/2016 First draft of document

v0.2 28/07/2016 Second draft of document

v0.3 31/07/2016 Third draft of document

Verification and approval

Name Date

Verification Final Draft by WP leader Mr Arnaud Burgess 11/08/2016

Approval Final Deliverable by coordinator

Mr Paul Tilanus 08/08/2016

Executive summary

The Control Tower concept needs very intensive and efficient cooperation between all involved stakeholders. However, interests of stakeholders are not fully aligned because their “environments” are not identical. Further, for such a complex innovation like the CT concept is, it is important that all decision makers adopt the innovation. This adoption is known as collective action and it can be obtained when the value created for each stakeholder, or potential losses of values are balanced. This Deliverable presents the results of the Value Case Methodology (VCM) for assessment of all relevant values of stakeholders. VCM is composed from:

• Value network analysis – all relevant stakeholders for rail enabled CT concept are identified and their interrelations are graphically illustrated through value network map;

• Value quantification analysis in which Analytic Hierarchy Process is applied in order to quantitatively interpret all qualitatively expressed effects which stakeholders expect from rail enabled CT concept;

• Value sensitivity analysis which demonstrates sensitivity of each stakeholder to a change in the value of every attribute;

• Value alignment step where the agreement on stakeholder’s value distribution is achieved.

As a synthesis of the VCM approach, analysis of potential risk and cost misalignments was performed and alternative scenarios for value redistribution were suggested. Considering the expected value that rail enabled CT concept will deliver to all stakeholders which is evident from their utility perceptions, very few possible misalignments were found. Therefore, it can be concluded that the agreement is reached and the proposed innovation may take place from the aspect of multi-value multi-stakeholder analysis.

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Table of contents

Executive summary ............................................................................................... 4

Table of contents ................................................................................................... 5

List of Figures ....................................................................................................... 5

List of Tables ........................................................................................................ 7

Definitions & Abbreviations ..................................................................................... 7

1 Introduction .................................................................................................... 8

1.1 Background Smart-Rail .............................................................................. 8

1.2 Purpose of the document............................................................................ 9

1.3 Synthesis of the problems addressed during the stakeholder meetings on 7.2. .. 9

1.4 Document Structure .................................................................................10

1.5 Deviations from original DoW .....................................................................11

1.5.1 Description of work related to deliverable as given in DoW ......................11

1.5.2 Time deviations from original DoW .......................................................11

1.5.3 Content deviations from original DoW ...................................................11

2 Methodology ..................................................................................................12

2.1 Selection of the tool: Value Case Methodology .............................................12

2.1.1 Comparative advantages of VCM ..........................................................12

2.1.2 Principal aspects and main steps of VCM ...............................................13

2.1.3 Usability of VCM to provide the answer on main issue of T7.4 ..................13

2.2 Survey implementation .............................................................................14

3 Multi-stakeholder business analysis ..................................................................22

3.1 Value network analysis .............................................................................22

3.2 Value quantification analysis ......................................................................27

3.3 Value sensitivity .......................................................................................37

3.4 Value alignment ......................................................................................44

4 Business options in Control tower context .........................................................48

4.1 Scenarios for cost alignment ......................................................................48

4.2 Scenarios for risk alignment ......................................................................48

5 Conclusions and recommendations ...................................................................50

References ..........................................................................................................52

List of Figures

Figure 2-1 An illustration of the Value Case Methodology ...........................................13

Figure 2-2 Country of residence of stakeholders .......................................................14

Figure 2-3 Type of stakeholders involved in Survey. .................................................15

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Figure 2-4 International character of stakeholders ....................................................15

Figure 2-5 Main categories of indicators that distinguish respondents from competition .16

Figure 2-6 Effects of cooperation ............................................................................17

Figure 2-7 Experience with cooperation ...................................................................18

Figure 2-8 Attitude toward cooperation ...................................................................18

Figure 2-9 The overall efficiency of intermodal transport ...........................................20

Figure 2-10 Relative performances of transport services ............................................21

Figure 2-11 Railway related influences on performance of transport chain ...................21

Figure 3-1 Value network analysis map ...................................................................27

Figure 3-2 Structure of the model ...........................................................................30

Figure 3-3 Relative rank of stakeholders in rail enabled CT concept ............................31

Figure 3-4 Attributes related to Infrastructure Manager .............................................32

Figure 3-5 Relative rank of effects from the aspect Infrastructure Manager ..................33

Figure 3-6 Attribute utilities for Logistic Service Provider ...........................................33

Figure 3-7 Utility values for Railway Operator ..........................................................34

Figure 3-8 Utilities of Wagon keeper .......................................................................34

Figure 3-9 Utilities of Terminal Operator ..................................................................35

Figure 3-10 Utilities of Shunting operators ...............................................................35

Figure 3-11 Expectations and their level for Shipper .................................................36

Figure 3-12 Absolute utilities of all effects or attributes expected by the stakeholders ...36

Figure 3-13 Part worth utilities per stakeholder ........................................................37

Figure 3-14 Results of sensitivity analysis - Shipper ..................................................41

Figure 3-15 Results of sensitivity analysis – Logistic Service Provider ..........................41

Figure 3-16 Results of sensitivity analysis – Infrastructure Manager ............................42

Figure 3-17 Results of sensitivity analysis – Railway operator ....................................42

Figure 3-18 Results of sensitivity analysis – Shunting operator ...................................43

Figure 3-19 Results of sensitivity analysis – Terminal operator ...................................43

Figure 3-20 Results of sensitivity analysis – Wagon keeper ........................................44

Figure 3-21 Point sensitivity curves of value “Profit” .................................................45

Figure 3-22 Point sensitivity curves of value “Capacity utilization” ..............................46

Figure 3-23 Point sensitivity curves of value “Cost of participation” .............................46

Figure 3-24 Point sensitivity curves of value “Mental shift” .........................................47

Figure 3-25 Point sensitivity curves of value “Visibility” .............................................47

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List of Tables

Table 3-1 Drivers and barriers of stakeholders for participating in rail enabled CT concept ..........................................................................................................................25

Table 3-2 Satty’s scale ..........................................................................................28

Table 3-3 Impact of stakeholders in rail enabled CT concept – Pairwise comparison matrix ..........................................................................................................................31

Table 3-4 Pairwise comparison matrix for determining the part worth utilities of attribute levels ..................................................................................................................32

Table 3-5 Pairwise comparison matrix for attribute utilities of Infrastructure Manager ...32

Table 3-6 Levels of attributes .................................................................................38

Definitions & Abbreviations

AHP Analytic Hierarchy Process

EDI Electronic Data Interchange

ERP Enterprise Resource Planning

CA Conjoint Analysis

CIT2 Continuous Improvement Track 2

CRM Customer Relationship Management

CT Control Tower

DoW Description of Work

IM Infrastructure Manager

LSP Logistic Service Provider

MCA Multi Criteria Analysis

RO Railway Operator

TO Terminal Operator

VCM Value Case Methodology

VNA Value Network Analysis

3PL Third Party Logistic

4PL Fourth Party Logistic

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1 Introduction

1.1 Background Smart-Rail

The aim of the European Railway Agency (ERA) is to construct a safe, modern integrated railway network with the overall target that railways must become more competitive to other transport modes and seek and offer high-quality, end-to-end services without being restricted by national borders.

To achieve the necessary modal shift from road to rail the rail sector faces an unprecedented challenge of providing the capacity for affordable and attractive services required to enable this modal shift. The current European rail freight market is a complex system involving a great number of different public and private stakeholders, such as infrastructure managers, rail operators, terminal operators and freight forwarders who jointly manage the operation of running trains from A to B. The Smart-Rail project is aligned with the objectives of SHIFT²RAIL and will ensure that the results can be used in further research in this programme.

The objectives of Smart-Rail are:

- to contribute to a mental shift of the rail sector toward a client oriented and supply chain focus;

- to develop working business models for cooperation of different stake-holders; - to develop a methodology and architecture for exchange of data/information

required for the optimisation process, between stake-holders, making use of existing initiatives where available (for instance the European Corridor Management and national logistical information centres;

- to establish three Living Labs that each focus on different aspects and markets and implement the developed tools, methodologies and concepts. The purpose of the Living Labs is to test and improve the innovative measures in a real life situation. Specific and more dedicated business models, information systems and new rail services will be test

The main focus of WP7 is development of CIT2, which will cover one of the long distance intermodal corridors.

Real operational problems include significant disruptions of agreed arrival times and the lack of real time information. Delays on the route and poor visibility have a big influence on the reliability of rail freight flows. This is especially important for high value consumer goods which are very dependent on time. Increasing the visibility, reliability and punctuality of intermodal links will significantly improve attractiveness of rail transport on intermodal corridors. Therefore, there is a need for increased level of visibility in supply chain via:

• Real time information of the status of the network; • Insight on the impact of events on total duration from origin to final destination.

There is also a need for proactive planning of alternative shipment routings in case of disruption via:

• Rerouting transport on particular legs; • Rescheduling of freight flows to different time slots; • Shifting transport to other modes for some sections of the route.

In order to fulfil these objectives an efficient data sharing and cooperation is needed between all involved stakeholders.

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In order to provide data to a Control Tower that will support decisions, an information platform will be developed in which real time data of different partners (and third parties) can be accessed in a controllable way. Data owners are always in control of data sharing; data remains in IT systems of these owners unless technical restrictions prevent proper data access by a Control Tower. Data sharing will be used to design, test and implement new measures that increase the attractiveness of the rail freight product. This will include measures such as:

� Optimizing connections of different legs by bringing slots forward or backward;

� Prediction of transport duration; � Optimizing routes or modes used.

The aim of CIT2 is to tackle the tactical (e.g. capacity planning) and operational planning issues (e.g. track and trace) so that rail transport can maintain and eventually improve its position on market. In order to reach this aim, following tasks are covered by WP7:

� Problem analysis, link with other studies and design of control tower concept;

� Potential impact of the control tower concept and involvement of participants;

� Information exchange required for the control tower concept;

� Alignment of the value case of involved stakeholders;

� Implementation of the control tower concept and design of monitoring approach;

� Monitoring and adjustment of the control tower concept;

� Conclusions and recommendations.

This deliverable will consider the Task 7.4. Alignment of the value case of involved stakeholders, in which value case method is used for assessing all values across all involved stakeholders in order to identify opportunities for value redistribution and creation of positive cases for all stakeholders.

1.2 Purpose of the document

This Deliverable follows the list of the tasks covered by WP7 and represents the logical continuation of the Deliverable 7.3. [8]. More precisely, by a comprehensive quantitative analysis of all actors, identifying their innovations and barriers for cooperation in this innovation it is possible to reveal all opportunities for value redistribution and the creation of positive cases for all stakeholders in rail enabled CT concept.

1.3 Synthesis of the problems addressed during the stakeholder

meetings on 7.2.

Some periodic and interactive sessions with the stakeholders have been organized by the partners involved in this work package. The discussions held during the stakeholders meetings focused on the requirements from stakeholders: what will be credible and useful, contribution, facilitation of quality data collection, help to make sense the data, increase capacity building and support for evaluation.

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Some of the problems addressed, comments and information provided by the stakeholders are summarized here. Part of the information that was requested considered stakeholders’ requirements and shippers’ point of view:

• From the shippers’ perspective, the IM analyses five parameters: o Reliability: The shipper wants to be fully reliable with the transport, in

terms of perfect conditions of security, without errors. Trains scheduled to departure one day at a particular time will departure. Their point of view is that at least in Spain this is achieved. Punctuality is over 95%. Agreements of Concerted Quality support them.

o Lead time: Shipper needs, one he’s arrived to the destination, an immediate manipulation, which is achieved. If they send a train to a particular destination, delivery is immediate since they have own locomotive means. If the delivery includes container on a truck, they can do it in a maximum of 90 minutes.

o Costs: Shippers want a minimum price. The infra manager thinks they do it as such. Canons they pay are reduced to promote these traffics.

o Flexibility: For the shipper, it has to be possible to change schedules, lengths, freight, wagons, etc. in an immediate way. In this area, the IM is quite slow, better than in the past but not enough.

o Visibility: As shippers, they want to know exactly where the freight is. The IM has not their own tools to facilitate trace and traceability of transport to the customer. Each railway company has its own system. The IM hasn’t got still an integrated tool for this issue.

• From the experience of international traffics, they ensure that it’s quite complicated to consolidate in multi-client trains. The multi-client trains with a big company afterwards, can provide then the perfect formula: Trains with freight in both directions. Main difficulties are still to achieve freight in the back haul at international level. One of the solutions to palliate this problem is the creation of trade trains, which mission is to fulfill freight trains.

• At the ECG Land Transport Working Group meeting, it was mentioned that if there

is no connection with IM, it will be difficult to have the information necessary for

LSPs. The other problem is that this information is confidential and it is not

possible to make it public.

• Due to the different terms used by different stakeholders, it was indicated that it

is important now to find a definition/semantics, so that everyone who will use the

Control Tower speaks the same language.

• Finally, the necessity of collaboration in the rail freight sector was a problem

underlined during most of these meetings, for which still solutions are being looked for.

1.4 Document Structure

The document is organized as follows. Chapter 1 is dedicated to the scope and general objectives of the Smart-Rail project as well as the role and contribution of WP7 in reaching the project objectives. Chapter 2 summarizes research methodology for fulfilling the aim of the Task 7.4. More precisely, Value Case Methodology as an important tool for multi stakeholder multi value business analysis is described. Also, important findings from stakeholders’ survey are summarized in this chapter. Chapter 3 contains multi stakeholder business analysis. All actors related to rail enabled CT concept, their motives and barriers are stressed. Value network map is presented as a graphical interpretation of all relations and value exchanges among stakeholders. Analytic Hierarchy Process is

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applied for quantification of all effects identified by the stakeholders. In order to assess sensitivity of each stakeholder to a change in the value of every attribute, point sensitivity analysis is conducted. Value alignment, as the last phase in multi stakeholder business analysis aims to determining an overall compromise outcome about stakeholder’s value distribution. Alternative scenarios for cost alignment and risk alignment are suggested in Chapter 4. The last chapter contains conclusions and recommendations from this analysis.

1.5 Deviations from original DoW

1.5.1 Description of work related to deliverable as given in DoW

D7.4 represents the output of the Task 7.4. In this task the focus are the stakeholders within the control tower concept, their relationships and value distribution. Namely, the control tower concept requires a lot of cooperation between involved stakeholders such as shippers, logistics service providers, rail operators, terminal operators and infrastructure managers. If financial and/or non-financial values are not positive for these stakeholders there is a high chance they won’t cooperate. Therefore, a value case methodology is applied in this task to investigate all relevant values of stakeholders (costs, risks, link with their strategy) and either to mitigate values if they are negative or to redistribute values over stakeholders so that the result is acceptable for all. This analysis will be carried out in close cooperation with mainly the general WP 4 about cooperation in the supply chain and with the general WP 3 about cooperation within the rail sector.

1.5.2 Time deviations from original DoW

Delivery postponed one month because of the Workshop “Value Case Methodology” managed by TNO in the first week of June (07.06.2016). Among the other objectives, the purpose of the Workshop was directly related to the aim and content of D7.4.

1.5.3 Content deviations from original DoW

The activities are conducted within the context of the DoW.

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2 Methodology

This chapter will outline research methodology for alignment the value case of involved stakeholders. The aim is to identify all value alignments and misalignments in a multi-stakeholder network as well as identifying potential value exchanges in order to propose a more even value alignment in the network related to rail enabled CT concept.

The research methodology comprises of:

• Value Case Methodology (VCM) as the main tool used; • Analysis of conducted stakeholders’ survey which will give some useful guidelines

for conducting the VCM.

2.1 Selection of the tool: Value Case Methodology

The Value Case Methodology (VCM) was developed in order to better represent the various stakeholder needs. For the successful implementation and later on market uptake, an innovative solution, such as the Control Tower for multimodal transport, needs to involve different stakeholders: from the developers and funding mechanisms to the end users. It is however, the case that these stakeholders have different interests and goals. In order to align these different interests and goals it is important to perform a multi-stakeholder analysis. Furthermore, it is the case that the benefits of a solution are not always financial. In general, assessment methodologies such as Cost and Benefit Analysis, try to translate all types of benefits in monetary terms. This type of representation, even though it harmonises the different values, includes a series of assumptions or is unclear, not always representing the benefits to the appropriate level. The VCM does not translate the benefits in monetary values, instead, it uses different types of units to fully represent the different types of benefits. Hence, the method is multi-stakeholder and multi-valued [3].

2.1.1 Comparative advantages of VCM

The two main features of VCM: a multi-stakeholder and a multi-valued approach are the main advantages compared to other methodologies. In the case of the Control Tower, we have a stakeholder structure of three main stakeholder types: the Logistic Service Provider, the Infrastructure Manager and the Railway Undertaking. When moving in different countries, these stakeholders are multiplied. In addition, more types could also be involved such as the shippers. This complexity is difficult to handle, especially in the case of innovative solutions, where the various stakeholders should be convinced over the benefits, the contribution of the solution to their individual goals and its potential profits.

Other aspects involve potential conflict of interest (e.g. cooperation with competitors) or issues with governance schemes, harmonisation issues as there are several other systems in place before the application of the solutions. Overall, the risk of adopting an innovative solution is quite high for the stakeholders, therefore, it is important to address their concerns and present the potential benefits. The value case is necessary to balance the risks and benefits between the various stakeholders. It is also very useful in sense that it is a transparent approach, bringing together the various stakeholders, increasing awareness and trust on the solution.

Finally, the VCM is not limited to monetised values, it is adjusted to the different parameters and presents different types of values making it clearer for the stakeholders what the benefits should be; for instance for a stakeholder with the policy to improve his environmental performance, the change in emissions is significant and should be clearly presented. The various Key Performance Indicators could be used to demonstrate the actual benefits in terms of time, cost, carbon footprint etc.

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2.1.2 Principal aspects and main steps of VCM

The first step of the VCM is to identify the main stakeholders and their specific roles during design, implementation and uptake of the solution (Figure 2-1). Next, after analysing the current situation, priorities and preferences for each stakeholder will be aggregated and the solution will be fine-tuned. An important part in the value case methodology is that it creates transparency in the distribution of effects of the expected innovation. Here, it should be noted that some of the effects could be positive for one stakeholder (and will be ‘drivers’), while the same effects might be negative for the other (barriers).

Based on this analysis (business and policy) interventions or measures can be derived, which are required to overcome barriers, while exploiting drivers.

Figure 2-1 An illustration of the Value Case Methodology

There are four main steps described in [3] for properly conducting the VCM:

• The value network analysis, describing the main drivers, barriers and values for each stakeholder (see also the Value Case Workshop for the second CIT)

• The value quantification analysis for determining the values as well as their sources, units, clear description, etc.

• The value sensitivity analysis, where sensitivity analysis is performed on the different parameters and

• The value alignment analysis, where agreement is expected to be reached on the solution elements.

In case it is necessary the four steps, or parts of the steps, are repeated creating a cycle (see figure in the left) in order to reach consensus among the stakeholders.

2.1.3 Usability of VCM to provide the answer on main issue of T7.4

In comparison to other methodologies, the VCM creates multiple business models, combining individual strategies to reach though the same targets. The VCM brings together the different CIT stakeholders in order to identify their barriers and drivers and overall objectives, translate them into concrete values and discuss their expectations of the Control Tower so at to fine-tune its concept and implementation and improve its potential rollout. Through this transparent process, it will be possible to openly share information, create a trustworthy and committed to the solution environment and support the deployment process. This later information is essential for risk minimisation. Another important element to this end is the clear representation of the different values, using agreed terms and sources. In this way, there is no confusion on the model

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potential; on the contrary it makes it easier for the stakeholders to understand the extent the solution has impact on different parameters such as cost, time etc.

2.2 Survey implementation

In order to get a clear idea about the general aim of Smart-Rail project it was needed to conduct a stakeholder analysis. The analysis regards stakeholders’ perspectives, barriers, demands and preferences for implementing and utilizing a new business concept which will improve the modal share of railway transport in the whole transport chain. The analysis is based on stakeholders survey that was conducted in previous period in order to collect all necessary information that characterizes the current position of railways from the aspect of total transport chain, main issues regarding the cooperation and collaboration among the actors, customer relationships, and other factors that limit the share of railway transport within the total transport chain.

As have already been stated in previous Deliverables D2.1 [5]; D2.2 [6] and D4.1 [7], transport chain constitutes of the stakeholders in public/private sector: shippers, carriers, forwarders, and operators as well as the regulatory framework set by the stakeholders in the public sector: regulators and associations.

The survey is oriented to European stakeholders representing all these different entities. It contains in total 43 questions divided into six methodological sections:

• Organization; • Value Case Methodology; • Collaboration; • Information and Communication; • Railway Sector; • Supply chain.

In the rest of this chapter, a summary of responses on all questions is presented. In total, 30 respondents provided answers on survey’s questions. Spatial distribution of these stakeholders within the Europe is presented on Figure 2-2:

Figure 2-2 Country of residence of stakeholders

First group of questions treats organizational aspects of stakeholders. Next figure illustrates the type of the organization each stakeholder belongs to.

Spain

23%

Netherlands

23%

Czech Republic

7%

Norway

7%

Poland

7%

Slovakia

3%

Germany

14%

France

3%

Hungary

3%

Belgium

7%

Austria

3%

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Figure 2-3 Type of stakeholders involved in Survey.

Figure 2-4. emphasises international character of stakeholders.

Figure 2-4 International character of stakeholders

The second group of responses is especially related to Value Case Analysis (VCA). On question related to company’ value proposition respondents provided different answers. However, the main indicators they rely on in order to keep or improve their market positions are full service and reliability. Geographical coverage, capability, price and accessibility of service also play important role in distinguishing them from the competition (Figure 2-5).

Shipper9%

Transport Operator26%

Infrastructure operator

18%

Freight Forwarder12%

Logistic Service Provider

35%

National

20%

International

80%

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Figure 2-5 Main categories of indicators that distinguish respondents from

competition

Besides these main categories some respondents also emphasized the quality of service, professionalism, and special knowledges on exceptional transportation.

Considering key activities on which the value proposition relies on, this response is in line with the previous one. The answers can be categorized according to the type of stakeholder as follows:

• LSPs and freight forwarders – broad set of services they offer (warehousing, storage of loading units, 24/7 transport surveillance);

• Shippers – material availability and service agility; • Infrastructure and Transport operators – proper preparation, coordination and

monitoring, provision of traction services for container manipulation (shunting, transportation).

In order to provide the set of activities which will make a distinction with respect to competition, stakeholders need to use following resources:

• LSPs and freight forwarders – good networks of suppliers, qualified staff, storage facilities, information & planning system;

• Shippers – inventories, transportation; • Infrastructure and Transport operators – fixed and mobile capacities, human

resources, IT capabilities, transhipment equipment.

All these stakeholders create value for:

• LSP and freight forwarders – shippers, railway operators and other parties in supply chain;

• Shippers – customers; • Infrastructure and Transport operators – shippers, LSPs and railway operators.

Key resources that are most expensive for their operation are as follows:

• LSP and freight forwarders –transportation, manipulation and storage facilities; • Shippers – raw materials, energy, personnel, transportation; • Infrastructure and Transport operators – transportation, handling facilities (ship to

shore gantries, rail mounted gantries, yard gantries).

Most expensive key activities are:

Price

12%

Full service

25%

Reliability

23%

Geographical

coverage

16%

Accessibility

10%

Capability

14%

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• LSP and freight forwarders – continuous service provision, sales/purchase activities, purchasing of transport skilled personnel, rail related services (traction);

• Shippers – transportation; • Infrastructure and Transport operators – transportation, transhipment, shunting,

continuous service availability.

Collaboration enables organizations to work together to achieve a defined and common business purpose. According to experience of respondents usual forms of collaboration are:

• LSP and freight forwarders – partnerships and agent relationships, contractual and spot business, partnership in local clusters;

• Shippers – partnership relying on trust among the partners; • Infrastructure and Transport operators – professional partnership based on

commercial agreements.

Among the stakeholders in these collaborations respondents mainly report customers, other service providers in supply chain (for terminal operator they are LSPs, freight forwarders, for an LSP stakeholders are transport companies, rental companies, producers).

Considering the benefits of cooperation for their KPIs, stakeholders emphasize arrival time predictability as the most important effect of cooperation. Also, cooperation has positive influence on lead time and some other factors like transparency, efficiency, responsiveness and cost reduction (Figure 2-6).

Figure 2-6 Effects of cooperation

In order to achieve these benefits from cooperation, stakeholders invested into various technological (data sharing systems, process optimization, other tools for better fulfilment of customer´s requirements – CRM, ERP) and organizational (customer relationships, agreements with other partners for capacity sharing) means.

On question “What else is needed to be organized by your organization to achieve the goals of cooperation?” stakeholders provided following answers:

Arrival time

predictability

42%

Lead time

37%

Other

(transparency,

efficiency,

responsiveness,

cost reduction)

21%

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• LSP and freight forwarders – continue to build confidence and goodwill in the market, more EDI connections and more open data;

• Shippers – rapid process of change; • Infrastructure and Transport operators – digitalization of the environment, EDI

between all stakeholders.

In general, stakeholders have a positive experience from cooperation (Figure 2-7).

Figure 2-7 Experience with cooperation

As the most important advantage of cooperation stakeholders emphasize following aspects:

• LSP and freight forwarders – A stronger position on the market by improved understanding of partners and improved responsiveness;

• Shippers –change and grow for the future; • Infrastructure and Transport operators – synergy and optimization, availability,

cost efficiency, reliability, win-win situations, minimum of financial risks & service intensity, expansion of possibilities on the market based on increased service portfolio.

Therefore, the attitude stakeholders have about cooperation is very positive (Figure 2-8).

Figure 2-8 Attitude toward cooperation

Information and communication has very important role for supply chain partners. Timely and accurate information sharing allows partners to efficiently plan their activities. Following set of questions enables an insight into information flow, partners involved, barriers and opportunities for improving the information sharing and communication among the partners in supply chain.

Unsatisfied

16%

Neutral

23%Satisfied

46%

Very satisfied

15%

Neutral

23%

Positive

23%

Very positive

54%

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Considering the partners with which they communicate, stakeholders provided following answers:

• LSP and freight forwarders – transport operators, infrastructure operators, infrastructure managers, warehouses, shippers;

• Shippers – transport operators, traders, vendors; • Infrastructure and Transport operators – infrastructure managers, transport and

infrastructure operators and shippers.

The type of information partners share in supply chain is:

• LSP and freight forwarders – shipment status data (time schedule, location, estimated time of arrival) with transport and infrastructure operators, shippers, freight forwarders, LSPs;

• Shippers – ETA, stock availability with shippers, transport operators, freight forwarders and clients;

• Infrastructure and Transport operators – train position, tariff policy, transhipment orders, warehouse service orders, storage orders, lead time with transport and infrastructure operators, clients, freight forwarders and LSPs.

However, stakeholders want to obtain additional information:

• LSP and freight forwarders – train status and ETA, infrastructure disruptions and capacities, capacities of different operators, full transparency along the supply chain from shippers, transport and infrastructure operators, LSPs;

• Shippers – market details from shippers, transport operators and freight forwarders;

• Infrastructure and Transport operators – ETA at terminals and other coordination information, volumes, tariffs, orders from LSPs, infrastructure and transport operators, freight forwarders.

Concerning information that they are capable to share stakeholders reported following:

• LSPs and freight forwarders – operational information (transport movement forecasts, train loading information, transportation plans;

• Shippers – planning, strategy, objectives; • Infrastructure and Transport operators – transport plans, volumes, shipments.

Concerning means of information sharing stakeholders mainly base their communication on email and telephone communication.

One of the major concerns represents the barriers in information sharing. Considering these issues stakeholders had different reactions:

• LSP and freight forwarders – non availability (fear to share information), nonexistence of on time information;

• Shippers – collaboration; • Infrastructure and Transport operators – non availability due to lack of trust, lack

of fluid and permanent information.

Railway transport related questions have to give an insight into the main subject of the analysis – information flow, participants in it, and main bottlenecks related to railway leg of the transport chain. The main actors in the process of train path acquiring and reservation are infrastructure managers and railway undertakings. Some of the stakeholders plan the whole capacity at once, and some other do this in a number of times. Also, there is a practice for some transport operators and LSPs to arrange train capacities implicitly via other rail carriers. Besides RUs and IMs, as the main parties involved in train path reservation, some stakeholders (like transport operators for example) need for some additional parties to be included also (subcontractors - other service providers, LSPs, freight forwarders). In cooperation with parties responsible for train path reservation, there is a need for monitoring some important performance measures (KPIs). Stakeholders use all available data as a source for monitoring the indicators which is mainly concentrated around reliability issues (real time vs. planned

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time for example), sales and profits for some LSPs, or costs for infrastructure operators. Measurement is performed on a periodic basis (monthly in some cases). KPIs are usually set independently or in coordination with other stakeholders (unification of some indicators, punctuality for example).

In order to improve their own performances with respect to reliability, stakeholders need real time and precise train traffic information in order to proactively respond and efficiently plan operations. Besides this request they need to have available the most important capacity related information (tons per train, train loading capacity, etc.). This information mainly represents the opinion of stakeholders regarding possibility for improving the whole transport chain. Of course, in order to tackle the reliability issue more strategically, there is a need to analyse the patterns of delay and distortions in the whole transport chain in order to understand the reasons for these events and to design effective measures for their minimizing. Stakeholders also share the opinion that this is an urgent matter which has to be tackled in order to increase efficiency and effectiveness along the supply chain.

The aim of the Smart-Rail project is searching for a better positioning of railway sector in

supply chain. Therefore, it is needed to identify all factors of misalignment the railway transport mode and supply chain in order to be able to search for appropriate actions. The last part of questionnaire was dedicated to supply chain and the current position of railway from the aspect of limitations, efficiency and relative performances.

As main bottlenecks that influence on smoothness of their cargo flows, stakeholders emphasized the following:

• Infrastructure capacities and disruptions related to infrastructure (track gauge in cross border transport, train length in national transport, closure of railway lines due to maintenance or other reasons);

• Mobile capacities and disruptions related to mobile capacities (lack of locos, failures, lack of loco drivers);

• Lack of appropriate service offer; • Interoperability between physical and data communication networks.

Considering intermodal transport, the overall efficiency is evaluated by stakeholders as sufficient but with a preference for its improving (Figure 2-9).

Figure 2-9 The overall efficiency of intermodal transport

Good

38%

To be improved as

soon as possible

31%

To be improved in

the long term

31%

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Next figure represents an evaluation of relative performances of transport services from the aspect of supply of services, quality and frequency of services as well as service availability and reliability. As it can be noticed, stakeholders had the highest preference to road transport mode.

Figure 2-10 Relative performances of transport services

Considering railway related factors that has impact on transport service operations, stakeholders expressed main concern on reliability (Figure 2-11). Unavailability of information was also highlighted as a limitation causing less efficient transport flow.

Figure 2-11 Railway related influences on performance of transport chain

Besides its general purpose, conducted survey analysis provides a useful insight in main characteristics of cooperation and collaboration among the stakeholders as well as their

0

1

2

3

4

5

Number of

transport

operators

Quality of

services Frequency of

servicesService

availability Service

reliability

Rail

Road

IWW

Availability of rail

service

21%

Reliability of rail

service

50%

Flexibility of rail

service

29%

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relationships and values exchanged. Therefore, it represents very important source of information for performing the VCM.

3 Multi-stakeholder business analysis

Implementation of rail enabled CT concept provides many financial and nonfinancial effects to all stakeholders directly and indirectly involved in realization of transport service. Therefore, there is a need for multi value multi stakeholder approach in order to make a collectively accepted solution and value alignment of all involved actors. Unlike the business analysis focused only on financial effects of an investment, the Value Case Methodology (VCM) takes into account both financial as well as non-financial values.

In order to apply VCM for rail enabled CT innovation there is a need to iteratively pass through a set of following steps:

1. Value identification – In this step all network participants that influence the value

the rail enabled CT concept delivers to its end customers are identified. In other

words, all actors that exist in transport chain and that have a direct influence on,

or they are affected by its value propositions toward customers. Their roles,

interests, values delivered, as well as barriers and motives must be assessed.

Value network analysis will be used for visual mapping of all relationships among

stakeholders.

2. Value quantification – in this step quantification of qualitative effects is performed.

This step also provides the input for value sensitivity step. Among a number of

quantification methods Analytic Hierarchy Process (AHP) is selected in this case.

3. Value sensitivity – in this step analysis and visualization of point sensitivity of

stakeholders in terms of acceptance the rail enabled CT concept.

4. Value alignment – this step consists of a structured process aimed at obtaining an

overall acceptable solution for rail enabled CT investment.

3.1 Value network analysis

Value network analysis (VNA) enables a visual interpretation of all business activities and sets of relationships from a dynamic system perspective. The general objective is to provide a description of where value lies in a network and how the value is created [1].

Value networks are comprised from a set of nodes and links connecting them. Nodes represent the actors or stakeholders in a system, whereas the links denote relationships between them. Thus VNA enables a mapping of all stakeholders in a system in order to understand how to complement and integrate their resources to co-produce value. More precisely, VNA enables an assessment where a value lies in the network and how it is co-created and how the activities of one particular stakeholder will affect the network (also in terms of reactions of other stakeholders).

By analyzing the system through VNA it is possible to assess possibilities for its improving or developing.

In the context of T7.4, VNA is applied in order to provide a comprehensive analysis of relationships between potential stakeholders involved in rail enabled CT innovation. Namely, implementation, or better, expanding the existing control tower by rail freight module will provide numerous effects to all involved actors in this value network.

Control tower concept has platform character and it is complex in nature, and it will involve multiple stakeholders with different roles, backgrounds and values. In order to make a clear picture about the value network in CT concept, all stakeholders involved

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and their interrelationships, a one day Workshop “Value Case Methodology” was organized by the project partner TNO in The Hague on July 07 2016. After a number of brainstorming rounds, project partners who took the part in CIT 2 related discussion made a clear picture about all stakeholders involved and their interrelationships. Thus, extended rail enabled CT platform will include following actors:

• Shippers/manufacturers;

• Logistic Service Providers;

• Terminal operators;

• Wagon keepers;

• Shunting operators;

• Railway operators;

• Infrastructure managers.

These are all actors connected directly with rail enabled functionality of CT concept. Roles, interests and values delivered of these stakeholders were also analyzed during the Workshop and the team made following conclusions:

Shippers/manufacturers

Role: Shippers/manufacturers are the end customers of transport service and they generate demand for transportation.

Interest: Main interest of shippers/manufacturers is a reliable, visible and competitive service. They expect that their shipment is transported when necessary from and to specified locations according to and agreed schedule without damages at minimum cost. One of the main issues for shippers is also provision of real time visibility of their shipments throughout the whole door-to-door transport process.

Value delivered: Rail enabled CT innovation will provide end customer with a more efficient (reliable, visible and competitive) service. This will imply higher satisfaction and an increase of the volume of rail related transport services as a value delivered from customer´s side.

Logistic service providers

Rule: Logistic Service Providers arrange full load, door-to-door transportation by selecting and combining without prejudice the most sustainable and efficient mode of transportation. 3PL logistic service provides its own vehicles. 4PLs act as integrators – they are non-asset based companies. The customers of 4PL’s are shippers or service providers. Therefore, 4PL represents an intermediary between providers and customers, one example of 4PL is the concept of control tower of DHL1.

Interest: Rail legs involved in everyday shipment planning provide more combinations which imply more flexibility for LSP, cheaper service provided to end customers, better business results through higher demand for services.

Value delivered: Through the developed rail enabled CT platform LSP will provide more efficient service from the aspect of flexibility, visibility, cost, time, and environmental effects.

Terminal operators

Role: Terminal operators are responsible for safe and efficient delivery and packing up of goods on ships, trucks and trains. In case of railway operations they provide assembly/dismantling and loading/unloading of trains.

1http://www.dhl.com/en/logistics/supply_chain_solutions/what_we_do/international_supply_chain_management.html

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Interest: Rail enabled CT investment will provide terminal operators with better planning of activities due to enabled visibility of rail shipments and more efficient terminal throughput which enables more efficient and possible higher capacities.

Value delivered: On the other side, terminals will be able to provide more reliable service about current status of shipments. Through provided visibility of shipments, and thus better coordination of activities, terminal operators will deliver higher smoothness of operations and less dwell times.

Wagon keepers

Role: Wagon keepers provide rail freight wagons of certain type. They are responsible for reliable service – provision of safe rail freight wagons in a proper condition.

Interest: By rail enabled CT solution wagon keepers may count on higher utilization of resources, more long term contracts and timely information about potential wagon’ defects. They also seek for better quality of vehicle performance data which will enable better planning of inspection intervals and preventive maintenance activities – performance based maintenance which will decrease operational cost, volume of maintenance activities and wagon downtime.

Value delivered: Wagon keepers will be able to provide a service of better quality under the same price or even reduced price.

Shunting operators

Role: Shunting operators provide short haul and shunting services from railway sidings and branch lines to intermodal terminals and rail yards. They are responsible for safe and efficient shunting operations (assembly/dismantling of trains, safety checks).

Interest: Shunting operators will be able to provide more efficient utilization of resources through more efficient coordination with LSPs and on that way they will decrease operational costs and might expect better business results through higher volume of service;

Value delivered: Shunting operators will provide more coordinated – more efficient service due to higher visibility of shipments on railway legs.

Railway operator

Role: Under the railway operators we assume all asset based companies (Railway Undertakings which provide freight transportation service and have its own traction, Railway Undertakings that provide traction only), non-asset based operators (Rail forwarders) as well as mixed forms (Railway Undertaking + Intermodal Operator).

Interest: Rail enabled CT provides possibility for increased volume of freight flows for railway operator, better utilization of resources, better business results.

Value delivered: Railway operators will provide real time info which will enable real time information about shipments and therefore better customer satisfaction.

Infrastructure manager

Role: IMs are responsible for establishing, managing and maintaining railway infrastructure, including allocation of railway capacity.

Interest: Through rail enabled CT solution IMs will gain more profit through better utilized infrastructural capacities;

Value delivered: IMs will deliver more efficient information about train position and possible timetable deviations. They will need to improve the infrastructure reliability and utilization of infrastructure capacities due to increased traffic. Besides technological solutions, they will need to deliver technical solutions (doubling of some sections, sidings, shunting services, more capacities for empty car storage)

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From previous discussion we may derive all drivers and barriers for participating in the transportation planning process managed by a rail enabled CT. Next table represents drivers and barriers of all actors involved in rail enabled CT innovation.

Table 3-1 Drivers and barriers of stakeholders for participating in rail enabled

CT concept

Stakeholder Change in business Drivers Barriers

Shipper • No change in

business • Decreased

running capital costs

• Improved carbon footprint

• Better predictability of business process

• Cost savings due to more transportation performed via rail

• No barriers

LSP • Better service

provision due to higher visibility

• Extended portfolio – upgrade to 4PL

• Better dynamical process because more information is available

• Higher cost for collecting the information

Terminal

operator

• Main business remains the same

• Different more intensive communication with stakeholders

• Processes optimized

• Significantly improved scheduling of activities

• Redesign of process needed in order to enable for participating in such an efficient system

Wagon

keeper

• No need for change in business

• Better predictability of wagon position, state, performances and working conditions

• Improved wagon maintenance process due to available information about their performances (performance based

• Does not realize the added value.

• Need for keeping the exclusivity and market position

• Afraid to lose close relationships with customers

• Afraid of challenge getting out of

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Stakeholder Change in business Drivers Barriers

maintenance) • Improved

scheduling process

comfort

Shunting

operator

• Redesign of processes needed due to a need for more demanding communication

• More visible and prominent position in chain due to increased value of service.


• Better service visibility

• Loosing exclusivity (monopoly position)

• Need for investments in resources for sharing the information

• Mental shift

Railway

operator

• Business process redesign due to more demanding communication and more visible planning of operations


• Resource utilization improved

• Unwillingness for information sharing

• Costly improvements of information sharing infrastructure

• Need for shifting in modality – from single modality to multi-modality

Infrastructure

manager

• No changes in business processes

• More services – better business results

• Higher utilization of infrastructure

• Unwillingness for more intensive information sharing

• No data sharing culture

• Legal barriers with whom they are allowed to share the data

After the conducted stakeholder analysis, the value network map that represents relationships among value chain actors has been designed. Together with these relationships, VNA enables displaying resources that actors exchange or pool as part of their operations (information, mobile capacities, infrastructure and financial assets). Information on exchange resources among actors is qualitative – the map illustrates that two actors exchange money and information but not the exact quantity of those two. However, these key resources are of strategic type and they are considered as

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underlying valuable resources achieved from the relationship among the stakeholders within the rail enabled CT solution.

Therefore, the final output of VNA is the value network map that looks like on the following figure.

Figure 3-1 Value network analysis map

3.2 Value quantification analysis

All the effects that express motives and barriers of stakeholders are summarized in previous section as well as in stakeholders survey (Section 2.2). However, these potential changes that stakeholders expect from rail enabled CT concept are qualitatively expressed. Qualitative effects are often analysed by quantifying the effect. In the literature, among many other techniques, multi-criteria analysis (MCA) and conjoint analysis (CA) are the most frequently used quantification techniques.

For purpose of value quantification analysis in the context of rail enabled CT innovation MCA is chosen as the more appropriate method. With the MCA stakeholders together with experts involved in CIT 2 assign weights to effects. With this input, MCA provides an overview of how different effects combine to a positive or negative outcome for the stakeholders.

AHP is a multi-criteria decision making method introduced by Thomas A. Saaty [3]. AHP uses a multi-level hierarchical structure of objectives, criteria, and alternatives. On the base of pairwise comparisons (of elements on lower level against the elements on upper level – criteria against objective, alternatives against criteria) it is possible to derive the weights of importance of the criteria, and relative importance of alternatives against each individual criterion. Main steps of AHP are:

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1) Problem is decomposed into a hierarchy of goal, criteria and alternatives; 2) Data are collected from DMs in the pairwise comparison matrices; 3) The principal eigen value as well as the corresponding right eigenvector of the

comparison matrix give the relative importance of the various criteria being compared;

4) The consistency of each pairwise comparison matrix is evaluated; 5) Each alternative´ rate is multiplied by weight on upper levels and aggregated in

order to obtain the local ratings with respect to each criterion.

According to literature, in solving the multi-attribute design problems, AHP performs slightly or even considerably better than CA [4]. The details of the method will be demonstrated through its implementation in case of VCM. In this application, the goal is to evaluate the effects each stakeholder expects from participating in a new CT concept which incorporates the railway transport mode also. Based on these preferences – preferred conjoint features of an innovation (CT concept in this case) it is possible to offer a concept which will satisfy interests of all stakeholders. Based on previous step of VCM we can summarize the set of all values that stakeholders and experts associate with CT innovation:

1) Profit. 2) Capacity utilization; 3) Reliability of service; 4) Flexibility of service; 5) Visibility of service; 6) Cost of participation in rail enabled CT concepts (related to business processes

redesign, IT related investments); 7) Cost of service provision; 8) Mental shift (for example, unwillingness for information sharing); 9) Lead time.

Seven pairwise comparison matrices (for each stakeholder one matrix that expresses its relative preference) which have to be fulfilled by all actors involved in this analysis represent matrices of corresponding dimension (dependent on the number of attributes that each stakeholder connects with CT concept) with 1s on main diagonal. Only the part above the main diagonal need to be filled because the part below represents reciprocal values of the values of upper part. Experts for each row i, column j pair of elements (i, j), in each (i, j) cell put their own preference regarding the relative importance of i against j. preferences are based on a scale, called Saaty’s scale presented in Table 3-2:

Table 3-2 Saaty’s scale

Intensity of

importance Definition Explanation

1 Equal importance Two activities contribute equally to the objective

3 Weak importance of one over another Experience and judgment slightly favour one activity

over another

5 Essential or strong importance Experience and judgment strong favour one activity

over another

7 Demonstrated importance An activity is strongly favoured and its dominance

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demonstrated in practice

9 Absolute importance

The evidence favouring one activity over another is over

highest possible order of affirmation

2, 4, 6, 8 Intermediate values between the two

adjacent judgments When compromise is needed

Reciprocals of

above nonzero

If activity i have none of the above nonzero numbers assigned to it when compared with activity j, then j has

reciprocal value when compared with i.

During the matrix fulfilling it is very important to be consistent. Inconsistency appears in cases such as for example situation where the effect i is strongly favoured than j, and j is slightly favoured then k, and k is slightly favoured than i. In these situations the reliability of results decreases. In order to cope with inconsistency, AHP uses consistency ratio CR which must be below 0.1. If CR is higher than 0.1 that means that expert or a group of experts was not consistent during the matrix fulfilling process and the whole procedure must be repeated.

Stakeholders and experts filled seven comparison matrices which comprise preferences of each of the seven stakeholders involved in the transportation planning process of rail enabled CT solution. However, it would be needed to know the relative impact (considering the value it delivers, role and “share” in whole process) of every stakeholder in the value network. This is important when the relative contribution of every effect to the rail enabled CT concept is analysed. Next figure shows the structure of the model.

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Figure 3-2 Structure of the model

Stakeholders are ranked according to their impact (the value they deliver to the CT concept). Pairwise comparison matrices with respect to goal – CT concept are as in Table 3-3:

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Table 3-3 Impact of stakeholders in rail enabled CT concept – Pairwise

comparison matrix

LSP Railway

operator Shipper

Shunting

operator

Terminal

operator

Wagon

keeper

Infrastructure

manager 1/2 1/2 3 3 2 2

LSP 3 1/2 2 2 2

Railway

operator 2 2 2 2

Shipper 3 3 3

Shunting

operator 1 ½

Terminal

operator 1

As it is previously stated, pairwise comparison matrices are filled with relative preferences expressed on a scale from 1-9 (Table 3-2). For example, considering the value it delivers to the whole rail enabled CT concept, Railway operator is slightly more preferred than Terminal operator (value 2 assigned). On the other side, LSP is a much more preferred than Railway operator (value 3 assigned). The final rank of stakeholders in CT concept is given on following figure.

Figure 3-3 Relative rank of stakeholders in rail enabled CT concept according to

value they deliver to it

Relative priority of effects from the aspect of each stakeholder is presented in following part of this section. These are quantitative expressions or part worth utilities related to stakeholder’s value perceptions given in previous section.

0,14182

0,21577

0,19098

0,22511

0,06685 0,07220,0809

0

0,05

0,1

0,15

0,2

0,25

Infrastructure

Manager

Logistic

Service

Provider

Railway

operator

Shipper Shunting

operator

Terminal

operator

Wagon

keeper

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In case of rail enabled CT concept (according to Table 1. and also insights from Stakeholders survey) the main value for Infrastructure Manager will be in capacity utilization (better utilization of infrastructure capacities) and profit (higher incomes due to more traffic intensity – more access charges). On the other side this will imply potentially higher cost of maintenance, so the cost of participating have to be included, and also, there will be some resistance to this more customer focused concept, so some level of unwillingness to cooperate (under the attribute “mental shift”) will exist. Therefore, four of eight attributes are related to IM. All these attributes with their attribute levels (these small variations are needed for determining the point sensitivity of stakeholders) are represented on Figure 3-4.

Figure 3-4 Attributes related to Infrastructure Manager

Pairwise comparison matrices filled by the experts and stakeholders and rank of all attribute levels look as follows (Table 3-4).

Table 3-4 Pairwise comparison matrix for determining the part worth utilities of

attribute levels

Capacity

utilization

Low Medium High Utility

(CI=0.03)

Profit Low Average High Utility

(CI=0.03)

Low 1 1/3 1/5 0.6369 Low 1 1/3 1/5 0.6369

Medium 3 1 1/3 0.2582 Average 1 1/3 0.2582

High 5 3 1 0.1047 High 1 0.1047

Mental

shift

Hard Acceptable Easy Utility

(CI=0.00)

Cost of

participating

Low Medium High Utility

(CI=0.00)

Hard 1 1/3 1/5 0.2308 Low 1 3 5 0.1111

Acceptable 1 1/3 0.6923 Medium 1 3 0.5555

Easy 1 0.0769 High 1 0.3333

Pairwise comparison matrix for IM related attributes has the following content (Table 3-5).

Table 3-5 Pairwise comparison matrix for attribute utilities of Infrastructure

Manager

Capacity

utilization

Profit Mental

shift

Cost of

participation

Rank

(CI=0.04)

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Capacity

utilization

Profit Mental

shift

Cost of

participation

Rank

(CI=0.04)

Capacity

utilization

1 1/2 2 3 0.2895

Profit 1 2 3 0.4094

Mental shift 1 3 0.2047

Cost of

participation

1 0.0964

Figure 3-5 contains graphical interpretation of preferences or utilities allocated to the attributes related to IM.

Figure 3-5 Relative rank of effects from the aspect Infrastructure Manager

As it can be noticed from the figure, IMs expect to increase profit and also utilization of infrastructure. Mental shift reflects their unwillingness to adapt to the whole concept, in sense of more intensive collaboration with other actors in value chain. Visibility, reliability and flexibility, effects preferred by the other stakeholders, also implicitly contribute to expectations of IMs. And at last, cost of service provision (operational cost of service) and cost of participating (no need for substantial investments of IMs in order to be capable to participate in CT platform) have less importance.

Remaining part of this section contains graphical illustrations of attribute rankings for all remaining stakeholders. Levels of attributes will be considered in sensitivity analysis section.

The relative priority of effects for Logistic Service Provider is as follows (Figure 3-6):

Figure 3-6 Attribute utilities for Logistic Service Provider

0,28946

0,40936

0,20468

0,09649

0

0,05

0,1

0,15

0,2

0,25

0,3

0,35

0,4

0,45

Capacity utilization Profit Mental shift Cost of

participation

0,5396

0,1634

0,2969

0

0,2

0,4

0,6

Visibility Cost of participation Flexibility

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Stakeholders give the highest relative utility to Visibility attribute, considering that it enables a complete tracking and tracing capability on the whole route (not only on non-railway legs). Flexibility is also the added value of rail enabled CT tower, considering that it will include railway legs, which are for some directions and some types of commodity (and other service requests) preferable mode. Cost of participation involves some investments in IT infrastructure and it also has some value from stakeholder’s perspective.

Utility values for attributes that concern the Railway operator are as follows (Figure 3-7):

Figure 3-7 Utility values for Railway Operator

Relative utilities related to Railway operators reflect their tendency to increase modal share and utilization of capacities. On the other side, some cost related to improvements of information sharing capacities must be taken into account. Mental shift includes unwillingness for higher level of information sharing and also represent a value that has to be taken into account from the aspect of Railway Operator.

Next figure represents the utilities for case of Wagon keeper (Figure 3-8).

Figure 3-8 Utilities of Wagon keeper

Wagon keepers expect to reach higher level of utilization of wagons due to more efficient maintenance process – based on performances which will be available by rail enabled CT concept. At the same time they expect to gain more profit due to more intensive freight flows. Cost of service provision represents decreased operational costs due to improved maintenance and scheduling process. Mental shift includes their doubts related to non-realizing the added value, afraid of challenge getting out of comfort, need for keeping exclusivity.

Through process optimization and significantly improved coordination terminal operators will substantially improve reliability (Figure 3-9). Visibility as a crucial feature that rail enabled CT concept provides will act as a supporting utility to the first one. However, they also take into account the cost of participation related to business process reengineering.

0,2755

0,14120,1006

0,4827

0

0,1

0,2

0,3

0,4

0,5

0,6

Cost of participation Capacity utilization Mental shift Profit

0,1689

0,2609

0,4512

0,1189

0

0,1

0,2

0,3

0,4

0,5

Cost of service

provision

Capacity utilization Profit Mental shift

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Figure 3-9 Utilities of Terminal Operator

Shunting operators expect some level of decrease in operational cost (costs of service provision) and better business results due to increased value of service. However, they have some fear of losing monopoly position, so there is a need for change in the way they think.

Figure 3-10 Utilities of Shunting operators

Shippers expect better business results due to decreased service costs, and also more visible service (Figure 3-11). The shippers also want to be fully reliable with the transport in terms of perfect conditions of security, without errors. Certain level of flexibility in terms of possibility to change schedules, lengths, freight, wagons is also desirable for shippers.

0,1996

0,1404

0,33 0,33

0

0,05

0,1

0,15

0,2

0,25

0,3

0,35

Cost of

participation

Capacity utilization Visibility Reliability

0,18810,2015

0,073

0,4196

0,1177

0

0,05

0,1

0,15

0,2

0,25

0,3

0,35

0,4

0,45

Cost of

participation

Cost of service

provision

Mental shift Profit Visibility

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Figure 3-11 Expectations and their level for Shipper

Now, after evaluating the hierarchy it is possible to determine the absolute utilities of all effects or attributes which are expected by the stakeholders. These utilities are calculated by multiplying all relative weights along the path from the top level objective to the level of attribute (Figure 3-12). As it can be seen, the overall aim of the concept is a contribution to better business results. Visibility also represents one of the utilities that most of stakeholders expect. Cost of participation play also a large share at some stakeholders, due to their unwillingness to cooperate in this more intensive information sharing concept, and also due to high investments in IT infrastructure that will enable the participation of some actors in the concept (like LSPs are).

Figure 3-12 Absolute utilities of all effects or attributes expected by the

stakeholders

However, considering that the focus is to find preferred conjoint features of rail enabled CT concept (or in other words, the best combination of features) it is needed to focus on partial utilities of all attribute levels in order to be able to evaluate rail enabled CT concept with different pre specified levels of key attributes. Part worth utilities are computed by multiplying the absolute utility of an attribute and a relative utility value of certain level belonging to that attribute (Figure 3-13). This is done for every DM (stakeholder) individually.

0,1955

0,3185

0,1963

0,1645

0,1252

0,0000

0,0500

0,1000

0,1500

0,2000

0,2500

0,3000

0,3500

Visibility Profit Lead time Reliability Flexibility

0,2865

0,0993

0,0608

0,1165

0,1683

0,1285

0,0271

0,07470,0442

0,0000

0,0500

0,1000

0,1500

0,2000

0,2500

0,3000

0,3500

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Figure 3-13 Part worth utilities per stakeholder

3.3 Value sensitivity

The aim of this section is to demonstrate the sensitivity of each stakeholder to a change in the value of every attribute, so called point sensitivity [2]. By generating various versions of rail enabled CT concept (by varying the attribute levels) and by their quantification it is possible to realize the incremental effect of each attribute level upon the rail enabled CT concept choice.

In other words, the idea is to present how much should stakeholder’s utility perception change when the proposal changes. Stakeholder’s utility in case of rail enabled CT solution can be viewed as the willingness to participate in the solution.

It is also useful to define the threshold value, or in other words, the attribute value which will still generate some utility acceptable to the stakeholder. Every level of attribute which is lower by utility than a threshold value will be rejected by the stakeholder.

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Threshold value for each stakeholder is assumed to correspond to a medium level of an attribute value.

All levels of attributes and their meaning are presented in following table.

Table 3-6 Levels of attributes

Attribute level

Low Medium High

Infrastructure Manager

Profit = < infrastructure maintenance cost

covering infrastructure

maintenance cost

= > infrastructure maintenance

cost

Capacity utilization = < production cost covering production cost, break even

= > break even

Cost of participation zero, without charge 0.1% of paths price 0.5% of paths price

Mental Shift no willingness to share data

passive, not actively contributing

actively contributing


Flexibility no flexibility, changes/modifications

not possible (measurement for

elasticity)

not fully conforming to required modification

fully conforming to

required modification

Visibility no visibility visibility only partial or only per demand

full visibility automatically

Mental shift no willingness to share data

only upon request according to

contracted process


Railway operator

Profit = < production cost = break even = > break even

Capacity = < production cost = covering production cost,

break even

= > break even

Cost of participation zero, without charge 0.1% of expected turnover

0.5% of expected turnover




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Attribute level

Low Medium High

contracted process

Shipper

Lead time delay >= 24 hours delay, but <= 24 hours

on time

Profit loss break even = > break even



Reliability no flexibility, changes/modifications


elasticity)


fully conforming to


Flexibility no flexibility, changes/modifications


elasticity)


fully conforming to


Shunting operator

Profit loss break even = > break even



Cost of participation zero, without charge

0.1% of paths price 0.5% of paths price

Cost of service provision

loss = break even = > break even



contracted process


Terminal operator

Capacity utilization = < production cost = covering production cost,

break even

= > break even

Reliability refusal of acceptance immoderate waiting access and handling

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Attribute level

Low Medium High

due to congestion time without delay



Cost of

Participation

zero, without charge 0.1% of handling fee 0.5% of handling fee

Wagon keeper

Profit = < production cost = break even = > break even

Capacity utilization = < production cost covering production cost, break even

= > break even

Cost of Service

Provision

loss = break even = > break even



contracted process


Therefore, it is needed to demonstrate sensitivity of stakeholder to a small change as compared to an attribute value of the idea behind rail enabled CT concept. This idea is based on providing a concept which will enable shippers a service with more degrees of freedom by incorporating the fully visible rail transport legs and on that way decrease the cost of the service for shippers and the lead time.

Therefore, in order to cooperate, shipper will expect substantial improvement of some key attributes, higher profit due to lower expenses by including railway legs and due to shorter lead time (high level of attribute “lead time” represents faster delivery service) and full visibility of railway related parts of the transport chain. In case of the last attribute, shipper will be very restrictive, considering his bad experience from the past and present practice. Shippers also insist on higher reliability and flexibility attributes which are not very bright feature of railway transport. Figure (3-14) represents the results of sensitivity analysis for Shipper. With increasing the attribute value the perception of Shipper’s utility increases. Yellow coloured points with associated utility values represent assumed thresholds for accepting the innovation by the stakeholder.

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Figure 3-14 Results of sensitivity analysis - Shipper

The same situation regarding the sensitivity analysis holds for LSP (Figure 3-15). With increasing the level of flexibility, visibility and decreasing the cost of participation the utility value of LSP raises. Cost of participation has negative point sensitivity (the slope of the curve is downwards), an increase in the outcome of that value means that the stakeholder is unhappy about this increase.

Figure 3-15 Results of sensitivity analysis – Logistic Service Provider

From the point of view of Infrastructure Manager the profit from higher intensity of traffic is the utility with biggest slope (highest sensitivity). However, mental shift concerns IMs and according to their belief the best rail enabled CT innovation should provide (contribute on some way) to seamless transition to a more customer oriented business operation of IMs (Figure 3-16).

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Figure 3-16 Results of sensitivity analysis – Infrastructure Manager

Profit also represents one of the main expectations of ROs (Figure 3-17). However, they are afraid of high cost of participation which includes high investments in IT infrastructure. So, for them, in order to cooperate, a solution which does not include so much of investments would be the best option. As all players from railway field in Europe, ROs also must cope with mental shift in order to increase the value of their service.

Figure 3-17 Results of sensitivity analysis – Railway operator

Almost the same situation is with Shunting operators (Figure 3-18). They also expect lower cost of service provision due to better visibility and optimized processes.

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Profit

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Figure 3-18 Results of sensitivity analysis – Shunting operator

TOs give the same utility values to visibility and reliability attributes (Figure 3-19).

Figure 3-19 Results of sensitivity analysis – Terminal operator

In order to cooperate wagon keepers expect to increase the efficiency of their operation through better performance based maintenance planning system, which can be provided via higher level of visibility (Figure 3-20). Higher capacity utilization and profit are attributes that also have substantial utility value for Wagon keepers.

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Figure 3-20 Results of sensitivity analysis – Wagon keeper

3.4 Value alignment

Sensitivity analysis may provide an insight in the attributes which may serve for value

compensation among stakeholders. Compensation must be with minimal costs and

maximal effect. In order to expand previous analysis in this section we analyse graphs on

the level of attributes. It is the most important to see which values have a collective

effect and which values have only individual effect.

For example, only Shipper will benefit from Lead Time, whereas an alignment on the

value like “Cost of participation” is likely to affect most of the stakeholders in rail enabled

CT concept. Therefore, in this case, we select the collective effects for alignment

analysis.

These effects and stakeholders that benefit from them are:

• Profit – IM, RO, Shipper, Shunting operator, Wagon keeper;

• Capacity utilization – IM, RO, TO, Wagon keeper;

• Cost of participation – IM, LSP, RO, Shunting operator, TO;

• Mental shift – IM, RO, Shunting operator, Wagon keeper;

• Visibility – LSP, Shipper, Shunting operator.

Graphs from previous section (analysis by stakeholder) as well as the graphs presented

here may give an insight which attribute has a large effect on the acceptance of

stakeholders. Therefore, it is needed to realize how much compensation – alignment is

needed. Alignment represents needed level of increase or decrease of an attribute value

which is offered by the initial design of proposed innovation – rail enabled CT concept in

this case in order to reach acceptance by the stakeholders to cooperate. Here, there is a

need to make distinction between stakeholders with utility below and above a threshold

value for a given attribute value. The former need compensation and the latter can

compensate if that is needed.

From graphs before and below, we may see which stakeholders will accept proposed CT

concept and which stakeholders need to be compensated. In this case there are no

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Attribute value

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Profit

Mental shift

Cost of service

provision


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blockers (stakeholders with opposite direction of point elasticity than other) so it will not

be difficulty to propose redistribution of values in case of possible misalignments

identified.

If we look in attribute “Profit” we can see that all stakeholders show positive point

elasticity and their threshold utility values (yellow coloured points corresponding to

ordinate value) are assumed to correspond to medium level of attribute value offered by

the CT concept. This is reasonable assumption since, it is expected that rail enabled CT

concept contributes to a significant increase of traffic intensity on rail lines. IMs will

probably gain more than only to cover infrastructure and maintenance cost (Table 3.6)

and other stakeholders will operate on a level higher than break even due to decreased

operational costs or increased revenues from higher volume of work. Therefore, the

medium level of attribute “Profit” is a minimum level which will be provided by the

concept.

Figure 3-21 Point sensitivity curves of value “Profit”

The same holds for attribute “Capacity utilization”. By the initial idea of rail enabled CT

concept it is expected to increase the level of capacity utilization on much higher level

than it is a medium level which corresponds to threshold utility value of stakeholders.

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lity

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Profit

Infrastructure

manager

Railway operator

Shipper

Shunting operator

Wagon keeper

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Figure 3-22 Point sensitivity curves of value “Capacity utilization”

Cost of participation represents very important criteria for some stakeholders. They have

the same negative point elasticity and various expectations due to different threshold

values. In case it the cost of participation is significantly higher than medium range of

this attribute it is probably that some stakeholders like LSP and RO will have to be

compensated by the others. The form of compensation can be only non-financial. Other

partners can compensate LSP and RO by granting them contracts for predominantly use

of their services. These mean increased volume of cargo flows for LSP and RO and

respectively increase of their financial profit. In open market conditions this will be hardly

achieved but it is possible theoretically to be implemented.

Figure 3-23 Point sensitivity curves of value “Cost of participation”

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lity

Attribute value


Infrastructure

Manager

Railway operator

Terminal operator

Wagon keeper

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Infrastructure

manager

Logistic service

provider

Railway operator

Shunting operator

Terminal operator

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Mental shift represents an attribute which will be one of the highest barriers for some of

the stakeholders, especially for IMs and ROs. Their sensitivity curves prove this. In order

to avoid possibility for value redistribution CT concept must be accepted within low to

medium level of mental shift complexity. In contrary it is needed to compensate this

value among RO and IM on one side and Wagon keeper and Shunting operator on the

other.

Figure 3-24 Point sensitivity curves of value “Mental shift”

According to point sensitivity curves on Figure 3-25 it is obvious that the visibility is a

very appreciated attribute by the LSP (high sensitivity and threshold value) and Shipper

also. Some lower perception is evident in case of Shunting operator. Considering that one

of the main features of CT concept is high level of visibility this will not represent the

weak point in the sense of possible value misalignment.

Figure 3-25 Point sensitivity curves of value “Visibility”

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manager

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Wagon keeper

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lity

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Logistic service

provider

Shipper

Shunting operator

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4 Business options in Control Tower context

Rail enabled CT concept requires different investments and services from each stakeholder, and the cooperation of multiple stakeholders is essential to the successful implementation of the concept. It is of crucial importance to identify the cost and benefit positions for all stakeholders and to raise the awareness of these cases across the value network. With this knowledge and common understanding possible business options can be identified and analysed to further define the innovation and its impact on the existing network of stakeholders. In general, according to the graphs presented it is obvious that all stakeholders will agree to cooperate in this innovation. However, there are possible critical points which have to be taken into account.

4.1 Scenarios for cost alignment

Considering cost perspective of rail enabled CT concept, from previous analysis may be concluded that possible weak points of this innovation lie in the mental shift and cost of participation. Considering that there are no precise estimations of attributes we can make some if-than scenarios for these attributes.

If we analyse the attribute “mental shift”, as it is mentioned in sensitivity analysis this will be one of the important barriers for some stakeholders, especially IMs and ROs. There is a need to organize workshops and trainings and to follow up results in order to gain a positive result and to secure low to medium level of mental shift complexity. This is the time sensitive and costly and can be considered as indirect cost of participation and might not be paid back in a short/med term (project runtime). However, the attribute “mental shift” is not only important for this project but also has positive effects on other future projects as well.

This may be the general conclusion, we can say that many efforts for the stakeholders in this innovation, especially (but not only) for the attribute “mental shift” should be seen as a longer term investment.

Considering the cost of participation, high level of this attribute will lead to unwillingness of some stakeholders to cooperate. However, if one stakeholder has higher expenses due to participation in the rail enabled CT concept than financial benefits, taking into account the longer term effects, he has to be compensated financially, otherwise he will not participate. Financial compensation might be on a bilateral contractual basis. For example, RO gets an extra fee from LSP for implementing IT solutions that allow higher visibility. On the other side, LSP has better reaction time and can save the costs, or will have a competition advantage and can ask higher prices from the shipper who will be able to earn the higher costs back from the market.

4.2 Scenarios for risk alignment

While all involved stakeholders are driven to achieve better business results and increased customer satisfaction, there are some individual and interacting barriers which are holding them back and imply a certain degree of risk.

In order to assess risk and suggest some scenarios we may analyze benefit/risk relationships between stakeholders.

Again, in the context of AHP, we can reverse a direction of comparison made in Table 3-3 and

quantify the expected benefits of stakeholders from the CT concept. This quantification assumes a

sum of stakeholder’s utilities for all positive financial as well as non-financial effects (Figure 4-1).

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Figure 4-1 Rank of stakeholders with respect to expected benefits

On the other side, the same ranking can be made regarding the risks of relying on the CT. It is

assumed that the intensity of risk that each stakeholder has proportional to the investments

(financial and non-financial) into the innovation. Therefore, this estimation of risk is based on a

summing of utilities for all negative financial as well as non-financial effects that stakeholders expect

from CT concept (Figure 4-2). It has to be noticed that Shipper is excluded from the risk analysis

because he does not have any kind of investments.

Figure 4-2 Rank of stakeholders according to risk associated

with the use of CT

From a stakeholder perspective willingness of support and participation in the CT concept will only be given if the potential benefits will be higher than the potential risks (benefit/risk ratio >= 1). Due to the uncertain nature of future results in general the interpretation of the different aspects is very important. In combination with this, the motivation of the parties and the main ‘drivers’ can be identified.

If we find out, that the LSP will see the high potential benefit from participation (benefit/risk ration >> 1), he will most probably be the motor of the CIT. His motivation

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should be used to convince other stakeholders with a less then acceptable benefit/risk ratio to support the concept. The ‘driver’ has to invest manpower/time into the project during the initial phase in order to convince stakeholders to cooperate. According to the results of benefit/risk comparisons we can say that the terminal operators are the only stakeholders that have to be motivated on some way to take a risk in order to cooperate in the rail enabled CT concept.

5 Conclusions and recommendations

The key objective of this document was to make a comprehensive quantitative analysis of potential areas for creating a reliable and beneficial co-operation between all interested actors in rail under the CT concept. It also aimed to investigate all possible barriers that restrict this co-operation and find alternative schemes for collaboration. Another purpose of this document was to see all possible opportunities for value redistribution and propose positive cases that can be proposed for all stakeholders in rail under the rail enabled CT concept.

In order to achieve the mentioned targets, the document was divided into three key chapters to tackle:

1. The general scope of the Smart-Rail Project and how WP7 on the CT concept fits

into general picture of the entire project;

2. Presentation of the research methodology to fulfil the aim of the Task 7.4, which

includes Value Case Methodology (VCM);

3. Multi-stakeholder business analysis.

The VCM was applied here in order to scrutinise all relevant values of stakeholders (e.g. costs, risks, etc.) and to mitigate values if they are negative or to redistribute values between stakeholders so that the result is acceptable for all. The VCM used the information obtained from the stakeholders survey (43 questions) conducted earlier. The survey included questions on stakeholders’ perspectives, barriers, demands and preferences for implementation and utilisation of a new business concept to improve the modal share of railway transport in the whole transport chain. It also contains some data regarding the causes that can affect the co-operation between the stakeholders. In this case the majority indicated ‘arrival time predictability’ (42%) and ‘lead time’ (37%) as the most important factors that influence collaboration. As for the advantages from co-operation between the stakeholders in the framework of the CT concept and their attitude to it, the majority indicated as a ‘very positive’ (54%). The survey has also shown that in order to improve stakeholders’ own performances with respect to reliability, they need ‘real time’ and ‘precise train traffic information’ in order to be able to respond and efficiently plan their operations. Besides the request for the services, they also need to have information on capacity availability (e.g. tons per train, train loading capacity, etc.) The key factor that impacts on transport service operations is ‘reliability of rail services’ (50%). ‘Unavailability of information’ was also indicated as a limitation causing less efficient transport flow. This information was very useful during the Workshop as a base for value network analysis and emphasising the motives and barriers of stakeholders.

Before implementing the CT concept, the multi-value stakeholders approach was needed to find a collectively acceptable solution and value alignment of all involved actors. Four consecutive steps were indicated to complete the VCM for rail enabled CT innovation, i.e. value network analysis (VNA), value quantification analysis, value sensitivity and value alignment.

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The VNA helped to create the value network map that indicates all relations among value chain actors. It also helps to map the resources that are exchanged during the operations.

The value quantification analysis in the context of rail enabled CT innovation shown the weights of importance of certain criteria, e.g. stakeholders ranking regarding the value they deliver to the CT concept, expectation per each stakeholder, ranking of effect and utility values for each type of stakeholder.

In value sensitivity analysis it was demonstrated the sensitivity of each stakeholder to a change in the value of every attribute of the idea behind the rail enabled CT concept, i.e. how much stakeholder’s utility perception alternates when the proposal changes. For instance, it was identified that in order to have a cooperation, shippers will expect substantial improvement of some key attributes, such as higher profit due to lower expenses as well as full visibility of railway related parts of the transport chain. It is also crucial for shippers to have higher reliability and flexibility attributes.

The final step in the multi-value stakeholders approach is value alignment. It represents a needed level of increase or decrease of an attributed value which is proposed by rail-enabled CT concept in order to attain acceptance by the stakeholders to co-operate. For example, in terms of “profit” from the CT, the analysis shows that all stakeholders will expect profit (with the highest for IM and RO). Therefore, it is expected that the CT concept significantly contributes to an increase of traffic intensity on rail lines. Regarding “capacity utilisation,” it is expected to be increased on much higher level than it is a medium level. As for the “cost of participation,” LSP and RO will have to be compensated by the other actors by non-financial means. Regarding “mental shift,” it will be a challenge for all stakeholders, but it will be the highest barriers for IMs and ROs. In terms of “visibility,” it was very appreciated by the LSP and Shipper, but it was less evident for Shunting operators.

The quantitative analysis of the obtained data showed that the rail enabled CT concept will be beneficial for all stakeholders. It will create a solid basis for mutual cooperation and it will contain a potential for further growth.

Analysis of possible weak points or misalignments of the concept in terms of costs or risks was performed in the last chapter. Potential cost and risk misalignments were identified and possible ways of compensation proposed. According to the analysis performed, it is clear that stakeholders as well as the experts consider the whole concept as a necessity and therefore, it was not so hard to make the agreement about this collective action.

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[6] SMART-RAIL, 2016. SMART-RAIL: Smart Supply Chain Oriented Rail Freight Services. Deliverable 2.1: Problem Analysis. Available at: http://www.smartrail-project.eu/downloads/.

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