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MOSS ProjectMaterial Off-Shore Sourcing

ECSC October 29, 2009

Peter Denno, NIST

Michael Comerford, Global Commerce Systems, Inc.

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Presentation Overview

▪ Problem / Objective / Solution

▪ Technical Solution Details

▪ Pilot KR-US

▪ Cost / Benefit Analysis

▪ Future Direction

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Problem/Objective/Solution

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Complexities of the Long Distance Supply Chain

Mes

sage

s / D

ocum

ents

Typ

e

SUMMARY INBOUND PROCESS FLOW: Foreign to USA

Mile

ston

e R

epor

ting

Even

t

Note: throughout Event activity there is numerous 997 FA and 824 AA reporting

Act

or

RCC Received

Consol Center

PAS Picked up at

Supplier

ACCArrived Consol

Center

LOCLoaded Consol

Center

APDArrived Port of

Departure

DCCDeparted

Consol Center

DOSDeparted on Ship

APAArrived Port of

Arrival

HEC Hold Export

Customs

CECCleraed Export

Customs

OPAOutgated Port

of Arrival

HICHold Import

Customs

CICCleared Import

Customs

PCP Picked up by Carrier at Port

ADCArived Deconsol

Center

RDCReceived

Deconsol Center

PDCPicked up from

Deconsol Center

LDCLoaded Deconsol

Center

DIMSDomestic

Intermediary Movements

DTD Delivered

to Destination

Supplier

Material Manager

Freight Forwarder

Inland Foreign Trucker

Consolidation Center

POD Port Authority

Drayage Carrier

Export Customs

Steamship Operator

POA Port Authority

POA Customs

Highway Carrier

RailRoad Carrier

POE Service Provider

POE Customs Broker

POE Customs

DeConsolidation Center

Ship To Party

Domestic Inland Carrier

POE OGA

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Technical Solution Details

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MOSS Solution

Current Process MOSS ApproachWith MOSS, processes follow a documented flow, and the body of information produced forms a cohesive whole.

Without MOSS, processes execute as isolated point-to-point communications; information is often obtained second- or third-hand.

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NIST provides to MOSS technical expertise in developing standardized data protocols used in long distance supply chains.

♦ Developed the MOSS Website at http://syseng.nist.gov/moss

♦ Developing the MOSS Conceptual Model

♦ Defining MOSS Message Structures

♦ Developing a MOSS Testbed

Manufacturing Engineering Laboratory

Manufacturing Systems Integration Division

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MOSS Data Matrix ( 220 columns X ~1450 lines ) ... (22 messages X 1450 lines)

EDI Path

Example Data

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MOSS Conceptual Model

MOSS Property : Line Item HTS Number

DESADV.SG10.SG17.PIA.4347(670:10)

ORDERS.SG28.PIA[PIA.7143=HS].4347(1050:10)

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MOSS Pilot KR-US

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MOSS Pilot Exercise 1 KR-US FCL

MOSS pilot exercises are experimental deployments of the MOSS solution performed for the purpose of assessing the correctness and effectiveness of the MOSS recommendation, and for fine-tuning the specification.

Pilot exercises are performed with “live data” run concurrent with existing “production” supply chain processes.

Exercise 1 involved a Korean – US supply lane of service part batteries;

▪1,379 shipments per year

▪annual purchase volume of $55 million.

▪operates as full-container load (FCL) shipments,

▪shipped under Incoterm Free Carrier (FCA) to multiple destinations.

▪ocean carrier service “port-to-door” from Busan, Korea to San Pedro, California, to rail into a

General Motors (GM) Kansas City, Missouri, warehouse.

The pilot exercise, using MOSS-conforming software from TradeMerit, managed ~20 containers monthly for three months. Exercise 1 was concluded in July, 2009.

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Pilot Participants

AIAG – Project Management and Technical Support

General Motors Company – SPO, Tax, Purchasing, Logistics

TradeMerit – MOSS Conforming SaaS system

AtlasBx – KR- Supplier

CEVA Logistics – LSP - US and AP offices

Eagle/CEVA – Customs Broker

DHL – Freight Forwarder - US and AP offices

APL – Ocean Carrier

Menlo WorldWide – Ship-To Party - KC BDC Whse

NIST – Conformance testing and technical support

Pohang Technical University KR/NIST – Dr. Hyunbo Cho

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Pilot Finding - Reduced Task Counts

*No Email, No Fax. In some cases these tasks require only one data element being entered into the MOSS TradeMerit System.

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Pilot Finding - Supply Chain Sources of ISF Data

TradeMerit - TCS ORDERS DELFOR DELJIT DESADV INVOIC IFTMIN IFTMBF

Manufacturer (line item)

Preloaded** from OEM data, confirmed by Shipper R274 DM* R274 DM* R274 DM* R274 DM R274 DM

HTS (line item)Preloaded** from OEM data R804 DM R804 DM R804 DM R804 DM R804 DM

C/O (line item)

Preloaded** from OEM data, confirmed by Shipper R704 DM R704 DM R704 DM R704 DM R704 DM

SellerPreloaded** from OEM data, R68 DM R68 DM R68 DM R68 DM R68 DM R68 DM R68 DM

BuyerPreloaded** from OEM data R244 DM R244 DM R244 DM R244 DM R244 DM

Ship To

Various are Preloaded** from OEM data, confirmed by Shipper R5 DM R5 DM R5 DM R5 DM R5 DM R5 DM R5 DM

Container Stuffing Location Shipper R 727 DM R 727 DM

Consolidator

Preloaded** from OEM data, confirmed by Shipper R 53 DM R 53 DM

Importer of Record #Preloaded** from OEM data R257 DM R257 DM R257 DM R257 DM R257 DM

Consignee #Preloaded** from OEM data, R 167 DM R 167 DM R 167 DM R 167 DM R 167 DM

* DM - Data Matrix ** Preloaded from OEM includes: Order, Schedule and General Shipping Instructions.

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Future State Solution

▪ The Pilot demonstrated that the error-prone, low value tasks common to the operation of most supply chains – the re-keying of data, the emailing and faxing of documents - can be eliminated

▪ In the Pilot, there was no re-keying – data was entered once and then reused as necessary by authorized supply chain trading partners

▪ In the Pilot, there was no faxing or emailing documents – all documents were either imaged paper documents or system-controlled documents (eDocs)

▪ In the Pilot, milestone reporting was real time

▪ In the Pilot, data was entered once into the TradeMerit Trade Collaboration System (TCS) and reused as necessary by authorized trading partners.

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MARSH CBA – Cost / Benefit Analysis

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MOSS BenefitsBenefits of MOSS to

US Automotive Industry

Other Direct Benefits

Improve Delivery

Predictability

Eliminates Data Re-Keying

Eliminates Faxing and

Emailing

Reduce Expediting

Real Time Visibility

100% Compliant

with Customs

eDocuments

Reduce Demurrage

Quantified Direct Savings

On-Going Cost Avoidance

One Time Cost Avoidance

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Investment Analysis – Pilot KR-US

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Investment Analysis – Pilot Lane KR-US

Note: this investment analysis does not include the one-time benefit of freed working capital of $ 313,511.

Initial Investment $ 32,000.

Recurring Cost $ 95,000.

Recurring Savings $ 228,000.

Net Cash Flow $ 133,000.

Net present Value (NPV) = $ 323,000.

Internal Rate of Return (IRR) = 413%

Payback period = 2.9 months

Note: this investment analysis does not include the one-

time benefit of freed working capital of $1,844,903.

Initial Investment $ 32,000.

Recurring Cost $ 95,000.

Recurring Savings $ 392,000.

Net Cash Flow $ 297,000.

Net present Value (NPV) = $ 761,886.

Internal Rate of Return (IRR) > 413%

Payback period = 1.3 months

UNIT

represents 1 day of transit reduction and 1 day buffer reduction

PILOT

represents 4.85 days of transit reduction and 7 day buffer reduction

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Future Direction

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Phase Gate

AIAG Governance

Pro

ject

Pha

ses

Business Case-Governance Model-Project Scope-Resource Needs-Cost/Benefit

Idea Acceptance

Analyze

Build

Validate

Deploy

Tem

plat

es &

Wor

k P

rodu

cts

CommunicationPlan

Kick-off Meeting

Pre-Plan

Project Nominated

OK toPre-plan

Business Case Definition

“Call to Action”Project

Qualification

Obtain Resources & Leadership

Current State

Build Guideline

Stakeholder review

Organize Work Groups

Project Plan

Project Charter

Prepare for Kick-Off

Industry Survey

Stakeholder Workshops

Collect Data

UML Activity Diagrams

Use Case Narrative of:- Current State- Ideal State - Gap Analysis - Future State

Define

Define Overall Charter

Develop Project Plan

Gap Analysis

 

These phases may be repeated as needed

Ideal State

Future State

Internal ReviewPOC Testing

AIAG Project Management Process

Pilot Testing

KR-US FCLQTR 1/2 2009

MOSS/MARSH Cost:Benefit Analysis Qtr 3

EU-US LCL Pilot

Exercise 2

QTR 4 2009

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MOSS Deliverables

● Cost Benefit Analysis

● Recommended Best Practices

● Technical Requirements

● TradeMerit Case Study

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Thank you. Questions?

MOSS Contact Information

AIAG Morris Brown, Program Manager (mbrown@aiag.org)

GM Michael Comerford, MOSS Co-Chair (michael.comerford@usgcs.com)

Honda Kevin Wade, MOSS Co-Chair (kevin_wade@ham.honda.com)

NIST Peter Denno (peter.denno@nist.gov)