RAILROADS ACT TO IMPROVE QUALITY

RAILROADS ACT TO IMPROVE QUALITY

A principal difference between motor carriers and railroads is the level of service.

A shipper by truck is used to dealing with just one carrier and generally can count on delivery being made when promised, frequently within a 15-minute

window.The rail experience has been considerably less pleasurable. Precise service has not been the hallmark of railroad operations. Frequently, the first a consignee knows that a car is arriving is when it shows up at the loading dock.

That is about to change.

Railroad chief executives, aware that they must increase the level and quality of service, have authorized an ambitious program to tie the industry together. The eventual goal is to provide customers with the same level of service they get from truckers.

Something in the range of 50 percent of rail traffic passes over the tracks of more than one railroad. Most of the major railroads in the industry have initiatives under way to schedule their own railroads.

Scheduling a railroad involves far more than scheduling trains. It means that when a car enters a system, it is scheduled. Each train in which it will move is determined, and in addition to knowing when a shipment is falling behind its schedule, the carrier will have the ability to make changes to bring it back on schedule.

It's not enough for a railroad to provide precision service if the connecting carrier drops the ball - or boxcar.

Truckers have not faced the problem to the same degree because they do far less interchanging of traffic. Truckload traffic also moves from loading dock to unloading dock and doesn't have to pass through as many potential handling points as do railcars.

The Interline Service Management program managed by the Association of American Railroads on behalf of its members is to go online in the first quarter of 1995.

The AAR has contracted with Lyman Transportation and Logistics Inc., a consulting firm headed by William Lyman, a former Atchison, Topeka and Santa Fe Railway executive, to manage the program.

Mr. Lyman said more than a dozen RFQs - requests for qualifications - were

sent out earlier this month to potential bidders for work on the system. RFPs - requests for proposals - will be sought by the end of the year, he said.

The service management program will be in four phases. Contractors will be selected to develop software and hardware, install, maintain and operate the system.

"Communications technology has just exploded in the last five or 10 years," Mr. Lyman said, explaining the railroad industry's ability to do now what it didn't earlier.

An example is Automatic Equipment Identification, a technology that likely will become a part of the interline service management system. AEI responder tags are being applied to every car and locomotive in the industry.

An earlier attempt to do the same thing, called Automatic Car Identification was started about 20 years ago and killed after carriers spent about $100 million when it failed to provide sufficient accuracy.

With the ability to identify individual cars and know where they are, carriers can work the data and keep track of scheduled operations.

The interline service project took off in 1992 when carrier chief executives decided to support the initiative. As railroads have become more responsive to customer and market pressures, there is greater awareness of the need for an industrywide effort.

"Railroads are acting like businesses as opposed to being regulated utilities," Mr. Lyman said.

The system, when it is up and running, will have two basic elements. It will provide a tracing system, and it will offer post-trip analysis.

"It's essential that you have measurement of performance," Mr. Lyman said. "We've learned that from W. Edwards Demming and the other disciples of quality management."

The industry expects to spend several million dollars developing and implementing the system. Mr. Lyman declined to provide specific estimates, pointing out that no contracts have been signed.

The system will go into a debugging phase in early 1995. Because each carrier must have its own scheduling system and some are not as advanced as others, not all will be able to take full advantage of the system immediately.

"The system will allow carriers to manage shipments on interline and captive traffic," Mr. Lyman said.

When a shipment is behind schedule, an automatic computer flag will pop up.

"Then, it will be a management decision what to do about it," Mr. Lyman said.

Actions could involve detouring a car to regain time or even putting a shipment on a truck, if necessary, to satisfy a commitment to a customer.

"The connecting carrier will know when a car is arriving and can control crew calling more precisely," Mr. Lyman said. It's just as bad to call them two hours early and run the risk of running out of time - and delaying delivery - as to hold traffic because the crew was called two hours late, he said.

Rail customers will benefit because precision service will allow them to tighten inventory control.

Precise scheduling also will allow carriers to handle more business without the commensurate investment in equipment, Mr. Lyman said.

Improving service should attract new business, while operating income should improve because of improved equipment utilization.

Shippers also will be able to schedule labor for unloading, which will minimize demurrage charges and cut down on wasted time for workers.