National Academies Press: OpenBook

Handbook on Applying Environmental Benchmarking in Freight Transportation (2012)

Chapter:Chapter 4 - Steps in Benchmarking Process

« Previous: Chapter 3 - Environmental Benchmarking: Overview of the Process and Benefits
Page 10
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page10
Page 11
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page11
Page 12
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page12
Page 13
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page13
Page 14
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page14
Page 15
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page15
Page 16
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page16
Page 17
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page17
Page 18
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page18
Page 19
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page19
Page 20
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page20
Page 21
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page21
Page 22
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page22
Page 23
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page23
Page 24
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page24
Page 25
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page25
Page 26
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page26
Page 27
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page27
Page 28
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page28
Page 29
Suggested Citation:"Chapter 4 - Steps in Benchmarking Process." National Academies of Sciences, Engineering, and Medicine. 2012. Handbook on Applying Environmental Benchmarking in Freight Transportation. Washington, DC: The National Academies Press. doi: 10.17226/22668.
×
Page29

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

10 The benchmarking process consists of five phases. These phases are as follows: planning, analysis, integration, action, and maturity. Exhibit 5 illustrates each phase of the benchmarking process. These specific phases and the 12 adapted steps that constitute the phases are described in more detail in the following sections. 4.1 Planning The critical steps involved in planning are as follows: • Identify function to benchmark; • Identify best-in-class organizations in that function; • Select performance measures; and • Identify data collection methods. Each of these steps is described in more detail below. Identify Function to Benchmark A key first step in planning a benchmarking study is to identify the function to benchmark. This begins by establishing one or more measures of output to be benchmarked, which could be a product or commodity, an amount of economic output, quantities of commodities shipped, or activity units such as vehicle miles traveled. By identifying a specific output of interest, the benchmarking sponsor (i.e., organization conducting the study) can more easily determine the function responsible for that output. Knowledge of the responsible functional unit guides the comparison of different departments, organizations, or industries on a “one-to-one” basis as opposed to attempting to interpret how data from one functional level translates to another. Furthermore, targeting the functions responsible for a given output allows the sponsor to col- lect the appropriate data regarding specific processes and supporting practices that contribute to the desired output. Given that processes are driven by day-to-day practices, benchmarking studies typi- cally focus on identifying the components and operational steps involved in an individual work process. Through a series of deductive steps, the work process studied is the process deemed responsible, at least in part, for the exemplary performance (i.e., desired outcome) of the organization. A work process involves repeated steps that are performed within a par- ticular sequence translating input into output to generate value for the consumer. The way in which this work process is performed or the method used (“the how” of a process) is often referred to as a practice. A benchmarking study helps to clarify the practices used to perform C h a p t e r 4 Steps in Benchmarking Process

Steps in Benchmarking process 11 the work process in order to answer the question, “how is this work process conducted?” See Exhibit 6. In the planning phase of the benchmarking study, the sponsor should also outline questions to clarify such as, “how is success of this work process measured?” which refers to the performance metrics used by the organization and “what resources and behaviors, including the people, tech- nology, and other assets, enable the conduct of this work process?” which are referred to as the “inputs” or “enablers.” To answer these questions, sponsors target the process owner for partici- pation in the benchmarking study. The process owner is the employee or group of employees who implement the steps involved in a particular work process. To understand the systematic steps involved in a process, benchmarking sponsors should plan to conduct process mapping. Organizations often use management tools such as Deming’s concept of Total Quality Management or the Baldrige Criteria for Excellence to guide process mapping. The result of process mapping is typically a workflow diagram that helps to clarify the prac- tices or steps involved in a process or series of parallel processes. The following are the steps that constitute the development of a process mapping flowchart: Determine the boundaries—This refers to where the process begins and ends and which other processes feed into the process. 1. Identify function to benchmark. 2. Identify best-in-class organizations in that function. 3. Select performance measures. 4. Identify data collection 5. Collect data internally & externally. 6. Measure and compare organizations’ performance 7. Identify best practices to close gap. 8. Communicate findings and obtain buy-in. 9. Develop action plan. 10. Implement actions and monitor progress. 11. Close performance gap 12. Integrate practices into processes. Analysis Planning Integration Action Maturity Adapted from Camp, R. C. (1989). Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance, ASQ Quality Press, 4–6. Exhibit 5. Typical benchmarking process.

12 handbook on applying environmental Benchmarking in Freight transportation List the steps—The developer must determine the desired level of specificity in the flowchart. If a benchmarking sponsor is seeking to mimic the process to achieve a specific outcome, typically, the process mapping will detail every decision point and finite action. Each process mapping step or task should begin with a verb to illustrate an action to be taken. Sequence the steps—Once the steps have been documented, the developer typically moves the steps into their proper location in the process flowchart and includes arrows or lines to show the relationship and sequence between steps in the process. Draw appropriate symbols—Each different type of step has its own symbol. For example, ovals are often used to represent the start or end of a process but boxes and rectangles are used for tasks or activities performed as part of the process. Arrows are used to show the direction of the process flow. Multiple arrows leading out of a box/rectangle typically represent a decision point, which is represented by a diamond. Exhibit 7 shows an example of how a process mapping flowchart should be constructed. Use a system model approach—The process mapping flowcharts should be created using a system model approach where the interrelationships among activities, practices, and processes are highlighted. A complete flowchart would illustrate how a series of processes or parallel pro- cesses work together to achieve an outcome. Thus, the final chart may include multiple flowcharts like the one presented in Exhibit 7, all constructed in “swimmer lanes” to illustrate timelines and sequencing. Contextual factors that should be included in the flowchart are the input (people, machines, technology, and other materials), output (desired outcome or results), control (rules followed by the best-in-class partners), and feedback (information obtained via data collection). Check for completeness—This includes ensuring all of the information (such as dates and titles) in the chart is accurate. Often, follow-up interviews with key stakeholders or the process owners can help verify the contents of the process mapping flowchart. Process Step 1 Practice 1.1 Practice 1.2 Practice 1.3 Process Step 2 Practice 2.1 Practice 2.2 Practice 2.3 Outcome/ Output Process Enabler 2 (e.g., technology) Enabler 3 Enabler 1 (e.g., people; process owner) Exhibit 6. Relationships among practices, processes, and outcomes.8 8Based on concepts described in The Basics of Benchmarking by Robert Damelio.

Steps in Benchmarking process 13 Finalize the flowchart—This final development step may include collecting additional data to determine not only whether the process steps have been accurately documented but also whether or not the process is being conducted in the proper way. The flowchart developer should docu- ment any recommended deviations so process improvements can be noted. It is important that the data collector conducting the benchmarking study be intimately familiar with the practices, processes, outcomes, and related enablers within his/her own organization. This information is needed to guide the type of data collected, help define the questions that need to be asked of the benchmarking partner, and determine how the processes might be transferable to the sponsor organization. Process mapping can be an important tool to examine business operations that affect the environmental performance of a company. For example, a business might want to map its process for vehicle maintenance to improve the operation and emissions performance of in-use vehicles. A railroad might want to map the process by which trains and railcars are handled in a classification yard to reduce locomotive idling. A shipper might want to map the process for how freight transportation is procured and routed to assess whether its environmental footprint can be reduced by using transportation options that are less energy intensive. A receiver could map out how freight is scheduled and handled at its loading dock to determine if there are opportunities to reduce truck idling. A trucking company might want to map procedures for Source: Ahoy, C. (1999), Facilities News. Exhibit 7. Process mapping flowchart.

14 handbook on applying environmental Benchmarking in Freight transportation vehicle procurement to determine if the company is purchasing equipment that is appropriately sized for its transportation needs, and this could help the company to consider incorporating all appropriate technologies to reduce fuel consumption and emissions. Priorities—Focus on the most important key performance indicators, operating metrics, and attendant environmental and business impacts. Although a benchmarking sponsor may be interested in studying the processes that drive a number of successful outcomes, it is important that the sponsor prioritize which ones are most important. The sponsor needs to focus its interests in order to conduct a thorough study of a particular outcome. This focus allows the organization to effectively prepare itself in terms of structure, culture, and employee engagement for transformation that will likely occur as a result of adopting new practices and processes that will help achieve a similar desired outcome. Focus- ing on multiple areas of interest can distract the organization in its study by straining resources, confusing data collection, and segregating the organization in terms of the changes its employees will be willing to accept and implement. Thus, it is important that sponsor organizations identify priorities in terms of which operating metrics and environmental/ business impacts are of most importance to target first. The following factors should be considered and weighted in defin- ing priorities relative to environmental benchmarking: 1. Which outcomes will have the greatest positive environ- mental impact? 2. Which outcomes and processes will be the most cost- effective to replicate? 3. Which processes will be most efficient to implement (i.e., which outcomes will be achieved in the shortest time- frame)? 4. Which outcomes and processes will require the greatest transformation when adopted by the sponsor organization? In answering these questions, benchmarking sponsors typically find it most advantageous to begin by studying the outcomes and processes that will attain the greatest impact with the least amount of resource allocation and transforma- tion by the organization. In other words, it is recommended that sponsors initially select priorities that will be easily pal- atable to the organization and demonstrate a clear payoff in the conduct of the benchmarking study. Logistics managers often refer to setting “SMART” goals (i.e., those that are spe- cific, measureable, attainable, with resources available for implementation and that are time-bound). Identify Best-in-Class Organizations in that Function An important component of designing a benchmarking study is the selection of organizations to be used for pur- poses of comparison. This is a particularly important issue in freight transportation, because there are many features that can influence performance, including the weight of cargo, the Logistics Center of Excellence Benchmarking Study A leading energy company’s logistics center of excellence benchmarked itself against its logistics peers and developed a carbon measurement and mitigation program based on this information. Peer firms selected for comparison included Dell Inc., Toyota Motor Corporation, Caterpillar Inc., and Siemens AG. In this context, peer firms were leading manufacturers of industrial and other types of equipment that faced similar logistics challenges. The elements considered in this benchmarking exercise included the commitments of these firms to fuel efficiency and emissions reductions, key performance indicators (KPIs), current environmental performance, and future targets for logistics activities. Among the peer organizations, both Dell and Toyota had made substantial improvements to their logistics operations. Strategies employed included reducing the use of packaging, increasing the loading of containers, and reducing emissions per ton- kilometer by changing the port of entry to reduce truck miles traveled. The logistics center of excellence used the information obtained from the benchmarking study to implement a carbon measurement program. Mitigation programs were put into place to shift freight to less polluting modes, including a wind turbine supply chain optimization program that shifted the port of entry for parts. In a single year, the supply chain optimization program reduced GHG emissions by 1,000 tons and reduced logistics costs by $5.4 million.

Steps in Benchmarking process 15 geography over which it is moved, the type of service provided, and the level of congestion of the transportation facility. The choice of entities to benchmark against can be driven by a variety of cri- teria, including a desire to compare against a similar type of operation, the location of innovation, or the availability of willing partners. The benchmarking literature suggests a number of different types of benchmarking and targets for comparison. In general, benchmarking studies can be classified according to the type of partner that one wishes to benchmark against, the nature and objective of the study, and the purpose of the partnership. A benchmarking study can combine several of these different categories. Exhibit 8 describes these different types of benchmarking studies in detail. Although benchmarking is often defined as an outward-looking exercise, some firms may have business units that operate independently from each other. In those instances, internal benchmark- ing can be done. Comparing oneself against direct competitors (competitive benchmarking) is per- haps the most common conception of benchmarking; however, the desire of firms to protect trade secrets may limit exchange of information among competitors in some cases. Many proponents of benchmarking argue that firms need to go beyond the group of direct competitors to have access to a larger universe of leading companies and innovative practices. Industry benchmarking draws comparisons to competitors in the same industry who may not be direct competitors, like truck- load and less-than-truckload (LTL) carriers. Functional benchmarking examines business func- tions between dissimilar industries. For instance, the logistics function between a manufacturer and a retailer could be compared. Generic benchmarking compares similar processes in significantly different types of firms or organizations. For instance, a vehicle maintenance process in a trucking company could be benchmarked against similar maintenance procedures used by the military. The nature of the object of study may also vary. Firms may engage in both process bench- marking and product benchmarking. Strategic benchmarking may look at higher level orga- nizational and management practices. Future benchmarking is forward looking and seeks to ascertain new technologies and breakthroughs that may eventually become benchmarks. Lastly, the purpose of a benchmarking partnership may be collaborative or competitive. Classification Type Meaning Type of Partner Internal Comparing best practices within an organization — for instance, a large firm with multiple subsidiaries could have these entities compare their performance Competitive Comparing best practices with direct competitors — for instance a large national truckload carrier benchmarking against another large national truckload carrier Industry Comparing best practices within the same industry including non-competitors — for instance comparing a truckload carrier to an LTL carrier Functional Comparing the same functional units in companies that may not be direct competitors — for instance comparing the logistics function of Ford and Wal- Mart Generic Comparing generic processes between organizations that may be in unrelated industries — for instance comparing the generic vehicle maintenance process between a trucking company and the military Nature of the Object of Study Process Used to compare operations and work practices Product Used to compare products or services Strategic Used to compare organizational structures and management practices with a more general and longer term focus on understanding what makes leading companies great Future A type of benchmarking that is forwarding looking and seeks to identify industry breakthroughs that will eventually become industry standards and benchmarks Purpose of Partnership Competitive Goal of the comparison is to surpass the best in the industry Collaborative Goal of comparison is to foster a learning environment & share knowledge Exhibit 8. Typology of benchmarking studies.

16 handbook on applying environmental Benchmarking in Freight transportation Select Performance Measures Performance measures are used to gauge the results of implementing practices. In a bench- marking study, metrics and measures identified in reports such as corporate sustainability reports (CSRs) may be used; however, as part of planning for a benchmarking study, performance mea- sures may have to be developed. In fact, the current performance measures used by other orga- nizations may indicate what should be benchmarked. In other words, if a partner organization presents specific metrics that speak of best-in-class performance in a particular environmen- tal area, it may be the processes performed within that function that the sponsor organization chooses to benchmark. However, caution should be taken when using the measures presented by another organization. Without knowing all the variables that were incorporated into their com- putation and the way in which the partner organization operationalizes a concept, there can easily be confusion over what the numbers mean. For example, a metric such as “number of preventable environmental accidents” may suggest an organization is performing well; however, there may be variability in what is deemed “preventable” and what is meant by “accidents.” Metrics may be in the form of qualitative or quantitative outcomes. Typically, in environmen- tal benchmarking, metrics are quantitative and include absolute, relative, and indexed metrics. Absolute metrics would include total quantities of an organization’s output, such as total num- ber of hours of idling or total tons of CO2 emissions. Indexed metrics would measure the per- centage of improvement from a baseline (e.g., percent reduction of emissions from 2005 levels). Clean Cargo Working Group: Choice of Performance Metrics The Clean Cargo Working Group (CCWG) is a business-to-business initiative of more than 30 shippers, carriers, and logistics providers that was formed to measure and reduce the environmental impacts of global goods transportation. The group’s efforts to date have focused primarily on the ocean transport of containerized freight. In developing its metrics, CCWG has tried to balance feasibility (i.e., what data carriers are reasonably able to provide) with materiality (i.e., the data that shippers would like to have). At the same time, CCWG strives to align its metrics and methodologies with leading external standards. For example, CCWG recently revised its metrics for waste, water, and chemicals to align more closely with those of the Clean Shipping Index, an environmental performance measurement system that originated in Sweden and is now widely used throughout Europe. The CCWG metric for CO2 emissions is grams of CO2 per nominal TEU-km. The use of the term “nominal” in the metric means that the maximum container capacity of the vessel is used (i.e., the vessel is assumed to always be full). To enable this calculation, carriers must provide CCWG with vessel-specific data on fuel consumption by fuel type, distance sailed, and cargo capacity. The carrier must also specify the number of refrigerated containers (“reefers”) a vessel can accommodate. This information is important because a container ship uses fuel to provide electricity to the cooling units of refrigerated containers. This information allows CCWG to calculate two CO2 emissions factors for each vessel, one for refrigerated containers and one for “dry” containers. CCWG also asks carriers to identify the trade lane in which a vessel operates. This allows CCWG to assess the average environmental performance of the set (or “string”) of vessels that a carrier devoted to a particular trade lane. Comparisons can then be made among the carriers servicing a given trade lane, and an average can be calculated for all carriers servicing a trade lane. The averages are used to benchmark carrier performance in specific trade lanes. In addition, shippers can use the lane-specific emissions factors to produce a more accurate estimate of the CO2 emissions associated with the ocean transport of their shipments. A carrier receives a score for each trade lane based on how its performance stacks up against the average among carriers working in that lane. A carrier’s overall score for CO2 emissions is based on its individual trade lane scores.

Steps in Benchmarking process 17 Relative metrics would include metrics such as emissions per mile, emissions per ton-mile or miles per gallon. An important component to interpreting and applying the metrics used across organizations is to know the standards/scales and measurement systems used by the benchmark- ing partner (the studied organization) in order to make the proper conversions and application to the sponsor organization. The following provides an example of how the terms key performance indicators, metrics, and measures would be used in a benchmarking context. A carrier might want to examine a key performance indicator (KPI) such as fuel efficiency. Key performance indica- tors are usually related to an organization’s critical success factors and business goals. For freight carriers, fuel efficiency would be an important KPI. Fuel use is one of the most impor- tant operating costs and the most important source of CO2 emissions from operations. For the fuel efficiency KPI, one could specify a metric that would be the criteria used to deter- mine if something was fuel efficient. For example, the metric could specify that fuel efficiency be measured in terms of miles per gallon. One could also specify a measure that would be the format and period used to report the performance metric. For example, one could measure the average miles per gallon of refrigerated long-haul tractor trailers for the month. Identify Data Collection Methods A comprehensive benchmarking study should include a detailed data collection plan. This plan describes existing data and records the sponsor intends to obtain, original data to be col- lected, and the timeline, methods, and contacts involved in collecting the data. Sponsor organiza- tions should thoroughly research data that is publicly available on benchmarking partners prior to requesting data from the organizations. By reviewing existing data first, the benchmarking sponsor will have a better sense of what is available, what is still needed, and who the process owners are in the organization. This a priori research helps to reduce the demands on the bench- marking partners and ensures that the sponsors are well prepared and can streamline data col- lection in terms of time and resource requirements. Although it is helpful to identify the metrics used by partner organizations in order to make noteworthy comparisons, the focus of the benchmarking study should be on identify- ing the effective practices that allow an organization to meet specific targets and become an industry leader. Thus, it is recommended that multiple data collection methods and sources be used to collect data. The purpose of this is to ensure information collected is comprehen- sive and deemed accurate because it is verifiable across various sources. Some of the most common means of data collection used in benchmarking are interviews, surveys, and site visits. The means of data collection should not be based solely on convenience but rather on the purpose of the data collection and type of data desired. For example, if depth of data is critical to answering questions such as identifying detailed decision points and steps involved in process mapping, then one-on-one interviews with process owners would be most ben- eficial. However, if the goal of the data collection is to engage multiple stakeholders and subject matter experts at the beginning of a benchmarking study and to develop a large list of practices that relate to specific processes, the sponsor might wish to use focus groups. Focus groups can engage multiple persons at once and leverage the interaction among participants to help generate data. For the instances in which the goal of data collection is to measure the frequency of a practice and create a large representative sample, paper or electronic sur- veys are typically used. Exhibit 9 provides an overview of different types of data collection methods that may be used and the advantages and disadvantages of each, as well as resource considerations. The exhibit also includes sources that specify the means by which the specific data collection method could take place.

18 handbook on applying environmental Benchmarking in Freight transportation Methods Existing Data Review Survey Interview Focus Group Site Visit Definition Analysis and interpretation of information that exists in house or in public domain Questions sent to sample from partner organization (multiple choice; open-ended; forced choice; scaled) A one-on-one meeting with a partner conducted either face to face or via telephone Multiple participants with similar profiles (job title, rank) who are convened to respond to questions from a facilitator An on-premise meeting at the partner’s facility; combines interview with observation When to Use Before engaging partner organization Need to gather same info from multiple sources; need representative sample to verify data To gather data at a detailed level; to probe stakeholders on particular topics of interest Means for gathering data from multiple sources at once; can be used to reach consensus when there are discrepancies in opinion If observing practices would be valuable (e.g., production line); may be used to help identify enablers Advantage Being prepared/ focused in data collection Permits extensive data gathering; analysis performed by computer; easy to gather large sample and amount of data; phone interviews are inexpensive and shorter, easier to complete than interviews Provides flexibility by allowing for probes/follow-up; allows interviewee to ask questions from a live person; helps to obtain buy-in from key stakeholders Can encourage creative thinking and brainstorming; interaction of participants may reveal new concepts or ideas; can collect data from multiple partner organizations, which can be mutually beneficial for partners and facilitator Can observe to verify practices, processes, enablers, and metrics Disadvantage Finding the appropriate information can be time- consuming Response rates may be low (tough to engage participants); may have confusion about terminology; creative ideas will not be captured; difficult to probe for depth; may be difficult to reach participants via phone for phone surveys; phone surveys are time- consuming because have to call multiple persons Can be time- consuming; interviewees may be reluctant to dedicate 1.0 to 1.5 hours (the typical length of an interview); may need to redirect interviewee to keep him/her on topic Can be time- consuming; focus group members may be reluctant to dedicate the time necessary; may need to redirect focus group members to keep them on topic Requires travel and coordinating schedules (may impact multiple persons at site); typically requires more time than other methods Example Sources Internet; financial reports, sustainability reports; journal (trade, peer- reviewed); news magazine articles Web-based; paper-pencil; e- mailed; phone In person; phone- facilitated (use Internet meeting software, e.g., WebEx, LiveMeeting) At client site or conference facility near client In person Exhibit 9. Benchmarking data collection methods.

Steps in Benchmarking process 19 Methods Existing Data Review Survey Interview Focus Group Site Visit Expertise Required Research skills; knowledge of sources Analyst; Web survey expert; item development expertise; survey administrator; phone surveyors need interview skills Knowledge of Internet meeting software; knowledge of interview protocol development; skill in conducting interviews and encouraging participation; need a note taker and interviewer Facilitator skills require a unique skill set (different from interview skills) — require ability to manage multiple participants and encourage participation from multiple personality types at once; need a note taker and facilitator Listening skills; technical expertise of processes observed; ability to ask questions and take notes Cost/Time Needed Low to no cost; time-consuming Development can be costly Low cost unless travel required; need to account for interviewer practice time and protocol development time Can be costly especially if arranging travel for participants to meet centrally; extensive prepa- ration required Travel expenses; extensive preparation needed to arrange logistics Source: Adapted from Damelio (1995) Exhibit 9. (Continued). 4.2 Analysis The analysis phase includes the initiation of data collection and an assessment of findings. To adequately analyze how practices and processes from partner organizations may be used to enhance the sponsor organization’s behaviors, it is essential to collect data within the bench- marking sponsor organization to know what processes and enablers currently exist, as well as data within the target partner organizations. It is important to understand not only what best practices are being implemented within the partner organization(s), but also where the greatest performance gaps exist between the partner and sponsor organizations and which practices and processes will be most effective in addressing that discrepancy in performance. The following steps are involved in the analysis phase: 1. Collect data internally and externally; 2. Measure and compare current performance “gap”; and 3. Identify best practices to close the gap. Each of these steps is described in the following sections. Collect Data Internally and Externally As mentioned, it is important that the data collector of the benchmarking study first be well educated on the needs, practices, processes, metrics, and enablers used within his/her own organiza- tion. Detailed knowledge provides context to the study and will help determine the receptivity of the organization to new processes and practices. This information is best gained by speaking with the process owners internally prior to collecting data externally from benchmarking partners. Once the data collector is well versed in the practices within his/her organization, the data collector should then proceed to research information that is available in the public domain. It is both frustrating to a partner and inefficient to ask questions that could have been easily answered

20 handbook on applying environmental Benchmarking in Freight transportation by publicly available data. For environmental benchmarking studies, sustainability reports and company websites often provide a wealth of information. The text box below describes how UPS reports key measures of its environmental performance in its sustainability report. Once the data collector is ready to begin collecting data from the partner organizations, he/she should develop structured protocols that outline key questions for discussion. These protocols should outline the questions of interest that will inform the process mapping and help identify the variables that contribute to the translation of processes into outcomes. The protocols should be structured according to purpose (e.g., open ended is typically best for focus groups while mul- tiple/forced choice are often used in surveys). Furthermore, in addition to collecting data from the benchmarking partner organizations, it may be important to collect data from organizations with which the partner organizations work closely. This can help to verify the processes and outcomes identified and gain a perspective on the enablers and other contextual factors that impact their business. One of the key challenges with collecting data from partner organizations is identify- ing the appropriate participants who will be most knowledge- able about the practices and processes being benchmarked. Ideally, the participants should be the process owners. How- ever, it may be beneficial to initiate data collection by hosting an on-site or phone-facilitated (if geographically dispersed) focus group with senior leadership that serves as an initial data collection of the high-level activities involved in a particular process and to communicate that there is buy-in from the top for the study being conducted. Participants are more willing to provide information if they know the study is being supported by their senior management. These broad focus groups may then be followed by more in-depth interviews, surveys, site visits, or some combination of methods. To encourage participation, it is also beneficial to offer the partner organization something of value in return for its participation. For example, offering to provide to each par- ticipant a summary of benchmarking results across partner organizations is often an effective way to encourage partici- pation. It is important that consent to release information is obtained from all partners and the data collector should be clear about the intent and use of the data collected. Further- more, prior to sharing any data, clearances for confidential information should be obtained from the partner organiza- tion. If there is any question regarding the appropriateness of data or release of information, this should be discussed with legal counsel at the partner organization and the spon- sor organization to ensure the sponsor organization does not violate any ethics codes or confidentiality requirements. Measure and Compare Performance Gap Since ideally the data collector should have thoroughly researched practices and metrics internal to the sponsor orga- nization, an understanding of the current performance of the sponsor organization should already exist prior to data collec- tion. After data are collected, the performance of the partner organizations should be clearer. As discussed in the planning UPS Sustainability Report UPS is widely recognized as a leader in the drive to reduce the environmental impacts of freight transportation. The company rigorously measures and manages dozens of factors that affect fuel efficiency, ranging from which vehicles it uses to how it maintains, routes, loads, and drives those vehicles. In its 2010 Sustainability Report, UPS provided an extensive amount of data on multiple facets of its environmental performance, including water consumption, aircraft emissions, energy consumption, environmental penalties, and reportable spills. Much of this data was reported using metrics that would allow internal or external benchmarking. Such metrics include • CO2 emissions per 1,000 packages, • Energy consumption per 1,000 packages, • Aircraft emissions per available ton-mile, • Water consumption per 1,000 packages, and • Penalties as a percent of all environmental inspections. UPS offers its customers the ability to offset the CO2 emissions generated by the transport of their packages within the United States. Rather than use generic GHG emissions factors to calculate the CO2 emissions associated with its customers’ shipping activities, the company developed a methodology for allocating its total CO2 emissions across its network according to freight flows.

Steps in Benchmarking process 21 section on metrics, conversion formulas may be required to establish proportional metrics that can easily be used to make comparisons across organizations. It is important to understand how metrics and measures are defined and to make appro- priate adjustments to facilitate comparisons between organizations. For instance, a trucking company benchmarking emissions per mile would need to ensure that the same definition of miles traveled is used (e.g., revenue miles, total miles). The treatment of owner-operators and leased equipment would need to be comparable across organizations to ensure the usefulness of the data developed. In a similar fashion, a railroad benchmarking fuel consumption per ton-mile would need to ensure that standardized definitions for ton-miles are used (e.g., gross-ton miles, trailing ton-miles). A full understanding of how practices and metrics are used by the partner organizations is necessary to appropriately analyze performance data and make comparisons. Comparative analysis should be used to analyze the performance gaps and indicate where and why gaps exist, as well as the magnitude of the gaps between the partner and sponsor orga- nizations. The analysis conducted to assess the gaps may be a combination of qualitative and quantitative analysis, depending on the type of data collected. The focus of analysis is typically on the differences between practices used in partner and sponsor organizations, especially when external operations by partner organizations are better. In analyzing performance gaps, it is important to understand the inputs or enablers that may contribute to how the practices and processes are performed. These contextual factors may indi- cate whether practices can be wholly adopted by the sponsor organization or must be modified with only partial benefits being recognized. For example, if a partner organization has an entire information technology department that is dedicated to the use of specific software but the spon- sor organization does not, it may be necessary to spend funds training staff on the basic compo- nents of that software or another less costly software application. The software may have reduced capabilities if establishing an entire department is not feasible given resource constraints in the sponsor organization. More discussion on types of enablers is provided in the previous section on planning in which Exhibit 9 provided an illustration of how enablers relate to practices and processes. Exhibit 10 shows a sample map of enabling factors that influence truck fuel economy. There are three types of performance gaps: negative gap, operations at parity, and positive gap. Negative gaps suggest that practices of partner organizations are more sophisticated and produc- tive than those of the sponsor organization while positive gaps indicate areas where the sponsor Source: White Paper on Fuel Economy, Kenworth Truck Company Exhibit 10. Fishbone chart of fuel economy enablers.

22 handbook on applying environmental Benchmarking in Freight transportation organization is advanced in performance of specific practices beyond the partner organizations. Parity, also referred to as a “neutral gap,” indicates practices for which there are no notable per- formance differences between the sponsor and partner organizations. Sponsor organizations make the mistake of solely focusing their efforts and action plans on the negative gaps, but all gaps provide useful information that the sponsor organization should integrate to make effective changes. The distinction between positive, neutral, and negative should be used to prioritize the order with which practice and process improvements are addressed rather than being used to disregard specific processes. For example negative gaps should be categorized as practices and processes that need immediate focus. Less substantial negative gaps and neutral gaps can be given a “raise-the-bar” status where the focus is on setting higher goals and standards to continue what works well. Some neutral and some positive gaps may need to be on a monitor-and-revisit status because, in some cases, it may be diffi- cult to explain why certain positive gaps exist. If the sponsor organization is unable to articulate what they are doing that is allowing them to perform so well in a given area, then the sponsor organization needs to monitor those areas. The sponsor organization should recognize that the positive gap could quickly change to a negative direction if the organization does not know what factors are allowing for positive performance and is ignorant of how to replicate those factors. For negative gaps, it is important to understand the contextual factors and enablers that may account, in part, for those gaps. In some cases, there may be a tradeoff between making process improvements to reduce the performance gap and avoiding other losses that could result from those process improve- ments. For example, a large California utility chose to adopt wind generators to produce energy with the goal of mak- ing environmental improvements that were consistent with some of its counterparts. In adopting this new system, the company quickly discovered that the wind generators were potentially harmful to bird populations, thereby, minimiz- ing one environmental hazard at the expense of another. In sum, it is critical that sponsor organizations not only iden- tify where negative performance gaps exist but also weigh the costs and benefits of addressing those gaps. Identify Best Practices to Close the Gap There are a wide range of strategies that can be used to reduce air emissions and other environmental impacts associated with freight transportation. These include new vehicle technologies, improvements in infrastructure, and operational improve- ments. Vehicle technology strategies can include purchasing new equipment, retrofitting existing equipment, and employ- ing alternative fuels. Operational strategies include reduc- ing equipment idling, shifting freight to less polluting modes, improved training for equipment operators, and improved methods for loading cargo. Infrastructure strategies include electrifying cargo handling equipment and installing equip- ment to provide shore power. There is no definitive list of best practices that is applicable to all organizations. Each organiza- tion must assess which strategies it can employ effectively given the specific markets in which it operates, its business model, and the resources it has available. The effectiveness of a specific SmartWay Transport Partnership The EPA SmartWay Transport Partnership provides information on best practices for saving fuel and reducing emissions for truck carriers, rail carriers, and shippers. The partnership publishes information on best practices and certifies the effectiveness of some vehicle technologies. The partnership provides information on a wide range of technological and operational strategies. For example, some of the strategies promoted by the partnership for truck carriers include • Wide-based tires, • Weight reduction, • Low-viscosity lubricants, • Speed reduction, • Driver training, • Idle reduction, • Automatic tire inflation systems, • Improved freight logistics, • Improved aerodynamics, • Hybrid power trains, and • Longer combination vehicles.

Steps in Benchmarking process 23 practice may depend on numerous other related organizational attributes and enablers. As such, it is advisable not to generalize that a specific practice is best in all contexts. Project Future Performance Levels It is important for sponsor organizations to project future performance levels based on whether the adoption or modification of practices is expected to widen, narrow, or have minimal impact on the performance gap identified. In projecting future performance levels, the sponsor organization must understand how practices will be received internally, the adaptations and resources required to adopt new practices, anticipated changes in market demands, and emerging environmental fac- tors. Making these projections requires estimating the direction and magnitude of performance changes expected within the sponsor organization, as well as changes likely to occur over time in the industry and within partner organizations. To represent the change from the current perfor- mance gap to the projected performance gap, it is beneficial to create a “z” chart. A z chart simply shows how performance levels from the sponsor organization relative to the industry will likely change over time. The three components of a z chart include the trends, the benchmark gap as it currently exists, and future trends. Researchers determine the reasons for the gap, both current and projected, by distinguishing between tactical and strategic actions required to close the gap. 4.3 Integration The integration phase of the benchmarking study refers to the activity of establishing operational targets or goals for organizational transformation. It is recommended that sponsor organizations chart a very specific course and set of steps that will be adopted, including the timeline for adoption, as part of determining when and how new practices will be incorporated. The two primary steps to inte- gration are communicating benchmarking findings to gain acceptance and developing action plans. Communicate Benchmark Findings to Gain Acceptance This step is one of the most critical to successful integration of new practices. To gain accep- tance and implement change, it is important that all employees understand the rationale for changes, have specific knowledge of how the changes should be implemented, and are given a voice in the process. Thus, acceptance must be obtained from the operational up to the manage- ment levels. Support from the top is key to employees adopting new practices. The best way for management to demonstrate to employees that their acceptance of the new strategies is genuine is by providing open and honest answers to employee questions and by demonstrating that man- agement is willing to change its behaviors to welcome the new initiatives. For example, if man- agement expresses to employees that they intend to adopt a blame-free culture when it comes to discussing environmental accidents, then management must demonstrate avoidance of punitive actions when mistakes are reported. Likewise, offering line staff a voice helps them to believe that their contributions to the overall outcome are valuable, thus, those staff are more likely to make the necessary changes to achieve the desired outcome. It is important to keep in mind that the employees are ultimately the people who will implement the new strategies and practices. It is recommended that sponsor organizations develop a detailed communications plan. This plan should identify the following: • Audience to whom the message will be sent; • Content of the message; • Purpose of the message; • Medium by which the message will be delivered (e.g., divisionwide meetings, electronic memo); • Timing of the message; and • Criteria used to determine receptivity to the message.

24 handbook on applying environmental Benchmarking in Freight transportation One of the most effective ways to communicate benchmarking findings and encourage accep- tance of them is by demonstrating the impact that the practices and processes have had for the partner organizations researched. It is much easier to obtain buy-in to the benchmarking find- ings if the purpose for conducting the benchmarking study is presented to employees in the planning phase prior to the initiation of the study. This helps to reduce skepticism and prepare employees for upcoming changes by showing employees that changes will be rooted in compre- hensive research. Furthermore, sponsor organizations should begin communications by articu- lating the positive gaps and the factors that have contributed to those gaps. Negative gaps should then be presented within the context of positive performance to show how some of the activities that have resulted in positive performance may be translated into the practices for which imme- diate improvement is needed. This approach also encourages employees to see how their positive performance is appreciated and can instill a strong sense of ownership for the neutral or negative gaps that exist. Additionally, providing validation through case studies to support the success of specific strategies can help to enhance and convince process owners. Finally, sponsor organiza- tions are encouraged to develop an internal assessment such as an employee survey to determine the degree to which employees are aware of the new strategies and intend to implement new practices. The assessment itself is often a successful communications tool in that it further demonstrates the value of employee initiative to successfully implementing the strategy. Establish Functional Goals Management needs to establish long-term targets and business plans that will support new strategies. These tar- gets should be functional goals that have clear timelines, specific milestones, and measurable results. These goals should be based on new strategies from benchmarking findings, a thorough review of data on employee perspec- tives concerning the benchmarking findings, and an outline of factors to consider in the implementation of practices. These goals should then be clearly communicated through- out the organization and used in the communication approach discussed. Develop Action Plan The process of developing an action plan begins with the construction of operating principle statements. These oper- ating principle statements are integrated into performance goals. The sponsor organization should then outline specific strategies and tactical decisions that help to implement new practices from benchmarking findings by initiating a series of projects. The performance targets established for those projects should become an essential part of the organization’s daily business and corporate goals. An important component of action plans is the identi- fication of the factors that may serve as facilitators or bar- riers to successful implementation of the benchmarking practices. The sponsor organization can then leverage this information to determine which factors should be maxi- Con-way Enterprise Sustainability Action Plan In 2008, Con-way launched an enterprisewide sustainability initiative with a formal action plan across all business units. The goal of the initiative was to make informed business decisions about sustainability that would have a positive effect on the company, its operations, employees, and customers while reducing the company’s carbon footprint. During the first year, the company benchmarked current operations and researched methods and best practices for advancing sustainability. Con-way has established a framework for a sustainability evaluation for every functional process in its shared services organization. All of Con-way’s operating companies—Con-way Freight, Con-way Truckload, and Menlo Worldwide Logistics—are members of the SmartWay Transport Partnership, and both Con-way Freight and Con-way Truckload have won SmartWay Excellence Awards. The company has extensively tested fuel-saving technologies and has implemented many of them, including speed governors, single-wide tires, weight reduction, and idling monitoring. Con-way Freight, the company’s less-than-truckload subsidiary, has reduced miles driven and air emissions from its fleet through multiple network redesigns In 2009, Con-way implemented new recycling and waste reduction practices, launched a major re-lamping project at its freight terminals to save electricity, piloted solar electric generating installations, and instituted use of “green” suppliers.

Steps in Benchmarking process 25 mized and which require additional intervention to mitigate them. An action plan should also include the impact the benchmarking practice is anticipated to have, the timeframe for implementing the new practice, the timeframe for a change in output to be recognized, resources needed for implementation, the extent to which the effect of the practice is expected to be positive, and the degree of effort and management control required to implement the practice. 4.4 Action Process team/process owners who actually perform the work should be engaged in the action planning process to help determine the best way to encourage implementation of work pro- cesses. Although the action plan establishes the foundation for what steps and resources will be required to implement practices, this phase refers to the process of taking those steps and acquiring necessary resources. This phase includes translating the benchmarking findings into language employees will understand. While it may not be difficult to translate a best practice into the specific steps involved in the practice and the roles and responsibilities of those per- forming it, it is important to keep in mind the number of different factors (barriers and facili- tators) that may impact how well practices are implemented. Sponsor organizations should engage in a comprehensive analysis as part of the action phase. This analysis includes articulat- ing ways that acceptance of practices can be obtained from multiple parties. This phase also includes anticipating the possible objections employees may have toward implementing the new practices and the assistance (e.g., consultant) the sponsor organization will need to imple- ment the practice. Furthermore, the location and timing of implementation should be well articulated so employees at all levels of the organization are “on the same page” regarding when and how to implement the benchmarking practices. To identify potential stumbling blocks to implementation, the sponsor organization should consider pilot-testing practices prior to full implementation. Another key element of this phase is the frequent measurement of performance and change in outcomes to ensure the practices are being implemented true to their intent. To help track implementation, the sponsor organization should maintain a continuous reporting system that allows progress toward the benchmarking findings to be shared across the organization. Implement Specific Actions and Monitor Progress To monitor progress regarding specific actions, it is important to look at both task and behav- ioral changes. Although implementing the tasks properly is essential to achieving the desired outcome, it is also important to obtain attitudinal support from employees to ensure that tasks are performed at the level they should be and with the integrity intended. Recalibrate Benchmarks One of the primary reasons that benchmarking should be continuous is that the timeliness of the practices identified may be affected as behaviors, attitudes, and marketplace demand shifts. It is important that sponsor organizations do not continue to target outdated benchmarking findings. If the sponsor organization maintains an ongoing benchmarking approach, practices that have lost their value can easily be spotted and benchmarks can be recalibrated if needed. By recalibrating benchmarks when needed, the sponsor organization stays on the leading edge of changes in the industry and the organization can be in “ready mode” to quickly anticipate and adapt to necessary changes.

26 handbook on applying environmental Benchmarking in Freight transportation 4.5 Maturity This phase in the benchmarking process refers to the point at which benchmarking becomes institutionalized within the sponsor organization and is viewed as a critical component of the management process. Maturity also refers to the phase in which change is beginning to be real- ized and desired outcomes begin to manifest themselves. The two key steps to maturity include closing the performance gap and integrating practices into processes. Close Performance Gap By applying best practices, negative performance gaps are eliminated. A litmus test for whether effective strides have been made in achieving desired outcomes (e.g., reducing environmental impacts, instituting efficient practices) is if the sponsor organization is being recognized through requests for participation in other benchmarking studies or through the receipt of industry awards. The sponsor organization can communicate its success by creating a system for sharing knowledge gained with others in the industry. Vocalizing success allows the sponsor organiza- tion to acknowledge the leadership position the organization has obtained in the industry and encourages employees to continue to improve performance. Practices Fully Integrated into Process In order for the sponsor organization to become a leader in the industry, best practices iden- tified via benchmarking must be fully incorporated into business processes and desired results realized. Once practices have been successfully implemented, the organization may seek to con- duct benchmarking and make comparative assessment of other operational areas within the company. As part of institutionalizing benchmarking, those that use the results can become educated on the process for conducting benchmarking and thus, use those steps to continuously assess processes internally and make practice improvements. Thus, maturity is achieved when benchmarking is conducted at all levels within the organization and not solely by trained facilita- tors. Ultimately, by fully integrating practices into processes, the organization demonstrates the value of benchmarking to its employees and benchmarking becomes a part of essential business conduct. The case study that follows illustrates how the Canadian National Railway Company (CN) has applied the benchmarking concept to reduce GHG emissions. CN’s GHG Benchmarking Program The Canadian National Railway Company (CN) is Canada’s largest railway and has extensive trackage in the central United States. CN has implemented a program to benchmark their carbon emissions. CN participates in the Carbon Disclosure Project (CDP) and uses this program to support their benchmarking program. The following is a brief description of each step of the benchmarking process and how they implemented it at CN. The major phases of a benchmarking process include planning, analysis, integration, and maturity. Each of these steps, and their subcomponents, are described in detail. Planning In the planning phase, corporations select the function to benchmark, establish performance measures, and develop data collection methods.

Steps in Benchmarking process 27 Identify function to benchmark—As a participant in the CDP, CN has selected GHG emissions as one of its environmental benchmarks. In the CDP methodology, GHG reporting is measured in Scope 1, Scope 2, and Scope 3 tiers, which are defined to include direct (Scope 1) and indirect (Scope 2, Scope 3) emission sources. Scope 1 includes GHGs directly emitted from the corporation’s goods movement activities. For CN, the primary source is locomotive emissions through fuel consumption. Also included are GHG emissions from non-locomotive transportation sources, including the CN intermodal trucking fleet and marine shipping fleet. Scope 2 includes indirect emissions associated with corporation activities. CN chose to include electricity consumption in this tier, as reported by utility invoices. This represents emissions from power plant fuel consumption to provide electricity for powering CN’s buildings, supply yards, and other facilities. As of 2011, CN extended its quantitative measurements to include Scope 3 emissions, which include emissions from business travel including air, rail, and road travel. Identify best-in-class organizations—The CDP allows companies to compare themselves against their peers. CN can compare itself against other Class I railroads and others in the transportation industry in general. The CDP reporting protocol allows a company to identify the top performer in its industry and see the magnitude of emissions from that performer. In addition, the public report allows any registered member to access the top performer’s submitted survey, which includes emission sources, goals, and strategies to achieve those goals. With this information, CN can set realistic benchmarks according to the achievements of its peers. Within CN’s peer group of seven North American Class I railroads, four of the companies report GHG emissions to the CDP. Select performance measures—CN has defined two performance measures for reducing GHG emissions and set reduction targets for these measures. Both measures relate directly to Scope 1 emissions through goods movement, the first specifically targeting locomotives and the second encompassing all goods movement modes. Target 1: Carbon intensity of locomotive activities, which account for more than 85 percent of total GHG emissions. This intensity is measured in kg of CO2-e per gross ton-mile (GTM) of rail movement. Between 2008 and 2011, this performance measure has dropped from 12.8 to 11.9 kg CO2-e per GTM. Target 2: Fuel consumption from all goods movement modes. This performance measure is more expansive than the first and includes locomotives, the intermodal trucking fleet, and the marine vessel fleet. Fuel consumption is normalized to cargo volumes and is measured in GTM per gallon of fuel consumed. Identify data collection methods—The Scope 1 and Scope 2 emissions are directly related to the amount of fuel or electricity purchased and consumed by CN’s operations. Because the company uses an enterprisewide business management package to track expenses, Scope 1 and 2 emissions are calculated with a high degree of precision. CN estimates that Scope 1 and Scope 2 emissions are accurate to within a 1 percent precision. Scope 3 emissions are related to activities outside the direct financial control of the organization. For the 2011 submission, CN includes employee business travel as contributors

28 handbook on applying environmental Benchmarking in Freight transportation to Scope 3. These data were compiled directly by the transportation service providers. Fuel consumption data is determined from two data sources: invoice statements, which show the amount of fuel purchased, and storage tank measurements, which show the amount of fuel on reserve in individual project sites. In combination, these measurements allow the company to determine the amount of fuel consumed (not just purchased) within a year. In order to develop ton-mile metrics, CN collects mileage and traffic data to determine the total gross ton-miles of shipments. Although these measurements are not needed to report total GHG emissions to the CDP, they are needed to evaluate progress against the company’s selected performance measures. Data for Scope 2 emissions are measured from electric utility invoices, provided through the same enterprise management system as the Scope 1 data. The invoices provide data on electricity purchases, which are converted to megawatt-hours (MWh) of consumption using utility rate price rates. Analysis In the analysis phase of the benchmarking process, CN calculates the total annual GHG emissions, measures progress against internal performance measure goals, and identifies strategies in order to achieve the emission targets. Collect data internally and externally—Because the majority of CN data collection methods rely exclusively on internal, quantitative data sources, the process of collecting and aggregating fuel consumption information is straightforward. However, the Scope 3 data, included as of the 2011 report, relies on external sources for collection. For locomotives, on a monthly basis, the corporation compiles the available fuel purchasing data and reconciles this data with purchase invoices and storage tank inventory measurements. Traffic data is compiled on an ongoing basis. For non-locomotive sources, CN assembles data in several ways. Shipping fleet data is compiled on an annual basis and reconciled with purchase records from CN’s shipping department and supply management department. Trucking data on fuel consumption is compiled on a monthly basis primarily from operators’ fuel charge cards. Mileage data is self-reported by operators using a mobile electronic system based on Blackberry cell phones. This data is audited on an annual basis. Compared to data on locomotive fuel, consumption from these sources is not as accurate. For the CDP reporting, the fuel consumption data from the prior step are combined with certified emission factors from the Intergovernmental Panel on Climate Change (IPCC) to determine the overall Scope 1 GHG emissions. Electricity consumption measurements are paired with provincial or state emission factors to determine Scope 2 emissions. Measure and Compare Performance—These results are used to track progress against internal goals. CN compares the fuel consumption and emission intensity results internally against goals set for the two performance metrics defined above. Emission results are also shared externally through the CDP for comparison against other peer companies in the rail industry. To aid in comparisons, the CDP calculates two scoring metrics for each submission: the Carbon Disclosure Rating scores the extent and detail of information provided in a company’s CDP response; the Carbon Performance Rating scores a company on the activities, actions, and strategies used to mitigate or adapt to climate change

Steps in Benchmarking process 29 (it is not intended as a comprehensive metric of a company’s GHG footprint and is based solely on responses in the CDP questionnaire). In order to compare the company’s environmental performance against its peers, CN can reference the Carbon Disclosure Rating and Carbon Performance Rating of other companies in its industry. However, these scores are not necessarily related to CN’s performance metrics of carbon intensity and fuel efficiency. To access more meaningful comparison metrics, CN can download the original reporting submissions from each company, which includes the same quantitative data as supplied by CN for CDP certification. Using these submissions, CN can compare its quantitative efficiency performance against that of its peers. Identify best practices to close gap—CN has sought to reduce GHG emissions from company operations by purchasing energy-efficient equipment, making logistical improvements, and implementing employee training. They have also sought to increase energy efficiency from buildings and equipment and initiated an energy efficiency plan that has sought to optimize data centers, consolidate computer servers, and initiate an employee telecommuting program. In industrial settings, CN has identified several strategies, including more efficient air compressors, yard lighting, and HVAC systems. One unique strategy that applies to rail operations in a northern climate is the development of efficient “switch heaters” that keep track switches (locations where trains can move from one track to another) operational in the winter. Integration In the integration phase of benchmarking, a company applies the goals and strategies previously identified in order to obtain buy-in throughout the organization. The two primary steps to integration are communicating benchmarking findings to gain acceptance and developing action plans. Action In the action phase of the benchmarking process, the strategies and action plans are implemented throughout the organization in order to achieve emission reduction goals. Action plans require that the teams responsible for meeting the performance metric benchmarks work directly with the teams responsible for implementing specific reduction strategies. Maturity When entering the maturity phase, a benchmarking program has been institutionalized within the sponsor organization and is viewed as a critical component to the management process. Since launching the CDP process, CN has achieved several internal goals and benchmark milestones. The company has made progress toward its performance measures, exceeding targets in some areas. The CDP process has allowed CN to integrate environmental stewardship throughout the company. The CDP surveys were originally completed by staff in the Investor Relations Department, because investors were the stakeholder group initially pushing for action. In recent years, the CDP process has been integrated into a new Sustainability Department, which implements and coordinates environmental initiatives throughout the company.

Next: Chapter 5 - Benchmarking Framework for Addressing Air Quality Impacts of Freight Transportation »
Handbook on Applying Environmental Benchmarking in Freight Transportation Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

TRB’s National Freight Cooperative Research Program (NFCRP) Report 21: Handbook on Applying Environmental Benchmarking in Freight Transportation explores how benchmarking can be used as a management tool in the freight and logistics industry to promote environmental performance.

The report provides a step-by-step overview of the benchmarking process and describes a framework for applying this process to freight carriers, shippers, and freight hubs.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!