Introduction to Scenario Planning Arizona State Freight Plan: - - PowerPoint PPT Presentation

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Introduction to Scenario Planning Arizona State Freight Plan: - - PowerPoint PPT Presentation

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Introduction to Scenario Planning Arizona State Freight Plan: Scenario Planning Workshop 5 November 2015 1 Which NFL team will win Super Bowl L in 2016? A. New England Patriot B. Green

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Introduction to Scenario Planning

Arizona State Freight Plan: Scenario Planning Workshop 5 November 2015

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Which ¡NFL ¡team ¡will ¡win ¡Super ¡Bowl ¡L ¡in ¡2016? ¡

  • A. New ¡England ¡Patriot ¡
  • B. Green ¡Bay ¡Packers ¡
  • C. Denver ¡Broncos ¡
  • D. Arizona ¡Cardinals ¡

E. Carolina ¡Panthers ¡ F. CincinnaI ¡Bengals ¡

  • G. SeaJle ¡Seahawks ¡
  • H. New ¡York ¡Giants ¡

I. OJawa ¡Redblacks ¡ J. Other ¡

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How should we plan for the future?

Time

Planning Horizon

But what about very long term (10+ years) planning?

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Long term planning is impacted by events

Source: ¡Scenarios: ¡An ¡Explorer’s ¡Guide, ¡Shell ¡InternaIonal ¡2003. ¡ ¡

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2 2.2 2.4 2.6 2.8 3 3.2 3.4 3.6 3.8 4 4.2 4.4 4.6 4.8 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 May-14 Nov-14 May-15 Nov-15 On Highway Price of #2 Diesel ($/gallon)

#2 Diesel Prices in US

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In ¡the ¡summer ¡of ¡2014, ¡I ¡knew ¡the ¡price ¡of ¡fuel ¡would ¡decrease ¡ by ¡more ¡than ¡a ¡$1 ¡a ¡gallon ¡

  • A. Yes, ¡I ¡knew ¡
  • B. I ¡had ¡an ¡inkling ¡
  • C. No, ¡I ¡had ¡no ¡clue ¡
  • D. It ¡did ¡what? ¡ ¡ ¡
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Why are we so bad at predicting the future?

We are all “Provincials in Time”

  • 1. We look to the future through today’s lenses.
  • 2. We forget how we got to today

– it seems pre-ordained

  • 3. We think today will go on for forever

– change happens slowly

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Great Horse Manure Crisis of 1894

Source: “From Horse Power to Horsepower,” Eric Morris, ACCESS no. 30, Spring 2007.

The situation was dire!

  • More than 150,000 horses in NYC producing over 2,000 tons of manure per day
  • Estimates of manure reaching 3rd floors by 1930 & nine feet in London by 1950
  • 1st International Urban Planning Conference held in NYC in 1894 – cut short!

Interestingly, though . . .

  • Over 4,000 cars were sold in the US in 1900.
  • By 1916 more cars than horses were registered in NYC.
  • The first subway in NYC was operating by Oct 1904.

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Some Changes Can Happen Rather Quickly . . . Mobile Communications

1956 88 lbs 1993 1.25 lbs 2005 0.2 lbs 2007 0.25 lbs

1983 8 lbs 1964 40 lbs

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How ¡many ¡phones ¡do ¡you ¡have ¡with ¡you ¡right ¡now? ¡

  • A. 1 ¡
  • B. 2 ¡
  • C. 3 ¡
  • D. 4 ¡

E. 5 ¡ F. More ¡than ¡5 ¡

  • G. None ¡
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What ¡percentage ¡of ¡the ¡Ime ¡do ¡you ¡use ¡your ¡ smartphone(s) ¡as ¡a ¡phone? ¡

  • A. ~90% ¡to ¡≤ ¡100% ¡
  • B. ~80% ¡to ¡≤ ¡90% ¡
  • C. ~70% ¡to ¡≤ ¡80% ¡
  • D. ~60% ¡to ¡≤ ¡70% ¡

E. ~50% ¡to ¡≤ ¡60% ¡ F. ~40% ¡to ¡≤ ¡50% ¡

  • G. ~30% ¡to ¡≤ ¡40% ¡
  • H. ~20% ¡to ¡≤ ¡30% ¡

I. ~10% ¡to ¡≤ ¡20% ¡ J. ≤ ¡10% ¡

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Some Changes Can Happen Rather Quickly . . . Mobile Communications

1964 40 lbs

Source: Nielsen

Percentage of time spent on Smartphones (US 2013)

Social 28% Games/Entertain. 16% Productivity 11% Phone 3%

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US Technology Adoption Rates from 1900 to 2005

Source: Source: Catlett, Charlie, “Technology adoption rates: historical perspective,” International Science Grid This Week, Argonne National Laboratory, http://www.isgtw.org/?pid=1001793, accessed June 2011.

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Rapid Changes . . . Data Storage

250 MB in 1970! 250 MB in 1990s ~175 3.5” Floppies (1.44 MB) Stack 2 feet high & ~3 lbs

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How ¡much ¡computer ¡storage ¡do ¡you ¡ ¡ have ¡with ¡you ¡right ¡now? ¡

  • A. None

¡to ¡≤ ¡1 ¡MB ¡

  • B. 1 ¡MB ¡

¡to ¡ ¡≤ ¡10 ¡MB ¡

  • C. 10 ¡MB ¡

¡to ¡ ¡≤ ¡100 ¡MB ¡

  • D. 100 ¡MB ¡ ¡to ¡ ¡≤ ¡1 ¡GB ¡

E. 1 ¡GB ¡ ¡to ¡≤ ¡10 ¡GB ¡ F. 10 ¡GB ¡ ¡to ¡≤ ¡100 ¡GB ¡

  • G. 100 ¡GB ¡

¡to ¡≤ ¡1 ¡TB ¡

  • H. 1 ¡TB

¡to ¡≤ ¡10 ¡TB ¡ I. > ¡10 ¡TB ¡

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Rapid Changes . . . Industries & Consumer Tastes

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Rapid Changes . . . in Consumer Taste

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Rapid Changes . . . Economics

  • Global Trade 1981
  • Switzerland was US’s 23rd largest trading partner

. . . China was 24th

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Asia-NA NA-Asia Asia-EU EU-Asia

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Rapid Changes . . . Economics

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Rapid Changes . . . Economics Container direction flipped within 5 years!

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What ¡will ¡happen ¡to ¡the ¡container ¡volume ¡coming ¡in ¡on ¡the ¡East ¡ Coast ¡in ¡5 ¡years ¡due ¡to ¡the ¡Panama ¡Canal ¡expansion? ¡

  • A. Exceeds ¡West ¡Coast ¡ports ¡
  • B. Matches ¡West ¡Coast ¡ports ¡
  • C. Increases ¡but ¡doesn’t ¡

match ¡West ¡Coast ¡ports ¡

  • D. Stays ¡the ¡same ¡as ¡now ¡

E. Other ¡

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Rapid Changes . . . Deregulation

Source: AAR and ATA

50.0$ 60.0$ 70.0$ 80.0$ 90.0$ 100.0$ 110.0$ 1980$1982$1984$1986$1988$1990$1992$1994$1996$1998$2000$2002$2004$2006$2008$2010$

Index of Revenue per Mile for US. Trucking in Real $

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Case of Rapid Change: Deregulation Bifurcation of US Trucking Market

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Source: Parming 2013

Predominant LTL Predominant TL Hybrid

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Recapping: Our major limitations for planning We are all “Provincials in Time”

  • 1. We look to the future through today’s lenses.
  • 2. We forget how we got to today

– it seems pre-ordained

  • 3. We think today will go on for forever

– change happens slowly We get lulled into the current Dominant Design!

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Dominant Design . . . Cell Phones

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Different Methods for Planning

Time

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Planning Horizon

Shift focus from prediction to preparation

But what about very long term (10+ years) planning?

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So many potential futures, so little time . . .

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Preferred vs. Probable vs. Plausible

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Now Possible Futures Preferred Future - VISION

Because we can’t explore ALL possible futures, we must create a handful of plausible, alternative futures that together contain the most relevant uncertainty dimensions

Probable Future

  • PREDICTION
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Scenario Planning

  • Criteria for a good set of scenarios
  • They are Situations NOT Solutions
  • Comprehensive – Cover STEEP forces
  • Decision Making– capture right decision
  • Plausibility – within realistic limits
  • Alternatives – no favorites or preferred (Unofficial/Official)
  • Consistency – internal logic is aligned
  • Differentiation – structurally different
  • Memorability – easy to recall after event (name helps)
  • Challenge – push against established wisdom
  • Accuracy of event forecasting is not important
  • The skill we are developing is preparation not predicting
  • The focus is on effects not on individual events

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Effects versus Events

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14 April 2010 Eruption of the Eyjafjallajökull Volcano Summer 2008 Manufacturing moratorium in Beijing

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Translating Events into Effects Freight Flow Patterns

How can an event impact freight flows?

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Impact on flow destination Impact on sourcing patterns Impact on routing Impact on flow volume Impact on value density

$

Where are raw products and WIP sourced from? Are materials sourced in or out of the region? Where is the demand located? How are final destination locations distributed? How is freight moved within the region? Are there intermediate shipment points or mode switches? How will the total volume of freight shipped in and through the region change? How will the product characteristics change? How does the value density change?

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The Real Value of Scenario Planning

  • Forecasting Challenges
  • Without step changes, forecasting would be easy!
  • Step changes are driven by events, and . . .
  • Events are next to impossible to predict, but . . .
  • Planners do a pretty good job preparing, so . . .
  • Scenario planning allows us to shift from

Predicting future Events To Preparing for potential Effects

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Questions, Comments, Suggestions?

caplice@mit.edu

Wilson didn’t see it coming either. Boston Commons, February 2015

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Lets Create Scenarios!

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Strategy vs. Factors vs Forces

  • Strategy
  • Things you control
  • Solutions & aproaches
  • Factors (“Inside-out”)
  • You cannot control
  • You may be able to influence
  • Direct and obvious effects
  • Forces (“Outside-in”)
  • You cannot control
  • You cannot influence
  • Indirect, ambiguous & unknown effects

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A scenario is a set of driving forces

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FFF Thought Leaders Candidate Forces& Uncertainties 12 Snapshot Scenarios Brainstorming Session Prioritization Workshop Expert Practitioners Analyze, Harmonize and Merge

Future Freight Flows Symposium

Stress maps Flow Impacts Influence Matrices Analyze and Merge Freight Stakeholders 20 Candidate Forces Distribute Survey 264 complete and usable responses

Stakeholders Survey Scenario Generation

Identify key driving forces Two structuring axes Develop storylines Potential storylines Test and Refine storylines 4 scenario skeletons Finalize scenarios 4 scenarios MIT CTL Team Supply chain professionals

Phase 1 Phase 2

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Driving Forces Survey - STEEP

  • Social
  • Urban congestion/bottlenecks (~Phoenix)
  • Population growth
  • Increased consumption per capita
  • Slower migration to Arizona
  • Labor Shifts (Shortage of truck drivers, millennials, etc.)
  • Technological
  • Autonomous Trucks
  • Alternative fuels
  • Solar roadways
  • Availability of CNG or LNG stations inter & intra state
  • Drones for delivery

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Drones

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  • Expected Industries of Adoption
  • Security and monitoring:
  • Exploration, aid efforts, disaster

recovery:

  • Delivery and Errands
  • Logistics: Remote delivery
  • Journalism, filmmaking, and

photography:

  • Farming:
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Driving Forces Survey - STEEP

  • Economic
  • Port development in Mexico
  • Development of the Canamex (I-11) Corridor
  • Economic growth in Arizona
  • Increasing international exports/ trade with
  • Increasing international trade with Asia, EU
  • Increasing domestic trade with California
  • Oil prices / fuel costs
  • Activities and flow at Ports of Long Beach and LA
  • Macro global economic conditions
  • National economic conditions in the US
  • Globalization of business to Mexico and Asia in particular
  • Mexico continued growth as a manufacturing leader
  • Increasing Arizona manufacturing
  • Establishment of new industries in Arizona
  • Industrial location patterns

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Driving Forces Survey - STEEP

  • Environmental
  • Increasing temperature due to climate change
  • Increased extreme events
  • Increasing demand for water – commercial and residential
  • New NOx standards – federal or state

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Driving Forces Survey - STEEP

  • Political
  • Federal funding for infrastructure investments
  • Truck/Container size & weight limits on highways
  • Infrastructrue improvement in line with OSOW dimensions
  • Increased road capacity
  • Investments in border crossings
  • Execution of MAP-21 Act
  • Land use regulations and restrictions
  • Increased Federal guidelines for electronic logs on smaller

companies

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Driving Forces Survey – STEEP+

  • Non-Categorized
  • Condition and capacity of the transportation system
  • Inland port / rail connection to LA/Long Beach and Houston
  • Lack of RoW for network expansion
  • Access to competitive rail
  • Collectivization of freight to negotiate lower rates and spur

investment in freight logistics

  • Overweight corridors between rail ramp and Mexico and other

key industrial clusters, preferably state-wide to benefit all

  • A comprehensive freight transportation network model [MA-

political? Not sure what this means]

  • Equilibrium position between rail (intermodal) and truck in U. S.

economy

  • Truck stops with Emission free idle service idle area
  • Disruptions/bottlenecks at US/Mexican border crossings

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