HIT Company Visit

HIT Company Visit                                                                           7th April,2014

It is honor to have a chance visiting Hong Kong largest container port business in 7/4.Kwai Chung Cargo Terminal is one of the landmark in Hong Kong which represent the success of Hong Kong. In 1980-90s, the intermediate trade business contribute 70% of GDP.

Background

Hong Kong International Terminals Limited (HIT) is a member of HPH Trust, the world's first container port business trust listed in Singapore. HIT is also a part of Hutchison Port Holdings Limited's (HPH) global network of port and logistics operations, and continues to have access to services and resources enjoyed by companies within the HPH Group.

Situated in the Kwai Tsing container port area of Hong Kong - one of the busiest container ports in the world.

HIT operates twelve berths at Terminals 4, 6, 7, 8 and 9. Established in 1969, HIT has continuously set industry benchmarks for productivity, efficiency and value-added services. Using modern management techniques, state-of-the-art computer systems and award winning IT applications, HIT has become a pinnacle of industry excellence.

HIT plays a key role in the continuing development of the port of Hong Kong, ensuring the port has the resources, facilities and people required to achieve smooth and efficient handling of container cargoes.

As global trade and the needs for logistics chain management increases, HIT has diversified its operations beyond the traditional role of a container port operator. HIT has leveraged the strength of HPH and developed a logistics network covering the Pearl River Delta and the rest of South China, based on the principles of efficiency, productivity and cost-effectiveness. The ultimate goal is the creation of an integrated supply chain network, with total logistics management services.

Presentation

We were invited to the HIT tower, the staff gave an detail introduction of HIT. After briefly introduce HIT to us, she brought us to the control tower and shown us the IT system they used, nGen.

nGen

Next Generation Terminal Management System (nGen) is a complete rewrite of award winning 3P Terminal Management System using much enhanced process logics and the latest open computer technologies. With the implementation of nGen, the system controls the entire scope of terminal operations from ship and yard planning, gate operations, vessel operations and interactions, yard configuration and performance, overall operations monitoring, equipment utilization, productivity to costs optimization. With extensive operational experience and powerful algorithms embedded in many different operating environments, nGen is able to offer the best automated operating solution to their customers.

Using industry standard open platform technologies such as Java and XML, nGen is truly scalable across all non-proprietary computer system hardware. From a small feeder terminal operation requiring a small-scale server setup to large hub ports relying on full server room support, nGen has been designed to support all platforms.

With real-time operator alerts, each control staff can customize more than a dozen automated alerts to suit different situations. These alerts not only allow the operators to take appropriate actions at appropriate times, but also relieve on-the-job pressure. Operators today don't need to constantly stare at the computer screen anymore to look for problem areas!

Finally, nGen has over one hundred user-definable business rules that can be fine-tuned. For example, an operator can adjust the laden box grounding and internal tractor deployment rules to meet customers' specific operating requirements. No more reprogramming and compiling, as nGen now adapts effortlessly.

nGen truly lives out our motto of doing more with less. With nGen, HIT is well positioned to meet increasing throughput and productivity requirements into the next decade and beyond.

Q & A

1.   As compared with other container terminals in Pearl River Delta (PRD) like Yantian International Container Terminals, HIT does not closely link to railway. Do you consider it as a disadvantage? Why or why not? 

Although HK has it own limitation, we still have stable and efficient terminal logistics. We have a deep harbor which is over 15.5 meter that allows huge cargo ship to park. The golden advantage which keeping us on the top position is that we are a free transction harbor with easy customs declaration process. Moreover, a large bundle of route was connected from HK to all over the world. These advantages facilitate HK terminal stay at high ranking.

2.   What contingency plans for the extreme situation of bad weather just like black rain extreme weather?

We set several precaution measures to tackle the extreme weather. For example, before the typhoon signal number 8 is hoisted, empty cargoes transaction are ceased. It is because empty boxes are relatively light and easier to be blown down. The existing empty boxes will be transported to places where sheltered from strong wind and leashed with thick ropes.

Also, we will inform the cargo ship company that they are not allow to park at the pier due to the potential dangerous to threaten our facilities. 

Blocks will be plugged into the rail of the cranes to prevent moving by the wind.

Staffs must go to the resting rooms and buildings until the typhoon ended.

During the T8, we will keep contact with Hong Kong Observatory to get the newest information. 

3.    Recent years the cargo throughput in Southern China region such as Shenzhen port keeps on increasing. Would this bring threats to port development in Hong Kong? How do the container port operators like HIT deals with the fierce competition to maintain its leading position?

Hong Kong leading position in Southern China region is still stable as our service structure is different from our competitors. 70% of our cargo transaction was transshipment while 70% of PRD are mainly export. 

4.     Last year, labour dispute adversely impacted HIT’s corporate image and brought a huge financial loss to HIT. What are the procedures and policies for HIT to prevent labour strike in order to maintain normal operation of HIT and harmonious employer-employee relationship? 

We keep improving the labor relationship with our staff and outsourcing company. In last year, we increase more toilet and rest room for the workers in order to provide better environment. We have renewing the cranes system which allows remote control. It let our staff can monitor and control the crane by moving the joystick and sitting in the office. Moreover, we will sit in the briefing of outsourcing company to listen their opinions. Even for employees coming from external companies (outsourcing), HIT also seeks for their comments or feedbacks.

5.     What system is using by HIT to control such a huge terminal?

We are using the computer system nGen to keep our efficiency. nGen can calculate the arrival time of the cargo ship accurately and can estimate how many resources we need to put in on each project.

Reflection

During this company visit , we have learnt how complicated is the system of a cargo terminal is. While the powerful computer system nGen tackle tones of data to optimize the resource allocation.

Also, HIT shows us how important communication is. With better labour relationship, HIT staffs can enjoy a better working environment and HIT get better efficiency simultaneously. While good communication with shipping company can let HIT allocate it resources better due to more accurate estimation of arrival time and resources required. Keep check with HK government can ensure all goods export and import are legal and keep track with the latest weather. 

Moreover, HIT let us know that HK has its present leading position in terminal industry required sustain evaluation and improvement, Such as making the crane can be remote controlled, keep on develop more suitable computer systems,etc.

With this chance, we learnt how important the terminal contributed to HK. Moreover, it raise our interest in logistic and supply chain by letting us know how important it is.

 

References:

1. HIT home page. (2014). Retrieved April 30, 2014, from http://www.hit.com.hk/
2. Fact sheet from HK government descripe the port on HK                             http://www.gov.hk/en/about/abouthk/factsheets/docs/port.pdf

Yakult Company Visit

Yakult Company Visit                                                                                            24^thMarch,2014

We appreciate to have a chance to visit the Yakult factory in 24/3. Yakult is one of the well-known health drinks in Hong Kong. Everyone who grown up in Hong Kong must tried Yakult before. We were really exciting about exploring the company logistic and supply chain.

Introduction

Yakult is a probiotic dairy product made by fermenting a mixture of skimmed milk with a special strain of the bacterium Lactobacillus casei Shirota. It was created by Japanese scientist Minoru Shirota. In 1935, he started manufacturing and selling Yakult. Official claims state that the name is derived from jahurto, an Esperanto word for "yogurt". Since then, Yakult has also introduced a line of beverages for the Japanese market that contain bifid bacterium breve bacteria, and has also used its lactobacilli research to develop cosmetics. More recently, the Yakult Honsha played a major role in developing the chemotherapy drugs.

After its introduction in Japan and Taiwan, Yakult was first sold in Brazil in 1966, due to the large number of Japanese immigrants in the country, before it was marketed elsewhere. Today, Yakult is sold in 31 countries include China and Hong Kong. Although its bacteria cultures are provided from a mother strain from Japan regardless of production location.

Presentation

During the presentation, the presenter introduces the content of Yakult to us. Then she played an video which show the foundation of the first Yakult and introduce the company  vision and mission. There is an impressing case shown in presentation is that a foreign infant got an unknown disease which made her stomach swell. After regular drunk of Yakult, The Illness gradually recovered.

Q n A

1.     It is observed that the rumor to Yakult products in China such as preventing cancers, whitening faces leading to the rising demand on Yakult. Are there any benefits and drawbacks caused by the rumor? Are there any follow up actions to deal with this rumor?

           Yakult is doing its best to increase public knowledge of their products. They are putting more effort and resources in marketing and promotion. The rumor is not an big driver of sales of its products.

2.     To deal with the large demand in mainland China, what is the reason for Yakult not to build up the sales network in China?

         Yakult has factory in mainland China already. The reason why people are still rushing to Hong Kong purchasing Yakult is because of their trust in HK food safety standard and a cheaper price of HK Yakult.

3.  Yakult has been increasingly putting focus on Guangzhou such as building a second manufacturing facility. With improving transport infrastructure at Pearl River Delta, does your company have the intention to move the production plant from Hong Kong to Guangzhou? Why or why not?

        As Yakult is a diary product with probiotics, it has only 1 month expired period after production. For the above suggestion, with the concern of serving the freshest product to customers, we temporally won’t move our plant to Guangzhou.

4.     As Yakult contains the milk powder which makes it a dairy product, it is harder to preserve than the other kinds of drinks. How does Yakult manage to preserve their products with such a large amount of them are being sold in the market? How does Yakult manage to control the inventory as the demand is sometimes hard to predict?

          We has our own trucks to transport the products to the retailer which are all conditioning trucks. We have good demand management that we produce exactly what we need to prevent over-stocking or expiration of products.

5.    In HK, Yakult only have one to two products. Will Yakult consider using its unique existing technology to diversify itself and expand the market? For example, adding new product lines to sell related healthy products such as yogurt or Yakult sweet or others.

           

           As the market size was not large enough in HK and the plant capacity was fully occupied. We are not going to introduce others favor to HK market as it will raise the burden of the production line.

Production line visit

The staff shown us the three production line of Yakult which were highly automate with only one inspector on each line.

However there is a bottle neck on the production line which was the production of bottle is much slower than the production of drinks. Thus, sometimes the machine needs to work 24 hours in order to satisfy the demand.

Moreover, it introduces a new technology of packing Yakult on to wooden pallets which is compactable with standard pallet truck. The machine increase the productivity of the whole supply chain by eliminate the time waste by human force.

Reflection 

The design of the supply chain of perishable products really needs extra care on every single stage. During the visit, it shows us tones of concerns when making supply chain decision and its shows the reality for us to the future career.

References:

1. Yakult HK home page. (2014). Retrieved April 21, 2014, from http://www.yakult.com.hk/home.htm
2. Search result of "Probiotic" from Wikipedia. (2014). Retrieved April 22, 2014 http://en.wikipedia.org/wiki/Probiotic

Case 3 - FedEx

Case 3: FedEx

FedEx has been organized into many operating units, each unit has its very own logo color.

FedEx Corp. which is one of the world's largest express transportation companies, provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services.



Q1 Find out more about the company background of FedEx

The Business Model

FedEx utilized multi-business models which involved B2B, B2C, C2C and B2G. Multi-business models allowed FedEx offering variety of services to upgrade itself and becoming more well-known.

Competitors



The four leading companies in the international courier business were DHL, FedEx, UPS and
TNT. Between them they held more than 90 per cent of the worldwide market.



The Express Delivery business was becoming saturated. For FedEx, there were lots of global and local competitors in this industry. UPS, DHL and TNT were those global competitors who provided similar services with FedEx. They both targeted at worldwide markets, utilized hi-technical systems such as Web-based package-tracking systems and offered many values added services, likes order processing, distribution center operation etc. Apart from global competitors, some local competitors also threatened the development of FedEx. For example, in Hong Kong, there were many traditional logistic companies, like Kai Kee. They offered only physical transportation services but set a very low price to attract customers.

Customers

Dell computers

Cisco Systems

FedEx welcomed any kinds of customers like general public, government and corporates. The business partners of FedEx mainly sought for a third-party logistics with high ability on providing supply chain solutions for them. It was because they took logistics as a key mean for differentiating their products and services from those of their competitors. For instances, Dell Computers and Cisco Systems allowed FedEx to monitor their manufacturing line and warehouse inventory so as to lower the inventory cost and lead time of the whole supply chain and increase the response rate and transparent rate toward the end customers. National Semiconductor Corp. and Omaha Steaks were another examples of customers who outsourced their warehouse to FedEx to enhance their services quality. The role of FedEx was mainly providing integrated logistics systems formed the basis of many long term partnership to help them linking in with other parties in the supply-chain, such as suppliers, customers.


Services and Products

FedEx offered variety of services as listed below:

     For General Services

              1. Air/Ocean Freight
              2. Truckload shipping
              3. Fast Ship
              4. Time-Definite and guaranteed services
              5. Packing materials service
              6. Temperature control
              7. Secure transportation

     For Online Services

              1. Schedule pick-up
              2. Viewing shipping documents or invoices
              3. Real time online enquiry
              4. Delivering to another address with click of button
              5. One access point service
              6. Get rate and transit time
              7. Payment Process
              8. Detailed Track of whole shipping process

     For Business Services

              1. Integrated logistics solutions
              2. Warehouse management
              3. Supply chain management
              4. Demand forecast
              5. FedEx Freight^® Customized Solutions.

     For International Services

              1. FedEx Global Return
              2. FedEx Priority Alert
              3. FedEx International Direct Priority Ocean^SM '
              4. International Forms

Q2 List the benefits of a virtual supply chain

The benefits of a virtual supply chain

1. Building one-to-one relationships with their customers

Adopting the Electronic data interchange (EDI), it provides integrated logistics systems formed the basis of many partnership arrangements. By helping customers to redefine sources and procurement strategies so as to link in with other parties in the supply-chain, such as raw materials suppliers.

Consequence: To squeeze time and inventory out of the system and increase profitability and reduce costs.

Second, Virtual supply chain helps identify and accommodate demand between buyer and seller electronically and provide efficient gathering and dissemination of real-time data.

2. Improving efficiency and control

Launching a series of technological systems (Power Ship) to provide proprietary on-line services serving over 100,000 or most active customers online. Additional services including store frequently used addresses, label printing, online package pick-up requests and package tracking

3. Keeping track of all packages handled by the Company On-line System (COSMOS)

First, it manages vehicles, people, packages, routes and weather scenarios on real time.

Second, COSMOS relays data on package movement, pickup, invoicing and delivery so as to send to a central database at Memphis headquarters.

Third, it places a bar-code on each parcel at the point of pickup, the bar-code can be scanned at each stage of the delivery cycle

Q3. Discuss the role of IT in FedEx’s Business Strategy

There are 2 main role of IT in FedEx’s Business Strategy

1.     Serve as the glue among the supply chain

•      IT can help FedEx to increase information sharing among the supply chain so as to enhance the quality and quantity of services FedEx could deliver to its customers
•     Increase the internal information flow within the company and between department-to-department and operation-to-operation
•      Increase operational efficiencies
•       Reduce cost
•       Improve customer services

Example(s):

EDI

• Build one to one relationship to customer
• The ability to interconnect and distribute information to all the players in a supply chain
• Tightening and synchronizing inventory out of the system

2.     Create the opportunity in Logistic Management

•       Internet and intranet to re-engineer the supply-chain
•       Customer check their orders anytime and anyplace(RFID )
•       Just-in-time inventory management system
•       Sharing the information between different department or external organization

Example(s):

RFID

•  Another system to track products, but focus more on checking order by putting chips on products
• Real –time information to see the location of truck shipping products
• Raise transparency

B2C e-tailing

• Consumers can also able to use internet to place order
• Consumers would be given an order checking number for checking where is their parcel and they may also receive an electronic signature receipt through the internet.
• Expand the market into other continent
• Expand global market

To conclude, the information technology of FedEx not only reengineers the supply chain for FedEx, but also improves customer relationship management so as to raise business opportunities and enhance competitiveness.

Q4 Discuss the virtual integration of supply chains without ownership

Virtual Supply Chain:
A term used to describe the use of internet to replace physical components of a company with information. Business engaged in virtual integration owns only their brand and their clients. This eliminates the need to physically produce, ship or handle any products as they are now outsourced.

For Fedex, the virtual supply chain can eliminate the boundaries in the supply chain because the information system will link other parties such as suppliers, manufacturer and customers. In other words, the customers outsource their supply chain management to Fedex. The information system of Fedex, PowerShip programme will act as a platform in order permit communication between supply chain parties.

Another powerful information technology of Fedex is that Fedex built an extranet on Cisco Website, Customers can use Fedex express service in the Cisco website directly.

The benefits brought by virtual supply chain is that it can raise the speed and accuracy of the information flow, it is because data is sent through one system only, manual mistake or mutli-times transition can be avoided.

Besides, those information can help customers to track the movement of goods. Without information technology, customer can only chase their goods in several ways, customer service in logistics company or even call the carriers. However, the GPS system and the PowerShip can permit customer to access the detailed information of their shipment.

Also, the virtual supply chain can reduce the order cycle time. Due the the faster information flow, lots of unnecessary waiting time can be eliminated. Therefore, the order cycle can be reduced.

Finally, the cost of operating can be reduced. It is because many of the processes has been automatic done by the information system such as booking shipment, customer clearance. Customer don't need to call the customer service several times but few buttons on the website. As a result, the lower the human power, the lower of the operating cost is required.

Q5 What are the factors that put pressure on FedEx to consolidate its operations, while remaining customer-focused?

Competitors

Firms are easy to enter the logistics industry. Rising firms in logistics industry causes intense competition. The industry was loaded with companies, local and global, that provided a myriad of transportation services to a wide range of businesses. Increasing competitors forces FedEx o consolidate its operations.

Customers

Rising demand on value-added services

More and more customers demand customized services. Low cost business strategy is no longer for FedEx to survive in the logistics industry since it is easily duplicated by its competitors. FedEx should adopt pull strategy to provide more various value-added services

. 

Customer confusion

IT resources spread across the Group, customers were confused and resources were duplicated.

Economic

Inflation

Inflation prevails in the global world. This raises the operation costs such as land prices, materials cost, thus putting pressure on FedEx to consolidate its operation.

Rising fuel prices

FedEx focuses on the air transport which requires heavy fuel to operate, thus rising fuel prices had severely impacted upon the Company’s profit margin. FedEx needs to it to re-think its business strategy.

Technology

Rise of internet

The Internet changed most operations of FedEx since it is low cost and diversity of applications.

Reflection on the case

FedEx opened up opportunities in logistics management and businesses.

FedEx were using the Internet to re-engineer their supply-chains and opened e-tailing business. 

References:

1. FedEx Express (2014). Offical Website of FedEx Hong Kong. Retrieved from http://www.fedex.com/hk_english/