Hactl Company Visit

Hactl  Company Visit                                                                                     24^th February,2014

We were very honored to have a opportunity to visit Hong Kong Air Cargo Terminals Limited (Hactl). Hactl was established in 1976 but operated since 1976, it is one of the world’s leading air cargo terminals with the unique world-class facilities, highly efficient operation, and innovative technology to supported the import, export and transshipment of air cargo in Hong Kong.

Vision and Values

Hactl aims to remain as the leading air cargo terminal in Hong Kong by:

• Consistently delivering exceptional service that exceeds customers’ expectations
• Continuing to invest in innovative technologies
• Enhancing logistics supports between Hong Kong and mainland China
• Engaging the best people in our business
• Optimising our operations and resources
• Living up to our core values: Trust, Respect, Professionalism, Integrity, Teamwork

Hactl's Values

Facilities

·        moved to SuperTerminal 1 at Hong Kong International Airport in Chek Lap Kok in 1998

·        3,500 Container Storage System (CSS) positions

·        10,000 Box Storage System (BSS) positions

·        a comprehensive range of specialized cargo handling facilities

·        To cater for all cargo types e.g. temperature-controlled products, valuable goods, livestock

Logistics Connection

·        offered multi-modal services through the wholly-owned subsidiary Hacis since 1984

• Hacis set up its own multi-purpose service centers and logistics hub and launched its SuperLink China Direct service to provide customers with integrated logistics solutions

·        Efficiency  of expanding market in Mainland China

Innovative Technologies

·        COSAC-Plus

• enabled the most efficient cargo tracking, information sharing and facilitates e-freight
• Allowed other parties like all airlines, freight forwards and related government departments monitoring and managing air cargo handled by Hactl

Services

·        Physical Cargo Handling

·        Ramp Handling

• aircraft loading and unloading, load control, flight operations, crew administration etc

·        Documentation Handling

·        Crew Transportation

·        Intermodal Services

• Road Feeder Service in Hong Kong as well as connecting to Mainland China

We took photo at Hactl front door

The visit divided in three parts: Introduction, Q&A session and warehouse visit.

Introduction

The company first showed us a video and a model that introduce their company background, business natures, their resources, their technologies and their markets to us.

We concentrated on listening the introduction

Q&A Session

1.     The performance rate on landside services (e.g. Truck waiting time, cargo acceptance time, cargo release time) always maintain to full capacity. What control policy have you made to maintain the superior service quality?

There are over 2600 employees who are responsible for varieties of duty, in order to maintain the high service quality, corporation and communication among departments are very important, so as to customers. Hactl has sign a service level agreement (SLA) to promise the performance target, such as the length of handling time, with each customer. In addition, Hactl has regular meetings with their customer reviewing the existing operations to see wherever the customers satisfy their service.

2.     The bad weather has become ubiquitous, like the deadly snow and ice storm in America’s southern states and eastern coast for the recent days. Would this bad weather create any challenges for your company like delay for cargo or rising cost? What are the contingency arrangements to deal with the bad weather for your company?

The contingency arrangement under the bad weather is not the consideration of Hactl as they are the third party that just follows the decision made by airlines.

3.     AAT has made a success in applying RFID for their security and operation. Do Hactl have any plan to improve their security level rather than using manual labor?

Hactl has invested a system called COSAC-Plus. One of its functions similar to RFID named Truck Paging which is a mobile app for truck drivers. Drivers can know where and when they can load or unload their goods via the mobile app.

COSAC PLUS Mobile App

There are 4 function in the mobile app, truck paging is one of them

4.     Different cargoes may have various investigation measures by government departments like C&E and AFCD dept. What are the roles of Hactl in managing the product and information flow?

Hactl has provided facilities and has authorized the government departments to access the COSAC-Plus. There are examination halls in Hactl for different government departments, such as Hong Kong Customs and Excise Department and Civil Aviation Department. When the government departments need to check one of the cargos, they can pick that cargo to their examination hall by using the COSAC-Plus.

5.     After the opening of Cathay Pacific Cargo Terminal, how does it affect the company’s business? As far as I know, most airlines in Hong Kong handle end customers through air forwarder agencies. Does the company have the intention to provide the services to the end customers like air forwarder agencies?

Cathay Pacific was the biggest customer of Hactl, Hactl lost 30% business since Cathay Pacific Cargo Terminal has opened. On the other hand, many spaces and resources in Hactl are free so that Hactl can take the job from other customers which cannot take previously due to the resource limited to achieve better customer service and fulfillment . In addition, there is an opportunity for Hactl to diversify their business, for example opening a new daughter company, Hacis. Hacis is a logistics support services provider which is similar to air forwarder agency, it offers airlines and freight forwarders services between Hactl's SuperTerminal 1 and the next transit point in the South China.

6.     The Hong Kong Government approved Airport Authority to build a third runway in 2012. Suppose the third runway is constructed, Hong Kong International Airport will be able to accommodate 620,000 flight movements per year which is 200,000 more than existing capacity. How would Hactl evolve to satisfy the increasing demand of cargo handling from the airlines in the future while at the same time keeping its current exceptional service performance?

In case the third runway is constructed, more airlines are able to set their point in Hong Kong. Therefore, both Hactl and Hacis will be benefit from it while Hactl, as mention in Question 5, has sufficient resource to handle the increasing demand.

Warehouse Visit

We visited Hactl's warehouse, and had a better understanding on the warehouse operation. The staff brought us around the company and showed us the process of their daily operations which were done by the COSAC-Plus system mostly. The warehouse was very large, and we had the opportunity to go to the outdoor area.  

Hactl's warehouse with COSAC-Plus system

We had a happy time in the visit

Reflection on the visit

Having a warehouse visit, our concept of logistics operation were more solid. We have an understanding on how warehouse is operated and how IT systems can help the industry. We were amazed that how useful of the automatic system COSAC-Plus  has help Hactl to deal with the large demand. In addition, after this visit we knew more about the air cargo terminal industry's nature and competitors. We were especially impressed by the impact of the opening of Cathay Pacific Cargo Terminal to Hactl. 


Reference: 
1. Hactl official website. (2014). Retrieved from http://www.hactl.com/en-US/Home.aspx

2. Hactl COSAC-Mobile. (2014). Retrieved from Google Play: 
https://play.google.com/store/apps/details?id=com.hsl.cosacmobile&hl=zh_HK
3. Cathay Pacific Cargo Terminal. (2014). Retrieved from Cathay Pacific Service LTD:
http://www.cpsl.com.hk/en-us/home.aspx

Case 2 - 7-11 Japan

7-11, which is a globalized company which operating convenience stores. It expand its business by franchising. It is the world biggest licencor of convenience stores. 7-11 has developed more than 50000 physical world all over the world and its headquarter located in Japan.

At the beginning of the business, it's act as a store selling simple foods bread and egg. At 1946, the business its name to 7-11 with serving customer 7 a.m. to 11 p.m.. 7-11 changed their service hour to 24 hours in 1963 and keep developing quickly and now become a well-known brand all over the world. Now, 7-11 is not only selling simple beverage but also other necessities such as shampoo, tissue. It also sells magazine, computer games and related products.

There existing distribution system has generated large customer value. Also, 7dream.com is the online purchase service provide by 7-11 Japan. Customer can purchase variety of product rather than typical product that you can found in convenience store. Their service characteristics has brought  actual convenience to their customers.

1. Compare the service and product in 7-11 Japan and Hong Kong

	7-11 Japan	7-11 Hong Kong
Type of Service and Product	Products are not usually be found in physical convenience stores Mainly in 8 content: Travel, Music, Photographs, Gifts, Mobile phones, Tickets, Books, Car-related items 7-dream.com: Purchase product through the internet, paid at store and pick up later Internet enabled computer service Providing products with famous brand Example: NEC  Corporation, Nomura Research Institute, Ltd, Sony Corporation, Mitsui & Co.,Ltd, Japan Travel Bureau and Kinotrope Inc.	Tangible goods  Easy-handle commodities and consumables: food, drinks, daily necessities, medicine and cigarette Fast moving informative items: newspaper, magazines Majority of the product is not expensive, customer will purchase those product without a long consideration.
Targeted Market	Youngsters who always browse the Internet	All citizens
Price Range of products	Relatively expensive	Relatively cheaper
Payment Method	Credit card through internet Cash payment in physical store	Cash payment Octopus card
Where to make purchase?	7dream.com: Personal computer, wireless devices and internet enabled kiosks in 7-11 Physical store	Physical store only
How to get the product?	Customer decide where to pick up: home address,specific address or any 7-11 stores (using their existing logistics system)	Pick and purchase immediately in existing store

Website of 7dream.com:

1) Food

                                                     2) Product for celebration: flower   

2. Identify the major obstacles to e-commerce in Japan.

1. Connection Charge

The combined telecommunication and Internet service fee in Japan is the highest over the world. It is because the market was dominated by a monopoly government-owned corporation.

2. Government Policies

The government regulated companies heavily in the e-commerce sector before 1999

3. Demographic Factor

Many household are having tiny house, it is not possible for them to accommodate a personal computer

Convenience store have a great coverage, customers can easily make purchase in convenience store no matter where they are

4. Local Culture

Japanese is a cash-base society which means they are paying cash to make purchase as a routine. It is common salary paid by bank note. Over 90% mail-order sales paid with cash-on delivery or bank transfer.

Japanese believe that when they are making purchase in physical store, they can see and touch the product, also obtain discount.

The privacy issue was a critical consideration. Japanese are fear about their credit card information will leak out to the hacker when they are using their credit card to make purchase through the internet. They afraid that they may need to bear the loss.

Problem of end-fulfillment of online order also exist, most customer were not at home during the day to receive the delivery of their products. There also some uncertainty such as mailing error or non-fulfillment on he part of the stores also bring uncomfortable to the customer.

3. Government Role in Japan for e-commerce development

1. Encourage Trade through internet
For the sake of international competitiveness, the government has deregulated the stock commissions to encourage consumer to start trading in the internet.

2. Increase competitiveness

Government break down NIPPON Telephone and Telegraph into three sub company( the original one is the monopoly government-owned corporation). It can enhance the competition in the market. As a result, the service fee of connecting to the internet will be lower, consumer can enjoy online shopping at a relatively low cost.

Supermarket is forced to close at 8 pm. Consumer can only make purchase online or in convenience store.

3. e-Japan Strategy in 2001

Government built ultra-speed internet network, also established rules on electronic commerce. The consumer will have more confidence in security while making online service.

Establish ECOM

Promote law that protect copy right

Discount of some specific products is not allowed, company will put their product to the online store which can reduce the cost of rent or expense in physical store

4. Identify the critical success factors of the business plan of 7dream.com.

1. Benefits from using existing delivery system
7-11 Japan use their existing delivery system to provide services. A critical benefits is that they can obtain the goods directly from the warehouse of its supplier. Therefore, 7-11 doesn't need to hold inventory and the inventory related cost is lower.

Also, the existing delivery system of 7-11 Japan can minimize the additional cost of delivering orders of 7dream.com to 7-11 stores.
                                                        Distribution of 7-11 in Japan

7-11 self-owned truck

2. Deal with cultural Issue (cash base society)

Japan is a cash base society which mean citizens usually refuse to use credit card to pay the bill or shopping online. It is because they think that they may obtain discount to afraid of the leaking of personal information. However, 7-11 use joint-venture to promote their business. For example, they cooperate with world class brand in order to build confidence to the customers to shop in the online store. Media is also an important role for 7-11 to promote the 7dream service

3. Government Support

The rise of e-business in Japan, the government plays an important role. Firstly, the deregulation and e-commerce in the middle of 1990s open the market to the public, business through internet or wireless devices become more easy. Also, the government split the telecom giant NTT into three companies in order to increase the competition which can lower the price and improve the service quality of the internet service. As a result, e-business can be promoted more easily and more customer have the chance to purchase through the internet.

Company structure of NTT today

4. Information Kiosks in physical store

In Japan, majority of the families are living in a tiny house. Therefore, it is not common for them to owning a personal computer in home. However, 7dream.com solve this problem by providing internet-enable multi-kiosks. It is an computer with internet service placed at the physical stores while customers can purchase the product from 7dream. Also, 7dream.com also provide alternative connection method, wireless devices such as mobiles. Customer can use their cell phone to purchase products from 7dream. Therefore, the requirement of a personal computer with internet service has been removed.

5. Phobia of credit card usage through the internet
Japan is a cash based society, citizens refuse to use credit card to pay online. However, 7dream provide an alternative for the customer, it is payment in convenience store.

6. Problem about receiving parcels

7dream use 7-11 existing distribution system including physical store and transportation to provide excellent delivery service. Customer can select one of the physical store to pick up their product. Nevertheless, they can choose the address  for the delivery. The flexibility provide a larger customer value to their customer. 

5. Conclusion

Besides the creative business idea for 7dream.com which is providing products that are not necessities to their customers. We can also see that how 7-11 can fully utilize their strength in order to expand their business. The wide distribution system can bring convenience to their customer. The word "convenience" become critical to their business because it can reduce customer consideration. Many customer purchase decision may change under consideration. Therefore, 7-11 Japan has made a great success in this case.

Finally, how 7-11 promote their business by eliminating the problem is also important. For example, the culture of Japan and the low penetration rate of personal computer. These two factors show that Japan is not a suitable places to promote e-business because it is not easy for this service become widely use. However, 7-11 can deal with the problem critically. If customer don't have a computer, they can come to our store or purchase by wireless devices. If customer don't want to pay by credit card through internet, they can pay at physical store. We can see that the decision makers in 7dream got the right direction in adopting e-business in Japan.



1. Seven-eleven Japan Co., Ltd (2014). . Retrieved April 10, 2014 from http://www.711net.jp/
2.Ntt Australia Pty. Ltd. (2014). . Retrieved April 10, 2014 from http://www.au.ntt.com/en/about-us/our-company/about-ntt-group.html
3. 7-Eleven (2014). Retrieved April 12, 2014 from http://en.wikipedia.org/wiki/7-Eleven
4. Retail in Japan (2014). Retrieved April 12, 2014 from http://factsanddetails.com/japan/cat24/sub158/item912.html
5. Deric Kk Tan (2000). SEVEN-ELEVEN JAPAN: VENTURING INTO E-TAILING. Asia Case Research Centre, .

TAL Company Visit

TAL Company Visit                                                                                        10^th February, 2014

TAL Apparel Limited, which was found in 1947 by Lee family, is one of the largest garment manufacturers in the world. It sets up its head quarter in Hong Kong and owns 11 factories all around the world. It mainly produces innovative garments and well manages the whole supply chain system by developing new technologies in order to add value into their supply chains. Therefore, Innofacturer^® is the trademark of TAL.   

The visit was divided into three parts: Introduction & production demonstration, presentation and Q&A session.

Introduction & production demonstration

The speaker was showing the pants which could still keep straight without ironing after washing.

The jointed polo shirt showed the products performance differences between TAL (right hand side) and others (left hand side) after 20 washes.

At the very beginning, the speaker utilized PowerPoints to show the history, mission and products of the company. After that, some innovation products were demonstrated to show the powerful technologies that they developed, for example SofTAL Process^® helped garments ensuring a wrinkle free pristine appearance throughout the day.



4 different supply chain models were used by TAL. They were worked together to enhance the effectiveness and efficiency of the whole supply chain.

IT technologies were utilized by TAL.

Presentation 

After the demonstration, the operation processes & policies, technologies used of TAL were presented in detail. Their supply chain models were separated into four levels, Quick Response (QR), Continuous Replenishment (CR), Warehouse VMI and store VMI, in order to effectively forecast and manage own inventory or customers’ inventory step by step. In addition, some technologies, such as pick-to-light system and cross docking were applied daily to enhance the efficiency of the product flow within the supply chain. Make-to-Measure was one of the value-added services to provide more choice and personalized services for end customers.

Q&A session

Mr. Roger Lee (right hand side) was answering the questions.

Finally, it was honored that Mr. Roger Lee, the CEO of TAL Group, answered our questions personally during the Q&A session. We raised altogether six questions as follows:

1.   VMI & MTM system help to offer great services to customers. How does TAL turn these innovations to a sustainable competitive advantage in a long run in order to avoid competitors’ replication?

First of all, it was required to understand the limitation of the existing products so TAL could continuously investigate, develop some new technologies. At the same time, it was necessary to understand the real needs of customers since the requirements of customers and markets always kept changing. Despite the investigation of new products, TAL would always upgrade the product requirements based on the needs. In order to maintain the competitiveness, supply chain reengineering and employee training were also important to support these activities. Combined all these elements, external competitors were difficult to directly replicate their core business. Moreover, TAL was always the first mover. They maintained a good relationship with their customers by efficiently communication. Therefore, they could obtain sustainable competitive advantage.

2.   As an international company, how does TAL resolve the problem related to cultural differences or uncertainties?

TAL hired the right people from different countries. In order to deal with the culture issue, they mainly arranged the local people to manage the business for their hometown since they were the one who clearly understood the local culture.

3.     Would TAL expand the market share to Asia Market in the future?

TAL was planning to expand the market to Sheung Hai. However, it was very difficult to enter the market because of the different lifestyle. Firstly, the demand of suits in China was much less than US. Therefore, the price strategy and production volume should be carefully considered again. Secondly, the taste of the Chinese was very hard to be measured. Since the franchise business model was quite popular in China nowadays, the bargaining power of franchisee was large enough to control the taste of the market but no longer the brand itself. It caused the failure in measuring the taste of Chinese people. As a result, TAL was going to spend at least five years to figure out these problems before the expansion.

4.    TAL relies heavily on the advanced information systems and the IS involve in most of the TAL’s operations to help TAL gains competitive advantages. However, there are so many hackers who specially attack the business server to steal information or destroy the system operation. Does TAL have any contingency plan if the information systems go down and how can TAL convince their customers to share their own information in this situation?

TAL had a strong IT teams to support their daily operations. They utilized Electric Data Interchange (EDI) or other secure measurements to defend the privacy of their customers. Furthermore, all kinds of documents would be encrypted during transferring. The most important was that TAL looked forward the long term partnership with their customers so there was a commitment to guarantee no any information revealed. For the case of systems going down, TAL constructed a list procedure for this situation. They kept the weekly data backup so the company could still use past data and excel spreadsheet to maintain the general operation. On the other hand, TAL thought the value of its data collected was not high enough to attract the hackers so it was a serious problem for them.

5.    What is the future strategy to deal with the global level network?

A consistent and straight forward strategy would be used. TAL continuously focused on its own mission which was the innovative manufacturing with offering extra supply chain services for their customers. Since manufacturing a shirt was not an easy job, it required lots of disciplines. Therefore, lots of interaction was a necessary. People chose TAL because TAL clearly understood the industry and the capability itself, it always provided professional solutions and met customers’ expectation so high reliability could be created. TAL through reliability was an essential element for a garment manufacturer. As a result, TAL was willing to put effort on training the right people to enhance the quality of whole team.

6.    TAL is going to have the RFID tags on its products as multiple RFID tags can be read at the same time. This may help to save the time and cost in the inventory management. If RFID tags are used in the products, how will TAL solve the possible privacy matter that might be encountered?

It was hard to apply RFID technology for a product during garment manufacturing process. It was because the using RFID is mainly for checking purpose only, for example TAL wanted to check whether the products completed the washing process or not. Although the cost of non-reusable RFID was not high, it was meaningless for using RFID since they could check the products by other methods such as measuring the weight. It was possible for using reusable RFID but the cost was really high and the working processes needed to be revised. Additionally, the privacy problem was another issue when applying RFID technology. Some customers did not like being tracked.

  

Reflection on the visit 

After the visit, we all agreed that TAL was full of passion in training next generations. It was because Mr. Lee, the CEO of TAL, found time to answer our questions personally. It was really impressive for a CEO to spend time on meeting a group of students. We felt so honor to learn from him. Additionally, our team both awoke that the innovations related to not only the creativity, but also the change. TAL taught us that manufacturer could also perform at a non-traditional way to add value into the supply chain and make information flow becoming faster and accurate. TAL has done well on both products development and supply chain management. We looked forward to its future development.