Hong Kong: A Logistics Hub Part I
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1 Hong Kong: A Logistics Hub Part I Logistics Services Waiman Cheung Director Li & Fung Institute of SCM & Logistics The Chinese University of Hong Kong
2 Logistics (traditional) Supplier - deliver materials Producer - produce product Consumer - consumes product Logistics is : physical movement of materials from suppliers to producers, and of products from producers to consumers
3 Logistics (traditional) Seller/Buyer Logistics: Warehousing Transportation Supply Chain Supplier Manufacturer Distributor Retailer Customer Pipeline Logistics Distribution Logistics
4 Integrated Logistics Management Global logistics Co-ordination of supply, production, distribution, sales, and customer location Supply Chain Management
5 Global Inventory Management Just in in time (JIT) for the raw materials Minimize inventory cost at at the stores in in transit minimize travel time Inventory at at the hub Easy consolidation Information intensive
6 Outsourcing Not company s s core competence Reliance on Suppliers Supplier s s TQM Supplier s s Process capability Supplier s s financial capability and Forex Supplier s s logistics: costs and reliability Joint Ventures
7 3 RD Party Logistics Services Supply Chain Supplier Manufacturer Distributor Retailer Customer by forwarders/integrators at the client sites
8 3 RD Party Logistics Center Supply Chain Supplier Manufacturer Distributor Retailer Customer 3PL Center Supplier Manufacturer Distributor Retailer Customer Supply Chain
9 3 RD Party Logistics Park Supply Chain Supplier Manufacturer Distributor Retailer Customer Customs, Banks, Insurance Companies, etc. Supplier Manufacturer Distributor Retailer Customer Supply Chain
10 4 TH Party Logistics Center Supply Chain Supplier Manufacturer Distributor Retailer Customer 3PL 4PL Center Customs, Banks, Insurance Companies, etc. Supplier Manufacturer Distributor Retailer Customer Supply Chain
11 Agents of Cargo Logistics Shippers and Buyers Freight Forwarders Trucking and warehousing agents River Trade Seaport Terminal Operators Airport Terminal Operators Air-lines and Sea-liners Customs Air-express couriers (Integrators)
12 Modern Logistics Functions consolidation and deconsolidation packing and repacking, transportation and handling, customs clearing, carrier bookings, warehousing, and inventory control
13 The Cost of Business Logistics Year Inventory Costs Transport. Costs Admin. Costs Total US Logistics Costs % of GDP Source: Twelfth Annual State of Logistics Report, % of the world s s GDP China s s Logistics Cost is 20% of GDP
14 Modern logistics support systems Included auxiliary functions: tracking of shipments, simple assembly, labeling, inspection, kitting, and merchandising.
15 Supply Chain Management
16 Product vs. Product Competition (in the old days)
17 Supply Chain vs. Supply Chain LSPs LSPs LSPs LSPs Supplier Supplier Manufacturer Distributor Retailer Customer Supplier Supplier Manufacturer Distributor Retailer Customer LSPs LSPs LSPs LSPs
18 Studying Supply Chain Structures. 2 nd tier suppliers. Manufacturer. 1. Physical flows 2. Information flows 3. Decisions 4. Financial arrangement 1 st tier suppliers Customers Inbound logistics Outbound logistics
19 Here is the Profit $4 Distribution Center $1 Retailing Manufacturing Logistics
20 Results: 95% is make-to-order. Few companies build inventory Semi-assembled parts, Parts Components Standard materials (Plastic, Cotton, etc.) Push Specialized materials (Accessories) Pull Finish products Inbound logistics Push-Pull Boundary Outbound logistics
21 Ocean Cargo Logistics
22 Ocean Cargo Logistics Forwarders Truckers Customs Ship liners Terminal Operators Warehouse/Logistics Providers Shippers
23 Delivery & Security Checks
24 Container Terminal Operations KPI Quay Crane Rate (move/hour) Vessel Operation Rate (move/hour) Truck Turnaround Time (mins) Measures
25 Ranking of Container Ports TEUs 5000 Singapore Hong Kong Shanghai Shenzhen Busan Kaohsiung Rotterdam Hamburg Dubai Los Angeles 0
26 IT & Logistics
27 Integrators Network Integration and Information Technology Information Integration Physical Integration
28 E-commerce Aviation Logistics will evolve around E-commerceE E-commerce Aviation Logistics Aviation Logistics E-commerce
29 Existing IT Infrastructure for Hong Kong Air Cargo Industry Myths: Plenty of software systems available for the players Internet-enabled online platforms and services are widely available
30 Carriers Forwarders Sellers Agents Terminal Operators Customs Banks Buyers
31 COSAC Terminal Operators ACCS Customs Carriers Banks Traxon Tradelink Forwarders Buyers LINE, ESCM, SAP Sellers ACCS Tradelink COSAC Traxon SCM
32 Problems with the Existing Logistics IT Infrastructure Systems don t talk to each others Heavy burden on freight forwarders
33 Air Cargo Community Network COSAC Terminal Operators ACCS Customs Carriers Banks Traxon Tradelink Integrators Forwarders Internet based Network Buyers LINE, ESCM, SAP Sellers E-commerce Host System Community Web Server Information Repository Warehouse/ Distributors
34 A Three-tier Community Network e-business e-commerce Management Platform Exchange Platform Information Exchange Hub
35 Different Levels of e-business Stand-alone Prearranged partners Online partnering e-community Platform Hacis Traxon
36 Digital Trade & Transportation Network (DTTN) in Hong Kong A Platform that Provides interconnection among industry stakeholders Facilitate information flow Supports business process interconnect
37 DTTN in Hong Kong Six core services for nine Communities Value added services Core messaging infrastructure Standards and protocols Source:
38 DTTN Example (Purchase to Delivery) 6. Shipment Status (EDIFACT) 5. BL (EDIFACT) 2. SO, CI, PL (EDIFACT) Buyer 1 1. PO (X 12) 4. Shipment Status (X 12) 3. Master SO (EDIFACT) 4. Master BL, Shipment Status (EDIFACT) Forwarders 1. PO (Web) Physical Delivery DTTN 1. PO (XML) 2. SO, CI, PL (XML) Application Service Provider 1 2. SO, CI, PL (Web) 5. BL (Web) Sellers 5. BL (XML) Carriers SO - shipping order CI - commercial invoice PL - packing list BL - bill of lading 3. Master SO (EDIFACT) 3. Master SO 4. Master BL, Shipment Status (EDIFACT) 4. Master BL Shipment Status Application Service Provider 3 6. Shipment Status (Web Services/XML) Application Service Provider 2 6. Shipment Status (Web) Buyer 2
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