Post Visit Review of Hactl

BRIEF BACKGROUND INFORMATION OF HACTL

Hong Kong Air Cargo Terminals Limited (Hactl) was established and operated since 1976, which is the symbol of the Hong Kong air cargo business. It is serving over 90 airlines and 1,000 freight forwarders. Hactl classified itself as world's leading air cargo terminals with world-class facilities, efficient operation and innovative technology. All people can be the customers of Hactl as it has no affiliation to any carrier, and providing unbiased service to its airline customers.

Services HACTL offers to customers

• Physical cargo handling

  - General / Express / Perishable

  - Vulnerable / Dangerous / Valuable / Special (Live animals / Outsized cargo / Mini shipment)

• Ramp handling

  - Aircraft loading and unloading

  - Load control 

  - Flight operations 

  - Crew administration 

  - Crew transportation between aircraft and airport terminals

  - All documentation for ramp handling services

• Import and export cargo documentation

  - Checking, accepting and issuing air waybills

  - Collecting charges

  - Processing manifests

  - Load estimates Import 

  - Arrival notification 

  - Document release 

  - Customs clearance 

  - Express discharge of special cargo

SITE VISIT AND SHARING

Container Storage System (CSS)

The multi-floor container Storage System is fully automated and providing more than 3,500 storage positions. System is directly linked to airside and allowing unit load devices (ULDs) to be transferred from tarmac straight into the system.

Box Storage System (BSS)

The Box Storage System is providing 10,000 computer-controlled storage positions with maximized security for protection. It is mainly used for import, export and transshipment cargo. With a proper design of location, it is enabled to have efficient retrieval of bulk cargo for customs inspection. 

The COSAC “Community System for Air Cargo”

The COSAC is designed by Hactl to facilitate efficient information sharing among all stakeholders, which includes airlines, freight forwarders, Hong Kong Airport, Customs and Excise Department and related government departments. It is a powerful system with more than 400 functions online, including some are available on mobile phones. With the assistance of COSAC, it can assist Hactl to operate in a much more effective way. 

Bulk Cargo Distribution System (BCDS)

Q&A SECTION

1. One of your service you provided indicated that “The first 48 Hours (from 0000 hours on the day of arrival & the Sunday and Public Holiday within the storage-free period)”, will there be large demand for such service? How do you match the supply and demand if the service is free?

The Hactl has a huge storage area and has installed more than 10000 automatic small cargos inside. The area is large to storage several days' volume of new arrival. The charge will be offer to the clients if they cannot take their shipment after two days with $2.40kg / day or minimum charge $40 per shipment per day. The charge will increase with the storage time of shipment increase. The charge of late take shipment can effectively avoid the over-demand problem.

2. How does the development of HACIS help facilitating the shipping processes of HACTL?

HACTL handles freights for carriers at Master Air Waybill level within SuperTerminal 1; while HACIS can process the import and export cargo down to House Air Waybill level, and arrange local cargo delivery to the warehouses in Hong Kong, as well as daily scheduled customs-bonded road feeder services to/from Southern China.

With headquarter at SuperTerminal 1, HACIS has the unparalleled geographical advantage to handle the time-critical shipments at the heart of Hong Kong International Airport, significantly shortening cargo processing time. Like no other logistic service providers, HACIS shares the state-of-the-art terminal facilities with HACTL and has long-standing good relationship with airlines, thus handling the cargo with greater efficiency and flexibility.

3.How will you response to the increasing demand caused by the third runway?

Recently, the Executive Council approved the expansion of Hong Kong International Airport into a three-runway system in order to meet further air traffic growth. While the argument of approving the third runway has raised so hot, to Hactl, it is surely a positive issue.

No matter how, building the third runway will increase the capacity of aircraft both on civil aviation and cargo. Once the supply of cargo increase, the demand for logistic and delivery will definitely increase. This will for sure benefit for the business of Hactl as more cargo or aircraft brand will cooperate with it for logistic services. 

4. Since the demand on air cargo has recently been increasing, how do Hactl deal with this problem and ensure your service quality?

The increasing demand on air cargo may help Hactl to expanse its business. As they have effective and efficient system, Hactl can deal with this kind of situation easily. Besides, the system of Hactl is automatic, thus the quality may not be influenced by the increasing demand.

5. It was mentioned on your site that the latest Hactl drill demonstrated that systems could be fully resumed in a maximum of four hours should there be a system failure, has there ever been such failures in the past when such precautions were not in place? How did it affect your operations?

According to the statistics of Hactl, it shows that the failure rate of system is lower than 1%, which is an absolutely low percentage and showing that Hactl had a tight control over the whole process of its system. However, as they didn't mention if there was any previous failure, we are not able to tell the impact due to insufficient information.

6. Listed under 'Special Cargo Handling Facilities' is a livestock room at Hactl, what exactly does this entail and how do you handle it when there is outbreak of influenza virus?

Hactl provides services for livestock, like horse, Polar bear, and there are specific aircrafts and sites for these animals. To protect them, Hactl will employ veterinarians for inspecting and treating animals to avoid sicknesses including influenza virus.

7. In the age of globalization, will you consider to expand your business overseas?

Nowadays, the main developing market of Hactl is Mainland, China. And the subsidiary, Hacis, is responsible for providing services for Mainland. Under Hacis, SuperLink China Direct program focuses on the growing demand for Hong Kong-China air-road connectivity1 and creates long term cooperation with many companies in Mainland.

8. How do you make use of the automation to improve your efficiency?

Hactl is using an effective “Automated Cargo Handling System” to duel with repeated working processes. The network of automation is well-developed: With 3,500 positions of container storage system, 10,000 positions of box storage system, 40 units of automatic transfer vehicle, 466 workstations and 1,573 of empty ULD standard positions.

With the assistance of automation, simple tasks can be handled properly, for example, to short-distance delivery of products will be dueled by the automatic transfer vehicle. Cost of labor can be reduced under automation, and error can be minimized. Efficiency can be achieved by implementing automation.

9. What have you done in the environmental protection aspect?

As Hactl treats environmental protection as one of its core value, it is committed to run its business in a sustainable way.

Hactl is implementing several green initiatives in reduction of waste, emission and energy consumption, the recycle of paper, plastic wrapping and pallets, and also creating a clean air environment in SuperTerminal 1 which also ensure a comfortable environment to its employees at the same time.

10. How Hactl apply information technology in company operation in order to enhance its competitive advantages?

The signature system used by Hactl is the COSAC-Plus. Hactl have invested more than 240million to research and develop this air cargo management system that can be used by different stakeholders.

According to the information on Hactl’s website, the fuction of COSAC-Plus are as follow:

“Hactl’s COSAC-Plus is the air cargo management system that enables freight forwarders, airlines, Airport Authority, government departments and related organisations to monitor and process the air cargo shipments 24 hours a day. More than 4,000 users use the system to communicate and share information. Over 1,000,000 data transactions are made every day. The system also facilitates e-Air Waybill and e-Freight, contributing to the paperless air cargo business.”

Besides, with the support of COSAC-Mobile, stakeholders like truck’s drivers, are also able to keep track on the order’s status. Thus, they will know when should go into the terminal to unload or pick up the related goods. With the usage of the air cargo management system and mobile app, it facilitate the daily operation within the terminal. 

SUMMARY

Hong Kong Air Cargo Terminals Limited has a all-rounded facilities for managing thousands of cargo and flights. No matter on technology system, management and human resource planning, it has utilized it properly in order to enhance the largest efficiency.  

REFLECTION

It is a memorable trip for us to visit Hactl, as we learnt a lots of practical knowledge related to terminal and air cargo services. We used to have many chances to visit different logistics company's system, but that is certainly our first time to have such a valuable opportunity to visit the air cargo terminal, and the experience is remarkable.

Besides, the well-organized structure of Hactl would be the key concept that we should learn. They try to provide the customized service to every customer, and a detailed planning before implementation is necessary. Thanks to the comprehensive plan, there seldom have error occur during the operation time, and this would be the successful part of Hactl to act as the world-class company in the industry. 

REFERENCE

http://www.hactl.com/en-US/Media-Centre/Press-Releases/2013/COSAC-Plus-wins-APICTA-Awards.aspx#.VRLspFy8GLs

Hacis website, http://www.hacis.com/en/about/company.html, latest visit: 26-Mar-15

Post Visit Review of Yakult

BRIEF BACKGROUND INFORMATION OF Yakult

Yakult is a Japanese probiotic dairy products created by Minoru Shirota in 1935. And Yakult was launched in Hong Kong in 1969 which is the the third overseas branch. Nowadays, all the Yakult drinks are produced in Hong Kong and distributed to Hong Kong and Macau markets.

Production line visit AND SHARING

Once we arrived Yakult, their staff introduce Yakult to us through a production line visit. Though this visit, we know more about Yakult's history, production process, and their products. We even have a chance to try on the fresh made Yakult.

The entrance of Yakult 

History of Yakult

History of Yakult

Advertisment of Yakult

Decoration of Yakult made by over 2000 Yakult drinks' bottle

Package of Yakult Drinks

The Yakult drinks that we tried

The Yakult dolls

Yakult bottles from different countries

VIDEO SHOWING

A video was shown to us to introduce some background information of Yakult, including the invention of this innovative product by Dr. Minoru Shirota. It is quite inspiring to us as the attitude of this company is adorable: The purpose of Dr. Minoru seems to be helping people rather than earning profit. However, such kind of thought has brought the Yakult company an unexpected profit as returned. Such attitude is the most important part that most of the companies lack of, since they mostly put the revenue first but neglect the basic needs of customers, and failure would probably be the result. 

Capture from the video

Q&A SECTION

1. How can Yakult deal with the increasing demand in China?

Regarding the production in China, Yakult has 6 factories in China to satisfy its own demand, which are located in Guangzhou, Shanghai and Tianjin. Unlike the production in Hong Kong, which only requires to fulfill the demand of Hong Kong and Macau, the production line and size in China are much larger scaled and structured. Also, the quantity sold is never Yakult’s utmost objective to run the business, their philosophy is all about providing a healthy and reasonable priced beverage as a preventive medicine. We can see the example in May 2012, there’s been an upsurge of demand from China since Yakult could allegedly prevent cancer, but Yakult claimed there would not be an increase of production.

2. As your company advocates customer to drink one bottle of Yakult per day, do you think this hinders the sales of products? Are there any methods to improve the daily intake under health consideration?

Yakult considers consumers' health. The state of one bottle hinders the sales of products. However, Yakult does not advocate consumers to intake more bottles in order to increase its revenue as it disobeys Yakult's vision. Yakult's researches shows that there is waste of supplement if a consumer intake more than one bottle. Yakult does not advocate any waste of product function. Therefore, there is no method to improve daily intake under health consideration. However, Yakult will advocate a concept that everyone has a need to take one bottle per day in order to strengthen one's body. It could be a strong promotion to explore its potential clients.   

3. How can Yakult maintain the profit by your current product line? Will Yakult develop more different ways to yield more profits (e.g. more flavor)?

According to the founder of Yakult, he aimed to provide a cheap healthy product which affordable by most of the people in order let them improve their health. So the main purpose for Yakult is not to obtain as much profit as they can and because Yakult had already gained their reputation worldwide, they can maintain their profit by the only current product line. And actually the Yakult factories in other countries produce other products like cosmetic, so they can also obtain profit in this aspect. For the Hong Kong factory case, deal to the area restriction, it is already pressurize for them to meet the demand for Yakult in Hong Kong and Macau, so recently they didn’t consider to come up with new products in Hong Kong.

As I mentioned in the above paragraph, deal to the area restriction in Hong Kong Yakult factory, they cannot afford to produce new products now and actually that’s also because they don’t have to do so. In Singapore, Yakult sells with different flavor like green apple, orange etc. The reason for Yakult to offer different flavors in Singapore is because they have many competitors in the industry, so they have to differentiate their products in order to increase their competitiveness there. In Hong Kong, there is not much substitute for Yakult, and they don’t have to produce more flavors to attract more customers.

Q4.Will you consider providing order sizes (volume) of Yakult?

According to Yakult’s information , there are different sizes of Yakult among the world in which Hong Kong one is the biggest. As a 100ml bottle of Yakult contains at least 100brillion of Lactobacillus casei strain Shirota which is totally enough for protecting our intestine daily and enhance the peristalsis of our intestine. Therefore, it’s useless and will be a waste to intake more Yakult as 100ml of Yakult per day is already enough for intestine protection.

On the other hand, due to hygienic problem, Yakult prevents people re-drink large size of Yakult after opening. As Lactobacillus casei strain Shirota is a bacteria, it is very easy for batteries to grow and deteriorate once they expose in air. Thus, producing small size of Yakult can prevent people keeping it overnight and re-drink after opening, also encourage them to finish Yakult at once.

Q5 What have you done in the supply chain management to handle this kind of perishable products.

Yakult is perishable because there is no preservative added. There is only 30 days before the expiration and the quality of Yakult may change due to the changed of temperature. Therefore, instead of outsource to the third party, Yakult manages the supply chain by itself.

1. All products are produced in Hong Kong.All Yakult’s live lactobacillus drinks are produced and packed in Hong Kong. These finished goods supply to Hong Kong and Macau market. For products of Hong Kong region, they will be sent to sales office either in Fo Tan or in Kwun Tong.

2. All products are delivered by refrigerated trucks.The Hong Kong Yakult has a total of 3 refrigerated trucks that are responsible for the transportation of Yakult drinks from factory to sales office, and from sales office to retailers. For the delivery to Macau, Yakult uses container with air conditioning system to maintain the Yakult drinks quality.

3. Yakult provides customer services to the retailer.The clerk from Yakult visits their customer shop regularly to monitor the condition that they keep the inventory of Yakult drinks. Besides, all inventories, which are out-of-date, can be exchanged by sending back to Yakult while Yakult will replace them by a new one until the retails sold out the entire inventory.

6. How do Yakult prevent the leakage of the secret of its recipe?

Yakult has a tight control over its production process, even though it is quite open for people to visit their factory, however, people are not be able to know any details of the production of Yakult. 

On the other hand, the important component, a good bacteria named “Lactobacillus casei strain Shirota”, is registered and only Yakult company can have the right to use it for production. As a result, even there are many similar drinks in the market, but there isn’t anyone which is having exactly the same taste as Yakult, and especially the bacteria contained in that tiny bottle.

7. How can Yakult ensure the level of probiotics in the Yakult is in the ideal/ appropriate amount when it reaches to the end customers?

Much efforts are spent by Yakult to control the amount of probiotics in every bottle of Yakult, in both perspectives of the use of labor and machines. There is a checking to ensure that there are the qualified amount of bacteria in each Yakult, and the process would be done by using their workers to check each Yakult by the assistance of advanced machines.In order to let their customers to obtain the fresh Yakult, the company tried to produce only the amounts that required for the next day rather than producing a lots for inventory. What’s more, would be the compromise of Yakult that if a shop is unable to sell all the Yakult it ordered during the shelf life, the company is willing to send that amount for the company and help it to sell all until the last bottle. This method is also a way to ensure the probiotics level and quality are kept in a high quality when the product reaches to the end customers.

8. A quick skim through your website showed that you were planning on introducing Yakult to Ahmedabad, India in Feb 0f 2015. What drives your introduction; did you collect information from locals about their likes and dislikes? Otherwise, how do you determine which place and when to introduce the product? And how do you minimize risks (for instance of unsatisfied customers)?

The Yakult representative kindly pointed out to us that since Yakult is first and foremost a beverage seeing to improve intestinal health, it takes into consideration factors like of said location’s health statistics. For Ahmedabad, the representative mentioned that statistics showed the population was extra susceptible to intestine-related health problems, hence their decision to introduce Yakult to the region, it also helps that it is majorly a region of hot and dry climate, with Yakult’s cool and refreshing nature they are confident it will catch on.In closing, Yakult’s strategy for introducing their product to new regions is that the said regions’ need for the product health-wise.

9. Yakult provides home delivery service in Mainland China, Japan and Korean areas. Why don’t you provide such service in HK?

In fact, there used to be delivery service in Hong Kong. However, the sale was not very ideal. Besides, the culture and consumer behavior of Hong Kong is not same as Mainland China, Japan and Korea. Hong Kong people prefer to go to market to purchase. Thus, Yakult customizes their service in Hong Kong. They cancelled delivery service, and focus more on super market like ParknShop.

10. Your company has different products in different countries. However, the products are sold locally. Why don’t you sell all types of flavor in all countries?

Yakult in different areas has its own factory, and the products are in different sizes and tastes according to the local market demands and their own marketing strategies. Or in other words, the branches in different countries have autonomous rights in the local market.

11. Would you have other sustainable policies other than the bottle recycling (e.g. plastic cover)?

Yakult puts the sustainable development on a top position, and takes many measures under the concept. For example, in Japan, the bottles are recycled to make artificial limbs.

SUMMARY

Our group photo took in Yakult

By visiting the Hong Kong-based Yakult company, we have found Yakult’s long history and background of its healthy element. As Yakult is having two production lines recently, it has risen the burden of its supply chain. It takes Yakult to devote more effort in order to achieve efficiency. This visit doubtlessly widened our view of the production line and supply chain of Yakult as well as the importance of food safety and the procedure of surveillance. All of us have acknowledged the healthy idea behind Yakult and how they apply technology system in their supply chain. It is really a remarkable visit for us. 

REFLECTION

The visit to Yakult was very eye opening in the sense that we were able to observe how a production line operates. The representative that toured us kindly explained to us the number crunching of it all, it made us realize that a production line isn’t simply about gathering the demand for the day and producing that number. Lots of factors come into play, one such very important factor is the capacity of production, or simply the capability of the machines. If the math isn’t done right the company faces opportunity costs. Hence the importance of the capability of facilities, equipment and labor is a very important factor for any production line, became quite clear after this specific visit.

REFERENCES

http://www.yakult.com.hk/

http://www.express.co.uk/life-style/health/509785/Brits-are-wasting-millions-of-pounds-of-probiotic-drinks

Case 2 - FedEx

1. Background of FedEx.

FedEx Corporation is an American global courier delivery services company headquartered in Memphis which is founded in 1971. It is one of the world's largest express transportation companies which provide a wide range of shipping service for documents, packages, heavy freight shipment and e-commerce services worldwide with annual revenues of $45 billion. Being the world’s most admired and trusted service provider ranked by customers, FedEx now employs over 300,000 workers to offer safety, ethical and professional service to satisfy customers’ needs, for instance, FedEx Express creates a global air-and-ground network to increase the speed of time-sensitive shipments within one to two business days with guaranteed delivery time.

Business Model

FedEx originally focus on B2B business. However, due to situation changed where e-business has became a major trend , it encouraged FedEx to transform into the business focus on B2C . 

1. B2B

   – Mainly provide the service for organisations, institutions and governments 

   – Business network includes delivery services, adopted protocols and agreements

2. B2C

   – Open to customers who have registered with FedEx. 

   – People just need to implement a simplified, electronic clearance for e-commerce shipments, and products can be delivered 

   – E-business operation of FedEx eliminated the geographical limitations, B2C service can be expanded globally.

Customers

   • Main targets --> individual express

      - Using motor and air to transfer the product

      - Transfer the products in 24hrs

   • Other targets -->small business

Competitors

   • Kerry Logistic --> Main competitor in Asian area

   • DHL--> Main competitor in UK market

   • UPS --> Main competitor in American (1st in American, 2nd in the world)

   • TNT --> Develop new IT to become more effective and efficient

   • S.F-express --> Main competitor in express market of Mainland China

2. List the benefits of a virtual supply chain.

Definition of Virtual Supply Chain

   • Network connected by electronic links

   • Shows the organisational structure

   • which can facilitate efficiency and effectiveness of both material flow and information flow

Benefits of a virtual supply chain much like FedEx’s

1. Building one-to-one relationships with customers through Electronic Data Interchange (EDI)

   • Matching supply to demand without wastage

   • Squeezing time and inventory out of the system

   • Identifying and accommodating demand between buyers and sellers electronically

   • Hence, providing both efficient gathering and dissemination of real-time data

   • Providing integrated logistics systems formed on the basis of many partnership arrangements.

   • These logistics systems help them to redefine sources and procurement strategies by linking with other parties in the supply-chain, e.g. raw materials suppliers

      -->Increase profitability by reducing costs

   • However, huge initial investment is required

   • Switching cost of customers and suppliers increase à enhance the customer’s loyalty

2. Improvement of efficiency and control within the company

   • Provides incredibly active customers with proprietary on-line services

   • Stores frequently used addresses (sort of like speed dial back in the day), label printing, online package pick-up requests, package tracking

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

                 *Customer, Operations, Service, Master On-line System

   • Used to manage vehicles, people, packages, routes and weather scenarios on real time.

   • Relays data on package movement, pickup, invoicing and delivery to a central database at FedEx Memphis headquarters

   • Places a bar-code on each parcel at the point of pickup and the barcode is scanned at each stage of the delivery cycle

4. Coordination of all parties via virtual supply chain

The virtual supply chain of FedEx.

   • All parties are connected together by the virtual supply chain

        – Stronger coordination leads to a great information flow

        – Cost can be greatly cut

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

Create opportunity of Logistic Management

• IT can help to update the backend database in time for packaging and tracking (Internal)

• Not only operates handling, warehousing and transport the goods, but also combines materials management, production distribution together

• By using IT, FedEx shares information within the company and with its consumers to make logistic management more effective and efficiency.(external)

• Just-in-time inventory management model à Information replaces inventory   

Provide Value-added activities

• High-tech innovations and developments prompt the customer service, such as customer ordering, package tracking and process monitoring.

• The useful COSMOS system can update the database timely once the new information entered the system.

Development on customer service

• Customers can book the service and track the shipment of products self service

• The system can help customers to quote the price and measure the time by themselves

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

1. Rising fuel prices

The trend of increasing fuel prices causes large pressure to its traditional business model. And FedEx in this situation has to reorganize its system to keep consumers.

2. The trend of online business

Customers have high recognition on online business. Therefore to provide better customer services as well as deduct the costs made by huge labor resource and facilities, FedEx should consolidate the operation.

3. The need of sharing information 

The developing cooperation among upstream and downstream companies drives FedEx to use backend database system to sharing information and provide corresponding service to its consumers.

4. Intensive competition 

The express industry faces very fierce competition. And the pressure coming from international market makes situation of consolidation is necessary.