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The logistics industry at a crossroad
The progression of traditional
logistics to modern logistics inherently carries more information
that critically affects the timely physical flow of goods. Electronic
Data Interchange (EDI) established on private networks facilitates
some of the information flow, while most agents of the industry
rely on faxes and hard copies, backed by some form of in-house data
processing. As the World Wide Web takes its hold on the business
world, e-commerce flourishes, effectively pushing trading data into
electronic form, and transfoming how commerce and business must
be conducted. Orders and shipments of finished goods drive both
shipment volume to its new height and extend the logistics network
well into other parts of the globe.
For example, new and time-definite logistics services are demanded
and Internet-driven. E-commerce logistics quickly transpires a new
logistics e-commerce business model. As Internet technology continues
its reach into core business processes, the logistics industry is
faced with fundamental business process reengineering, and online
knowledge management needs. For the industry to continue to provide
effective and efficient logistics services in this cyber-based business
world, it is undergoing a rapid transformation to a technology-driven
cyber-based logistics industry. Cyber logistics is a web-enabled
Internet-based information model for the logistics industry that
allows a collaborative, dynamic, global online formulation of logistics
processes.
Clearly, both information technology and strategic alliances among
agents of the industry are critical elements in the competitiveness
equation. While there are substantial developmental efforts to address
such issues, innovative solutions appear to be missing. The issue
is not just one of meeting the challenges of the integrators. The
integrators are merely showing what can be achieved in aviation
logistics with network integration and information technology. But
the challenges go far beyond those brought on by the integrators.
The real challenges come from those brought on by e-commerce and
e-business, around them the future of aviation logistics will evolve.
This is a time of reflection and a time of opportunity for the industry
to shape its future. With careful planning and cooperation among
the industry agents and with e-commerce as an enabler, the industry
can be transformed into one that can provide customization to individual
shippers at a cost of mass production. The industry exhibits characteristics
- vertical integration, cross-company collaboration, time-definite
delivery, etc. - that are well-suited to be operated and managed
in an e-business environment. Conformance of information exchange
is the key to interoperability, a necessary element in e-business
processes. Accessibility of logistics services providers from other
existing global e-marketplaces and SCM portals must be also enabled.
There is an urgent need for the industry to operate on-line to gain
operational efficiency, collaborate and to compete effectively.
Local Small and Medium Enterprise (SME) logistics agents are slow
to adopt IT solutions. While various solutions exist today, they
are piecemeal with incompatible data interfacing. Typically, agents
need multiple IT solution components to complete a single shipment
transaction. Barriers such as nonconformance in data exchange hinder
logistics agents' development of e-commerce and e-busines activities.
Existing software products such as Ariba's Dynamic Trade (www.ariba.com),
i2's Supply Chain Management (www.i2.com) and Commerceone's B2B
e-Marketplace (www.commerceone.com) are tailored towards common
business practices. Most if not all, do not address the specific
practices of regional logistics industry such as Hong Kong. These
systems are not designed for cross-agent interoperability. As mentioned
above, logistics industry involves participants from many other
well-established industries such as the banking industry and regulatory
agents, of governmental or global nature. Cooperation among these
parties is paramount in achieving a seamless chaining effect for
global logistics. Furthermore, the need of information interoperability
must achieve to reduce redundancy and errors.
As an example, efforts to bring electronic commerce into the industry
have been forthcoming by constituents of the Hong Kong air cargo
logistics industry. HACTL (www.hactl.com) formally launched www.hacis.com
at the beginning of this year to facilitate electronic submission
of manifest information and other cargo information. Tradelink (www.tradelink.com.hk)
processes 100% of government required trade declarations electronically.
LINE (www.line.net), in cooperation with Hong Kong Trade Development
Council (www.tdctrade.com) provides services such as 'Logistics
Document Services' and 'Government Declaration Services' through
their Transact Link (www.transactlink.net) website. These efforts
shift the logistics industry to a paperless environment but yet
something is still amiss. The information is not integrated, let
alone interoperable.
There are also ongoing efforts such as B2B Data Exchange Pilot,
ebXML, BizTalk, and EZ*TRADE. They are enabling electronic information
exchange at different levels, by different media and with different
standards. The lack of a common information standard for exchange
is a key barrier in the industry's e-business development.
The
Center of Cyber Logistics (or Cyber Logistics Research Center),
is a research center under Li & Fung Institute of Supply Chain
Management & Logistics, The
Chinese University of Hong Kong. The Center was first established
in early 2000 affiliated with the Department
of Decision Sciences & Managerial Economics (DSE), Faculty
of Business Administration, The
Chinese University of Hong Kong and Department
of Management Sciences, Faculty
of Business, The City University
of Hong Kong
© Center of Cyber Logistics,
2000-2007.
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