QUESTION 1
In the Class Discussion on 7 March 2010, you have learnt about the HKSAR LOGSCOUNCIL Digital Trade and Transport Network. In 1000 words, with an address from a small and medium enterprises’ point of view, who should be the owner of such “Digital Trade Network”.
In the Class Discussion on 7 March 2010, you have learnt about the HKSAR LOGSCOUNCIL Digital Trade and Transport Network. In 1000 words, with an address from a small and medium enterprises’ point of view, who should be the owner of such “Digital Trade Network”.
You should address pros and cons of each of the following ownership.
(a) 100% government ownership (e.g. Airport Authority)
(b) 100% government ownership, will be listed / sold (e.g. MTRC)
(c) Government being a substantial owner (e.g. Current DTTN Model)
(d) Implemented and operated by a private firm
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INTRODUCTION
This assignment was requested by Mr. Philip Lam, the subject examiner of ISE544, in the lesson of 7 March 2010. This assignment is a response to some skeptics and the queries addressed from the Small-and-Medium Enterprises about adopting or implementing the DTTN (the Digital Trade and Transportation Network). The main aims of this assignment are to promote the multipurpose functions, core services and key benefits of the DTTN to the supply chain entities and to address the advantages and discussible problems of the e-commerce services to the government ownerships.
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I present findings which attempt to explain why some supply chain entities are reluctant to use DTTN services and will indicate difficulties and worries being responded from the small-and-middle sized company owners. Few of the most popular answers were “We don’t know what the DTTN is and we don’t want to be the first movers”, “We are a mosquito-sized company and have no money to invest IT infrastructure for the so-called DTTN e-commerce services”, “Here are IT illiterate at all, no need to use computer”. Some even thought that DTTN may disrupt their normal operation rather than helping to improve their operational efficiency, and some will say that they do not believe the DTTN as it is an immature government product; they mistrust the reliability of DTTN technology and performance.
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Undoubtedly, the problems in DTTN currently encountered in developing the service in supply chain communities as it is a voluntary and optional service that individual firms of the supply chain may consider joining or not.
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Following the analysis of the findings, brief conclusions are drawn and a number of initiatives are made as to how enterprises will be induced to connect their business partners through DTTN services.
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SOURCE
Data and information for the assignment were gathered between classmates in the first Sunday’s lecture on 7 March 2010, other relevant articles were collected by searching more than 12 randomly-keyed private and government-based websites, such as LOGSCOUNCIL (Hong Kong Logistics Development Council), HKTDC (Hong Kong Trade and Development Council), Hong Kong Productivity Council and Tradelink etc.
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ANALYSIS OF THE FINGINGS AND GOVERNMENT PROMOTION TO CURRNET DTTN MODEL
Based on the findings, most of buyers and logistics services providers seem unfamiliar with the DTTN services; they didn’t know how many the pros they can acquire from it. In fact, The Digital Trade and Transportation Network is a state-of-the-art electronic logistics platform that provides interconnection among the trade, logistic and finance industries to facilitate information flow and enhance efficiency and helps to maintain the competitiveness of Hong Kong as a global logistic hub.
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Using the DTTN, daily business will be simplified as most of the documents are being able to transfer through the internet, which will save the user time and ensure a more reliable in supply. DTTN is not only a super electronic document conversion engine that supports any-to-any transformation of data format and communication protocols and is also a mega electronic data store in which documents transacted and comprehensive audit trails can be available online for 2 years and offline for 7 years.
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Furthermore, DTTN is simple as an excel document which can easily be converted to sophisticated formats like EDI or XML. Users can interconnect with the DTTN using their existing document formats/structures and communication protocols, and with no or minimal changes to their internal systems. The function is like a very efficient translator to translate languages from Chinese to English or from Chinese to Germany.
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Figures below show an example demonstrating the DTTN process:
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Taking an example by Figure 1A, a buyer from oversea sends a sheet of PO (Purchase Order with ANSI /X12 format) through DTTN, the PO will be translated to the DTTN EDIFACT formatted document to their Forwarder (see Step 2). Then DTTN will translate the BL (Bill of Lading) from EDIFACT to DTTL XML formatted document to the Application Service Provider 1 and to BL (Excel Format Document) sending to Seller in China (see Step 5)..
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Document formats supported include:
XML Vx.0
UN/EDIFACT
IATA Cargo Interchange Message Procedures (Cargo IMP)
ANSI/X12
Microsoft Excel
Comma-Separated Values File
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DDTN does not require SMEs to put considerable resources and investment in their IT system, it is simple as an excel document and can be compatible with a common desk-top computer. For those SMEs or mosquito-sized companies, DTTN can truly help to facilitate information exchange and daily documentation flow compared to the traditional logistics process. It is not required to invest special resource and money in IT system for DTTN, but can enhance the competitiveness and information exchange speed in their logistics operations, in particular to the business partners in China.
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KEY BENEFITS OF THE DTTN TO SMEs (Current DTTN Model)
Apart from the above, the owners of Small-and-Middle Sized Enterprises can enjoy the following key benefits after joining the DTTN system.
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More Business Opportunities
No longer restricted by the expensive multiple communication formats required by different buyers and save IT integration and maintenance cost in fulfilling the EDI requirements mandated by the buyers.
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Cut Operation Cost
With the data inheritance function, documents like shipping orders, packing list, invoice, can be prepared from the same source document (e.g. purchase order) so as to reduce errors, discrepancies, double handling and data entry cost. In addition, eliminating the need for courier and yet with a much faster speed.
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Better Management of Your bookings
Forwarders and carriers exchange information through a single channel can avoid delays, missing and incorrect bookings due to loss or incorrect manually entered data. More visibility on shipment status: Have the goods left the factory? Has the vessel arrived? Was there a delay in the delivery? Was there any discrepancy at the warehouse?
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More Efficient and Secured Payment Process
By receiving electronic service invoices and pay online, more timely and accurate financial records can be assured. Save time and money in the cumbersome cheque handling process and enjoy quicker service delivery.
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Simple Solution for SME
The full set of shipping documents can be prepared in standard Excel spreadsheets and be submitted securely using normal emails. (For details, please see again the Figure 1 and 1a)
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No Training Required
Existing application system/software will be used to generate the documents and hence no need for training.
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Save document storage cost
Documents will be stored online for 2 years and offline for 7 years. No more physical space and the associated cost required for storing tons of shipping documents.
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To enable SMEs to enhance interests in adopting DTTN system, an incentive package is being offered by Digital Trade and Transportation Network Limited (DTTNCo) to seminar / workshop participants (company based). The package includes: wavier of registration fee and the first year annual subscription fee; waiver of the first two mapping fee; and free transaction usage for the first 100 transactions within 3 months.
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All the benefits listed above and a government incentive plan will offer to SMEs and such incentive packages can enhance the competitiveness and cost-effectiveness of the SMEs in a fast-changing industry.
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CONS AT ANOTHER SIDE OF DTTN TO SMEs (Current DTTN Model)
The people saying that a coin has two faces, one you can see the positive but one is the negative, pros of using the DTTN can effectively enhance HK logistics competitiveness, however DTTN’s cons can become a barrier entry to the SMEs as DTTN is a e-commerce service being linked between companies through the internet, it is a big problem to some small-sized companies who are not used to operating computer system, not mention to the companies who have not computer, they think that they have to hire a computer clerk to operate logistics documents on DTTN before they join it. Nevertheless, additional costs to hire a clerk who is familiar with computer-operated skill and to purchase at least a set of computer with internet function will be their concerns. Even if they do these all, but harvest they may not seen immediately.
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The reasons are:
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First, unlike Tradelink, the DTTN is a voluntary and optional service that individual firms of the supply chain may consider joining or not. A critical mass of DTTN users is essential in providing incentives for other supply chain entities to join the group. Therefore, some potential users, not to mention the above small-sized companies’ story, will have reservations about being the first movers.
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Second, the DTTN interface, along with the systems of individual firms may occasionally require some sophisticated integrating procedures, prolonging the phase-in duration. Also the current development of the DTTN is more focused on Hong Kong-based supply chain enterprises, global expansion is an essential strategy for the continuous growth of the project, China in particular is the DTTN’s top priority market for expansion in view of the business trend of the domestic supply chain parties.
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Third, Tradelink’s critical success factor is the system’s close linkage to government functions (it is said to business-to-government or B2G). This kind of strategic role is non-existent in the DTTN. The government authority is just currently playing a monitor’s role rather than being actively involved in the promotion of DTTN services. It becomes the enterprises who are unwilling to be the first mover in using DTTN.
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PROS & CONS OF DTTN TO SMEs (If it were owned by Government with 100%)
Logistics is an important sector of the economy, accounting for about 5.2 per cent of Hong Kong’s Gross Domestic Product. Hong Kong is Asia’s premier international transportation and logistics hub, and for many years has maintained its position as the world’s busiest container port and busiest international air cargo centre.
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CONS AT ANOTHER SIDE OF DTTN TO SMEs (Current DTTN Model)
The people saying that a coin has two faces, one you can see the positive but one is the negative, pros of using the DTTN can effectively enhance HK logistics competitiveness, however DTTN’s cons can become a barrier entry to the SMEs as DTTN is a e-commerce service being linked between companies through the internet, it is a big problem to some small-sized companies who are not used to operating computer system, not mention to the companies who have not computer, they think that they have to hire a computer clerk to operate logistics documents on DTTN before they join it. Nevertheless, additional costs to hire a clerk who is familiar with computer-operated skill and to purchase at least a set of computer with internet function will be their concerns. Even if they do these all, but harvest they may not seen immediately.
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The reasons are:
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First, unlike Tradelink, the DTTN is a voluntary and optional service that individual firms of the supply chain may consider joining or not. A critical mass of DTTN users is essential in providing incentives for other supply chain entities to join the group. Therefore, some potential users, not to mention the above small-sized companies’ story, will have reservations about being the first movers.
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Second, the DTTN interface, along with the systems of individual firms may occasionally require some sophisticated integrating procedures, prolonging the phase-in duration. Also the current development of the DTTN is more focused on Hong Kong-based supply chain enterprises, global expansion is an essential strategy for the continuous growth of the project, China in particular is the DTTN’s top priority market for expansion in view of the business trend of the domestic supply chain parties.
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Third, Tradelink’s critical success factor is the system’s close linkage to government functions (it is said to business-to-government or B2G). This kind of strategic role is non-existent in the DTTN. The government authority is just currently playing a monitor’s role rather than being actively involved in the promotion of DTTN services. It becomes the enterprises who are unwilling to be the first mover in using DTTN.
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PROS & CONS OF DTTN TO SMEs (If it were owned by Government with 100%)
Logistics is an important sector of the economy, accounting for about 5.2 per cent of Hong Kong’s Gross Domestic Product. Hong Kong is Asia’s premier international transportation and logistics hub, and for many years has maintained its position as the world’s busiest container port and busiest international air cargo centre.
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Viewing on this, the government provides a conductive environment and necessary infrastructure to facilitate the development of the logistics sector. It would bring other advantages to the logistics field if DTTN were owned by Hong Kong Government instead of playing a monitor role to the current DTTN. I am a layman in the logistics field but I wanna say something about DTTN which is a sophisticated e-commerce idea, it is, it definitely is, it can speed up the information flow and e-document exchange between buyers and sellers, and between users. If government fully owned the DTTN share, then DTTN will be driven with the help of a long-term government support, such doing might have been a dream to be a Delta model (it would be B2B+B2G, business-to-business, and business-to-government).
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However, a knife has two sides, one is knife-edged, and another is not. The government policy may be sluggish in responding to the sudden changes in the logistics areas due to many factors (like the bureaucracy) happen in the existing government structure.
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PROS & CONS OF DTTN TO SMEs (If it were owned by Private Company)
If the DTTN to be owned and implemented by a private firm, I think that it would also be good for the DTTN as in general the owner which should be a familiar in the logistics field and his/her idea in creating the DTTN would be expected unlimitedly, and more innovative compared to the current model. Private firm to manage the DTTN would be achieving more expectations which are the sound of the logistics entities. However, private firm operating the DTTN may have inequity and discrimination in the field.
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CONCLUSION AND INITIATES
The findings clearly indicate that the DTTN exists the pros and cons in the B2B zoon (it is also said to be Business-to-Business) to the users who are using or will be using on-line trading service as their information flow process in businesses.
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This assignment has shown, however, that the DTTN simply does not have enough attractions to induce SMEs to join nor to encourage entities to become the first movers, even if the incentive package and key benefits of DTTN have already been offered to SMEs’ sides. The problem is that the scheme is not a mandate; the individual firms of the supply chain can join DTTN or consider not joining it. Although DTTN is a sophisticated online trading system, it is not a must for the supply chain entities; it will make the current logistics process into an inconsistent model.
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As a matter of fact, the main problems faced by small businesses are a lack of capital, lack of computer skill (IT illiterate is the worst one) and difficulties in adapting the DTTN life (most of enterprises are reluctant to change). Small businesses tend to maintain a smaller number of people and facilities per unit unlike large enterprises, it can be concluded that to induce the small-and-middle enterprises to join and stay, the HKSAR should put in place an optimal plan that is conductive to leading the SMEs to be DTTN users. Like a special allowance offers to those mosquito-sized logistics companies for setting up their computer system, and establish a grace period (e.g.1st July 2011) of implementing the DTTN to all logistics entities in HK.
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As for the main problems by middle or bigger-sized enterprises, HKSAR should change the development of the DTTN which is not only focused on Hong Kong-based supply chain enterprises; global expansion will be an essential strategy for the continuous growth of the DTTN project. As we all know that China is the DTTN’s top priority market for expansion in view of the business trend of the domestic supply chain parties.
End Here
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PROS & CONS OF DTTN TO SMEs (If it were owned by Private Company)
If the DTTN to be owned and implemented by a private firm, I think that it would also be good for the DTTN as in general the owner which should be a familiar in the logistics field and his/her idea in creating the DTTN would be expected unlimitedly, and more innovative compared to the current model. Private firm to manage the DTTN would be achieving more expectations which are the sound of the logistics entities. However, private firm operating the DTTN may have inequity and discrimination in the field.
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CONCLUSION AND INITIATES
The findings clearly indicate that the DTTN exists the pros and cons in the B2B zoon (it is also said to be Business-to-Business) to the users who are using or will be using on-line trading service as their information flow process in businesses.
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This assignment has shown, however, that the DTTN simply does not have enough attractions to induce SMEs to join nor to encourage entities to become the first movers, even if the incentive package and key benefits of DTTN have already been offered to SMEs’ sides. The problem is that the scheme is not a mandate; the individual firms of the supply chain can join DTTN or consider not joining it. Although DTTN is a sophisticated online trading system, it is not a must for the supply chain entities; it will make the current logistics process into an inconsistent model.
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As a matter of fact, the main problems faced by small businesses are a lack of capital, lack of computer skill (IT illiterate is the worst one) and difficulties in adapting the DTTN life (most of enterprises are reluctant to change). Small businesses tend to maintain a smaller number of people and facilities per unit unlike large enterprises, it can be concluded that to induce the small-and-middle enterprises to join and stay, the HKSAR should put in place an optimal plan that is conductive to leading the SMEs to be DTTN users. Like a special allowance offers to those mosquito-sized logistics companies for setting up their computer system, and establish a grace period (e.g.1st July 2011) of implementing the DTTN to all logistics entities in HK.
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As for the main problems by middle or bigger-sized enterprises, HKSAR should change the development of the DTTN which is not only focused on Hong Kong-based supply chain enterprises; global expansion will be an essential strategy for the continuous growth of the DTTN project. As we all know that China is the DTTN’s top priority market for expansion in view of the business trend of the domestic supply chain parties.
End Here
Best,
Ken Ngan Chi Keung
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