1.0Introduction
Content
1.0 Introduction
-----------------------------------------------------------------------------------------------21.1Operation
BY Hock Cheong
Transportation-------------------------------------------------------2
1.2 SWOT Analysis of Hock
Cheong---------------------------------------------------------------------3
1.3 Challenges Faced By Hock Cheong Transportation in Its
Operation------------------------3 1.3.1 Long Lead Time due to
Unavoidable
Delay----------------------------------------------------4 1.3.2
Fluctuation of Petrol- Crude Oil
Price----------------------------------------------------------4
1.3.3 Exchange
Rate-------------------------------------------------------------------------------------4-52.0
Becoming A Truly Global Company in Providing Total Supply Chain
Solution-----------5 2.1 Total Supply Chain
Solution------------------------------------------------------------------------5-63.0Technologies
That Assist Hock Cheong in Realising Its
Potential-----------------------------7 3.1
E-commerce--------------------------------------------------------------------------------------------7-8
3.2 Global Positioning System (GRS)
System--------------------------------------------------------8-9
3.3 Automated Warehousing and Material Handling
System--------------------------------------9 3.4 Online
Tracking-----------------------------------------------------------------------------------------94.0
Conclusion---------------------------------------------------------------------------------------------9-10
5.0
Reference----------------------------------------------------------------------------------------------11-12
1.0IntroductionHock Cheong Transportation Company started it
operation back in 1945. The company started it operation by
delivering and distributing newspaper, trailers and movie films in
Malaya and Singapore (Hock Cheong, 2014). Since its establishment,
Hock Cheong Transportation has grown dramatically and strongly by
providing one-stop integrated logistics services to business in
Peninsula of Malaysia, Sabah and Sarawak, Singapore and Brunei. The
one-stop integrated logistics services provided includes
door-to-door and project cargo deliveries; warehousing and
distribution; land, sea and air transportation delivery and other
logistic related value-added services (Hock Cheong, 2014). Growing
of Hock Cheong Transportation has made the management to organize
its business into different subsidiaries such as Hock Cheong
Logistics Pte Ltd and Hock Cheong Forwarding Pte Ltd (Figure 1). It
makes the management of business easier and efficient and effective
because different employees and subsidiaries in charge of different
business.
Figure 1: Affiliate Companies of Hock Cheong Group
Hock Cheong Forwarding Pte LtdHock Cheong today Pte LtdHock
Cheong Logistics Pte LtdHock Cheong Transport Co. (S) Pte LtdHock
Cheong Logistics Sdn BhdHock Cheong Trading Sdn BhdHock Cheong
Transport Co. (1974) Sdn Bhd
Source: Hock Cheong (2014)
Source: Hock Cheong (2014)
1.1Operation BY Hock Cheong TransportationHock Cheong
Transpiration is an effective company whereby its businesses in
three different countries: Malaysia, Singapore and Brunei is
facilitates its operation by its own network branch in each
countries. In the late 1990s, Hock Cheong Transportation provides
additional services to its existing and potential clients in ASEAN
regions such as warehousing, distribution, and freight forwarding.
Moreover, Hock Cheong also partners with other logistics companies
in other ASEAN regions as well. Although its 69 years in pioneering
logistic services, Hock Cheong Transportation also faces intension
competition from local and foreign competitors, namely DHL, Li and
Fung Logistics and Tiong Nam Logistics and others. Moreover, there
are also challenges faced by Hock Cheong in its operation.
1.2SWOT Analysis of Hock CheongDespite Hock Chong business
efficiency and effectiveness in operation for almost 7 decades in
business. There are weaknesses in Hock Cheongs business and
opportunities and threats. Therefore, the SWOT analysis provides a
deep understanding of Hock CheongTransportation. By fully utilizes
strengths and opportunities to overcome weaknesses and minimize
threats, Hock Cheong is in a big step in becoming a truly global
company and practicing total supply chain management to its
clients.
Table 1: SWOT Analysis of Hock CheongStrengthsWeaknesses
1. Has been in operation for 69 years.2. Has its own strategic
partners in ASEAN regions
1 Family owned business.
2 Main market: Malaysia, Singapore and Brunei
OpportunitiesThreats
1. Incentive by Malaysian Government.2. ASEAN Intra-trade3.
Dramatic expansion of external trade in ASEAN regions such as
China, Singapore and Vietnam
1 Fluctuation of the petrol price
2 Compete directly with international logistics
companies3.Natural disaster
1.3Challenges Faced By Hock Cheong Transportation in Its
OperationThere are many challenges faces by logistic providers
today (Logistics Quarterly, 2014). However, there are only few
prominent challenges faced by Hock Cheong will be discussed in this
section. (1) long lead time due to unavoidable delay, (2)
fluctuation of petrol- crude price oil, (3) exchange rate
1.3.1Long Lead Time due to Unavoidable DelayUnavoidable delay
from controlled and uncontrolled circumstances such as natural
disaster and uncertainty in transportation will lead to long lead
time and thus incur high operation cost to the company. Lead time
is crucial for logistic provider as shorter lead time will affect
customers satisfaction. According to Luck (2006), lead time is
crucial in determining consumers satisfaction.However, delivery of
goods to other companies in other countries out of Malaysia might
take longer time. This is because of different procedures at custom
check point and documents required for submission are different as
well. Sometime, the address given by the customers is incorrect and
it will also lead to long lead time.
1.3.2Fluctuation of Petrol- Crude Oil PriceFigure 2: Crude Oil
Price
Source: InfoMine.com (2014)Figure 2 shows the fluctuation of
crude oil and it is crucial for logistic provider as it will impact
the profitability of the Company. Therefore, increase of crude oil
price is one of the challenges for Hock Cheong Transportation.
Increase of operation expenses means increase cost to do business.
Eventually the increase cost will be transfer to the customers.
Some of the customers might change its logistic service providers
when it can provide same service at cheaper price.
1.3.3Exchange RatePolitical, economic, social and technological
factors that happen in the country will affect the rate of
currency. Therefore, fluctuation of currency is also one of the
challenges for Hock Cheong Operation as the company involves
cross-boundary delivery to Singapore and Brunei. According to
Investopedia (2014), weaker domestic currency stimulates exports
and makes imports more expensive or otherwise.Therefore, logistic
providers need to adjust their rates in order to ensure that they
remain economically viable. The exchange rate of the country might
also impact Hock Cheongs performance and growth.
2.0Becoming A Truly Global Company in Providing Total Supply
Chain SolutionAccording to Sum et al. (2001), the potential for
growth for logistics companies is very promising in Asia Pacific
region. This is due to the expansion of external trade in countries
such as China, Singapore and Vietnam. For example, Singapore;
strade in February 2014 increased 8% compared to January, and it is
boosted by higher exports of pharmaceuticals and petrochemicals
(Trading Economics, 2014). Therefore, Hock Cheong can grape the
opportunity and compete directly with other local and international
competitors such as DHL and Tiong Nam Logistics by adopting total
supply chain management. Objective of adopting total supply chain
management is expected to help Hock Cheong to explore international
market, becoming more effective and efficient in its operation and
reducing operation cost.
Moreover, the total supply chain solution has also been provided
by local and international players in the logistics industry.
Example, Fedex, ODW Logistics, Spincer Boy Transportation, Shin
Shin Japan and Transways Logistics Sydney. It shows that total
supply chain solution is a best practice to gain more market share
and become a truly global company. In addition, Hock Cheong needs
to also releasing its business based on other SMART objectives as
well. This will help Hock Cheong to growth stronger and becoming a
truly global company. The example of SMART objectives apart from
adopting total supply chain management is shown in Table 2
below.Table 2: Objectives That Might Be Set by Hock Cheong
transportation1. Fully providing total supply chain solution to its
clients by end of 2014.2. Achieve ISO 14000 environmental
management in 2016.3. Maximizes the use of technology in business
and increase revenue by 10% at the end of 2014.4. Expend
international market share by 5% in 2015.5. Making Hock Cheong a
preferred brand by business and individual clients.
2.1Total Supply Chain SolutionAccording to Levi et al. (2008),
supply chain management is a set of approaches utilized to
efficiently integrate suppliers, manufacturers, warehouses and
stores, so that merchandise is produced and distributed at the
right quantities, to the right locations, and at the right time, in
order to minimize system wide costs while satisfying service level
requirement.
The possible total supply chain solution by Hock Cheong is shown
in Figure 3. Hock Cheong Transportation can provide total supply
chain solution to its clients. Hock Cheong has already an one-stop
integrated logistics services providers whereby it is specialize in
door to door and project deliveries, land transportation with air
freight and sea services, warehousing, distribution, customs
documentation and port clearance, freight forwarding and total
logistics. Moreover Hock Cheong can other value added services
which is useful in realizing its potential to become international
player as well. Example of value added services that can be
provided by Hock Cheong. 1. Supply of ISPM-15 compliant pallets2.
Fumigation services3. Project cargo crating4. Stuffing
&unstuffing of containers5. Haulage services6. Port-to-port
bonded transshipment7. Heavy lift & special transportation8.
Escort traffic services9. Cargo consolidation10. Short term
warehousing services11. Shrink wrapping & packing12.
Labelling& marking13. Insertion of warranty card &
manualsFigure 3: Possible Total Supply Chain Solution by Hock
Cheong
Overseas WarehousingDistribution OfficeImport
FreightCustomsWarehousing
Receiving product Consolidation (cross docking) Store packing
Labeling, scanning & packing Internet availability Purchase
order management Purchase order follow up Liaise with suppliers
&organize transport Full domestic coverage Internet tracking
Management of Ocean & Air transportation Preparation of
documents Full Internet tracking system
Landed costs Electronic entry of imports Pre clearance Draw back
processing Technical valuation and classification Dynamic cartage
and delivery solution Bonded warehousing Storage Pick & Pack
Delivery to end user Internet tracking
A lot of the total supply chain solution that can be provided by
Hock Cheong requires the help of technology. Therefore, Hock Cheong
needs to invest heavily in technology to help the company to
realiseits potential.
3.0Technologies That Assist Hock Cheong in Realising Its
PotentialAccording to ODW Logistic (2014), Technology is able to
manage customers distribution effectively and correctly and it
helps to solve supply chain problems.At the same time, Marchet et
al. (2009) mentioned that Information and Communication Technology
has several tools that helps logistic companies in realising total
supply chain solution to its clients.Cheetah (2014) also stated
that technology helps logistics companies prosper. Therefore, Hock
Cheong can invest heavily in technologies in order to realise its
potential to becoming global logistics company.
3.1E-commerceHock Cheong needs to invest in E-commerce in order
to penetrate more market share. Giant logistics service provider
such as Fedex is also adopting e-commerce in its business.
E-commerce is the trend of doing business today. It brings a lot of
benefits to both companies and consumers. The benefits of adopting
E-commerce will be enjoyed by Hock Cheong are as following. Tseng
et al. (2005) stated that a successful E-commerce is determined by
the optimal logistic operation as well. A. Expend the market from
regional to globalB. Promote companys efficiency and
competitivenessC. Number of single trip/ delivery is reducedD.
Reduces warehouse and the stock costIn terms of the benefits to
customer, customer can access to logistics services at anytime,
anywhere without physically appear at the logistics service
providers company. Moreover, it helps customer to save time and
money as well. The figure 3 below shows the differences between
traditional trade and e-commerce.
Source: Tseng et al. (2005)
3.2Global Positioning System (GRS) SystemTsai (2005) stated that
GPS system enable tracking physical goods at real-time greatly
improves logistics performance, cost efficiency and customer
satisfaction. Moreover, Malladi and Agrawal (2002) mentioned -that
GPS system is a space-based radio positioning system that provide
24 hour X 365 days, 3 dimensional position, velocity and time
information to suitably equipped users anywhere on the surface of
the Earth. Other benefits of applying GPS by Hock Cheong (1)
increase security of company asset, (2) allows consignments to be
tracked faster and easily, (3) improve drives safety and enhance
productivity. In order to be a global players in providing total
supply chain solution to client, GPS will give extra confidence to
its clients and help to minimize operating cost to Hock Cheong.
Other giant players such as DHL, FedEx is applying GPS in their
vehicles as well.
3.3Automated Warehousing and Material Handling SystemIn order to
achieve objective its potential, Hock Cheong needs to also invest
the automated warehousing and material handling system in its
warehouse. The example of automated warehousing and material
handling system are conveyor system and stacker cranes. Those
effective material handling equipment is useful in transportation
of bulky and heavy materials and reducing picking error (Industrial
Storagemhs, 2014) and thus reduce time of handling materials and
increase productivity. Heavy investment need to be made by Hock
Cheong, however, Hock Cheong it will help Hock Cheong to increase
its revenue and customer base in long-run.
3.4Online TrackingReviewing Hock Cheong Transportations website
found that Hock Cheong does not has any online tracking system in
the website. However, many other local and international logistics
providers have already provide online tracking conveniences to
their customers. Therefore, Hock Cheong needs to benchmarking other
business approaches for better growth and transportation of its
business. Online tracking allows customers to easily trace the
status of their shipment using the Internet.
4.0 ConclusionAfter reviewing Hock Cheong operation, Hock Cheong
needs to adopting benchmarking strategy in order to compete with
local and international. Moreover, Hock Cheong Transportation needs
to invest heavily in technologies and applying total supply chain
solution to its clients and at the same time aligned with other
objectives in order to become a truly global company. It is crucial
as Hock Cheong needs to enhance its existing performance to create
its own competitive advantage and its own customer base. It is a
win win situation for both Hock Cheong and customers. With those
investment and approaches, Hock Cheong is able to deliver better
value and helping its customer to reduce costs. Delivering value
and reducing costs will be shown in the Table 4 below. The tangible
and intangible benefits which will be enjoyed by Hock Cheong is
shown in Table 5 below.Table 4: Delivering Value and Reducing
Costs1. Reducing clients acquisition cost2. Reducing clients
transactional costs 3. Reducing clients down time through improve
deliveries4. Reducing clients inventory costs and capital
invested5. Reducing clients transport and logistics costs
Table 5: Possible Tangible and Intangible Benefits
TangibleIntangible
1. Reducing operating cost2. Increase profit3. Enhance companys
reputation4. Increasemarket shares5. Explore global market1. Save
time2. Better customers experience and satisfaction3. Better
relationship with clients4. Increase productivity
5.0 References1. Cheetah (2014) Technology helps logistics
companies prosper. [online]Available at:
http://www.cheetah.com/news/technology-helps-logistics-companies-prosper(Accessed
17 March 2014)
2. InfoMine.com (2014) Historical Crude Oil Prices and Price
Chart. [online]Available at:
http://www.infomine.com/investment/metal-prices/crude-oil/all/(Accessed
17 March 2014)
3. Investopedia (2014) Interesting Facts About Imports and
Exports. [online]Available at:
http://www.investopedia.com/articles/investing/100813/interesting-facts-about-imports-and-exports.asp(Accessed
17 March 2014)
4. Hock Cheong (2014) About Us. [online]Available at:
http://www.hockcheong.com.sg/about(Accessed 17 March 2014)5.
Induatrial Storagehms (2014) Advantages of using material handling
equipment for industry storage. [online]Available at:
http://industrialstoragemhs.blogspot.com/2011/02/advantages-of-using-material-handling.html(23
March 2014)
6. Levi, D.S., Kaminsky, P. and Levi, E.S. (2008) Designing and
Managing the Supply Chain. Concepts, Strategies, and Case Studies.
3rd edn. The United States: McGraw Hill.7. Logistics Quaerterly
(2014) The impact of exchange rate on supply chain management.
[online]Available at:
www.logisticsquarterly.com/issues/10-1/article3.html(Accessed 17
March 2014)
8. Marchet, G., Perego, A. and Perotti, S. (2009) An exploratory
study of ICT adoption in the Italian freight transportation
industry, International Journal of Physical Distribution and
Logistics Management, 39(9), pp. 785-812.
9. ODW Logistics (2014) Technology. [online]Available at:
http://www.odwlogistics.com/technology/index.htm(Accessed 17 March
2014)
10. Sum, C.C. and Teo, C.B. (2001) Strategic Logistics
Management in Singapore, International Journal of Operations and
Production Management, 21(9), pp. 1239-1260.
11. Trading Economics (2014) Singapore Trade Surplus Increases
in February. [online]Available at:
http://www.tradingeconomics.com/singapore/balance-of-trade(Accessed
17 March 2014)
12. Tsai M-C (2006) Constructing a logistics tracking system for
preventing smuggling risk of transit containers, Transportation
Research Part A, 20(2006_, pp. 526-536.
13. Tseng, Y.Y, Yue, W.L, and Taylor, M. (2005) the role of
transportation in logistics chain, Proceedings of the Eastern Asia
Society for Transportation Studies, 5 pp. 1657-1672.
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