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Supply Chain Innovation
for Competing in Highly
Dynamic Markets:
Challenges and Solutions
Pietro Evangelista
IRAT-CNR & University of Naples Federico II, Italy

Alan McKinnon
Heriot-Watt University, UK

Edward Sweeney
Dublin Institute of Technology, Ireland

Emilio Esposito
University of Naples Federico II, Italy
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Library of Congress Cataloging-in-Publication Data

Supply chain innovation for competing in highly dynamic markets: challenges and solutions / Pietro Evangelista ... [et al.],
editors.
p. cm.
Includes bibliographical references and index.
Summary: “This book investigates the role of innovation in the management of supply chains of today, focusing on supply
chain integration from both strategic and operational perspectives and the impact of information technology-related
innovation in supply chain and logistics service industries”--Provided by publisher.
ISBN 978-1-60960-585-8 (hbk.) -- ISBN 978-1-60960-586-5 (ebook) 1. Business logistics. 2. Business logistics--Infor-
mation technology. 3. Business logistics--Technological innovations. I. Evangelista, Pietro, 1963- II. Title.
HD38.5.S8954 2012
658.7--dc22
2011013907

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 123

Chapter 8
Innovative ICT Applications
in Transport and Logistics:
Some Evidence from Asia

Mark Goh
University of South Australia, Australia & National University of Singapore, Singapore

Kym Fraser
University of South Australia, Australia

ABSTRACT
This chapter examines the applications of innovative information and communication technology (ICT)
applications in transport and logistics in Asia. Specifically, the authors examine two case studies of how
a Logistics Service Provider (LSP), and a public sector agency based in Asia who acts as a regulator
of ports and maritime services and facilities have effectively used ICT tools and applications to their
advantage and how this has shaped the innovation landscape of the supply chain in Asia.

INTRODUCTION modern, integrated Enterprise Resource Planning

(ERP) systems to help provide a holistic view
To thrive in today’s competitive global markets, of a company’s activities. Such an ICT applica-
managers need to keep an eye on a multitude of tion mounted on an SAP platform has helped to
activities within the firm and across the supply give managers and decision makers the requisite
chain. These activities include the critical functions information needed to do the job effectively, and
of procurement, production operations, employee to stay ahead of the competition. However, such
productivity, load utilization, and ultimately applications do not come cheap.
profitability and cash flow. Many companies, As the world becomes increasingly globalised,
including medium sized firms, have adopted there is in reality a renewed call for greater innova-
tion especially in the areas of services, technology
DOI: 10.4018/978-1-60960-585-8.ch008 and practices so that the delivery of goods and

Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
 Innovative ICT Applications in Transport and Logistics

services are up to speed vis-à-vis competition. chain innovation is provided in the next section.
Already, we note that two dimensions of business, Thereafter, we discuss ICT diffusion in supply
namely, speed to market and product life cycles, chain management in Asia. This is then followed
are getting shorter with each passing business by a presentation of two case studies, one a public
cycle, and with knowledge (both tacit and explicit) sector agency involved directly in maritime logis-
aging rapidly. In the context of the supply chain, tics, and the other a global LSP with a significant
it has been well recognised and accepted that ICT footprint in Asia. Next, we provide a discussion
engenders the integration of supply chain activi- highlighting the managerial implications, followed
ties which enables the seamless globalisation of by some managerial recommendations.
services and can afford greater specialisation for
the service provider as operations become more
sophisticated. Indeed, the innovative use of ICT LITERATURE REVIEW
in the supply chain context can be referred to as
the use of ICT applications that support the sup- Over the past two decades, the nature of interna-
ply chain’s objectives of improved efficiency and tional trade operations and international logistics
responsiveness, based on the needs of the current practices has changed by leaps and bounds. In-
stakeholders in the supply network. Today, in novations in transport, information and commu-
Asia, we see ICT innovations continually driving nications technologies as well as the liberalisation
down costs, with the quality of logistics service of trade tariffs and finance have brought to life a
standards being simultaneously raised. Indeed, global production structure (e.g. Dicken, 2003)
in many industries today, most services are char- that is highly dependent on reliable and robust
acteristic of continuous innovation with limited ICT applications and their delivery. As mentioned
shelf and user life. Based on the Clark-Fisher by Grainger (2007), with global supply chain and
hypothesis, the redeployment of people from the networks at work, there is now an imperative for
less productive to the more productive sectors a robust ICT system to bring the supply chain
stimulates innovation, competition and growth system to fruition, as in any cross border opera-
(Botten and McManus, 1999). This in turn fuels tions interfacing with the regulatory authorities
the trade in services. at the national borders, without pre-emptive
This paper seeks to describe the state of prog- technologies in place would mean excessive
ress of innovative ICT applications in the LSP documentation requirements and a lack of trans-
sector in Asia where there is now a greater need to parency in the goods inspection requirements and
drive for better innovation solutions and delivery objectives. Hence, there is a need to bring about
so as to maintain the rate of business evolution greater and quicker modernisation to the flow of
mentioned earlier. We will focus on two cases, cross border trade and hence the case for greater
one of a global LSP competing in an increasingly innovation in ICT applications in logistics as this
competitive marketplace in Asia and the other type or family of applications brings business to
of a public sector agency acting as a ports and the heart of the supply chain, namely, speed, ef-
maritime regulator where innovation has played ficiency, and transparency in cross border flows.
a big part in driving the continued relevance for On another note, innovation in ICT applications
the organisation and the relevant community as if appropriately applied can also bring to bear a
a whole, respectively. real reduction in trade compliance costs. Grainger
The rest of this chapter is organised as fol- (2007) rightly identifies the following uses for ICT
lows. In the interest of space and time, a short applications, which are still unevenly applied and
literature review on ICT applications and supply enforced throughout Asia, namely,

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Innovative ICT Applications in Transport and Logistics

1. Standardisation of documents and electronic roles effectively in the supply chain relationships,
data requirements ICT applications are likely to have an immediate
2. Automation of business processes impact on the construction of this collaboration.
3. International electronic exchange of trade Each change or innovation in one of the above
data mentioned areas will have an influence on the sup-
4. Single window for customs clearance ply chain system as a whole, in relation to improved
performance in the materials flow, transport units,
In the literature, much has been done to empiri- and management control of the entire supply chain.
cally examine the role of ICT in improving supply There is no doubt that ICT innovations if managed
chain performance through better collaboration properly and diffused pervasively can effectively
(e.g. Salam, 2009). Indeed, ICT has been shown support an optimized supply chain especially in
to support the exchange between trading part- the last mile context (Gevaers, Van de Voorde, &
ners (Pramatari, 2007). This finding is not new, Vanelslander, 2009), and this is useful for ensuring
rather it is a reinforcement of Nohria and Eccles a sustainable logistics system.
(1992) who have suggested that electronically The literature also reports that in the role as
mediated exchanges such as those in modern ICT a supply chain manager and developer, the LSP
applications contribute to increased collabora- has partial (sometimes more) responsibility of the
tion because it empowers front-line workers tactical or strategic management of the supply
with information, enables direct communication chain or supply network (Fulconis, Saglietto, &
between individuals at the operational levels in Paché, 2006). In many ways, the LSP develops
the organization across time and space, and blurs new operational models, which enhance the per-
organizational boundaries. These electronically formance of the supply chain. This role differs
mediated exchanges refer to the extent to which from the earlier role of a value adder in a way that
supply chain partners communicate through an supply chain innovations are originated by the LSP
electronic media such as the Internet, intranets, instead of the manufacturer or the subcontractor.
electronic mail or Electronic Data Interchange To be able to be in this role, the LSP has to have
(EDI) systems (Kulchitsky, 1997). In the supply a deep understanding of the industry environment
chain context, we know through the learnings of in which they are working and be proactive in in-
the beer game (Chopra and Meindl, 2009) that novating their ICT applications intended for use
integrated information flows often reduce un- on the shippers so as to sustain long-term business
certainty (Allaire and Firsirotu, 1989) as well as relationships with them. The case of DHL being
reduce any supply chain system volatility induced constantly involved in ICT innovations helps to
by unnecessary information delays (Towill, 1992). put this thinking in its proper perspective.
The ICT applications that support electronically At the same time, it has been recognised in
mediated exchange encourage inter-organizational the literature that direct intervention by the state
collaboration by facilitating interaction and dis- especially in the arena of global trade is found to
semination of information at all organizational be detrimental to the market efficiency of busi-
levels. Myhr and Spekman (2005) have found ness (Stiglitz, 1991; Markham and Millar, 2009).
that collaborative partnerships can be achieved Hence, in the case of Singapore and other progres-
both via trust and through electronically medi- sive Asian countries, the role of the government
ated exchange. Because electronically mediated agencies in assisting innovation and technology
exchange assists people at the operational level applications for logistics facilitation is to only
who need up-to-date information to carry out their proactively dismantle and minimise the barriers

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 Innovative ICT Applications in Transport and Logistics

and restrictions to trade and business (Goh, 2005). ter coordination is needed from a control tower
As such, we will present the case of the Maritime perspective. In this regard, the astute observer will
and Ports Authority of Singapore (MPA) to high- notice a greater diffusion of ICT applications in
light how such an agency has proactively invested the logistics industry in Asia in the past decade.
in ICT applications to create seamlessness in the There are two reasons for doing so.
passage of goods through the port of Singapore. First, Cette and Lopez (2008) recently reported,
There are other reasons cited in the literature in an empirical study of eleven OECD countries
for the public sector engaging in innovative ICT that the extant literature has shown that the level
applications. Hülsmann and Berry (2004) argue of ICT diffusion has a favorable effect on pro-
that the LSPs have to face complex and perpetually ductivity. Further, they showed that the use of
changing settings of environmental requirements. ICT applications generally requires labour with
Thus, the LSPs have to engage in innovative ICT a higher degree of skills than other production
applications to ensure the relevance and longevity technologies. In the case of Asia, a similar phe-
of technology based competitive advantages, par- nomenon is observed. In terms of ICT diffusion,
ticularly when the profit margins are rapidly erod- Table 1 below shows the state of ICT diffusion
ing with time and industry maturity. However, as in some of the major economies in Asia. Table
pointed out by Hülsmann, Korsmeier, and Cordes 1 shows the low base that the key economies in
(2009), the innovation capabilities also depend on Asia, particularly China, India and Indonesia,
the technological savvy-ness of the firm, which are starting from. Thus, it is worthwhile examin-
has to balance eroding profit margins with the ing the approach taken by the logistics industry
rising cost of ICT investments. This necessitates in fostering innovative ICT applications to help
bringing an independent higher hand to introduce drive greater productivity improvement and ensure
new larger scale innovative ICT applications for business success.
the common good of the community, namely, the We now present two case studies to showcase
public sector agencies. how each has exploited and adapted innovative
To date, there few studies on how innovation ICT applications for competitive advantage and
in ICT applications has been managed strategi- for the common good of the business community
cally in an Asian context to improve supply chain in Asia. We first present the case of the MPA to
performance. This paper therefore contributes show specifically how it has strategically deployed
to the literature by highlighting two specific innovative ICT applications to improve the busi-
cases of how innovative ICT applications have ness and operational processes in and around the
been employed to integrate the various logistics port area. The second case company we analyze,
activities in the supply chain, to create sustained our focus on innovative ICT applications adopted
competitive advantage (Watson, Kelly, Galliers, by DHL, a global LSP targeted at improving
& Brancheau, 1997). functional productivity and greater customer
satisfaction among Asian clients.

ICT DIFFUSION IN SUPPLY Maritime and Ports Authority

CHAIN MANAGEMENT IN ASIA of Singapore (MPA)

In Asia, the landscape of logistics/supply chain It has been reported that 90% of non-bulk cargo
management is becoming competitive and chal- worldwide moves by containers stacked on trans-
lenging. For one, the logistics and transport port ships (Ebeling, 2009). Of this amount, 26%
functions are becoming more complex, and bet- start their journey from the ports of China (The

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Innovative ICT Applications in Transport and Logistics

Table 1. ICT diffusion fact sheet

China India Indonesia Malaysia

ICT expenditure in 2001
Total ICT (USD mil) 66,612 19,662 3,540 6,325
ICT as % of GDP 5.7 3.9 2.2 6.6
ICT business and government environment in 2002
Local specialized ICT services availability 4.3/7 5.8/7 4/7 3.9/7
Government online services availability 3.5/7 3.9/7 2.0/7 3.3/7
Government prioritization of ICT 5.3/7 5.6/7 3.7/7 5.9/7
Note: ICT business and government environment in 2002 is measured on a 7-point Likert scale where 7 indicates the highest or best rating.
Source: Promoting ICT for human development in Asia: realizing the millennium development goals, UNDP 2005.

World Bank, 2010), an important export source with robust maritime, aviation, and land transport
for the world. Another half of this amount pass capabilities supporting the global economy. This
through the Straits of Malacca calling on the vision rides on 3 key enablers: political, economic
Port of Singapore for transshipment. In all, there and regulatory stability; excellent infrastructure;
are more than 18 million containers which make and a critical mass of professionals. Part of this
at least 200 million trips each year since 2005. responsibility in ensuring the sustainability of the
Considering this massive scale for maritime and enablers lies in the judicious use and development
logistics, the maritime industry is at the core of of suitable ICT applications for maritime logistics.
the logistics sector. The agency responsible for making this initiative
Hence it makes good sense to study the happen is the MPA.
maritime logistics sector to appreciate the ICT
innovations that have taken place to the extent Profile of MPA
that it encourages more trade between nations and
we choose Asia as the context as highlighted by The MPA was established on 2 February 1996,
the high percentage container movement to and with the original mission to develop Singapore as
from China annually. Thus, we will discuss the a premier global hub port and International Mari-
case of the MPA, a public sector agency located time Centre (IMC), and to advance and safeguard
in Singapore. Singapore’s strategic maritime interests. The MPA
The maritime industry in Singapore is vibrant is the driving force behind Singapore’s port and
and contains more than 5,000 maritime establish- maritime development, taking on the roles of port
ments and businesses, contributing about 7% each authority, port regulator, port planner, an IMC
year to Singapore’s Gross Domestic Product and champion, and a national maritime representative.
provides jobs for more than 120,000 workers. The MPA partners the logistics industry and other
Maritime Singapore is a thriving ecosystem of agencies to enhance safety, security and envi-
maritime and port services, with an entrenched and ronmental protection in Singapore’s port waters,
growing base of ship owners and operators, sup- facilitate port operations and growth, expand the
ported by a broader and deeper suite of maritime cluster of maritime ancillary services, and promote
services and capabilities. It is Singapore’s desire maritime R&D, and manpower development.
to be a leading global integrated logistics hub,

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 Innovative ICT Applications in Transport and Logistics

Supply Chain Challenges for MPA of asset tracking used in the typical warehouse,
except now it is used in the open yard.
Being responsible for the above activities around Yet another innovative ICT application is the
the shore of Singapore practically means that the BunkerNet system which draws heavily on ICT
MPA has to manage expeditiously the more than innovations to improve bunker supply chain vis-
26 million TEUs that transit through the Port of ibility by enhancing the work processes. This
Singapore. This translates to tracking and provid- system simplifies and accelerates the electronic
ing visibility for the 471 million tonnes of cargo, reporting of bunker barge movements within the
the 36 million tonnes of bunker fuel and the more waters of Singapore, facilitates the ease and speed
than 130,000 vessels that visit Singapore each of calculation of bunker quantities on board the
year. The efficiency needed to clear these ships ships, and expedites the billing cycle for the ship
ultimately means that the MPA has to engage in owners, not to mention the usual benefits of ICT
innovative ICT applications to be efficient, pro- applications such as streamlining document flow,
ductive and competitive lest the ships venture to enhancing the planning and deployment of bunker
neighbouring ports for cargo clearance and so on. craft, increasing the operational efficiency and
reducing data errors by automating information
Innovative Logistics ICT Applications flow, and serving as a gateway for bunkering
operations and information, thus leading to better
Further, the MPA is responsible for port develop- accuracy, reliability and timeliness of operational
ment and investments in systems and technologies data, as well as boost safety and security.
to raise the speed, productivity and reliability of In terms of the other ICT applications, the MPA
port operations. Indeed, ICT continues to play a has adopted a number of measures and applied
big part in the hub port of Singapore, and the MPA state-of-the-art technology to ensure that vessel
continues to leverage on ICT through the IT Master traffic in the busy waterways of the Singapore port
Plan and the Infocomm@SeaPort programme. and the Singapore Strait flows smoothly. Chief
Specifically, the Infocomm@SeaPort programme among these is the radar-based Vessel Traffic
set up in September 2007 by the MPA and the Information System (VTIS). The MPA currently
Infocomm Development Authority in which both operates two fully integrated port operations con-
agencies have each provided S$6million serves trol centres, and both centres employ the VTIS,
to enable the maritime community to create more which can track up to 5,000 vessels in real-time
efficient business and operational processes using to provide accurate navigational information to
ICT, and has given rise to several projects. We ships plying around Singapore, and is integrated
report some of these in this case study. with electronic navigational chart displays, syn-
WIrelesss-broadband-access for the sea port, or chronised voice, track and data recording, and the
WISEPORT, is one of them, which puts in place computerised Port Traffic Management System.
the mobile WiMAX infrastructure to provide The use of the VTIS and other navigational
vessels operating within the port vicinity with safety measures not only allows for effective
wireless mobile broadband connectivity. This command and control of all vessels involved in
innovation allows for faster and cheaper short dealing with emergencies, it also allows the MPA
range communications with the port area and is to keep an eye on the other vessels in the port and
a world first. Other projects involve the use of to keep them clear of the affected areas, if neces-
radio frequency identification or RFID technology sary, and this has enabled the MPA to maintain
to improve car transshipment operations at PSA its excellent port safety record at a very low 0.03
terminals. This innovation draws from the concept incidents per 1,000 vessel movements, in spite

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Innovative ICT Applications in Transport and Logistics

of the busy daily traffic. Apart from managing ability. This platform for Test-bedding, Research,
the larger vessels, the MPA has also taken steps Innovation and Development for New-maritime
to secure the port waters in terms of regulating Technologies is known as TRIDENT.
smaller vessels, through the ship self-security Through this supply chain technology-re-
assessment checklist, harbour craft security code lated funding in April 2009, Global-I Pte Ltd, a
and pleasure craft security code, as well as the Singapore-based company, developed a ground-
Harbour Craft Transponder System (HARTS), breaking container tracking solution, with the
which became fully operational in 2007. support of the MINT Fund. Called G-Track, the
HARTS enables the automatic identification tracking device is designed to improve the vis-
of all powered harbour and pleasure craft plying ibility and security of high-value perishable cargo
in Singapore waters. This allows the security requiring cold chain logistics. Complete with GPS,
agencies to focus on marine craft without an iden- GPRS, GSM, Zig-bee modules, a RFID reader and
tification tag, which greatly simplifies the task of temperature sensors, the G-Track device assures
monitoring and control of smaller vessels within security as well as proper product temperature
Singapore waters. Doing so practically reduces the throughout the entire transport chain, from packing
opportunity for pirate ships to slip into Singapore to delivery. The technical details of these innova-
waters from the Straits of Malacca, which has one tions can be found on the MPA website.
of the highest incidence of piracy. The HARTS
set-up comprises three main components, namely, DHL
the transponders fitted onboard the craft, the
wireless communication link, and a shore-based For many logistics service providers in Asia, the
tracking system. Through this system, real time past decade has witnessed huge leaps in logistics
data from the transponder such as vessel identity, technologies due to the corresponding advances
position, speed, course and other information made in ICT development and applications such
are transmitted to a shore-based system via the as wireless, GPS, GPRS, RFID and so on. Indeed,
wireless communication link using either GSM/ today many logistics players see ICT applica-
GPRS (Global System for Mobile communica- tions as a tool that enables them to build and
tions/General Packet Radio Service) offered by operate new, more efficient logistics structures
the local telecommunications service providers to for its internal workflow processes and its cus-
provide the most cost effective solution requiring tomers. Integrated tracking and tracing systems,
a minimum set up cost as the onshore base station originally implemented by the international parcel
is already in place. Locally-registered craft known and express cargo service providers represented
as harbour craft operating within the port would a breakthrough for the transport and logistics
be required to carry the low-cost transponder service industry. With the help of better and
system (HARTS). faster computers, the tracking (control) and real
At a strategic level of ICT innovation and appli- time routing (scheduling) as well as the locating
cation, the MPA has also established a S$100 mil- and monitoring (tracing) of shipments has led to
lion Maritime Innovation and Technology (MINT) greater productivity improvement of a logistics
Fund to support development programmes for network. Shippers are now able to query on the
the maritime technology cluster, in particular to status of their shipments at any time and at any
support the main area of offering development location. This system coupled with vehicle asset
research funding for proof-of-concept projects, tracking using GPS makes it possible for full-
test-bedding and establishing commercial vi- coverage utilization.

129
 Innovative ICT Applications in Transport and Logistics

With the advent of the contactless RFID tech- to the more demanding time sensitive sectors of
nology, such shipment monitoring will be even life sciences and healthcare.
faster and more widespread than previously pos-
sible with barcodes and scanners. The location and Supply Chain Challenges for DHL
the processing history of millions of parcels and
cargo items, exchange pallets, swap bodies and Being in a service oriented industry, DHL faces
containers can thus be automatically called up at challenges on several fronts. First, As DHL expects
any time and be made available to other applica- Asia to contribute to almost 40% of global trade by
tions, such as load optimizers and slot optimizers. 2028 (Mahalingam, 2011), there is an immediate
Another innovative direction is evident in the need for DHL to be ready for this growth through
advances in the supply chain event management the smarter use of ICT, equipping DHL’s regional
(SCEM) systems. The fundamental idea behind offices in Hong Kong and Singapore to handle the
such systems is to rely on ICT applications to increase in traffic volume. Second, while more free
eliminate the need for persons responsible for a trade agreements are being established between
supply process (or other processes) to perform countries in Asia, such as that between China and
tracking and tracing for all shipments or objects North Korea and between ASEAN and China, the
(such as vehicles and containers) and instead manpower needed for the highly service oriented
automatically provide them with information, logistics industry has not increased correspond-
should something unforeseen occur as the result ingly. Again, DHL has to rely on innovative ICT
of an unplanned event during transit. The SCEM applications to cope with the anticipated traffic
system, with sufficient rules or knowledge built increase and the shortfall of human capital. Third,
into it, can also suggest remedial measures for related to the above two reasons, there is an in-
the unforeseen situation and initiate the necessary creasing request from the shippers to have better
corrective measures. The new opportunities made visibility of the supply chain for better control
possible by ICT applications are enhancing the tower planning of the product lifecycle of emerging
ability of the LSPs to offer their customers bet- products such as healthcare products, and other
ter rationalization (which is important for yield perishables. Fourth, in line with DHL’s corporate
management), quality assurance and new value policy on sustainability, DHL is actively working
added services. to reduce the amount of documentation needed
for cargo freight to reduce the cost of trading by
Profile of DHL up to 30% by 2020.

We now turn our attention to DHL. DHL is a Innovative ICT Applications by DHL
part of the Deutsche Post DHL group, one of
the largest employers in the world with 300,000 DHL employs three different ICT systems in
employees, with a global network covering more Singapore to support the Asia Pacific’s logistics
than 220 nations ([Link]). DHL provides operations, namely the Real Time Shipment Man-
innovative, reliable logistics services and solutions agement System (RTSMS), the Crisis Manage-
in international express, air and ocean freight, ment System (CMS), and the Regional Security
road and rail transportation, contract logistics Centre System (RSCS).
and international mail to multinational shippers. The RTSMS monitor DHL’s shipments
DHL serves a wide range of products from the continuously, from freight pickup to delivery.
traditional automotives and retail goods sectors It comprises two sub-systems; one is used for
monitoring line haul services while the other is

130
Innovative ICT Applications in Transport and Logistics

for shipment itself. Both systems are real time, Unlike the RTSMS, CMS focuses on forecast-
governed by separate applications and working on ing or trying to avoid any disasters. It helps DHL
the same principle of the traffic light mechanism. to manage natural disasters, such as earthquakes,
Put simply, the application uses simple visual typhoons and tsunamis. CMS, as an ICT applica-
identifications similar to the traffic light system: tion, monitors any crisis, including earthquakes,
green for on-time delivery, amber for potential or strikes, bombings or typhoons. The contingency
slight delay and red for delays in shipment and plans are usually decided at the regional office.
actions are required. If nothing goes wrong, the However, country stations have the authority to
systems will show a green light. Sometimes, an revise and improve such plans as most crises
“amber threshold” or a “red threshold” may not affect only local areas. The most common con-
necessarily mean there is a problem. It could be a tingency plan is to bypass DHL’s logistics hubs
potential problem. For example, the system may when a crisis occurs. For example, the decision
generate an “amber alter” if it does not have the to fly direct from origin to destination rather than
confirmation on the departure of an aircraft. Using hubbing, despite the lower load volume, is often
the RTSMS, DHL’s country stations can assess made with the help of the CMS. In this way, DHL
the situation and decide on the necessary actions can perform service recovery in a timely manner,
to take. As a rule of thumb, country stations will for example, by shifting particular shipments to
handle all “amber thresholds” while the staff in the other aircraft to recover lost time or reduce fur-
regional office will handle all the “red” situations. ther delays. Customers are then informed so that
The contingency procedures will be decided by they could plan their contingency plans in case
each station and validated by the regional office. of such delays.
The movement of flights is displayed on a large The RTSMS and CMS both work together to
screen and shows the real time location of the flight. provide advance information on shipment delays.
These visual cues allow the service centre at DHL This is critical in information management as DHL
to respond to any potential delay and prevent the staff can now drill down to get specific information
problem from escalating to an alert status. In the related to the information on the delayed shipment
case of a red alert, the incident within any service and the particular flight. A contingency plan is
centre will be escalated to the country level, and also generated by the system and information is
from country level to the Asia Pacific level. kept for future learning.
The metric used in the RTSMS is “saved ship- The last integrated ICT system, RSCS, links
ments”, referring to those shipments which could the four DHL hubs in Asia: Tokyo, Bangkok,
have incurred a delay without this system. In a Singapore, and Hong Kong. Regional CCTV
two-week pilot test, DHL achieved 2,000 saved networks monitor the activities at the hub and
shipments by implementing the RTSMS. The gateways so that incidents such as the mishandling
RTSMS was developed specifically for DHL’s of shipments or other security risk issues can be
operations and was deployed in the Asia Pacific. mitigated. The high value shipments item can be
With this system, millions of shipments passing tracked continuously through the CCTV network
through the 17 country checkpoints were tracked to protect goods against theft. Hence, shippers are
and fed into the system. It helped DHL to track assured that their shipment reaches their destina-
changes during the shipment process, allowing tions safely. This is a simple yet innovative ICT
DHL to react pro-actively to any potential de- application making use of cost effective CCTVs.
lays, to respond quickly to any unexpected crises As of now, other smaller players have adopted this
and to make contingency plans to ensure timely innovation to their advantage in managing their
shipments. business operations by remote.

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As the development of DHL’s ICT applica- DISCUSSION

tion is web based, they can be easily deployed
to the other divisions globally. The application As the supply chain becomes more global to meet
management is based on the operations structure the growing globalised world and marketplace,
and once that structure is established, the software the battle cry is for better, smarter and more
can be fanned out to the other regions such as innovative ICT applications which can help to
Europe or the US. achieve the desired overall productivity levels
Further, as the systems are portable and scal- in transport and logistics. In this regard, the past
able, DHL is now able to extend its service offer- decade has witnessed many quantum leaps in
ing to the supply chain partners who also require ICT applications, from those that employ simple
similar visibility albeit on a fee paying basis. In bar-coding technology to those that rely on RFID
this way, the real-time logistics visibility systems related applications. Moving forward, innovative
developed for DHL’s internal use is now packaged ICT applications in this arena will continue to
as ICT support solutions for external providers dominate discussion, both academic and practice
too as a value-added component of DHL’s service wise. The reason is simple. ICT applications have
offerings. This potentially creates a new revenue transformed this sector from a labour intensive one
stream, leveraging on DHL’s ICT experience in to one which can be highly automated, intelligent
the supply chain arena. and proactive. In the future, with a greater need
The provision of real-time visibility to its cus- for visibility in the supply chain, ICT applications
tomers forces an impetus for DHL to ensure the will seek out greater innovations in order to meet
most efficient and streamlined operations. This the requirements of greater visibility, security and
serves to enhance its competitive edge against environmental sustainability. In short, the new
its competitors. It can also serve as a powerful perennial question is to determine if there are
branding and marketing collateral that can be smart intelligent agents which can miniaturized
capitalized upon to DHL’s benefit and advantage. onto the palm of a hand to track and trace, and
Having such a centralized system built for Asia clear container movements, just like the electronic
can help DHL to re-look at its operating structures drones that are currently used in sophisticated
in areas where there is no real-time system yet. warehouses for cycle counting.
This can help to streamline global operations and However, we have also noticed that the imple-
lead to cost-savings along the supply chain. The mentation of large scale, general use ICT applica-
strategic investment by DHL in ICT capability and tions such as those afforded by the MPA requires
support systems serve to add value to both the value a push approach in that an over-arching player
chain as well as the supply chain of DHL and by e.g. the government or her related representative
extension, to those of DHL’s customers as well. (in this case, the MPA) has to provide the appli-
More importantly, DHL realises that continuous cation and users have to suggest the innovation
innovation, sometimes incremental, is crucial in direction of such applications. Nevertheless, these
maintaining the competitive advantage in the face innovative ICT applications, if used strategically,
of constantly changing global business conditions can have immense value add to the community
and stiff competition. and provide a potential stream of revenue to the
service provider just as the case of DHL has al-
luded. We leave this discussion to another forum.
Theory-wise, there are several explanations
provided by the literature to understand this phe-
nomenon. For instance, Corrocher, Malerba, and

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Montobbio (2007) who have looked at the growth a higher plane of technology driven solutions in
and technological pervasiveness of ICT-related transport and logistics, which is really good news
innovations mention that ICT applications are for all concerned as this will widen the network
dependent on a number of factors, two of which of firms who will embrace new technologies and
are the high rate of entry of new innovators and strengthen the security and visibility fabric of the
the high concentration of technological activity supply chain in Asia.
across firms. In the case of DHL, the situation
depicted in this case study here resembles the
Schumpeterian Mark II or “deepening” pattern SOME SOLUTIONS AND
of innovation, which is typical of the major role RECOMMENDATIONS FOR
of the existing set of service providers engaged in SUPPLY CHAIN INNOVATION
innovative ICT applications and the customer’s
desire to see greater improvements in supply chain From the two case studies presented in this chap-
visibility probably explains for the incremental ter, we observe that innovative ICT applications
innovation done on the DHL’s visibility system are needed in response to a dynamic business
which has also since been replicated quickly by landscape. Clearly, as the supply chain grows in
DHL’s competitors. This phenomenon is supported tandem with global trade, there is an obvious need
by Carr’s (2003) argument and that is competitive for better visibility, better capacity and equipment
advantage (in this case DHL’s logistics visibility utilisation, further reduction in inventory and
system) driven by ICT is not sustainable unless the transportation costs, better monitoring of supply
ICT application strengthens the existing competi- chain security and better stewardship of the en-
tive advantage. While the risk of failure in this vironment, and finally an increase in sustainable
situation is minimal, however, mimetic pressures competitive advantage.
would force competition to mimic DHL’s innova- The solutions for supply chain innovation
tion or risk losing customers. Doing so can only as provided by DHL and the MPA occur at both
make the application more ubiquitous, which is the operational level (functions and processes)
not necessarily a bad thing from the perspectives and the strategic level (human, knowledge and
of cost, usage and familiarity. technology capital development), at the firm and
In the case of the MPA, the proactive step industry levels, and more importantly, some of
undertaken by the MPA to build innovative ICT these innovations have longer term environmental
applications for the general good of the community ramifications.
and hence the environment also helps to promote Moving forward, clearly, some of the recom-
a similar set of innovative ICT applications down- mendations for companies and countries wishing
stream. This represents the Schumpeterian Mark to stay at the forefront of competition and business
I or “widening” pattern of innovation whereby could include those innovative ICT applications
taking the first step in creating such applications, already rolled out by the MPA and DHL. For in-
MPA has indirectly fostered a higher concentration stance, interested companies (and governments)
of innovative and technological activity in the could undertake the following improvements in
space of logistics service providers and technology their supply chains by:
platform providers. With a public sector agency,
given its sense of openness and neutrality, taking 1. Using system wide ICT applications to
the lead in boosting the overall productivity levels improve supply chain visibility events by
of actors in the supply chain, the smaller players in exception e.g. DHL’s RTMS and CMS.
the supply chain can now afford to leap-frog onto

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