MANAGEMENT OF TECHNOLOGY

Technology man in the air express mdustry

0

a case study
The air express industry moves not only physical packages but also shipment
information. Keen market competition means that only those operating in an excellent quality environment will survive. Technology management is one major ingredient to help achieving quality excellence. The article discusses materials, methods and IT innovations, with real-life illustrations drawn from the DHL organisation in the Asia Pacific region.

by Xu-Man Wong
he air express service providers handle time-sensitive shipments across international borders in a professional manner. There are two types of movement involved: (i) the physical package, and (ii) shipment information. These two movements need to go hand in hand until the entire door-to-door delivery process is satisfactorily completed. Under fierce market competition and everrising customer expectations, there is a big struggle for survival among the key players in the air express business. It is essential to have an excellent quality environment in the organisation to gain the continued support and patronage of customers. Wide distribution network, right product offering, high service productivity, seamless service quality performance, and appropriate technological innovations are the main ingredients to achieve such excellence. In particular, technological innovations in processing physical package and shipment information, if applied correctly, can increase a companys agility and help to make a marked difference in competition with its rivals.

Introduction

This article discusses the various technology management aspects and strategic movements into the next century for DHL in the Asia Pacific region (with particular reference to Hong Kong).

Technology management According to Michael Porter: technological innovations have the power to influence industry structure and competitive advantage. The individual organisations strategy for the development and use of technology hence becomes an essential ingredient of the overall corporate strategic plan. There are three important issues in the management of technology. The first is the choice of technologies to develop. At DHL, the technologies must support the corporate strategic imperatives. There is a preference to develop those that really give customers more value. It is vital that investments in process and information technology must contribute to a return in either better serving the customers, raising quality of service, or reducing the operating costs. The second issue is whether to seek technological leadership in these technologies. The
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different forms are further explained in the subsequent sections. Materials technology One of the main themes of material technology is to conserve the Earths resources. Many of DHLs packaging materials are made of recycled or recyclable materials. For instance, the plastics flyer bags contain photodegradable materials which can decompose slowly under sunlight. There is also a plan to test the bio-degradable type of plastic flyer bags. This may offer an even better solution to the environment since it is known that a lot of rubbish is land-filled and may not have time for sufficient exposure to sunlight to enable decomposition. In approaching the design of such packing, inevitably economics, technology and environmental demands must be considered. The loading strength of the bag will decrease with the increase of degrading chemicals. There is a need to strike a balance between the bags loading strength and the rate of degradation. Blow moulding of thin and yet tough bags is also a challenge to manufacturing technology. Methods technology Methods technology relates to the development of new equipment, processes, and ways of working. As the company moves towards heavyweight shipments, adequate process flows and materials handling systems become necessary. To facilitate physical movement of parcels, conveyor belt and roller systems are essential. Huge investments in conveyor systems incorporating the latest type of bar code scanners using RF to upload data to the network are being made in a number of service centres around the region. Fig. 1 shows the new service centre in Hong Kong which is one of the many investment items within the Asia Pacific region. To achieve more accurate weight assessment of the shipments, an automatic volumetric measurement system has been successfully deployed. It uses a video sensing unit to capture the image of the horizontal surface and then detects the height via difference in reflected signals. The accuracy is to within 1 cm in each dimension. It can compare and pick the higher figure between the actual gross weight and the volume weight [volume weight = (length x width x height in cm3)/6000].A series of other processes like auto-update of the shipment weight data file, label printing and management

Fig. 1 Conveyor system at DHL Hong Kong main service centre

answer is both yes and no. Yes is in the strategic sense of wise spending selectively on those areas that suit the company the best and to obtain the benefits earlier. No is because of the easy copying of such applications. This creates discomfort in trying to sustain leadership for too long due to heavy R&D investments, and it becomes not cost effective to be the technological leader all the time. The third question is on the role of technology licensing. This is nice to have, but not essential. For example, when D H L developed its bar-code scanner applications with the equipment supplier, there were special modifications and configurations on the hardware as well as tailor-made software. Nevertheless the supplier can do exactly the same for DHLs competitors. The only undertaking is to keep commercial secrets as part of its integrity obligations. At DHL, the drive for technological innovation is both centralised and decentralised. The Asia Pacific regional office continually watches out for new technological developments and potential applications. It then lays down major strategy directions and guidelines, while the deployment is largely dependent on the individual countries. A free hand is given to each individual country office to cater for local regulations and conditions. It is believed that this can trigger more creative and better-suited solutions. Many researchers (see, for example, Reference 3) consider technology to be a major source of competitive advantage in service sectors. Materials, methods, and information are the three main forms of technology w h c h are both interrelated and interactive. These

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video

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Fig. 2 Schematic diagram for volumetric measurement system

bar code

reports can also be done. A schematic diagram is shown in Fig. 2. Additionally, for the sake of shipment security, a new two-dimensional X-ray machine with operator-assisted software programs is being used to help screen possible contraband materials. The conventional onedimensional shooting may not provide a very satisfactory image due to viewing from on1.y one angle. Simultaneous horizontal and vertical scans can help the screening inspector make better judgments. DHL also works with vehicle manufacturers to develop new series of vehicles to suit the actual applications. Recently a Supervan has been developed in partnership with Mitsubishi. It is a modified light truck with a low centre of gravity. It has the flexibility of a small van while it can accommodate a higher shipment volume. Also there are a number of tailor-made design features, e.g. internal walk-through aisle, interior natural illumination, 1.8 m high headroom with shelves, retractable roller ladder, ramp or tail-lift etc. This Supervan can greatly help the couriers on the field for mass movement of parcels. In addition to the Supervan, there are also other innovations to support the ground services operations in areas like shipment security and quality of service in the field. To quote some examples in Hong Kong, there are mobile service centres, shipment parking boxes, shuttle buses, shipment collection trolleys and bags etc. To further facilitate the use of automation in the process, state-of-the-art technology in sorting the document packages is also used. An automatic sorting machine has been installed

with a processing speed of 6000 shipments per hour for packages up to 7 kg each and sorted for up to 85 destinations. Packages are fed into the induction conveyor belt with the bar coded air waybill (AWB) face up. They are then automatically taken into the system, scanned, and finally sorted to the respective destination bags. There is also collaboration between D H L local offices and universities to further improve the process. Examples include research on autowrapping of goods on pallets and optimal stacking for air containers. Information technology Information technology (IT) is probably the most exciting part of technology management in helping customers and competing against rivals. It encompasses data and information processing, communications, integrated systems, decision-support tools etc. There are four main areas: ( a ) information management structure (b) customer front-end innovations (c) back-end innovations ( d ) trends and future development.

(a)Information management structure The DHL global network database is split (but interconnected) into three geographical regions: America (North, Central and South), Europe & Africa, and Asia Pacific with almost identical hardware set-ups. The various countries are connected to one of these three gateway nodes, and then become globally accessible by virtue of the interconnection (see Fig. 3).
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Fig. 3 Worldwide database network for Asia Pacific countries

( b )Customer front-end innovations

There is a policy of employing more IT at the customer front end. Ideally customers can be totally served by technology, and there is no need to communicate with a real person. Nevertheless if contact is inevitable, then it should be easy to make contact, and all the information should be readily available when an inquiry is made. Three levels of customer front-end IT innovations are: (i) The highest one, which is also the ideal situation, is to have true partnership with the customer. This allows the companys application software to tap into the customers own database to choose the orders to be shipped, generate commercial invoice and air waybill (AWB) etc. The customers can also receive their order shipment status from DHLs shipment records database, get proof of delivery or even prepare management reports. This full customer integration can save the customers resources and they can get exactly what they want since the software is tailor made for them. There is no need for a customer to have daily telephone communications with DHL since the process has already catered for all their needs. (ii) The second level is called customer automation. Customers are provided with the companys software and hardware equipment installed at their sites. However, they do not communicate with the customers own computer system. A good solution is to let customers operate on the shipment ordering process, though they need to type in the necessary information into the DHL system. This would not be as integrated and automated as for the first category of customers above. However, it suits those customers who do not want to expose their own database for security or other reasons. The system that is mentioned above is called Easyship. There are thousands of Easyship units installed around the Asia Pacific region. One full i G s s 5 n ZcXdes: software, modem, PC hardware, weighing scale, bar-code scanner and printer. The customers need to key

in all the shipment order details first. Then the Easyship will generate the AWB and invoices, and transmit the shipment data back to DHL network through a modem. Customers can also check the shipment status on these Easyship systems. (iii) Since there are so many customers at large who do not use D H L service on a daily basis, customer integration or automation would not be the best solution. In this case customer service (CS) will take an important role as front-end contact is necessary. The first IT innovation is to make sure that the customers incoming telephone calls are received. In most countries automatic call distribution (ACD) systems are installed. The ACD systems will monitor all the incoming calls, and distribute the call to the longest idle CS operator. They also record how quickly the operator picks the line, how many abandoned calls there are, how many incoming calls are in the waiting queue, how much time an operator takes to finish a call etc. This can provide good management information for assessing the customer service quality. To provide customers with an alternative way to trace shipment status, master air waybill, flight number or services offered, an interactive voice response (IVR) systems is established. This is marketed as an AutoLink Service in Hong Kong. There is a choice of four languages: English, Mandarin, Cantonese and Japanese. Customers just dial in a hotline number, select the services, and get the answers without actually talking to a CS operator. The CS operators are assisted by a number of other IT application software tools such as shipment tracking module, customer information system, customer service module, electronic service directory, auto image retrieval on air waybill, and proof of delivery. Finally, since early 1996 D H L has had a World Wide Web home page (address www.dhl.com). It can provide Internet users with the ability to trace a shipment from anywhere in the world. (c)Back-end innovations Besides supporting customer front end, IT can also contribute to the back-end activities. With reference to the D H L Hong Kong situation, there are three main areas of interest: (i) The first is management decision support and control. With appropriate application software, there is a wide range to help

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management run the business effectively. The following are some examples. O n the sales and marketing side, there are business decision support systems, business performance management systems and marketing information systems. On the service operations side, there are shipment information systems, flight management modules, ED1 with the customs department, service audit modules, transit time modules, and IS09002 documents in electronic format. For other functions, examples include activity-based costing systems, cargo billing systems and human resources information systems. (ii) Shipment movement information processing is another area where IT can contribute a lot. Firstly there is a list of mandatory and optional checkpoints defined by the DHL global network. Then whenever the shipment arrives at certain location points, the respective checkpoints will be updated to the network. There are a number of IT applications, like the shipment control library, to govern the specifications of data to be uploaded into the network, and the electronic pre-alert and pre-advice of manifest for earlier customs notification at the destination side. ED1 applications are widely used within the DHL network. (iii) Mobile data capture allows shipment data to be updated to the network immediately after the event has occurred. It involves order logging and dispatch, pickup and delivery scanning via hand-held scanners, and two-way communication while the courier is working in the field. The following is a recent project initiated in the Asia Pacific Region. The objective of this project is to develop a regional initiative and guide the various countries towards achieving a real-time checkpoint data availability. The main business benefit is improved level of service to the customers because shipment status is ready whenever they want to know. The order scheduler can have closer contact with the courier on the road, and thus can better manage the order pick up process. Finally since shipment data are available earlier, the subsequent processes can start sooner. The requirements on the mobile data network include: real-time communication; store and forward capability (to save the trouble of requiring successful connection every time in the case of circuit switching); and dense and wide network coverage in all specified business districts. Two main public network service

providers exist in the region, namely Motorola and Ericsson. Both have wide geographic area coverage and very low error rates during communication. Voice-based networks such as GSM can also be an alternative to the above two data networks. However, there is a lack of readily available devices to output the data message on the telephone set. Nevertheless this would be a good alternative to follow up a few years later when GSM has developed more applications on the data communications side. According to Bill Gates, by 1997 most fast modems will support the simultaneous transmission of voice and data across telephone lines. Regarding communication hardware, it is ideal to have an all-in-one piece of equipment that can be a two-way communicating device, a bar code scanner, a voice-communicating telephone as well as being a handy device containing all the relevant reference information. However, such an ideal piece of equipment does not yet exist, unless a heavy and bulky alternative is used. Motorola has recently released a miniaturised GrackleSeries 500 wireless modem. This can make mobile communication equipment more conveniently sized. The deployment of mobile data communication in the entire Asia Pacific region has been targetted for 1998. By then, higher service and quality levels should have been attained. ( d ) Trends and future development The trend is expected to move towards: more effective and timely shipment movement communications; and making it easier for customers to employ the companys services. To achieve faster data entry as well as destination code sorting, high-speed optical character recognition (OCR) scanning of the AWB is being looked into. It will be even better if both imaging and data capture are done at the same time. There is a new technology currently under study called Dataglyth that can do the imaging and data encoding processes in one shot. Portable Data File PDF 417 developed by Symbol Technologies Inc. is also being studied. It is basically a multi-layered bar code encrypted with a high degree of data redundancy so that even a partly-torn label can still be read. There is a talking shipment option being considered. Using radio frequency technology, the shipment packages (which have been stuck
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Table 1 Different levels of radio-frequency identification techniques

level 1 simple one-bit tag to detect niovement of a controlled item level 2 stores 8 to 128 bits, used in product identification systems, and gives computerstored information about the item lcvel 3 contains up to 512 bits so that the product number, routing and status information can be stored level 4 complex tags containing a large amount of information for use in a database amlication

with individual ID tags) can trigger the sensor as they pass through certain checkpoint locations along the conveyor belt. The tag is a key element in radio-frequency identifi~ation.~ DHL. It can be of either active or passive type, and A number of illustrations showing how contains a coil or plate antenna to receive technology can help the air express industry to and broadcast signals, a transceiver, control better serve customers needs have been logic and a non-volatile memory. The other key covered. Hence technology management is equipment is the reader, which has an antenna, very important to the success and growth of a transmitter-receiver and an electronic this industry. processor to handle the data. The tag can be preprogrammed or be reprogrammed in the References PEEL, R.: Information technology in the express field installation. Referring to Table 1, there are transport industry, The Logistics Information four levels of radio-frequency identification Management Journal, 1995,8, (3), pp.8-21 techniques in common use, and the company is PORTER, M. E.: Competitive advantage (The looking into Level 2 or 3 applications. Free Press, 1990, pp.164-200) In order to help the order scheduler know HASKETT, J. L., SASSER, W. E. J., and HART, where the drivers are and whether they can take C. W. L.: Service breakthroughs-changing in more orders, a global positioning system the rules of the game (The Free Press, 1990, incorporated with electronic fleet management pp.173-193) system is being studied. This technology is GATES, W. H.: Theroad ahead (Viking,Penguin Group, 1995, p.100) designed to install a device in the vehicle that DAVIS, H. W.: Product identification and links up with a satellite communications tracking in Maynards industrial engineering system. Thus at any time, the order scheduler handbook (McGraw Hill, 1992, 4th Edn., can know the actual situation in the field, and pp.13.141- 13.149) hence can distribute the jobs more effectively. Finally there is some research being done on Further reading imaging and smart card technologies. One Preliminary research report on mobile network example is to have paperless transaction for availability in Asia Pacific (Mobilesoft Pty Ltd., signing receipt of shipments. The images are Australia, July 1995) captured and stored in the scanner that is The integrators giant electronic advantage, Air virtually a hand-held PC. Ultimately this Cargo News, 7th June 1996 captured information will be released and WHITE, C.: On-road, on-time and on-line, Byte, uploaded to the host computer for final storage. April 1995, pp.60-66 Another example is to accept electronic cash MAUTH, R.: Client/server on wheels, Byte, July 1995, pp.7-20 from customers. WHALLEY, P., AMIN, V.: Automation in a and customer contact environment, The International Conclusions Journal of Operations & Production Management, This article has discussed the relationship 1994, 14, (5), pp.86-89 between technology management, quality HAMMANT, J.: Information technology trends in excellence and market competitiveness. logistics, The Logistics Information Management Materials and methods technology contri- Journal, 1995,8, (6),pp.32-37 bute to the various applications for moving the 0IEE:1997 physical package while information technology of Service Operations of leads the way in moving shipment information. The author has been the Directorsince April 1995, with DHL International (HK) Ltd. Both customer front-end and back-end responsibility for all the operational aspects for Hong applications have been discussed with various Kong and Macau. He is an IEE Member.
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illustrations. The organised approach of customer integration, customer automation and customer service provides a new angle for looking at the customer front-end function. For back-end innovations, management decision support and control, shipment movement information processing and mobile data capture are the major topics discussed. Future developments and trends of IT will go towards more effective and timely shipment movement communications as well as making it easier for customers to employ the services of

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