Asia Logistics Wrap

Rolling on the (Yangtze) River

I have been meaning to get to this article for some time, and it has been touched on already at 3PLWire. I just can't pass up going through it here because of my own recent, and albeit short, experience along the Yangtze River--particularly Jiangyin.

The article is "River of Opportunity" by Kris Knutsen and Clarence Kwan from Logistics Management Online, and was published on October 1 this year. The article is quite long and so I will just pull some pieces that add some context to my own trip along the Yangtze.

"...for companies that are willing to look westward, China's competitive advantages remain undimmed. Manufacturing wages in interior provinces are much lower, and prime industrial real estate is both more readily available and a fraction of the cost of land in the crowded coastal zones. Some of China's fastest-growing and most underserved consumer markets also beckon."

From conversations with Jiangyin officials, visits to sites with both utilized and available commercial real estate, and time spent downtown and in the parks taking in the local flavor, I can personally vouch that the above statements describe Jiangyin.

"The Chinese government has already spent billions of dollars to facilitate use of the river and to develop the roads and rail lines that parallel it. Much of that investment has been focused on “containerizing” China's inland economy; in other words, encouraging the use of containers to transport goods, by road, rail, or barge. For foreign investors looking for new opportunities to source, manufacture, and sell in China, the emergence of the Yangtze as a modern, multimodal transport corridor will be of tremendous significance."

This is an important marketing point for Jiangyin.

"The Yangtze, the world's third-longest river, is one of the most heavily utilized waterways in the world. Before 2000, traffic on inland stretches was almost exclusively bulk cargo, but as inland economies have grown, containerized traffic has markedly increased. Even today, the Chinese government estimates, 80 percent of the iron ore, 72 percent of the crude oil, and 83 percent of the coal delivered to manufacturing enterprises along the Yangtze is carried by barge."

As a result, in my Jiangyin post, you can see the new port equipment just prior to opening the second container berth. As the article states:

"In the short term, at least, expanding container capacity on the Yangtze will plug critical gaps in the existing road and rail network and will link huge areas of central and southwestern China to the coast at relatively low cost. The government has therefore moved quickly to improve conditions on the river through dredging, reef demolition, and, most particularly, navigational improvements associated with the Three Gorges Dam project. It has also coaxed more than two-dozen inland container ports into existence as far as 1,500 miles upriver. As a result, the river itself has emerged as a crucial enabler of expanded intermodal trade in China's interior."

One of Jiangyin's hopes is to increase direct-to-export shipments coming out of its ports by utilizing its own custom clearance authority. This will reduce costs by eliminating the need for many exports to transfer shipment at Shanghai. The article confirms what I heard from Jiangyin officials:

"Some operators are even experimenting with seagoing barges; the first one began serving the port of Yangshan directly from Nanjing in December. These deeper-draft, more powerful vessels will significantly cut transit times on the river and open the possibility of direct container-on-barge service from deep in China's interior to seaports as far away as South Korea and Japan."

In the meantime, until cities like Jiangyin become more strategic as a logistics hub, the growth at Shanghai ports pulls business through the smaller Yangtze ports:

"A major stimulus for the long-term development of Yangtze shipping is the massive expansion of container berths now underway at Shanghai. In December, the first phase of Shanghai's new deep-water container complex opened, adding 2.2 million TEUs of additional capacity to what is already the world's third-largest container port.

"Yangshan, located 21 miles off the coast, will eventually add between 15 million and 20 million TEUs to Shanghai's total handling capacity--more than the 2005 throughput of the top three U.S. container ports combined.

"With a six-lane causeway that provides the only direct link to the port short of capacity, and the timeline for introducing rail service uncertain, expanded barge service clearly will be required to move traffic between Yangshan and the mainland. Port planners now expect container barges will move more than 30 percent of that traffic by 2020, and barge companies all along the Yangtze already are moving to upgrade their fleets."

The article goes on to highlight Wuhan and Chongqing as worthy target locations for new waves of investment. But only looking at these cities means locations closer to the Shanghai-Nanjing corridor will be missed. Although I am biased, Jiangyin is one of those cities that deserves some investigation--not just for its available and growing logistics infrastructure but also for the city environs that I believe are quite hospitable to foreign crowds but without the congestion typical of the coastal cities. And of course, it is only a 1-2 hour drive from Shanghai making weekend getaways to the city entirely reasonable.

The Age of Resilience (UPDATED)

Not just surviving, but also instilling the learnings from those before us

Resilience is defined by Merriam-Webster as "an ability to recover from or adjust easily to misfortune or change."  So when I hear an article titled "The Age of Resilience" I can't help but think that resilience has been the focus of humans for ages, although most likely framed simply as survival--survival of the individual, the family, the community, the enterprise/organization, the nation, and perhaps at times the entire human species itself. No matter the pursuit to survive, in history even the greatest individuals, families, communities and nations have perished as opposing agents seek their own survival in the form of the former's extinction. More often than not, the lessons learned of those that have perished become buried, not to be built further upon for the good of all. As a result, ignorance ensures that the cycle is repeated.

But, if a critical mass of systems were in place to not only help retain the lessons learned of the past but absorb at the same time the lessons being learned in real time, perhaps the institutions we maintain and desire today can be regularly built and improved upon so as to ensure greater continuity (think fluidity not permanency) between entities and across future events. The momentum of such an effort could even eventually lead to an even greater predictability of those future events--and as a result, more appropriate reaction to them.

This, in a very big-picture way, is how I see an "Age of Resilience" unfolding and as distinguished from the past. As inferred above, number of entities are continually trying to instill resilience, some consciously and not so consciously. As covered recently in Esquire under the title "Age of Resilience," Steve DeAngelis of Enterra Solutions wants to make sense out of the quest for resilience via coordinated technologies and applications that people can manage and respond to while making the world a better place.

Where supply chain solutions come into view

Decending from the stratospheric big-picture view, zooming in on the world brings global supply chains into general focus--millions of intersecting lines that traverse land, sea, air and space. At the same time, any number or combination of these supply chain lines could face destructive events that are induced by machines, humans or nature--or any combination of the three. The question is understanding the range of events possible and the corresponding action that will ensure supply chain resilience.

For the time being we can classify this pursuit generally as supply chain event management. Quite vividly, the introduction of the "Age of Resilience" article displays a diagram illustrating the resiliency mechanism for a given supply chain event. (Click Download resilience.pdf to see the diagram).

In this first diagram, the following is illustrated:

1. Detection: A system of scanners pull in information from the supply chain and communicate to an automated nerve center driven by a catalogue of rule sets; these define the range of acceptable supply chain security standards.

Assessment: The automated nerve center references its rule sets to determine whether any of the information taken from the supply chain can be classified as a decision-critical event; otherwise, information is collated as within normal operations and fed to databases for regular business use.

Analysis: Decision-critical events are assessed for the appropriate response, which begins to be formed off preprogrammed, generic models; these interact with other systems, such as weather tracking to further solidify a response directive.   

1. Rerendering: A more event specific, response model is created with alternative scenarios, particularly worst-case, and provides the optimal solution for worst-case scenario avoidance, simultaneously notifying for deployment the assets to be involved in stopping or stalling the event.

Counterattack: Human resources previously assigned for the resolution of such an event are alerted and allocated based on current readiness, environmental conditions and, to the degree possible, other intangibles.

Security: The process above occurs, in the vision of Mr. DeAngelis, within seconds and without time-consuming meetings and shoot-from-the-hip coordination efforts. System communications are carried out via encrypted transmission ensuring protection against meddling and bad actors.

Obviously, supply chain event management is critical given that no company wants its assets deployed on a regular basis for "fire-fighting duty" where there is more reactive activity than proactive. Supply chain managers want to prevent "fires" completely, or detect far enough in advance situations and conditions that are conducive to producing problems.

UPDATE: When exploring the range of applications such a system would have for supply chains, the pictures above might lead one to focus too much on physical architectures (nodes such as ports and modes such as container ships, for example). I just want to emphasize that there are a wide-range of potential applications that could strengthen the other supply chain architectures--financial, informational, relational and innovational. In addition, supply chain concepts can be applied to both goods and services firms. Reading the resilience article, and also Thomas Barnett's recent column, many potential applications are touched on.

Also, I think the focus on physical architectures leads some to overstate the danger of centralizing hardware, such as that at the Oak Ridge Institute, to pull from a decentralized network. This is the same mistake made when making the judgment that Singapore can't possibly ever be "resilient" because it is concentrated on a small island. However, if one takes into account how the other four supply chain architectures can be leveraged to distribute entity or system "DNA," financial, informational, relational and innovational architectures can go a long way towards building resilience. In fact, these latter architectures are the most difficult to do really, really well. It is the physical architecture that can relatively be quickly reestablished to fit the still existing DNA, combining that which was great before with integrated improvements.

Bad actors tend to focus on the destruction of physical architectures, but as Tom Barnett has had to explain recently, bad actors can't build or are horrible at building non-physical architectures able to compete with those currently driving globalization. As a result, these bad actors make news by destroying physical architecture, but for the most part have to utilize globalization's non-physical architectures to operate--primarily financial networks and informational networks. Relational and innovational architectures operated by the bad guys are sophisticated only to the degree necessary to destroy physical architectures--not build deeply rooted and complex governance systems and institutions.

Critical masses from the individual level to entire nations will drive resilience's rise or fall

If you can figure out what this means for you, the individual, you can work this quest for resilience back to the bigger picture. Whether the event is the spread of a harmful disease in your area or a disruption in the delivery of a new computer, this will have a varying degree of impact on your family, which then can have impact on your community, perhaps the enterprise/organization you work for, on a larger scale perhaps the nation you live in and ultimately the globe.  This impact can also work horizontally at the same time between all the above entities. For example, once an event has impacted a critical mass of communities, it could rise to impact an entire local or state government.

Of course, many event detection applications have been in place for some time. An easy example is shipment tracking provided by shipping companies online. Where is my package and when? This provides great comfort to many, and we often demand even better and more accurate information pushing technology to improve above and beyond its current capabilities. But I am sure I am not alone when I say that business' response to a particular bad event in the supply chain--mis-shipment, lost item, damaged goods--has often been lackluster in terms of customer service. In the government sector, where the worst events are on the level of natural disasters, terrorism, wars, and widespread disease--lackluster responses are even more pronounced and we are left thinking that we could do much, much better.

Final Thoughts

Although I am a relative neo-phyte in this area, I look forward to following these trends further and refine my thinking and ability to discuss these concepts. This is one of the reasons I have decided to shift my career focus to tackling supply chain operations from within an IT applications provider targeting the supply chain field. Although I will still write on operations, especially the role of people in operational environments, I am excited about exploring not only the transformation of IT serving supply chain business processes, but also how those processes transform themselves.

 

Revisiting the Kaesong Industrial Park

Over the past few months, I have admittedly neglected wrapping up my case study on the Kaesong Industrial Complex (KIC), and although I intend to return to the topic by the end of the year, I will more than likely have to update my previous case study pieces. Remaining for me to touch on are the political, security and people pieces related to the KIC.

But I was fortunate just now to have browsed The Financial Times Online, as it has a journal written by FT columnist Anna Fifield, who has recently visited the KIC for the seventh time over the past 2 years. Since most of the development at Kaesong has occured over the past 2 years, the author's perspective on the KIC's progress is interesting and, I feel, trustworthy.

It is worth reading the entire column, but I will focus on the reflections on progress. The author early on quotes a North Korean presenter, Ryu Jin-mi, at the complex:

Here in a high-tech presentation suite in the South Korean-built Kaesong industrial complex in North Korea, the 22-year-old graduate of the Pyongyang University of Foreign Studies explains the merits of this capitalist zone to potential investors from the US, Japan and Switzerland.

"Kaesong will be the logistics hub of north-east Asia,” Ms Ryu says, using a phrase spoken every day in the South. "This will help North Korean companies overcome their economic difficulties."

Those who have delved into my case study will understand the hub vision regarding the KIC, so I won't go into that in detail here. After Ms. Fifield sorts through the difficulties so far in getting North Korea to open up, she offers her own assessment of the KIC, supporting it with what she sees as evidence of progress in the right direction:

"...despite the obvious moral dubiousness of paying money to a regime that lets its people starve while all the while developing nuclear weapons, the positives of Kaesong still outweigh the negatives...Indeed, there is plenty of evidence to suggest that engagement is making a difference.

"The trip to Kaesong marked my seventh visit to North Korea in the last two years. Even in that short time it has become apparent to me that economic links are having an impact in this most closed and communist of societies.

"I have haggled with the managers of a state-run art gallery as they jacked up their prices by 20 per cent in six months, and I have sat in on joint venture discussions between a Chinese businessman and the men who run the Pyongyang soap factory, discussions that taught the North Koreans about remittances and guarantees.

"These anecdotes might represent only a baby step towards marketisation, but in a country like North Korea, which has barely changed in the last five decades, they represent significant steps."

In regards to workers on the floor, Ms. Fifield indicates that interaction with outsiders at the KIC takes on huge significance given its rarity anywhere else in the world, perhaps except the area on the China-North Korea border: 

"The 9,500 North Koreans now working at the Kaesong complex every day see how much taller, healthier and wealthier South Koreans are. If even 10 per cent of them go home and talk about their Southern colleagues, or about the foreigners who intermittently visit this park, that will have a profound effect. This will only be amplified if Kaesong develops according to plans. It is projected to employ 500,000 North Koreans when it is completed in 2012.

"South Korea knows this. "We never talk about this but the real reason behind engagement is to show the North Koreans that their system is based on lies," one senior government official confides. "This will destroy the ideas that sustain their system. They can’t keep out these ideas of freedom and prosperity. It’s what is invisible that is most important.""

For those managing operations at the KIC on a daily basis, it seems there is gradually evidence of the desired effect:

"Indeed, Hong Heung-joo, the South Korean executive director of the Kaesong Industrial District Management Committee, says he has already noticed significant attitude changes since the complex opened.

""The most important change is that North Koreans have realised the importance of production. Under the North Korean system there is no sense of profit, but here North Korean workers are working to targets and asking for extra hours. That means they are becoming aware of market economics.""

Of course the nature of people flows is still strictly enforced:

"Personal contact does remain limited – the two sides eat lunch separately and conversation rarely strays outside work-related matters. Indeed, the tip sheet given to visitors by Southern authorities advises that North Koreans are "generally simple, naïve and emotional."

"Visitors should refrain from commenting on “the economic situation of either the North or the South, liberal democracy, the superiority of the market economy, unification-related matters, the North Korean leadership, education systems, human rights and/or other potentially sensitive issues," the sheet says.

"And the complex is not free of ideology. Indeed, the South Korean-made model of the completed development that Ms Ryu used features an illuminated statue of Kim Il-sung, the nation’s founder and father of the current leader."

Ah, there is no place in North Korea where the Kim brand is not marketed for the populace to see. But in the end, Ms. Fifield sees hope behind the prominence of controls, ideology and symbols:

"...there can be no doubt that engagement is having a psychological impact. I sat with Ms Ryu while we watched a promotional video shown to potential investors showing a Kaesong industrial park of glittering glass high rises, parks and fountains right here in North Korea.

""Can you imagine this place ever looking like that?" I asked her as the video was running.

""Yes," she replied immediately. "Three years ago this whole area was just fields. I couldn’t imagine then that it would like this even now.""

One of course has to be skeptical of those interviewed in this column--most seem deeply involved in the project and thus could have a predisposed bias towards seeing progress and a successful outcome. None of those interviewed are workers themselves. The key question is whether such a project is appropriate at this stage of North Korean leadership, or would be better initiated later after the current regime either changes or undertakes a significant transformation in trade and foreign policy.

Supply Chain Design Considerations for China

Dustin Mattison, writing at the China Supply Chain and Logistics Strategy blog, posted regarding "Sales and Distribution in China" on November 1. This post is particularly interesting because it essentially discusses the struggle of supply chain integration when trying to serve both the domestic and foreign markets from the same sources within China. For example, a company that has perhaps established its China supply chain primarily for export to non-China destinations may experience problems down the line when trying to reach the domestic market on the same infrastructure.

Dustin first touches on a possible cause of this short-sightedness:

There is no shortage of supply chain and logistics seminars in China, with practically at least 1 such event per day in Shanghai alone, not to mention Beijing, Guangzhou, Chengdu, etc. At such events one can gain insight into the mentality of government planners as well as logistics and supply chain professionals in China.

The recent CSCMP event in Shanghai is a good example. Discussions mainly centered on assets, infrastructure, capacity utilization, etc. Little focus was placed on the demand side of the equation. Currently, the majority companies in China believe they need to operate in a single "lean" fashion.

Dustin then follows up with a mention of John Gattorna (who I have posted about previously in regards to DHL and people power) and summarizes a recommendation:

However, as John Gattorna mentioned to me, a mistaken view of many companies is that they assume all customers act as one in a 'lean' buying behaviour...Companies selling in the China market need to conduct a detailed analysis of the buying behavior of their target customers, followed by an assessment of how the behaviors can be segmented according to different supply chain service strategies.

Because issues with the physical architecture of the supply chain can tie up so many resources within a firm, naturally companies follow up much more slowly with improving the other architectures necessary for a high-performance supply chain--financial, informational, relational and innovational. Thinking simply of the term "supply chain," it itself implies a "push" dynamic where the term "demand chain" might be recommended in instilling a "pull" dynamic that feeds off of the end customer or consumer. The most famous pull system is that employed in the Toyota Production System.

For reference on supply chain types, my former supply chain professor at Thunderbird, Joe Cavinato, long ago wrote an article for Supply Chain Management Review titled "What's Your Supply Chain Type?" John Gattorna also has a fairly new book out that I am looking forward to buying soon titled "Living Supply Chains."

Lenovo CEO on China

This past Thursday I had dinner with an expat friend from UPS and a halfpat friend from DHL. One of the topics that came up was the benefit of having a Westerner in the top leadership positions of branch offices in Asia. My DHL friend summarized that because Westerners are comfortable taking on significant amounts of responsibility, Asians feel more comfortable deferring to that leadership, answering commands, and avoiding the risk associated with assuming more leadership themselves. On the other hand, my friend argued that once an expat position is handed over to Japanese leadership, major decisions end up more in "committee" to better disburse responsibility. As a result, he said, decisions are likely to be less decisive and successful.

Personally, I feel this is in line with the characteristics commonly associated with Asian societies: greater collectivism (decision-by-committee) and high risk avoidance (disbursing responsibility to the point no one person can be held accountable). My friend at DHL said his own experience verified this dynamic. Obviously, working as I have for a Japanese company the past 1 year and 4 months has provided an environment for me to see the "decision-by-committee" approach as well as risk avoidance in action. As the only Westerner in the company, I have many times felt like a droplet of oil in a pan of water.

This past Friday, November 17, the Wall Street Journal posted an interview with a Westerner leading an Asian company: Bill Amelio, CEO of China's Lenovo. By Jane Spencer, I read the interview looking for Mr. Amelio's perspective on the dynamic my friends and I had just discussed the previous evening. Below are the selected highlights:

WSJ: What kind of cultural issues come up between the American and Chinese sides of the company?

Mr. Amelio: Every day there's something. On both sides, you need to have great trust in your colleagues to know that their intentions are good, even though the words might not come out right.

In the U.S. and Europe, we have highly opinionated executives who like to make their voices heard. The China team tends to listen more and express themselves more thoughtfully. The Americans and Europeans need to know that if a Chinese colleague is nodding silently, it doesn't mean they're agreeing. We also have a program in place to teach our China team better confrontational management skills.

The Chinese team also tends to be very, very thorough -- and sometimes when you want to get something implemented, it's important to have conciseness.

Sometimes it's great to rally the whole team around something that everybody is interested in. Last week, we had an event where we brought in the 1992 Chinese Olympic ping pong champion, and had him play our executives. Our chairman is the reigning champion [at the company].

WSJ: You've said that American companies typically use a "colonial approach" when they enter the global market. What's different about Lenovo's strategy?

Mr. Amelio: [With a colonial approach] you send an effective executive on an expat assignment to Asia. They hire talent in-country. The downside is that you tend to hire people through the filter of the language that you speak, and you don't get the best talent. It's hard to identify talent if you're conducting the job interview in English.

In all the previous jobs I had before Lenovo, the struggle was finding midlevel managers in China. What I came to learn at Lenovo is that there's a lot of talent, but a lot of the best people aren't at a high level of English proficiency. If you look inside Lenovo, we've been hiring without a screen for English for years, and that means we really have depth when it comes to talent in China. Now we're working with our Chinese midlevel managers on English skills.

With more and more Westerner "halfpats" acquiring jobs overseas, certainly in Asia, there will be less and less of a language barrier in placing Westerners as top managers. The above answer by Mr. Amelio assumes that expats aren't proficient in the language of their assignment location in the traditional approach. But I think this assumption is generally correct, especially for Asia where the languages are quite different from Western languages and thus much more difficult to learn. 

Outsourcing Space-bound Logistics

While browsing Instupundit, the short post "OUTSOURCING cargo transport to the space station" piqued my interest immediately, with the link taking me to an article at Popular Mechanics on outsourcing necessary freight shipments to space, titled "To cut costs, NASA plans to outsource its shipping jobs." Hey NASA, welcome to the club!

Written by Thomas D. Jones, a planetary scientist and former shuttle astronaut, the article can be broke down as follows:

It's not a glamorous mission--hauling water, food, spare parts and clean clothes to the International Space Station (ISS)--but somebody has to do it. The shuttle was the truck of choice when my crew delivered the Destiny Laboratory to the ISS in 2001. But now, with the shuttle orbiters heading for retirement by 2010, NASA wants commercial suppliers to take on the orbital shipping job, to lower costs and spur industrywide innovation.

Space will obviously offer some extremely different environmental challenges than Earth-bound shipping, and quality and safety will need to be prioritized when targeting cost reductions. But I think many cost reductions will come from simply accessing suppliers from outside the halls of NASA, which is probably paying outrageous prices on maintaining its current shuttle fleet. By contracting out, third-party logistics providers (3PL's) can reconfigure the supply chain appropriate to the task. And over time, the competition could likely result in that industrywide innovation.

The paragraph below suggests that eventually other supply chain management practices could become useful for space, such as perhaps vendor-managed inventory (VMI): 

Since ISS crews moved in six years ago, the space shuttle and Russia's unmanned Progress freighters have made deliveries. But the Columbia accident grounded the shuttle fleet for over two years, and the Progress's small capacity forced even two-man ISS crews into sometimes spartan operations. Last year, spacesuits aboard the ISS were out of commission for months waiting for spare parts.

The investment in space-bound cargo vehicles is of course not cheap:

The two companies getting NASA seed money (over $100 million each) for cargo craft are SpaceX and Rocketplane Kistler. SpaceX plans to loft its Dragon capsule atop a Falcon 9 rocket, but the smaller Falcon 1 caught fire and plunged into the Pacific last spring. With $100 million invested, the company hopes a second launch this winter will pave the way for the Falcon 9.

Rocketplane Kistler's craft, a reusable K-1 two-stage rocket, has yet to reach a launchpad. But John Herrington, director of flight operations and a former shuttle astronaut, says the K-1 will not only reach the ISS, but return cargo safely to Earth.

It seems that supply chains where the last leg will be a trip to space are upon us, and the same demands by customers on Earth will take hold in space:

Both firms plan to fly three test flights by 2010. The end of the shuttle era is upon us. But future crews won't care who delivers their cargo. They'll just want it to show up on time.

Semantic Web for the Supply Chain

The "Semantic Web" is introduced via Wikipedia as:

"...a project that intends to create a universal medium for information exchange by putting documents with computer-processable meaning (semantics) on the World Wide Web...the Semantic Web extends the Web through the use of standards, markup languages and related processing tools."

Another term for the semantic Web, as I found out today, is "Web 3.0" and was brought to my attention by Enterra Solutions' Tom Barnett, who references this general description by Steve DeAngelis at his Enterprise Resilience Management Blog. In summary, Steve states that Web 3.0:

"...intends on taking advantage of grid computing (or what IBM is trying to market as "utility computing") to make surfing a faster and more valuable experience. It is called the semantic Web because it will be able to understand more fully what it is that a surfer is looking for."

This is fleshed out in Steve's excerpting of an article from the New York Times by John Markoff, cut down and merged further for convenience below, that focuses on entrepreneurs:

"Their goal is to add a layer of meaning on top of the existing Web that would make it less of a catalog and more of a guide — and even provide the foundation for systems that can reason in a human fashion...in the future, more powerful systems could act as personal advisers in areas as diverse as financial planning, with an intelligent system mapping out a retirement plan for a couple, for instance, or educational consulting, with the Web helping a high school student identify the right college...the Holy Grail for developers of the semantic Web is to build a system that can give a reasonable and complete response to a simple question like: “I’m looking for a warm place to vacation and I have a budget of $3,000. Oh, and I have an 11-year-old child.”

That last sentence sounded eerily familiar to me when I read it, as did the entire post by Steve--familiar in the sense that I had either covered these concepts here without directly referring to the semantic Web, or discovered some of this vision and these concepts in a course I took almost exactly three years ago in Michigan State's MBA program.

As Steve discusses further in his post, the capabilities of a semantic Web tool is quite important to the Development-in-a-Box (DiB) solutions being developed for deployment by Enterra:

"At Enterra Solutions, we are aware of both the promise and the challenges associated with the semantic Web. We have developed Semantic Paths (TM) for use in our systems and have already begun enjoying the benefits of this relational tool when it comes to bundling rule sets into business processes."

Returning to Steve's use of the term "grid computing," I am reminded of the time I tackled DiB as the third piece in looking at how the four flows of globalization as discussed by Barnett can be cross-sectioned into modules using the five architectures of high performance supply chains as advocated by Dr. Cavinato of Thunderbird. After Steve's discussion of Web 3.0, I realized that my insertion of Enterra's DiB solution (Enterprise Resilience Management Framework) to what I dubbed the "FAR Matrix" really leverages a semantic Web-type component (Semantic Paths above) that enables the intelligent alignment of solution modules for a particular supply chain. (Below is a JPEG of the single FAR Matrix PPT slide).

In other words, for any particular supply chain, not only will the architectures necessary to deliver value need to be in place but also those architectures need to reflect the flows of other economic activities, politics (laws and regulations), security and people that shape the supply chain environment end-to-end. The semantic Web, or DiB component, in the FAR matrix thus can help in initial supply chain configuration and in the continuing need for innovation towards establishing resilience. At the same time, such a component can also enhanced advanced planning solutions aimed at influencing a supply chain environment for delivering greater value to society--particularly in the area of security and laws and regulations.

As was written by me earlier this year and once referenced by Steve in April:

"...architectures created for economic flows alone are quite vulnerable to parallel failings in non-integrated architectures designed for political, security and people flows. This is where the ERM framework says “Oh, for that module you are working on, and with the given constraints, these are the best practices catalogued for a matching political flow informational architecture on immigration process management.” How cool would that be?"

My statement above very basically describes the semantic Web component providing an "answer" to a particular question or query as mentioned above my Mr. Markoff. At the time I wrote the above, it didn't really hit me that this was essentially a semantic Web-type component. Now, suddenly, I am reminded of my studies at MSU's Broad School in a course taught by Bill McCarthy called "Enterprise Database Systems."

In regards to supply chain applications, Bill collaborated with a Robert Haugen to publish back in January 2000 an article titled "REA, a Semantic Model for Internet Supply Chain Collaboration." I won't go into the article too deeply, but essentially the idea is posited in this case by saying that:

"A semantic model describes the content of the semantic Web: that is, what classes of objects, relationships, and functions are involved in supply chain collaboration (and)...can link economic events together across different companies, industries, and nations."

Utilizing the FAR Matrix, we can also integrate not just economic events, but all political, security and people flow events that impact the performance of supply chains. The fact that I can link the concepts being engaged on here and at Steve's blog to my past coursework is very exciting, almost in a "Back to the Future" way.

I am sure that for some readers this may not exactly be the most exciting of material, and fairly abstract in nature, but for supply chain managers semantic Web-oriented applications are sure to bring quite transformative changes--leaps in improvement versus smaller, iterative steps--that will greatly impact all industries.

(Important Announcement): Beginning in December, I am very excited to make my own entry into the world of supply chain IT applications by joining Manhattan Associates as a senior consultant. For those unaware, Manhattan Associates is:

"...the leading provider of supply chain planning and execution solutions (and)...offers easy-to-use solutions to make your supply chain work better from demand to consumption."

As Steve DeAngelis often advocates Enterra Solutions at his blog, I expect to be biased towards Manhattan's supply chain solutions in my own future writing as I begin my new job. However, I don't intend to transform this blog into a platform for promoting Manhattan solutions in regards to different supply chain issues of the day, nor will I be revealing any specific dealings or projects that Manhattan is engaged in for its business.

Rather, I definitely expect to write increasingly more about the role of information architectures in high-performance supply chains, and if this indirectly results in improving my company's opportunities and business, then all the better. How my new job will affect the frequency of my writing is yet to be seen as the work culture (foreign company in Japan) will be quite different from my current work environment (domestic Japanese); but I am looking forward to an even better second year discussing supply chain logistics in Asia.

UPDATE: More commentary on Steve's post at Dan's tdaxp.

China's Port Investments Boosting Overall Capacity

Below is the full text of some news from Logistics Management:

China has spent over 10 billion US dollars to enhance the handling capacity of Chinese ports by 18 per cent to 5.5 billion tonnes by the end of this year, the state media reported (November 9).

These ports are expected to handle 94 million TEUs (twenty-foot equivalent unit) this year, up 24 per cent over 2005, Minister of Communications, Xu Zuyuan said at a national navigation industry meeting held in Tianjin, the largest port in north China.

By the end of 2006, the minister said, China will have invested USD 7.59 billion in building 166 new port projects. With completion of these projects, the country's seaports handling capacity will be increased by 548 million tons to reach 3.44 billion tonnes.

Investment in inland river ports will reach USD 2.78 billion, which were used to build 165 new berths with an additional handling capacity of 19.5 million tonnes, Xu said.

At the end of the year, China's investment in coastal harbour construction will reach USD 7.5 billion, accounting for 45 per cent of the total investment in the country's 10th five-year plan period (2000-2005).

Over the next five years, China will increase investment in infrastructure construction of waterway transportation, Xu said. The construction will focus on building specialised ports for handling coal, oil, ore and container in inland waterway transportation. By 2010, the minister said, China will further upgrade the handling capacity of coastal harbours by 2.1 billion tonnes.

DHL Moves to Strengthen Korea Hub

Nicci Pugh, from Logistics Business Review, covers a new investment by DHL in South Korea:

Global express and logistics group DHL plans to invest $50 million in South Korea for capacity expansion and service capability enhancement. Since 2001, DHL has increased its investments in the country by almost 280%, from $18 million to $68 million, following the company's latest investment.

The bulk of DHL's latest investment will go into expanding its current DHL Express facility at Incheon Airport. The company also plans to upgrade and expand its service centers, introducing more than 100 new vehicles.

As I have touched on in the past, South Korea's government maintains its vision of establishing the country as a key logistics hub, if not the most advanced logistics hub, in the East Asia region. As a result, this investment is in line with encouraging private investment that supports this vision:

DHL's investment plan complements the South Korean government's vision of establishing Incheon as a preferred logistics hub to serve the region. According to the Ministry of Construction and Transportation, the volume of air cargo between South Korea and the neighboring region has shown a significant increase over the last five years, particularly the freight movement between South Korea and China.

"Our commitment to South Korea is largely driven by customer needs arising from a steady flow of trade volumes into and out of South Korea," said Scott Price, CEO, DHL Express - Asia Pacific. "We are confident that our robust network infrastructure, as well as our upgraded facilities, will not only serve the increasingly sophisticated needs of our customers, but will enable us to actively enhance our role as a trade facilitator to improve trade links between South Korea and the rest of the world."

I like the statement by Mr. Price in the last paragraph, because it pretty effortlessly zooms out from the ground-level infrastructural investments to the 30,000 foot level, big-picture view of DHL's influence in the region, and particularly in its established position in South Korea.

Logistics Managers on Positioning in Greater China

An interesting article from Cargo News Asia covers a recent logistics panel in Texas on operating logistics operations in China. In particular, I wanted to point out the author Greg Knowler's focus on the panelists' regular mention of the operational disconnects that still exist between the mainland and Hong Kong and Taiwan:

The limitations of a Hong Kong presence were raised by the panelists time and again. There was surprise that having this "China" office did little to open up access to the mainland.

"We find that Shanghai does not talk to Hong Kong," said Brock. "A mainland forwarder would rather lengthen the supply chain than go directly to Hong Kong."

Honeywell had the same experience, and Jay Fortenberry, vice-president of distribution and logistics, said communication between the mainland and Hong Kong - and between the mainland and Taiwan - was poor.

"We do a lot of boots on the ground business and find that even though we are in Hong Kong and have been there for years, the relationship between that office and China is not good," he said.

In the United States, it can be difficult to explain the differences between the countries of East Asia to non-observers, let alone those differences within a country such as China, expanded to Hong Kong and Taiwan. Therefore, it is understandable that proximity to China can be deceiving in regards to leveraging Hong Kong and Taiwan capabilities in connection with the mainland. Of course, a number of factors are involved here that are not simply infrastructural disconnects but also cultural. It will be interesting to see how these walls break down over time, and in the case of Taiwan, perhaps logistics can play its part in helping cultivate a more peaceful coexistence with the mainland.