Linking The Virtual Logistics Supply
the humble barcode could soon become a thing of the past if RFID
technology takes off as expected
Hong Kong and Chinese
mainland businesses including small- and medium-sized enterprises (SMEs)
should begin planning immediately for the next big revolution in the
modern supply chain.
The advent of the
Electronic Product Code (EPC) that combines radio frequency identification
(RFID) with an Internet backbone is about to take the business world
Developed at the
Massachusetts Institute of Technology's Auto-ID Centre in Boston, EPC
was formally unveiled in 2003 as the global standard for RFID applications
that enhances end-to-end supply chain visibility.
such as Wal-Mart, Tesco and Metro as well as the US Department of Defence
have announced plans to adopt EPC as the standard to integrate RFID
into their supply chains by January 2005.
They perceive tremendous
benefits in the 50-year-old RFID technology, which has tremendous potential
to deliver new-century solutions to improve the way manufacturers, distributors
and retailers do business.
However, it is
only when RFID is implemented with international standards and a global
open-information network that its potential to revolutionise the industry
and global supply-chain operations is truly unveiled.
The EPC standard
provides the missing link by providing much cheaper adaptation and better
support as much higher value will be added to the global supply chain
by a combination of key elements.
The major building
blocks of EPC are:
EPC - which is being used to uniquely identify items down to serial
RFID-radio frequency identification involves tags which combine silicon
chips and antennas that communicate with readers by radio waves
EPC backbone - which communicates product-specific information such
as an item's origin or production date with pointer-like protocol
via the RFID tag
The EPC backbone
ONS - object name service, which is used to locate databases containing
information service, which is used to store item characteristics and
PML - physical mark-up language that is used to represent item characteristics
middleware that sits between readers and the back-end information
system for passing information across the network
Kong, formed under the auspices of the Hong Kong Article Numbering Association,
is charged with facilitating and overseeing the adoption of EPC- related
technologies, standards and applications in the local business sector.
The new organisation
believes there are several advantages to implementing EPC's vision to
create an Internet of Things, which is a concept for storing a wide
spectrum of information about the supply chain in an open and distributed
By providing real-time
inventory visibility, EPC offers numerous potential benefits including:
anti-counterfeit capability (especially in drugs and high-end consumer
on-shelf stock availability
warranty and after-sales service
reduce theft, administrative errors and costly product recalls
as logistics, information technology, packaging and printing and electronics
are among those that have the best potential for EPC development, with
logistics particularly well suited given Hong Kong's status as an international
The EPCglobal Network,
an open global system that allows trading partners to improve their
ability to track and share supply-chain information, should therefore
ideally be linked with the Digital Trade and Transportation Network
(DTTN) due to be launched in Hong Kong next year.
two systems would provide:
real-time, automatic location of objects throughout the supply chain
increased responsiveness to customers' needs
visibility at all points along the supply chain
of an open, collaborative environment with trading partners
Kong is exploring various EPC implementation pilots with the local logistics
industry, including an EPC global track-and-trace pilot that aims to
help track and trace products flowing from the mainland's manufacturing
facilities, their shipment through Hong Kong and export to overseas
have also expressed strong interest in participating in pilot implementation
projects in such diverse areas as production control, warehouse management
and asset management.
In addition, the
new technology could help boost Hong Kong's efforts to establish itself
as the regional supply-chain hub by accelerating and further enhancing
the integration of the mainland's manufacturing base with the rest of
A common EPC data
platform, together with other infrastructure such as DTTN, would further
boost the integration of logistics operations and increase the volume
of goods and information flow between Hong Kong and the mainland. EPCglobal
Hong Kong is now working closely with EPCglobal China to further integrate
the two areas via EPC development.
the collaboration would bring progressive growth to the local software
industry through developing information technology solutions to support
different EPC applications, creating new business opportunities and
employment and positioning Hong Kong as the EPC pioneer and leader for
Seeing the benefits
EPC/RFID pilot implementations have already provided solid examples
of the benefits that can be provided by the new technology.
The logistics industry
test schemes included:
the truck-loading pilot at a food manufacturer's warehouse which showed
that EPC and RFID for pallet-level tracking could possibly help drive
down the cost of a single warehouse by 16,000 euros per year and save
an average of 20 euro cents per pallet
Foods' truckload assembly and truck-loading test scheme indicated
that approximately 7-30 seconds per pallet could be saved for 300,000
pallets shipped using RFID scanning, giving a potential saving of
25,000 euros in labour costs per year and 25 euro cents per pallet
AIDC Freightways' fleet has 1,250 tractors, of which 750 are used
for pick-up and delivery operations. With the implementation of EPC-enabled
inventory tracking, the company cut the number of pick ups and deliveries
by 10% while simultaneously reducing labour costs by US$4.5m per annum
A Watertight Web
use secure passwords and change them regularly to protect against
The Internet has been
a boon to business. However, it has also given criminal elements new possibilities
While some of these
are traditional crimes committed through the Internet, others use computers
to commit new offences or target the computer system itself.
There are several
main areas of concern for small- and medium-sized enterprises (SMEs) including:
- hacking (unauthorised
access, access with criminal intent)
- criminal damage
comprising website defacement, Denial of Service Attack (DoS) or viruses
- Internet fraud
such as bogus websites and commercial fraud
- misuse of accounts
- online theft including
abuse of passwords (theft of personal identity numbers or PINs), theft
of corporate information and Internet banking
senior inspector Kevin Leung of the Hong Kong Police says technology crime
is not as daunting as it may seem. "Most SMEs have nothing to worry
about if they are aware of the potential problems and implement some commonsense
steps to safeguard themselves, their staff and their businesses,"
The first concern,
Leung says, is hacking, or the abusive use of and unauthorised access
to computer systems. "This often involves gaining access by using
a number of different hacking programs to exploit the vulnerability of
a computer system and the abuse of account IDs or passwords," he
vary but can be summarised as:
- browsing information
on computer systems for "fun"
- misuse of the
computer system to launch further cyber attacks
- disruption or destruction
of computer data and files
- obtaining sensitive
information such as personal data, passwords and credit card account
details to commit further offences such as Internet banking theft
Most hacking activities
are unsophisticated and often involve young people who are either unaware
of the implications of their illegal activities or are unconcerned as
to the consequences of their actions. "To date, there is little evidence
to suggest that organised criminals are using hackers in support of their
criminal activities in Hong Kong," Leung says.
He warns there is
no simple solution to deter hackers. "Viable solutions involve a
combination of firewalls, an intrusion detection system and virus detection
software, physical security and incident response procedures and high
security awareness," Leung advises.
Criminal damage is,
he says, of much more concern to local SMEs because they involve the use
of programs written to disrupt or destroy computer data and files. "The
three most commonly encountered malicious programs are computer viruses,
Trojan horses and logic bombs, which work in several distinct ways,"
These include website
defacement or the change of content - usually the front/main page - of
a website with hacker messages or a virus. "The other, and far more
serious effect from an SME's point of view, is a denial of service attack
or DoS," Leung says.
A DoS uses a networked
computer or computers to bombard another networked computer or server
communication traffic to disrupt, cause the server to break down or enable
unauthorised access. "These attacks often result in significant financial
loss as a result of down time, damage to computer systems and loss of
reputation," he adds.
The final malicious
program is a computer virus, which takes its name from its biological
virus replicates itself or inserts copies or new versions of itself in
other programs when executed within the infected program," Leung
The virus can manifest
itself in several ways including signs on the screen regarding its existence,
erasure of memory or destruction of hard drive contents. "Viruses
can be written for all platforms, including PC, Macintosh and UNIX,"
he warns, adding, "Estimates of the total number of computer viruses
Internet fraud includes
the same scams that have been conducted by mail and phone, as well as
new cyber scams.
hard to tell the difference between reputable online sellers and criminals,"
"But it is important
you know who you're conducting business with, what security features they
Bogus websites that
use domain names very similar to genuine websites are another area of
potential concern to SMEs. "Examples include bogus cyber banks and
investment houses that create a fake website and then solicit potential
victims throughout the world by email," Leung says.
advertise their services or products via the Internet, using anonymous
or false registration information to commit commercial fraud. "They
often ask victims for down payments and then never deliver the promised
service or products," Leung explains.
Internet fraud also
encompasses scams such as the '419' advance fee racket in which culprits
(usually from African countries such as Nigeria) send out emails claiming
to have a huge sum of money that needs to be moved to foreign accounts
but requires an advance fee. "Thankfully, this is very rare in Hong
Kong," Leung adds.
More common is the
misuse of Internet access accounts, where criminals obtain users' accounts
on the Internet. "The main purpose is to avoid billing for goods
or services or identity or password theft," Leung reveals.
"Abuse of passwords
or theft of PINs lets criminals take over the victim's financial life,
including opening new bank accounts, transferring bank balances, applying
for credit cards and loans, buying property or taking luxury vacations."
Theft of corporate
information, however, is more likely to involve an ex-employee who steals
company secrets before leaving. "There have also been cases where
ex-employees have hacked into the companies' computer systems to look
at confidential emails," Leung says.
banking theft occurs when the victim's bank PIN or password is misappropriated.
"In some overseas countries, the victim's computer system was infected
by Trojan horse programs that allowed criminals to capture user IDs and
passwords," Leung reveals.
to be extra careful when using online banking in offices especially if
a computer is shared with other colleagues."
But, he advises,
there is no guarantee that technology crimes such as these will not increase
in future as Internet use becomes even more widespread and criminals become
"The most important
thing for SMEs to remember is to be aware of technology crime and implement
basic precautions," Leung concludes. "If SMEs continually monitor
their technology and upgrade their computer protection systems, there
is no reason why they should not utilise the Internet to build profitable
There are several
simple steps that small- and medium-sized enterprises (SMEs) can take
to protect themselves from technology crime including:
- install a personal
firewall and Intrusion Detection System (IDS)
- upgrade anti-virus
protection software frequently
- upgrade operating
systems and applications files frequently using the security patches
provided by the developer
- back-up critical
data files regularly
- use secure passwords
and change them regularly
- scan all email
attachments for viruses before opening them
- do not give out
personal information to any caller or email recipient unless they are
known or the company they claim to represent is trusted
- monitor the activities
of all underage computer users and teach them how to avoid security
- shred all paper
files, bills, correspondence and personal documents before placing them
in the trash for disposal
- do not use pirated
software or software from untrustworthy sources
- don't play with
The careful SME should
follow these essential tips to remain free from technology crime:
- don't invest or
purchase a product or service without carefully checking out the investment,
product, service, and the company
- don't be afraid
to request further documentation from the marketer so you can verify
the validity of the company
- don't be pressured
to send money to take advantage of a special offer or deal
- don't be hurried
into sending money to claim a prize that is available for only a limited
- don't disclose
information about finances, bank accounts or credit cards - not even
the credit card expiry date
statistics in Hong Kong
access to computer by telecommunication
to computer with criminal dishonest intent
property by deception
services by deception
* Others include traditional offences such as criminal intimidation, using
a false instrument etc
commerce: various applications are available to facilitate the entire
process and allow SMEs to perform certain tasks automatically
Hong Kong may be one
of the most advanced cities in the world in terms of e-commerce technology,
but there are still opportunities for small- and medium-sized enterprises
(SMEs) to make significant cost savings and productivity gains by integrating
it further with their businesses.
So says Peter Yan,
chief executive officer of Global e-Business Services Ltd or GO-Business,
who points to the flourishing import/export sector as proof.
"Hong Kong has
around 70,000 import/export companies, a much larger trading community
than other Asia Pacific economies - for instance, Singapore has approximately
10,000," he says. "The Hong Kong government has adopted the
approach of accepting only electronic submissions, so basically all of
them have the capability, and are required, to submit electronic documents."
The Hong Kong government's
Commerce, Industry and Technology Bureau granted GO-Business a licence
in April last year to provide front-end Government Electronic Trading
Services, or GETS, for processing official trade-related documents. (The
company also operates the government's Logistics Department's Electronic
Tendering Systems (ETS).)
GETS alone handles
around 17 million electronic documents per year, and the company is accordingly
deeply involved in electronic commerce between business and government.
documents is a statutory requirement rather than a part of a company's
core business, and Yan advocates using e-commerce technology creatively
in this area as it also lets companies achieve significant operating benefits
in other sections of their operations.
focus on their core business - submitting electronic documents to government
should be an automatic step within the trade flow and not a separate manual
process taking up valuable time and resources," he insists.
"SMEs can work
with us to have their entire trade process automated, or if it is already
automated they can easily integrate that trade documentation submission
process with their systems using our tools, so that processes are handled
automatically with a minimum amount of human intervention."
According to Yan,
a number of large corporations, such as Samsung and DHL, and SMEs alike
have used GO-Business's services and experienced dramatic benefits from
Yan says GO-Business
has been rather successful in terms of penetrating the enterprise segment
of the trade community. "Take DHL as an example," he says. "By
integrating the whole electronic document process with its in-house system,
we allowed DHL to achieve substantial savings in terms of costs and operational
resources and redeploy these resources to other higher-value tasks."
Now the company is
trying to replicate the success with SMEs, which Yan asserts can achieve
comparable benefits at highly competitive costs despite being generally
more risk averse.
"We have covered
different industry sectors - for example, DHL is a logistics service provider,
Samsung a manufacturer and Edward Keller a trader," he says. "They're
easily recognisable representative cases in their industry sector, so
when we replicate this to SMEs they feel comfortable and can recognise
the benefits and advantages of our system."
the integration of electronic trade documentation with an SME's other
computerised functions as a "holistic" approach to business
administration, allowing the organisation as a whole to operate more effectively.
largely on making the entire trade process electronic we let customers'
operational staff focus on the main line duties related to their business,"
SMEs various applications or solutions to facilitate the entire trade
process, as a result of which the SME is able to perform certain tasks
there is enormous room for growth in those areas and that we shouldn't
only focus on trade documents - even though the trade document is a very
good entry point to introduce people to other ways of doing things,"
To this end, GO-Business
has begun to cooperate with software houses whose systems are widely used
to integrate its e-commerce technology with other applications that can
then be sold as a package, or incorporated as an upgrade in an existing
an SME will be paying less than it is paying to its existing service provider
- not to mention all the other things we provide," he explains. "They
subscribe to our basic service and our value-added services, and the total
cost is invariably less than what they used to spend."
According to Yan,
using GO-Business' services is more cost-effective than its competitors
and the system has the advantage of guaranteed recorded delivery - something
its competitors cannot offer in electronic trade processing.
This can be invaluable
for avoiding government penalties for failure to declare trade declarations
within 14 days, Yan notes. "If you submit your declaration after
14 days you are subject to a penalty charged by government, and guaranteed
transmission then becomes important," he notes.
Yan notes that one
company incurred a fine of HK$120,000 for non-submission of electronic
documents it thought had been delivered.
negotiated it down, but it still had to pay a substantial sum - then it
switched to using our service," he adds.
The Hong Kong government's
policy of encouraging businesses to use e-commerce as a channel for important
documents in general and for the tendering process in particular has lead
to a number of tangible efficiency gains.
- electronic tendering
is a secure and confidential process
- electronic tendering
is faster, more responsive and virtually free of wasteful paper work
- electronic tendering
is possible round-the-clock and, because no physical delivery is involved,
is free of geographical constraints
- electronic tendering
can be integrated with other functions of a business, greatly enhancing
efficiency in generating tenders based on up-to-the-minute information
- online tendering
vastly increases the procurer's supplier sources and thereby enhances
- e-commerce technology
greatly reduces dependence on repetitive tasks such as re-keying text
and data, freeing staff for more productive purposes
- because e-tendering.com
is linked to tdctrade.com the process gives procurers access to the
TDC's vast network of suppliers.
E-tendering is the
first step on the path to fully integrating e-commerce practices with
business operations, and as such is a key initiative in preparing businesses
for the fast track of the future when paperwork, courier deliveries and
many day-to-day clerical duties will be obsolete.