Kerry Logistics

   6.  DHL and FedEx are the major global competitors while SF express is the local main competitor in recent years.  How can Kerry Logistics keep the international market position without losing the local market share?

Kerry Logistics aims to provide integrated services for its customers. Comparing with traditional logistics service provider, the service coverage of Kerry Logistics is larger because they are focusing on whole supply chain business activities. For example, in addition to third party logistics service, Kerry Logistics is now providing warehousing service, QC, vendor inventory management and so on. Customers can obtain the tailor-made supply chain solutions from Kerry Logistics. Therefore, Kerry Logistics can establish a long term partnership with its customers by offering an integrated supply chain service.

2.     7.Apart from using RFID to save cost effectively, what other methods or technologies that Kerry Logistics have been adopted?

Kerry Logistics have been adopted Kerry EAS Logistics’ IT technology. It fully guarantees the smooth circulation of cargo and information across the whole supply chain, which covers 1,100 cities in Chinese mainland. High transparency, convenient storage and close connection are the three main advantages of our network. This technology allows you to monitor and manage the orders online throughout the year twenty four hours a day providing information on various cargos and the supply chain.

3.   8.  Kerry Logistics won the award for Asian 3PL of the Year at the prestigious Supply Chain Asia Logistics Award, what made Kerry logistics succeed in doing 3PL service?

Kerry Logistics has one of the strongest distribution and cargo networks in Asia. Its solid assets in the region offer its customers reliability and flexibility, supporting their continuing growth and expansion. Its unique ASEAN-wide road transportation network also connects China (Shanghai, Shenzhen, Kunming) to ASEAN countries (Thailand, Vietnam, Laos, Malaysia, Singapore), providing shippers with effective long-haul trucking as well as sea-land and air-land services. 

To retain the title of Asian 3PL of the Year, Kerry Logistics had to satisfy the judges in a range of criteria including the size and scale of the Asian network; IT know-how and systems; level of customer service; client partnering/track record in understanding, collaborating well with customers; launch/upgrade of new products and services on an ongoing basis to match market demand; reliability of service and value for money; ability to handle specialized shipments; level of local knowledge of developing Asian markets; approach to sustainability and social responsibility issues and approach to security and risk management. 

4.     9.Hong Kong is the largest market for Kerry.  Will your company worry about the rise of Shanghai as a new logistics hub may affect Kerry’s performance in Hong Kong in the near future?

Kerry Logistics have its sub own solid assets in Shanghai, having a synergistic effect between Hong Kong and Shanghai. Shanghai also have 8 subsidiary corporates to handle the logistics matters. In this circumstance, these two regions both have benefit to build a better connection in China in order to let Kerry Logistics become larger. As we know, Shanghai is far from Hong Kong in term of geographic location, rising of Shanghai as a new logistics hub is not too harmful for Hong Kong’s the international hub.

Hactl company visit

Company Name

Hong Kong Air Cargo Terminals Limited (Hactl)

 

Company Background

Hactl operated since 1976 and located at Hong Kong International Airport (HKIA). It supported the import, export and transshipment of air cargo in Hong Kong.  It, is one of the leading air cargo terminals in the world, provides world-class facilities and innovative technology with highly efficient operation to its customers. It is the neutral air cargo terminal operator at Hong Kong International Airport providing unbiased services to all of their airline customers. Value-added services like pre-arrival customs clearance, import scheduled collection, schedule empty until release, etc. are offered to enhance customer satisfaction.

1.      After the opening of Cathay Pacific Cargo Terminal, how does it affect your company’s business performance?  How do Hactl react to its local and global rivalries?

In the past, Hactl was the largest air cargo terminal in Asia and it dominated the market. Cathay Pacific is the main customer of Hactl that owned 40 percent business of Hactl.  However, Cathay Pacific opened its own Cargo Terminal and built up its own transportation team.  Cathay Pacific sold its shares to the remaining shareholders and become a competitor to Hactl. Cathay Pacific’s action has caused cargo volume of Hactl to drop around 30%.

In fact, Hactl realized its biggest customer was planning to build its own cargo terminal and would leave them. Hactl has done preparation actions for coming up with this situation. For example, in the past, Hactl has not enough resources and capacity available for excessive cargo demand. However, after they realized their biggest customers would leave them soon. They had more resources and capacity available for new customers. They put more manpower resources and capacity on absorbing new or small-scale businesses. Moreover, Hacis, is a wholly-owned subsidiary of Hactl, supports Haclt to diversify its business into Mainland China. So that, Hactl can provide one-stop logistics service for its customers that can enjoy not only the storage services but also the transportation of cargo directly to mainland China.

 

 

2.      What will you do proactively if the similar event occurred again?

Hactl’s managers has not replied this sensitive question. However, we believe that Hactl is optimistic about their future. They will keep providing the high quality and more value-added services to their existing customers to improve Hactl’s service level. Moreover, with the advance of technology development in recent years, Hactl should invest more resources on innovation technology development to provide more customer-oriented services to their customers in order to enhance customer loyalty and maintain its air cargo leading position in Hong Kong.

 

 

3.      What efforts have you made in terms of Corporate Social Responsibility to achieve its sustainability?  For example, what are the means used in reducing the greenhouse gas emission and wastes from packaging?

Hactl has participated in the Clean Air Charter Certification Scheme since 2010 and is attained an Excellent Class Indoor Air Quality Certificate in 2013. These scheme and certificate indicate that Hactl has helped improve the air quality of SuperTerminal 1.

Burning of crude oil will emit gases with high content of carbon dioxide which may facilitate the seriousness of Global warming.

Firstly, Hactl has used electronic charger for its forklift trucks in order to reduce the use of crude oil. Secondly, Hactl recycles most of the plastic wrapping and wooden pallets in order to reduce the consumption of plastics and woods. Recycling bins are used to encourage recycle of paper, plastic and bottles. It also supports recycling of computer and electronic waste. Thirdly, Hactl has used electrically power cars to deliver document and small scale cargo so that less crude oil is used. Finally, it has encouraged its customers to use e-freight to reduce the use of paper.

 

4.      Hong Kong Airport Authority continues to expand HKIA’s catchment area beyond Hong Kong and into the PRD.  What are the strategies for Hactl to seize this business opportunity?

After the building up of the third runway in HKIA and finishing the construction of Hong Kong-Zhuhai-Macau Bridge (HZMB), more airlines and traffic flow will pass through Hong Kong. Hacis will continuously help Haclt to diversify its business into Mainland China. With more capacity available for the cargo demand, Haclt can seize this opportunity to further expand its business into Mainland. For example, Hacis has taken advantages of the project of Hong Kong-Zhuhai-Macau Bridge to extend its depot network to tap the potential from the connection. With this bridge, the transportation time will be shortened. Hactl are trying to find new partners in China e-commerce and on the western area of the PRD.

 

 

5.      How does Hactl tackle the increasing competition from other competitors in the Pearl River Delta?

 

Hactl operates as an integral role in the logistics company in Hong Kong and the Pearl River Delta. The rise of so-called competitors in Pearl River Delta is not a threat to Hactl. It would be an opportunity for Hactl. Hactl wants collaboration with its mainland counterparts instead of considering them as competitors. Such initiatives can be evident by the SuperLink China Direct road solution with is developed by Hacis. This solution build seamless air-road connection between Hong Kong and some major cities in China.

6.      How does Hactl use information technology to manage the receipt, storage, delivery of containers?

Hactl has used Innovation technology to smooth information and logistics process.

It makes use of COSAC-Plus and COSAC app to improve its operation efficiency and customer loyalty. It provides the cargo tracking services for their customers to check the status of their cargo by using internet or mobile app. COSAC-Plus, a home-grown system is a new generation air cargo management system which enables tracking cargo, exchange of information and facilitating e-freight. This system links airlines, freight forwards and government authorities with a common database and allow them to manage and monitor the air cargo.

Hacis E-logistics System which is a warehouse and order management system facilitates cargo information flow along supply chain. It provides real-time cargo status including the inventory records and GPS summary and connects to COSAC.

Control-M which is event based job scheduling system is used for all end of day or overnight jobs. It improve operation efficiency and streamlines the operation processes by starting the next job when the preceding one is finished. This system handles 400-850 production tasks per days. The tasks range from data lifecycle management to preparing reports for clients. It is a centralized system that provides a standard platform for the whole company to use.

It has also make use of Box Storage System (BSS) and Container Storage System (CSS) which are fully automatic systems to provide 10,000 and more than 3500 storage positions respectively to manage the storage containers safely and efficiently. CSS is direct and covered interface with the airside to transfer unit load devices from the tarmac straight into the system. BSS is directly linked to the Customs Examination Hall to facilitate efficient cargo retrieval for customs personnel. The security level of BSS is high as the storage location of cargo can only be identified by the computer system.

Bulk Cargo Distribution System (BCDS) is a computer controlled system that move cargo between floors and over 300 workstations. There are more than 300 computer-controlled workstations for build-up and breakdown of import and export unit load devices.

 

7.      Global warming is an important issue. How can Hactl minimize the emission of carbon?

 Similar question with question 3. The answer of this question can be refer to question 3.

 

 

8.      What is the contingency plan of Hactl under extreme weather when employees are required to work outdoor?

Hactl’s staffs are not permitted to work at aircraft parking apron if there is typhoon signal number 8 or above. However, if the cargo aircrafts are already arrive under the extreme weather employees are also require to take off the cargos in a safe situation. This can ensure customers’ products will not be affected by the extreme weather. There are some safety areas in the aircraft parking apron for their staffs who require to work outdoor to stay out from extreme weather.

Moreover, Haclt cooperates closely with airlines in order to relieve the cargo bottleneck and more staffs are assigned to apron to resume the operations after the extreme weather warning signal is gone.

 

 

 

9.      Hong Kong International Airport is planning to build the third runway.  What will be the impact on Hactl’s logistic operations?

Hong Kong Airport is the world’s busiest cargo gateway with more than 4 million tonnes of air cargo handling yearly. It is expected the trend will keep increasing in the near future. Haclt has handled large volume of air cargo movement in Hong Kong. With one more runway, the airport’s air cargo handling capacity will be improved so that aircraft movements can be kept at safe levels. It would be an opportunity for Haclt’s logistics operations to maintain its position as one of the world’s leading air cargo hub.

10.  What are the challenges of handling large volume of goods?

Hactl has expertise experiences on handling large volume of goods. However, the greatest challenges for Hactl are handling small pieces goods or goods which are soft in texture. Sometimes, it is difficult for Hactl to find a convenient and efficient way to deliver the goods through aircrafts.

 

 

 

 

 

 

 

 

 

 

Fedex Questions

1.Introduction for FedEx

     FedEx provides customers and business worldwide with broad portfolio of transportation, e-commerce and business services. Other than traditional delivery, FedEx offers customers all-round solutions with high information technology in order to exceed their expectation.

The main customer service of FedEx contains different stage of supply chain management. Firstly,Our specialists advises customized,professional solutions for unique customers. Secondly, when customers want to know the lasted status of goods, we will always track  and update it. Lastly, FedEx is  always on your side to answer your inquiries when finishing the delivery service.

The Vision and Mission behind the Business:

Vision: “If we.re all operating in a day-to-day environment, we.re thinking one to two years out. Fred.s thinking five, ten, fifteen years out.”

Mission: We strive to be the Best Company to work for with the Best Service and the Best Brand in our industry.

FedEx treats infrastructure as an important investment,  so more and more perfect aspects are developed. Our service area is throughout the world,more than 220 countries and territories, including every address in the United States. Moreover, we uses 650 aircraft and around 47500 motorized vehicles to serve more than 375 airports worldwide in 1200 stations,including 640 in US and 560 outside US,and 12 air express hubs.

FedEx provide supply chain chain management functions ,integrated operation,warehousing and transportation service based on market conditions. Also, B2C is another important customer source,which received reliable,fast and on-time delivery service. Totally, we deliver packages and freight to more than 375 destinations nearly every country each day. However, DHL,UPS and TNT are our main competitors nowsaday, over 90% of the market is dominate by these three company and FedEX.

There are a lot of services and products offering by FedEx. For packing services and shipping ,FedEx Ground and FedEx One Rate can serve international shipping with professional packing service like specialty boxes.In addition, fax ,passport,office supplies and convention center services are also provide to our customers in order to enjoy all-round logistic service.

2. List the benefits of a virtual supply chain

Virtual Supply Chain is Any chain (or network) connected through electronic links represents an organizational structure that facilitates efficient and effective flows of both physical goods and information in a seamless fashion.

   Systems are used now: 

1.Power ship system:  It provides customers with proprietary online services and to provide additional services including storing of frequently used address, label printing and the others

2.COSMOS (Customers Operations, Service, Master on-line system):

   It can manage on-time information such as vehicle, people, package, routes and the others and provide integrated information flow of shipped goods and transportation mode. It makes use of bar code to improve the delivery cycle efficiency, evaluating customer service levels as well.

 

3.EDI (Electronic Data Interchange):

It can build one-to-one relationship with their customers by providing management services, such as order processing and related distribution, to interconnect and distribute information to all roles in supply chain. It links to other parties in supply chain to improve the sources and procurement strategy and finally can improve tighten and synchronize inventory out of the system to squeezing time.

 Here are benefits of virtual supply chain:

 1.Improve the efficiency and control:Just-in-time inventory management can help reduce cost including warehousing cost and wastage through obsolete stock.Also, It provides high flexibility in relation to changing marketing conditions in terms of the volume of production.
2.Greater transparency and convenience in information sharing: It improves communication along the logistics value chain,decrease mismatch of demand and supply and reduce wastage.
 3.Better value-added service:Power Ship System is provided for high-volume shipper with high speed, secure connectivity to streamline customer’s supply and relevant data into their existing system.Therefore,customer can be more loyal to the company when FedEx has stronger brand positioning.

 

Yakult Company Visit

Company Background

Yakult is a Japanese probiotic milk-like product which is made by fermenting a mixture of skimmed milk with a special strain of the bacterium Lactobacillus casei Shirota. It was created by Minoru Shirota who found that lactobacilli were effective in suppressing harmful bacteria within the intestines, in 1930. After 5 years, in 1935, he started the manufacturing and Yakult had sold to the public.

In 1969, Yakult operated their business in Hong Kong. The first factory was located at Kwun Tong and now the factory is moved to Tai Po. In the beginning, Yakult used to employ “Yakult Lady” direct marketing strategy to sell the drink. It used to use glass bottles in order to recycle and reuse them. However, this trend was not suitable for Hong Kong and changed to sell at supermarket now. In 2011, Yakult has published a new production line in Hong Kong for producing a new flavor of Yakult – Yakult LT, which has lower sugar content and high vegetable fibre.

Today, Yakult sells in 34 countries to suit 30 million demands every day.

Questions

1. How can your company deal with the increasing customer demand in China?  How do you plan for your production forecast?

9. How do you manage the fluctuation in demand to your production resulted by the large volume of purchase from the mainlanders especially the parallel traders?

Answer: In order to deal with the increasing demand in mainland China, Yakult is trying to build more production factories in China to ensure meeting the growing demand. Nowadays, it has 6 factories in China and the number will keep increasing in the future. Under the six production plants, Yakult can produce a total of several million bottles per day, as to meet the increasing demand in mainland China.

2. With more intensive competition from similar probiotic products from mainland and other Asia countries, what are the strategies for Yakult to keep its competitiveness?

11. There are many similar products in the existing market, how can you differentiate yourself with those products?

Answer: Yakult registered for the bacterium Lactobacillus casei which was created by Japanese scientist Minoru Shirota, the starter of Yakult. This bacterium has its unique function which is benefit to the intestinal system of human body. This differentiates Yakult from other Probiotic Drinks as no other companies are able to use the same bacterium to perform the same function. Besides, Yakult has a team of professionals to monitor each bottle of the probiotic drink has enough number of Lactobacillus casei strain Shirota. Yakult believes that it can help to gain the trust of the customers by ensuring the product quality. Moreover, Yakult is a renowned company which is developed for nearly 80 years. The history of the company is also a promise to customers.

3. Will you consider providing more varieties of products?

8. There are lots of favours in different regions except Hong Kong only got 2 favours in total. What is your product strategy in dealing with customers in Hong Kong?

Answer: For Hong Kong Yakult, there is only one flavor in order to maintain the good quality of probiotics and taste of the beverage. There are two types of Yakult in Hong Kong which are the original one, and the other one with low-sugar and hi-fibre. In addition to the Yakult, Yakult has also launched a new drink which is a sugar-free tea called 蕃爽麗茶 to cater the healthy lifestyle of Hong Kong people.

4. Why don’t Yakult develop a new product with other flavor?

Answer: Until now, Yakult will not consider providing more new products as the production lines of original and Yakult LT have already saturated. Their production capacity is around one million bottle per day. Hong Kong Yakult factory does not have enough places to launch more production line as land limitation. So, Yakult only can product two products. Also, there are not strong rivals of Yakult in Hong Kong, unlike Singapore, where need to introduce different flavors to compete with other competitors in the market.

5. Yakult can keep longer than in the past.  What is the reason behind?

Answer: Yakult has done several ways to maintain the quality of its products. First, once the Yakult are produced, they will be refrigerated in the freezer in order to prevent it from going bad under warm temperature. Also, the Yakult Company supervises the super market to store their product in the freezer too. If super market does not follow to do the procedure, Yakult Company will stop supplying the products. This issue can make sure the customers can buy the good quality product. If the products in super market are overdue, they will be replaced by fresh products. This is one of the after sale service of Yakult Company.  Besides, Yakult Company has two subsidiaries centers which are responsible to distribute the product to whole Hong Kong stores or super markets. The two subsidiaries centers are located in Shatin and Kwan Tong respectively. Kwan Tong’ center is responsible for distributing the product to East Kowloon and Hong Kong Island while Shatin’s center is responsible for New Territories. Each day, Yakult Company will assign a staff to these two centers to check the expiry date of the product. If the products are overdue, they will be returned to main company and destroyed. At the same time, visiting these two centers can help to estimate the demand of Yakult milk by checking the sale information in the distribution center. Therefore, it can help planning of production of milk so as to maintain the sufficient supply of milk in the market.

6. As the customer demand of mainlander increases, how do Yakult control its production process efficiently?

Answer: Today Yakult investigate the important steps which ensure that they deliver the highest quality products to the customers. The Yakult manufacturing has strict procedures in place to guarantee that the quality of the products is never compromised. Yakult’s International Organization for Standardization products and services how their products and services meet the highest international food manufacturing standards. The policies and procedures are also independently audited as regular part of the accreditation process. Testing at the on-site quality control area ensures that every bottle of Yakult and Yakult light contain 6.5 billion probiotic bacteria; the unique Lactobacillus casei strain and also guarantee a product of the highest integrity. The commitment to quality extends beyond the manufacturing facility through each stage of the distribution process to stores, ensuring the cold chain to stores is uninterrupted. In practical term this mean the temperature in the Yakult refrigerated vans and transport delivery vehicles is below 4 ℃. Yakult staffs are committed to giving the best service possible. Their highly trained sale team work at supermarket level to ensure that product is not out of date or damaged and the Yakult fridges are clean. These are all vital steps in Yakult quality process. Therefore, they can ensure the quality of product during the manufacturing and transportation.

7. How do you forecast the market demand under the condition of decentralized sales in numerous distribution networks?

Answer: To forecast the demand and manage the production in Hong Kong, there are more than one hundred employees going to the retail stores around Hong Kong to collect data of the sales. Then, the data about demand collected and integrated to help the company decide how many bottles of Yakult to be produced. Besides, the weather information and the past demand record would also help in forecasting the market demand.

10.   To cope with the huge demand from mainland China, do you consider making some new changes in your logistics/ distribution network, such as providing online purchase to mainland people?

Answer: Yakult has already had some production plants in Guangzhou, Tianjin etc. There is not any intention to provide online purchase because Hong Kong’s product supply for Hong Kong and Macau. The delivery time is another important factor to consider because Yakult cannot be stored for a long time.

TAL Visit Questions

1.      What is your future plan for developing new technologies?

As TAL Group now offer nine technologies for customers, they provide people different functions and comfort. For example, the Dot.TAL® technology which can against bacteria and mold growth on clothers prevent unpleasant odors. Another is technology is  EZCOOL™, it is a moisture treatmetn and allows the garments to dry twice as fast as a normal garment. It also helps to be anti-wrinkled. Then the SofTAL® Wool technology makes the 100% wool to be more smooth, washable and dryable . Although wool garments after washed several times, they are without the headaches of shrinkage or felting. Other technologies like nano technology, DriXpert ®, Emboss and so on. They all have offered different comfort and function to people. As you know, developing a new technology is not easy. However, they will keep investing our research and development and hope to provide more functionality and comfort to their customers.

2.      As TAL has a deep understanding on the customer preference and product design, will TAL consider the possibilities to transfer its position from manufacturer/ vendor to retailer, such as taking the advantage of the internet coverage and trend of online shopping, to become ab online retailer to sell your own products?

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5.      Will TAL consider any merging & acquisition to expand the business?

Question 2 is about vertical integration and question 3 is about horizontal integration, the answer is quite similar, therefore, we think it is better for us to combined it.

Whether TAL will or will not integrate vertically or horizontally is heavily depends on their company objective. In the visit, the manager emphasis that they want to mantain their current position as a innofacturer rather than reposition TAL. There are several reasons behind.

Firstly, TAL needs to consider their relationship with their clients. If TAL chooses to integrate forward (e.g. open a TAL retail store), then the clients now they are serving will become their competitors because they are selling similar products, therefore, it is doubtful that whether their clients will still order clothes from TAL. To sum up, if TAL integrate forward, there will be a risk of losing their current customers.

Secondly, although TAL has advantage on knowing the customer preferences, there are still some aspects TAL is inexperience with if TAL decided to transfer its position from manufacturer/ vendor to manufacturer plus retailer. For example, TAL needs to think about the marketing strategies on how to promote their products to end customers, but not the retailers, this could be a different strategies. Besides, brand name is quite important in the clothing industry, although TAL is famous among the clothing industries, it does not famous among the end customers, building up brand name to end customers is also an aspect it does not familiar with.

3.      Can TAL explore the opportunity of “Total customization”, such that having a website allowing individual customers to design their own clothing, to create a new business opportunity.

TAL is now the leading producer of innovative clothes around the world. It will manufacture garments according to their customers’ requirements such as the material, style and fuction they want. They have around thirty partners and they are well-known brands like Coldwater Greek, Thomas Pink, JCPenny, Callaway and so on. The customers have high loyalty to the TAL Group because they are not only providing the manufacturing service but also the demand forecasting service to help them predict how many garments should be produced and stored in the warehouse. For example, the dot to dot ?

So, at this monment TAL’s business model is B2B, not B2C. To achieve B2C, it is hard for TAL to be completely customermized and start up in the nearly future as they need resources, time and cost. They are now enjoy the stage, be a manufacturer of innovative clothes and focus on the role to offer the best service to their customers. 

4.      How does TAL get involved in corporate social responsibility?

TAL bears its corporate social responsibility by introducing the following three methods.

Firstly, as TAL need to use plenty of water in their innovation and testing procedures and it will definitly create water wastage, therefore, it has taken some methods to reduce their water wastage. These includes waste water treatment, recycling for flushing, landscaping irrigayion, and water scrubbers for exhaust emission management, and heat exchangers that recover energy from steam to heat domestic water. Originally, TAL aims at reducing their water intensity by 15% by the end of 2014 compared to the 2011 baseline. The result is very enouraging when these measures take into account, TAL not only achieved its target, the actual number is much higher than what TAL wants to achieved, it has reduced their water intensity by 27.5% by 2014 in Quater 3 already. Those water saved by TAL is equivalent to 235 standard swimming pool!

Secondly, when producing clothing such as shirts and treasures and testing the products, it is unavoidably that there will be some unused paper, cardboard, plastics, cans, textile cones and used drums. TAL will recycle those unused materials rather than just throw it away.

Thirdly, TAL has tried to minimize the greenhouse gas (known as GHG) generated during the manufacturing process. TAL aims at reducing their GHG intensity by 21% by the end of 2014 compared to the 2009 baseline. The actual outcome is that TAL has already reduced 24% GHG by 2014 Quarter 3.

Lastly, TAL voluntarily controls their kitchen exhaust emissions from their workers’ canteens in order to create less air pollution. Not many industrialists will take this into consideration.

6.      Why does not TAL produce material to get full control of its value chain?

Producing material involves professional knowledge and experience, it is not learned or imitated for a short period, let along producing the high quality material as TAL required. It is a high risk to get full control of the supply chain, be a material manufacturer. So it is not a goal for TAL at this stage and it has its own suppliers.

7.      As we know that ERP system is a sophisticated software and involved huge capital investment.  Has TAL encountered any difficulties and hurdles when TAL initially adopted VMI system?

ERP system is a sophisticated software and involved huge capital investment, therefore, TAL has set up a prodessional team for enhancing the EPR system and for answering and helping the clients to solve the problems they have encounted when using the EPR system.

8.      We all know that TAL has been using IT to gain a big success.  However, other companies are likely to follow the same strategies to succeed by using the similar IT systems.  How could you continuously maintain your market share and stay competitive?

Firstly, the cost (including both money and time) for developing similar IT system is quite high, not many companies can afford to pay such a large capital. The overall system integration had cost US$10 million (including system design, software licenses and support), involving 30 people working full-time in the IT core team, as well as a cohort of non-core members from different departments and factory locations. Besides, TAL starts to develop their technology in 1980s, it takes around 20 years to get the system to be mature enough. Therefore, in terms of time and money, it is hard for other companies to follow the same strategies to succeed by using the similiar IT systems.

Secondly, the source code of the technology is being kept safely inside TAL. In the visit, the manager reviews that only specific persons can have the rigth to access to the source code, therefore, it is hard to steal it and copy it.

9.      How does TAL face the trade-off between high innovation cost and the benefits of competitive advantage?

Actually, it is quite hard for TAL to quantify the marginal innovation cost and marginal benefits of the competitive advantage. For TAL, they do not just focus on the relationship on innovation cost and competitive advantage, they also focus on other four aspects including supply chain capabilities, sustainability and value-added services.