1.0 Introduction: Company and Contextual Background
As a very large import-dependent country, Singapore each imports millions of manufactured goods from its trade partners. Currently, China remains as Singapore’s largest trading partner, both in terms of the largest importing and exporting country. Unicorn Electronics (Shenzhen) Co. Ltd., is one of China’s top 10 LCD manufacturers. Unicorn is incorporated in Hongkong in 1983. It first started LCD, EOL and MOL business. Lately in 1998, it established its first LCD production front line. Zastron, one of the largest electronic manufacturing company, outsourced the LCD production services to Unicorn in 2011. From then, Unicorn gradually becomes one of the China’s largest LCD manufacturers. It now produces LCD products for customers from Telecommunication, Automotive, Industrial/Customer electronics, and Office Automation industries. It also expands its production capacities by introducing more production line and acquires more manufacturing orders even in TFT production. In the automotive industry, for instance, Chevrolet Singapore is importing Unicorn’s 1/94 duty ASTN LCD screen in its vehicles. Hornet Group is currently Singapore’s largest sourcing company. It is now specialized in product sourcing, manufacturing and importing from China and nearby countries. It was founded in 2005. Hornet Group is not targeting at importing low-end manufacturing spare parts or goods. It eyes more on importing high-quality products or outsourcing manufacturing products to China. There is a very high possibility for Hornet Group to import Unicorn’s products largely because the outsourcing product from Unicorn is highly complying with international standards and cheap in price.
In this report, relevant logistical, transportation, documentation, packaging and containerization considerations will be especially discussed and evaluated. Particularly the logistics considerations for onward delivery from Singapore Ports to a warehouse in the Mayfield Industrial Area will also be addressed in details.
1.1 The product
LCD manufacturing products are extremely important spare parts for many final electronic products. For instance, electronic watches, TV screens, temperature control panel in cars, CD display panels are requiring LCD screens(Jeong, Sim, Jeong&Kim, 2002). Unicorn’s LCD screens are reputed for high quality and competitive prices. Hence, its products are favored by Singapore’s importing companies and outsourcing agents.
1.2 Transportation and Shipping
As LCD manufacturing products are imported from Unicorn Electronics, the oversea supplier is identified to be Unicorn. The product will also be loaded in Shenzhen port terminals. There are three major port terminals in Shenzhen, including Yiantian, Chiwan and shekou terminal(Wang& Slack, 2000). Currently, the port of Shenzhen is ranked the 4th busiest port in the world. It is also the fastest growing container ports in the world. The port is home of more than 40 shipping companies. It now has over 130 international routes(Wang& Slack, 2000). 10 routes are directly linked to Singapore ports. Shekou terminal is chosen as the overseas terminal for importing unicorn’s LCD products.
Singapore International Container Terminals Pty Ltd (SICTL) is located on Sirius Road, Botany. The major function of Port Botany is dominated by exporting or importing containerized manufacturing products. There are two terminals in the port which are designed for containerization. However, in this report, the Northern container terminal will be chosen as the port terminal to unload Unicorn’s imported LCD products. The Northern Container terminal was created in 1979. it is now leased and operated by the Patrick Corporation. The Southern Terminal cannot compete with the Northern container terminal both in terms of size and capacity.
2.0 Packaging and Material Handling
In the packing and material handling process, the most important part is certainly the labeling. Most countries have specific requirement for product labeling. It will provide relevant information for customers to learn about the products(Garvic, 2003).. It may include the manufacturing country, size, material and other general production information. Warning labels and user instructions should also be depicted on the package of the products. Singapore government also requires the imported goods to have special marks, such as compliance mark, if the products are meeting legal safety requirements. This is a general product labeling requirement applied to a wide range of imported manufacturing products, including Unicorn’s LCD screens.
Moreover, packaging is defined as all products are made of materials or used for the containment, protection, handling, delivery and preservation from the producer to customer(Hellström& Saghir, 2007). There are basically three types of packaging method, including primary packaging, secondary packaging and tertiary packaging. Both primary packaging and tertiary packaging are important in the shipping process. The product labeling should be complying with Singapore’s regulations as the above-mentioned in the primary packaging. In the primary packaging, the major purpose is to protect the products inside. LCD products are high-tech goods so it is highly necessary to make sure that the primary packing can provide essential of the goods inside. Besides, the primary packaging of the LCD products should allow customers to track relevant information such as country of origin. The tertiary packaging should also be in accordance of both China’s and Singapore’s requirement for transportation. It is crucial for facilitating an effective material handling process. By definition, material handling is concerned with the movement, storage and control of materials in process. There are three major steps in this process, including manual, mechanized and automated (Liu&Luo, 2011).. The major purpose of this process is to reduce production cost, maintain or improve product quality, decrease the damages and control the inventory.
3.0 Order and Supplier Management
3.1 Order management
Order Management system is a complex system that allows customers to capture the process of new order. From the supplier’s perspective, order management system process customer’s moves and changes, price quotes and orders, validated orders, etc. It also has extra functionality such as providing order template documents, and processing partner applications. Hornet Group can access Unicorn’s portal to acquire importing services and add them into its existing account. The order management system will immediately verify and process the order based on its product catalog. It is in synchronization with the product control center of Unicorn. The order will be decomposed and then send to Unicorn’s inventory management system. The inventory management system will then allocate the stored LCD screens and other resources for packaging and other business activities. The order management submits the order to an activation system. The service activation system then send the activation data back to the order management system. Lastly, the order management system will further notify the simulated billing system that new order has been made. The service will thereafter be activated. The service activation system will also notify subscribers about the new subscription of the service. Therefore, it can be observed that order management system generally has two function.
First, in the order and entry validation process, the order management system capture the order details such as package, quality control planning, service address, customer accounts, etc. The orders will also be validated when other relevant data is entering such as customer’s information. The order management system will also guide customers to validate the order through product configuration process. Second, in the order decomposition process, Hornet’s order can be decomposed into one or more service requests. For instance, if Hornet is making both VoIP and web order, two service requires will be sent to the provisioning system separately.
Through advanced order management system, Unicorn is able to eliminate quote and order errors in the quote-to-order-cash business process. It will also concern the latest pricing and discount rates so that Hornet may increase its order size due to effective upsell management. Moreover, in the order system, there is also an automated shipping process incorporated. It is integrated with NetSuite’s out-of-the-box service and collaborated with UPS, FedEx and other shipping agents(Fabre, Kessman&Forjindam, 2011). .
3.2 Supplier delivery management
3.21 On-time delivery from Shenzhen port to Port to SICTL
From Hornet’s side, Unicorn should also act in accordance to supplier delivery management rules. Hornet requires Unicorn to provide 100% on-time delivery performance with correct quantity and contracted pricing. Usually the communication methods between Hornet and its supplier is through EDI, Web EDI, etc. In the delivery process, Unicorn has to review the orders weekly and reconfirm its ability to fulfill the order requirements for timing and quantity with usually two days of the receipt of the order. Very often, there may be the risk of having a missed delivery. Missed delivery is defined as the imported products are received one day before or after the due date. If Unicorn is expecting any missed delivery, it should notify Hornet’s material scheduler immediate, who shall be responsible for rearranging for expedited delivery at the expense of supplier. In the supplier management, Unicorn as the supplier should be sole responsible for any discrepancies or missed delivery in the transportation process.
In addition, Unicorn should also be responsible for supplier packaging, labels, and associated documents required to meet the standards communicated and agreed by both parties. Neither quantity shipped nor the delivery time should vary unless written consent is obtained from the Singapore importer. Very similar to missed delivery, any over-shipments or early shipments are also subject to rejection or return to Unicorn at the supplier’s expenses. Moreover, Unicorn also needs to coordinated all expedited shipment with Hornet. Most importantly, any changes to the coordinated schedule must be approved by Hornet prior to shipment and with written consent. Authorized Excess Transportation Costs or AETCs must be provided by Hornet prior to shipment. Shipments with accurate and precise AETC number will be resulted in debit to the supplier. Supplier’s deliver performance should be tracked and updated to Hornet frequently.Suppliers are required to respond within 24 hours, and are expected to cooperate in identifying the causes of missed deliveries and implementing effective corrective actions. Unicorn may be charged back for costs and expenses incurred as a result of any missed delivery or line shutdown.
3.22 Capacity
Hornet and Unicorn will work together to protect the supply chain by assuring the process which has sufficient capacity to meet the order requirements. Usually the standard weekly requirement and maximum weekly requirement are standards to make sure that the delivered quantity can meet Hornet’s expectation and requirements. Unicorn should demonstrate its production capacity in the form of run-at-rate on-site in the manufacturing process. The requirement for run-at-rate is also provided by Hornet. It is important as any errors in quantity of the LCD products may result in enormous economic loss from the customer’s perspective. And also, any reduction in capacity commitment will also require Hornet’s written consent. Unicorn may re-allocate any equipment, personnel, facilities, raw materials, etc, but it is necessary for the supplier to receive written approval from the purchasing representative from Hornet.
3.23 Suspension of production at Supplier
Both during the production and pre-production period, Unicorn may be encountering critical problems such as shortage of raw materials, financial inputs or workers on strike. These problems may potential threaten the delivery and transportation process. However, authorization must be granted by Hornet before stopping production for five days or more while any requirements are open for delivery. In extreme cases, for instance, Unicorn is suffering for bankruptcy. It has to notify Hornet as early as possible, at least two weeks beforehand.
4.0 Supplier Quality Requirements
4.1 Quality management system
Suppliers are expected to implement and operate a total quality management system that effectively lowers the defect rates. In fact, Hornet is expecting defect-free LCD products from Unicorn. Basically in the outsourcing manufacturing LCD products, suppliers should fulfill the commitment of producing zero defects and 100% on-time delivery. Unicorn shall be fully responsible for their product quality and delivery.
Moreover, Unicorn’s LCD products have to be certified by at least one of the following international quality control standards, including ISO 9001, IATF 16949, ISO 13485 and AS 9100(Hoyle,2017). Besides, additional certification may also be necessary to be presented to Hornet according to the order requirement. It may include ISO 14001 Environmental management, ISO 26262 Functional Safety Management, ITAR and others. Unicorn should also provide the most updated or renewed certification to Hornet.
4.2 Packaging, Material handling and Traceability
4.21 Packaging
The packaging of LCD products and display screens may be comprised of two parts, including original factory box and recommended display box for shipment. Both top and bottom filters, right and left filters, recommended display box for shipment. Bottom filters are first installed to make sure that the labels of LCD display facing up. It will allow customers to check relevant information about the products, such as country of origin. The top filter on the LCD display with labels up and arrows pointing to the front of the box. It is necessary to make sure that LCD product is firmly attached to the top and left filters so that it can not be easily moved during the shipping. The top of the original factory box is also fixed securely with shipment tape. Very similarly, the display product is also fixed by right and left filter with the arrows indicating the front.
For international shipping, Recommended Display Box is also necessary to shipping LCD display products or returning them back to suppliers. As compared with original factory box packaging, recommended display box will sandwich the product with two generic foam pieces. The back of the LCD play goes into the foam piece with an indentation of the stand part. The boxes and foam pieces are applicable to a large variety of LCD products. Filters and the foam will make sure that the stand side down during the transportation. Similarly, the Recommended Display Box is also taped with the shipment tape securely.
4.22 Material Handling
LCD display products should be handled with good practices. For instance, as the units differ in size and weight, any products larger than 28” should require two or more persons to carry. It will potentially avoid the injuries caused by moving the products. Usually it is very difficult to define what is an average weight of the LCD products, so it is highly important to estimate the size before lifting. Moreover, it is also necessary to make sure that the screen of the LCD display is facing towards the body. It will avoid collision or other potential dangers which may scribe or destroy the screen. Containers should be loaded in an organized manner. For instance, large display screens are placed at the bottom whereas small ones on the top. it will reduce the potential injuries at the unloading point. The falling LCD products may hit the porters and lead to injuries. It is also important to distribute the weight of the LCD products evenly to avoid problems when using the pallet truck or vehicle loading.
4.23 Traceability
Unicorn shall establish and maintain an effective traceability system that will ensure the final components and subcomponents used in the production which can be traced to the manufacturing date, shift, tool number, cavity and respective inspection results. Lot number traceability must be identified on the shipping label and any accompanying data, such as SPC, PpK, etc .(Thakur&Hurburgh, 2009). Moreover, the Unicorn should also fulfill FIFO (First in First out) inventory requirements. It means that Unicorn should have an effectively inventory control to make sure that the shipments are received in a sequential order. The product labels and package labels should also be approved by Hornet.
5.0 Communication within the supply Chain
While shipping the LCD products from Shenzhen port to Singapore, it is also very important for both suppliers and customers to establish effective communications. The manual handling practices should be clearly instructed to Hornet by Unicorn. For instance, the mercury contents inside the LCD display is highly poisonous. It is necessary to inform customers about how to handle the products up and down in the transportation. Due to the hazardous nature of the products, as the aforementioned, requirements should be clearly specified about the containerization, packaging and handling. The detail requirement should include both the responsibility and provision of bulking-up containers.
Apart from the transportation issues, supplier and importer should also be aware of the environment issues which are related to the materials in the LCD products. For instance, the raw materials of producing the LCD should be recyclable materials. Unicorn and the importers should also specify clearly about the contents of the products in the documentation. This may include the location and volume of the hazardous components. The information is important for importers to learn about materials and contents used in the manufacturing process.
Furthermore, the receipt of the delivered goods is not the end of the service. Importers and retailers should also be informed about how process or handle the LCD wastes(Li, Gao, Duan&Liu, 2009). The redundant or waste LCD screens should also be transported back to producers or at least learn about the marketing information of recycling the unused products. Besides recycling, importers and retailers can also learn about possibilities for the redundant or waste LCD to be reused either in house or re-use facilities. Both the reuse and recycle process can generate positive social externalities and benefits.
6.0 Logistics considerations of Onward delivery
When LCD products are unloaded and transported from SICTL to Hornet’s warehouse in the Mayfield Industrial Area, there are still many logistics considerations. First, it is important to make sure that porters and warehouse workers should fully make sure that they are working within their capabilities. As the aforementioned, there is no specified average weight of the LCD products, the porters should be careful and avoid the risk of being hit by the falling LCD screens. Besides, units should face glass to glass with very thick cardboard. It works as a protective covering to avoid the screens being damaged.
When the products are transported to the Hornet’s warehouse, it is important to make sure that the products are placed in an orderly manner. The heavier and large LCD display screens should be placed at the bottom and the smaller on the top. If pallet trucks are used int he transportation process, the height of the products should not be be very high so that it may have the risk of toppling over during the transit and unloading in the warehouse. Shrink wrapped pallets should have shrink wrap at each separate level. It will effectively enhance stability during the transit and unloading process.
Moreover, if the original factory boxes or recommended boxes are no longer available during the international delivery, warehouse workers for Hornet should apply Robust packaging to store the LCD products. As an importer, Hornet also has to do so as the products may lately be redistributed to retailers and other customers in Singapore. Robust packaging placed around LCD screens will prevent potential transit from the Hornet’s warehouse to elsewhere in Singapore.
LCD screens protected with the Robust packaging may still be subjected to shock when they are hitting at hard surface by accident. Hence, the re-packaging process itself should not only avoid to protect the units but also make sure that the shocks will not adversely affect the inner components of the LCD products.
6.0 Conclusion and Recommendation
Generally speaking, according to this supply management report, it is feasible for Hornet or perhaps for other large importing agents to effectively import LCD products, screens and spare parts from China to Singapore. It is very meaningful as China is now Singapore’s largest trading partner. There are thousands of LCD manufacturing companies in China which produce high-end LCD products for not only Singapore but the world. As these Chinese manufacturers are not directly producing the final products, a huge portion of the profit margins could still be enjoyed by the importing countries. Unicorn Electronics, Shenzhen, is producing LCD components for Casio, BWM, Sony and many other large Multi-national companies. In other words, the brand reputation for outsourcing manufacturing LCD products is rather trustworthy. It is advisable for Hornet Group to import LCD electronic components and display screens directly from this company. There are two major steps in the transportation of China’s LCD products. One is from Port Shenzhen to SICTL. The other is the onward delivery from SICTL to the warehouse of Hornet in the industrial area. In the first step, importers should make sure that the supplier has effective order management system, bear the responsibility of delivering the goods, and meet the international quality control standards. Besides, packaging, material handling and traceability system should also be taken special care. Last, in the onward delivery, warehouse workers should be careful about the re-packaging process during both the transit and unloading processes.
During the distribution process, it is recommendable for suppliers, importers and other stakeholders to also be concerned about the various environmental issues. For instance, the mercury contents inside the LCD screens may harm the environment if they are not properly handled, transported or unloaded. The redundant or waste LCD screens should either be reused or recycled. In this sense, Unicorn should work with Hornet Group and instruct both importers and retailers about how to reuse or recycle the unused products.
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