Speeches and Presentations

SCED's speech at GS1 Hong Kong Supply Chain Management Excellence Summit 2013

Following is the opening address by the Secretary for Commerce and Economic Development, Mr Gregory So, at The 13th GS1 Hong Kong Supply Chain Management Excellence Summit 2013 today (November 8):

Joseph (Mr Joseph Phi, Chairman of GS1 Hong Kong), Anna (Ms Anna Lin, Chief Executive of GS1 Hong Kong), distinguished guests, ladies and gentlemen,

Good morning. It gives me great pleasure to join you all today at the 13th GS1 Hong Kong Supply Chain Management Excellence Summit. I would like to thank GS1 Hong Kong for its zeal in continuously promoting technological adoption and knowledge exchange in supply chain management.

Trading and logistics, being the largest among the four pillar industries, is a key driving force for the economic growth of Hong Kong, providing impetus to the growth of other sectors and creating employment. Employing over 770 000 people, the industry generated a value added of HK$485.4 billion in 2011, accounting for 25.5 per cent of Hong Kong's GDP. It is therefore very important for this key sector to maintain its competitiveness.

Endowed with a strategic geographical location and world-class transport and logistics infrastructure, Hong Kong is a global trade and logistics hub. Hong Kong is situated in close proximity to China's most economically vibrant Guangdong Province, with half of the world's population in reach within a five-hour flight. Our airport is the world's busiest international air cargo airport, handling around 4.1 million tonnes of cargo annually. One of the world's busiest container ports with nine container terminals and 24 berths, Hong Kong handles over 23 million of containers annually. With these advantages, Hong Kong is a leading centre for the movement of goods and an ideal converging point for freight-forwarding and logistics business.

However, there is no room for complacency. Apart from the increasing competition from nearby cities, our trading and logistics industry is facing a number of challenges, such as growing customer expectations and rising logistics costs. To maintain our leading position, we must leverage on technology to further improve our supply chain performance and meet rising customer expectations.

The appropriate application of technology can greatly improve efficiency and enhance competitiveness. Technologies such as Radio Frequency Identification (RFID), inventory optimisation software and big data analytics make the entire supply chain more traceable, visible and integrated, thereby enhancing overall efficiency and effective management.

Let me illustrate this with a couple of examples. Since 2012, Hong Kong International Airport has been using RFID tags for baggage handling. Each day, our airport tags 70 000 items of baggage from more than 100 airlines. The majority of baggage arrivals are delivered to passengers within 20 minutes of the aircraft landing. Such an advanced baggage handling system is a good example on how technology can significantly enhance efficiency.

Another example is the e-Lock system of our Customs and Excise Department for streamlining the clearance of air-land and sea-land trans-shipments. After a cargo container is locked with an e-Lock, our customs officers can track it all the way using Global Positioning System (GPS) technologies. With e-Lock and GPS, we have created an efficient, secure and traceable customs clearance process, requiring less frequent cargo inspection at the land boundary control points, which may sometimes take two to three hours.

As we can see, identification technology like RFID is very useful in supply chain management. The latest development indicates that identification technologies are becoming increasingly intelligent, being able to "sense" their environment and communicate among themselves, leading to an emerging technology known as the Internet of Things. The Internet of Things will allow people and things to be connected anytime, anyplace, with anything and anyone. This will open up new frontiers for supply chain management and it has a vast potential. It will enhance supply chain visibility and allow easy identification of goods, and dramatically speed up transaction tracking, asset location and warehouse management.

Hong Kong has what it takes to be an early adopter of the Internet of Things. Hong Kong's telecommunication infrastructure is among the most sophisticated in the world, offering innovative and secure services at competitive prices. Our average peak Internet connection speed of 63.1 Mbps and average connection speed of 10.8 Mbps are among the fastest in the world. As of July this year, we have over 16.7 million mobile service subscribers, representing a penetration rate of 233 per cent. Furthermore, our Internet infrastructure is ready for IPv6 deployment, and this will provide sufficient address space for Internet connected devices. Such advantages provide an ideal environment for interconnection and interaction with all sorts of Internet-enabled devices, thus providing a favourable environment for the Internet of Things to flourish.

To help drive the development and adoption of the Internet of Things, the GS1 Hong Kong, with the support of the Innovation and Technology Commission and the Science Park, established the Hong Kong Internet of Things Centre of Excellence this April. The Centre features over 40 smart Internet of Things applications in five thematic zones, one of which relates to logistics.

In addition, the Hong Kong R&D Centre for Logistics and Supply Chain Management Enabling Technologies (LSCM) is also dedicated to fostering the development and promotion of logistics and supply chain related technologies. Up to May this year, the LSCM has already approved, via the Innovation and Technology Fund, 47 projects at a total project cost of HK$269 million. These will help increase the productivity and competitiveness of the logistics and supply chain industries in Hong Kong.

The Government is committed to fostering the continuous development of the trading and logistics industry and enhancing its competitiveness. To stay ahead of global competition, our industry will need to explore ways and leverage on appropriate technologies to enhance its supply chain performance, reduce overall logistics costs and cope with the increasing demand and expectation of customers. Through various initiatives and measures, the Government has been supporting the development and adoption of supply chain management related solutions and the application of related technologies like RFID and the Internet of Things. The theme of today's Summit, "Ride on Digital Tide to Optimise Supply Chain Value", echoes and coincides with the Government's commitment. I hope all of you will find today's summit a valuable and fruitful event, providing you with insight for the improvement of supply chain processes and enhancing your businesses.

Thank you.

Friday, November 8, 2013