Strategically located at the heart of Asia, Hong Kong has long been known as one of the world’s foremost logistics hubs. The shipping and logistics industries comprise one of Hong Kong’s four key business pillars. It contributes around 22% of Hong Kong’s GDP and employs 20% of its workforce.
But to stay competitive and stay at the front of the pack in the Asia Pacific logistics space, Hong Kong must keep on evolving its logistics capabilities. Digital technologies and data analytics can play a key role in transforming the supply chain to overcome the challenges we’ve seen in the past year, and other challenges to come.
A new Orange report, Real-Time Intelligence and the Future of Supply Chains, found that supply chains in 40% of multinational corporations (MNCs) have been overwhelmed by the fallout from the pandemic. As such, 83% of companies said they are now more aware of the risks associated with supply-chain disruption than they were a year ago.
Hong Kong has long been a hotbed of innovation and has the skills and knowledge to modernize traditional supply=chain competencies. Digital tools like artificial intelligence (AI) and machine learning (ML) can help transform the supply chain, improve predictability and agility, and make it more resilient.
Injecting intelligence into the supply chain
AI and ML learn continuously from the data in the supply chain to update automated systems dynamically. They help reduce the time needed to develop and deploy new process models, meaning supply-chain process management grows much faster and more efficiently. They also enable predictability in the supply chain, helping companies match supply to demand.
It’s something that Hong Kong will need to develop if it is to retain its position as a world-leading logistics hub. Having an understanding of demand levels and ways to adapt in the event of disruption is a powerful tool, and something AI and ML can offer.
Hyperautomation is another digital trend that will transform supply chains. It combines AI, ML and robotic process automation (RPA) to make supply chains more resilient. RPA automates the many repetitive tasks in the supply chain to reduce errors and free up human workers for more complex tasks.
Furthermore, RPA and AI complement other technologies to improve business decisions, analyze data and predict risk. Predictability is something that will be central to supply chain moving forward to minimize the potential for errors and make supply chains more efficient and resilient in general.
The supply chain of the future will be powered by data, enabling real-time visibility combined with highly accurate forecasts of future performance. A Harvard Business Review Analytics survey found that digitizing supplier data is a top priority for business leaders in 2021. However, our report found that just 45% of organizations are currently using real-time data insights to enable better decision making in their supply chains.
Hong Kong investing in the future of supply chain
It is hard to overstate the importance of digital technologies in ensuring that supply chains remain resilient. It is something that Hong Kong has recognized and responded to, with the city making logistics a priority in the aftermath of COVID-19 disruption. September 2020 saw the Hong Kong government allocate US$44.5 million to boost investment in technology in the logistics industry. According to Hong Kong Financial Secretary Paul Chan, this was to help “Maintain Hong Kong’s key, even leading, position in the global supply chain, capital flow and technology race.”
Logistics companies in Hong Kong need to realize the value in deploying AI and ML tools and using predictive intelligence and data analytics to make quicker, more accurate decisions. The end result of this is shorter times to get goods to consumers and improved overall productivity in the supply chain.
To help develop these capabilities, Hong Kong has also established five supply-chain digitalization R&D centers, such as the Logistics and Supply Chain MultiTech R&D Centre (LSCM). The LSCM has carried out over 160 supply-chain projects, jointly between industry, academia and the public sector, with USD$90 million backing from the Hong Kong Innovation and Technology Fund.
Focusing on the importance of real-time data in supply chain and using digital tools to exploit it can help Hong Kong take its logistics capabilities to the next level. Enabling transparency and visibility will drive the predictability required to stay resilient in the face of any future disruptions.
Read our exclusive research report on how multinationals are accelerating their digitalization, artificial intelligence (AI) and data analytics programs to solve urgent supply-chain challenges.
Edmund Yick is General Manager of Orange Business Services in Hong Kong and Taiwan. He is responsible for developing and managing the Orange Business Services portfolio of business solutions for multinational enterprises.
He has over 30 years of sales and management experience and is a Commerce and Business Administration graduate of the University of Toronto.