LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Information Technology in Supply Chain

PSA: THE WORLDS PORT OF CALL

Disusun oleh:
Arya A. Sembiring

1506699333

Erico Septian

1506772725

Martina Ratna Uli 1506773034

Nurhayati Caesaria
Nico Juanto

1506773204

1506773192

MAGISTER MANAJEMEN
FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS INDONESIA
2016

BACKGROUND
The Port of Singapore Authority was founded on April 1, 1964 to
administer the Port of Singapore, provide port services and facilities,
regulate and control navigation of port waters, and promote the use of the
port by all members of the shipping community. On October 1, 1997, as
the first step in its privatization, the Port of Singapore Authority was
restructured into two private entities:
(1)PSA Corporation (PSA), a wholly owned subsidiary of Temasek
Holdings, operated the port terminals; and
(2)Maritime and Port Authority, a statutory board, served as the
regulatory body responsible for port and maritime affairs.
PSAs Container Terminals Division, headed by deputy group
president (Terminals), Ng Chee Keong, operated the companys four
container terminals in Singapore: Tanjong Pagar, Keppel, Brani, and Pasir
Panjang. The International Business Division, headed by deputy group
president (International), Goon Kok Loon, developed and operated
international ports. In true Singapore style, these two broad business
segments were further subdivided into a network of independent
businesses, each focusing on a particular niche. In May 2000, PSA spun
out its IT capabilities into a wholly owned subsidiary, Portnet.com Ltd.,
with Robert Yap as managing director.
Fundamentally, Singapores strategy was to leverage its natural
advantage of strategic location to become a global business hub, with
limited land, limited sea space, and a limited number of people. PSA
executives viewed this clear focus by the country as crucial for the
companys growth and success.
PROBLEM IDENTIFICATION
Competition to control worldwide shipping and logistics was fierce.
Niche markets that had looked unassailable a few years back were
floundering. Many believed that the Singapore Miracle could have been
achieved only in Singapore. They argued that it would be hard for a

Singapore-grown company. With these several conditions, PSA is faced in

2 problems:
1. The challenges of globalization in transforming PSA from a
Singapore success to a global success & from a port operator to a
global software and logistics services business.
2. The impacts of PSA privatization.
THEORY
Information is the driver that serves as the glue to create a coordinated
supply chain. Information used at all phases of decision making: strategic,
planning,

and

operational.

Information

must

have

the

following

characteristics to be useful:

Accurate
Accessible in a timely manner
Information must be of the right kind

Information provides the basis for supply chain management decisions

Inventory : demand patterns, carrying costs, stockout costs,

ordering costs
Transportation : costs, customer locations, shipment sizes
Facility : location, capacity, schedules of a facility; need
information

about

trade-offs

between

flexibility

and

efficiency, demand, exchange rates, taxes, etc.

Effective use of IT in the supply chain can have a significant impact on
supply chain performance. Relevant information available throughout the
supply chain allows managers to make decisions that take into account all
stages of the supply chain. Allows performance to be optimized for the
entire supply chain, not just for one stage leads to higher performance
for each individual firm in the supply chain.
The Supply Chain Macro Processes

Customer Relationship Management (CRM)

Internal Supply Chain Management (ISCM)
Supplier Relationship Management (SRM)
Plus: Transaction Management Foundation

The processes that take place between an enterprise and its customers
downstream in the supply chain. Key processes:

Marketing
Selling
Order management
Call/Service center

Earlier systems focused on automation of simple transactions and the

creation of an integrated method of storing and viewing data across the
enterprise. Real value of the Transaction Management Foundation (TMF)
exists only if decision making is improved. The extent to which the TMF
enables integration across the three macro processes determines its
value.
At the highest level, the three SCM macro processes will continue to drive
the evolution of enterprise software. Software focused on the macro
processes will become a larger share of the total enterprise software
market and the firms producing this software will become more
successful. Functionality, the ability to integrate across macro processes,
and the strength of their ecosystems, will be keys to success.

CASE ANALYSIS
The port of Singapore is the second busiest port since 1982 with a high
efficiency. Ships from a network of 250 shipping lines berthed at
Singapore linked the country to 600 ports worldwide. Typically, a third- or
fourth- generation container ship carrying up to 7,000 containers on board
will discharge about 2,000 of these containers and load up say another
1,500, all within 24 hours. Most of the containers are distributed to and
collected from 40 to 50 regional ports by feeder ships. To accommodate
these demand, PSA implementing the technology (PORTNET) as operating
systems to achieve its goal.

The Portnet.com suite of products, available in early 2001, included:

1. P-Commerce was Portnet.coms flagship suite of products built
upon the PORTNET software program used in Singapore. By using PCommerce, port and shipping communities could interact with port
operators to schedule services and submit documents.
2. eMart was a global Internet on-line marketplace and exchange for
selling and auctioning containers, slots, and other assets. Its two
main software applications, BoxChange and SlotMax.
3. eSolutions commercialized the CITOS, port operating systems for
the global port and shipping communities and GEMS, an e-business
solution that commercialized its container routing, tracking, and
inventory management technology.
4. Infohub, a port and shipping community portal, provided real-time
and reference data (e.g., vessel schedules, directory) for the
shipping community.
PSAs core terminal operations were broken into three key processes. The
pre-arrival process for vessels and trucks covered administrative activities
that took place prior to a ship arriving in port or a truck arriving to
transport containers. The vessel loading, unloading, and container storage
processes involved loading and unloading ships and storing and managing
containers awaiting transshipment. The Flow-Through Gate process
involved loading and unloading trucks.
1. Pre-Arrival Process for Vessels and Trucks
Twelve hours before a ship arrived in Singapore, details about the
arriving vessel (its capacity, sailing schedule, etc.), the cargo and
container (e.g., load list, special requirements, customs declaration),
and the booking (e.g., facilities needed for the delivery of cargo,
berth requirements) were forwarded to PSA through its proprietary
software PORTNET. Pre-arrival information was fed to CITOS (the
container management system) to activate a set of processes that
minimized waiting time and achieved optimal deployment of port
space and resources.

2. Vessel Loading, Unloading, and Yard Storage

Instructions from the system were transmitted through real-time
wireless data systems to four expert systems that helped operate
cranes and vehicles, provided real-time operator information, and
enabled online management reporting and decision support. PSA
cranes were state-of-the-art with computers in the cabin, anti-sway
mechanisms, a higher trolley, and faster speeds. For safety reasons,
human operators handled quay cranes. But yard cranes, in the
newest terminal at Pasir Panjang, were operated via wireless remote
control.

3. Flow-Through Gate Process

When a truck arrived at the gate of a port terminal to collect or
deliver a container, It automatically registered information from the
trucks transponder; read container identification numbers painted
on the upper right-hand corner, recorded container weight, matched
information about cargoes, containers, consignees, and customs
submitted earlier through PORTNET, and was assigned a location
all within less than 25 seconds. On reaching its destination, the
container could be loaded onto or off the truck by automated yard
cranes.
Since implementing this technology, PSA set a world record in vessel
loading and unloading. On February 8, 2000, the Ever Growth, a ship
owned by the Evergreen Shipping Line, berthed at PSAs Pasir Panjang
Terminal and unloaded 2,001 containers in 9 hours 51 minutes. On April
25, 2000, PSA loaded and unloaded 243 containers per hour on the NYK
Line vessel Andromeda. In 2000, PSA achieved vessel unloading rates of
above 200 containers per hour on eight occasions. By comparison, few
ports in the world had ever surpassed the 100 containers-per-hour mark.

To strengthen its business, PSA launched a new services business called

PortCare in 1999. These specialized service offerings generated new
revenue streams.
1. Keppel Distripark provided logistics, distribution, and inventory
management for regional distribution, cargo consolidation and
breakdown,

and

cargo

sampling,

surveying,

remarking,

and

repacking.
2. PSA BoxCare provided repair, servicing, maintenance, cleaning,
painting, and inventory management for containers.
3. PSA ReeferCare provided specialized care for perishable goods.
4. PSA ProCare provided specialized care for unmarked and out-ofgauge cargo that did not fit within standard containers.
5. PSA ChemCare provided safe handling of hazardous cargo,
including labeling, shipping, inspection, storing, monitoring, and
consulting.
To enhance the staff and labours capabilities to operating the systems,
PSA implemented a number of training programs over the year to instill
PSAs

core

valuescustomer

focus,

teamwork,

innovation,

and

communication. PSA grew transshipment volume from 1 million TEUs in

1983 to over 17 million TEUs in 2000 while reducing the number of staff
from 12,000 to 7,000.
In line with privatization strategy held by Singapore government whereby
companies would pursue an IPO as soon as it was deemed that they could
attract shareholders and raise capital to support a growth strategy, PSA
announced to take the company public to achieve its lofty goals and to
extend PSAs commercial flexibility. In July 2000, PSA also issued US$500
million bonds to be sold internationally and S$600 million bonds to be sold
locally. The net proceeds of the bond issue would be used to support
capital improvements and to return capital to PSAs existing shareholders.
In early December 2000, PSA returned approximately $3 billion worth of
its non-core property assets to its parent company, government-owned
Temasek Holdings. By the transfer of assets, PSA can focus its energy and

resources on growing its core business, on providing world-class

integrated port and logistics services both in Singapore and globally, and
on better meeting its customers requirements through increased
application of technology and e-commerce solutions, such as the
PORTNET system.

RECOMMENDATION
To strengthen its position in regional transshipment, PSA should acquire or
had joint venture with another ports around so that PSA could going global
widely. Moreover, PSA should build the capability and competitiveness of
its staffs and labors, with training, coaching and seminars about the new
technology to get the cost and time efficiency that can be applied in PSA.