Management Information System in Container Services-North Port (MALAYSIA) Bhd

COMPANY OVERVIEW

Northport is Malaysia's largest operator of multi-purpose ports, handling 60% of the nation's trade. It is also Malaysia's pioneer port, bringing along with it 103 years of rich heritage in port dynamics.
81 shipping lines as well as 44 conventional and 502 container vessels made approximately 8,000 ship calls to Northport last year, providing services to 300 ports of call in major parts of the world.

Northport is a major hub port and an integral component of the transportation pipeline in the region. With increased connectivity to ports in China and the East Asia and increase in the spread of services linking US ports, the Mediterranean and Europe, Northport now offers more links to worldwide ports than any other port in Malaysia and has emerged as one of the most important hub Ports in the region. With growing demand for more sophisticated facilities rising from the surge in global trade, Northport beckons to offer viable solutions to shippers intending to maximize returns through their operational presence in this region.

The combined resources of its container and conventional terminals, namely CT1, CT2, CT3 and South point complements Northport's services and positions its users directly within the burgeoning boom of Malaysia's import and export hub fully supported by an elaborate network of infrastructure to further facilitate trade connections throughout the country and the region. The increased demand for our port services and facilities has been easily met since we maintain a supply-driven environment. Our ability to offer such an enlarged capacity has not only boosted the confidence of major shipping lines that are presently calling at Northport but others have also expressed keen interest to use Northport to reach worldwide.

NORTHPORT(MALAYSIA) BHD (146850-A)
Jalan Pelabuhan, Pelabuhan Utara, 42000 Port Klang,
P.O.Box 234, 42009 Port Klang, Selangor, Malaysia.
Tel : 603-31698888
Fax : 603-31698811

NORTHPORT CONTAINER THROUGHPUT 2011 (TEUs)
MONTH	IMPORT	EXPORT	TOTAL
JAN	138,821	122,233	261,054
FEB	113,815	111,067	224,882
MAR	143,677	132,028	275,705
APR	147,833	131,106	278,939
MAY	148,289	135,723	284,012
JUN	146,270	132,542	278,812
JUL	145,889	136,035	281,924
TOTAL	984,594	900,734	1,885,328

NORTHPORT CONVENTIONAL THROUGHPUT 2011 (FWT)
MONTH	IMPORT	EXPORT	TOTAL
JAN	371,260	179,635	550,895
FEB	415,880	227,607	643,487
MAR	407,087	228,670	635,757
APR	394,835	250,097	644,932
MAY	411,198	199,768	610,966
JUN	440,737	299,055	739,792
JUL	452,194	237,567	689,761
TOTAL	2,893,191	1,622,399	4,515,590

About the Interviewee

Mr. Suresh Kumar is the General Manager for the Information services in Northport, and takes charge of the IT department in Northport. The IT department in Northport handles anything involving electronics in the port, where there is a microprocessor or a programming is involved. For example, if there is an issue with the PLCs that control the quay cranes, IT department gets involved, and also the telephone services via the PABX is also under the department. Even if the business processes requires upgrading or to improve the current system, the IT department does it. And many of the IT systems are built by the in house IT department, other than certain systems such as the finance system, HR system or engineering management system, whereby there are already widely used systems out there in the market but mainly the business system itself in done in-house.

Mellisa : What are the types of Management Information System used in North Port Klang, and in which areas has this system been used in the services provided by the port?

Suresh Kumar : To ensure that the in-house IT system is better than what the outside market could offer, every year there will be benchmarking done with a few selected other IT systems out there in the market, and on a technology standpoint, the in-house IT systems are at par with the others.

When there is a better and more innovative system out there, the IT department will decide to outsource, such as the NAVIS SPARCS system and it’s integrated with the business process IT done by the in house department.

The IT technologies used in the port are of a wide spectrum, but we have been standardizing for the past six to seven years, and migrating from proprietary technology to open source technology. Propriety meaning programs or software such as Microsoft or even Oracle, whereby the programs or IP rights are of closed source as there is no sharing with other types of programs / software. In the early 80s thru 90s we bought IT solutions from companies like HP, Oracle, and IBM etc. Then in early 94-95, when emails were introduced the port went into 'internet email base standards', which are open standards. This enabled us to 1) leverage on open source, 2) lowers the cost of investment, 3) many suppliers or vendors to choose from. For example, LINUX, where it’s supported by Redhat, IBM, Microsoft, etc. Even the database system has moved on from Oracle at about 2000s.

Basically these have lowered the business cost and provide savings to customers, indirectly.

The cost of IT now is about ¼ of what was paid 10 years ago.

Mellisa : How is that possible?

Suresh Kumar : It involves reinventing what has been done for the past years, moving into new technologies. For example, in the 90s we’ve been using HP Open Vivas, which was the best that time for use in clustering, fault tolerance, master recovery unit. However nowadays, open source products such as LINUX has caught up with the technologies which were only provided my closed source operating systems such as Microsoft or HP.

Then there is this power of microprocessor architecture, such as in the 90s where 64bit microprocessors and alpha chip, which were only done by COMPAQ at that time. But nowadays even INTEL & AMD does it, and it is available in commodity prices. So moving towards other technologies actually saves in capital & operations cost. For example, in 2006 we were using an ALPHA server which was bought in 2000 at RM 1.2million for 2 servers in a cluster, which includes HP and Oracle licenses and it is to run the operating systems of the finance, HR and engineering management systems. When the time came for renewal, we invited HP, IBM and DELL for benchmarking purposes and is able to run in UNIX, LYNX & Oracle. The machines were used to run on 32 & 64bit CPUs and also the Proline (high level entry machines) to run a month end benchmark. The original ALPHA machine took 8 hours to complete, the HP superdome (RM1.8million) took 12minutes, IBM (RM800,000) took 1 hour, DELL machine (RM180,000) took 1 hour 20mins, and then PROLINE took 58 mins. So we decided to use 2 units of PROLINE (RM300,000), and changed from HP high end machine, thus saving cost, better hardware, and faster response time then the older HP Alpha unit. Save on license because it’s running on LYNUX, and save on hardware because it runs on commodity. All savings were passed back to business.

In Northport, there are very little outsourcing, meaning vendor dependent IT systems. Many of the IT systems are in house.

Mellisa: What are the key areas improvement required in the current MIS system or current change?

Suresh Kumar :Change is constant, so we basically leverage on technology to improve the services, in terms of re-engineering processes. For example the introduction of E-gate passes. Traditionally the hardcopy gate pass is a document which issued after the customs, shipment & delivery orders are cleared which is basically passing over the cargo to the owner or consignee. So after collecting the port charges, issue E-gate pass, and then pass to trucking company, truck bring it to the terminal to be used for verification (bar code system) and finally after validation the containers are let out.

To shorten the time cycle, nowadays, instead of collecting the hardcopy E-gate pass in the Northport office, we allow the shipping agents to generate the E-gate pass from their forwarding agents office. In order for this to be done, we needed to web enable other processes, such as in 2000 we invented the E-delivery order, whereby the shipping agents will clear the delivery orders electronically in our system. Once this is implemented in the shipping lines, and then we simplified the custom clearances into 'electronically clearing' the documents and be able to pass on those documents to the Northport office, which enabled us to electronically clear those documents and then the final part was to convince our shipping agents and forwarding agents to accept the use of E-gate pass. Now we are improving the E-gate pass system to PDF documents so that the forwarding agents do not need to print the hardcopy and deliver it by hand to the office. But this could also cause forgery of documents, so the IT department is looking into perhaps installing encrypted signatures into the pdf document for verification purposes.

Another technology is the RF (radio frequency) ID based tracking tags, which are basically tags which can be embedded on devices, cargos packing, part of container seal, part of track and trace security. Mainly due the 9 / 11 attack, main ports have to comply to international standards in security, such as CT Pact (Container terminals partnership) to curb terrorism. So basically, any shipment bound to US, before it gets loaded in Port Klang, the US customs needs to accept and clear the cargo, therefore a lot of information needs to be transferred to them electronically, because you need advance pre-notification.

An improvement to the system is CSI (Container security initiative) which was done late 2008, and lately for the last 3 years is the Mega Ports Initiative, which involves US and 25 other major ports around the world to track & trace WMDs (Weapons of mass destruction) in the ports, via radiation scanners, OCR Technologies basically to detect WMDs passing thru the port, and these things are integrated to our IT system.

So the latest initiative under the ISO standards is to use the Electronic Seals where initially containers are mechanically sealed to protect from tempering. But nowadays people are able to duplicated those seals, and even the serial numberings, etc. So to curb this problem, the RF ID chips are embedded into the seal and its becoming an E-seal, so if there are tempering on these seals, when the cargo or container reaches the port, the RF ID reader used to check, can pick up the signal, and the point of origin of tempering can be detected, and be used for insurance or back charging or legal claims.

This kind of technology that being introduced, you may not see this in other industries because the port is a major global supply chain in the world such as cargo tracking, cargo security, cargo visibility are very important consent for the nation and also internal global track. So any consent on the security then you has to make sure the cargo is safe. So that is why a lot of technology being introduced and adopted for supply chain security. So being in port you have to make sure everything is in place.

Mellisa : What are the latest MIS technologies implemented in order to improve the quality of the container services?

Suresh Kumar : From the security perspective, beyond that now we are using this system called Navis Sparcs and by next year there is a plan to move to Navis Sparcs N4 which is the next generation of terminal system which embodies more technologies. It has what is available today plus it has the capabilities to integrate technologies far more easily. Today we can do a lot of integration works but it needs a lot of efforts and customization. So with Navis Sparcs N4 which we will going for next year we would be able to do the same thing but at much lower cost but its fully on Java which use lot of technologies, so we are running on 'Java environments', so we will be doing our benchmarking on Navis Sparcs N4.

In terms of operations improvement initiative, basically this is done by jointly business and us such as ship planning optimization to ensure when changes occurred, especially the critical last minute changes because basically we don’t communicate with the changes all the time, so we have the problem with the shipment delayed, or even worst unloaded and undelivered on time and this actually can cause effect on the supply chain.

So basically our intentions is for optimization, customer retentions which is to ensure customer happy and continuously doing business with you, improve productivity and overall efficiency.

Mellisa : Can you briefly explain what is the improvement for a particular work flow that you have implemented now compare to how it was done earlier?

Suresh Kumar : Basically as i mentioned to you earlier we have this technology of K-Plus (K+) which is custom clearance being done. Traditionally this is where the information being passes on us through warrant custom K-1. (SMK). This system enables us to create Client Access System (K2 Document). So we told customers instead of passing a hardcopy, this system does not interface with port system so they can use my terminal and port terminal or double entry system through client access system as i mentioned to you earlier so this can save the customer saving paper document or to come over.

•       There’s also improvement on the security so paper document can be   altered.
•       Double entry system (SMK2) and how does it work? Custom had to go back to SMK and tell   the supplier that they need to integrate with port operation systems. Because of this internal pressure on the integration done the supplier actually able to work with us and build interface. So now instead of having the key twice, they are now able to update the customer in SMK system and the information will automatically transferred through a system which we called GCS system (Gate Control System) into the port system and it is auto cleared. This basically reduced the cycle time because traditionally clearance takes about six to seven days if we do it manually but after having this system it drops to three days so this is a major saving in terms of cycle time.
•       In terms of shipping line improvement between the consignment and the consigner, we have implement Electronic Delivery Order in 2000 thus we tell the ship in the custom that they do not need o endorse the hardcopy because the hardcopy can be your own internal consumptions only. What the shipping need to do is to clear it in the port system which is available in their office through 'documentation office'. So clear it first and then the freight forwarding can immediately come there and pay the port charges can collect the container.E-Gate Pass started in 2008 which is the conversion of hardcopy document to PDF document which is delivered via web. This is also improved on the security as well as the time line of waiting. In terms of EDI (Electronic Data Interchange) usage, we use the most of EDI. We and our direct customers like shipping customers, they do most everything electronically and in automated system which we called Web Base Interface so that your back end system from shipping line for example could be in Hong Kong or China or US, they also using the EDI or 'electronic file' and it comes straight to our system to validate and verify the information. This all to avoid double data entry this is not our basis to your system. We use an online system for enquiry and reporting purposes for example to ask about where is my container and with this EDI system we can track your container out of 1000 container in the system.Doing EDI since 1995, we are the 1^st one implement  using the web which is real time online for enquiry and towards 2000 we consent more on the cost so we migrating everything to open source to cut our cost doing business.

Mellisa :  Please point how North Port has benefited in using this system that you mentioned earlier in terms of profit?

Suresh Kumar : Business has been increasing every year, for example we spend about 40 millions 10 yrs ago but now we spend only 10million so it is a big saving for us already and we provide more services than before. And so does to our internal apps support for our internal management such as  HR, vendor management and  contract management system and all these integrated with financial system or 3^rd party system. So with all this open source system, we don’t pay cost for licensing. The cost is internal because we have our own development team and we have flexibility and if business change we don’t have to go back to the vendor.

Mellisa :    What are your advices for student who are currently pursuing in MBA, in relations with MIS / IT?

Suresh Kumar : MBA programs have done locally have no significant value addition in their teachings and curriculum. As the subjects are loosely based on basic understanding for business management which is good for a general understanding in a management point of view of the technologies available in terms of IT or MIS, however not into detailed IT or even management.

However, it does give the students an appreciation of the work being done in an overall aspect, for example in the IT department or field, and how to align business and IT.

I also do see a significant drop in standards in local universities graduates as compared to 10 years ago, and am still baffled as to what went wrong in the system.

Even the government use their annual program, which is the Cyber security drill done by CSM (Cyber security Malaysia) as a marketing tool to sell their cyber security courses or programs to government bodies or organization. The reason I am saying this is because, basically the parties involved in this drill were not provided with sufficient time for preparation for the “penetration test” by these government initiative hackers. Normally penetration test are done on virtual setup (to be secured at its best), and not on the actual business system or web based organization, which could cause serious harm if hacked without control. The CSM however only provided the virtual environment 1 day before the drill, and didn’t provide the password to the virtual machine application (VMA). The password was only provided on the drill day at 9.00am, and at 9.05am the VMA was hacked by the CSM hacker in a compromised virtual environment prepared by CSM themselves, without providing the time for the involved parties to even hardened the security. So the whole drill was a sham, just to show to the government that cyber security programs offered by CSM is a necessity and all IT employees of government bodies and other organizations need to attend this it’s just a marketing gimmick without actually doing the right thing, or what is really required.

So, my advice would be, to pursue an MBA course in a reputable university. Otherwise it is not worth it. Because many people nowadays think that an MBA is going to guarantee employment or promotion, and since many are into this MBA course, many universities and colleges are offering this program and its becoming a business, rather than actually churning out good graduates in MBA. Many MBA holders now can’t even speak their mind properly, or articulate the idea or concept across the table, etc.

So, in order to get a full benefit of an MBA, pursue the course in a reputable university.