According to the interview question: “What kind of barrier do you have in your logistic system?”
For instance, the “Bab Invest” LLC director said: Can’t share our information directly with drivers and customers and between employees. Cannot track our logistics.
The “Bab Invest” LLC manager said: It’s challenging that we don’t have the constant drivers and truck and the renting cost is always fluctuating when we plan our delivery and logistics.
We have barrier on managing our production and logistics.
The employee of the “Sarana Goods” LLC explained: It is hard to track our shipping to the supermarkets when we make our delivery by own car and with renting truck.
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Table 9. Barriers confront in logistic system
Barriers
The logistic system barriers have been reported by the SME employees. The most significant responses are written in (table 9). All interviewees total 100 % reported that they cannot track and manage logistic process of the company; second significant barrier is that Mongolian road infrastructure is poor; have road traffic during the day time.
From this result we can conclude that most important barrier in logistic system is that SME company in Mongolia don’t have IT systems which can track their logistic processes.
Explanation on the most common barriers in logistics: For the SMEs managing and tracking their logistic process is the most common problem of all issues. During the interview all six interviewees responded that they confront such challenge. For instance, when company makes delivery to retail stores it is hard to track the delivery car and the product quantity which stores (customer) are needed. During logistic process making notes; doing transactions manually are taking time and consuming money.
52 4.4 IT system advantages in Logistics
According to the interview question: “SMEs most common challenge is the IT competency.
Will IT competency enhance the Logistic performance of your Company? Why?”
For instance, the “Bab Invest” LLC director answered: Yes, it will enhance our logistics.
Because we can manage our logistic process and production. And reduce the cost. If IT logistic system penetrates in Mongolian market.
The “Em Dji DI” LLC director said: Yes, the integrated logistic IT system will facilitate our logistic process, we can get the mobile apps and through that we can decide our international transactions. Because we import our products from china. We can track our process.
Table 10. IT System and improvement in Logistics
Improvements
Total 83% of the interviewees responded that IT competency will improve their logistic process by managing and tracking their delivery process. 17% employee responded that they will consider about IT system when company starts to export products abroad. 33% of the interviewees responded IT system will reduce their logistic cost (Table 10).
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From this result we can conclude that IT system can facilitate the logistic process of Mongolian SME Factories.
Explanation on IT system which can enhance the Logistic process: If the IT System penetrates in Mongolian market it will facilitate the whole logistic process (managing and tracking production and delivery) of the SME. It will reduce cost and save time.
4.5 IT system challenges: High cost software and hardware
According to the interview question: “IT system faces such challenges; high up-front costs associated with hardware, software, training and integration. Could you purchase high cost software? Why?”
For instance, the employee of the “Sarana” LLC said: Our company cannot purchase the expensive software currently, because our business is just getting familiar with customers. And it’s just expanding and nowadays we are not that efficient with profits. But it is getting better day by day. And it will be challenging to learn our employees to the IT system. But further it will be efficient to connect to the IT system and it will facilitate our job.
The “Bab Invest” LLC manager responded: Construction process in Mongolia depends on a season. In Mongolia the cold seasons take about 6 months. That’s why We conduct business for the rest of six months in a year, that’s why we cannot afford expensive hardware and software. We need cheaper way to solve the problem. In Mongolia we don’t have the local logistic IT systems yet. For the international IT system, the price is so high and it will be challenging to train our employees on it.
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Table 11. The interview result indicates about 83 % of employees reported that their company cannot afford the expensive Software and Hardware.
Table 12. Training and integration
Training employees them. Although 17% of the interviewee responded that company can purchase the IT system (table 11); 50 % of employees said it depends from the Type of the SME (type of products;
number of costumers; number of cooperation; suppliers) table 13.
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Explanation on SME cannot afford the expensive hardware: For small and medium sized company purchasing high cost software is infeasible; the reason is not enough capital, small number of costumers. It also depends on the type of SME; what kind of productions they produce, how many months per year the company operates.
4.6 Application which is used by SMEs in their Logistics
According to the interview question: “Currently what kind of applications do you use? Is it useful for you? Why?”
For instance, the manager of the “Sarana” LLC said: We currently use Facebook page. And have 3000 followers but it is not much affect to our sales and delivery.
The “Bab Invest” LLC director said: We use the Facebook. There are lots of Facebook ads related with the private drivers and trucks.
Table 14. Current application
Application usage Do not use apps Use apps (Facebook) Total interviewees Response
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Table 14. indicates the number of employees who uses the simple mobile application (Facebook). 83% of people responded they use Facebook to communicate and find private driver from Facebook Page and have own Facebook page to advertise their business.
33% of interviewees responded they use mobile bank application to make their logistic money transactions (Table 15).
We can conclude that most of the SME company’s employees use Facebook Page just to seek for the driver with private Truck.
Explanation on apps which SMEs use mostly: Recent days the most common communication; advertisement approach is the social media. Through the social media (Facebook) SMEs create own pages; find the feasible driver and truck from the Facebook group;
using Facebook chat communicate with employees. This is the only one approach for SME companies conduct business in Mongolia. However, this platform cannot facilitate the whole Logistic process.
4.7 Customized IT System for SME
According to the interview question: “Would you prefer to customize the appropriate web software for your own company? It will cost expensive but once you have your own software it will enhance the efficiency of your logistic system”
For instance, the “Bab Invest” LLC director said: For our company it’s unfeasible. I think for the SMEs the own IT system is more challenging because we have few customers and few suppliers.
As the “Sarana Goods” LLC manager said: Our business is just expanding that’s why cannot afford the own IT system.
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Table 16. Customized Web Software
Own
For the SME company the appropriate customized web software is not suitable according to the interview investigation. First it is expensive; second depending from type of SME; their activity; customer size; product variety the customized Software is unaffordable. And 67% of all interviewees responded it’s not suitable for their company; only 33 % of them responded the company can afford it.
From interview answers conclude that customized software is not affordable for the SME company.
Explanation: Due to business size (customer size; variety of product; cooperated companies;
suppliers) purchasing own customized web software is infeasible for the SME companies.
4.8 The solution: Cloud Computing System
According to the interview question: “One of the solutions to these problems is cloud computing with web semantic services based on the Internet network. Is it useful for you or not?”
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For instance, the “Sarana Goods” LLC manager responded: I assume that once we train employees to integrate to cloud computing system; then all of my employees can penetrate to the cloud compute anytime anywhere and connect with coworkers and share with the information, and can track the orders and schedule the delivery of products. It will accelerate our logistic process and will be convenient. Employees can work from home even if they are sick.
Table 17. Cloud Computing System is convenient solution
Cloud
Cloud computing is one of the solution for the IT competency barrier in Logistic system of SME (Table 17). Through the interview responses 67% of interviewees said it’s convenient for local logistics; one interviewee 17% of all responses said it will be feasible if the company goes international; rest of the interviewee 17% responded it is feasible for both logistics (international; local).
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Table 18. For the Cloud Computing System, it’s not challenging to train employees for the integration responded 83% of interviewees.
Table 18. All of the interviewees 100% responded that they can access to the system anytime (notebook; cellphone; pc) and anywhere (home; office).
From the responses conclude that Cloud Computing System can facilitate logistic process of the SME companies. Using cloud computing system employees can do their work from home through the phone and laptop.
Explanation: When the Cloud Computing System will penetrate in Mongolian market most of the SME companies will utilize it because it is cost efficient. Cloud compute will facilitate process such as finding logistic partners, gathering of relevant data sources, can penetrate to the system anytime anywhere, save all personal data in own storage, share important logistic information with another companies. For SME users, ICT infrastructure, platform, equipment and the majority of the application data can all be taken care through cloud computing to support individual business needs.
4.9 Solution - the LEAN IT system
According to the interview question: “How about the LEAN IT system?”
For instance, the “Bab Invest” LLC director said: For this system it is more convenient for our company because we can track our logistics and expenses. And manage the delivery process.
For the most important thing is it will reduce the costs. All the processes are transparent. It will facilitate our work. We prefer the Lean IT system the most.
As the “Em Dji DI” LLC director said: In Mongolian market the most urgent system is Lean system for me. All the tax and expenses have to be transparent. Everyone can see it. And all the processes in logistics can be simplified through it.
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Table 19. Lean IT System is convenient solution
Lean IT solution
Table 20. Most common answers
Other responses Reduce logistic cost
Lean IT System is transparent
Facilitate Logistic Process
Responses (N;%) 5; 83% 6; 100 % 6; 100 %
All participant said Lean IT solution is convenient for the local Logistics (Table 19).
If this system penetrates in Mongolian market; SME companies will access to the system, it is cost efficient and track their logistics; find consistent partners; reduce the lead timing;
simplifying complex process responded majority of interviewees (Table 20).
From the responses we can conclude that Lean IT system is most feasible platform which can facilitate the whole logistic process for the SME companies.
Explanation: The application of an effective and inexpensive lean IT solution can solve the problem of enabling a logistic network. The solution must act as the central communication platform and contact for all the companies within the network. It must offer consistent and simple means to communicate with the solution for all participants. The intended extensions include support for container management and advanced tracking and tracing features. All of
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the companies which penetrate the system can track their logistic process; can easily communicate with suppliers and consumers; production management and other transactions will be simplified.
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Chapter Five: Conclusion
5.1 Research Summary
Logistics are not very well developed in Mongolia. There are no regulations or legal frameworks for logistic services. Especially the SME industries don’t have an appropriate Logistic System. We have chosen three different types of SME companies “Bab Invest” LLC;
“EM DJI DI” LLC; “Sarana Goods” LLC as a Representatives of Mongolian SME industries to evaluate the logistic system.
Small and Medium Enterprises (SMEs) confront IT challenges in the field of Logistics. Modern logistics companies today rely on advanced ICT solutions for information processing and sharing. Access to data and information about the demand for logistics services and supply opportunities are becoming a key competitive factor. Unfortunately, only the largest companies can afford advanced systems. Small and medium companies have limited or don’t have IT system to run business. SMEs still likely to use the Internet only to send e-mails, transfer files or documents or gather information. For SMEs having their own IT system faces such challenges; they cannot afford the high cost software and hardware, it is challenging to integrate to the system and training employees. An effective and inexpensive Cloud Computing System and Lean IT System can reduce the SME’s logistic barriers.
Based on Literature review we conducted the Interview with each companies which were selected as a Mongolian SMEs. Three companies are conducting business in different sectors:
Agriculture; Construction; Food production. According to the interview responses we got significant results that can indicate most common Logistic barrier of SMEs; they have insufficient Logistics. Having own Logistic System depends on the type of company; in which sector the industry is operating. For instance, the SME is from construction field, in that case the company operates seasonally (Mongolia have four seasons which winter is cold) doesn’t have own truck and driver; they think having own logistics will consume more expenses. In
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another hand company operates in Food Production field has own car; however, they rent truck and driver when it is needed.
Most common barriers in Logistic System are that SME companies in Mongolia cannot track their logistic processes; companies spend excessive money on their logistics; they don’t have an appropriate IT system. Another significant problem is that SMEs cannot afford the expensive software and company’s customized IT system. However, most of the employees responded that IT system can facilitate the logistic process of SME Factories. For daily logistic process most of the SMEs use Facebook as connection with coworkers; suppliers and customers; as company’s web page; as finding new car and truck which can make their delivery.
Although it is not sufficient for them.
Two solutions such as Cloud Computing System and Lean IT System were suggested to the interviewees. Most of the interviewees responded that Lean IT System is feasible for Mongolian condition for local logistics. It will facilitate their whole logistic process by transparency; reducing costs; saving time; reducing errors or defects in logistic processes;
production management and other transactions will be simplified. Most important Lean IT System is inexpensive; has centralized platform. If the System penetrates the Mongolian market most of them will utilize it.
5.2 Managerial implication
To facilitate the logistic process in the whole; the Mongolian SME companies have to penetrate in IT System. The Mongolian market needs the inexpensive solution for the SMEs logistic problem. One of the solution is Lean IT competency, which all interviewees from Mongolian SMEs responded that it is feasible for them. First of all, government have to introduce Lean IT system to Mongolian market to facilitate the Logistic System.
64 5.3 Research limitation
As many studies, there are inevitable limitations in research. And in my research it is same, there are three major limitations as follows:
The first is the number of SMEs and employees. To evaluate The SMEs Logistic problem, I conducted one to one interview with three of Mongolian SME companies. The number of interviewees was only six; could not do the interview with all of the employees of the three companies. The reason was some of employees refused to share their opinions.
The second is the limitation of study time. For better research I might use the secondary data about Mongolian SMEs logistic process to evaluate the problem more deeply. However, I have just focused on primary data (interview) because I had so less time for my research; studying another subject at the same time with my thesis.
The third is statistical analysis. It based on survey questionnaire. To get accurate result from statistical analysis; it required to survey more than hundred people.
5.4 Future research
This study mainly focused on the SME’s common Logistic problems and the solutions such as IT competency (Cloud Computing System and Lean IT solution). And the research based on the primary data such as Interview with SME companies in Mongolia. For future study, researcher can expand topic research as follows:
Choose more SME companies and conduct survey questionnaire for all employees
To Find another feasible IT solution for Logistic system
To use secondary data of Mongolian SMEs for better evaluation
The Study of Logistic System of Corporation; their main barrier.
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