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Contemporary logistics, Murphy (2015) Logistics information technology IBS3002 Logistics International Trade 8282020 1 IBS3002 Logistics International Trade Chapter 2 Logistics information technology 1 Contemporary logistics, Murphy (2015) Topic areas Benefits.
8/28/2020 IBS3002 Logistics & International Trade Chapter Logistics & information technology Contemporary logistics, Murphy (2015) Topic areas Benefits of effective and efficient use of information for logistics management Types of information systems and their logistical applications The Internet’s influence on logistics Information technology challenges Benefits of effective and efficient use of information Greater knowledge and visibility across the supply chain Greater awareness of customer demand via point-of-sale data Better coordination of manufacturing, marketing, and distribution Streamlined order processing and reduced lead-times 8/28/2020 General types of information management systems General Types of Information Management Systems Office automation systems Provide effective ways to Process personal and organizational business data Perform calculations Create documents Include general software packages Word processing Spreadsheet (most relevant for logisticians) Presentation Database management applications Spreadsheet (most relevant for logisticians) Able to solve for basic logistic optimization models through add-in packages such as “What’s Best” General Types of Information Management Systems Communication system Help stakeholders work together by interacting and sharing information in many different forms Examples of telecommunication technologies: Fax machines Personal computers Electronic mail Cellular phones Tablets Smart phones 8/28/2020 General Types of Information Management Systems Communication system Examples of logistics information technology Electronic data interchange (EDI) Viewed as the measuring stick in the 1990’s Wireless communication Emerged as the measuring stick during the first decade of the twenty-first century Device examples include Global positioning systems (GPS) Tablets (such as Apple’s iPad) General Types of Information Management Systems Transaction Processing System (TPS) Collects and stores information about transactions Efficient processing of transactions with a choice of Real-time processing or Batch processing Examples include Electronic data interchange (EDI) Automatic identification technologies Essential component in point-of-sale (POS) systems General Types of Information Management Systems Transaction Processing System (TPS) Benefits of EDI Reduced document preparation and processing time Increased cash flow Reduced inventory carrying costs Increased billing accuracy Reduced personnel costs Increased productivity Reduced Information float Increase customer satisfaction Reduced shipping errors Reduced lead times Reduced order cycle times Reduced ordering costs 8/28/2020 General Types of Information Management Systems Transaction Processing System (TPS) Benefits of EDI Reduced document preparation and processing time Increased cash flow Reduced inventory carrying costs Increased billing accuracy Reduced personnel costs Increased productivity Reduced Information float Increase customer satisfaction Reduced shipping errors Reduced lead times Reduced order cycle times Reduced ordering costs 10 General Types of Information Management Systems Transaction Processing System (TPS) Examples of automatic identification technologies Optical character recognition Machine vision Voice-data entry Magnetic strips Bar code scanners Radio-frequency identification (RFID) 11 General Types of Information Management Systems Transaction Processing System (TPS) RFID Consists of: A scanning antenna An RFID tag (chip) that conveys relevant data A receiver that interprets the data Compared to bar codes, RFID Does not require clear line of sight between an object and RFID hardware Can store much larger quantities of data Can offer both read and write capabilities 12 8/28/2020 General Types of Information Management Systems Management Information System (MIS) and Executive Information System (EIS) - Convert TPS data into information for monitoring performance and managing an organization - Objective is to provide managers and executives the information they really need - A logistics information system (LIS) can be defined as “the people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to logistics decision makers.”1 13 General Types of Information Management Systems Management Information System (MIS) and Executive Information System (EIS) 14 General Types of Information Management Systems Decision Support Systems (DSS) Help managers make decisions by providing information, models, or analysis tools Examples of specific uses include Vehicle routing issues Inventory control decisions Developing automatic order picking systems Optimization models for buyer-seller negotiations 15 8/28/2020 General Types of Information Management Systems Decision Support Systems (DSS) Several prominent DSS techniques include: Simulation Technique that models a real-world system, typically using mathematical equations to represent the relationships among the system’s components Application specific software Technique developed to help managers deal with specific logistics processes or activities Popular option includes on-demand software (also referred to as softwareas-a-service or cloud computing) 16 General Types of Information Management Systems Decision Support Systems (DSS) Examples of logistics-related application-specific software: Transportation management systems (TMS) Software package that automates the process of building orders, tending loads, tacking shipments, audits, and payments1 Warehouse management systems (WMS) Software package that provides oversight of the storage and flow of materials within a company’s operations2 17 General Types of Information Management Systems Decision Support Systems (DSS) 18 8/28/2020 General Types of Information Management Systems Decision Support Systems (DSS) Data mining – a DSS technique Is the application of mathematical tools to large bodies of data in order to extract correlations and rules1 Dependent on data warehouses Central repository for all relevant data collected by an organization 19 General Types of Information Management Systems Enterprise Systems Create and maintain consistent data processing methods and an integrated database across multiple business functions1 Enterprise Systems example: Enterprise resource planning (ERP) “lets a company automate and integrate the majority of its business processes, share common data and practices across the enterprise, and produce and access information in a real-time environment”1 Shortcomings of Enterprise resource planning (ERP) Costs of installation Time-consuming installation process 20 Initially lacked strong application-specific logistical capabilities such as TMS or WMS The Internet’s Influence on Logistics Approximately 35% of the world’s population uses the internet – up from 5% at the beginning of the 21st century Specific Influences on Logistics Include: Online retailing Cloud computing Electronic procurement 21 8/28/2020 The Internet’s Influence on Logistics Similarities between online retailing and in-store retailing Logistical Functions and Activities • • • • Transportation Warehousing Materials handling Order management Equipment and Materials • Bar coding • WMSs 22 The Internet’s Influence on Logistics Differences between online retailing and in-store retailing Online Retailing •More, smaller orders •Order management systems must handle large volumes of orders •Information management systems capable of correctly transmitting each order so it can be filled in a timely fashion •Smaller orders dictate opencase picking In-store Retailing • Fewer, larger orders • Order management system is set up to handle orders from resellers, not consumers • Full-case picking • Warehouse set up to handle large volume orders 23 The Internet’s Influence on Logistics Differences between online retailing and in-store retailing Online Retailing •Products slotted to facilitate picking smaller orders •Totes and push carts used •Packaging is small cartons, envelopes, bags suited to holding small quantities In-Store Retailing • Variety of materials handling equipment used • Packaging generally cartons that hold large volume orders 24 8/28/2020 The Internet’s Influence on Logistics Differences between online retailing and in-store retailing Online Retailing •Transportation companies used with extensive delivery networks; experience in parcel shipments •Outbound shipments usually picked up by vans •Return rates much higher and from ultimate consumers In-store Retailing • Transportation methods and companies vary by request of buyer • Outbound shipments may be picked up by tractor trailers or railcars • Return rates lower and from resellers 25 The Internet’s Influence on Logistics Cloud Computing Worldwide public cloud services market – where software, services, or information are shared via the Internet without the users having control over the technology infrastructure – grew almost 20% between 2011 and 20121 Advantages of Cloud Computing Pay-per-use allows firms to avoid high capital investment which speeds up ROI for the software Since it involves operational as opposed to capital expenditures, it is a viable option for firms that could not afford to purchase, install, and maintain application-specific software such as TMS and WMS Due to the economic slowdown of 2007, many firms were forced to slash IT 26 expenditures, thus benefitting cloud-based applications The Internet’s Influence on Logistics Cloud Computing Advantages of Cloud Computing continued Faster and less costly installation Smaller IT staff Regular upgrades and updates from the software provider Drawbacks of Cloud Computing Upgrades and updates can be too numerous and too frequent Limited amount of customization Security issues 27 8/28/2020 The Internet’s Influence on Logistics • Electronic Procurement, or e-procurement - Uses the internet to make it easier, faster, and less expensive for an organization to purchase goods and services Benefits realized from e-procurement include: Transactional benefits Measures the benefits of enhanced transactional efficiency associated with e-procurement Compliance benefits Focus on the savings that come from adherence to established procurement policies 28 The Internet’s Influence on Logistics Electronic Procurement, or e-procurement Benefits realized from e-procurement include: Management information benefits Encompass those that result from management information, customer satisfaction, and supplier satisfaction levels after implementation of e-procurement Price benefits Are those that are given as a result of adopting e-procurement 29 The Internet’s Influence on Logistics Electronic Procurement, or e-procurement - Drawbacks of using e-procurement Security risk of transmitted information Impersonal as human interaction is replaced by computer transactions - Drawbacks of using e-procurement Security risk of transmitted information Impersonal as human interaction is replaced by computer transactions 30 10 8/28/2020 Information Technology Challenges IT is a tool that can help manage organizational problems, but it is not a be-all/endall solution for organizational problems Theft of proprietary information Websites protected from viruses and hackers Decreasing size and increasing portability of technology devices Employee resistance to IT implementations 31 11 ... an object and RFID hardware Can store much larger quantities of data Can offer both read and write capabilities 12 8 /28 /20 20 General Types of Information Management Systems Management Information. .. Cellular phones Tablets Smart phones 8 /28 /20 20 General Types of Information Management Systems Communication system Examples of logistics information technology Electronic data interchange (EDI)... A logistics information system (LIS) can be defined as “the people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to logistics