Chapter 12:

1. Chapter 12: Logistics and Supply Chain Information Systems

2. Logistics and Supply Chain Information Systems: Introduction • Many firms view effective management of logistics and supply chain activities as: • Prerequisites to overall cost efficiency, and • Keys to ensuring their ability to competitively price their products and services.1 • Effective information management also can help ensure that a firm meets the logistics needs of its customers. Management of Business Logistics, 7th Ed.

3. Contemporary Issues in Information Systems Quality of Information: Three major issues • Availability of Information • Managers may be uncertain of needs. • Supplied data not consistent with needs. • Accuracy of Information • Three strikes and you’re out policy. • Accounting practices must accommodate logistics needs. • Effectiveness of Communication Management of Business Logistics, 7th Ed.

4. Architecture and Objectives of Information Systems • Information System Building Process • Figure 12-1 (p. 455) illustrates the information building process. • Three key types of IS people needed: • Architect to design process • Systems programmer to assemble hardware and software • Data manager to build data warehouse Management of Business Logistics, 7th Ed.

5. Architecture and Objectives of Information Systems • Positioning Information in Logistics • Figure 12-2 illustrates logistics information flow. • Logistics Information Systems include coordination flows and operational flows • These two flows should: • freely interchange data • integrate coordination activities into operational activities • be flexible, not linear. Management of Business Logistics, 7th Ed.

6. Figure 12-2 Logistics Information Flow Management of Business Logistics, 7th Ed.

7. Figure 12-3 Examples of Information Flows Management of Business Logistics, 7th Ed.

8. Table 12-3 The Shift of Logistics Operations in the Connected Economy Management of Business Logistics, 7th Ed.

9. Major Drivers of the Connected Economy17: Customer-Centric Value Web Model • Customer-Centric Value Web Model • Customers of all types are expecting more from their suppliers, at faster speeds, and with increasing reliability. • Traditional linear supply chains are being replaced by new, consumer-centric approaches. • Examine Figure 12-4. Management of Business Logistics, 7th Ed.

10. Technology Impacts on Supply Chain Disintermediation and Evolving Technological Changes • Technology Impacts on Supply Chain Disintermediation • See Figure 12-5 (Appendix) • Evolving Technological Changes • See Figure 12-6 (below) for a chronology • Stand alone businesses and traditional firms extending goods and services through web sites to more complex intelligent marketplaces. Management of Business Logistics, 7th Ed.

11. Figure 12-5 Technology Impacts on Supply Chain Disintermediation (a) Simplified Supply Chain (b) Supply Chain with Disintermediation Management of Business Logistics, 7th Ed.

12. Figure 12-6 Chronicle of Internet Milestones Management of Business Logistics, 7th Ed.

13. Major Drivers of the Connected Economy17: Customer-Centric Value Web Model • Exchanges • Allows supply chain participants to buy and sell needed goods and services. • Limited coordination or collaboration • Trading Communities -- Fig 12-7(App) • Hubs of suppliers, customers, manufacturers, distributors, and wholesalers brought together in an Internet interchange platform. Management of Business Logistics, 7th Ed.

14. Figure 12-7 Logistics Trading Exchanges Management of Business Logistics, 7th Ed.

15. Major Drivers of the Connected Economy17: Customer-Centric Value Web Model • Intelligent Marketplaces – Four elements • Tools • Network optimizing software tools used. • Technology • Equipment is available to all participants. • Integration • Greater collaboration and seamless integration of supply chain processes. • Flexibility • Trades, transactions, and solutions will include operational flexibility components. Management of Business Logistics, 7th Ed.

16. Contemporary Logistics Information Technologies • Bar coding • Most commonly used automatic identification technology • Consistency of this technology important factor in efficiency and effectiveness. • Electronic Data Interchange (EDI) • B2B, computer-to-computer exchange of business data in a structured, machine- processable format. (Figure 12-8) Management of Business Logistics, 7th Ed.

17. Contemporary Logistics Information Technologies • Extensible Markup Language (XML) • Method of packing information for movement on the Internet. • May replace EDI in the future. • Data management • Handheld input devices and optical scanning popular in data management. • CD-ROMs are another data management tool seeing increasing use. Management of Business Logistics, 7th Ed.

18. Contemporary Logistics Information Technologies • Imaging • Both photographic and facsimile processes are being used to image documents. • Artificial intelligence/expert systems • Attempts to transfer human intelligence to a machine. • Expert systems replicate “best practices” of humans to a computer-based system. Management of Business Logistics, 7th Ed.

19. Contemporary Logistics Information Technologies • RF technology • Uses radio frequency to transmit computer outputs, possibly from an expert system to human operated devices, such as, a forklift. • Optimizes quality, efficiency, and accuracy. • Onboard computers and satellite tracking • Uses systems such as GPS to track and communicate with mobile and/or remote vehicles. Management of Business Logistics, 7th Ed.

20. Logistics Information Systems • Definition • An interacting structure of people, equipment, and procedures that together make relevant information available to the logistics manager for the purposes of planning, implementation, and control.23 • Examine Figure 12-9 (Appendix). Management of Business Logistics, 7th Ed.

21. Figure 12-9 Logistics Information Systems Management of Business Logistics, 7th Ed.

22. Logistics Information Systems: Planning System • Illustrated in Figure 12-10 • Provides decision support for logistics managers • Logistics functional databases • Comprehensive relational database that contains the type of information needed to make effective decisions. • Greatest use in the transportation, inventory, and product areas with warehousing and customer areas showing less progress. Management of Business Logistics, 7th Ed.

23. Logistics Information Systems • Types of modeling approaches -Table 12-5 (App) • Optimization • Searches for “best” solution • Simulation • Replicates the logistics network • Heuristic • Used for broader, non-optimum solutions Management of Business Logistics, 7th Ed.

24. Logistics Information Systems: Execution System • Examine Figure 12-11 • Responsible for short-term, day-to-day functioning of the logistics system. • Include technologies that help manage warehousing, transportation, international trade, and inventory. • Many recent advances in technology and these advances will most likely continue to evolve and impact logistics management in the future. Management of Business Logistics, 7th Ed.

25. Table 12-5 Logistics Decisions Management of Business Logistics, 7th Ed.

26. Logistics Information Systems: Research and Intelligence System • Environmental scanning • Undirected viewing • General exposure to information • Conditioned viewing • Directed exposure to information • Informal search • Limited and unstructured effort to find information • Formal search • Deliberate effort to find information relating to a specific issue Management of Business Logistics, 7th Ed.

27. Logistics Information Systems: Knowledge Management • To maximize the results of an environmental scan, the logistics manager needs to consult: • Logistics area employees • Channel partners • Internal audit or external consultant • Other internal logistics initiatives • It is increasingly popular to dedicate a web site to hold information from the scan. Management of Business Logistics, 7th Ed.

28. Logistics Information Systems: Reports and Outputs System • Many logistics managers do not believe that reports communicate effectively. • Communication occurs only if the message keys into the receiver’s values and responds directly to the needs of the recipient. • Types of reports • Planning reports • Operating reports • Control reports Management of Business Logistics, 7th Ed.

29. Adapting to New Information Technologies • Relevant issues in the search for new technologies • Firms must have a scientific and intuitive knowledge of customer and supplier information requirements. • Lack of coordination and integration among key logistics and supply chain processes. • See that logistics organizational strategies move from a functional to a process orientation. • Early implementation efforts may suffer due to poor data or the non-availability or non-sharing of future data. Management of Business Logistics, 7th Ed.

30. Adapting to New Information Technologies • Relevant issues in the search for new technologies • The organization must have the financial resources needed to assure a smooth, full implementation, and the people willing to accept and use new technologies. • Firms must create opportunities for interaction and team efforts among logistics managers and those others most knowledgeable about information technologies. Management of Business Logistics, 7th Ed.