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Haslet Demirkoparan

on 15 May 2014

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How Systems Facilitate Logistics Management
Overview of Logistics Information System
Transportation Management System
Warehouse Management System
Order Management System
An interacting structure of people, equipment, and procedures which together make relevant information available to the logistics manager for the purposes of planing, implementing and control.
• Shipment consolidation
• Routing and scheduling
• Claims
• Tracking
• Bill payment
• Freight bill auditing

• Decide when, what to produce, store, move
• Rapidly communicate orders
• Communicate orders, track order status
• Check inventory availability, monitor levels
• Track shipments
• Plan production based on actual demand
• Rapidly communicate product design change
• Provide product specifications


• Stock level management
• Order picking
• Picker routing
• Picker assignments and
work loading
• Product availability



• Share information about defect rates, returns
- LIS combine hardware and software to manage, control, and measure logistics activities.
- LIS perform three vital roles in business firms.
• Logistics processes and operations,
• Logistics decision making; and
• Strategic competitive advantage
- Major application categories of information systems include:
• Operations Support Systems; and
• Management Support Systems.

Supply chain partners

Contact with customer
Stock availability
Crediting checking
Product allocation to customer
Fulfillment location
Logistics Information Systems
• to know why timely and accurate information is critical for effective logistics systems design and operations
• to know four levels of SCIS’s functionality including transaction systems, management control, decision analysis, and strategic planning
• to understand the comprehensive information system integration
• to know how firms obtain access to supply chain applications
• to know the remarkable advances in logistics communication systems capability

Information System Functionality
1) Why Timely and Accurate Information is Critical for Effective Logistics Systems Design and Operations.There are four reasons why timely and accurate information has become more critical for effective logistics systems design and operations:

a) Customer perceive information about order status, product availability, delivery schedule, shipment tracking, and invoices as necessary elements of total customer service.

b) With the goal of reducing total supply chain assets, managers realize that information can be used to reduce inventory and human resource requirements.

c) Information increases flexibility with regard to how, when, and where resources may be utilized to gain strategic advantage.

d) Enhanced information transfer and exchange capability utilizing the Internet is changing relationships between buyers and redefining channel relationships.

2) Information Functionality

Supply chain information systems (SCIS) are the thread that links logistics activities into an integrated process.
The integration builds on four levels of functionality:
-Transaction systems,
-Management control,
-Decision analysis, and
-Strategic planning.
As the pyramid shape suggests, management control, decision analysis, and strategic planning enhancements require a strong transaction system foundation.

a) Transaction Systems

A transaction system is characterized by formalized rules, procedures, and standardized communications; a large volume of transactions; and an operational, day-to-day focus.

b) Management Control

Management control focuses on performance measurement and reporting. Performance
measurement is necessary to provide management feedback regarding supply chain performance and resource utilization.

c) Decision Analysis

Decision analysis focuses on software tools to assist managers in identifying, evaluating, and comparing supply chain and logistics strategic and tactical alternatives for improved effectiveness.

d) Strategic Planning

Strategic planning organizes and synthesizes transaction data into a wide range of business planning and decision-making models that assist in evaluating the probabilities and payoffs of various strategies. Essentially, strategic planning focuses on information support to develop and refine supply chain and logistics strategy.

Comprehensive Information System Integration
1) Integrated Supply Chain System Modules
A comprehensive information system initiates, monitors, assists in decision making, and reports on activities required to complete logistics operations and planning.

The major system components include:
-Enterprise Resource Planning (ERP) or legacy systems,
-Communication systems,
-Execution systems, and
-Planning systems.

ERP or Legacy Systems
The ERP or legacy systems are the backbone of most firms' supply chain information systems. This backbone maintains current and historical data and processes transactions to initiate and track performance.
Legacy systems refer to the mainframe applications that were developed prior to 1990 to automate transactions such as order entry, order processing, warehouse operations, inventory management, transportation, and related financial transactions.
Communication Systems
The communication module facilitates information flow between functional areas within the firm and between supply chain partners. Logistics information consists of real time data on company operations – inbound material flows, production status, product inventories, customer shipments, and incoming orders.

Execution Systems
Enterprise execution systems work in conjunction with the firm's ERP to provide specific functionality to support logistics operations. While some ERP systems include reasonable logistics functionality, many lack the capabilities to facilitate contemporary warehouse and transportation operations. Most execution systems are "bolted-on" or integrated into the ERP system to facilitate data exchange.
Planning Systems
Supply chain planning systems, now being termed Advanced Planning and Scheduling (APS) systems, are designed to assist in evaluating supply chain alternatives and advise in supply chain decision making.
Accessing Supply Chain Applications
1) Advantages and Disadvantages of software purchase
Advantages: The first is through direct ownership. The firm purchases the hardware and soft-ware for implementation within its facilities. While the initial cost can be substantial, the direct ownership route offers high security and low variable cost. Firms can reduce capital investment by leasing equipment or software from vendors or a third-party financing company.

Disadvantages: There are also risks associated with the direct ownership plan. The firm must employ or contract individuals who can provide the expertise to implement, modify, and maintain both the hardware and the software. Management and financial support of information technology resources may use capital and talent that are needed to develop core competency of a firm.
2) Advantages and Disadvantages of Third-Party Providers
Advantages : The hardware and software can be dedicated or shared with other clients of the service provider. In either case, both the hardware and the data are reasonably secure. The benefits of outsourcing are that operational responsibility is assigned to a specialist that has extensive resources to focus on both hardware and software implementation and operations.

1) Advantages and Disadvantages of software purchase
1) Advantages and Disadvantages of software purchase
2) Advantages and Disadvantages of Third-Party Providers
2) Advantages and Disadvantages of Third-Party Providers
Disadvantages: The major disadvantage of using a third-party service provider is increased variable cost. To provide the service, a profit margin must be added to the cost of equipment and software. However, the cost differential may be more than justified since the service provider should be in a position to achieve economies of scale by sharing resources and personnel across multiple clients.
3) Application Service Provider Benefits and Risks
3) Application Service Provider Benefits and Risks
3) Application Service Provider Benefits and Risks
-Cost savings: Not necessary to purchase or upgrade software
-Time savings: Firm can focus on core business
-Staffing: ASP provides technical staff to implementation and maintenance
-Flexibility: Client can remotely access software with a Web browser


-Security: Proprietary information possibly vulnerable due lo ASP failures
-Infrastructure: ASP requires high-speed Internet connection
-History: No clear business model yet.

Communication Systems
1) Electronic Data Interchange
EDI Versus
Traditional Methods
EDI is defined as intercompany computer-to-computer exchange of business documents in
standard formats to facilitate high-volume transactions. It involves both the capability and practice of communicating information between two organizations electronically instead of via the traditional forms of mail, courier, or even fax.
2) Internet
The Internet is quickly becoming the supply chain information transmission tool of choice for forecasted requirements, orders, inventory status, product updates, and shipment information. In conjunction with a PC and an Internet browser, the Internet offers a standard approach for order entry, order status inquiry, and shipment tracking.
3) Extensible Markup Language (XML)
Extensible Markup Language (XML) is a flexible computer language that facilitates information transfer between a wide range of applications and is readily interpretable by humans.

A basic XML message consists of three components: the actual information being transmitted, data tags, and a DTD (Document Type Definition) or schema.

In situations characterized by low volume, XML is superior to EDI for three reasons.
-First, it is not expensive to install.
-Second, XML is easy to maintain.
-Finally, XML is more flexible.

4) Satellite Technology
Satellite technology allows communication across a wide geographic area such as a region or even the world. The technology is similar to microwave dishes used for home television in areas outside the reach of cable.

Satellite communication provides a fast and high-volume channel for information movement around the globe.

5) Radio Frequency Exchange
Radio Frequency Data Communication (RFDC) technology is used within relatively small areas, such as distribution centers, to facilitate two-way information exchange.

Radio Frequency Identification (RFID) is a second form of radio frequency technology.

RFID can be used to identify a container or its contents as it moves through facilities or on transportation equipment. RFID places a coded electronic chip in the container or box.

6) Image Processing
Image processing applications rely upon facsimile (fax) and optical-scanning technology to transmit and store freight bill information, as well as other supporting documents such as proof of delivery receipts or bills of lading.
7) Bar-Coding and Scanning
Bar coding is the placement of computer readable codes on items, cartons, containers, pallets,and even rail cars.

Another key component of Auto ID technology is the scanning process, which represents the eyes of a bar-code system. A scanner optically collects bar-code data and converts it to usable information.
Thank you for your listening...
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