LOGISTICS AND SUPPLY CHAIN INFORMATION SYSTEM

1. Chapter 12:
Logistics and Supply Chain
Information Systems

2. Learning Objectives - After reading this
chapter, you should be able to do the following:
 Understand the overall importance of
information systems to logistics and supply
chain management.
 Recognize key issues in information systems.
 Know what is meant by the quality of
information, and know what to measure to
assure that this quality exists.
 Understand the architecture and objectives of
information systems.

3. Learning Objectives
 Appreciate the role of logistics in the
“connected” economy, and appreciate how
evolving technologies are impacting logistics
and logistics processes.
 Identify the structural components of the
logistics information system, and understand
how each contributes to the overall
effectiveness of logistics and supply chain
processes.

4. Learning Objectives
 Appreciate the importance of adapting to new
information technologies.

5. Logistics Profile:
Applebee’s…
 Restaurant ordering practice has progressed
from phone to fax to Internet.
 Information systems (IS) help Applebee’s to
monitor pre-negotiated prices and rebates, and
to better manage inventory tracking.
 Internet-enabled information systems have
great potential to improve the efficiency and
effectiveness of supply chain activity.

6. 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.

7. Contemporary Issues in
Information Systems
 Results from Annual Computer Sciences
Corporation Study on Information Systems
Management suggest that highest priorities
are on customers, productivity, and
performance.
 It is clear that Internet and E-commerce
issues are both recognizable and critical.
 Top technology issues are reviewed in
Tables 12-1 and 12-2.

8. Table 12-1 Top Information Systems
Issues for 2000 (Global Responses)

9. Table 12-2 Critical Business Processes
(North American Responses)

10. Contemporary Issues in
Information Systems
Quality of Information: Three major issues
1. Availability of Information
 Managers may be uncertain of needs.
 Supplied data not consistent with needs.
1. Accuracy of Information
 Three strikes and you’re out policy.
 Accounting practices must accommodate
logistics needs.
1. Effectiveness of Communication

11. Architecture and Objectives of
Information Systems
 Information System Building Process
 Figure 12-1 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

12. Figure 12-1
Information System Building Process

13. 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.

14. Figure 12-2
Logistics Information Flow

15. Figure 12-3
Examples of Information Flows

16. Table 12-3 The Shift of Logistics
Operations in the Connected Economy

17. 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 on the next slide.

18. Figure 12-4 Customer-Centric
Value Web® Model

19. Technology Impacts on Supply Chain
Disintermediation and Evolving
Technological Changes
 Technology Impacts on Supply Chain
Disintermediation
 See Figure 12-5 for these alternatives
 Evolving Technological Changes
 See Figure 12-6 for a chronology
 Stand alone businesses and traditional firms
extending goods and services through web
sites to more complex intelligent
marketplaces.

20. Figure 12-5 Technology Impacts on
Supply Chain Disintermediation
(a) Simplified Supply Chain
(b) Supply Chain with Disintermediation

21. Figure 12-6
Chronicle of Internet Milestones

22. 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 --- Figure 12-7

Hubs of suppliers, customers,
manufacturers, distributors, and
wholesalers brought together in an
Internet interchange platform.

23. Figure 12-7
Logistics Trading Exchanges

24. 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.

25. On the Line:
ShipChem.com
 $4.6 billion chemical industry leader outsourced
all its logistics operations to become a 4PL.
 Replaced traditional logistics with B2B
electronic commerce model, hoping to do it
more effectively, cheaper, and more profitably.
 Uses G-Log’s Internet-based software to link
shippers, 3PLs, forwarders, and carriers.
 ShipChem plans to enable better supply chain
integration and collaborative planning.

26. 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)

27. Figure 12-8
EDI versus Traditional Methods

28. 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.

29. 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.

30. 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.

31. 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 on the next slide.

32. Figure 12-9
Logistics Information Systems

33. Logistics Information Systems:
Planning System
 Illustrated in Figure 12-10
 Provides decision support for logistics managers
 Logistics functional databases --- Table 12- 4

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.

34. Figure 12-10 Supply Chain Functional
Scope: Planning and Execution

35. Table 12-4
Trends in Logistics Data Computerization

36. Logistics Information Systems
 Types of modeling approaches --- Table 12-5

Optimization
 Searches for “best” solution

Simulation
 Replicates the logistics network

Heuristic
 Used for broader, non-optimum solutions

37. Table 12-5
Logistics Decisions

38. 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.

39. Figure 12-11 Direct Materials
Purchasing Moves Online

40. 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

41. 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.

42. 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

43. 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.

44. 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.

45. Figure 12-12
Critical Emerging Technologies
1.19
1.32
1.54
2.10
2.67
3.68
Modeling/ Simulation
Know ledge
Management
Automat ic
Transaction System
Groupw are
I nternet/ WWW
E-commerce
Level of Criticality

46. Chapter 12:
Summary and Review Questions
Students should review their knowledge of the chapter
by checking out the Summary and Study Questions
for Chapter 12.

47. End of Chapter 12 Slides
Logistics and Supply Chain
Information Systems