Chapter 12 Logistics and Supply Chain Information Systems

Chapter 12: Logistics and Supply Chain Information Systems

Learning Objectives - After reading this chapter, you should be able to do the following: n n 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. Chapter 12 Management of Business Logistics, 7 th Ed. 2

Learning Objectives n n 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. Chapter 12 Management of Business Logistics, 7 th Ed. 3

Learning Objectives n Appreciate the importance of adapting to new information technologies. Chapter 12 Management of Business Logistics, 7 th Ed. 4

Logistics Profile: Applebee’s… n n n 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. Chapter 12 Management of Business Logistics, 7 th Ed. 5

Logistics and Supply Chain Information Systems: Introduction n n Many firms view effective management of logistics and supply chain activities as: n Prerequisites to overall cost efficiency, and n 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. Chapter 12 Management of Business Logistics, 7 th Ed. 6

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

Table 12 -1 Top Information Systems Issues for 2000 (Global Responses) Chapter 12 Management of Business Logistics, 7 th Ed. 8

Table 12 -2 Critical Business Processes (North American Responses) Chapter 12 Management of Business Logistics, 7 th Ed. 9

Contemporary Issues in Information Systems Quality of Information: Three major issues n Availability of Information n Managers may be uncertain of needs. n Supplied data not consistent with needs. n Accuracy of Information n Three strikes and you’re out policy. n Accounting practices must accommodate logistics needs. n Effectiveness of Communication Chapter 12 Management of Business Logistics, 7 th Ed. 10

Architecture and Objectives of Information Systems n Information System Building Process n Figure 12 -1 illustrates the information building process. n Three key types of IS people needed: n Architect to design process n Systems programmer to assemble hardware and software n Data manager to build data warehouse Chapter 12 Management of Business Logistics, 7 th Ed. 11

Figure 12 -1 Information System Building Process Chapter 12 Management of Business Logistics, 7 th Ed. 12

Architecture and Objectives of Information Systems n Positioning Information in Logistics n Figure 12 -2 illustrates logistics information flow. n Logistics Information Systems include coordination flows and operational flows n These two flows should: n freely interchange data n integrate coordination activities into operational activities n be flexible, not linear. Chapter 12 Management of Business Logistics, 7 th Ed. 13

Figure 12 -2 Logistics Information Flow Chapter 12 Management of Business Logistics, 7 th Ed. 14

Figure 12 -3 Examples of Information Flows Chapter 12 Management of Business Logistics, 7 th Ed. 15

Table 12 -3 The Shift of Logistics Operations in the Connected Economy Chapter 12 Management of Business Logistics, 7 th Ed. 16

Major Drivers of the Connected Economy 17: Customer-Centric Value Web Model n Customers of all types are expecting more from their suppliers, at faster speeds, and with increasing reliability. n Traditional linear supply chains are being replaced by new, consumer-centric approaches. n Examine Figure 12 -4 on the next slide. Chapter 12 Management of Business Logistics, 7 th Ed. 17

Figure 12 -4 Customer-Centric Value Web® Model Chapter 12 Management of Business Logistics, 7 th Ed. 18

Technology Impacts on Supply Chain Disintermediation and Evolving Technological Changes n n Technology Impacts on Supply Chain Disintermediation n See Figure 12 -5 for these alternatives Evolving Technological Changes n See Figure 12 -6 for a chronology n Stand alone businesses and traditional firms extending goods and services through web sites to more complex intelligent marketplaces. Chapter 12 Management of Business Logistics, 7 th Ed. 19

Figure 12 -5 Technology Impacts on Supply Chain Disintermediation (a) Simplified Supply Chain (b) Supply Chain with Disintermediation Chapter 12 Management of Business Logistics, 7 th Ed. 20

Figure 12 -6 Chronicle of Internet Milestones Chapter 12 Management of Business Logistics, 7 th Ed. 21

Major Drivers of the Connected Economy 17: Customer-Centric Value Web Model n n Exchanges n Allows supply chain participants to buy and sell needed goods and services. n Limited coordination or collaboration Trading Communities --- Figure 12 -7 n Hubs of suppliers, customers, manufacturers, distributors, and wholesalers brought together in an Internet interchange platform. Chapter 12 Management of Business Logistics, 7 th Ed. 22

Figure 12 -7 Logistics Trading Exchanges Chapter 12 Management of Business Logistics, 7 th Ed. 23

Major Drivers of the Connected Economy 17: Customer-Centric Value Web Model n Intelligent Marketplaces – Four elements n Tools n Network optimizing software tools used. n Technology n Equipment is available to all participants. n Integration n Greater collaboration and seamless integration of supply chain processes. n Flexibility n Trades, transactions, and solutions will include operational flexibility components. Chapter 12 Management of Business Logistics, 7 th Ed. 24

On the Line: Ship. Chem. com n n $4. 6 billion chemical industry leader outsourced all its logistics operations to become a 4 PL. Replaced traditional logistics with B 2 B electronic commerce model, hoping to do it more effectively, cheaper, and more profitably. Uses G-Log’s Internet-based software to link shippers, 3 PLs, forwarders, and carriers. Ship. Chem plans to enable better supply chain integration and collaborative planning. Chapter 12 Management of Business Logistics, 7 th Ed. 25

Contemporary Logistics Information Technologies n n Bar coding n Most commonly used automatic identification technology n Consistency of this technology important factor in efficiency and effectiveness. Electronic Data Interchange (EDI) n B 2 B, computer-to-computer exchange of business data in a structured, machineprocessable format. (Figure 12 -8) Chapter 12 Management of Business Logistics, 7 th Ed. 26

Figure 12 -8 EDI versus Traditional Methods Chapter 12 Management of Business Logistics, 7 th Ed. 27

Contemporary Logistics Information Technologies n n Extensible Markup Language (XML) n Method of packing information for movement on the Internet. n May replace EDI in the future. Data management n Handheld input devices and optical scanning popular in data management. n CD-ROMs are another data management tool seeing increasing use. Chapter 12 Management of Business Logistics, 7 th Ed. 28

Contemporary Logistics Information Technologies n n Imaging n Both photographic and facsimile processes are being used to image documents. Artificial intelligence/expert systems n Attempts to transfer human intelligence to a machine. n Expert systems replicate “best practices” of humans to a computer-based system. Chapter 12 Management of Business Logistics, 7 th Ed. 29

Contemporary Logistics Information Technologies n n RF technology n Uses radio frequency to transmit computer outputs, possibly from an expert system to human operated devices, such as, a forklift. n Optimizes quality, efficiency, and accuracy. Onboard computers and satellite tracking n Uses systems such as GPS to track and communicate with mobile and/or remote vehicles. Chapter 12 Management of Business Logistics, 7 th Ed. 30

Logistics Information Systems n Definition n 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 n Examine Figure 12 -9 on the next slide. Chapter 12 Management of Business Logistics, 7 th Ed. 31

Figure 12 -9 Logistics Information Systems Chapter 12 Management of Business Logistics, 7 th Ed. 32

Logistics Information Systems: Planning System n n Illustrated in Figure 12 -10 Provides decision support for logistics managers n Logistics functional databases --- Table 12 - 4 n Comprehensive relational database that contains the type of information needed to make effective decisions. n Greatest use in the transportation, inventory, and product areas with warehousing and customer areas showing less progress. Chapter 12 Management of Business Logistics, 7 th Ed. 33

Figure 12 -10 Supply Chain Functional Scope: Planning and Execution Chapter 12 Management of Business Logistics, 7 th Ed. 34

Table 12 -4 Trends in Logistics Data Computerization Chapter 12 Management of Business Logistics, 7 th Ed. 35

Logistics Information Systems n Types of modeling approaches --- Table 12 -5 n Optimization n n Simulation n n Searches for “best” solution Replicates the logistics network Heuristic n Chapter 12 Used for broader, non-optimum solutions Management of Business Logistics, 7 th Ed. 36

Table 12 -5 Logistics Decisions Chapter 12 Management of Business Logistics, 7 th Ed. 37

Logistics Information Systems: Execution System n Examine Figure 12 -11 n Responsible for short-term, day-to-day functioning of the logistics system. n Include technologies that help manage warehousing, transportation, international trade, and inventory. n Many recent advances in technology and these advances will most likely continue to evolve and impact logistics management in the future. Chapter 12 Management of Business Logistics, 7 th Ed. 38

Figure 12 -11 Direct Materials Purchasing Moves Online Chapter 12 Management of Business Logistics, 7 th Ed. 39

Logistics Information Systems: Research and Intelligence System n Environmental scanning n Undirected viewing n General exposure to information n Conditioned viewing n Directed exposure to information n Informal search n Limited and unstructured effort to find information n Formal search n Deliberate effort to find information relating to a specific issue Chapter 12 Management of Business Logistics, 7 th Ed. 40

Logistics Information Systems: Knowledge Management n n To maximize the results of an environmental scan, the logistics manager needs to consult: n Logistics area employees n Channel partners n Internal audit or external consultant n Other internal logistics initiatives It is increasingly popular to dedicate a web site to hold information from the scan. Chapter 12 Management of Business Logistics, 7 th Ed. 41

Logistics Information Systems: Reports and Outputs System n n n 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 n Planning reports n Operating reports n Control reports Chapter 12 Management of Business Logistics, 7 th Ed. 42

Adapting to New Technologies n Information Relevant issues in the search for new technologies n Firms must have a scientific and intuitive knowledge of customer and supplier information requirements. n Lack of coordination and integration among key logistics and supply chain processes. n See that logistics organizational strategies move from a functional to a process orientation. n Early implementation efforts may suffer due to poor data or the non-availability or non-sharing of future data. Chapter 12 Management of Business Logistics, 7 th Ed. 43

Adapting to New Information Technologies n Relevant issues in the search for new technologies n The organization must have the financial resources needed to assure a smooth, full implementation, and the people willing to accept and use new technologies. n Firms must create opportunities for interaction and team efforts among logistics managers and those others most knowledgeable about information technologies. Chapter 12 Management of Business Logistics, 7 th Ed. 44

Figure 12 -12 Critical Emerging Technologies Chapter 12 Management of Business Logistics, 7 th Ed. 45

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.

End of Chapter 12 Slides Logistics and Supply Chain Information Systems