Logistics and Supply Chain Information Systems

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Chapter 12

• Logistics and Supply Chain Information Systems

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Logistics Profile Applebees

• Restaurant ordering practice has progressed from
  phone to fax to Internet.
• Information systems (IS) help Applebees 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.

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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.

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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.

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Table 12-1 Top Information Systems Issues for
2000 (Global Responses)
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Table 12-2 Critical Business Processes (North
American Responses)
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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 youre out policy.
• Accounting practices must accommodate logistics
  needs.
• Effectiveness of Communication

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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

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Figure 12-1 Information System Building Process
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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.

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Figure 12-2 Logistics Information Flow
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Figure 12-3 Examples of Information Flows
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Table 12-3 The Shift of Logistics Operations in
the Connected Economy
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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.

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Figure 12-4 Customer-Centric Value Web Model
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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.

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Figure 12-5 Technology Impacts on Supply Chain
Disintermediation
(a) Simplified Supply Chain
(b) Supply Chain with Disintermediation
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Figure 12-6 Chronicle of Internet Milestones
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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.

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Figure 12-7 Logistics Trading Exchanges
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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.

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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-Logs Internet-based software to link
  shippers, 3PLs, forwarders, and carriers.
• ShipChem plans to enable better supply chain
  integration and collaborative planning.

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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)

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Figure 12-8 EDI versus Traditional Methods
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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.

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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.

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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.

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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.

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Figure 12-9 Logistics Information Systems
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Components of Logistics Information Systems

1. Planning system
2. Execution system
3. Research and intelligence system
4. Knowledge management
5. Reports and outputs system

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1. 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.

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Figure 12-10 Supply Chain Functional Scope
Planning and Execution
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Table 12-4 Trends in Logistics Data
Computerization
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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

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Table 12-5 Logistics Decisions
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2. 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.

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Figure 12-11 Direct Materials Purchasing Moves
Online
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3. 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

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4. 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.

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5. Reports and Outputs System

• Many logistics managers do not believe that
  reports communicate effectively.
• Communication occurs only if the message keys
  into the receivers values and responds directly
  to the needs of the recipient.
• Types of reports
• Planning reports
• Operating reports
• Control reports

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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.

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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.

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Figure 12-12 Critical Emerging Technologies
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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.

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End of Chapter 12 Slides

• Logistics and Supply Chain Information Systems