Chapter 12:
Logistics and Supply Chain
Information Systems
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.
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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.
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Learning Objectives

Appreciate the importance of adapting to new
information technologies.
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Logistics Profile:
Applebee’s…
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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.
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Logistics and Supply Chain
Information Systems: Introduction

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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
1.
Availability of Information

Managers may be uncertain of needs.

Supplied data not consistent with needs.
2.
Accuracy of Information

Three strikes and you’re out policy.

Accounting practices must accommodate
logistics needs.
3.
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

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$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.
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Contemporary Logistics
Information Technologies

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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, machineprocessable 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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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.
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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
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Simulation

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Searches for “best” solution
Replicates the logistics network
Heuristic

Chapter 12
Used for broader, non-optimum solutions
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Table 12-5
Logistics Decisions
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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.
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Figure 12-11 Direct Materials
Purchasing Moves Online
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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
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Logistics Information Systems:
Knowledge Management

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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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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
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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
3.68
E-commerce
2.67
Internet/WWW
2.10
Groupware
Automatic
Transaction System
Knowledge
Management
Modeling/Simulation
1.54
1.32
1.19
Level of Criticality
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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.
End of Chapter 12 Slides
Logistics and Supply Chain
Information Systems