Chapter 12:
Logistics and Supply Chain
Information Systems
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.
Chapter 12
Management of Business Logistics, 7th Ed.
2
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
Chapter 12
Management of Business Logistics, 7th Ed.
3
Architecture and Objectives of
Information Systems

Information System Building Process
 Figure 12-1 (p. 455) 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
Chapter 12
Management of Business Logistics, 7th Ed.
4
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.
Chapter 12
Management of Business Logistics, 7th Ed.
5
Figure 12-2
Logistics Information Flow
Chapter 12
Management of Business Logistics, 7th Ed.
6
Figure 12-3
Examples of Information Flows
Chapter 12
Management of Business Logistics, 7th Ed.
7
Table 12-3 The Shift of Logistics
Operations in the Connected Economy
Chapter 12
Management of Business Logistics, 7th Ed.
8
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.
Chapter 12
Management of Business Logistics, 7th Ed.
9
Technology Impacts on Supply Chain
Disintermediation and Evolving
Technological Changes


Technology Impacts on Supply Chain
Disintermediation
 See Figure 12-5 (Appendix)
Evolving Technological Changes
 See Figure 12-6 (below) for a chronology
 Stand alone businesses and traditional firms
extending goods and services through web
sites to more complex intelligent
marketplaces.
Chapter 12
Management of Business Logistics, 7th Ed.
10
Figure 12-5 Technology Impacts on
Supply Chain Disintermediation
(a) Simplified Supply Chain
(b) Supply Chain with Disintermediation
Chapter 12
Management of Business Logistics, 7th Ed.
11
Figure 12-6
Chronicle of Internet Milestones
Chapter 12
Management of Business Logistics, 7th Ed.
12
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 -- Fig 12-7(App)
 Hubs of suppliers, customers,
manufacturers, distributors, and
wholesalers brought together in an
Internet interchange platform.
Chapter 12
Management of Business Logistics, 7th Ed.
13
Figure 12-7
Logistics Trading Exchanges
Chapter 12
Management of Business Logistics, 7th Ed.
14
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.
Chapter 12
Management of Business Logistics, 7th Ed.
15
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, machineprocessable format. (Figure 12-8)
Chapter 12
Management of Business Logistics, 7th Ed.
16
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.
Chapter 12
Management of Business Logistics, 7th Ed.
17
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.
Chapter 12
Management of Business Logistics, 7th Ed.
18
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.
Chapter 12
Management of Business Logistics, 7th Ed.
19
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 (Appendix).
Chapter 12
Management of Business Logistics, 7th Ed.
20
Figure 12-9
Logistics Information Systems
Chapter 12
Management of Business Logistics, 7th Ed.
21
Logistics Information Systems:
Planning System


Illustrated in Figure 12-10
Provides decision support for logistics managers
 Logistics functional databases
 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.
Chapter 12
Management of Business Logistics, 7th Ed.
22
Logistics Information Systems

Types of modeling approaches -Table 12-5 (App)
 Optimization


Simulation


Searches for “best” solution
Replicates the logistics network
Heuristic

Chapter 12
Used for broader, non-optimum solutions
Management of Business Logistics, 7th Ed.
23
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.
Chapter 12
Management of Business Logistics, 7th Ed.
24
Table 12-5
Logistics Decisions
Chapter 12
Management of Business Logistics, 7th Ed.
25
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
Chapter 12
Management of Business Logistics, 7th Ed.
26
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.
Chapter 12
Management of Business Logistics, 7th Ed.
27
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
Chapter 12
Management of Business Logistics, 7th Ed.
28
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.
Chapter 12
Management of Business Logistics, 7th Ed.
29
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.
Chapter 12
Management of Business Logistics, 7th Ed.
30