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CHAPTER 2
Logistics and Information
Technology
Copyright © 2015 Pearson Education, Inc.
Logistics and Information Technology
Key Terms
• Application specific
software
• Big Data
• Cloud computing
• Data mining
...
Logistics and Information Technology
Key Terms
• Logistics information
system (LIS)
• Logistics optimization
models
• On-d...
Learning Objectives
• To appreciate the importance of effective and
efficient utilization of information for logistics
man...
Learning Objectives
• To look at the Internet’s influence on logistics
• To learn about select information technology
chal...
Benefits of Effective and Efficient Use
of Information
• Greater knowledge and visibility across the
supply chain
• Greate...
Figure 2.1:
General
Types of
Information
Management
Systems
2-7
Copyright © 2015 Pearson Education, Inc.
General Types of Information
Management Systems
Office automation systems:
• Provide effective ways to
– Process personal ...
General Types of Information
Management Systems
Office automation systems:
• Include general software packages
– Word proc...
General Types of Information
Management Systems
Office automation systems:
• Spreadsheet (most relevant for logisticians)
...
General Types of Information
Management Systems
Communication system
– Help stakeholders work together by interacting and
...
General Types of Information
Management Systems
Communication system
• Examples of logistics information technology
– Elec...
General Types of Information
Management Systems
Transaction Processing System (TPS)
– Collects and stores information abou...
General Types of Information
Management Systems
Transaction Processing System (TPS) (continued)
2-14
Copyright © 2015 Pear...
General Types of Information
Management Systems
Transaction Processing System (TPS) (continued)
2-15
Copyright © 2015 Pear...
General Types of Information
Management Systems
Transaction Processing System (TPS)
– Examples of automatic identification...
General Types of Information
Management Systems
Transaction Processing System (TPS)
– RFID Consists of:
1. A scanning ante...
General Types of Information
Management Systems
Management Information System (MIS) and
Executive Information System (EIS)...
Management Information System (MIS) and
Executive Information System (EIS)
•A logistics information system (LIS) can be
de...
2-20
Copyright © 2015 Pearson Education, Inc.
General Types of Information
Management Systems
Management Information Syste...
General Types of Information
Management Systems
Decision Support Systems (DSS)
•Help managers make decisions by providing
...
General Types of Information
Management Systems
Decision Support Systems (DSS)
•Several prominent DSS techniques include:
...
General Types of Information
Management Systems
Decision Support Systems (DSS)
•Examples of logistics-related application-...
General Types of Information
Management Systems
Decision Support Systems (DSS)
2-24
Copyright © 2015 Pearson Education, In...
General Types of Information
Management Systems
Decision Support Systems (DSS)
•Data mining – a DSS technique
– Is the app...
General Types of Information
Management Systems
Enterprise Systems
•Create and maintain consistent data processing
methods...
General Types of Information
Management Systems
Enterprise Systems
•Enterprise Systems example:
– Enterprise resource plan...
General Types of Information
Management Systems
Enterprise Systems
•Shortcomings of Enterprise resource planning
(ERP)
–Co...
The Internet’s Influence on Logistics
• Approximately 35% of the world’s population
uses the internet – up from 5% at the ...
The Internet’s Influence on Logistics
Logistical Functions and
Activities
•Transportation
•Warehousing
•Materials handling...
The Internet’s Influence on Logistics
Online Retailing
• More, smaller orders
• Order management
systems must handle large...
The Internet’s Influence on Logistics
Online Retailing
• Products slotted to
facilitate picking smaller
orders
• Totes and...
The Internet’s Influence on Logistics
Online Retailing
• Transportation companies
used with extensive
delivery networks;
e...
– Worldwide public cloud services market – where
software, services, or information are shared via
the Internet without th...
The Internet’s Influence on Logistics
• Cloud Computing
– Advantages of Cloud Computing
• Pay-per-use allows firms to avoi...
The Internet’s Influence on Logistics
• Cloud Computing
– Advantages of Cloud Computing continued
• Faster and less costly...
The Internet’s Influence on Logistics
• Cloud Computing
– Drawbacks of Cloud Computing
• Upgrades and updates can be too n...
2-38
The Internet’s Influence on Logistics
• Electronic Procurement, or e-procurement
- Uses the internet to make it easie...
The Internet’s Influence on Logistics
• Electronic Procurement, or e-procurement
– Benefits realized from e-procurement in...
The Internet’s Influence on Logistics
• Electronic Procurement, or e-procurement
– Benefits realized from e-procurement in...
- Drawbacks of using e-procurement
• Security risk of transmitted information
• Impersonal as human interaction is replace...
• IT is a tool that can help manage
organizational problems, but it is not a be-
all/end-all solution for organizational
p...
Copyright Notice
2-43
Copyright © 2015 Pearson Education, Inc.
All rights reserved. No part of this publication may be rep...
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Logistics and Information Technology

  1. 1. CHAPTER 2 Logistics and Information Technology Copyright © 2015 Pearson Education, Inc.
  2. 2. Logistics and Information Technology Key Terms • Application specific software • Big Data • Cloud computing • Data mining • Data warehouse • Electronic data interchange (EDI) • Electronic procurement (e-procurement) • Enterprise resource planning (ERP) system • Global positioning systems (GPS) • Information 2-2 Copyright © 2015 Pearson Education, Inc.
  3. 3. Logistics and Information Technology Key Terms • Logistics information system (LIS) • Logistics optimization models • On-demand software (software-as-a-service) • Radio-frequency identification (RFID) • Reverse auction • Simulation • Transportation Management System (TMS) • Warehouse Management System (WMS) • Wireless communication 2-3 Copyright © 2015 Pearson Education, Inc.
  4. 4. Learning Objectives • To appreciate the importance of effective and efficient utilization of information for logistics management • To learn about general types of information systems and their logistical applications 2-4 Copyright © 2015 Pearson Education, Inc.
  5. 5. Learning Objectives • To look at the Internet’s influence on logistics • To learn about select information technology challenges 2-5 Copyright © 2015 Pearson Education, Inc.
  6. 6. Benefits of Effective and Efficient Use of Information • Greater knowledge and visibility across the supply chain • Greater awareness of customer demand via point-of-sale data • Better coordination of manufacturing, marketing, and distribution • Streamlined order processing and reduced lead- times 2-6 Copyright © 2015 Pearson Education, Inc.
  7. 7. Figure 2.1: General Types of Information Management Systems 2-7 Copyright © 2015 Pearson Education, Inc.
  8. 8. General Types of Information Management Systems Office automation systems: • Provide effective ways to – Process personal and organizational business data – Perform calculations – Create documents 2-8 Copyright © 2015 Pearson Education, Inc.
  9. 9. General Types of Information Management Systems Office automation systems: • Include general software packages – Word processing – Spreadsheet (most relevant for logisticians) – Presentation – Database management applications 2-9 Copyright © 2015 Pearson Education, Inc.
  10. 10. General Types of Information Management Systems Office automation systems: • Spreadsheet (most relevant for logisticians) – Able to solve for basic logistic optimization models through add-in packages such as “What’s Best” 2-10 Copyright © 2015 Pearson Education, Inc.
  11. 11. General Types of Information Management Systems Communication system – Help stakeholders work together by interacting and sharing information in many different forms – Examples of telecommunication technologies • Fax machines • Personal computers • Electronic mail • Cellular phones • Tablets • Smart phones 2-11 Copyright © 2015 Pearson Education, Inc.
  12. 12. General Types of Information Management Systems Communication system • Examples of logistics information technology – Electronic data interchange (EDI) • Viewed as the measuring stick in the 1990’s – Wireless communication • Emerged as the measuring stick during the first decade of the twenty-first century • Device examples include – Global positioning systems (GPS) – Tablets (such as Apple’s iPad) 2-12 Copyright © 2015 Pearson Education, Inc.
  13. 13. General Types of Information Management Systems Transaction Processing System (TPS) – Collects and stores information about transactions – Efficient processing of transactions with a choice of • Real-time processing or • Batch processing – Examples include • Electronic data interchange (EDI) • Automatic identification technologies – Essential component in point-of-sale (POS) systems 2-13 Copyright © 2015 Pearson Education, Inc.
  14. 14. General Types of Information Management Systems Transaction Processing System (TPS) (continued) 2-14 Copyright © 2015 Pearson Education, Inc. Benefits of EDI Reduced document preparation and processing time Increased cash flow Reduced inventory carrying costs Increased billing accuracy Reduced personnel costs Increased productivity Reduced Information float Increase customer satisfaction Reduced shipping errors Reduced lead times Reduced order cycle times Reduced ordering costs
  15. 15. General Types of Information Management Systems Transaction Processing System (TPS) (continued) 2-15 Copyright © 2015 Pearson Education, Inc. Drawbacks of EDI Lack of awareness of the benefits of EDI High setup costs Lack of standard formats Incompatibility of computer hardware and software Reduced shipping errors Reduced lead times Reduced order cycle times Reduced ordering costs
  16. 16. General Types of Information Management Systems Transaction Processing System (TPS) – Examples of automatic identification technologies • Optical character recognition • Machine vision • Voice-data entry • Magnetic strips • Bar code scanners • Radio-frequency identification (RFID) 2-16 Copyright © 2015 Pearson Education, Inc.
  17. 17. General Types of Information Management Systems Transaction Processing System (TPS) – RFID Consists of: 1. A scanning antenna 2. An RFID tag (chip) that conveys relevant data 3. A receiver that interprets the data – Compared to bar codes, RFID 1. Does not require clear line of sight between an object and RFID hardware 2. Can store much larger quantities of data 3. Can offer both read and write capabilities 2-17 Copyright © 2015 Pearson Education, Inc.
  18. 18. General Types of Information Management Systems Management Information System (MIS) and Executive Information System (EIS) •Convert TPS data into information for monitoring performance and managing an organization •Objective is to provide managers and executives the information they really need 2-18 Copyright © 2015 Pearson Education, Inc.
  19. 19. Management Information System (MIS) and Executive Information System (EIS) •A logistics information system (LIS) can be defined as “the people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to logistics decision makers.”1 1 Adapted from a definition of “marketing information system” provided by Philip Kotler and Gary Armstrong in Principles of Marketing, 11th ed. (Upper Saddle River, NJ: Prentice Hall, 2006), Chapter 4. Copyright © 2015 Pearson Education, Inc. 2-19 General Types of Information Management Systems
  20. 20. 2-20 Copyright © 2015 Pearson Education, Inc. General Types of Information Management Systems Management Information System (MIS) and Executive Information System (EIS)
  21. 21. General Types of Information Management Systems Decision Support Systems (DSS) •Help managers make decisions by providing information, models, or analysis tools •Examples of specific uses include – Vehicle routing issues – Inventory control decisions – Developing automatic order picking systems – Optimization models for buyer-seller negotiations 2-21 Copyright © 2015 Pearson Education, Inc.
  22. 22. General Types of Information Management Systems Decision Support Systems (DSS) •Several prominent DSS techniques include: – Simulation • Technique that models a real-world system, typically using mathematical equations to represent the relationships among the system’s components – Application specific software • Technique developed to help managers deal with specific logistics processes or activities • Popular option includes on-demand software (also referred to as software-as-a-service or cloud computing) 2-22 Copyright © 2015 Pearson Education, Inc.
  23. 23. General Types of Information Management Systems Decision Support Systems (DSS) •Examples of logistics-related application-specific software – Transportation management systems (TMS) • Software package that automates the process of building orders, tending loads, tacking shipments, audits, and payments1 – Warehouse management systems (WMS) • Software package that provides oversight of the storage and flow of materials within a company’s operations2 1 Amy Zucherman, “Transportation Management Systems Give Shippers Power to Make Smarter Trucking Choices,” World Trade, January 2008, 34-38. 2 Dave Piasecki, “Warehouse Management Systems,” www.inventoryops.com. 2-23 Copyright © 2015 Pearson Education, Inc.
  24. 24. General Types of Information Management Systems Decision Support Systems (DSS) 2-24 Copyright © 2015 Pearson Education, Inc.
  25. 25. General Types of Information Management Systems Decision Support Systems (DSS) •Data mining – a DSS technique – Is the application of mathematical tools to large bodies of data in order to extract correlations and rules1 – Dependent on data warehouses • Central repository for all relevant data collected by an organization 1 Sam Joseph and Daniel Scuka, “AI”, Japan Inc., November 2001, 20-28. 2-25 Copyright © 2015 Pearson Education, Inc.
  26. 26. General Types of Information Management Systems Enterprise Systems •Create and maintain consistent data processing methods and an integrated database across multiple business functions1 2-26 Copyright © 2015 Pearson Education, Inc.
  27. 27. General Types of Information Management Systems Enterprise Systems •Enterprise Systems example: – Enterprise resource planning (ERP) • “lets a company automate and integrate the majority of its business processes, share common data and practices across the enterprise, and produce and access information in a real-time environment”1 1 Joel D. Wisner, G. Keong Leong, and Keah-Choon Tan, Principles of Supply Chain Management: A Balanced Approach, 2nd ed. (Mason, OH: South-Western Cengage Learning, 2008), p. 507. 2-27 Copyright © 2015 Pearson Education, Inc.
  28. 28. General Types of Information Management Systems Enterprise Systems •Shortcomings of Enterprise resource planning (ERP) –Costs of installation –Time-consuming installation process –Initially lacked strong application-specific logistical capabilities such as TMS or WMS 2-28 Copyright © 2015 Pearson Education, Inc.
  29. 29. The Internet’s Influence on Logistics • Approximately 35% of the world’s population uses the internet – up from 5% at the beginning of the 21st century • 3 Specific Influences on Logistics Include: 1. Online retailing 2. Cloud computing 3. Electronic procurement 2-29 Copyright © 2015 Pearson Education, Inc.
  30. 30. The Internet’s Influence on Logistics Logistical Functions and Activities •Transportation •Warehousing •Materials handling •Order management Equipment and Materials • Bar coding • WMSs 2-30 Similarities between online retailing and in-store retailing Copyright © 2015 Pearson Education, Inc.
  31. 31. The Internet’s Influence on Logistics Online Retailing • More, smaller orders • Order management systems must handle large volumes of orders • Information management systems capable of correctly transmitting each order so it can be filled in a timely fashion • Smaller orders dictate open-case picking In-store Retailing • Fewer, larger orders • Order management system is set up to handle orders from resellers, not consumers • Full-case picking • Warehouse set up to handle large volume orders 2-31 Differences between online retailing and in-store retailing Copyright © 2015 Pearson Education, Inc.
  32. 32. The Internet’s Influence on Logistics Online Retailing • Products slotted to facilitate picking smaller orders • Totes and push carts used • Packaging is small cartons, envelopes, bags suited to holding small quantities In-Store Retailing • Variety of materials handling equipment used • Packaging generally cartons that hold large volume orders 2-32 Differences between online retailing and in-store retailing Copyright © 2015 Pearson Education, Inc.
  33. 33. The Internet’s Influence on Logistics Online Retailing • Transportation companies used with extensive delivery networks; experience in parcel shipments • Outbound shipments usually picked up by vans • Return rates much higher and from ultimate consumers In-store Retailing • Transportation methods and companies vary by request of buyer • Outbound shipments may be picked up by tractor trailers or railcars • Return rates lower and from resellers 2-33 Differences between online retailing and in-store retailing Copyright © 2015 Pearson Education, Inc.
  34. 34. – Worldwide public cloud services market – where software, services, or information are shared via the Internet without the users having control over the technology infrastructure – grew almost 20% between 2011 and 20121 1 Bridget McCrea, “Cloud Breakthrough,” Logistics Management 51, no. 11 (2012): 36-40. 2-34 The Internet’s Influence on Logistics • Cloud Computing Copyright © 2015 Pearson Education, Inc.
  35. 35. The Internet’s Influence on Logistics • Cloud Computing – Advantages of Cloud Computing • Pay-per-use allows firms to avoid high capital investment which speeds up ROI for the software • Since it involves operational as opposed to capital expenditures, it is a viable option for firms that could not afford to purchase, install, and maintain application-specific software such as TMS and WMS • Due to the economic slowdown of 2007, many firms were forced to slash IT expenditures, thus benefitting cloud-based applications 2-35Copyright © 2015 Pearson Education, Inc.
  36. 36. The Internet’s Influence on Logistics • Cloud Computing – Advantages of Cloud Computing continued • Faster and less costly installation • Smaller IT staff • Regular upgrades and updates from the software provider 2-36Copyright © 2015 Pearson Education, Inc.
  37. 37. The Internet’s Influence on Logistics • Cloud Computing – Drawbacks of Cloud Computing • Upgrades and updates can be too numerous and too frequent • Limited amount of customization • Security issues 2-37Copyright © 2015 Pearson Education, Inc.
  38. 38. 2-38 The Internet’s Influence on Logistics • Electronic Procurement, or e-procurement - Uses the internet to make it easier, faster, and less expensive for an organization to purchase goods and services Copyright © 2015 Pearson Education, Inc.
  39. 39. The Internet’s Influence on Logistics • Electronic Procurement, or e-procurement – Benefits realized from e-procurement include: • Transactional benefits – Measures the benefits of enhanced transactional efficiency associated with e- procurement • Compliance benefits – Focus on the savings that come from adherence to established procurement policies 2-39Copyright © 2015 Pearson Education, Inc.
  40. 40. The Internet’s Influence on Logistics • Electronic Procurement, or e-procurement – Benefits realized from e-procurement include: • Management information benefits – Encompass those that result from management information, customer satisfaction, and supplier satisfaction levels after implementation of e-procurement • Price benefits – Are those that are given as a result of adopting e-procurement 2-40Copyright © 2015 Pearson Education, Inc.
  41. 41. - Drawbacks of using e-procurement • Security risk of transmitted information • Impersonal as human interaction is replaced by computer transactions 2-41 The Internet’s Influence on Logistics • Electronic Procurement, or e-procurement Copyright © 2015 Pearson Education, Inc.
  42. 42. • IT is a tool that can help manage organizational problems, but it is not a be- all/end-all solution for organizational problems • Theft of proprietary information – Websites protected from viruses and hackers – Decreasing size and increasing portability of technology devices • Employee resistance to IT implementations 2-42 Information Technology Challenges Copyright © 2015 Pearson Education, Inc.
  43. 43. Copyright Notice 2-43 Copyright © 2015 Pearson Education, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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To appreciate the importance of effective and efficient utilization of information for logistics management To learn about general types of information systems and their logistical applications

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