Itl lecture-22 (logistics information system)

07/06/10 1
By :
Prof. Amit Kumar

07/06/10 2
“Logistics has advanced from warehousing and
transportation to boardrooms of the successful leading
companies across the world. Due to increasing
importance of business logistics, it becomes necessary
for the student pursuing management education from
IILM- Graduate School of Management, to understand
logistics, its basic framework and practical utility.”
IILM-GSM
Importance of this course
International Trade Logistics

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Course: International Trade Logistics
1. Logistics - At the Centre of World Trade
2. Supply Chain Management
3. Warehousing: A Role Beyond Storage
4. Material Handling & Storage System
5. Inventory Management
6. Transportation: Backbone of Logistics
7. Logistics Packaging
8. Logistics Information System
9. Global Logistics & Outsourcing
IILM-GSM
International Trade Logistics

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IILM-GSM
International Trade Logistics Logistics Information System

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Contents
• Logistics Information Needs
• Designing Logistics Information System (LIS)
• Elements of LIS
• Desired Characteristics of LIS
 Accuracy, Flexibility
 Interactive, Availability
 Timeliness, Format
• Levels of Logistics Information System
 Operating Level, Strategic Level
 Tactical level, Control Level
IILM-GSM

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Using information more effectively is the single most
important source of competitive advantage for
business firms today.
Logistics is an information-based process of material
movement across the supply chain, and hence
information is a major factor for enhancing logistics
competitiveness.
Introduction: Logistics Information
System
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• Logistics information is required for operation planning
and control, system development and also for the
strategic decision-making process.
• Operational planning covers customer order registration,
order processing, procurement actions, storage, order
picking, packing and transportation.
• There is a high degree of risk element in strategic
planning exercise, which can be minimized through
designing a proper LIS using latest technologies,
ensuring speed and reliability in information availability,
processing and movement.
Logistics Information Needs
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• The information system is an interacting structure of
people, equipment, methods and control, designed to
create information flow in the required format for the user
to make the decision to reduce the risk element.
• Like, MIS which is designed more for general
management information needs, the LIS caters to the
specific information needs for decision making in the
areas of logistics management.
Designing Logistics Information System
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LIS basically consists of the following elements:
• Information sources
• Information collection system
• Storage
• Processing
• Retrieval
• Report formatting
IILM-GSM

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Information Sources:
• There are two basic resources for information, namely
external customers and the internal departments or
functional areas of the enterprise.
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Information Collection System
• Customer order may come in the form of a purchase
order through mail, fax or EDI. Information in electric
from will be directly decoded and entered into the LIS.
• The customer order may be assigned a particular code
(bar code) to track and trace it by various internal
information users.
• From internal sources the information may be collected
and punched annually or fed into the system
electronically by using bar coding, radio frequency tags
and voice interactive system.
IILM-GSM

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Storage
• Information storage is done on magnetic tapes, CDs or
the hard disk of centralized computers.
• With the advance data storage systems based on the
magnetic principle, it is possible to store voluminous
data.
IILM-GSM

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Processing
• Today, with advanced computer technology using
microchips, instant processing of voluminous data with
great accuracy is possible.
• However, selection of the right computer system for a
given application needs to be done cautiously, keeping in
view the objectives, investment cost and maintenance
capabilities.
IILM-GSM

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Retrieval
• With advanced computer data warehousing and mining
system will facilitate instant data retrieval at user
terminals spread across the system.
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Report Formatting
• The appropriate software designed for the installed
system makes it possible to generate reports for users in
the required formats.
• Non value-added system output capabilities may be
identified and taken out of the system to reduce
investment cost.
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To reduce the risk involved in decision-making, the
following features are required to be considered while
designing the LIS.
Desired Characteristics of LIS
IILM-GSM
Logistics
Information
System
Accuracy
Flexibility
Availability
Timeliness
Interactive
Format

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Accuracy
• Accuracy with regard to inventory can be defined as the
degree to which the information generated through the
reports matches with that of the physical counts. Ideally,
an inventory, counted physically, should match the one
reflected in the LIS report.
• If there is a deviation, it is necessary to maintain a buffer
stock to take care of the deviation.
• A high degree of accuracy always helps minimize the
risk element in making a decision.
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Availability
• Operating level data is frequently required to prepare
status reports in different formats for various
management levels in an organization.
• This information should be readily available and
retrievable.
• For example, if a customer wants to know the status of
his order, or the management wants information on
current inventory levels to make a commitment to some
large client of strategic importance, LIS should be
designed to respond to such queries immediately.
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Timeliness
• Updates on information for addition or deletion should be
(on real-time basis) taken care of before the periodic
reports are due for generation.
• Material allocation based on the old report may create
problems in providing services to the important
customer.
• Delay in customer order registration and order
processing will give an incorrect picture of ‘orders on
hand’. The procurement actions initiated on the basis of
an incorrect report will create material shortages in
future, particularly for long delivery parts.
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Flexibility
• It refers to information requirements in the formats
needed by the internal users and the external customers
of an organization.
• Internal users may require information in one particular
format.
• While, the customer who places a very large order for a
Greenfield project requires order status reports
periodically in different formats to forward to his bankers,
top management, government and so forth.
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Format
• The format in which the information is required differs with
the authority making the decision. LIS should be designed
to satisfy the information needs of system users in the
format of their choice.
• At the top management level, a half-page status report on
inventory level is sufficient to decide on the funds
requirement; while the material manager will call for a
status report on A-class items, leaving the decision for B-
class items to his subordinates.
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Interactive
• If the safety or reorder levels of the inventory dangerously
deviate from the norms, LIS should bring this to notice of
the system users by way of generating an exceptional
status report.
• Any deviation, especially in the case of large orders from
strategic clients, should be highlighted to the concerned
users.
• The expert system or the information systems based on the
artificial intelligence help the management to look for
solutions to the problems that were earlier encountered
and resolved by the experts.
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Levels of LIS
IILM-GSM

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Levels of LIS
IILM-GSM
Logistics
Information
System
Strategic Level
• Capability and
capacity planning
• Alliances and
partnership
• Customizing
Tactical Level
• Inventory Management
• Facility Planning
• Channel Integration
• Vehicle route planning
and scheduling
• Outsourcing
Control Level
• Customer Service
• System productivity
• Cost control
• Asset utilization
Operational Level
• Order registration
• Order processing
• Inventory planning
• Warehousing & distribution
• Transportation & delivery

Itl lecture-22 (logistics information system)

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