Information Technology

1. IT in Logistics
Chapter 5
Technology Designing Supply Chains

2. Introduction:
Main Reference Text:
• Chikohora, E. (2018). Information Technology in Logistics (Study Guide).
Windhoek, Centre for Open and Lifelong Learning. Namibia University of
Science and Technology.
• ITL611S Book Link: https://online.fliphtml5.com/hbhcd/uusi/
Recommended Reading:
• Beynon-Davis P. Business Information Systems: New York, Palgrave
Macmillan 482
• David L. Supply Chain Information Management (Harvard Business School)
• Relevant articles from journals such as Harvard Business Review

3. Lecture 1: Technology Designing Supply
Chains
Objectives:
Upon completion of Chapter 5 you will be able to:
• Analyse the benefits of Supply Chain Management (SCM) Architecture to
organisations.
• Evaluate the systems architecture for Supply Chain Management.
• Outline the Information Technology tools used in Value Chains Analysis.
• Discuss key technologies for enhancing Supply Chain Management.
• .

4. Definition of terms
• Design: refers to a specification of an object/ system manifested by
some agent, intended to accomplish goals in an environment using a
set of primary/fundamental components satisfying a set of
requirements .
• Architecture: the art and technique of designing and building

5. Supply Chain Designs (SCD)
SCD is the process by which a company structures and manages
the supply chain to identify the right balance between inventory,
transportation and manufacturing cost.
SCD involves the following:
• Locating and rationalizing the facilities within the supply chain,
• Determining the capacity of the located facilities,
• Determining how to source demand through the network and
• Selecting the modes of transportation in a manner that provides the required
level of customer service at the lowest cost.

6. Supply Chain Model - Example
Figure 1 shows a simple SCD
model with:
i. 2 Plants,
ii. 3 Distribution centres and
iii. 5 Customer locations
As the number of (products,
sourcing options, transport
modes, costs, lead times)
increases the complexity of the
model grows exponentially.
Hence require special tools to
evaluate the model.
Figure 1: Supply Chain Model

7. SCD Benefits to Organisations
• Forecasting product demand, predicting future product or service demand based on the
past events and prevailing trends in the present.
• Position and manage inventory, supervision non-capitalized assets (inventory) and stock
items from manufacturers or suppliers to warehouses right through to the point of sale
facilities.
• Move product between facilities, keeping track of goods movement by using
a warehouse or inventory transfer to ship items from one warehouse to another.
• Segment and collaborate with customers, help organisations to target customers or
demographics of attractive or untapped market segments.
• Organise the supply chain function, management of cross-functional approach in the SCM,
ie. managing the movement of raw materials into an organization, internal processing of
materials into finished goods and the movement of finished goods to the end-users.
• Select locations for manufacturing and distribution, decisions on where best to locate
facilities such as warehouses, manufacturing plants, wholesale and retail outlets for
business convenience.

8. Supply Chain Management Systems (SCM)
SCM is a network of retailers, distributors, transporters, storage facilities, and
suppliers who take part in the production, delivery and sale of a product that
convert and move the goods from raw materials to end users.
SCM software applications provide real-time analytical systems that manage
the flow of product and information throughout the supply chain network.
They are designed to enhance:
i. SCM operations,
ii. Supplier sourcing,
iii. Production planning,
iv. Inventory planning,
v. Transportation planning and
vi. Demand planning,
vii. etc.

9. SCM Systems Architecture
Supply Chain Architecture is the
provision of understanding, direction
and tools to apply the principles of
SCM such as Velocity, Variability,
Vocalize, Visualize and Value to
improve a company’s supply chain
network competitiveness.
There are 3 basic system architectures
namely:
i. Enterprise Resource Planning
systems (ERP),
ii. Warehouse Management Systems
(WMS) and
iii. Transportation Management
Systems (TMS)
# Basic
System
Functions Users
1 ERP Purchasing,
Material
management,
Sales.
Manufacturers,
Trading companies.
2 WMS Receipts put-away,
Bin management,
Order picking,
Order packing.
Logistic service
providers,
Wholesalers.
3 TMS Transport booking,
Planning and
monitoring.
Forwarders,
Carriers.
Table 1: Basic System functions & Users

10. SCM
software
Components
Architecture
Figure 2: Software Components Architecture

11. Value Chain Analysis (VCA)
• Value Chain is a way of
conceptualizing the
activities that are needed to
provide a product or service
to a customer.
• Value Chain Analysis is a
theoretical tool for
analysing the competitive
advantage for an enterprise.
• A combination of internal
and external logistics
namely industrial and
business logistics
respectively.
Figure 3: Value flow in LVC

12. Porter’s Value Chain (PVC)
• Michael E. Porter was the first to
introduce the concept of a value
chain
• The firm’s discrete activities such
as:
i. Designing,
ii. Producing,
iii. Marketing,
iv. Delivering and
v. Supporting its product
Determines it’s Competitive
advantage
Figure 4: Michael Porter’s Value Chain

13. PVC Activities
Primary activities:
i. Inbound logistics are the receiving, storing
and distributing of raw materials used in
the production process.
ii. Operations is the stage at which the raw
materials are turned into the final product.
iii. Outbound logistics is the distribution of the
final product to consumers.
iv. Marketing and sales involves advertising,
promotions, sales-force organization,
distribution channels, pricing and managing
the final product to ensure it is targeted to
the appropriate consumer groups.
v. Service refers to the activities needed to
maintain the product's performance after it
has been produced, and includes things like
installation, training, maintenance, repair,
warranty and after-sale services.
Support activities:
i. Procurement is how the raw materials for the
product are obtained.
ii. Technology development can be used in the
research and development stage, in how new
products are developed and designed, and in
process automation.
iii. Human resource management includes the
activities involved in hiring and retaining the
proper employees to help design, build and
market the product.
iv. Firm infrastructure refers to an organization's
structure and its management, planning,
accounting, finance, and quality-control
mechanisms.

14. Software for Value Chain Analysis
VCA software is used by
organisations to build different
scenarios to analyse business
models such as:
• The socio-economic impact of
policies opening to international
trade,
• New technologies adoption, etc
VCA Software allows you to
calculate:
• Inputs & outputs
• Costs, benefits, value addition
• Profitability indexes , etc. Figure 4: FAO VCA-Tool software extract

15. SCM Technology Tools
• Electronic Data Interchange (EDI).
• Bar coding and Scanner.
• Enterprise Resource Planning (ERP)
Systems.
• Warehouse Management Systems(WMS).
• Transportation Management Systems(TMS).
• Inventory Management Systems (IMS).
• Radio Frequency Identification (RFID).
• Decision Support Systems (DSS).
• Web Services.
• Electronic Commerce (e-commerce).
• Electronic Supply Chains (ESC).
Figure 5: Functional Roles of IT in SCM

16. Activity 1
In what ways does key technological tools benefit Logistics
organizations in realizing their SCM activities? Discuss.

17. End of Chapter 5