The document discusses the importance of a logistics information system (LIS) in decision-making and management functions, highlighting various elements such as sourcing, collection, storage, retrieval, and reporting of information. It details the significance of computerized information systems for efficient logistics operations, including order processing, inventory management, and cost considerations. Additionally, the document presents a comprehensive overview of internal and external information systems, emphasizing the necessity of timely and accurate information for effective supply chain management.

1. CHAPTER-2
LOGISTIC INFORMATION
SYSTEM

2. INFORMATION
• i-Information is basic to decision making
• ii-Decision making is the essence of
management function.
• iii-A manager relies on a information system to
make decisions pertaining to his function and
level of his management.
• iv-The information so collected is integrated into
a system.
• v-The information may be in the form of
computer, desk calculator, group of
people,filescontainers.etc.

3. INFORMATION(contd.)
• vi-Information is a structure of machines and
management technology enabling the manager
to collect,receive,process and analyze
information.
• vii-Information is transmitted, stored and
retrieved in an information system.
• viii-Information is transmitted to create a data
base for decision making
• ix-The storage function involves filling,retrieving
and file maintaining.

4. Management Information
System(MIS)
• i-An information system which enables the
management to make a decision is called
MIS.
• ii-Lack of information leads to poor
decision making.
• iii-An information from a particular source
must be accepted with caution since every
source has its own bias.

5. Elements of Information
• i-Sources-Sources must be reliable, authentic
and easily available. For Physical distribution, it
can be sales orders, accounting data, data from
booksperiodicals, from executives and
knowledgeable persons.
• ii-Collection of information-The system may
receive information sales
staff,periodicals,publications,letters,telegrams,tel
exes from dealers,distributors,customers and
research organizations.

6. Elements of Information(contd.)
• iii-Storage-The data so collected from various
sources in a formmanner which are convenient
for storsageuse.The data bank may be
registers,files,documents,books etc
• iv-Retrieval-The information so collected from
data sources, processed and stored has to be
retrieved for the purpose of decision making,
and should be in a form which is useful in
decision making.

7. Elements of Information(contd.)
• v-Reports-The data collected, stored and
retrieved has to be put to decision maker
in specified forms called reports and can
be in the form of letters, orders and must
get information which is essential for
decision making.
• It is essential that retrieval of information is
without errors, fast and prompt and should
be in a form useful to the reader.

8. Computerized Information System
• i-Computerized data is rapid, prompt and error
free and gives large volume of information for
accurate analysis and decision making.
• ii-Computer enables us to analyses information
in a manner and speed which can not be
obtained manually.
• iii-Computerization may look to be expensive,
because of initial high cost but with the advent of
minimicro processors and with the possibility of
hiring and leasing the costs are much to the
advantage of decision maker.

9. Logistic Information System
• i-The function coordinates the function of
physical supply of raw materials and distribution
of the finished products.
• ii-The prime functions performed are movement
control and demand supply coordination.
• iii-The movement control of raw materials,
finished products involves the transportation of
goods, warehousing and material handling.
• iv-Under demand supply coordination, purchase
orders and sales orders are processed.

10. Computerized Information System
• Computer data is rapid, prompt and error
free
• Allows analyzing information with speed,
not possible manually
• Computerization helps in better
coordination between supply of material
and demand
• Though initially expensive, in the long run
saves on space and staff.

11. Computerized Information
System(contd.)
• Total information system includes mathematical
and statistical modeling facilitating analyzing of
data.
• It is a decision assisting system.
• Helps in control systems such as Inventory
control, computerized material handling and
storage system, order processing system.
• Delegates the responsibility to lower levels
under rulesregulations, which are made in
advance, departure from established rules
becomes almost impossible.

12. Logistic Information System
• Coordinates the function of supply of raw
material as also distributes the finished product.
• Prime functions being movement control and
demand supply coordination.
• On raw material side, involves follow up indent
up to issue of raw material, Purchase Order
follow up,reciept and warehousing of material,
Inventory control, issue etc.
• On finished product side ,follow up sales orders,
processing, information
flow,warehousing,scheduling,allocation of
finished products.

13. Four Primary activities of Logistic
Inf. System
• i-Data flow from external sources
• ii-Processing and storage of information
within Firm
• iii-Communication of data for
storageprocessing the decision maker in
the form of reports
• iv-Communication of decision to
customers and their feedback.

14. External Information System
• i-Order pattern of the customers- means total
numbervolume of products ordered.
• ii-Material handling system available with
Customers -Can result in saving if material
handling system of SupplierCustomer is
compatible.
• iii-Re-order point of the customers-
Computerized order processing can reduce the
reordering level
• iv-Ordering procedure of customer -requires
coordinationcooperation

15. External Information System
• Following information is desirable from internal
departments.
• i-Purchasing –Preference of purchased parts.
• ii-Production- Inf. On Product reference,
Competitor product performance
• iii-Marketing- Sales structure, Customer service
requirement.
• iv-Finance and control- Sales statistics, credit
rating.
• v-Physical distribution- Warehousing
locationscapacity, reorder pattern etc

16. Internal Information System
• Purchasing
• i-Logistic costs of purchasing from different
suppliers and supply points.
• ii-Routing instructions and status for inbound
materialssupplies.
• iii-Supplier preferences in meeting delivery
schedules.
• iv-Supplier pricesdiscounts, name
adresses,delivery schedule
• v-Alternate source of supplyprocess.

17. Internal Inf. System(contd.)
• Production
• i-Warehouse capacity for raw materialsfinished
products.
• ii-Production quantitiesScheduling.
• iii-Warehousing material handling systems.
• iv-Alternate costs of logistics based on different
schedules.
• v-Delivery requirements from production to
warehouse.
• vi-Logistic innovations.

18. Internal Inf. System(contd.)
• Production (contd.)
• vii-Status of inbound movement of suppliesraw
materials.
• viii-Production capacity.
• ix-Alternate methods of production based on
different production plans.
• x-Revised Party's plans.
• xi-Production innovations.
• xii-Physical supply requirements and delivery
requirements.

19. Internal Inf. System(contd.)
• Marketing
• i-logistics costs of alternatives levels of customer
service.
• ii-Performance in meeting regular customer
service standards.
• iii-Potential changes in logistics' which may
affect future sales efforts programmes.
• iv-Competitor logistics' costs.
• v-Customer complaints.

20. Internal Inf.System (contd.)
• Marketing(contd.)
• vi-New Product introduced and sales
production plans.
• vii-Sales costs.
• viii-Customer service norms.
• ix-Prices and price adjustments.
• x-Special customer service requirements.

21. Internal Inf. System (contd.)
• Finance
• i-Budget for physical distribution costs.
• ii-various estimates of costs.
• iii-Projected capital investment
requirements.
• iv-Order processing system to provide
coordination within invoicing and accounts
receivable.
• v-Freight bill auditing procedure.

22. Internal Inf. System (contd.)
• Finance (contd.)
• vi-Customer credit rating
• vii-Credit procedure.
• viii-Corporate financial conditional and
performance.
• ix-Capital availability.
• x-Status of capital requests.

23. Internal Inf. System (contd.)
• Service Agencies
• i-Proposal for rate adjustments.
• ii-Rate information requirements.
• iii-Request for quotations for equipment.
• iv-Freight rates.
• v-Carrier rates, service and availability.
• vi-Request for rate adjustments, transportation
equipment, transit time standards etc.

24. Order Processing
• Order processing cell documentation
• Credit check
• Inventory check.
• Order for dispatch.
• Replenishment of inventory.
• Intimation to customer.
• Dispatch of goods.
• Receipt of goods.
• Collection of payments.

25. Document Processing
• Customer order
• Order processing cell (Inventorycredit check,
Production schedules coordination)
• Customer intimation
• Invoicing
• Shipping documentation
• Warehouse
• Transportation
• Dispatch to customer

26. Costs
• Order processing costs include employee
remunerationbenefits, rentelectricity
• Once system is established and staff is
recruited, no major variation takes place on year
to year basis. increase takes place due to
inflatory conditions
• One universal problem in order processing is
bunching of orders during last few days of month
because sales staff want to surpass sales
targets.
• This leads to avoidable expenses and generates
errors and pressure of work.

27. Order Cycle Time
• This is the time interval between receipt of
customer order and actual dispatch of
goods.
• Orders are generally held up in dispatch
section for clarification etc.
• The improvements should be effected for
better order improvements, thereby
improving overall order processing.

28. Order Form
• To avoid errors,pre- printed forms are used to book
orders.
• Can be simplified by coding the standard
quantitiesnamesaddresses of customers.
• In a departmental store, at the end of the shiftday orders
are sent on teleprinter communication of batch
processing. presently done on line.
• By reducing the number of transcriptions,discrepencies
in quantities destination etc can be avoided.
• If customer uses his order format, it can be transcribed in
form which can be used by suppliermanufacturer.

29. Status Reporting
• Customer in placing order, would need an
acknowledgement and expected date of
delivery.
• In case acknowledgements are not given
and delivery dates are not adhered to,
Customer may resort to various modes of
follow up, the costs of are much higher
than anticipated, leading to appreciable
cost increase in physical distribution.

30. Internal Processing
• Order form data are utilized for sales records,
such as credit status reports ,billing schedules,
manufacturingpurchase schedules.
• These have to be routed to all departments.
• The sequence must be so determined that the
flow of information is expedited and it is ensured
that documentation takes place in all relevant
departments.

31. Credit checking
• Order processing requires checking credit
worthiness of customer.
• Sales representative ,in order to expedite
sales would tend to ignore credit
worthiness .
• An elaborate credit checking is a
necessary activity but it must be
performed expeditiously ensuring no
delay.

32. Inventory check and Policy
• After checking creditworthiness, the
available stock of goods have to be
checked.
• Considering existing stocks may not be
adequate to meet present demand,
requiring a decision how much to be
supplied to customer.
• Sales policies have to be framed to offer
discount etc.

33. Dispatch Communication
• After checking credit, prices etc,the order
to be transmitted to warehouse for
execution.
• Longer is the delay in executing the order,
larger is the possibility that customer will
cancelamend the order.
• Explicit dispatch instructions to be issued
to warehouse and customer should be
informed about the status of the order.

34. Dispatch
• After receipt of order, the warehouse manager
have to order for transport,simultenousl;y
preparing the documents for dispatch for the
purpose of accountal of stocks, billing and
advice to the customer, billing of transportation
and intimation to all concerned including
marketing,production,finance,purchase etc to
fulfill the requirements of an integrated system.
• An expeditious order processing is required.

35. Logistic Information System Design
• Four major considerations are required for
an optimal system.
• i-The decision to be made at each level of
organization.
• ii-The requirement of the system.
• iii-The requirement of control over the
system.
• iv-Input and output data.

36. Logistic Information System
Design(contd.)
• i-Organization decision- While designing information
system, it has to be ensured who is entitled to get
information for decision making.
• ii-A judgment has to be made between tangible and non-
tangible costs of collectionprocessing of information.
• iii-Closely examine what types of decisions are made
and their importance, ensuring quality information for
decision making.
• iv-While planning Log. Inf. System, the requirement of
daily routine information and decisions which are made
under exceptional circumstances.

37. Logistic Inf. System Design(contd.)
• ii-System requirement-
• After arriving on the decision on collecting
information, next requirement is identification of
source of information, the volume and quality of
information
• A suitable channel of communication wil have to
be designed to satisfy various requirements.
• Considering various factors, it is suggested
electronic data processing system offers various
advantages.

38. Logistic Inf. System Design(contd.)
• iii-Control requirements-
• a-Based on guidelines given by the
management, system should be able to arrive at
decisions, minimizing delays and increasing
efficiency.
• b-Specifying and arranging the parameters of
the automatic system and should have the
possibility of redesigning id so desirable.
• c-Control is required to ensure no errors are
made.

39. Logistic Inf. System Design(contd.)
• iv-System input and output data
• In order to satisfy the demand of a
customer, number of activities are
undertaken by organization to satisfy it
and need proper coordination
• Action reports are made for the purpose of
undertaking an activity already planned on
the basis of generated information

40. Total Inf. System in Logistic
• The following costs may be taken into account
under the TIS for physical distribution system
• A-Transport costs
• i-Common carrier
• a-Pool freight per ton per km for smalls and
wagon loads.
• b-Truck freight
• c-Air freight
• d-Land ,water, sea freight rates.
• e-Forwarder and shipping charges.

41. Total Inf. System in
Logistcs(contd.)
• A-Transport Costs(contd.)
• ii-Private Vehicle Capital costs
• a-Capital costs, depreciation and interest.
• b-Return on capital
• c-Cost of transport equipment
maintenance.
• d-Equipment, tools and structures.

42. Total Inf. System in Log. (contd.)
• A-Transport costs(contd.)
• iii-Operating costs
• a-Maintenance of equipment, replacement of
parts.
• b-Maintenance of Labour and supervision.
• c-Maintenance of tools and equipment structure,
fuel oil etc.
• d-Transport Labouroverheads
• e-Maintenance supervision and overheads.

43. Total Inf. System in Log. (contd.)
• B-Warehousing costs
• i-Private warehousing costs
• a-Landbuilding costs, depreciationinterest
• b-Equipment and material.
• c-Personneloverhead costs.
• d-Fire,safety,security costs.
• e-Training of Labourequipment.
• f-Insurance and maintenance costs.

44. Total Inf. System in Log. (contd.)
• B-Warehousing costs (contd.)
• ii-Public warehousing costs
• a-Storage charges.
• b-Handling charges.
• c-Insurance.
• d-Fire,theft,loss ,compensation etc
• e-Other charges.

45. Total Inf. System in Log. (contd.)
C- Distribution Administration
Distribution management personnel and
clerical personnel costs.
D-Inventory Costs
a-Return on Inventory investment.
b-Inventory service costs.
c-Cost of space occupied.

46. Total Inf. System in Log. (contd.)
• E-Packaging costs
• a-Materials
• b-Personnel wages
• c-Equipment costs.
• d-Equipment maintenance.
• e-Tare shipping costs.
• f-Weight of packaging.
• g-Damaged goods.

47. Total Inf. System in Log. (contd.)
• F-Material handling costs
• i-Equipment
• a-Capital cost and return on income.
• b-Cost of fork lift, hand truck, conveyor etc.
• ii-Labour costs
• a-Basic pay and DA etc.
• b-Employment insurance scheme.
• c-Pension, welfare fund etc.

48. Automated Order Processing
• i-Sales order
• ii-Check Inventory levels ( if inventory levels
above reorder point ,no action.)
• iii-Inventory level below reorder point
• iv-Decide replenishment of inventory.
• v-Determine quantity for replenishment ,based
on sales forecasts, lead time, ordering costs etc.
• vi-Issue order for replenishment, receive and
update inventory

49. Order Processing
• Advantages of automated order processing
• i-Processing time is reduced, giving lower
location inventory, physical distribution costs.
• ii-Accuracy reliability of the processing system
is enhanced.
• iii-Manual system is normally expensive
considering manual labour,lower efficiency etc.
• iv-Automated system can be more
productiveefficient and a wide variety of
machines are available.

50. Essential componants of
Automated Order Processing
• a-Order terminal -receives Sales order
through E- telephone, Telex etc.
• b-Order display -Requires display for
editingadding information.
• c-Order modification -Displayed orders
are scrutinized and modified if required.
• This can be done manually or can be done
automatically.

51. Essential componants of auto.
order processing(contd.)
• d-Internal processing by computer
• i-The customer Master Credit File – Gives
credit limit data, present credit available.
• ii-Inventory Statistics File -Contains data on
inventory available on hand and at various
locations.
• iii-Open orderBatch order File- Contains data
on the status of orders on the system.

52. Essential Comp. Of Auto. Order
processing (contd.)
• d-Internal processing by computer (contd.)
• iv-Price File –Contains
prices,discounts,taxes,duties etc for each
product.
• v-Transportation File- Contains data on various
modes of transport, gives possibility of grouping
orders
• vi- History File- Compiles data on logistical
aspects required for future reference –
forecasting demand, logistical planning.

53. Essential Comp. of Auto. Order
Processing(contd.)
• e-Physical distribution command- May issue
commands in the field of production, materials
management,finance,marketing.Depend on the
structure of organization, logistic system,
capabilities of the equipment.
• f-House Keeping –An automated system
makes it possible to communicate with outside
agencies e.g. customers, transporters, tax
authorities.
• Makes it more efficient and cheaper than the
manual system.

54. Essential Comp. of Auto. Order
Processing(contd.)
• g- Monitoring and control- It calls for greater
skills by Manager to ensure he
understandanalyze each aspect of system,
ensuring efficient management operations.
• h-Corporate data link- Total information on
order processing has to be conveyed to top level
management. Type and frequency of information
can be decided in consultation with corporate
office.

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