itl lecture-22 (logistics information system)

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By :

Prof. Amit Kumar

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“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

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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


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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.


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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.


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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.


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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

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LogisticsInformation

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

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Levels of LIS

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LogisticsInformation

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)

Leadership & Management

logistics competitiveness

backbone of logistics

logistics packaging

information availability

areas of logistics management

information flow

specific information

system development