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Role of IT (Information Technology) in Logistics and Supply Chain

Updated: Mar 26


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Technological innovation has changed the market place in that:

  • time has been compressed

  • customer expectations have increased


IT has also enhanced supply chain efficiency real-time information can be made available regarding:

  • Product availability,

  • Inventory level,

  • Shipment status, and

  • Production requirements.

IT has the potential to facilitate and improve collaborative planning amongst supply chain partners by sharing information on demand forecasts and production schedules, which dictate supply chain activities. In some supply chains, the goal is to replace inventory with timely information; these systems will ensure the goals are achieved.


They are "enablers", i.e. the effectiveness of supply chain networks and operations are often dependent on information technologies. Organisations have been able to collaborate with supply chain partners resulting in the integration of activities becoming more effective, and reduced uncertainty and double-guessing. These activities include product and service flows, which heavily rely upon information flows, i.e. the whole life cycle from concept to consumption including disposal.


They are not the goal or a ‘silver bullet’ that will solve any of our operational problems. If we make mistakes using technologies in our duties, they enable us to make these mistakes faster and so do the wrong things more efficiently!


Role of IT (Information Technology) in Logistics and Supply Chain: Communication Systems


We can use telecommunication systems, such as fax machines, electronic mail (email), and mobile phones, to mention a few. Emails accessed from mobile phones allows logistics personnel to remain connected with their operations from outside their offices- 24/7.

There are other advanced communication technologies used within the industry. Technologies are now applied for telephone and video conferencing, and the concept of ‘virtual meetings’ has increased. Staff and work colleagues located around the world can now attend the same meeting at agreed times—irrespective of time zones and distances.


Voice-based order picking systems

Another example of technological improvements in logistics and supply chain operations is the application of voice-based order picking systems. These voice-based technologies are used to talk and give instructions to warehouse staff regarding which and how many items to pick.


Emergency environments

Radio communications have also advanced significantly during the late 20th Century.

Amateur radio operators have provided emergency communications during disasters since 1910 (Coile, 1997). With equipment becoming smaller and more portable, processing power and bandwidth increased.

Information became more readily available in databases and on CD-ROM.

By 1990, laptops and portable printers could be carried on a disaster response.

Other developments include:

  • telecommunication companies switching from voice networks to packet switching networks

  • efficient transfer of data.

  • commercial e-mail services, such as CompuServe, became available

  • electronic bulletin boards became popular places to share information.

  • emergency management professionals established such as the Emergency Preparedness Information Exchange (EPIX), The United Nations Joint Logistics Center (UNJLC - http://www.unjlc.org)

  • electronic communication has allowed remote access to information and broken down the barriers to information exchange.

EIS


EIS (Emergency Information Systems) International Corporation recognised the need to prepare for, and communicate during, disasters, and accordingly created the first commercial attempt to use computers in real-time emergency information management. Geographic Information Systems (GIS), such as SPLASH and SLOSH (Griffith, 1986), were also beginning to be developed to map disaster risks (Marston, 1986). These systems utilise computer-generated maps as an interface for integrating and accessing massive amounts of location-based information.


Transaction Processing Systems (TPS)

These systems collect and store information about transactions with the primary objective of processing the transactions in batches or real time.

Batch processing allows for a number of transactions to be received before the actual processing; for example, this could be after every 6 hours or at the end of each day. Real-time processing is done almost the very moment the transaction takes place.


Electronic Data Interchange (EDI)


A good example of TPS is Electronic Data Interchange (EDI), which is computer-to-computer transmission of business data between and across organisations. EDI provides seamless data and information flows across companies, provided there is compatibility between systems. In logistics and supply chain operations, examples include:

  • purchase orders

  • invoicing

  • pricing

  • advanced shipment notices

  • electronic funds transfer

  • bill payments.

  • Automatic identification technologies


Automatic identification technologies

Other types of logistics-enabling technologies include:

  • optical character recognition (technologies that can read letters, words and numbers)

  • machine vision (technologies that can scan, inspect and interpret what is viewed)

  • voice data entry (technologies which can record and interpret a human voice.

  • The barcode scanner remains the most popular automatic identification system universally used in logistics and supply chain operations. By integrating suppliers with customers along supply chain operations, barcodes enable parties to read the same labels and, in addition to the transfers of goods and services, the processes can be recorded electronically.

  • Scanners are used to record inventory data, and when these are connected to the system, they enable inventory records to be updated simultaneously.


Electronic Point of Sale (EPOS)

One of the best examples of EDI is the Electronic Point of Sale (EPOS),

where the above automatic identification systems have become an essential element of the systems. EPOS involves scanning of product labels (barcodes), thereby reading and recording such data as:

  • item description

  • product price

  • applicable taxes

  • special promotions.

Let us visualise a customer at a point of sale in a supermarket. At the checkout, goods are scanned by the check-out operator; the scanner reads the barcode on product labels, which automatically registers the price on the till. The customer receives verification of the products bought by way of an invoice (the receipt), listing the items and price charged.


Radio Frequency Identification (RFID)

Another enabling technology that has supported supply chain operations is RFID. RFID has helped organisations and their supply chain partners to trace, track and identify important items using the data and information provided by the RFID tags. You will find RFID tags implemented or incorporated into the item or packaging.

The unique serial identifier in RFID tags identifies the cartons individually, thereby preventing multiple scanning of the same bulk items. These tags then send radio signals that help gather regular information about the item. RFID has the potential to create a truly adaptive supply chain, enabling all aspects of the supply chain cycle (sourcing, production, storage, distribution, retail and returns) to be monitored in real time.


Proof of Delivery (POD)

When RFID technology is used, the receipt of materials into stock is enhanced. As a result, it becomes much easier and faster to acknowledge receipt of goods with the suppliers. Other electronic devices are used to obtain proof of deliveries signatures. In Europe and other regions electronic proof of delivery is a common feature for logistics operations.

You may have already received a delivery when you have been asked to sign on a hand-held electronic pad.

A soon as you affix your signature on the pad you have acknowledged receipt, and this information is transmitted electronically to the depot and onto the sender of the goods.


Supply chain e-business operations

E-business is a wider business range of transactions that include processes of procurement, production, distribution and other supply chain related transactions, which may not be directly buying and selling transactions. This is often referred to as B2B, i.e. business-to-business interfaces. Some of the components of e-business in a logistics and supply chain operation are:

  • procurement-related systems, such as e-procurement involving requisitioning, order processing and award, receiving and payment processes.

  • production-related systems, such as materials requirement planning (MRP1); manufacturing resources planning (MRP11), enterprise resource planning (ERP), with prominent examples systems being SAP, Oracle, Baan to mention a few.

  • financial system invoicing including payment of suppliers


Warehouse Management Systems (WMS)


Covering all aspects of the warehouse operations, such as automatic checking by scanning goods received and generating locations for storage. Order-picking and automatic replenishment activations, and returns processing and management.

Transport management systems, including Fleet Management Systems, is the term given to a type of software programme which comprises individual applications, such as:

  • fuel consumption

  • vehicle costing

  • Tachograph chart analysis

  • scheduling and routing

  • administration

  • vehicle maintenance

  • fleet reporting on vehicle utilizations.

© Content Copyright by CILT UK

 


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