ChAPTER 2 Logistics and Information Technology

CHAPTER 2
LOGISTICS AND
INFORMATION TECHNOLOGY
Copyright © 2015 Pearson Education, Inc.

Introduction
Logistics definition mentions the:

Flows and storage of goods, services and related information
Data vs. information:

 Data: are facts – recorded measures
 Information: facts in a format suitable for decision making
Introduction
 Data only becomes information when it is timely

and relevant.
 Logistics is focused on providing time and place
utility for customers; thus timely information is
very important.
 However, if the information is meaningless or
confusing then it has no relevance. Thus, data from
any logistics IT system must be able to address
both these issues before it is appropriate for
logistics and supply chain users.
Importance of IT for logistics
and supply chain management
 There are a number of ways in which information can
be helpful in logistics and supply-chain management.
These include, but are not limited to:
1. greater knowledge and visibility across the supply

chain, which makes it possible to replace inventory
with information;
2. greater awareness of customer demand via point-of-
sale data, which can help improve planning and
reduce variability in the supply chain;
Importance of IT for logistics
and supply chain management
3. better coordination of manufacturing, marketing, and
distribution through enterprise resource planning
systems;
4. streamlined order processing and reduced lead times

enabled by coordinated logistics information systems.
A logistics information system
 A logistics information system begins with a logistics
manager requesting information and ends with the manager
receiving regular and customized reports.
A logistics information system
 “the people, equipment, and procedures to gather, sort,
analyze, evaluate, and distribute needed, timely, and
accurate information to logistics decision makers.”
 Timely:
 Up-to-date status of information
 How quickly managers receive the information requested
 Accurate:
 Nature and quality of the relevant data
 Erroneous, misinterpreted, unclear information would

result in poor decisions by logisticians.
IT applications that support
logistics activities
1. Office Automation System
 Provides effective ways to
– Process personal and organizational business data
– Perform calculations
– Create documents
 Spreadsheet (most relevant for logisticians)

– Able to solve for basic logistic optimization models:
warehouse sizing, transportation modal and carrier
selection, minimum transportation cost, production
planning, forecasting, among others.
2. Communication System
 Helps people work together by interacting and
sharing information in many different forms
Examples of logistics related communication system

 Wireless communication
 Global positioning systems (GPS)
 Voice-based order picking
© Pearson Education, Inc. publishing as Prentice Hall

3. Transaction Processing System (TPS)
 Collects and stores information about transactions
Examples of logistics-related TPS

 Electronic data interchange (EDI)
 Automatic identification technologies
 Essential component in point-of-sale (POS) systems
 Bar code scanners
 RFID
© Pearson Education, Inc. publishing as Prentice Hall

Electronic data interchange (EDI)
 The computer-to-computer transmission of business

data in a structured format.
Automatic identification technologies
• Bar code scanners

• Most popular automatic identification system
• They work to integrate suppliers and customers along
the supply chain because all parties read the same labels
Automatic identification technologies
Radio-frequency identification (RFID)

• involves the use of radio frequency to identify
objects that have been implanted with an RFID tag.
1. A scanning antenna
2. An RFID tag (chip) that conveys relevant data
3. A receiver that interprets
the data
4. Application specific software
Technique developed to help managers deal with specific

logistics processes or activities
 Transportation management systems (TMS)
• Is a software package that automates the process of building
orders, tracking shipments, pickup scheduling, carrier
selection and payments.
• Potential benefits include:
• Decreases in empty vehicle miles
• Reduced fuel consumption
• Reduced transportation expenditures
4. Application specific software
 Warehouse management systems (WMS)

• A warehousing management system (WMS) provides, stores
and reports the information necessary to efficiently manage the
flow of products from time receipt until time of shipping.
• Potential benefits include:

 Dramatic reduction in data entry errors as well as travel
distance of order picking.
 Reduced operating expenses, fewer stockouts, increased
inventory accuracy and improved customer service.
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mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2015 Pearson Education, Inc.

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CHAPTER 2

Copyright © 2015 Pearson Education, Inc.

Logistics definition mentions the:

Data vs. information:

 Data only becomes information when it is timely

1. greater knowledge and visibility across the supply

4. streamlined order processing and reduced lead times

 How quickly managers receive the information requested

 Erroneous, misinterpreted, unclear information would

 Spreadsheet (most relevant for logisticians)

Examples of logistics related communication system

© Pearson Education, Inc. publishing as Prentice Hall

 Collects and stores information about transactions

Examples of logistics-related TPS

© Pearson Education, Inc. publishing as Prentice Hall

 The computer-to-computer transmission of business

• Bar code scanners

Radio-frequency identification (RFID)

Technique developed to help managers deal with specific

 Warehouse management systems (WMS)

• Potential benefits include:

All rights reserved. No part of this publication may be reproduced, stored in a

Copyright © 2015 Pearson Education, Inc.

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