6 – Information Technology Framework

Introduction

In this era, the information technology wave has introduced new business methods. Word processors have mostly supplanted typewriters. Electronic mail has made it simple to send text messages (potentially with embedded image and sound files) worldwide over the telephone, satellite, and cable television networks, utilising computers, cellular phones, and specially equipped televisions. The dream of a “paperless office” has become a reality thanks to automation. A local area network (LAN) now connects workstations, printers, database systems, and other tools (LAN).

While today’s Web is far more compelling than it was even a decade ago, we are still in many ways in the “horse and buggy” phase of the Internet. In 2004, the Web accounted for $184 billion in retail spending.

The next-generation Internet will give small and large organisations the agility they need to compete and flourish in the digital economy. Today, it can take several weeks for a corporation to discover the correct supplier for a particular component, negotiate a contract, and set up the complicated business processes necessary to ensure it arrives when and where needed. Advanced Internet software is on the horizon and will do all of this in a matter of days, if not minutes. If you believe today’s Web is changing how businesses are done, just picture tomorrow’s Web.

No matter where or what device one uses, one can collaborate and communicate smoothly. Speech, handwriting, and simple gestures will be able to interface with computers more naturally. The PC will still reside on the desk, but it will be the hub of a vast “personal network” of gadgets and services that, combined with intelligent Internet software, will keep you connected, informed, and entertained no matter where you are.

The Internet Generation – born after 1994 – will be tomorrow’s knowledge workers and business and government leaders — the first generation for whom the Internet is as pervasive as television was for baby boomers. Technology will enhance their learning experiences and help to build connected learning communities in which teachers, parents, students, public libraries, and organisations can collaborate. We will also witness a generation for which the Internet is a daily means of connecting, meeting new acquaintances, shopping, and entertainment.

6.1 Information Functionality – The Supply Chain

Information is one of the most essential facilitators in supply chain management. In today’s highly competitive industry, supply chain intelligence is vital to a company’s ability to respond quickly to end-user demand. Timely and accurate information is also critical for three reasons: customers perceive information on order status, product availability, delivery schedule, and invoices as a necessary component of total customer service; information can reduce inventory by minimising demand uncertainty; and information increases flexibility in terms of how, when, and where resources can be used for strategic advantage.

Information functionality

Information connects supply chain activities through four layers of functionality: transaction, management control, decision analysis, and strategic planning systems.

6.1.1 Transaction

Order entry, inventory assignment, order selection, shipping, pricing, billing, and customer inquiries are examples of transaction activities. The customer order performance cycle begins with a receipt customer order input activity. This starts the following transaction, which assigns inventory to the order. A third transaction is subsequently issued to instruct the material handlers on which order to select. A transaction that controls the order’s movement, loading, and delivery follows this. The final transaction prints or sends the invoice to be paid. As a result, a series of information system transactions completes the customer order performance cycle. The procedure allows customers to access order progress information when needed.

Codified rules, inter-functional communications, a high volume of transactions, and a day-to-day operational focus distinguish the transaction system. Transaction system costs can be relatively high due to the vast number of system users, high communication demands, high transaction volume, and significant software complexity. The emphasis in the transactions system is on information system efficiency. However, because the processes are highly structured, the system costs are reasonably well-defined, and benefits or returns are easily calculated.

6.1.2 Management Control

Management control distinguishes itself by its evaluative, tactical, and intermediate-term focus on evaluating past performance and identifying alternatives. Financial, customer service, productivity, and quality indicators are standard performance measures.

Example: Transportation and warehousing cost per kilogramme (cost measure), inventory turnover (asset measure), order fill rate (customer service measure), cases per labour hour (productivity measure), and customer perception are some examples of measurements (quality measure).

While specific management control metrics, such as cost, are quite explicit, others, such as customer service, are less so.

It should be capable of measuring competitive capabilities and identifying potential areas for improvement. When processing information, reporting exceptions accomplishes this. Exception reporting information is frequently beneficial in identifying future customer or order difficulties, inventory shortages based on expected requirements and anticipated receipts, or a firm’s capacity to leverage price, among other things.

6.1.3 Decision Analysis

This concentrates on decision applications for identifying, evaluating, and comparing logistics strategic and tactical alternatives for managerial decisions. Various analytical tools are frequently included in most supply chain application packages. Inventory planning and management, forecasting, vendor scheduling, truck routing, and cost-benefit analysis of operational trade-offs and arrangements are just a few examples. Decision analysis has a tactical, evaluative focus, just like management control. Decision analysis, on the other hand, differs from management control in that it focuses on analysing future tactical possibilities.

Analysis of Decisions The SCIS focuses on effectiveness rather than efficiency (identifying profitable versus unprofitable accounts) or efficiency (faster processing or increased transaction volume while utilising fewer staff resources). The SCIS must be relatively unstructured and fluid in examining various choices to do so effectively.

Newer SCIS applications can provide a competitive edge by reengineering supply chain procedures to reduce the number of cycles and sequential activities.

6.1.4 Strategic Planning

As the title suggests, the emphasis is on information that helps the organization’s capacity to define and enhance supply chain strategy. These decisions are less organised than the others, but they are long-term.

For example, strategic planning decisions may involve network reorganisation, leveraging business competencies and market prospects, strategic alliances, and significant customer service improvements, among other things.

Lower-level data collection must be reflected in SCIS strategic planning level information, which must then be converted into a wide range of business planning and decision-making information. This data can then be used in models to help evaluate the probabilities and payoffs of different methods. The ability to assess customer/product profitability, segment contribution, or alliance synergies through strategic planning can significantly impact enterprise profitability and competitiveness.

Traditionally, information flow was employed to improve the efficiency of transaction systems. While this has provided speed and lower operating costs, the predicted cost savings are fading as competitors build their competencies. With rising competitiveness, the focus in SCIS applications on management control, decision analysis, and strategic planning is changing to these components.

6.2  Principles of Logistics Information

Logistics information systems must contain six principles to meet management information needs and appropriately support organisational planning and operations.

Availability

First and foremost, logistics information must be quickly and consistently accessible. Order and inventory status are two examples of needed information. While businesses may have a lot of data about their logistics operations, it’s often on paper or challenging to get from computer systems. To respond to customers and improve management decisions, it is vital to be available quickly. Customers usually require quick access to inventory and order progress information; thus, this is crucial. Another availability component is the capacity to obtain necessary information, such as order status, regardless of management, customer, or product order location.

Accuracy

Second, logistics information must accurately reflect current status and periodic activities for metrics such as client orders and inventory levels. The degree to which LIS reports reflect actual physical counts or status is characterised as accuracy.

Timeliness

Third, logistics information must be timely to provide prompt management feedback. Timeliness is the delay between an activity occurring and being visible in the information system.

For example, because orders are not always directly placed into an active demand database, it can take hours or days for the system to detect a new order as actual demand.

An information system’s timeliness refers to system status, such as inventory levels, and management controls, such as daily or weekly performance reports. When there is still time to take remedial action or limit the loss, timely management controls provide information. To summarise, timely information minimises uncertainty and detects problems, resulting in lower inventory requirements and higher decision accuracy.

Exception

LIS with Exceptions Fourth must be exception-based to identify problems and opportunities. Logistics operations frequently confront many consumers, products, suppliers, and service providers.

For example, to schedule replenishment orders, the inventory status for each product-location combination must be evaluated regularly.

The status evaluation of pending replenishment orders is another repeated activity. Many products or replenishment orders often necessitate evaluation in both circumstances. Frequently, the evaluation process requires the asking of two questions. The first consideration is whether any action should be taken in response to product or replenishment orders. If the first question is answered affirmatively, the second question concerns the type of action that should be taken. Many LIS require manual evaluations, even though they are progressively being automated. The reason for continuing to employ manual methods is that many decisions are unstructured and require the user’s judgment. Modern LIS incorporates decision rules to identify these outlier circumstances that necessitate management attention and decision-making.

Flexibility

Fifth, logistics information systems must be adaptable to fulfil the needs of both system users and customers. Data must be adapted to meet client requirements through information systems.

Some customers, for example, may prefer order invoices aggregated over specific geographic or divisional boundaries. A versatile LIS must be able to meet both types of requirements.

Internally, information systems must be upgradeable to suit future corporate requirements without incurring crippling costs in terms of financial investment and programming effort.

Appropriate Format

Finally, logistics reports and screens must be properly formatted, which means they must have the correct information in the proper structure and sequence.

For example, a distribution centre inventory status screen is frequently included in LIS, with one product and distribution centre listed on each screen.

This format requires a customer support person to check the inventory status at each distribution centre when attempting to identify inventory to fill a given client order. In other words, a review and comparison of five computer screens is required if five distribution centres exist. A suitable structure would provide the inventory status for all five distribution centres on a single screen. The unified screen makes finding the optimal product supplier much easier for a customer service person. A screen or report that contains and effectively conveys all vital information for a decision-maker is another example of a suitable format. The screen combines previous and future data for a single item’s on-hand inventory, minimum inventory, demand projection, and planned receipts at a distribution centre.

Another suitable format is a screen or report that contains and effectively conveys all important information for a decision-maker. The screen combines previous and future data for a single item’s on-hand inventory, minimum inventory, demand projection, and planned receipts at a distribution centre. The graphical display blends inventory flows and levels. It simplifies inventory planning and ordering by directing the planner’s attention to the weeks predicted on-hand inventory may fall below minimum levels.

6.3 Logistics Information System Architecture

Logistics information systems combine hardware and software to organise, regulate, and measure logistical processes. Computers, input/output devices, and storage media are examples of hardware. Examples include system and application programs for transaction processing, management control, decision analysis, and strategic planning. The design covers the data warehouse’s information base and the execution components. Purchase orders, inventory status, and client orders are all stored in the database. The data warehouse holds information regarding past activity levels and current status and is the foundation for future requirements planning.

Planning and coordination tasks include scheduling procurement, manufacturing, and logistical resource allocation across the company. Specific components include defining strategic objectives, rationalising capacity limits, and assessing logistics, production, and procurement requirements.

Operations refer to the transaction activities required to handle and process orders, operate distribution facilities, organise transportation, and integrate procurement resources. Both consumer and enterprise replenishment orders go through this process.

Customer orders represent the demands of commercial customers. Replenishment orders govern the transfer of finished goods between manufacturing and distribution sites.

6.3.1Planning and Coordination

Logistics system planning/coordination components serve as the backbone of information systems for manufacturers and merchandisers. These components define the essential activities determining enterprise resource allocation and performance, from procurement to product delivery. The following are the specific components:

1. Strategic Objectives:

Strategic objectives that define marketing and financial goals are primary information drivers for many businesses. These strategic objectives are often defined over a multiyear planning horizon, with quarterly updates. The strategic objectives of marketing specify target markets, products, marketing mix plans, and the role of logistics value-added activities like service levels or capabilities. The objectives are the customer base, breadth of products and services, planned promotions, and anticipated performance levels. Customer service rules and objectives that define logistics activities and performance targets are referred to as marketing goals. Service availability, capability, and quality are all performance targets. Revenue, sales, and production levels, as well as matching expenses, capital and human resource limits, are defined by financial strategic objectives. Marketing and economic objectives determine the markets, goods, services, and activity levels logistics managers must handle during the planning horizon. Annual or quarterly activity levels such as shipments, dollar volume, and total cases are examples of specific goals. Product promotions, new product releases, market rollouts, and acquisitions are particular events to consider. Marketing and financial plans should ideally be coordinated and consistent. Inconsistencies will lead to poor service, excess inventory, and failure to reach financial targets. Other business plans are guided by marketing and financial strategic objectives. While the process of developing strategic objectives is unstructured and broad, it must generate and present a plan that is comprehensive enough to be operationalized.

2. Capacity Constraints:

The strategic objectives drive capacity restrictions and logistical, production, and procurement requirements. Internal and external manufacturing, warehousing, and transportation resources determine capacity restrictions. Capacity constraints detect material bottlenecks and effectively manage resources to satisfy market needs using activity levels set by strategic objectives. Capacity limitations define the “where,” “when,” and “how much” for each product’s manufacturing, storage, and movement. The limits consider aggregate production and throughput constraints, such as annual or monthly capacity. Investing in resources, speculating, or postponing production or delivery are all ways to address capacity issues. Acquisitions or alliances, such as contract manufacturing or facility leasing, might be used to alter capacity. Speculation lowers bottlenecks by predicting production capacity requirements through previous scheduling or contract manufacturing. Production and transportation are delayed until particular requirements are known and capacity can be assigned. To postpone delivery, it may be required to offer customer incentives such as discounts or allowances. Considering facility, financial, and human resource limits, capacity constraints inject the time dimension into the enterprise’s strategic objectives. These constraints significantly impact logistics, manufacturing, and procurement timelines. Capacity restrictions connect the enterprise’s overall operational strategy to weekly or daily logistics needs. These limits significantly impact each manufacturing location’s monthly or weekly productivity. The nature of the product and lead time determine the capacity’s flexibility. Long-term flexibility is frequently present, as many delay, speculation, and purchase techniques can be employed. However, there is limited flexibility in the short term, such as this week, because resources are often committed. Integration of capacity constraints with the remaining enterprise demand systems differs by organisation. The most successful businesses usually exhibit a high level of integration across all planning/coordination components.

3. Logistics Requirements:

Logistics needs to organise the facility, equipment, labour, and inventory resources required to complete the logistics task. For instance, the logistics demand component organises finished product shipments from production plants to distribution centres and merchants. The shipping quantity is determined by subtracting the client requirements from the inventory level. Distribution requirements planning (DRP) is a tool for inventory management and process control frequently used to implement logistics requirements. Forecasts, customer orders, and promotions are used to determine future requirements. Forecasts are based on sales and marketing data and past activity levels. Current orders, future committed orders, and contracts are all examples of customer orders. Promotional activity is significant when estimating logistics requirements since it frequently accounts for a considerable percentage of overall volume and significantly impacts capacity. The current inventory status is that the product is ready to ship. In particular, the total projection plus future client orders plus promotional volume indicates period demand for each planning period (e.g., weekly or monthly). It is difficult to identify the percentage of the predicted volume accounted for by known customer orders; thus, some discretion is required. Periodic demand is usually a mix of the three because current predictions may include some future orders and promotional volume. When determining period demand, it is critical to consider the overlap between predictions, future customer orders, and promotions. Period logistics requirements equal period demand minus inventory on hand minus projected receipts. Using this method, each period should ideally end with zero stocks available, such that anticipated receipts equal period demand exactly. While perfect demand and supply synchronisation is great for inventory management, it may not be the best plan for the organisation. Logistics requirements must be integrated with capacity restrictions (upstream) and manufacturing requirements (downstream) to achieve optimal system performance. Poorly connected logistics and manufacturing components generally result in finished goods inventories at the end of the production line that are not apparent when determining logistics requirements.

4. Manufacturing Requirements:

Manufacturing requirements: plan production resources and overcome day-to-day capacity bottlenecks in the materials management system. Raw material shortages or daily capacity constraints cause primary bottlenecks. The manufacturing requirements (MRP) determine the master production schedule (MPS) and the manufacturing requirements plan. The MPS establishes production and machine schedules on a weekly or daily basis. The MRP coordinates the procurement and arrival of materials and components to fulfil the intended manufacturing plan based on the MPS. Although this article covers logistical and manufacturing requirements sequentially, they must function together. This is especially true for businesses that use demand flow or market-paced manufacturing techniques. These solutions decrease the need to forecast or prepare by immediately coordinating production schedules with market demands or orders. In a sense, demand flow or market-paced manufacturing techniques design all production as “made to order” and thus wholly integrate logistics and manufacturing requirements.

5. Procurement Requirements:

Procurement requirements plan the release of materials, shipments, and receipts. Capacity restrictions, logistical requirements, and production requirements illustrate long-term material requirements and release timetables. The requirement and release schedule are then used to negotiate and contract for purchases.

6.4 Comprehensive Information System Integration

A comprehensive information system initiates, monitors, supports decision-making, and reports on actions necessary to accomplish logistical operations and planning. Multiple components must be merged to construct an integrated information system, and numerous ways exist to organise and present the combined components.

(1) Enterprise Resource Planning (ERP) or legacy systems,

(2) communication systems,

(3) execution systems,

(4) planning systems

6.4.1 Enterprise Resource Planning (ERP) or legacy systems

Most organisations’ supply chain information systems are built around ERP or legacy systems. This backbone stores current and historical data and processes transactions to initiate and track performance. Before 1990, mainframe applications were built to automate procedures, including order entry, order processing, warehouse operations, inventory management, transportation, and related financial transactions.

Example: Because they managed the order fulfilment process, systems related to customer orders were frequently referred to as Order Management Systems (OMS). Legacy systems often store information about customers, items, inventory status, facility operations, and order information.

Many of these legacy systems comprise independently designed software modules that lack integration and consistency, resulting in data dependability and integrity issues. These issues are exacerbated by multidivisional businesses sometimes using distinct legacy systems for each division or country.

6.4.2 Communication Systems

The communication module allows information to flow within the organisation and between supply chain partners. It is one of the primary communication elements required for supply chain operations. Logistics information comprises real-time data on firm operations, inbound material flows, production status, product inventories, customer shipments, and incoming orders.

Firms must make order, shipment, and billing information available to suppliers, financial institutions, transportation providers, and customers. Internal operating units must be able to share and exchange production schedules and status information. Barcoding, scanning, Electronic Data Interchange (EDI), satellite communication, radio frequency, and the Internet are standard supply chain communication technology examples.

6.4.3 Execution Systems

Enterprise execution systems collaborate with the company’s ERP to provide unique capabilities to support logistics operations. While some ERP systems contain decent logistics features, many do not support modern warehouse and transportation operations. To enable data sharing, most execution systems are “bolted-on” or integrated into the ERP system. Warehouse Management Systems (WMS) often incorporate management reporting, support for value-added services, and decision support capability in addition to traditional warehouse management functionality such as receiving, storage, shipping, and warehouse automation.

6.4.4 Planning Systems

While the ERP system processes transactions to carry out specific logistics tasks, transaction systems generally do not evaluate alternative options or aid decision-making. Supply chain planning systems, also known as Advanced Planning and Scheduling (APS) systems, are intended to aid in evaluating supply chain options and provide advice on supply chain decision-making. Sophisticated supply chain planning systems are becoming more widespread to allow for the assessment of complex alternatives under time restrictions. Production scheduling, inventory resource planning, and transportation planning are typical supply chain planning applications. APS software identifies and evaluates alternative courses of action using historical and current data stored in the data warehouse and recommends a near-optimal solution within the constraints imposed. Production, facility, transportation, inventory, and raw material constraints are expected.

Strategic and tactical planning systems are the two broad categories of planning systems. Strategic planning systems are intended to aid in analyses where many alternatives are available, and data outside the scope of current history is required. Supply chain network design and structural studies are examples of strategic planning applications, such as which combination of supplier, production, and distribution facilities should be employed and how products should flow between current or planned facilities.

Tactical planning concerns operational challenges limited by short-term resource restrictions such as production, facility, or transportation capacity. A company’s data warehouse is typically used to provide information support for tactical planning. Tactical planning techniques assess customer needs and identify an operational mix of production, inventory, facilities, and equipment utilisation that may be implemented within capacity limits. As a result, an action plan to lead short-term operations is created.

6.5 Communication Technology

Information technology is also essential for facilitating logistics and supply chain planning and operations. Historically, logistics coordination has been problematic since logistical tasks are frequently undertaken at places remote from information technology hardware. As a result, information was unavailable at the critical work site in terms of both time and content. The capability of logistical communication systems has advanced dramatically over the last decade. EDI, the Internet, Extensible Markup Language (XML), and satellite technologies are available to promote communication between enterprises and facilities.

6.5.1 Electronic Data Interchange

EDI and the Internet are quickly becoming the norms for effective, accurate, and low-cost information sharing, replacing the phone, fax, and direct computer connection. Intercompany computer-to-computer exchange of business documents in standard formats to allow high-volume transactions is characterised as EDI. It entails the ability and practice of transmitting information between two firms electronically rather than through traditional methods such as mail, courier, or even fax.

Increased internal productivity, enhanced channel partnerships, increased external productivity, increased ability to compete internationally, and lower operational costs are all direct EDI benefits. EDI increases productivity by allowing for faster information delivery and reducing redundancy. Reducing repetitious data entry and interpretation improves accuracy. EDI reduces logistical and operational costs by

(1) lowering labour and material costs involved with printing, mailing, and managing paper-based transactions;

(2) lowering phone, fax, and Telex costs; and

(3) lowering clerical costs. The graphics sector has discovered that EDI may eliminate up to 90% of paper-based systems, cut receipt processing time in half, and save $8.00 for each invoice document.

Texas Instruments, for example, claims that EDI has decreased shipping errors by 95%, field inquiries by 60%, data entry resource requirements by 70%, and worldwide procurement cycle time by 57%.

While EDI has made significant advances in logistics communication, its adoption is beginning to level off at around 50% of transactions. Large manufacturers, wholesalers, and retailers have used EDI to exchange information with large trading partners. Still, the high startup costs and expertise necessary have limited its use by medium and small businesses.

EDI requires communication and information standards. Communication standards define technical qualities that allow computer hardware to perform the interchange appropriately. They address character sets, transmission priority, and speed. Information standards dictate the structure and substance of the message. Standards groups have produced and modified two broad and numerous industry-specific standards to standardise communication and information transmission.

Communication Standards

ANS X.I 2 (American National Standards Committee X.12) and UN/EDIFACT (United Nations/Electronic Data Interchange for Administration, Commerce, and Transport) are the most widely acknowledged communication standards. X.12 is promoted as the US standard, although the United Nations promotes EDIFACT as a more global standard. Each organisation has created a system for transferring common data among supply chain partners. According to experts, the most likely migration path is to EDIFACT standards. The National Institute of Standards and Technology (NIST) and automotive experts push information integration further by experimenting with data exchange options throughout the business cycle. The STEP (Standard for the Exchange of Product Model Data) initiative was created to facilitate the exchange of design and engineering data among supply chain participants. STEP should enable users to integrate data from business and technical systems across the whole business cycle, including design, analysis, manufacture, sales, and service.

EDI Transaction Sets

Transaction sets are used to implement communication standards. A transaction set is a shared standard that allows partners in any business or country to exchange information. The transaction set describes the documents that can be transferred for each industry. Ordering, warehousing operations, and transportation are all covered in the papers. The transaction set begins with a transaction code (or ID) and ends with the required data. The transaction code, for example, shows whether the electronic communication is a warehouse shipping order (code 940) or a warehouse stock transfer receipt (code 944). A warehouse transaction includes the warehouse number, item number, quantity, and transaction code.

6.5.2 Internet

The ubiquitous availability of the Internet and standardised interfaces provided by Internet browsers such as Netscape and Internet Explorer have significantly improved the opportunities and capabilities for organisations of all sizes to communicate information. The Internet is increasingly becoming the preferred supply chain information transmission platform for predicted requirements, orders, inventory status, product updates, and shipment information. In conjunction with a PC and an Internet browser, the Internet provides a standard method for order entry, order status enquiry, and shipment tracking. According to an Ohio State University poll, the Internet will carry 20% of client orders by 2010.

The growing accessibility of the Internet has also facilitated the creation of the exchange portal, a communication channel with substantial supply chain consequences. An exchange portal is an information intermediary that promotes horizontal and vertical information exchange among supply chain parties. A company’s exchange site was created to improve contact between the company’s consumers and suppliers. The firm can submit information about raw material requirements, product availability, or price changes, allowing the market to respond by making bids or orders based on the most up-to-date information. By 2003, 60% of Fortune 500 companies are expected to have exchange portals to facilitate communication with key customers and suppliers. While a single business site may provide good Internet advertising, it can add complexity because all partners must deal with several unique interfaces, resulting in high transaction costs.

An industry-based exchange portal is a different sort of exchange site. It improves communication among all supply chain stakeholders in an industry and can significantly cut transaction costs. While the information can be made available to all interested parties, it is also possible to limit its availability. There is growing concern that industry portal alliances may enhance the possibility of monopolistic behaviour and trade constraints. The Federal Trade Commission (FTC) will likely play a more significant role in the evolution of exchange portals, particularly for B2B activity.

The Internet and exchange portals have moved supply chain communication from a one-to-one or limited capability to a one-to-many environment, with the potential to be extended to a many-to-many capability. As a result, an expanded Internet connection presents a significant challenge in utilising widely available information.

One of the primary barriers to the widespread use of trading portals is the definition and acceptance of online catalogues. Like its print counterpart, an online catalogue includes a listing of the items and services available, as well as descriptions and specs. A consistent catalogue across participating enterprises facilitates effective product and service comparisons among firms.

For example, a company that wants to buy a simple T-shirt from a portal would prefer all of the T-shirt providers on that portal to have a similarly written entry explaining the shirt, its colour, its contents, and other minute details so that the consumer can make an informed decision.

Customers prefer consistent catalogues; however, providers seek to utilise a catalogue as a differentiation and are hesitant to change from their proprietary structure. The Voluntary Interindustry Commerce Standards (VICS) and Collaborative Planning, Forecasting, and Replenishment (CPFR) push common and uniform catalogue definitions and standards to allow information sharing and interchange.

Extensible Markup Language (XML)

Extensible Markup Language (XML) is a versatile computer language that allows information to be transferred between various applications and is easily interpreted by people. The World Wide Web Consortium released it in 1998 to improve information transfer between systems, databases, and Web browsers. Because EDI is highly organised, the high setup cost and needed knowledge restrict applications to oversized transaction volume circumstances. XML is emerging as a channel for information transfer between enterprises and service providers who lack the transaction quantities to support EDI. XML facilitates communication by removing many information technology constraints that have hindered EDI adoption.

A primary XML message comprises the communicated data, data tags, and a DTD (Document Type Definition) or schema. The data tag is an essential characteristic since it defines the data that is being delivered.

In a shipment XML, for example, the tag for address would be “address,” and it may appear as address>123 Main St./address>.

The tags instruct computers on the data within the brackets and where it should be stored in a database or web page. Because of the usage of standard words and the lack of sequencing constraints, XML transactions are easier to use than EDI transactions. When decoding a message, the XML DTD or schema tells the computer the document format to use. A DTD is essentially a template that defines a standard form, its tags, and how they relate to a database.

For example, client orders, advanced shipment alerts, and transportation documentation have their schema.

For three reasons, XML outperforms EDI in low-volume circumstances. First and foremost, it is not expensive to install. It is simple to build an application, and considerably less time is required to implement it. Second, XML is simple to maintain because it can be quickly transformed into HTML (HyperText Markup Language), the language of Web browsers. This dramatically simplifies the modification and sharing of data between programmes. Finally, XML is more adaptable, allowing for a broader range of applications and rapid standard formulation and extension. The definition of industry standards is one of the primary hurdles for the evolution of XML. RosettaNet, a consortium of more than 60 organisations, was founded in 1998 and had since begun defining standard definitions for business operations and products, as well as standards for using XML to transport information throughout the supply chain. A standard vocabulary is required to allow supply chain partners to speak with one another while remaining confident that the information transmission is secure.

6.5.4 Satellite Technology

Satellite technology enables communication over a large geographic area, such as a region or globe. The technique is comparable to microwave dishes, utilised for home television in places where cable is unavailable. Satellite communication provides a high-volume, high-speed conduit for information movement worldwide. Schneider National, a nationwide truckload carrier, employs communication dishes mounted on its vehicles to allow drivers and dispatchers to communicate with one another. This real-time connection gives dispatchers up-to-date information about truck position and delivery information, allowing them to move trucks based on need or congestion. Retail chains often use satellite communication to quickly communicate sales data back to headquarters. Walmart uses daily sales numbers to promote store replenishment and to give marketing information about local sales patterns.

6.5.5 Radio Frequency Exchange

Radio Frequency Data Communication (RFDC) technology facilitates two-way information transmission in relatively limited regions, such as distribution centres. Real-time communication with mobile operators such as forklift drivers and order selectors is a prominent application. Instead of using a hard copy of instructions written hours before, RFDC allows drivers to have instructions and priority updated in real-time. Real-time instructions to guide workflow provide greater flexibility and reactivity, with the ability to improve service while utilising fewer resources.

Two-way voice communication and advanced RFDC capabilities are entering logistics warehouse applications. Rather than requiring warehouse staff to interact with a mobile or handheld computer, speech RFDC guides operators through tasks using auditory commands and waits for verbal responses or requests. To direct parcels through their modern sortation facilities, United Parcel Service employs speech-based RFDC to read zip codes from inbound packages and create routing tickets. The voice recognition systems are based on each operator’s keywords and patterns. The fundamental advantage of voice-based RFDC is a simplified operator interface; because no keyboard data entry is necessary, two hands are free for order picking.

A second type of radio frequency technology is radio frequency identification (RFID). RFID technology can track a container or its contents as it moves through facilities or on transportation equipment. RFID embeds an electronic chip with a unique code in the container or packaging. The container or box can be scanned for an identifying code or a list of contents through the supply chain. Retailers are starting to utilise RFID to scan full cartloads of merchandise at the same time, and the US Department of Defense uses RFID to list the contents of pallets so that they can be traced when loaded onto transportation equipment or travel through facilities.

6.5.7 Image Processing

Image processing programs rely on facsimile (fax) and optical-scanning technologies to send and preserve freight bill information and other supporting documents, such as proof of delivery receipts or bills of lading. This new service is based on the idea that timely shipment information is almost as crucial to the client as prompt item delivery. Support documentation is transmitted to image processing centres, electronically scanned, and registered into the system when freight is delivered to customers.

The documents’ electronic images are transferred to a central data centre and stored on optical laser discs. Customers can obtain the documents the next day via computer links or a phone call to their service agent. A facsimile transmission can meet a customer’s request for a tangible document copy in minutes. Customers benefit from more accurate billing, quicker carrier personnel responses, and simple record access. The carrier also benefits because the system eliminates the need to file paper documents, minimises the risk of loss, and improves consumer credibility.

Significant capital expenditure is required before profits can be obtained via satellite technology, RF, or image processing. However, as experience has shown, the primary benefit of modern communication technologies is not lower costs but rather excellent customer service. Faster shipment tracing, quicker sales and inventory information transfer, and more timely job definition all contribute to improved service. Customers will be more interested in these communication technology applications as they see the competitive advantages of real-time information flow.

6.5.7  Bar Coding and Scanning 

Auto identification (ID) technologies such as barcoding and electronic scanning were created to improve the collection and distribution of logistical information. Tracking receipts in warehouses and retail transactions are two typical applications. These ID systems necessitate a significant capital commitment on the part of users. Still, they must replace previous paper-based information collection and exchange processes that were error-prone and time-consuming. Indeed, rising local and worldwide competition is driving shippers, carriers, warehouses, wholesalers, and retailers to develop and implement Auto ED capabilities to compete in today’s market.

Auto ID enables supply chain members to track and share movement details rapidly and with a low risk of error, and it is gradually becoming a core service demand for freight tracking by carriers. Consumers and business-to-business clients expect to be able to trace the progress of their package using the Web-based system provided by carriers such as United Parcel Service and FedEx.

Placing computer-readable codes on products, cartons, containers, pallets, and even rail cars is known as barcoding. Most people know the Universal Product Code (UPC), which can be found on almost any consumer product. Introduced in 1972, UPC bar codes assign a 12-digit number to each manufacturer and product. Standard bar codes decrease errors when receiving, handling, or shipping a product.

A bar code, for example, distinguishes between product size and flavour. The European and United Nations standard for item bar coding is European Article Numbering (EAN). Due to global trade pressures, the UPC and EAN systems will likely become increasingly standardised.

6.5.8 Enterprise Resource Planning (ERP)

The main software components of logistics information systems are enterprise resource planning (ERP) and enterprise execution systems. ERP provides database and transaction capabilities for initiating, tracking, monitoring, and reporting on customer and replenishment orders. ERP systems give businesses information consistency, economies of scale, and integration. The design of an ERP system contains a central database and application modules to help with supply chain, financial, and human resource management. The design of a supply chain system contains elements for planning/coordination, operations, and inventory deployment. The planning/coordination component oversees firm and supply chain resources such as manufacturing, storage, and transportation. The operations component manages transaction processing for customer and replenishment orders, initiating, managing, fulfilling, and shipping them. Inventory deployment manages a firm’s and, increasingly, a supply chain’s inventory resources.

Enterprise execution systems bridge ERP and day-to-day operations involving customers, transportation, and warehouses. Customer relationship management systems provide information on a company’s activity level and performance with key customers. Transportation management systems initiate shipments and track movements to track the firm’s transportation performance and costs. Warehouse management systems initiate warehouse activities, regulate material handling equipment, monitor labour performance, and report warehouse performance and cost levels.

 6.6 Rationale for ERP Implementation

When businesses began using extensive computing to regulate and monitor operations and finances in the early 1970s, much of the work was done piecemeal. Following the adoption of some sales and order management systems, financial and accounting systems were next. Other apps were developed or purchased when additional capability was required. These new modules commonly employ process inconsistencies, contradictory assumptions, and redundant data. The corporation created functional systems to meet internal work processes in several circumstances. As a result, a succession of legacy systems included much of the firm’s history in processes and information but were distinct in processes, capabilities, and features. Because processing and storage hardware were frequently prohibitively expensive when these legacy systems were developed, their designers often used clever and challenging programming approaches to reduce storage and run-time requirements.

Example: Many of these legacy systems, for example, included programmes with the Year 2000 Millennium Bug (Y2K) built into the working logic. Because only the first two digits of the year were stored, less disc storage was required to hold dates, lowering the cost of the device. During the 1990s, corporations reinvested in their enterprise systems due to events involving legacy systems and the availability of relatively inexpensive information-storage technology. Firms were also attempting to improve internal integration. While the capabilities of the new technologies are unquestionably superior to those of the original legacy systems, the installation costs are pretty high – in some cases exceeding millions or tens of millions of dollars. Currently, most, if not all, of the Fortune 1000 organisations have deployed or are deploying an ERP system, and the market for ERP systems for small and mid-sized businesses has significant development potential. Regardless of the firm’s size, consistency, economies of scale, and integration typically justify such investments.

6.6.1 Consistency

Many businesses or divisions of companies created legacy systems to fulfil their unique requirements and operations. This was also true for overseas divisions as the company expanded into new markets and activities worldwide. Similarly, the numerous acquisitions and mergers in the 1980s and 1990s brought together companies with incompatible legacy systems. As a result, innumerable systems delivered varying and, in many cases, inconsistent processing. One manager from a multinational consumer products company said he had to consult 15 separate computer systems to determine their South American operations’ sales and inventory position.

6.6.2  Economies of Scale

As companies amalgamated and developed globally, management became increasingly pressed to capitalise on global-scale economies through resource rationalisation. Customers, likewise, began looking for suppliers who could offer products globally while using consistent system capabilities and interfaces to capitalise on scale economies. ERP provides organisations with potential economies of scale in a variety of ways. For starters, a single centralised processor or network of decentralised processors with shared configurable hardware has the potential for significant procurement and maintenance scale economies.

Second, the centralised ERP approach provides significant software scale economies because only a few software licenses are required when all divisions and regions use the same programme. While the initial software license fee may be significant, a single ERP application’s license and maintenance fees should be less than the multiple copies required for each division or region. On the other hand, the accurate scale economic gains arise from the reduced manpower needed to deploy and manage a shared ERP system. Multiple divisional or regional systems necessitate a large number of people with diverse hardware and software knowledge to install, maintain, and alter each application. Individual expertise is often ineffective because specific knowledge has poor transferability between hardware and software platforms. Potential scale economies for ERP expertise may not be visible today because relatively few people have developed extensive skills, and they are in high demand as employees.

Finally, the centralised ERP approach expands a multidivisional firm’s ability to implement shared resources and services across divisions or regions. Reviewing the resource requirements of multiple divisions in the standard production, storage, or transportation system increases the possibility of critical resource sharing. The integrated information makes it easier to employ standard suppliers, manufacturing facilities, storage facilities, or transportation equipment, resulting in significant opportunities for negotiation and operational savings.

While there is insufficient evidence that present ERP deployments deliver these scale economies, the benefits will most likely accrue when the relatively new implementations settle.

6.6.3 Integration

The final ERP advantage is improved system integration both within the firm and across the enterprise, as well as between suppliers and customers. Utilizing a single integrated database and implementing standard procedures across divisions and regions are two ways to achieve internal integration. Order entry, order processing, warehouse management, invoicing, and accounting are examples of standard ERP procedures. Such commonality allows for the merging of processes and provides a standard and uniform interface with the firm for significant customers. Standard financial processes across corporate units are also the product of such integration. Many ERP systems have standardised interfaces that simplify external contact with supply chain partners.

For example, several companies in the automotive and chemical industries have adopted SAP’s ERP system. The leading manufacturers then request that their suppliers interact with their SAP database to receive requirements data and release schedules.

Such information and process integration significantly improves supply chain information exchange, reducing uncertainty inside the firm and between supply chain partners. The growth rate in ERP implementations among large enterprises has slowed as most organisations absorb and refine what they have deployed. On the other hand, smaller businesses are just getting started with their investments and execution.

A new generation of ERP systems is being developed to allow more integration, particularly with customers. These ERP II systems combine classic ERP with a Customer Relationship Management (CRM) system to better connect the needs of major customers with the firm’s supply chain strategies. ERP II’s critical enhancement is external connectivity, which is crucial for supply chain coordination. These linked applications are also increasingly being accessed via the Internet, giving a familiar worldwide interface.

6.7 ERP System Design

The central database or information warehouse is at the heart of the system, where all information is kept so that all modules have access to standard and consistent data. The functional modules that originate and organise business actions surround the database. Although overall ERP benefits are best realised when all operations are integrated into a single application, many organisations install systems modularly to distribute resource requirements and minimise risk, as only a few company functions are in transition at any given time.

6.7.1 Central Data Base

The core database serves as the ERP system’s relational information store. It is called relational because it relates or links information about operational entities to reduce redundancy. Information redundancy frequently leads to inaccuracy over time since one reference to a data item is eventually updated without a corresponding change in the other reference.

For example, suppose a customer’s address is stored in two different places in the database. One reference will likely be modified if the client moves, but the second reference will be forgotten. At that point, the database would no longer be consistent, and all references to the second address would be inaccurate.

Some ERP systems include a proprietary data structure that restricts access. In these circumstances, all database connectivity must be done through the ERP. Having the ERP system operate as an interface is unnecessary, but it may restrict flexibility and data consistency. However, in most cases, the database structure employs one of several open database architectures that other systems may access. The phrase “open database architecture” refers to the fact that the interface is publicly defined and published and that various other applications can use it.

6.7.2 Supply Chain Applications

Inventory and supply applications and production, sales, and delivery apps are part of the ERP supply chain applications. These three modules help with supply chain activities such as raw material acquisition, manufacturing, and customer order fulfilment. They also include the transactions and operations that start the complete supply chain process.

6.7.3 Financial Applications

The financial module includes the transactions required to keep the firm’s financial and accounting records current. The module keeps track of payables and receivables and preserves the contents and references to the firm’s general ledger. The module also makes creating uniform income and balance sheets for divisions, geographic regions, or the full worldwide company easier. Accounts receivable and payable, invoicing, financial accounting, and management reporting are typical transactions.

6.7.4 Service Applications

The service module provides after-sales product servicing as well as warranty assistance. Customers who purchase expensive capital equipment such as manufacturing, medical, communication, or transportation equipment demand robust after-sales maintenance and repair support.

The service module can also track usage and repair data to predict prospective problems with preventative maintenance or equipment adjustments.

6.7.5  Human Resources Applications 

The human resource module tracks employee data, assignments, and performance. This data supplements payroll, tax, and job history documents. In addition to the standard human resource applications, this module supports the costing of supply chain activities by measuring the time individuals spend on an order, an activity, or a process. Detailed activity tracking enables supply chain managers to calculate the relative cost of customised or bespoke production and service costs.

6.7.6 Reporting Applications

The reporting module creates standard and customised management reports for monitoring, performance evaluation, and decision assistance. These report apps, which use the central data warehouse, enable management to monitor activity levels and detect performance inadequacies and issues.

6.7.7 Common ERP Systems

The software sector, particularly ERP software, is undergoing significant consolidation, much like the industrial industry. As a result, there are fewer and larger ERP software providers. While a few suppliers concentrate on particular sectors, most central systems incorporate functions and features and advertise to various businesses.

6.8 SC Information System Design

The supply chain information system serves as the foundation of modern logistical operations. Previously, this infrastructure was focused on starting and regulating processes such as receiving, processing, and shipping customer orders. To remain competitive, today’s organisations must expand the role of information infrastructure to encompass requirements planning, management control, decision analysis, and integration with other supply chain members.

The essential processes begin, monitor, and measure the operations required to fulfil customer and replenishment orders. There are two types of these processes. The first is the process of planning and coordinating inventory production and deployment. The second set of operations includes receiving, processing, shipping, and billing customer orders.

Planning and coordination refer to the activities required to organise and coordinate procurement, manufacturing, and logistical resource allocation across the company. Specific components include defining strategic objectives, rationalising capacity limits, and identifying market/distribution, manufacturing, and procurement requirements.

Order processing, inventory assignment, distribution operations, transportation operations, and procurement coordination are all part of the operations required to manage client order fulfilment. Both customer and replenishment orders have these steps fulfilled. Customer orders represent the demands of commercial customers. Replenishment orders commence the flow of finished items between manufacturing and distribution sites.

When a Make-to-Order (MTO) or Assembly-to-Order (ATO) strategy is impossible, inventory deployment and management link planning/coordination and operations that regulate the cycle and ensure a safe inventory supply. When a company employs an MTO manufacturing approach, the planning/coordination and operations processes virtually mirror one another.

For example, if an MTO approach is feasible, it may not be essential to plan ahead of time for raw materials and production or to keep buffer inventory.

Planning/Coordination

The supply chain system planning/coordination components constitute the foundation of the information system for manufacturers and merchandisers. These components outline the key activities influencing enterprise resource allocation and performance, from procurement to product delivery planning/coordination, including materials planning processes within and amongst supply chain partners.

(1) strategic objectives;

(2) capacity limits;

(3) logistical requirements;

(4) manufacturing requirements; and

(5) procurement requirements are the specific components.

Strategic Objectives 

Strategic objectives that define marketing and financial goals are primary information drivers for many businesses. These strategic objectives are often defined over a multiyear planning horizon, with quarterly updates. The strategic objectives of marketing determine target markets, product development, marketing mix strategies, and the role of logistics value-added activities like service levels or capabilities. Among the objectives are customer scope, breadth of products and services, planned promotions, and targeted performance levels. Customer service policies and objectives that specify logistics and supply chain activity and performance targets are referred to as marketing goals. Service availability, capability, and quality are all performance targets. Revenue, financial, and activity levels, as well as matching expenses, as well as capital and human resource limits, are all defined by financial strategic objectives.

The marketing mix of marketing and financial objectives defines the scope of markets, products, services, and activity levels that logistics and supply chain managers must handle within the planning horizon. Annual or quarterly activity levels, such as revenue, shipments, and case volume, are examples of specific goals. Product promotions, new product releases, market rollouts, and acquisitions are all considered events. Ideally, marketing and financial plans should be linked and consistent, as inconsistencies result in poor service, excess inventory, or inability to fulfil financial targets.

Other business plans are guided by a combination of marketing and financial objectives. While the process of developing strategic objectives is unstructured and broad, it must generate and present a plan that is comprehensive enough to be operationalized.

Capacity Constraints

Internal and external manufacturing, warehousing, and transportation resource restrictions impose limits on logistics and production capacity. These limitations generate material bottlenecks and drive resource allocation to satisfy market needs based on the activity levels defined by the strategic objectives. Capacity restrictions impact where, when, and how much each product is produced, stored, and moved. The restrictions consider aggregate constraints such as periodic production, movement, and storage capacity.

Capacity issues can be solved by acquiring resources or speculating on/postponing production or delivery. Acquisitions or alliances, such as contract manufacturing or facility leasing, might be used to alter capacity. Speculation lowers bottlenecks by predicting production capacity requirements through previous scheduling or contract manufacturing. Production and transportation are delayed until particular requirements are known and capacity can be assigned. Offering consumer incentives such as discounts or allowances may be required to delay customer delivery. The capacity constraints time phase the enterprise’s strategic objectives by considering facility, financial, and human resource constraints. These constraints significantly impact logistics, manufacturing, and procurement timelines.

Logistics Requirements

Logistical needs include time-phased facility, equipment, labour, and inventory resources required to complete the logistics task.

For instance, the logistics demand component organises finished product shipments from production plants to distribution centres and merchants.

The shipping quantity is determined by subtracting the client requirements from the inventory level. Distribution Requirements Planning (DRP) is a tool for inventory management and process control frequently used to implement logistics requirements. Forecasts, customer orders, and promotions are used to determine future requirements. Forecasts are based on sales and marketing data and past activity levels. Current orders, future committed orders, and contracts are all examples of customer orders. Promotional activity is especially significant when calculating logistics requirements since it frequently represents a large percentage of volume variance and significantly impacts capacity. The current inventory status is that the product is ready to ship.

Specifically, the sum of projected + future client orders plus promotional volume indicates period demand for each planning period, day, week, or month. It is difficult to determine the percentage of predicted volume that is accounted for by known customer orders, thus some discretion is required. Period demand is typically a blend of the three because current predictions may include some future orders and promotional volume. When determining period demand, it is critical to consider the overlap between prediction, future customer orders, and promotions. The period logistics requirements are then calculated by subtracting the period demand from the inventory on hand plus planned receipts.

Manufacturing Requirements

Manufacturing requirements plan production resources and try to overcome day-to-day capacity bottlenecks in the materials management system. Raw material shortages or daily capacity constraints cause primary bottlenecks. The Master Production Schedule (MPS) and Manufacturing Requirements Plan are determined by manufacturing requirements (MRP). The MPS establishes production and machine schedules on a weekly or daily basis. MRP time phases the acquisition and arrival of materials and components to fulfil the planned manufacturing plan based on the MPS. Although this article covers logistical and manufacturing requirements sequentially, they must function together. This is especially true for businesses that use demand flow or market-paced production techniques. These solutions decrease the need to forecast or prepare by immediately coordinating production schedules with market demands or orders. Demand flow or market-paced manufacturing methods design all production as make-to-order, completely integrating logistics and manufacturing requirements. The Dell MTO computer model exemplifies a technique that aligns manufacturing with demand within constraints. Even the Dell model, however, must function under capacity restrictions over a limited time horizon.

Procurement Requirements

Procurement requirements schedule material purchase order releases, shipments, and receipts. Capacity restrictions, logistics, and production requirements define long-term material requirements and release timelines. The requirement and release schedules are used for purchase negotiations, contracts, transportation equipment coordination, and arrival scheduling.

Planning/Coordination Integration 

While each component of planning/coordination can and frequently has worked independently, such independence often leads to discrepancies that result in excess manufacturing and logistical inventories and operational inefficiencies. Because a separate organizational function governed each functional module, it was pretty uncommon for firms to have different predictions for each.

For example, strategic objectives may produce aggressive estimates to inspire the sales force, whereas logistics may focus on more conservative forecasts.

Similarly, variations in logistics, manufacturing, and procurement projections led to irregularities in product acquisition, production scheduling, and logistics deployment, resulting in needless safety stocks to buffer independent operations.

Individual planning/coordination procedures have historically been limited within capacity restrictions. As though there were boundless capacity, each planning process was essentially incapacitated.

Operations

Coordinated, integrated operations information systems are also required for supply chain competitiveness. Coordination and integration allow for a seamless and consistent flow of customer and replenishment order information throughout the company and visibility into current order progress. When information is shared in an integrated manner, delays, inaccuracies, and resource requirements are reduced.

(1) order processing,

(2) order assignment,

(3) distribution operations,

(4) transportation, and

(5) Procurement is the operations process required to fulfil customer orders and coordinate the acceptance of purchase orders.

Order Processing

Order processing is the point at which customer orders and queries are received. It enables the entry and maintenance of customer orders through communication methods such as mail, phone, fax, EDE, and the Internet. Order processing inputs and retrieves required information, edits for proper values, and retains acceptable orders for assignment as orders or queries are received. Order processing can also provide information about inventory availability and delivery dates, which can help to set and confirm consumer expectations. The primary contact between the client and the ERP or legacy system is order processing in collaboration with customer service professionals.

Orders Assignment 

Order assignment assigns open customer and replenishment orders to available inventories. Assignment can happen in real time, as orders come in, or in batch mode. Orders are bundled for periodic processing in batch mode, such as by day or shift. While real-time allocation is more immediate, a batch approach gives the firm more control over low-inventory conditions. In a batch process, for example, order assignment can be configured to distribute stock only from current inventory or scheduled production capacity. It becomes more responsive if the operational system permits inventory to be assigned based on expected production amounts or capacity. The term “assignment of production numbers” relates to the use of available to promise inventory, whereas “assignment of production capacity” refers to the use of capable to promise inventory. There is a trade-off, however, because assigning scheduled production capacity decreases the firm’s flexibility to reschedule output.

Distribution Operations 

Distribution operations include processes that guide the physical activities of distribution centres, such as product receiving, material movement and storage, and order selection. As a result, they are frequently referred to as inventory control or warehouse management systems and warehouse locator systems, which relate to the capacity to track inventory storage locations in warehouses. All activities within distribution centres are directed by distribution operations, which use a combination of batch and real-time assignments. The distribution operations system creates a “to-do” list of instructions or tasks to guide each material handler in the warehouse in a batch setting.

Transportation and Shipping 

Transportation and shipping procedures, often known as Transportation Management Systems (TMS), plan, execute, and manage transportation and movement functions. Shipment planning and scheduling, shipment consolidation, shipment notification, transport documentation creation, and carrier administration are all part of the TMS. These procedures allow for more efficient transportation resource usage and more effective carrier management.

The TMS is distinguished because it frequently involves three parties – shipper, carrier, and consignee (recipient). A minimal level of information integration is required to manage the process successfully. Standardized data formats for transporting documents are needed for information sharing. The Transportation Data Coordinating Committee (TDCC) and VICS in the United States pioneered and refined the standardisation of transport document formats.

Procurement

Procurement controls PO preparation, revision, release, vendor performance, and compliance. Although procurement systems have typically been considered separate from logistics systems, integrating procurement with logistics schedules is crucial to synchronising material receipt, facility capacity, and transportation backhaul.

REVIEW QUESTIONS:

1. Explain how information integrates supply chain activities across four levels of functionality, accompanied by a diagram illustrating the concept.
2. Discuss the fundamental principles of Logistics Information.
3. Elaborate on how logistics system planning/coordination components serve as the information system backbone for manufacturers and merchandisers.
4. Provide definitions for ERP (Enterprise Resource Planning) or Legacy Systems.
5. Define Execution Systems and their role in logistics management.
6. Provide insights into the Planning Systems used in logistics and supply chain management.
7. Define Electronic Data Interchange (EDI) and its significance in information exchange within supply chains.
8. Briefly discuss the role of the Internet in facilitating communication and information exchange in logistics and supply chain management.
9. Define Extensible Markup Language (XML) and its application in data interchange and system integration.
10. Describe the application and benefits of Radio Frequency Data Communication (RFDC) technology in logistics and supply chain operations.
11. Discuss the reasons and benefits associated with implementing ERP systems in supply chain management.
12. Explain the design and architecture of ERP Systems in the context of supply chain operations.
13. Discuss the components of supply chain system planning/coordination.
14. Elaborate on the logistics and manufacturing requirements within the supply chain system.