Running head: APPLICATION OF IS IN LOGISTICS 1

Application of IS in Logistics

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Abstract

An information system that is well designed is an important element of logistics in the chain of

organizing, managing, and operating in both the nonprofit and profit companies. The

organization must consider using strategic management when trying to develop an information

system as it leads to the development of a positive logistics function in parts of the organization

or the whole company. it's important that before the organization gathers the required

information about logistic management as the success of this system depends on it. In today's

business environment it's nearly impossible for an organization to run without having the right

working information. An organization that has a well-constructed information system is at a

point of advantage over the other businesses. The competitive advantage is reflected when the

organization can lower their cost but still maintain the quality of their services. The systems also

produce information that is important for the top management as it helps them in making

strategic decisions aimed at moving the organization forward. Also, organizations with the

logistics management information system are able to create a specific dependency differential in

its activities as well as ensuring that they obtain better results of all the logistics functions. The

main important goal of a logistics management information system is to ensure that it makes a

successful link between consumers, suppliers, and competitors. One of the key aims is to ensure

that the organization is able to obtain a competitive advantage through logistics. And if the main

aim of logistics management information system is to ensure that there is effectiveness in logistic

management the information obtained will aid in decision making that is more aligned to the

purchasing function, possible association with the distributors, linking logistics with the

customers, comparative advantage in the supply chain and finally in determining the impact of

logistics to the organization competitiveness. logistics management information system is key

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within the organization as it helps in making a correct interpretation of how the company is

performing. It important that the organization continuously monitors the logistics management

information system so that where it falls short the organization can adopt new options to help

improve.

Introduction

Countries and companies are becoming more involved with the international economy as this

helps them to increase and have a large market share in foreign trade. Countries' involvement in

foreign trade has been made possible by globalization and the deregulation of the trade of goods

and services. As a result of many countries wanting to participate in foreign trade, it has made

the international market experience more competition (Helo & Szekely, 2015). Competition is

important and healthy as it makes people and companies creative so that they can gain a

competitive advantage over the other. In a highly competitive environment, the companies are

left with only one objective which is to satisfy and meet the customers' desires and needs. For

these organizations to be able to meet this objective then it's up to them to ensure that they gain

an upper hand in all of their operations in terms of timing, quality, cost, and readiness. Logistics

is important in every organization as it helps companies to easily realize some of these criteria

and play a very vital role in establishing useful communication channels that will help link the

organization and the market.

There has been a rapid change in the economy these is because of the developments that are

happening in technology (Narasimhan & Kim, 2011). There has been a shift as the economy and

management is becoming more knowledge-based. Most logistic companies have also become

dependent on knowledge and as a result, they have started utilizing information systems to help

them address these needs. information systems have played an important role in making a
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company become one unit as it helps in easier transfer of information among different branches

regardless of their location without the need for any movement. As a result of this, the decision-

making process has been made easier, faster, and more effective. information systems have been

playing an important role in the logistic companies as they are used in all aspects of the logistic

activities that is from procurement activities to end customer (Nickerson, 2017). Information

systems are an essential part of the logistics industry as they facilitate flexibility, auditing, and

decision making by ensuring that the efficiency and productivity of logistics management are

increased. Every logistics company should ensure that all of its operations are effective and

productive this is because the competition is intense in the e-commerce environment. With

information systems its easier now for somebody to order an item that is processed in another

country and there has been made possible as most logistics companies have redesigned their

operations and activities which has enabled distribution and warehousing to easily accessible to

the end customer and these have made these organizations to ensure that they produce cost-

effective quality products. A good example of an information system used in the logistic industry

is the logistics management information system

Definition of terms

Logistics

The word logistics was first used by the military and it meant those activities that would help in

the provision of the essential supplies in compliance with the strategy, service support, and

tactics that would help in combating the elements (Bardi & Raghunathan, 2014). But in business

logistics is used to mean the delivery of a good, services, information from the place where they

are manufactured to the end customer or point of delivery. Also, logistics can be termed as the

effective and productive management of how goods, services information flow from the point
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where they are produced to the point where they are consumed to meet the needs of the

consumer. In other terms, logistics is viewed as that act in which the right product which is in the

right quantity is delivered to the right place and in good condition and at the right price. Some

example of the logistic activities includes customer services, product management, demand

forecast, material management, information communication, ordering, packaging, parts and

service support, storage, and transportation.

Logistic management

This is the management of the logistic process to ensure that it's effective and productive to

enable the organization to meet the needs of the customer in terms of how material, services, and

information flow between the production and the customer (Gunasekaran & Ngai, 2014). In

other term logistics management can be summarized as planning, application, and control of the

logistic process. The main objective of why logics management is important is to ensure there is

a quick response, cargo load consolidation, minimum stock, quality is maintained, the shipment/

delivery can be tracked and finally, it can support the life cycle. Logistics management is

important in business and for it to be a success, the company needs to integrate an information

system that will enable improve the effectiveness and productivity of the process. Logistic

management and information systems have become important in business because of the

following reason;

 There has been an increase in the transportation distance and cost

 Companies need the logistic process to be cost-effective while at the same time ensure

that there is a quick response to the changes that might be happening in the production

technology.
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 To help address the issue of diversity of products and services to ensure that they meet

the customer needs.

 To ensure that the organization gains a competitive advantage as the environment is

competitive.

 Companies have a desire to ensure that they provide services that are not encompassed in

the main activities but are within the framework of supply and demand chains for

instance warehousing, transportation, distribution, and inventory management.

 The economy has also changed and become knowledge-based.

E-logistics

E-logistics can be defined as that process that enables the transfer of information about activities

that are related to logistics within the shortest time possible to the end customer and this transfer

is made possible by the use of electronic and information system technologies through any

logistic mode (Narasimhan & Kim, 2011). E-logistic is an advanced form of traditional logistics

that helps in the transfer of information in a faster way. In other words, it’s a system that enables

the traditional logistic process such as customer service, procurement, and warehousing to be

based on internet technologies. An e-logistic process has the following process;

 Receiving of goods

 Labeling and packaging of goods

 Ensuring that the handling process is done

 Ensuring that the loading process is done electronically by the use of automated

software’s

 Ensuring that the route is prepared after planning the load

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 Using satellites and communication systems to trace the vehicles that are in transit.

 Using a computerized integrated automation system that enables the cargo to be unloaded

automatically at the port

 Ensuring that web-based online electronic consultancy services are provided to aid in

making the logistic process effective.

 Also, this process helps in providing electronic insurance services to cover the cargo

 There is also the aspect of transportation of the cargo from warehouse or port to the point

of delivery or the end customer and also ensuring that the load arrives its destination in

good condition

Application of information systems in logistics business operations

Information systems very important in logistic business operations as they help make the logistic

process more effective and efficient. In logistics an information system is used to ensure that

data is given, processed, stored, correlate ad then it's transferred to all activities in logistics

simultaneously with the use of communication mediums, bar code readers, computers, software,

and finally control tools (Helo & Szekely, 2015). These information systems help the

organization to be able to gain control over the logistics process by ensuring that coordination of

all activities is maintained to help both the internal and external customer save information about

orders they want to make, it also helps give access the user access to information, it also ensures

that inventory planning for both the customers and suppliers is possible, the system also enables

the generation of both demand forecast as well as the acting as an aid in strategic planning. The

system also helps the organization in ensuring that it maintains good customer service, system,

and porter performance in every logistic activity.

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A good example of an information system used in logistics is the logistics management

information system (LMIS). An LMIS is a system that has both the physical and technology-

based reports and records that are used by managers in the supply departments to collect,

analyze, organize, present and allow the logistic data gathered to be used across all levels of the

system. For a logistics management information system to be effective then the organization

needs to ensure that they get the right combination between the people, technology, and process.

For instance, skilled people are required so that they can record, analyze, manage, and then make

use of supply chain data at every level (Gunasekaran & Ngai, 2014). The logistics management

information system should also ensure that the business workflow and process are effective and

efficient. The LMIS should also be able to incorporate the routine data management processes. It

is also important that the LMIS be able to make use of the available and appropriate technology

that is easy to use, sustain, and can be easily be accepted by the users at each level. For a

logistics information system to be complete it is supposed to be made by the following

information systems and they include;

 Sales information system.

 Quality management information systems.

 Purchasing information systems.

 Retail information systems.

 Inventory control.

 Transport information systems.

 Plant maintenance information system.

 Shop floor information system

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Due to the advancement of technology, there has been a shift from the paper-based LMIS as it is

being replaced by digital applications like tablets, cellphone, computers which are usually linked

with an online dashboard and centralized databases that make it easy for staff in the supply

department to access data (Helo & Szekely, 2015). Paper to digital technology transition usually

starts when the logistic department starts with a limited number of users for instance field sales

agents use SMS to notify the warehouse about the stock balance but with time the organization

can make a shift and start using more complex but powerful LMIS systems that can handle a big

number of the business processes. Examples of these digital tools include;

 The point of service is used to track the consumption rate.

 The electronic LMIS (e LMIS) is used in reporting data, allocating, or requisition goods,

and whenever this system notices any performance issue it's able to notify the users.

 The warehouse management system (WMS) which helps in the control of inventory

 A fleeting management system which helps in the planning of transportation and loading

 The distribution planning system helps the supply manager in planning for the load and

the route to be used.

 Enterprise resource planning (ERP) is a more advanced system that can manage most of

the core functions and it also supports other functions like finance, sales, procurement,

human resource among other business functions.

The use of bar code technology and remote temperature monitoring devices has been on the rise

as they are integrated into the above systems to make them more effective (Narasimhan & Kim,

2011). In some countries there link two technologies so that they have a strong and effective for

instance a company can link eLMIS with the ERP system of the distributor so that customer

requisition can easily and automatically be transferred into a sale order for the supplier’s finance
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department and a picking list is sent to the warehouse so that the products can be released (Bardi

& Raghunathan, 2014). Dashboards are also important as they help the supply chain manager in

drawing data from these systems and display performance and critical operational data. The

systems automatically send feedback to the customers through the use of application notification,

emails, and SMS. The information systems also send reminders alerts to the staff working in the

supplies departments warning them of any impending expiry or stock out risk. These reports are

generated automatically by the use of simple business logic.

Digital logistics management information system

Automating the logistics management information system makes it easier and faster for the

supply department to be able to prepare summaries and generate feedback reports. If the

electronic LMIS is used for opening balance, routine inventory control, receipts, consumptions,

adjustments, or losses are recorded after every transaction then it's possible for the Digital

logistics management information system to automatically populate the elements of the report

(Gunasekaran & Ngai, 2014). When one clicks the button it sends a command to the electronic

LMIS to generate a report summary and an order requisition that has a suggestion on the

replenishment of quantities. This system is also effective and efficient as it helps in quick

identification of mathematical errors, ensuring that missed deadlines are highlighted, expected

reports are received and finally it makes it easier for one to be able to determine data averages,

lows, and highs.

Importance of the logistics information systems

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The logistic management information system is very important in the logistics industry as it

helps in improving the logistics process effectiveness and efficiency. The following are some of

the reasons why a logistic information system important for logistics companies;

 The system ensures that the organization logistics functional operations can ensure that it

maintains customers’ satisfaction at the lowest cost possible.

 A firm with an information system gains a competitive advantage over the other firms as

it helps in making a better tactical and strategic decision that aims at benefiting the

organization and its customers.

 Helps in providing information to the customers about a product in terms of its

availability, the status of the order, and the delivery schedule and by doing so the

organization can promote customer service.

 The information system helps the organization in controlling and planning for all

activities that are related to logistics so that a customer.

 The system enables planning hence it reduces the requirement of both the human

resource and the inventory.

 The system can link with the marketing, manufacturing information systems and it gives

crucial information to the top management that will help them in formulating strategic

decisions that will help in pushing the organization forward.

 Information systems are important because they help in linking the firm operations for

instance manufacturing and distributing with the operations of the supplier on one hand

and the other the customers.

Problems associated with the implementation of the Logistic information system

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For a Logistic information system to be efficient within then the organization needs to ensure

that its properly implemented. Implementation of a Logistic information system refers to the

process of integrating data into useful information that can be used to make a decision within the

organization. implementation of a Logistic information system involves putting up systems that

can help to ensure that there is an efficient conversion of data using the method that aims at

decision making (Bardi & Raghunathan, 2014). The main problem associated with the

implementation of the Logistics information system is the cost that the organization incurs

during the implementation process. For instance, if a company decide to install a Logistic

information system then it will have to purchase the system and train their staff so the company

must ensure that it manages the implementation of the system to mitigate the risk of failure.

Another challenge is when there is a lack of strategy in that managers in the supply chain are

unable to make use of the information that is obtained from the information system. After the

system is implemented it is important that the organization keep track of changes so that they

ensure that they keep the system up to date in that the system will be able to remain effective and

for the organization to be able to address the issue of change then they can integrate new

technologies to the system.

Conclusion

In every sector technology is one issue that most of the companies are putting their emphasis on.

The importance of having a technological infrastructure can be determined only when the parties

involved keenly observe and analyze the competitiveness of the market or environment the

business is operating in. so it important that every organization ensure that it adopts the most

efficient and appropriate technological management system so that they can be able to keep up

with the change. The main issue is that organizations should aim at having the right technology
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that will be compatible with their business operations, human resource, and it's able to operate

with minimum cost rather than owning the technology that might not be of use to them.

Sometimes if an information system is not implemented ell it might have more harm to the

organization than good but in scenarios where the organization disregards the implementation of

these information systems they may end up missing on opportunities that may be of benefit to

them. Therefore, it's important for logistics companies to embrace this technology of information

systems and adopt them in their strategic policy. The ever-growing logistic sector has a lot of

competition so it's important for companies in this sector to invest in the information systems as

it will help them gain a competitive advantage over the other businesses which are using the old

and outdated systems.

References

Bardi, E. J., & Raghunathan, T. S. (2014). Logistics information systems: the strategic role of top

management. Journal of Business Logistics, 15(1), 71.

Gunasekaran, A., & Ngai, E. W. (2014). Information systems in supply chain integration and

management. European journal of operational research, 159(2), 269-295.

Helo, P., & Szekely, B. (2015). Logistics information systems. Industrial Management & Data

Systems.

Narasimhan, R., & Kim, S. W. (2011). Information system utilization strategy for supply chain

integration. Journal of business logistics, 22(2), 51-75.

Nickerson, R. C. (2017). Business and information systems. Addison-Wesley.