Meaning and Definition of Logistics Information System
In logistics management, the main task is to control the supply of products to the final consumer. The business unit acts at the source while the consumer acts as the destination of the products. Supply chain management (logistics management) helps keep in track all activities that occur to the products from time of dispatch to time of consumption. The number of times that the products change hands is also accounted for in the logistics management and plays a very vital role in the whole process.
Logistics information system is an important information system in a firm, it will affect company’s logistics decision making. It provide reliable and safe delivery and reducing transporting cost. Logistics information system is nothing but a part of Management Information System to manage, control and measure the logistical activities. These activities occur within the organization or as well as overall across the supply chain.
Functions of Logistics Information System
Narrowing down to the specific field of logistics management, the main tasks of Logistics information system are to plan, implement and control the forward and reverse flow of products in the supply channel. It also covers the storage and disposal of products that prove to be substandard. For a better understanding of this management information system, let us look into the functions themselves.
One of the main functions of logistics management is planning. This occurs according to the conditions attached to a specific scenario. For example, consider the sale of a vehicle. From the word go, all the costs must be considered before setting the selling price of the product. The conditions to consider may include buying price, shipping costs, profit margin and insurance. For the best selling price and discounts on these products, these conditions must be attached to the product. When feeding data to the logistics system, all these conditions must be fed. The system then come up with a plan of marketing the product at the minimum cost, the anticipated profit, the depreciation rates and even the shelf life of the product. The system also gives a set of rules under which the products may be returned to the source, ways of dealing with the returned goods and how to dispose the already useless products to the dealer. In this component of the logistics system, the main ICT components are a case based program which accepts the set of conditions and then makes the best decision. This program must have an input and output window which helps in accepting the input and displaying the output. The program has also to incorporate mathematical expressions which help n computations of profit margins, discount rates and the anticipated profit.
Moving on to the next function of the system, analysis is vital. This process is the most crucial thus requires a careful planning. This component must have the ability to accept data and then process the whole bulk of data according to a set of rules making it possible for the transaction to occur. The analysis component is closely related to the planning since it receives data from the planning component for further processing. This component of the system does not interact with human beings thus is entirely dependent on the technology part of the information system. Back to our illustration, the data about the car is fed to the system from the input window. For the planning to occur, the received data in the system is analyzed according to the set conditions and the best suited option in the case statements provoked. The data is then processed according to the rules and the output is done. However, this is also done for other alternative case statements in the whole program after the case analysis, the outcomes are displayed and the management chooses the best option. This option is then used to analyze the rest of the data pertaining to the product.
Lastly, let us move to control component of the system. This component is very important since it is the one that allows only valid information to be entered to the machine. Any data outside the accepted bracket of data is rejected and a message is displayed simultaneously. This part of the system is usually incorporated in programs as exceptional handling strings which help keep the system robust and free from any crashing. Deeper in the control aspect, the system ensures that the stock moves as anticipated. If excess stock flows out, it prompts the people using it input more stock. By this, it controls the movement of stock and produces a report to that effect. This part of the system is the only component in the whole system that prints a report to a peripheral device like a printer. The control aspect deals with the input and output, compares them and uses a part of the master program in the analysis component to come up with a report.
From the actual operation of the logistics management, there exist two logistic management subsystems. These subsystems can be attributed to the fact that supply chain can have products moving in either of the directions. In the forward movement of products, forward logistics management system is evoked. This subsystem helps in computation of the required discounts, anticipated profits and the other facts like shelf life of the products. When a product has been returned to the business unit due to some defects, it has to be considered by the system for the best record updating. This calls for reverse logistics management subsystem which is part of the main logistics system. This subsystem helps keep record of the defective products as well as help in making decision s regarding the best way to repair or deal with the returned products. These two subsystems work in opposition to each other and they are stored on the same main system. They are evoked as one of the very initial steps thus they use almost the same subprograms but call the functions differently or in different orders.
Objectives of Logistics Information System
Logistics information systems are important for achieving logistics efficiency and effectiveness. In an enterprise, logistics information system seeks to achieve the following:
- It ensures of logistics functional operations into a process pursuing customer satisfaction at the lowest total cost.
- Information system facilitates planning and control of the logistical activities related to order fulfillment.
- It makes the firm more competitive, by making better tactical and strategic decision for the benefits of the firm and its customer.
- Helps provide customers information regarding product availability, order status, and delivery schedules promoting customers service.
- It reduces the requirements of inventory and human resources by enabling requirements planning.
- It interfaces with marketing, financial, and manufacturing information systems and provides information to top management to help formulate strategic decisions for the whole firm.
- The use information technology in information systems has enabled quick response to demand making forecasting redundant. This has also helped in implementing “pull” systems like just-in-time making the firm more competitive.
- It promotes systems that link the operations of the firm, such as manufacturing and distributing, with the suppliers operations on the one hand the customer on the other.
- In the other cases, organizations are finding that through information they can manage dispersed inventories as if they were single inventory. The benefits of this can be considerable. If inventory management is centralized and decisions on replenishment and other quantities are taken or the basis that is a single stock, then only one safety stock instead of many required. The stock itself can be carried anywhere in the system, either near the point of production or the consumption. This is the concept of ‘virtual’ inventory management or electronic inventory management.