LOGISTICS AND SCM INFORMATION SYSTEM, SCM SOFTWARE

Sarath M V

School of Management Studies

CUSAT, Kochi - 22
E-mail:sarathmenon.venugopal@gmail.com

Abstract. Supply Chain and Information systems is a boundary-spanning field of study of supply chain networks, which
organizations use to acquire, produce, and deliver goods and services all over the world. The core processes span
traditional functional boundaries and encompass important activities such as information management; purchasing;
inventory flow scheduling and control: logistics -production coordination; transportation systems operation and
infrastructure; and customer service, order fulfillment, and distribution facilities management. Supply chain management
SCM is the integration and management of supply chain organizations and activities through collaboration, effective
business processes and high levels of information sharing. The supply chain concept has become a concern due to
global competition and increasing customer demand for value. Thus, the information must be available in real time
across the supply chain and this cannot be achieved without an integrated software system for supply chain
management. Supply chain members have to collaborate, sharing information for improving customers’ satisfaction. Web
technologies enable enterprises to become more effective, to trade with suppliers and customers over the Internet in real
time. For this, businesses have to integrate their information systems and applications with those of their suppliers and
customers. First, companies have to redesign their supply chain to create an integrated value system and afterwards,
companies can develop business to business applications across supply chain structure for the optimization of the
supply chain. The implementation of the supply chain information systems in companies facilitates an increase in their
competitiveness and their profits.
, Key words: Supply Chain Management, Logistics Information System, SCM Information System

1.0 INTRODUCTION

Logistics is the function responsible for the flow of materials from suppliers into an organization through operations with in
the organization and then out to the customer.
Logistics is the field of study to focus on the design, control, and implementation of the efficient flow and storage of goods
and services and other related information from the point of origin to the point of final consumption with an aim to satisfy the
requirements of its existing and prospective customers. The management of Logistics involves the integration of
information, transportation, inventory, warehousing, material handling, and packaging, and often security .

2.0 LOGISTICS INFORMATION SYSTEM

Converting data to information, portraying it in a manner useful for decision making, and interfacing the information with
decision-assisting methods are considered to be at the heart of an information system. Logistics information systems are a
subset of the firm’s total information system, and it is directed to the particular problems of logistics decision making. There
are three distinct elements that make up this system: the input, the database and its associated manipulations, and the
output. The inputs are data items needed for planning and operating logistics system obtained from sources like customers,
company records, and published data and company personnel. Management of the database involves selection of the data
to be stored and retrieved, choice of the methods of analysis and choice of the basic data-processing procedures. The
outputs of a logistics information system include:

 Summary reports of cost or performance statistics,

 Status reports of inventories or order progress, e
 Exception reports that compare desired performance with actual performance, and reports that initiate action.
 Output can also be in the form of documents such as transportation bills of lading and freight bills.

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.
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.
 The shift in the economy from the industrial era to the information age has profound implications for the management
of the modern enterprise.
 Issues of ASEAN Connectivity in physical, people, and institutional connections.
 Supply Chain Management is a relatively new discipline within the firm and originally dealt with the transportation and
storage of goods, an advanced supply chain program coordinates activities across management functions.
 In addition to transportation and distribution, other areas influenced by logistics include customer service and quality
management, inventory management, location, strategic planning, procurement, and logistics information systems.
 The intent of this presentation is to introduce the participants to the important concepts of Logistics Information
Systems.
 In addition, a special attention is given to how information technologies will transform the business landscape on
logistics and supply chains.
A Supply Chain = A Network of Logistics

2.1Logistics Management

•Understand the role of logistics in an enterprise.

•Define customer service.
•Describe electronic and other logistics information systems.
•Explain inventory management.
•Explain materials management with special reference to Japanese systems.
•Define supply chain management.
•Explain the methods of transport.
•Illustrate the calculation of transport cost.
•Illustrate the types and costs of warehousing.
•Explain electronic aids in materials handling cost and price determination of purchases.
•Explain how logistics can be organized.
•Explain methods for improving logistics performance

2.1.2 Integrated Logistics

This explains the overall integration of logistics which includes logistics strategy, logistics control, logistics
processes, logistics structure , logistics ICT, logistics organization, logistics performance with respect to product
and customer.
 Example of Integrated Logistics

3.0 INFORMATION SYSTEMS DISCIPLINE

 Information Systems is an applied discipline that studies the processes of the creation, operation, and social contexts and
consequences of systems that manipulate information.
 The creation and operation of such systems requires the sub-processes of systems analysis, design, development and
management which are bracketed at the beginning by social context and at completion by social consequences.

3.1 Logistics Information Systems

•Logistics is the field of study to focus on the design and implementation of the efficient flow and storage of goods from the
point of origin to consumption.
•Information System is the field of study to deal with problems against the design, development, implementation, application
of information system.
Logistics Information Systems (LIS) is a new discipline that unifies Logistics and Information Systems.

3.1.2 Key Building Blocks of LIS

•Logistics Information Portal: Transactional and Analytical LIS

•Logistics Computing and Simulation
•Decision Support System
•Database and Data Mining
•E-Logistics and E-Commerce
•Logistics Process Management
•IT and Software: CRM, ERP, CRM, ERP, RFID, TMS, and WMS.
•LIS Applications: port, retail, energy, humanitarian, agriculture, military, trade, manufacturing
3.1.3 Analytical and Transactional LIS

3.1.4 Research Areas of LIS

•DSS (Decision Support System), Wide-area-information sharing system, SIS (Strategic Information System)
•Analysis of LIS by the examples of Geographical Information System (GIS)
•Organizational control of human activity and organizational learning in LIS
•Project Management Methodology for LIS development
•Analysis, design, evaluation for user oriented LIS: System analysis, design, and evaluation at the viewpoint of LIS
•Qualitative Research in LIS
•Qualitative failure analysis of LIS projects at the viewpoint of each stakeholder
•Value model of LIS
•Logistics optimization based on LIS
•LIS for SMEs
3.1.4 SAP Logistics Information System

4.0 SCM INFORMATION SYSTEM

4.1 Evolution of SCM

Stage 1: Vendor – Purchase – Production - Distribution – Retailer

Stage 2: Materials Management - Logistics Management
Stage 3: Supply Chain Management
Supply chain management (SCM) is the management of a network of interconnected businesses involved in the provision
of product and service packages required by the end customers in a supply chain. Supply chain management spans all
movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of
consumption.
Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control,
and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure,
leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."

Supply chain management SCM is the integration and management of supply chain organizations and activities through
collaboration, effective business processes and high levels of information sharing. The supply chain concept has become a
concern due to global competition and increasing customer demand for value. Thus, the information must be available in
real time across the supply chain and this cannot be achieved without an integrated software system for supply chain
management. Supply chain members have to collaborate, sharing information for improving customer’s satisfaction. Web
technologies enable enterprises to become more effective, to trade with suppliers and customers over the Internet in real
time. For this, businesses have to integrate their information systems and applications with those of their suppliers and
customers. First, companies have to redesign their supply chain to create an integrated value system and afterwards,
companies can develop business to business applications across supply chain structure for the optimization of the supply
chain. The implementation of the supply chain information systems in companies facilitates an increase in their
competitiveness and their profits.
Supply chain management is a cross-function approach including in managing the movement of raw materials into an
organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished
goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and
becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions
are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect
is to increase the number of organizations involved in satisfying customer demand, while reducing management control of
daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management
concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners,
thus improving inventory visibility and the velocity of inventory movement.
Several models have been proposed for understanding the activities required to manage material movements across
organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain
Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can
be grouped into strategic, tactical, and operational levels. The CSCMP has adopted The American Productivity & Quality
Center (APQC) Process Classification Framework a high-level, industry-neutral enterprise process model that allows
organizations to see their business processes from a cross-industry viewpoint.

4.2 Flow of Information

 Item’s UPC (Universal Product Code – Bar Code) scanned at check-out.

 Creating POS (Point of Sales) data, which goes POS data base available to category buyer.
 With integrated supply chain management; POS data goes directly to regional DC (distribution center) and to product
vendor via EDI (Electronic Data Interchange); no paper orders, shipping statements, billing.
 A replenishment order is generated automatically; when given amount of product is sold at a store.
 Vendor (product supplier) will also know when to send a shipment to the DC.
 Retailer & supplier acting as partners. Retailer also stores data on each sale & customer to use to improve
merchandising
 In other systems purchase data is aggregated by category buyer, who sends order to supplier.
 Category buyers & store managers coordinate to get deliveries from DC (distribution center) when needed.
 Wal-Mart has been a leader in using IT to improve supply chain management.
 Next step is RFID (radio frequency identification); bar codes that can be scanned from a distance.
 Just walk through scanner on way out of grocery store.
 Going slow!

EDI

 Proprietary systems; Wal-Mart.

 Intranets: secure systems within a company.
 Extranets: use the internet, although usually private & secure.
 CPFR (collaboration, planning, forecasting, &replenishment); popular in grocery industry.
 Inventory management system using EDI with retailer
 sharing sales data with supplier to coordinate sales
 forecasting & replenishment

Security

 Has become a major challenge.

 Authentication: assure & verify the party’s id.
 Authorization: assure party has authority to access info.
 Integrity: data protected from unauthorized changes/tampering.

Logistics

 Plans, implements, and controls efficient flow and

 Storage of goods.
 Merchandise flows from: vendor to DC’s.
 ex. C. H. Robertson used to source half of all
 Produce sold by Wal-Mart Supercenters.
-From DC’s to stores.
- Direct store delivery
4.3 Advantages of Advanced Supply Chain Management

 Improved Product Availability; fewer stock-outs; huge increase in number of SKUs (stock keeping units).
 Improved Return on Investment:- Return on Assets = Net Profits/ Total Assets.
- Greater supply chain efficiency reduces costs; hence net profits.
- Greater supply chain efficiency reduces inventories; hence assets.
 Data Warehousing – data stored from inside & outside the company ready for analysis

4.4 Benefits of Quick Response Inventory System

 Reduces lead time: time between placing order & receiving goods at store.
 Increases product availability & lowers inventory investment.
 Reduces logistics costs.
 Outsourcing to third-party logistics companies.
 Cost- large IT investment & training.
 Counter example – Trade Joe’s.
 Global sourcing – has made whole process more complex.

5.0 SUPPLY CHAIN MANAGEMENT SOFTWARE (SCM Software)

Supply chain management software (SCMS) is a business term which refers to a whole range of software tools or modules
used in executing supply chain transactions, managing supplier relationships and controlling associated business
processes.
While functionality in such systems can often be broad – it commonly includes
 Customer requirement processing
 Purchase order processing
 Inventory management
 Goods receipt and Warehouse management
 Supplier Management/Sourcing

A requirement of many SCMS often includes forecasting. Such tools often attempt to balance the disparity between supply
and demand by improving business processes and using algorithms and consumption analysis to better plan future needs.
SCMS also often includes integration technology that allows organizations to trade electronically with supply chain partners.

5.1 Types of SCM Software

There are two main types of SCM software: 1) planning applications and 2) execution applications.
Planning applications use advanced algorithms to determine the best way to fill an order.
Execution applications track the physical status of goods, the management of materials, and financial information involving
all parties.
Some SCM applications are based on open data models that support the sharing of data both inside and outside the
enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a
specific company). This shared data may reside in diverse database systems, or data warehouses, at several different sites
and companies.
By sharing this data “upstream” (with a company’s suppliers) and “downstream” (with a company’s clients), SCM
applications have the potential to improve the time-to-market of products, reduce costs, and allow all parties in the supply
chain to better manage current resources and plan for future needs.
Increasing numbers of companies are turning to Web sites and Web-based applications as part of the SCM solution. A
number of major Web sites offer e-procurement marketplaces where manufacturers can trade and even make auction bids
with suppliers.
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