ICT & Logistics – an overview Rommert Dekker Erasmus School of Economics

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  • ICT & Logistics an overviewRommert Dekker Erasmus School of Economics

  • *ContentsIntroduction relation ICT & Logistics

    Information systems ERP

    Decision support systems


  • *What is logistics?Right (type and number of) products at right time at the right place Thinking about customer needs Plan, control and check execution

    Apart from products also services & information

    Apart from forward also reverse logistics

  • *Start with customer marketing interfaceWho is the customer?

    Through which channel does he / she buy? When does he / she wants what? What are the right product characteristics

    What are the right delivery conditions?

  • *1. What are my products?(source P. de Wit - HIDC)


  • *Product codingPictures are misleading

    It is all about standardized product coding who defines and maintains the code (costly).

    Major problem: products have short lifecycles, moreover they are changed often during their lifes.

    Example: do you buy Aspirin, or acetyl salicyl acid (workable substance) from a generic brand. A major issue in pharmacies.

  • *2. What is my sales channel?DistributorsConsumersVARBranch officeWholesaler?E-commerce

  • *ProblemEach organisation in the supply chain is likely to treat data in their own way

    Each organisation has own objectives

    Each organisation is likely to distort information to others.

  • * HelsinkiStockholmNetherlandsBonnViennaRomeOsloCopenhagenLondonBrusselsParisBerneMadridLisbon

    Shaded Areas Indicate Economic Activity3.Where are my customers ?

  • *Location codeKnowing addresses of customers is a major logistical issue.

    Postal codes are not standardized in Europe and are also not unique (several addresses, backhouses, living boats etc).

    Distinction between delivery address, office addresses, billing address

  • *4.What are my requested customer response times?

  • *Desired and actual Response / lead times There is a trade-off between speed and costs. Longest acceptable times are not registered.

    Major issue for industrial customers: what is the actual leadtime. ERP systems contain for every product a leadtime, but how did they ever enter 150.000 leadtimes in a package? Info is likely to be outdated.

    Difference between: original leadtime, supplier accepted leadtime and actual leadtime. In fact it is a negotiation process.

  • *What are main logistic drivers?Transportation ships, planes, trucks, trains

    Facilities ports, airports, stations, sorting centers, warehouses

    Products inventories in factories, pipeline, warehouses, shops, customer

  • *Elicit demand, plan delivery and control execution Register customer orders (and preferably also the unsatisfied demand) in a shop is different from a website Make sure the products arrive at the customer at the right time and place options: customer pickup or delivery at home

    Check whether the right products arrive in the right quality

    Take care of after-sales support (where is the product)

  • *ContentsIntroduction relation ICT & Logistics

    Information systems ERP

    ICT and reverse logistics Decision support systems

  • *Example of an IT system (based on MRP)

  • *Information components

    Supplier info: what products can be purchased, what price, with what lead time, and where can they be delivered.

    Manufacturing info: what products can be made, how many, by what facilities, with what lead time, with what trade-offs, at what cost and in what batch size.

    Distribution and retailing information: what is to be transported where, in what quantity, by what mode, at what price, how much is stored at each site, and with what lead time.

    Demand information: who is buying what, at what price, where and in what quantity. Info includes forecasts?

  • *Distribution/retailing system

  • *Information should be

    accurate (it should give a right picture of the supply chain) accessible in a timely manner (often information comes available too late) of the right kind (no overflow with non-informative details)InformationGlobal Scope GoodDecisionsSupply Chain Success

  • *Examples of not good info

    ProRail platform lengths of stations in spreadsheet vs official construction drawings

    University students following courses (background, year class, etc) OTIS getting information on every elevator movement, instead of a matrix of people wanting to move from i to floor j.

  • *The very Past - Legacy systems

    - older IT systems based on mainframe technology that usually work at an operational level on only one stage or even one function within a stage of the supply chain.

    - they have seen many updates and exist beyond original life span.

    they can cover a variety of functions.

    examples: Amadeus: airline ticket booking system: indicates nr of empty seats per fare class (9 means no limit)

  • *IT systems -legacy systems

  • *IT systems -legacy systemsAdvantages- are able to get the operation done- take less incremental investment

    Disadvantages- focus on only a small part of a stage in the supply chain- usually have only transactional capabilities- based on mainframe technology which is difficult to modify

  • *Example legacy systems - GDSA GDS (global distribution system) is a system that keeps track of the number of free seats in an airplane flight.

    Typically it uses booking classes and digits to keep track: B9, C5,

    Database structure is difficult to change and not really modern

  • *IT systems -the present: ERP systemsEnterprise resource planning (ERP) systems are operational IT systems that gather information across all of a companys functions, resulting in a common database of all a companys data.

    Functions- finance- logistics- manufacturing- order fulfillment- human resources- supplier management

  • *IT systems -the present: ERP systemsAdvantages ERP systems- ERP systems provide a wider scope to managers of supply chains- ERP systems are fairly good at giving real-time information- ERP systems are better at using enabling technology like Internet

    Disadvantages- weak analytical capabilities in providing decision support- very expensive and difficult to implement

  • *IT systems -ERP players

    SAP - 30% market share, GermanOracle - based on a general database languagePeoplesoft -JD Edwards -

  • *Track and tracing tools RFID, Barcode and other auto-id

    Container portals: INTTRA, GTNexus booking tool over several shipping lines

    Port Community Systems: link and exchange information over several parties in a port e.g. Portinfolink

    General tracking systems: link several computer systems (e.g TNTs Matrix)

  • *RFID and Barcode Standards maintained by GS1 (earlier EAN) which allows exchange of data over several companies

    Barcode took many years to become established

    RFID is upcoming fast but will take also some time.

  • *Logistics, SCM and IT systems a visionConsider a company Maurice Philips, importer of home textile and soft furnishing products in UK

    It would like to concentrate on its core competences - knowing what type products of customers want - buying them / letting them make at the right (cheap / quality) place

    It would like to leave all logistics issues to a fourth party logistic provider! Yet it needs to know where its orders are and when it can be in its shops.

  • *Issues in tracking and tracing?The 4PL has to face many parties in the supply chain and accommodate messages from very many parties.

    Demo Matrix

    Consider e.g. the messages just in the port of Rotterdam!

    Shipping lines have also developed their internet booking systems (INTTRA, GTNexus, CargoSmart), which do not match the alliances by the way.

  • *The transport chain consists of players who accompany goodflows and the related document and information flows (source vd Zande PWC)

  • *High efficiency gains can be made through optimisation of information streams

    Large number of players and goods results in a very large information exchange

    The same information is exchanged in several documents

    A use of information systems will result in optimisation because of

    Less administrative work;Better planning by faster and more accurate information

    (Source: vdZande PWC)

  • *Several ports developed already a Port Community SystemSeveral ports in the world have already developed ntegrated port community systems.

    Port community Systems differ in content, structure and architecture, but all intend to optimise the chain by streamlining information and document streams

    Although the Port of Rotterdam does not have a PCS, several applications for specific problems have already been developed.

  • *ContentsIntroduction relation ICT & Logistics

    Information systems ERP IT and reverse logistics Decision support systems


  • *Decision support systems What are they? Interactive computer systems that help decision makers utilize data and models to solve (unstructured) problems (Sprague and Carlson 1989) DSS Generators aimed at general problems, like Excel, Aimms, SAS Specific DSS aimed at particular problems like personnel planning, Vehicle Routing

    DSS Tools special languages to create a DSS Read article in wikipedia.org (english)

  • *DSS Generators Examples Aimms, CPLEX / ILOG aiming at LP solver

    SAS oriented around a statistical analyzer

    Matlab oriented at facilitating mathe