Abstract
Information technology is a factor that no firm can afford to ignore given the wake of globalization. Each firm is going global and management of every sector is not as simple as it used to be in the past.
Moreover, efficiency and effectiveness as regards delivery of services are given much weight than they were given in the past. As far as logistics management is concerned, there has been renewed urge for exceptional performance.
The paper looks at the concept of information technology. It begins by defining what information technology is and goes on to enumerate the components of information technology. Thereafter, it gives the advantages of information technology in logistics management.
Introduction
There is virtually no organization that can operate without information systems in the current economic environment, where keeping up with the level of changing technology is a necessity.
A firm can operate efficiently hence reducing costs if a state-of-the-art information system is put in place. Though information needs are different in various organizations, it is a general agreement that all these firms depend on the information system just as a car depends on the engine.
Different sections of an organization have different roles; hence, they require different types of information systems.
Logistics management has proofed to play a key role in cost reduction as well as improving relationships between a firm and its partners in the market, consequently boosting a firm’s competitive advantage.
In this regard, information technology has been found to have immense benefits on logistics management.
Information Technology
The way businesses operate has highly changed and the necessity of information for the survival of organizations has increased.
Due to advancement in technology, employees of all levels in any organization require smooth flow of information in order to make informed decisions besides measuring their performance.
For this reason, organizations have found it paramount to put in place information systems to monitor the flow of information (Joia, 2003).
An information system not only integrates business processes and computes knowledge for processing and storing, but also facilitates transmission of important information for the decision-making process in the organization.
On the same note, an information system assists in coordination, visualization, control and analysis in an organization.
For an organization to keep up with the changes in the business environment, it must have in place an effective information system function which should be able to come up with new software that matches with the level of technological advancements (Rushton, Oxley & Croucher, 2000).
This role is performed by programmers who are specialists in software engineering. In addition, the raw data that is received by the information systems is processed into useful and easily understood data by the system analysts.
Moreover, there is need to have a continuous evaluation of the current programs and either advance their use or come up with new ones in order to ensure organizational progress.
To meet this need the information systems unit through the knowledge officers seeks for new sources of information, or ways through which the current information can be made more useful for the benefit of the organization.
It is important for any organization to try as much as possible and prevent leakage of its important and confidential information because this could be misused by its competitors or even enemies (Sudalaimuthu & Raj, 2009).
As a result, the role of information system function includes ensuring security of the information systems as well as making the management aware of the existing security threats.
Components of Information Technology Infrastructure
Components of information technology infrastructure can be divided into five broad groups which include computer hardware, computer software, data management technology, telecommunications technology and networking.
To ensure efficiency and effectiveness of the information systems, all these components of the information technology infrastructure must work in synchronization with each other (Sheffi, 2012). Computer hardware is composed of the technology that inputs, processes, stores and outputs data.
It also includes the equipments that are used in the process of data collection as well as those used in delivering the processed information to desired destinations.
In addition, information technology infrastructure consists of the programs which instruct the computers on the type of functions to perform at any given point in time.
These programs, which are known as computer software, can be divided into system software and applications software (Wang, 2012). While some firms may choose to have their software custom programmed, others choose to purchase them from outside.
A firm’s data needs to be organized and be made available to users in a form that the users can easily interpret so that they can be able to take necessary actions.
This function is achieved through the help of data management technology, which not only processes but also manages and organizes business data. On the same note, an information technology infrastructure is also composed of telecommunications technology and networking (Horch, 2009).
Besides providing data, these components also provide voice and video connectivity not only to employees but also to suppliers and customers of the firm.
In addition, these components provide the technology of maintaining web sites and internal networks as well as enabling connection to other computer systems.
Advantages of Proper Logistics Management
Logistics management is the process interconnection among organizations, which involves the flow of resources of production, information, finances and finished products that helps in facilitating production, marketing, and selling of goods and services.
It is a two way process and can either be downstream where it begins from the supplier of raw materials and flows through the manufacturer to the wholesaler the retailer and lastly to the consumer, or upstream in which case the chain starts from the consumer passing through the retailer, the wholesaler, the manufacturer and ends at the supplier.
Logistics management is for that reason, the management of the supply chain system to ensure efficient, smooth running and well coordination of the chain of supply in order to take advantage of it (Sinha 2009).
Furthermore, Logistics management involves the incorporation of important aspects that add value to the consumer over and above that of the partners in the supply chain.
Producers expect to receive inputs of production at the right time, to ensure that production process is carried on without interruption because interruption interferes with the entire supply chain since the commodity will not be available for delivery to buyers.
In addition to that, higher inventory kept by producers, higher storage costs and consequently lowered the profit margin. Therefore, producers desire to maintain at its minimum possible quantity in order to reduce storage costs.
At the same time, suppliers expect to receive payment in time to cater for their expenses and therefore enable them to continue supplying.
On top of that, wholesalers, chain stores and other retailers expect a Continuous supply of commodities to ensure that they do not run short of any commodity, while they want the level of inventories to be at minimum since huge inventory increases storage cost but bring no income (Bolstorff & Rosenbaum 2012).
On top of that, it is to the advantage of the producers, wholesalers and retailers if consumers find the commodity they are looking for on the shelves of their local retail shops always because this will help in boosting consumers’ confidence.
On top of that, availability of commodities near to consumers’ locality all times is very important not only in maintaining current consumers, but also in attracting new ones.
These expectations can only be realized if proper and efficient management of the supply chain is put in place thus making certain that the flow either downstream or upstream is continuous, well-timed and cost-effective (Sinha 2009).
Information Technology in Logistics Management
For an organization to succeed in the highly competitive business environment, it should be prepared to react to the changes that take place efficiently.
It is the applications of an organization that controls the execution of functions within the organization and also directs the operations in various departments. Information technology ensures that all applications of an organization are working properly.
Furthermore, the flow of information to and from various units of the organization as well as from the external business environment is highly influenced by the organizational applications (Cao & Zhang, 2012).
Generally, the enterprise applications allow for consolidation of organizational operations across different units or departments for easy management.
Examples of enterprise applications include the logistics information system which combines the important business processes into a single central data handling unit.
This eliminates data fragmentation that complicates data management, thus enhancing information sharing among various business units.
On the same note, logistics application makes management of suppliers easier by ensuring that information about all aspects related to the relationship between the organization and the suppliers is easily accessible when needed (Radhakrishnan, 2001).
On the other hand, intranet increases consolidation of information besides speeding up the flow of information between different business units.
The integration between one department and the others is very essential for timely decisions and making of follow-ups whenever necessary (Wang, 2012).
In this regard, intranet comes in handy as it enables internal connection among various departments of the organization thus allowing smooth communication besides securely storing the organization’s policies and programs.
Present also is the position control system, which is used to identify various job positions present in the logistics department, current employee serving the position and the job title within the position. This helps the manager in knowing which positions are supposed to be filled.
Information technology is also crucial in screening of job applicants, evaluation and selection in order to fill open positions. It is important to note that, performance information system is present and contains data related to appraisal, and productivity information of each employee (Sheffi, 2012).
To cope with the dynamic job environment, the organization deemed it essential to continuously train their staff as well as encourage skill development through employee training and development system. The system enables the manager to ensure that the training offered matched the specific requirements within the organization, and that it was directed to those who were bound to benefit from it according to the skills inventory system.
The level of integration in the supply chain system highly depends on the number of components that are involved as well as the complexity of each component.
It should be noted that every aspect of the supply chain should be taken care of properly for the benefits of the firm (Cao & Zhang, 2012).
Information needs to be incorporated in the system as it helps in collection of feedback from the customers so that effective action can be taken in time to avoid any losses that might be imminent.
Products must reach the consumer who is the final person in the chain and therefore anybody or firm that can help in delivering the product to the final consumer efficiently should be integrated in the system (Sinha, 2009).
Information technology helps in ensuring information to all stakeholders and feedback is efficient.
Ability of the firm to secure competitive advantage over its competitors enables the firm to emerge the winner during competition, and this can be achieved through proper management of the supply chain of the firm.
Supply chain management requires that a firm carries out its competencies but outsource what requires specialization (Bolstorff & Rosenbaum 2012).
Additionally, information technology hastens turnover expansion through value addition by involving manufacturers in assisting retailers to reduce their costs of operation especially by delivering commodities just when they are needed thus reducing the retailers’ cost of holding inventory.
When a partner organization in the supply chain recognizes that there is a possibility of reducing operation costs by being in the system, it becomes more willing to be part of the system hence increasing competitive advantage (Bolstorff & Rosenbaum 2012).
Additionally, through proper supply chain management, a company is capable of realizing areas of weakness of the partners.
The firm can, therefore, rectify the same by helping in these areas and in turn the partner will be forced to stick with the firm; hence, gaining competitive advantage over the competitors.
On the same note, supply chain management helps in the reduction of operational expenses especially costs of maintaining high inventories of either raw materials or finished products or the transportation costs which mostly increases because of sending low quantities of a commodity each time (Cao & Zhang, 2012).
By efficiently managing supply, transportation is well-coordinated and as a result goods are sent only when they are required, and this is always harmonized in a way that retailers in the same area can be supplied at the same time thus, eliminating chances of vehicles wasting space on their supply trips.
It should be noted that efficiency and effectiveness are key when it comes to logistics management. A problem in one department can make the whole business to come to a halt. Consequently, speed detection of any factor that may seem to hinder execution of duties is crucial.
Information technology is very vital because it helps in speeding up the process of problem detection as well as problem-solving.
Moreover, information technology hastens the process of decision making thus reducing time wasted and enhancing productivity (Sudalaimuthu & Raj, 2009). Similarly, there is need of speed in the current business world given the high level of competition.
Additionally, firms have gone global and there is increased need to link services between one branch and the other. Information technology offers a platform through which all these questions can be answered.
Cycle time is arguably one of the most sensitive factors to consider when it comes to logistics management. This directly affects inventory levels and consequently storage costs.
However, by improving distribution channels, information technology is able to reduce cycle times, thus reducing the levels of inventories held at a particular moment (Wang, 2012). This tremendously reduces the costs of all stakeholders.
On the same note, information technology makes it easier for the stocks held by stores in a particular region to be known.
As a result, transportation to these areas can be merged thus reducing not only the number of vehicles on the road but also transportation costs and other risks involved (Rushton, Oxley & Croucher, 2000).
On the same note, implementation of change is a very crucial process and must be handled carefully. If change is wrongly administered, the probability of the whole process failing is very high. Many organizations, therefore, struggle to know the best method of implementing any change.
Nevertheless, information technology helps logistics managers to know which section is not performing well and what is required to increase output (Sheffi, 2012).
Knowing the exact change that is required is also made easy. Moreover, information technology streamlines the whole process of change implementation.
Notably, with many firms now opting for electronic business, no sector should lag behind. E-commerce has gained popularity among many people. It reduces the distance that one has to walk to shop for goods and services (Horch, 2009).
Moreover, it reduces paperwork and increases market share of a firm. In this regard, information technology is inevitable given that all business partners will want to go online. Consequently, information technology has to form part of logistics management (Sinha, 2009).
Factors Affecting Information Technology
Capacity planning and scalability form the main issues in management of hardware and software technology. Capacity planning is concerned with ensuring that the firm is able to meet its current and future computing needs.
Scalability, on the other hand, means taking into consideration the possibility of increase in the firm’s scale of operations in the future (Joia, 2003). Therefore, the infrastructure installed should have the ability to expand and accommodate increased number of users without breaking down.
On the same note, the issue of costing is paramount in management of infrastructure. It is important to ensure that the cost of installation, maintenance costs, technical support costs and all other costs related to the housing of the technology are included in the total cost of ownership.
Therefore, when valuing the software and hardware all costs, including direct, indirect and hidden costs should be taken into consideration. On the other hand, any firm needs to consider the benefits that it can get if it outsources some services and the cost implications of the same.
If it is feasible to outsource, then it is advisable to do so for this helps in elimination of other costs that could have been incurred (Radhakrishnan, 2001).
On the same note, a firm can also consider the possibility of maintaining optimum capacity and hire the extra services during peak times. Similarly, the firm can also choose to rent software functions or buy them depending on their needs and the cost implication.
Emerging Issues in Supply Chain Management
Globalization has brought about new challenges into the process of supply chain management hence, forcing the organizations involved in the supply chain system to come up with new ways of tackling supply chain issues.
To begin with, globalization has brought about internationalization, where companies have ventured into international markets where tax structures are different from those in their home countries.
This has necessitated supply chain management to take into consideration the tax structures of various countries where the partners of the chain system will be operating, because it has been depicted that tax structures highly influences the profit margins (Bolstorff & Rosenbaum 2012).
As a result, a new strategy of supply chain management, known as tax efficient supply chain management, which ensures that global firms take advantage of the difference in tax structures to increase their profits has been developed.
The need to go beyond delivery of the commodity to the consumer and look at how waste materials are disposed as well as environmental sustainability also poses a new challenge. This has led to the emergence of the concept of reverse logistics, which also should be taken into consideration.
On top of that, traditionally linear supply chain management was very effective because substitutes were minimal and competition was not stiff.
On the contrary, globalization has increased competition as well as substitutes and linear supply chain management system availability is no longer feasible which has compelled firms to look for a new mode of management (Sinha 2009).
Conclusion
Information system is inevitable in any organization, and therefore efforts must be made towards customization of the systems to fit the requirements of the organization.
Supply chain management plays a key role in increasing competitive advantage of any company, therefore, increasing its profit margin; consequently, it is very important today’s management.
Unfortunately, expansion of international trade has made the business environment to change continuously thus compelling firms to work day and night and come up with advanced ways of managing the supply chain in order to remain competitive.
Employees may lack the knowledge needed to run the information systems, hence a specialized department of information technology should be incorporated in the organization, to ensure that everything involving the information system is given proper concern.
References
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