Information technology has transformed the way operations are carried out in the logistics industry. A well-designed information system is an important component in management, operation, and the running of a profit-making or non-profit making entity. Benefits that are associated with the application strategic management in developing information technology systems play a big role in the development of logistics-related functions in a business entity or any other organization as a whole.
A basic requirement for success in the management of logistics is the systematic collection of the relevant business data. Running an operation successfully in the current world is only possible upon the deployment of a properly functioning information system. Such a system boosts an organization’s competitive merits.
These merits are seen in the creation of new competitive positions, reduction of costs, attainment of certain specific operations differentiation, and the bettering of outcomes of the logistics functions in the organization. The fundamental goal of an IT system within the management of logistics is to connect competitors, consumers, and suppliers. The key aim is to attain efficiency in logistics. This paper seeks to explore the impact that information technology has on the logistics industry.
Impact of Information Technology on Logistics Industry
Efficiency and Quality Management
Information technology has enabled firms in the logistics industry to enhance the efficiency of their operations. One of the ways in which it has brought about efficiency is through the allowing of close monitoring of resources such as raw materials from the time they are obtained to the time consumers utilize them.
With IT, logistics companies are able to leverage their systems to have a good visibility of the movement of their cargo and other items on an end-to end basis. This plan has helped to avert huge losses that are associated with the loss of cargo due to theft and fear that people who intend to steal have a tracking plan that the involved companies are able to carry out, thanks to information technology (Choy et al., 2014). It has also helped to ensure more disciplined personnel that are motivated to work harder due to the ease of tracking that the implementation of IT has brought with it to their companies.
Another significant impact of information technology is that it has improved quality management when it comes to the supply chain. Logistics heavily relies on an efficient and effective supply chain to achieve greater success in logistical operations. Logistics managers are tasked with the purchase of commodities and/or ensuring their safe transportation to the intended destination through the correct and recommended means. Information technology has made this job easy for them.
They use advanced information systems to manage the movement of materials and goods from their initial production by the plants to their point of sale (retail stores). Due to the increased complexity and amount of goods that companies and other business entities have to handle in the current business world, information technology is continuously being used as the major means of finding desirable ways managing such a load (Lawrence, Konstantinos & Efthimos, 2013).
Firms are able to find to develop solutions that fit their specific contexts perfectly with the assistance of information technology specialists. IT has allowed them the ability to determine the correct kind of goods to promote. IT has help in determining the best routes through which companies can ship their products.
Drivers in some logistics companies are currently drawing huge benefits from the GPS mapping software. They can access real time information concerning the extent of traffic on the routes they plan to use in their journey. With such knowledge, they have been able to avoid routes that have heavy traffic as a way of ensuring faster delivery of goods to their destination (Lawrence et al., 2013).
IT has helped to reduce the amount of time that companies take in fulfilling a client’s order. As a result, manufacturers can place an order for raw materials on a shorter notice and still have them delivered in time for scheduled manufacturing. This possibility has enabled such manufacturers to cash in on sudden increment in the demand for their commodities. Both the logistics and manufacturing firms are thriving because of using the GPS mapping software.
With the implementation of information technology, logistics firms and their clients worry less in case of a slight delay in the delivery of goods that are being handled by the relevant logistics service providers. Staff at the logistics firms can determine the location of a given vehicle or ship that is transporting a given consignment through a freight tracking system that helps them to tell the last scan point (Choy et al., 2014).
They are able to learn of the direction to which the involved carrier is headed and use a calculation of the distance between it and its destination to arrive at good estimate of the time it may take for the carrier to reach its intended destination.
Hence, IT has helped to reduce anxiety and better the management of expectations on the part of the client and the logistics company. The two parties can plan their activities accordingly as opposed to basing their plans on assumptions that are associated with the absence of modern freight tracking systems.
Online tracking of the movement of goods has eliminated the need to check the location of goods along their transit lines. Logistics firms do not have to send someone to confirm the position and safety of their clients’ goods. This situation saves on transport costs that might arise because of dispatching staff to look for the goods in case they are missing. Moreover, searching the goods physically may often be in vain, as one may not be sure of where to search, especially if the route was not designated for the driver to use.
In addition, some handlers of the goods may have changed their routes by choice or after encountering a problem on the designated route. Such a scenario usually raises the searching cost to significantly high levels that may have serious implications on the firm’s finances (Lawrence et al., 2013). With freight tracking systems, logistics firms are now able to grow and expand their services at a very fast rate due to the reduced operational costs that have served to avail more funds for other expansionary activities.
Security of Goods
Information technology companies are now able to locate any stolen goods. IT has taken them an extra mile of helping them to apprehend the suspects, thanks to the freight tracking system that is commonly used by a vast majority of logistics companies. It is almost unimaginable to think about how a firm can operate in the current world without adopting information technology into its operations. This situation would impose a great risk on clients’ commodities (Geetha, 2013).
With the freight management system, logistics firms insert a computer microchip in a hidden part of the goods where someone who intends to steal the goods will not see it easily. The microchip is placed is placed strategically to enable its detection by satellite. Clients are increasingly adamant to transport their goods using logistics firms that have not implemented a freight tracking system within its operations for fear of losing their goods.
Insurance firms have also made it a requirement that any goods must have proper tracking for them to be insured. This requirement has helped the insurance firms to determine the level of risk that they bear when insuring goods in transport. It has given them the confidence to invest more in insurance firms to secure their goods.
Incorporation of information technology into the logistics business has led to the creation of more job opportunities. Firms that have implemented IT in their operations have had to hire staff members who are specifically trained in IT-related courses, thus enabling them to handle issues concerning automation of their operations and tracking of goods in transport (Geetha, 2013). This case serves as another avenue for information technology graduates to access employment.
Their functions within the logistics companies involve designing, installation, and maintenance of the appropriate software to suit the specific needs, context, and size of their employer firms. They also help in tackling various challenges that come with the implementation of such systems.
In case of a system breakdown, they are able to determine the source of the problem and/or offer the relevant advice. Such creation of new jobs has boosted various initiatives by both the private and public sector in creating more employment opportunities to check on the levels of unemployment in the economy
Reduced Number of Warehouses
Published research indicates that there has been a trend by many firms to cut down on the number of the available warehouses. It has been the case for both the logistics companies and their clients. With the faster service delivery that has been enabled by the implementation of information technology in the logistics industry, clients can now order goods within a short time and get timely deliveries.
For this reason, many of them are opting to order raw materials and other goods only when the need arises since this plan enables them to cut down on inventory costs that are associated with storing goods for long periods. Such costs result from rental charges, damaged goods due to certain storage conditions that may be undesirable, and the paying of security services to protect the goods (Mohezah, Aziz, & Kader, 2013).
Logistics firms have also limited their number of warehouses due to the faster handling of their clients’ goods. The reduced the need for storage space serves to lessen storage costs. The port authorities of various countries have also experienced a reduction in the number of warehouses they need for their operations.
Information technology has made it possible for them to quicken the processing of goods that pass through the ports as a way of cutting down the need to store goods for a long a long time. This case has reduced the costs for logistics firms and clients that usually result from the use of government warehouses that are located at the port as they await clearance before their goods can be released for transportation to their intended destinations.
The yard management system is an application that has brought about efficient management of trailers and trucks while in the yard or logistics firm. Many of them have adopted the yard management software that provides real-time data on the location of the trucks and trailers within the yard, thus allowing employees to move the trucks from the staging areas to the docks whilst filling the orders efficiently (Geetha, 2013).
It has also enabled the provision of information through the web or the ERP system regarding vehicles to their owners, some of whom may be freight forwarders. The constant monitoring of the operations within the yard invokes the necessary methods of responding to the continuously changing circumstances within the yard. It avails information regarding problematic situations that may be crucial in assisting one to handle them.
Further, it has provided a scheduling chart with which one can manually generate and manage scheduling activities. Employees who manage the yard are even able to present data to a given entity using their mobile phones, courtesy of the implementation of information technology.
Increased Revenue and Customer Service
With the adoption of information technology, logistics companies that have adopted it are now experiencing increased income. One of the reasons for the increase in revenue is the heightened capacity of the logistics companies to handle more goods, which come with various technological applications (Geetha, 2013).
With just a few staff members, the companies are able to handle huge volumes of goods. A higher volume of goods that are being handled implies higher revenues. Improved security has increased the confidence of manufacturers and other businesses in the services of the logistics companies.
This situation has made many clients to entrust logistics companies with their expensive items to transport them to their designated destinations. Transportation of such goods bring with them high incomes due to the high charges at the logistics for such goods since they have to bear huge risks. The freight tracking system enables them to feel more comfortable while transporting such goods. This observation reveals their use in transporting cash and other valuables from one place to another.
Many logistics companies have instituted online platforms where their clients can access real time information on the progress of their orders. They do not have to travel to firms’ premises to find out such information. Through the platform, they are also able to communicate information on upcoming jobs that they wish the respective firms to handle (Mohezah et al., 2013).
This plan provides them with an opportunity to avail all the relevant details relating to such jobs and the timeframe within they expect the deliveries. They are able to get feedback on the firm’s capacity and ability to handle such jobs in good time, thus allowing them to plan accordingly. Firms that have implemented information technology successfully in their logistics processes experience reduced number of errors during entry of customer data.
The result of this case has been minimal number of disputes with customers regarding certain order specifics. It has also led to happier customers who have greater confidence in the involved firms. Such kind of satisfaction has been one of the major contributory factors to the success of the logistics industry.
IT has opened new methods of interacting with clients. Firms reach their clients through online platforms such as Facebook, Twitter, Instagram, and MySpace among others. Since the interaction is real time, clients can have their enquiries responded to without any delays.
Information technology has had a huge impact on the logistics industry. The effects have been varied depending on the size of the firm, the kind of adopted applications, and the extent of IT application by an organization. Information technology has helped to cut down the costs operations for the firms in the logistics industry. It has become possible for many of them to increase their profits. It has also enabled many of them to increase the volume of goods and revenues that they can handle.
More clients are now willing to transport their valuables through the available logistics companies that have implemented information technology in their firms, as it enables the tracking of the movement of cargo from one place to another. Further, it has helped in reducing the need for many or large warehouses to cut down the costs that accrue from both the logistics firms and their clients. The quality of management that is depicted by logistics firms has also improved immensely.
Information technology has enabled them to bring about efficiency in their operations, thus enabling them to experience great growth. Another impact of the adoption of information technology is the creation of more job opportunities for ICT graduates to help in the design, installation, and maintenance of the involved application software. With proper adoption and implementation of information technology in the logistics industry, continued growth and development can be realized.
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Lawrence, D., Konstantinos, P., & Efthimos, P. (2013). Information communication technology’ innovation in a non-high technology sector: Achieving competitive advantage in the shipping industry. Service Industries Journal, 33(6), 594-608.
Mohezah, S., Aziz, A., & Kader, M. (2013). Usage of Logistics Information Technology (LIT) and the innovative impact on third-party logistics service providers in Malaysia. Advances in Natural and Applied Sciences, 7(5), 462-462.