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ICT & Logistics – an overview
Rommert Dekker
Erasmus School of Economics
2
Contents
• Introduction – relation ICT & Logistics
• Information systems – ERP
• Decision support systems
• Examples
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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
4
Start with customer – marketing interface
• Who 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?
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1. What are my products?(source P. de Wit - HIDC)
46.13
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Product coding
• Pictures are misleading
• It is all about standardized product codingwho 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.
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2. What is my sales channel?
Distributors
Consumers
VAR
Branch office
Wholesaler
?E-commerce
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Problem
• Each 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.
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HelsinkiStockholm
NetherlandsBonn
Vienna
Rome
Oslo
Copenhagen
LondonBrussels
ParisBerne
MadridLisbon
Shaded Areas Indicate Economic Activity3.Where are my customers ?
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Location code
• Knowing 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
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4.What are my requested customer response times?
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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.
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What are main logistic drivers?
• Transportationships, planes, trucks, trains
• Facilitiesports, airports, stations, sorting centers, warehouses
• Products – inventoriesin factories, pipeline, warehouses, shops, customer
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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 placeoptions: 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)
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Contents
• Introduction – relation ICT & Logistics
• Information systems – ERP
• ICT and reverse logistics
• Decision support systems
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Example of an IT system (based on MRP)
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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?
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Distribution/retailing system
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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
GoodDecisions
Supply Chain Success
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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.
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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)
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IT systems -legacy systems
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IT systems -legacy systems
Advantages- 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
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Example legacy systems - GDS
- A 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
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IT systems -the present: ERP systems
Enterprise resource planning (ERP) systems are operational IT systems that gather information across all of a company’s functions, resulting in a common database of all a company’s data.
Functions- finance- logistics- manufacturing- order fulfillment- human resources- supplier management
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IT systems -the present: ERP systems
Advantages 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
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IT systems -ERP players
SAP - 30% market share, German
Oracle - based on a general database language
Peoplesoft -
JD Edwards -
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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 TNT’s Matrix)
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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.
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Logistics, SCM and IT systems – a vision
Consider 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.
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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.
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The transport chain consists of players who accompany goodflows and the related document and information
flows (source vd Zande PWC)
Port Authority / Stevedore
Ocean / Air Transport Operator
Port Authority / Stevedore
Liner Agent / Freight Forwarder
Pre-carriage Operator
Trade Officials
On-carriage Operator
Trade Officials
Consignee
Insurance Company
Shipper
Exporter’s Bank Importer’s Bank
Goods receipts
Container messages
Stowage instructions
Dangerous Goods
Discharge report
Dangerous Goods
Container StatusArrival NoticeBooking ManifestBill of Lading
Load List
Discharge List
Release Order
Goods receipts
Transport order Transport order
Insurance Certificate
Certificate of Origin
Insurance Certificate
Bill of Lading / Waybill
Transport Documents
Letter of Credit Advice
PaymentLetter of Credit Insurance
PaymentLetter of Credit Advice
Letter of Credit Documents
Payment
Contract / Order
Delivery Forecast
Despatch Advice
Request for Quote / Quote
Invoice
Remittance Advice
Status
Arrival Notice
Status
Arrival Notice
Inspection Certificate
Export Licence
Certificate of Origin
Shipping Instructions
Status
Bill of Lading
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High efficiency gains can be made through optimisation of information streams
Inhoud van de informatiestroom
Cha
rter
par
ty
B/L
Laad
brie
f
Maa
tbrie
f
Mat
e's
rece
ipt
Sch
eeps
man
ifest
Vra
chtm
anife
st
Del
iver
y or
der
Laat
vol
gen
ScheepsnaamNaam van de rederijNaam van de agentLoshavenAankomstdatumLaadhavenMerken/num. goederenAantal colli'sAard van de verpakkingAard van de goederenWaarde van de goederenGewicht van de colliPlaats van herkomstBestemmingVervoermiddel aan/afvoerDatum ontvangst aan boordReisnummerBehandelingskostenVrachttarief/prijsRabattenCommissiesPlaats betaling van de vrachtAantal originele connossementen + nr.Naam van de expediteur
• 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)
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Several ports developed already a ‘Port Community System’
• Several ports in the world have already developed ïntegrated 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.
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Contents
• Introduction – relation ICT & Logistics
• Information systems – ERP
• IT and reverse logistics
• Decision support systems
• Examples
36
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 Generatorsaimed at general problems, like Excel, Aimms, SAS
• Specific DSS – aimed at particular problemslike personnel planning, Vehicle Routing
• DSS Tools – special languages to create a DSS
• Read article in wikipedia.org (english)
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DSS Generators – Examples
• Aimms, CPLEX / ILOG – aiming at LP solver
• SAS – oriented around a statistical analyzer
• Matlab – oriented at facilitating mathematical computation
• Arena, ED – oriented around simulation
38
IT systems present - Analytical Applications
Advantage of analytical application lies in use for planning and strategic decisions.
Procurement and content cataloging applications
focus on relationship between manufacturer and supplier and the procurement process. They allow comparisons of suppliers and part vs part.
Advanced Planning and Scheduling (APS)
produce schedules for what to make, where and when, while taking plant availability, capacity and business objectives into account.
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• Transportation Planning and Content Systemsvehicle routing systems
• Demand Planning and Revenue Management
• Customer Relationship Management and Sales Force Automation (Siebel Systems)
• Supply Chain Management
• Inventory Management
• Manufacturing Execution Systems
• Transportation Execution Systems
• Warehouse Management Systems
IT systems present - Analytical Applications
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Overview Business Software (source IT and Logistiek)
intern oriëntatie extern
vereistesoortkennis
key-user
generalis-tisch
specialis-tisch
oper
atio
neel
takt
isch
stra
tegi
sch
IT-infrastructuur backoffice frontoffice
Networkmanagement
Supply Chain Event Management
Word processor, spreadsheet, presentation software
Automation finance personnel R&D production warehousing transport purchasing marketing sales service
e-business
Business simulation
business intelligence
ProductLife-cyclemanagement
collaborativedesign
PDM/EDM
CAD/CAM
knowledge &documentmanagement
HumanCapitalPlanning
e-learning
employeeportal
risk &profitabilitymanagement
e-payment &e-invoicing
webservices
EnterpriseApplicationIntegration
workflowmanagement
Enterprise Resource Planning (ERP) / Professional Service Automation (PSA)
AccountingPersonneladministration
Productadministration
Material Requirements Planning(MRP)
Distribution Resources Planning(DRP)
Purchasingadminstration
Customeradministration
order entryServicecontractsadministration
balancedscorecard
Companyconsolidation
Supply Chain Planning
supply chaindesign demand
planning &forecasting
supply planning
Productionplanning
Productionscheduling
ManufacturingExecutionSystem
projectplanning
EnterpriseAssetManagement
Supply Chain Execution
Order management
International Trade Logistics
Inventorycontrol
Trip planning
WarehouseManagement
routeplanning
transportmanagement
SupplierRelationshipManagement
sourcing
e-procurement
vender rating
EDI
E-marketplace
privateexchange
e-commerce
click-throughanalyse
productconfigurator
contentmanagement
Web catalogue
virtual agents
e-selfservice
e-billpresentment
PartnerRelationshipManagement
collaborativeCRM
Analytic CRM
Operational CRM
MarketingAutomation
Sales ForceAutomation
Contact centermanagement
Addressmanagement
Contactregistration
servicemanagement
w
info-security
Data-extraction
database/-warehouse
hardware
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Assignment – write an essay about
• Compare Ortec’s Transport and Distribution planning software with that of competitors (e.g Descartes Routing and Scheduling, Direct Route). Write a short summary in your own words (DO NOT COPY).
• Which quantitative models are likely to be present in these software?
• Sketch the relation / interface with an ERP system like SAP
• Sketch the relation with TomTom’s navigation software
• What is the relation with a Truck board computer?
• How would it relate to an Truck appointment system?
• What do you foresee in the future (which extra functionality do you think is useful); will it be integrated in SAP? Will it be combined with other software?
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Assignment cont.
• Consider a truck company (called G) transporting containers within The Netherlands, Belgium and Germany upon demand.
• G receives orders during a day and makes aplanning for the next day. Orders are typically- pick up container 453l71 at ECT Terminalsand transport it to the warehouse of C1000 in Amersfoort to arrive between 10h-12h next dayand when the container has been unloaded, move the empty container to the depot of Maerskshipping line in Houten (between 9h – 20h)
• What information systems / decision support systems would play a role in this case / or alternatively, do you consider to be presently available / available in the near future. Considerorder intake / acceptance, transfer information to trucker / contact ECT / inform C1000, allocate job to trucker, check execution and take care of payments.
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Help
• Search the web for help, e.gsearch on vehicle routing software survey (from Lionheart publishing) Informs
• Search at Ortec’s website (www.ortec.com or .nl)
• Info on a Truck Appointment system can be obtained from blackboard.
• State in your report always the sources of your statements: either from a reference or from your own inferences.