Logistical Information

After this unit you should be able to answer following questions
A. Concept Questions & B. Short notes
1. Management Information System
2. Logistical Information System
3. Logistical Information Functionality
4. Exception based LIS
5. Differentiate between internal and external information system.
6. External information system
C. Section II descriptive questions [10 marks each]
1. Explain the principles for logistical information system design
2. Comment on the statement ‘Logistical Competency is competitive Logistical Information System’
3. Detail the importance of information in logistics
4. Design an information system suitable for logistics objectives catering to order processing
5. Explain the importance and significant features of Logistical Information System
6. What are the primary activities of LIS?
7. Explain Logistical information functionality
8. Explain the four levels of information functionality




LOGISTICAL INFORMATION SYSTEM
MIS [Management Information System] is a structure of machines and management technology that enables management to receive, collect, store, transmit and analyze information. Transmission of information involves its movement to and from processing center. Order transmitted from customer to the order-processing unit in a firm is an example of transmission activities.
Logistics management is concerned with the functions of storage, handling, moving of materials and information. So MIS performs logistics of information in an organization.
Logistical Information System [LIS] handles information related to Logistics Management. Hence it is a structure of machines and management technology that enables management to receive, collect, store, transmit and analyze information which has an immensely important role in achieving business goals.
Importance of logistical information system
1. Key element to develop logistical competence
2. Integrates various activities of logistics
3. One of the three pipelines managed by logistical management
4. Important to customer service
5. Underwent revolutionary change due to changes in technology
Primary activities of LIS
a. Data flow from external sources
b. Processing and storage of information within the firm
c. Communication to the decision maker in the form of reports
d. Communication to customers and suppliers and their feedback
Logistical information functionality

Logistical information functionality is enabling appropriate decision-making at different levels of hierarchy. Information is required in different form and shape at different levels adequate to the requirements of decision-making. Importance of information cannot be over emphasized.
Information integrates logistical functions to deliver customer expectations. Logistical information links logistical activities into an integrated process



Four levels of information functionality are transaction, management control, decision analysis and strategic planning systems
• Decision making focus is on developing refinement to logistical strategy
• More unstructured, focus is in long term. Hence more judgmental.


Principles of logistical information system:
A logistical information system should include some principles to make it competitive. Incorporating these principles is a cost. But these principles when incorporated provide cutting edge to logistics. These principles are availability, accuracy, timeliness, exception based LIS, flexibility, appropriate format.
Availability:
• Rapid availability is vital for responding to customer needs and management decisions.
• Quick access to information even in decentralized system from anywhere
Accuracy:
Principle of accuracy is ensuring that there is no gap between information available and reality. Eg. Inventory levels as per LIS Vs. Physical stock levels.
Timeliness:
• Time gap between event taking place and information appearing in LIS is a problem. Principle of timeliness says that this gap should be minimum.
• An item moving from WIP status to finished goods status has major significance
• If LIS is not updated in real time, information leads to wrong decisions
Exception-based LIS:
• Highlighting problems and opportunities for management action
• Raising questions on actions on exception
• Handling exceptions, LIS should take structured decisions where managerial discretion is not warranted, making manager free for judgmental decision-making
Flexibility:
• Informational needs are diverse depending on the perspective of the user of the system. A good LIS should be able to provide information as per user’s need.
• Perspective of organization is operational improvement and perspective of customer is availability of a particular product.
• Different customers can have different perspectives.

Appropriate format:
• LIS should structure information in right sequence.
• Decisions like locating the inventory for order processing or inventory planning is possible when information is structured adequately in right sequence.
Logistical information system functionality
• Logistical information system integrates the logistical operating system to provide the organization competitive edge.
 Logistical information system keeps the necessary information at the fingertips of the manager.
• LIS functionality areas should be reviewed to identify and eliminate bottlenecks.
Logistical information system functionality areas are mentioned below.
Order management:
• Entry of the order into the system
• Edit for acceptable orders, find out acceptability of the orders checking against quantity, lead times and quality conformance standard.
• Check inventory availability, delivery dates
• Based on the above checks confirmation of customer’s requirements is done.
• Primary interface between customer service representative and logistical operating system
Order processing:
• Allocation of inventory on real time or in batch mode is a policy decision. Order processing is done based on this policy.
• Back-order creation: at this stage backlogging of orders is done keeping the benefits of backlogging and cost of customer dissatisfaction in mind.
• Conflict resolution to match customer requirement by doing necessary modification to the order.
• Order selection [direct distribution function to draw the inventory from which DC]
Distribution operation
• Directing all activities in a distribution center to meet customer order requirement. This includes receiving, handling, storing, order selecting etc.


Transportation and shipping:
• Plan execute and manage all transportation activities like shipment planning, scheduling, shipment consolidation, shipment notification, document generation and carrier management.
• LIS for transportation and shipping involves shipper, consignee and carrier.
Procurement:
• Purchase order preparation, modification and release
• Track and coordinate shipping and receiving activities for consolidation