Logistics and operations management has improved with the introduction of the current ICT systems like GPS, GIS, warehouse management systems, and transport management systems. Adoption of the current technology offers a solution to ensure logistics and supply chain management is more streamlined and efficient than before. The flow of a product depends on information, regarding that particular product. Manufacturers and distributers aim at serving their customers in a flexible and speedy manner through exploiting various ICT systems. According to Edwards, Peters and Sharman (2001), manufacturers and distributors have created global nervous systems enabling continuous flow of information and materials between suppliers and consumers.
The increasing rate on technology makes business organizations are on the lookout for better means of achieving their business goals and attaining the expected returns. The use of ICT has found a lot of use in the present business environment. All firms are competing on the best placed ICT operations to win the stiff competition (Daft and Marcic 2008). Logistics involves the process of managing the acquisition, transport and storage of materials, related to information flow, from the organization and its marketing operations in order to maximize profit. A lot of knowledge is demonstrated through many theories and practical applications of operations management. In addition, understanding of the principle theories and techniques used in logistics and operations management assists in developing a perfect study. Moreover, there are many known companies worldwide who deal with logistics and operations management. These are: Tele Communications, Oyster-TFL, Sky-Customer management system, Loality Cards, and banking institutions. Some of these companies will be used as case studies in the discussion.
Understanding the essence of logistics and operations management requires the researcher to answer the following questions.
1. What are the key components of logistics and operations management?
2. What are the principal ICT systems used in these components?
3. What aspects of operations management are involved in these components? Which are the techniques used?
4. Which companies utilize these operation management solutions in ICT?
The discussion below analyses the above questions and the findings are discussed and a concrete conclusion made.
The key components of logistics and operations management
Logistics and operations management composes of the following key components. These are:
Customer order processing
Inventory control and Material handling
Packaging, Transportation and Warehousing
All these components have outstanding ICT systems operating them, and each has benefits and challenges associated with adopting and applying technology.
Customer order processing
This process contains the following flow of actions. Its starts with filing up of orders, making product specifications, deciding the quality of check list of the product, and deciding the final destination for the product. The most common technologies used on this component are Electronic Data Interchange (EDI), CPFR, and Web portal. Applying ICT in the following process is significant because it ensures fast flow of information from the customer to the supplier. In addition, technology enables fast filing up of orders because the programs used sorts out orders according to destination, urgency, and the time of arrival. The continuous advancement of technological infrastructure in the logistics and operations management sector allows companies to realize various opportunities. ICT has substituted manual processes by electronic exchanges improving the flow of information and products between companies by using different e-business software systems (Tilanus 1997).
The challenges found on this key component involve lack of knowledge on how to make use of these software systems. Many employees in logistics and operations management companies lack the necessary skills to operate the ICT systems introduced costing the company through training them. In addition, some systems are too expensive, and some companies cannot afford them. Some companies always lag behind, while those companies with a good operating capital attract more customers due to their quality services. EDI technique requires keen intervention, since unauthorized people could sign in and access private information meant for a specific person. This results due to the Cyber terrorism threat that catches the attention of the media, the IT industry, and the national security, as they try to figure its nature and the real offenders (Cordesman 2002).
This element deals with the cost of transportation of raw materials and finished goods availability of land, and government regulations. The software systems used on this element calculates the cost of operations as a percentage of sales, and the product shelf life. The planning of product location is based on the actual and forecast demand, transport network information, and traffic conditions. The planning includes identifying the appropriate routs, schedules, types of services, and utilization of available resources. Data for logistics location analysis comes from many sources, but the most prominent source contains order processing, industry data, and management (Stan and Reynolds 2001).
Using ICT of location analysis element has a lot of benefits in the logistics and operation management sector. First, the software systems used are highly accurate in making the necessary calculations. Telecommunications Services Company has been using ICT in its operations that have enabled it succeed in the logistics and transportation business. The company makes use of various components like mobile phones to identify the nearest locations to deliver its products. Oyster-TFL is one of the leading logistics Company that has utilized the aspect of ICT in all its operations from receiving to delivery. Adoption of ICT in logistics and operation management has a significant benefit through influencing the mobility of people and goods. In addition, the use of ICT in operations management has lead to changes in social and organizational operations that affect the demand for transport. Advancement in technology leads into demand for comfort, speed and safety (e-Business Watch 2008).
The most common challenges faced by these organizations come from utilization of available resources, and competition from rivalry companies. Managers in the present business environment make crucial decisions regarding the current business opportunities, but the fast growing business environment gives no room for slow decision making. The fast changing technology requires business organization to make keen observations, and identify the available opportunities in order to win the ever-increasing competition (Daft & Marcic 2008). Telecommunications Services Company adopts ICT systems in many of its operations. Some companies, like Sky-Customer management System, have well established ICT systems that are updated on daily basis giving consumers a wide range of choices to select from. In addition, the location analysis used by this company is unique because the software systems are less prone to Cyber attacks and computer viruses.
Inventory control and material handling
In the following component, inventory analysis takes place by communicating the quantity, quality, and timing materials. It also involves acquiring materials of the right quality, quantity, and at the right time. Various stages are involved in inventory control, and each stage has a set of specific time. The techniques used include DRP and replenishment order control, order control with ROP system, and order forecasting using statistical tools. Setting up logistics in ICT distinguishes between transaction systems, operational planning systems, and control systems. The transaction systems enable transfer of structure data in regard to agreed message standards from a computer application. These operations occur through the interaction between business-to-business and business-to-consumer where online sales takes place. The operations planning systems carries all sorts of logistics decision support and route planning.
The benefits of adopting ICT in this element range from the urgency of the product, cost of product, and cost of transportation. At telecommunications Services Company, information sharing is very crucial function in supply chain management. Securing information accessibility in all logistics operations ensures maintenance of product quality. Information transfer through the current technology ensures the company overcomes most common problems. Inventory control is a sensitive component in logistics and operations management.
The Vendor Managed Inventory system used that ensures order fulfillment whereby the retailer is responsible for managing the inventory. The system assists in managing retailer stores and offers a lot of benefits to a firm. First, it minimizes dual errors since it involves computer-to-computer communication. It also increases the speed of communication. Second, the system has an advantage since when two parties are interested the customer gets better services. The system ensures the correct items are maintained on the stock leading to benefits to all involved parties, that is, manufacturer, supplier, retailer, and consumer. Moreover, the system leads to the formation of a true partnership between the distributor and manufacturer since they work together to improve the product movement (Reding 2006).
The following component faces several challenges especially when the company lacks experienced people to handle the ICT systems used. Loality Cards experienced a significant loss when some of its employees failed to develop a software system that could handle inventory control in most companies. The provision of logistics and transport services is based on the actual and future forecast demand. If software Development Company fails to come up with systems capable of solving the actual problem, the operations delay the services required by customers. The government should facilitate manufacturing companies to acquire gainful participation in global value chains in order to learn the necessary technology required in developing perfect systems.
Packaging, Transportation and Warehousing
Packaging requires understanding of product packaging requirement. These are based on product expiry or fragile materials. In addition, the cost of packaging should be included. After packaging, the company should decide the mode of transportation for the product. This deals with; the cost of transportation, the speed, and urgency of the product to the customers. On the other hand, the final destination of the product requires the transporting company to have a warehouse for storing its products. The warehouse should be located in a secure place, and placed strategically for easier delivery of products.
The most common ICT practices used in the following element are vehicle tracking systems, storage processes regulating systems, and preservation systems. The warehouse should have temperature regulating systems in order to avoid spoilage of perishable products. On the other hand, technology has introduced vehicle tracking systems that allow people locate the position of a given transporting vehicle at any time. The control system consists of communication gadgets like mobile phones, tracking systems, and tracking transportation vehicles using Global Positioning System (GPS). In addition, the control system measures the vehicle performance with boxes containing logistic data and Automatic Equipment identification (AEI). All these systems ensure accurate and timely transfer of information improving logistics operations. In addition, the systems ensure logistics information is always available in six essential areas: processing of orders, order assignment, distribution, inventory management, transportation and shipping, and procurement (Bowersox et al 2002).
It creates software like Advanced Planning and Scheduling (APD), enabling design and planning of supply chain management operations. Moreover, the system creates Enterprise Resources Planning (ERP) Software that enables processing, and fulfillment of orders. This software enables quality warehouse operations reducing congestion and improving road mapping.
The most common challenges faced on this element are the interference of the tracking systems. In addition, some systems, like air conditioners, may fail resulting to many losses. Some companies produce cheap systems that get damaged within a short period after use. Moreover, some employees in the logistics and operations management organizations lack the necessary knowledge on handling these software systems.
This forms the final component in transport and logistics. The component ensures that customers get contractual services, depending on the type of product. In addition, the customer should be in a position to locate the service centre, and understand the cost of services offered. The most important factors considered in this element include; the contractual requirements of customer service, the quality of services offered, and the type of logistics available. The element uses many ICT techniques. The consumers get annual maintenance contracts, guarantee and warrantee, and limited trial periods. The customer order cycle composes of for steps; customer arrival, customer order entry, customer order receiving, and customer order fulfillment. Customer order processing is very substantial in logistics and operations management because it aid s in attracting customers and increasing their desire. Order processing should be taken very seriously by the vending company since it creates different customer needs. Order processing also ensures the company has necessary resources to satisfy her customers.
This component uses Electronic Data Interchange (EDI) software system. This system gives enables exchange of information from the organization to customers using computers (Covalent Works 2012). Different software programs have been designed to cater for all these operations in an efficient and timely manner. The system used identifies the customers, and locates the product needed by that specific customer. The customer then receives a code that is used once the product is delivered. Some companies have introduced login panels where customers could access their products information. This system is very important since it minimizes delays, and ensures quality delivery of materials to their destinations. Moreover, the login window created enables customers to view the progress of their products from the manufacturer, to the transporting agent, and to the final storage.
Customer service faces challenges especially when customers’ products are delayed due to technical problems. In most cases, organizations suffer great losses, especially in case of an accident and all the products get lost or are stolen on the way. Logistics and operation management companies that are less secure always have this issue. This leads to inconveniences and loss of esteem customers.
Logistics aims at achieving the highest customer utility and perceived value. The concept of operations management is not new since during the olden days people use to move goods from one location to the other. In addition, storage of products has been taking place since time immemorial since its discovery. The only new thing concerns the methods used in operations management today, which is different from the past methods. Electronic commerce has changed the ways that supply chain operates. ICT has enabled exchange of information in a faster way than expected by most entrepreneurs. Most companies try having an equipped channel of distribution from production, to information flow from the supplier to the final consumer. The integration of ICT in logistics and operations management leads into global inventory, and reduced cost of production with increased customer services (Christopher 1992).
The impact of ICT on the operations management deals with planning and control of logistics and different transactions involved. Use of computer in logistics and operations management has facilitated faster data processing and giving opportunity for more information to be handled. Information management has become a critical aspect in the movement of goods and services. Poor ICT management in a single channel of distribution leads to delay of operations in terms of costs, planning, and consumer services. Introduction of IT services in operations management leads to a lot of changes in the logistics sector. First, there is fast information flow, and major delays are minimized whenever possible. Second, technology allows electronic transfer of logistics and cost information aspects for all materials increasing efficiency and reliability. Finally, technology has introduced electronic cash flow operations that enable fast transfer of cash encouraging more investments.
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