Impact of Information Technology on the Logistics and Transportation Industry

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Summary

The logistics and transportation industry is undergoing an unprecedented and rapid transformation. The importance of technology and innovation continues to grow across different sectors of the economy. As claimed by Murphy and Knemeyer (2018), the efficient use of information benefits supply chain management by providing greater knowledge and awareness of customer demand and enhancing manufacturing, distribution, and marketing management. Information Technology (IT) promotes effective communication and ensures value-enhancing relationships in logistics and transportation. In turn, improved connection with customers results in a better understanding of their needs and wants, which constitutes a baseline for meeting consumer demand and closing the satisfaction gap.

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The emergence of big data has stimulated the development of effective data management strategies to enhance communication, increase visibility, and reduce variability across the supply chain. IT helps logistics firms expand and share information openly and frequently with their clients and suppliers. As a result, the operational processes become more compliant, and a logistics cost optimization strategy can be applied. Organizations employ logistics optimization models and software to improve operational, tactical, and collaborative decision-making, and the practical implementation of this approach is considered more resource-efficient. In this way, a company can anticipate changes and respond to them in a relevant and timely manner.

The logistics and transportation services industry involves numerous companies and stakeholders, which makes it highly competitive. According to Gunasekaran et al. (2017), IT contributes to a competitive advantage in logistics and supply chain management. It helps in understanding the complex competitive issues that ensure greater discovery and information disclosure through real-time information and data exchange throughout the whole operation chain. In particular, logistics information systems can be used to track the resources and products, monitor the need for inventory, and provide optimal lead times and lot sizes. The automation of the processes can improve logistics competitiveness and overall service quality, providing value for the customer and reducing demand variability.

Information Technology is involved in problem-solving in a number of specific areas within an organization, among which logistics, finance, accountancy, production, marketing, and many others. Incorporating a comprehensive system can benefit each of the elements as well as the company as a whole. In particular, data processing can significantly impact the organization’s financial performance. IT increases annual turnover in the logistics industry, as evident in the 70% competitive advantage in Europe (Ndonye, 2014). As Murphy and Knemeyer (2018) report, advanced hardware and software can result in “dramatic cost reductions,” in turn, shortening the payback period (p. 44). Consequently, improved investment performance can engage more shareholders, which positively affects the enterprise’s profitability. As can be seen, the logistics function significantly contributes to competitive advantage. By reducing cost, transportation times, and labor required, as well as increasing delivery speed, reliability, and order fulfillment rate, IT advances logistics performance, thus, strengthening the company’s overall business performance.

A well-developed approach to the utilization of data in logistics and supply chain management helps the company make the most of the resources available while keeping organizational goals in mind and reaping financial rewards. Innovation is both disruptive and essential to upgrade the existing processes, and logistics businesses widely incorporate new technology to provide more reliable, faster, and sustainable delivery. Replacing inventory with information and enhancing warehouse management affects the whole firm’s performance (Murphy and Knemeyer, 2018). Shortened transportation and conversion times, decreased inventory level, efficient planning, and reduced loss order rates increase order fulfillment rate and customer satisfaction. As logistic activities of the company advance through the use of data, service quality, diversity, and efficiency are expected to improve. Therefore, using IT in logistics and transportation positively impacts the value creation and competitiveness of enterprises.

Statement of the problem

There is a tremendous need for advancing IT in logistics and supply chain processes to maintain competitiveness and improve service quality. Information exchange through automation in the transport industry enhances performance and efficiency in transport costs. Implementing technological software and hardware provides access to large volumes of data within short periods of time, allowing logisticians to organize and analyze it in a timely manner, optimizing the decision-making (Murphy and Knemeyer, 2018). In the contemporary business environment characterized by high competitiveness, taking appropriate measures as soon as possible, anticipating changes, and being proactive is critical to enterprises. IT improves logistics performance by enhancing port and transport efficiency to minimize cargo dwell time. Without IT, the industry faces delays and insufficient services that contribute to high taxation, bribery, and tariff barriers.

This study contributes to the literature investigating the role of IT in logistics and transportation performance in the context of Hungary. Addressing the problem can assist Logistics Service Providers (LSPs) in Hungary in determining the primary factors of transportation and logistics management, thus, improving service quality and meeting consumer demand and expectations throughout the value chain. The lack of adequate IT strategy affects the quality of services and logistics performance, while the well-organized use of data enhances warehousing activities and improves the connectivity of supply chains.

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Research objectives

General objective

The study seeks to investigate the impact of IT on logistics and transportation performance in Hungary.

Specific objectives

  • To determine how information flow affects logistics performance in Hungary.
  • To determine how logistics integration impacts logistics performance in Hungary.
  • To assess the relationship between major success factors (such as IT developments) and the performance of logistics services in Hungary.

Research questions

This study focuses on investigating the impact of information technology on logistics and transportation performance in Hungary. Based on the current debate regarding the subject, the following research questions were formulated to contribute to the discussion and help fill the knowledge gap in the Hungarian context:

  • RQ1: How does information flow affect logistics performance?
  • RQ2: How does logistics integration impact logistics performance?
  • RQ3: Does the extent of sector-specific IT development of Logistics Service Providers (LSPs) affect the flexibility of enterprises? (Oláh et al., 2018).

Literature Review

System approach theory

The review of relevant literature showed the growing importance of the subject to research, and several theoretical frameworks can be applied to logistics and transportation management. The system approach theory explicates how different enterprises can share information within their logistic system using websites. This model views the company as a dynamic and open environment consisting of interrelated elements that interact with each other (Jackson, 2019). A systems approach enables the automatization of transporters’ freight activity and tracking of shipments onboard vessels. As a result, the expected times of arrival can be assessed to keep all the stakeholders updated and reduce delays. With lead times met and optimized, the customer efficiency improves, positively affecting the company’s performance.

Information sharing between enterprises directly impacts the supply chain integration, and the application of IT solutions can enhance communication among partners, resulting in optimized decision-making by management. Consequently, the available resources are allocated and utilized in an efficient manner aiming to improve day-to-day logistics operations. Furthermore, IT integration benefits the company in the long run by providing data for analysis and improving decision-making across numerous business activities (Gunasekaran et al., 2017). When adopted proficiently, IT facilitates efficient information management and flow; hence, enhancing operational processes and supporting informed decision-making.

Adaptive theory

The adaptive theory highlights the role of explicitness and accountability in the decision-making process, which contributes to the implementation of a comprehensive strategy. A Logistics system is more reliable if firms can utilize technology to automate, organize, and synchronize tasks and business processes. The new mobile networks enable better connectivity and balanced operational speed and cost (Jackson, 2019). In particular, the enterprise can track the shipment automatically by incorporating devices into delivery vehicles; furthermore, driver, transport, and mobile workforce management can be linked through corporate IT systems (Gunasekaran et al., 2017). IT ensures efficient fleet management based on satellite positioning, data logging, and communication. Mobile technology improves business performance and quality of services while providing high usability for users.

The adaptive theory enables the company to integrate control mechanisms in logistics activities and meet the set service, cost, and environmental requirements. Management and coordination of transport-related activities are critical for optimizing the company’s business systems and procedures. The concept of adaptive logistics implies the use of technology and artificial intelligence (AI) to improve communication between logistics facilities and management systems. The adaptive theory framework can help provide a feasible model for transportation and logistics systems based on the nature of the process, network, and stakeholders.

References

Gunasekaran, A., Subramanian, N., & Papadopoulos, T. (2017). Information technology for competitive advantage within logistics and supply chains: A review. Transportation Research Part E: Logistics and Transportation Review, 99, 14-33.

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Jackson, M. C. (2019). Critical systems thinking and the management of complexity. John Wiley & Sons.

Murphy, P. R., & Knemeyer, A. M. (2018). Contemporary logistics (12th ed.). Pearson.

Ndonye, S. K. (2014). Influence of Information Technology on Logistics Performance in Kenya With Reference to Cargo Transportation. Journal of Supply Chain Management, 1(2). Exclusive Journal Publishing.

Oláh, J., Karmazin, G., Pető, K., & Popp, J. (2018). Information technology developments of logistics service providers in Hungary. International Journal of Logistics Research and Applications: A Leading Journal of Supply Chain Management, 21(3), 332-344. Taylor & Francis Group.

Wilson, M. N., Iravo, M. A., Tirimba, O. I., Ombui, K. (2015). Effects of Information Technology on Performance of Logistics Firms in Nairobi County. International Journal of Scientific and Research Publications, 5(4).

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BusinessEssay. (2022) 'Impact of Information Technology on the Logistics and Transportation Industry'. 3 September.

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BusinessEssay. 2022. "Impact of Information Technology on the Logistics and Transportation Industry." September 3, 2022. https://business-essay.com/impact-of-information-technology-on-the-logistics-and-transportation-industry/.

1. BusinessEssay. "Impact of Information Technology on the Logistics and Transportation Industry." September 3, 2022. https://business-essay.com/impact-of-information-technology-on-the-logistics-and-transportation-industry/.


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BusinessEssay. "Impact of Information Technology on the Logistics and Transportation Industry." September 3, 2022. https://business-essay.com/impact-of-information-technology-on-the-logistics-and-transportation-industry/.