In the past decade, the business community and service organizations have recognized the necessity of administering the supply chain as one of their business and organizational strategies. The need to establish and maximize harmonious associations with the supply chain associates has equally been recognized. Despite the acknowledgment of the importance of inter-business associations with the supply chain associates, many businesses and organizations have not been able to reap the profits of such relationships. This can be attributed to the inability of the firms or organizations to leverage effectively manage the flow of information within the supply cycle. Information plays a key role in the successful delivery of goods and services from the suppliers to the end-users. This is especially true for firms and organizations that deal with products that have a short life cycle. Such firms must endlessly look for and implement new ways to devise and distribute sensitive products and services aptly. The lack of adequate and sufficient information sharing lowers the ability of a company or organization to make use of otherwise helpful associations. Furthermore, rapid technological progress, as well as the globalization of information networks, implies that businesses and their supply chain associates have to develop suitable and competitive inter-business information systems which would enable them to react swiftly and efficiently to the ever-varying needs of their clients (Chin-Chun, Vijay, Keah-Choon and Keong, 2008, p.296). This however cannot be realized without an effective logistics management information system. Indeed, the proper use of logistics management information results in an effective system design process, cost-effectiveness, and correct data passed on to members of the logistics team that contributes towards continuous improvement of the system.
Logistics management information system
One of the roles of an effective logistics management information system is the provision of timely and correct information that can be used in the decision-making process (Blanchard, 2004). The movement of products and services into and through the supply cycle relies heavily on the flow of information through the system and levels that make use of such information. Information that is produced at a central place is used for decision-making at the operational and managerial levels. This information is then passed on to the lower levels of management to enable supervision and monitoring of tasks and employees. Previously, the focal point of an LMIS was to collect three important types of information: quantities of goods and services distributed to consumers; the available stock; and losses and changes in the stock (Roche and Felling, p.4). In an effective LMIS, this information is availed in an apt manner to enable the product and program managers to make accurate and effective decisions. In the end, the availability of such information enabled the firms to address the needs of their clients in a timely and accurate manner. The majority of firms and organizations have improved their LMI systems to enable them to stay abreast with the changing market conditions.
Scaling up of LMIS can be done in two ways: increasing the types of products or services to be managed and combining the classifications of products or services into one logistics system. In the first scale-up of LMIS, the increasing categories of products and services are still controlled by “parallel, vertical supply chains,” (Roche and Felling, p.2). An example of this type of scale-up involves the introduction of HIV testing kits and antiretroviral therapies. Such countries are forced to introduce new products that will complement these new services. The problem arises when the countries are unable to make the services available to many clients due to a lack of necessary skills. The second type of logistics scale-up involves the integration of products or services that were previously managed separately into one logistics system. Regardless of the type of scale-up adopted, the logistics system should sustain the new products and services. This requires the accessibility of timely and accurate logistics information.
Roche and Felling argue that the designing of any effective LMIS should go through four crucial steps. First, the design should involve all partners of the business/organization including those not directly concerned with the supply chain. This is because logistics data are useful to programs and other managers who are involved in the monitoring and supervision of the firm’s activities. The involvement of all partners will enable them to include the LMIS in their tasks and to support the system because they have knowledge of its working and its importance in their business. Second, the present condition of the business and market should be assessed and compared with the preferred condition before the LMIS is designed. Assessment of available resources will ensure the effective introduction and implementation of the system. Third, the type of LMI system desired (whether vertical or integrated) should be designed based on the present and forecasted conditions. Lastly, the LMIS should be revised and tested frequently according to changing needs and competence of the users (Roche and Felling, p.4).
The importance of information sharing
Information sharing is the degree to which essential and appropriate information is made available to all the partners in a firm or organization (Blanchard, 2004). Information sharing can either be calculated (for instance, purchasing, operations scheduling and logistics information) or strategic (for instance, long-standing corporate goals, and client information). Previous studies on the significance of information sharing among partners of a firm have revealed that successful information sharing increases visibility and minimizes doubt. It enables organizations to access information at all levels of their supply cycles, permitting them to work together in marketing, sales, manufacturing, logistics and other activities. The degree of information sharing affects the number of opportunities created for organizations to work harmoniously to get rid of inefficiencies created in the supply chain and therefore it has an important effect on the buyer-supplier relationship. In addition, a firm’s ability to access timely and accurate information can enable the managers to make necessary adjustments to their operations and to plan for future actions. Information sharing is composed of three elements: “information system integration, decision system integration and business process integration,” (Chin-Chun, Vijay, Keah-Choon and Keong, 2008, p.299).
Information system integration increases the trade of information between the supply chain partners and the firm’s managers. It also enables the firm to address the needs of the clients more competently and successfully. The information involved in information system integration includes variations in the market and customer preferences which assist the firm to harmonize activities related to the transactions.
Mohr and Sohi (1995) assert that information sharing has five aspects which include “timeliness, accuracy, adequacy, completeness, and information credibility,” (Chin-Chun, Vijay, Keah-Choon and Keong, 2008, p.300). Timeliness of information means that the information is made available to the concerned parties within the agreed time period and when the parties require it. Accurate information is information that is based on true facts. Adequate information is information that has enough details that can be used by a firm’s partners for the required tasks. Completeness of information implies that all the necessary details pertaining to that information are available. Credibility refers to the trust that the users of information have in it (Jonsson and Gustavsson, 2008, p.284). Integrated information systems can also enhance information sharing by providing more apt and better information hence maintaining close and reciprocally valuable relationships among the concerned partners. The system is also an indicator to the supply chain partners that the firm is willing and committed to working harmoniously to achieve common objectives, a major aspect of successful relationships. Integration of information systems, therefore, acts as a bond that unites partners of an individual firm as well as many firms involved in a supply chain.
Automatic data communication and registration
The use of technology in logistics management increases the effectiveness and the quality of information shared between the parties involved. Manual communication and registration cause great delays in the distribution of information. It also leads to the passing on of information that is not standardized. Such information, if used by different managers or other partners of the firm, can have adverse consequences on the operations of the firm. Past studies such as those done by Ahmad & Schroeder (2001) and Rassameethes et al. (2000) reveal that automated information communication “results in generally better delivery performance, higher productivity, better financial performance, more information exchange and a higher level of trust between customer and supplier,” (Jonsson and Gustavsson, 2008, p.286). Automatic data communication also saves a lot of time and high costs that are usually involved in manual work such as paperwork. This disadvantage of manual data communication is experienced by the Federal Emergency Management Agency (FEMA) whose logistics systems are not fully automated. FEMA logistics systems fail to provide visibility of the emergency goods from the beginning to the end of the shipment process. The systems fail to trail the goods throughout this process. As a result, FEMA workers are forced to use paperwork to record the movement of the emergency goods from the Federal Operational Staging Areas to the final points of delivery. Department of Homeland Security Office of Inspector General argues that “as a result, FEMA employees expend unnecessary time and effort to track, receive, and ship disaster goods, and cannot manage the deployment of goods effectively,” (2008, p.7).
Logistics information management deals with the management of information necessary for the effective delivery and distribution of goods and services in a firm. Various aspects of logistics information such as its timeliness, credibility, accuracy, adequacy and completeness have a significant impact on the supply chain, the performance of a firm and the relationship between the firm and supply partners. Bearing this in mind, it is important for firms to implement effective logistics management systems which have been designed according to the available resources and the present and anticipated conditions of the market and of the firm/organization. An effective LMIS greatly minimizes the amount of time spent and the costs incurred in the distribution of goods and services from the suppliers to the firms and ultimately to the end consumers.
Blanchard, B. S., (2004). Logistics engineering and management (6th ed.). Upper Saddle River, NJ: Prentice-Hall.
Chin-Chun, H., Vijay, R.K., Keah-Choon, T., & Keong, G.L. (2008). Information sharing, buyer-supplier relationships, and firm performance; A multi-region analysis. International Journal of Physical Distribution & Logistics Management, 38(4), 296.
Jonsson, P., & Gustavsson, M. (2008). The impact of supply chain relationships and automatic data communication and registration on forecast information quality. International Journal of Physical Distribution & Logistics Management, 38(4), 280.
Office of Inspector General. (2008). Logistics information systems need to be strengthened at the Federal Emergency Management Agency. Washington, DC: U.S. Department of Homeland Security.
Roche, G., & Felling, B. (n.d). Best practices in scaling up: Scaling up logistics management information systems in health commodity supply chains. Boston, MA: John Snow, Inc.