Tuesday, 21 June 2016

How Information Technology helps Operation Management?

How Information Technology helps Operation Management?  
Information is one of the key drivers in operation management as it coordinates with other drivers to work together to make an integrated, coordinated organization. In recent years, almost all business processes and functions are based on information systems and technology. Several tools of information technology such as SAP help to take right decisions and gives company competitive sustainable advantages from the competitors. Information technology helps to be aware of information, analyse this information and execute on it to increase the performance of operation management. Utilizing Information Technology, managers can know in least possible time with lowest possible cost and maximum accuracy about customer’s needs, inventory stocks, and products movement etc. Information Technology serves as the eyes and ears of management in operation capturing and analyzing information necessary to make the good decision.

Information technology is the communication tool to communicate inside the organization as well as outside the organization. Nowadays, E-commerce has great impacts on business in a variety of keyways. These include cost efficiency, improve data accuracy, streamline business processes, accelerate business cycles, and enhance customer service etc. Besides that, Ecommerce gives businesses more flexibility in managing the increasingly complex movement of products and information between businesses, their suppliers, and customers. It is a vital link in the support of logistics and transportation services for both internal and external customers to give better services to their customers. E- Commerce also helps a company and its suppliers and customers in shipment tracking, shipping notice, freight auditing, shipping documentation and labeling, online shipping inquiry etc.

Nowadays, due to the shorter product life cycles of the products, increased product proliferations, more demanding customers with higher expectation and ever-changing needs, just-in-time manufacturing and globalization of marketplace, companies are using Information technology as a weapon to get competitive advantages from the competitors. Due to the emergence of Electronic Data Interchange (EDI), E-Commerce Company can handle large number of suppliers and customers in a lowest possible time. Improvements of Information Technology reduced logistics transactions costs and promoted better communications between organizations.

Traditional logistics distribution systems involve long processes. It involves the movement of goods from manufacturers to the distributors, distributors to the retailers and finally from retailers to the end customers. But Company like Dell’s does not follow these usual routes. Part of their success depends on proper logistics management and efficient utilization of Information Technology. Dell computers directly reach to the end customers without any activities of distributors and retailers. Customers can order their products online according to their preferences. The product will be reached to the destination with the help of logistics and information technology. The Customer can trace their product easily. With the help of logistics and information technology, the company as well as the customer is saving their costs. It also helps to minimize the agency costs associated with distributors or retailers who do not act in the producers' interests.

The main impacts of Information Technology are reduced cost on physical distribution, lower search and product costs for end users, and improved communications between end users, distribution channel operators, and manufacturers. With the ‘Holy Grail’ of Information Technology, company personnel can recognize the new parts just looking at computer screen. With the help of Internet, managers can compare several suppliers, their products with price list. After observing product review and all they can order their products and pay the bill online instantly. There would be a reduction in response time as well as in communications and information processing costs. Even he can receive the product on next day through express delivery.

With the help of Information Technology tools the manufacturer could own or control all data associated with own products. This would minimize the decision information costs of keeping the producer informed of the status of the goods (whether ordered, in transit, delivered, or paid for), referred to in the messages passed through the information substructure. It needs less manpower and it saves company’s cost.

Effective coordination of logistics activities is essential to organizational performance. However, for improved coordination to be possible, Information Technology must play a larger role than simply providing status information on existing flows of goods. Effective utilization of Information Technology helps in cheap, fast and effective connectivity between business and with the consumer. To be effective, logistics processes such as just-in-time (JIT) delivery require effective Information Technology support to share information between buyers and suppliers.

Information technology provides rich opportunities in transaction efficiencies, when-
*    Organization engages in many small transactions, especially among a multitude of buyers/sellers.
*    Significant buyer/seller qualification is not required in a transaction
*    Organization suffers from out-of-stocks, long lead times, and/or high inventory levels

Logistics communications-
Communication is the key to the efficient functioning of any system, whether it is the distribution system of an organization or the wider supply chain. Logistics communications are becoming automated, complex and rapid. The Logistics Communication takes place mostly between

·        The organization and its suppliers and customers
·    The major functions within the organization, such as logistics, engineering, accounting, marketing and production departments.
  • Various logistics activities such as inventory management, warehousing, parts and service support, Procurement, customer service etc.
  • The various aspects of each logistics activity such as coordinating warehousing of materials, work-in-process (WIP) and finish goods (FG).
  • Various members of the supply chain such as Intermediaries and secondary customers or suppliers who may not be linked directly to the firm.

Information Technology helps business in several ways. Some of these are -

Production Process- Information technology helps production process in analyzing and selecting the process, designing and scheduling process, and monitoring and controlling the process. It helps a company to acquire the raw materials in write time to maintain the flow of the operation. The effective utilization of information technology tools can help a company to reduce the costs of operating, and maintenance, produce the highly quality of products and services, shorter cycle times, and speed up operating, delivery flexibility, new product introduction speed, etc.

Inventory Planning- Setting optimal inventory policies is one of the important concerns for the management. Low inventory levels means low working capital but chance of dissatisfying customers on the other hand high inventory level means high working capital but satisfy the customers. To optimize inventory level requires information that includes demand patterns, the cost of carrying inventory, costs of stocking out and costs of ordering. Evaluation of Information technology helps the organization to integrate its functions as a result low inventories and improved financial performance. It helps to reduce transaction cost for the company. The company like Dell holds very less inventory because customers order their product online and the company starts assembling the products only after getting the order.

Transportation- Now in the age of cut-throat competition companies are going global to acquire cheap products and to sell their product worldwide. At the time of transferring goods, which transportation mode (e.g. rail, water, air, truck, pipeline etc.) to use with proper routes which will provide lower cost but on time delivery is a crucial decision for the management. Moreover, Traffic and Transportation department is the major investment of whole business and it contributes larger part of products selling price. Information technology with the help of reliable information can help the company to decide on transportation networks, routing, modes, shipments and vendors requires information including costs, customer locations, and shipment sizes to make good decision.

Purchasing - The term purchasing means to acquire materials from outside the organization to facilitate the firm’s operation from production to logistics. In the recent years, companies are crossing the national boundary to acquire its raw materials. Suppliers are becoming one of the main resources for the manufacturer because purchase materials consider more than 50 percent cost of whole goods around the world. Companies are making a long-term relationship with the key suppliers to get good quality products in lower price and to reduce development times. Vendor Managed Inventory (VMI), Collaborative Planning, Forecasting and Replenishment (CPFR) and Collaborative Transportation Management (CTM) are different types of collaborative pattern between suppliers and organizations. Information on suppliers and company’s product margins, prices, quality, delivery lead times, and are all important in making sourcing decisions. Recently companies are using E-procurement while purchasing.

The advantages of E-procurements are

• Significant reductions in order processing costs
• Faster, more accurate order processing
• Centralized purchasing for volume discounts
• Prevents “maverick” (off-contract) buying
• Improved accountability

Through satellite communications, company can incorporate strategic alliances with suppliers; carefully select their store locations etc. Part of WalMart’s success can be attributed to computerized advance communications systems which link their suppliers to their actual customer sales on a regular basis, so that suppliers can plan based on up-to- date demand information, and provide timely and adequate replenishment to Walmart stores.

Customer service- Customer service involves getting the right products, at the right place, in right conditions, at the right time with lowest possible cost. Customer service is the output of logistics systems. Information technology helps a company to improve its customer service. It helps customers to select their products among various options, make their purchase order online, and track their products. Good customer service supports customer satisfaction which is the output of entire marketing process. Through information technology company can market their product worldwide. Information technology helps a company to maintain data about the customers and treat them according to profit gained from the customers.

Warehousing- Warehouses allow an item to store for later consumption saving time and place utility. Information technology helps in warehousing and storage activities such as warehouse layout, design, ownership, automation, training of employees and related issues. Information technologies such as telemarketing, express delivery, and improved inventory forecasting have already reduced the need for local warehousing and distribution networks.

Monday, 13 June 2016

The impact of Logistics on the Environment of Sweden

Research questions- How logistics can help to reduce environmental effects in Sweden?

Today logistics is a ‘part and parcel’ of our life. In our daily lives, logistics helps us to acquire our daily stuffs from the retail outlets, provides life-saving drugs for the patients on time, and delivers important letters to our letter box etc. From the New Product Development to the product recycle as well as product disposal to maintain the green environment everywhere logistics plays a crucial role.

Proper logistics management can help the environment in several ways-

• Thorough properly arranging rail and road network (inter-modal network), people will use more rail transport than road transport which is less harmful for the environment.

• Utilizing road transport in its fullest efficiency such as while transporting goods from the company, the truck should be fully loaded (FTL); frequency of busses should be to fill it with maximum number of passengers.

• Company can reduce the pollution by selecting proper transportation mode while acquiring raw materials or transporting finished goods.

• The packing size should be to optimize to utilize maximum space in the carrier vehicle.

• Using reverse logistics to collect waste materials to dispose it in a correct way.

• Selecting right materials at the time of packaging which have less environmental effects.

Fig: Environmental effect of road transportations. (Source: - EUROSTAT)

From morning to night, we are using several transportation modes (rail, car, bus etc.) to go to our work places or using daily stuffs which we are acquiring through the logistics carriers. Several transportation modes have different environmental effects. From the Table 1, we can conclude that Global warming potential of road transport is increasing year by year. From above Fig. we can see the road transport is one of the main sources of environmental pollution (almost four times than rail transport). Therefore, optimizing logistics carriers, logistical impact on the environment can be reduced to make Sweden safer and better place to live.

From the discussion with the professionals from Aerosol industry, Sweden, I got to know that in Aerosol industry, the finished goods are mainly transported through road transport, because transporting through water need to maintain several formalities such as Dangerous Good Documents (DGD) declarations etc. But using more road transport enhances the probability of air pollution. Through increasing flexibility in rules and regulations and encouraging the aerosol manufacturer to transport through water air pollution can be reduced.

In case of Car Industry, optimizing length of the cars, one car-carrier truck can carry more cars and can utilize 100% efficiency to save company’s cost as well as the environment. Due to lack of resources or keeping inventory level low, several companies order small amount of materials, and transport-company carry this material without fully loading the truck.

In case of a city called city-logistics, through properly arranging rail connections between main destinations and encourage (by keeping fare price low, increasing frequency at peak time,) the people to go by train rather than road transport which will make less air pollution.

If we look at separate transportation mode used in Sweden, we will see Railway division is decreasing from 1970 to 2005, but Motor way transport is increasing in year by year which is harmful for the environment. Similarly, Inland water ways is still (until 2005) same as it was in 1970. And oil pipeline is not used in Sweden. But country like United Kingdom, Italy (Source: - EUROSTAT) oil pipeline is used extensively for transferring liquid, which will save our environment from the pollution created by automobiles.


From the table 3 and table 4, we can see the index of transport growth is increasing in Sweden year by year and in the same pace motorization rate of passengers cars and Lorries or Road Tractors are increasing.

In case of Freight transport in Sweden, we can see the percentage of total tonne - kilometres are decreasing in rail transport while it is increasing in road transport.

For passenger Transport by Rail and Buses and Coaches in Sweden using Rail transport is increased little bit, on the other hand, Buses and Coaches are same for four years. Therefore, from the above Fig. and Tables we can conclude that with properly managing logistics, properly planning intermodal transports, environmental effects due to logistics can be reduced.

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