Page 130 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 6: Information Technology Framework

Tactical planning focuses on operational issues as constrained by short-term resource constraints Notes
such as production, facility, or vehicle capacity. The information support for tactical planning is
typically available from a firm’s data warehouse. Tactical planning processes evaluate customer
requirements and identify an operational combination of production, inventory, facilities, and
equipment utilization that can he applied within capacity constraints. The result is an action
plan to guide short-term operations.

Self Assessment

State whether the following statements are true or false:

7. The communication module facilitates information flow between functional areas within
the firm and between supply chain partners.
8. There is only one component that must be combined to form an integrated information
system.

6.5 Communication Technology

Information technology is also critical for information sharing to facilitate logistics and supply
chain planning and operations. Historically, coordination of logistics has been difficult since
logistics activities are often performed at locations distant from information technology
hardware. As a result, information was not available at the location of essential work in terms
of both time and content. The past decade has witnessed remarkable advances in logistical
communication systems capability. EDI, the Internet, Extensible Markup Language (XML), and
satellite technology exist to facilitate communication between firms and facilities.

Notes Radio frequency allows short-range communication within facilities such as
warehouses. Image, bar coding, and scanner technologies allow communication between
supply chain information systems and their physical environment.

6.5.1 Electronic Data Interchange

While the phone, fax, and direct computer connection have enabled information exchange in the
past, EDI and the Internet are quickly becoming the standards for effective, accurate, and low-
cost information exchange. EDI is defined as intercompany computer-to-computer exchange of
business documents in standard formats to facilitate high-volume transactions. It involves both
the capability and practice of communicating information between two organizations
electronically instead of via the traditional forms of mail, courier, or even fax.
Direct EDI benefits include increased internal productivity, improved channel relationships,
increased external productivity, increased ability to compete internationally, and decreased
operating cost. EDI improves productivity through faster information transmission and reduced
redundancy. Accuracy is improved by reducing repetitive data entry and interpretation. EDI
impacts logistics operating cost through (1) reduced labour and material cost associated with
printing, mailing, and handling paper-based transactions; (2) reduced telephone, fax, and Telex;
and (3) reduced clerical cost. The graphics industry has found that EDI can eliminate up to 90
percent of paper-based systems, can reduce receipt processing time by 50 percent, and can save
$8.00 per invoice document.

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