Logistics Improvement by Investment in Information Technology Using System Dynamics

Logistics Improvement by Investment in Information Technology Using System Dynamics

Amrita Jhawar, S. K. Garg
Copyright: © 2018 |Pages: 40
DOI: 10.4018/978-1-5225-4077-9.ch017
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In this era of globalization, adoption of information technology (IT) is one of the critical contributing factors of logistics companies' competitiveness and growth. This chapter investigates the investment in IT by an Indian-based logistics company on the logistics performance. Technologies like RFID, EDI, GPS/GIS, and ERP are chosen for improving processes like tracking and tracing, planning and forecasting, transportation automation, coordination with suppliers and customers, and decision optimization. Simulations are carried out using system dynamics modelling. The model is validated and sensitivity analysis is performed. Scenarios are generated under optimistic and pessimistic conditions.
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Information is a valuable logistics resource and IT plays a very important role to enhance logistics competitiveness. Many studies since the 1990s suggest the important role information technology plays in enhancing the effectiveness and efficiency of logistics management (Introna (1991); Schary (1991); Hammant (1995); Closs (1997); Loebbeck (1998)). Timely, accurate and well-managed information improves decision making and enhances effectiveness, efficiency and flexibility. Functional role of IT is transaction execution, collaboration and coordination and decision support (Nair et al., 2009). Bowersox et al. (2002) separated the functionality of ICT systems for logistics into four categories: strategic planning, decision analysis, management control and transaction systems. The various activities performed under the above functions and the benefits obtained through them are shown in Table 1.

Table 1.
Role of IT in logistics management
Closs et al. (1997) Accuracy, information sharing, timeliness, availability, internal connectivity, operating timeliness, usage driven formatting and flexibility
Lai et al. (2006) Improving delivery speed and reliability, customer relations and order accuracy, higher cost advantage
Pokharel (2005) Higher efficiency, cost savings, reduced data entry error and increased customer service level
Auramo et al. (2005) Customer service, efficiency, information quality, planning collaboration for improving agility
Tseng et al. (2011) Robust, seamless and resilient supply chain, enormous economic benefits, reduction in cost and time wastage, enhancing competitive advantage
Savitskie (2007) logistic costs, inventory turnover, order fill capacity, product and order flexibility, delivery time, flexibility, customer satisfaction

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