Information Technology in Transport and Logistics - Essay Example

The Impact of Information Technology on Transport and Logistics Management IT Solutions for Transportation Application of IT solutions to transportation and logistics can bring about better management of highways, shipping, airfreight, railroad and public transportation systems. It can help ease traffic congestion, enhance the efficiency and productivity of transportation services and logistics, and more significantly reduce costs. As Andersen (2001) aptly observed, sustainable transportation in an age when energy prices are uncertain but broadly increasing requires that efforts be made to shift passenger and goods transport to cheaper means of transportation. Customised safety solutions can be integrated into movement control systems in order to make the transportation of passengers much safer, and freight/cargo movement smoother and more secure. In the U.S. alone, over 10 billion dollars has been invested in the last ten years to try and develop so-called ‘Intelligent Transportation and Logistics Systems’ through the application of IT-enabled solutions. Software systems currently used by large transportation giants such as TNT enable managers to schedule freight movements, find new routes for transportation, and aid strategic planning, carrier management as well as supply chain execution and management (TNT, 2005). Integrated networks of transportation information permit the gathering, storage and extrapolation of traffic, transportation and logistics data. This can facilitate the implementation of appropriate policies, procedures and security technologies that enables a more efficient and expedient management of traffic. An example can be seen in the civil aviation sector where computerised and IT-enabled navigational systems and even ‘auto pilot’ options in the cockpits and air traffic control stations have revolutionised passenger transportation modes. This is not to speak of online ticket reservations, payments, and check-ins that could not have been possible in the absence of the Internet coupled with a range of IT solutions. Recent developments in Global Positioning Systems (GPS), and Radio Frequency ID (RFID) Tag technologies have given a new dimension to transportation tracking and logistics management regardless of geographical barriers. Today these new technologies, combined with mobile wireless technology and IT-enabled solutions such as dynamic routing for transportation, are capable of assisting in the tracking and identification of cargo or containers (IDII, 2003). Along with RFID devices, the use of IT-based automated systems for data collection has been widely accepted by transportation and logistics services worldwide. This has not only helped in reducing errors, labour costs, and transit time, but also resulted in paperless operations. The returns on investment from a reduction of shipping mistakes alone are adequate to justify the expenditure on computerised shipping systems by even smaller companies engaged in the transportation and logistics business. Applications in Logistics Management Information technology applications integrated with computer simulation enable new and efficient solutions in logistics management. For instance, computerised traffic modelling and simulation can lead to better transportation system design and strategic planning for smoother traffic flow on the highways. The global proliferation of e-business has meant that transportation and logistics companies should be in a position to seamlessly integrate with e-business merchants (GC, 2002). A sound logistics management policy has now become an integral part of the business strategy of many companies as a means for achieving competitive advantage. This has signalled a paradigm shift in focus from the quality and price factors in products to the quality and cost factors in service. To some extent, an appropriate logistics strategy is even more important for multi-national corporations (MNCs). Most MNCs have distributed manufacturing plants in a number of countries and regional distribution centres. These are connected to centralised warehouses and manufacturing plants through computerised and even wireless-enabled communication links. A decision to locate a manufacturing plant would usually consider factors such as the availability of raw materials and energy, the availability of skilled human resources, the cost of labour and government regulations, etc. On the other hand, a decision to locate warehouses or regional distribution centres should be based on the ability to satisfy customer demands quickly, efficiently and cheaply. These regional distribution centres serve to predict demand, accept orders and help with the coordination of manufacturing, distribution and warehousing. It is desirable to reduce the number of distribution centres for multinational operations to the extent possible with a view to reducing costs and optimising efficiency. This can be achieved if these distribution centres are able to use automated order fulfilment systems, which are interlinked with the manufacturing and warehousing systems to promptly and efficiently meet the demands and deliver. Customised Solutions for Large Companies The ability to service large global demands and to coordinate with subcontractors or component manufacturers requires that information technology be used in the regional distribution centres and warehouses so that efficient manufacturing, demand forecasting and distribution are made possible. Many global corporations dealing with automotive manufacturing, pulp and paper, electronics, computers and chemicals need to operate in such a distributed environment. This has meant that MNCs have now to increasingly use information technology in all facets of transportation, logistics management, and transaction processing (Abdiu, 2005). In turn this has necessitated the development of appropriate software solutions to assist in transport and logistics management. Some of these ready application tools include, among others, Compaq’s i-track tool for order tracking, and the SHIP system developed by Van Gend & Loos Euro Express of Germany (Dantuma and Hawkins, 2001). Fleet transportation and distribution management software systems engineered by Ryder Europe cater to the requirements of Nissan, Daewoo and Ericsson (Ryder, 2005). Yet another carrier giant, DHL, has also engineered and deployed in-house systems to cover its distribution and logistics requirements (DHL, 2005). Multi-agent systems are likely to play an important role in the application of information technology solutions to transportation and logistics management. In this context, it is imperative that the business processes associated with e-logistics or collaborative e-business are identified and clearly defined in order to design customised and comprehensive models. The SME (small and medium enterprises) sector has generally been perceived to be reluctant and slow in adopting e-commerce and ERP (enterprise resource planning) solutions, and online procurement systems. However, in the rapidly changing scenario of IT applications across all business domains, SMEs are also expected to jump into the bandwagon and resort to IT solutions for transportation and logistics management. The application of information technology for real-time logistics can certainly result in reduction of inventory, better delivery accuracy, improved customer service and increased flexibility. At the same time there is a great responsibility on the part of the IT solutions vendor to consider several issues while designing and delivering the systems. Handling of large volumes of data and information through electronic communications can pose several challenges such as those relating to capacity building and security concerns. The solutions to be developed must be capable of providing more accurate and controlled transaction processing that is above all cost-effective and efficient. The IT solution must not only suit the business processes and strategic needs of the company but also contribute towards building a lasting relationship of mutual trust with the clients. The effects of change management must also be taken into consideration along with an evaluation of the impact of information technology on the business in the light of current practices and comparative systems. Among other things, it must be demonstrated that the implementation of IT-enabled solutions is capable of supporting a faster and smoother flow of business processes. It is therefore necessary to clearly perceive the opportunities and challenges involved in the implementation of information technology applications for logistics and transportation management (Abdiu, 2005). The application of IT solutions to large-scale transportation and logistic systems has certainly produced increased efficiencies, particularly in order booking and tracking, vehicle navigation, route planning, and safety and control systems. However there is still more room for making such applications wider across the globe in tune with the rapid strides in information and communication technologies and the Internet revolution. Information technologies also need to be capable of graceful scalability when applied to traffic control, logistic management or vehicle systems (Dugarry, 2004). In an era when many logistics and transportation companies serve a large clientele, transparency of information about real-time operations can also make a substantial difference to clients, particularly in scheduling and tracking shipments (Gustaffson, 2004). References Abdiu, D., Strandberg, M. & Stridsberg, M. (2005). The impact of real-time IT Logistic Solution: Implementation effects and consequences. Jonkoping International Business School. Retrieved November 7, 2005, from http://www.diva- portal.org/diva/getDocument?urn_nbn_se_hj_diva-122-1__fulltext.pdf Andersen, O., Groven, K., Brendehaug, E., Uusitalo, O., Suutari, U., Lehtinen, J., et al. Energy saving in transport of goods – a pilot project in rural natural resource based industries. European Commission. 2001. Retrieved November 3, 2005, from http://www.vtt.fi/rte/transport/tutkimus/logistiikka/savee.pdf Dantuma, L. M. Y. & Hawkins, R. W (2001). TNO Report: E-commerce in the logistics sector. Retrieved November 6, 2005, from http://www.oecd.org/dataoecd/49/4/2072925.pdf DHL (2005). Integrated IT Solutions. Retrieved November 10, 2005, from http://www.dhl.com/publish/g0/en/services/logistics/it.low.html#aPar0010 Dugarry, A., (2004). Advanced driver assistance systems: Information management and presentation. Cranfield University. Retrieved November 10, 2005, from http://dspace.lib.cranfield.ac.uk:8080/bitstream/1826/833/2/thesis-dugarry.pdf GC (Government of Canada, 2002). Final report for Canada Transportation Act review. Retrieved November 7, 2005, from http://www.reviewcta- examenltc.gc.ca/english/pages/final/ch16e.htm Gustaffson, I., (2004). Information for transparency in transport chains. Blekinge Institute of Technology. Retrieved November 10, 2005, from http://www.bmt- ts.com/en/texts/licentiat_ingergustafsson.pdf IDII (Industrial Data and Information Inc., 2003). White papers on the use of IT in transportation and logistics. Retrieved November 6, 2005, from http://www.idii.com/wp/index5.htm TNT Logistics. (2005). MATRIX Supply Chain Technologies. Retrieved November 6, 2005, from http://www.tntlogistics.com/EN/Images/040628%20- %20Matrix%20Supply%20Chain%20Technologies_tcm13-9636.pdf ---. MATRIX Transportation Management. Retrieved November 6, 2005, from http://www.tntlogistics.com/EN/Images/040628%20- %20Matrix%20Transport%20Management_tcm13-9637.pdf ---. MATRIX Warehouse Management. Retrieved November 6, 2005, from http://www.tntlogistics.com/EN/Images/040628%20- %20Matrix%20Warehouse%20Management_tcm13-9638.pdf * * * * Read More