Transport Management & Theory Practices (12)

Management of Transportation

Seventh Edition Coyle, Novack, Gibson & Bardi

© 2011 Cengage Learning

Chapter 12Information

Management and Technology

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Introduction

• IT use in supply chain explodes in ’90s– IT use enables reduction of assets– IT use enables better management of

• Information flows

• Product flows

• Cash flows

– Cost of IT declines significantly


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Information Systems

• Purpose– Collect, organize, and portray meaningful data

to decision makers• Challenge: vast volumes of information

– Serve multiple organizational levels– Facilitate integrated decision making within

firms and across supply chain

• Core components– Common databases, hardware, software – Enterprise resource planning (ERP) systems


4© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 12-1

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Information Systems, cont’d

• Ex: info needed to manage transport transaction

– Pre-transaction phase: info needed to plan carrier movement

• Shipper needs purchase order, forecasts, POS data, equipment availability, possible pick-up times

– Input to carrier selection decisions

• Carrier needs bill of lading info., preferred pick-up and delivery times

• Receiver needs advance shipment notice, scheduled delivery times


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Information Systems, cont’d

• Info needs for transport transaction, cont’d– Transaction phase

• All parties need shipment status info– Carriers typically provide on exception basis

– Post-transaction phase• Shipper and receiver needs depend upon terms of sale

– Proof of delivery and carrier performance

– Freight bill

– Claims, if necessary

• Carrier needs payment info, claims info



Table 12-1

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Information Sources

• Prime sources were paper documents– Many transactions are now paperless

• Bill of Lading (BOL)– The single most important document.– Initiates shipment, typically generated by shipper– Provide all the information the carrier needs to accomplish

the move– Stipulates the transportation contract terms including the

scope of the carrier’s liability for loss and damage– Acts as a receipt for the goods the shipper tenders to the

carrier– Shows certificate of title to the goods


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Information Sources

• Bill of Lading (BOL)– Serves five legal purposes

• Receipt for goods• Description of shipment • May be evidence of title to goods• Operating document• Defines terms of contract between carrier and shipper


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Information Sources, cont’dBill of Lading, cont’d

– Minimum information required:1. Origin/destination of shipment2. Carrier designation3. Special operating instructions4. Shipment description5. Billing instructions


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– Minimum information required:1. Origin/destination of shipment

– Carrier to identify freight lane that will be used for shipment, availability of equipment and personnel to provide transportation, to determine pick-up and delivery times

2. Carrier designation– Determine carrier-routing process– Helps identify the initial contact with the pickup carrier

3. Special operating instructions– Temperature control, loading/unloading requirements,

blocking/bracing, pickup or delivery requirements


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– Minimum information required:4. Shipment description

– About the commodity, quantity, weight– Hazardous material

5. Billing instructions– Information on the identity of the party responsible for

paying the transportation services


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– Two types of bills of lading• Straight or non-negotiable

– The carrier must deliver the goods only to specific receiving organization and destination in return for freight charge payment

• Order or negotiable– The owner of the goods has the right to transfer title to the

goods to another party and reroute the shipment to a location other than the one listed on BOL



Figure 12-4

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Figure 12-5


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Information Sources, cont’d• Waybill

– Operating document for railcar movement• Assigns car to train, contains billing info

– Describes car’s contents– Most are now electronic

• Manifest– Trucking equivalent to waybill– Documents weight loaded in each trailer quartile– To address axle weight restrictions on the highway

system


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Figure 12-6


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Information Sources, cont’d

• Freight bill– Purpose/function

• Carrier’s invoice for transport services and related charges

• Notifies buyer of charges and means of assessment

• Can serve as proof of delivery

– Efforts to shorten freight bill payment cycle• Many buyers require proof of delivery (signed freight

bill) before initiating payment process– Delivery proof matched with BOL and packing list

– Carriers supply electronic delivery proof to speed process



Figure 12-7

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Information Technology

• A leading and constant concern of logistics and transport managers

• Areas of application– Top application: connecting to supply chain – Drivers

• Information can substitute for assets, services– Ex: Satellites, inventory visibility, safety stocks

• Cost of IT continues to fall and capabilities rise– Hardware, software, networking communication and data

exchange capabilities


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Table 12-2


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Table 12-3


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Information Technology, cont’d

• Areas of application, cont’d– Drivers, cont’d

• Supply chain partners demand more info– Ex: Collaborative planning, forecasting and replenishment

(CPFR) requires sharing/collaborating on demand forecasts

• Managing information flows well is critical to meeting customer demands and to efficient operations and profitability

– Info flow necessary for managing relationships and product and cash flows


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• Types of information technology– The basics: comprehensive, quality electronic

data interchange (EDI)• Definition: the application-to-application exchange

of standard format business transactions– One of oldest IT forms, now nearly a standard

requirement

• Advantages– Eliminates human intervention and errors

– Reduces transaction costs by reducing labor costs

– Improves customer service – auto. exception alerts



Table 12-4

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– EDI, cont’d• Requires protocols and standards to define data, its

order, field lengths, etc.– Universal standards set by ANSI– Industry-specific standards– Proprietary standards

• Most popular uses – sending/receiving orders, ASN, invoicing, and electronic funds transfer

• Institutional and technical barriers– Capital investment, hardware/software compatibility– Consistent formats, security, top mgmt. support– Internal ownership



Figure 12-8


Figure 12-9

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– EDI, cont’d• Role of third-party value added networks (VANS)

– Translates proprietary and industry-specific EDI standards

– Enables EDI user to develop a single EDI transmission network rather than multiple networks direct to customers

» User to VAN to customers

– Saves on capital and operating costs compared to multiple networks

• Internet: possible substitute for VANS and dedicated EDI networks

– Extensible mark-up language (XML) mitigates standards requirements

– Capacity can be a concern


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• Types of technology, cont’d– The basics: automatic ID - bar coding

• Patterns of dark bars and spaces that when coupled with other IT provides info on product movement throughout supply chain

• Requires standard formats of bar/space patterns– Code 39 and Code 128 are most popular formats

• Developments– 2-D bar codes

– Matrix bar codes

– “License plates” for pallets


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Figure 12-10


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Figure 12-11


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Figure 12-12


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Figure 12-13


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Figure 12-14


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Figure 12-15


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Figure 12-16


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• Types of technology, cont’d– The basics: track and trace

• Provides in-transit shipment visibility• Greatly enhanced by satellite technologies coupled

with EDI and radio frequency (RF) technology– Carriers can monitor vehicle positions, better manage

vehicle utilization, and be more customer responsive

• Classification of shippers by track/trace capability– Lagging edge– Mainstream– Leading edge



Table 12-6

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• Types of technology, cont’d– Emerging: electronic product code (EPC) tags

• Bar code info: static and requires readers to capture• EPC or “smart” tags

– Info can be updated, carrying more info than bar codes, and can transmit info via RF technology

• Wal-Mart requirements for RFID• Issues in universal adoption

– Cost– Standards– Compatibility with current software systems


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• Types of technology, cont’d– Emerging: the Internet

• Principal current uses– Information resource: ex: track and trace

– Communications purposes

» Share demand, production forecasts

» CPFR, collaborative transportation mgmt. (CTM)

– To accomplish transactions

• Challenges – Capacity

– Security


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• Types of technology, cont’d– Emerging: the Internet, cont’d

• Many future applications– Sales interface

– Customer service utility

– Load-matching services – shipper/carrier without broker

• Trends in e-business capabilities to support transport


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Information Technology, cont’d• Types of technology, cont’d

– Emerging:Transportation Requirements Planning• Sharing of info regarding movements

– Improves flow efficiency/effectiveness– Using data inputs from shippers and carriers, develops optimal

shipment plans/schedules given shipper requirements and carrier constraints

– Includes “what if” planning analysis capabilities– Given shipment plan, provides status/performance reporting

• Penske LMS system as example• TRP may be stand-alone or linked to ERP system• Transportation management software development and

implementation



Figure 12-17


Figure 12-18


Figure 12-19


Table 12-9

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• Types of technology, cont’d– The future: Internet-intelligent applications

• Heuristics designed to reduce degree of manual interaction

– Ex: event management

– The future: Transparent EDI– Reducing EDI cost via more flexible standards

– The future: Data warehousing– Aggregation of a firm’s functional databases into

relational databases


Transport Management & Theory Practices (12)

Business

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