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Information Technology and Its Impact on the Logistics Industry

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information-technology-in-logisticsBy Humberto Coronado
Manager, Corporate and Strategic Relationships in Transportation and Logistics at American Public University

Most modern day businesses have IT departments. In the early years of information technology, an IT department would consist of one computer operator storing data on magnetic tape and then boxing it in a basement. Nowadays, IT departments have many employees with a variety of skills that include systems administration, database administration and information technology management. Instead of using magnetic tape, there are now sophisticated computers, servers, database systems and cryptography that help store data. Advanced IT systems have made businesses more competitive around the world, so businesses of all types are trying to stay ahead of one another with their information technology.

A good example of IT driven competitiveness can be found in the logistics industry. Logistics information systems are used in every big company. This system help companies improve operational efficiency by tracking resources from when they are first obtained, such as raw materials, to their point of consumption. Companies leverage these systems to gain end-to-end visibility of their products or raw materials. Logistics information systems also help companies track internal information within a company by providing reports on inventory costs that determine how much more inventory needs to be purchased (Ballou, 2013). This feature allows companies to be more efficient by providing optimal lot sizes and lead times.

Logistics depends on a high quality level of management within the supply chain in order to be effective. These logistics managers are in charge of purchasing goods and making sure they’re transported correctly to their destinations. Logistics managers rely on advanced information systems to manage and track materials, starting from when they’re first made in the factory to when they’re sold in retail stores. Because of the increase in volume and complexity that businesses face, information systems are the only way to accurately manage the product flow within an organization. Information technology specialists are always coming up with specialized solutions that are suitable for their company, like finding the right goods to market or finding the right routes for their shipments (Business.com, 2013). That is their job and they communicate with the logistics managers to accurately convey information back and forth.

Businesses depend on shipping products and knowing where those products are at all times. If a shipment has not arrived at its destination, their freight tracking system will let a company know where their shipment was last scanned. The drivers transporting these goods have it easy with information systems as well. With the use of GPS mapping software, a driver can receive real time driving directions while heading towards their shipping destination. Newer GPS software even allows drivers to get real time information regarding the amount of traffic along their scheduled route. If their route is jammed with traffic then it may suggest an alternative route with less traffic on it. This is a huge advantage for a company’s transportation needs because businesses thrive on having items arrive within a certain timeframe.

Sometimes though, the amount of items that needs to be shipped can be overwhelming for a company to deal with. So, they’ll implement a third party logistics system which outsources their transportation and logistics needs to other companies. It is no surprise how businesses simply cannot afford to be without information technology in this day and age.

About the Author:

Humberto Coronado is a member of the Corporate and Strategic Relationships team at American Public University. His area of specialization is Logistics and Supply Chain Management. He holds a Master of Professional Studies in Supply Chain Management from The Smeal College of Business at The Pennsylvania State University. He is also a Certified Professional in Transportation and Logistics (CTL) and a Certified professional in Logistics and Supply Chain Management (PLS) by the American Society of Transportation and Logistics. A current board member of the American Association for Operations Management, Humberto is also a passionate teacher. He is an APICS certified instructor.

His Logistics industry experience included operational responsibilities with American President Lines (APL), European West Indies Lines (EWL), Frontier Liner Services in Colombia and Evergreen Marine Taiwan’s Colombian General Agent. His experience at Evergreen Marine included Port Operations Management and Quality Assurance Management. His entrepreneurial spirit lead him to co-found First Priority Cargo Colombia, a small freight logistics services provider based in Colombia, where he held the position of Operations Manager.

 

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