Section 5： Information Technology
Information Technology is the backbone of logistics and effective supply chain management. It is the life-blood of competent logistics performance. Without a sound IT competency it will be almost impossible to seek a competitive advantage through logistics. Companies have to choose between developing this competency in-house or to outsource with IBM， EDS or similar provider. Implementation under either alternative is no quick and easy assignment and you can usually figure that it will take two to three times as long as your supplier of software or outsource vendor promises during their initial assessment.
However， the benefits can be substantial. In an effective supply chain， an increase in the flow of information can result in lower inventories， increased productivity， and improved customer service. Productivity can increase 20-30%； inventory and shipping accuracy rates can exceed 99%； inventory reductions from 25% to 60%； improvements in forecasting accuracy 25 to 80%.
A key capability needed for smooth product flow， effective distribution， and quality delivery of goods to customers is EDI transmission. Traditional EDI will eventually give way to Internet EDI communications. Again， implementation can be frustrating taking between a few weeks （unfortunately this is the exception） to six or more months. EDI can also be expensive. It is estimated that 100，000+ businesses worldwide use EDI. And， this has been driven by retailers who demand carriers utilize EDI allowing the retailers to significantly reduce time in moving products through the supply chain from manufacturers， to warehouses or direct， to the store shelves. Manufacturers use EDI so they can manage distribution networks with greater efficiency in a just-in-time production mode.
Traditional EDI software can cost between US$35，000 to US$125，000 with out-of-pocket expenses ranging from US$1200 to US$2500 for each vendor. The goal is to achieve per transaction cost of US$50 or less （US$25 is an excellent target but not always attainable）。 The new direction is to accomplish EDI type communications over the Internet. Internet systems now in place or being tested show the potential for reducing per transaction costs to US$10 or less. One project called UCCnet， a subsidiary of the Uniform Code Council， is planning its rollout in year 2000. This new standards technology will provide an infrastructure that will enable trading partners to collaborate more efficiently. UCCnet has launched a pilot program with six companies including Proctor and Gamble， Kroger （a US based grocery chain）， and PepsiCo.
Now， this writing would not be complete without a word about the Internet. We are at the dawn of the Internet Age. Corporations worldwide are struggling to jumpstart their e-commerce activities. Established players， like amazon.com， less than five years on the Web， are broadening their appeal and building a bigger gap between itself and competitors. Leading futurists predict that some businesses that are household names today will not exist tomorrow. Strategic planners are in a frenzy coping with business planning cycles that are now measured in weeks versus 12 months. In the United States， Internet penetration is estimated to be only 5%， perhaps less， but this is expected to grow on a quantum basis. However， leading firms like Sun Microsystems， IBM， and the big consulting organizations forecast the biggest growth in the use of the Internet worldwide to be in the business-to-business sector.
Dell Computer CFO Tom Meredith said， “Fortunes are won and lost in moments of transition， and the Internet is all about a moment in transition”。 Thus， it is apparent that E-commerce is here and the future is bright for those companies that can execute a good model quickly.
Now a word about how one determines if investing in a certain information technology makes sense. The answer may seem simplistic but the basic rule is to invest only in technology that addresses fully three transaction types： （1） day-to-day activities， （2） planning and decision making， （3） strategic analysis.
ASP： Abbreviation for “Application Service Provider”。 This is an emerging Internet business model that will provide for the rental of software in lieu of the purchase of software. Revenues from rentals are expected to exceed that of purchase with Microsoft， Compaq， KPMG， British Telecom and Nortel expected to be the big hitters.
CAD： Computer-aided design； design workstations that enable designers to manipulate parts diagrams and simulate operations； can be linked to CAM.
CAM： Computer-aided manufacturing； systems which facilitate manufacturing processes， including computer numerical control （CNC）， materials planning， process control and robotics.
CBO： Carrier bid optimization. Emerging TMS segment of enterprise transportation planning that provides help to logistics managers in controlling the annual process of requesting carrier bids and awarding carrier contracts.
CIM： Computer integrated manufacturing. Applies information technology to manufacturing processes and organization to streamline operations. CIM often focuses on integrating systems and processes company-wide， including order entry， scheduling， and production.
CNC： Computer numerical control； allows production machines （such as punch presses and machining equipment） to operate by numerical control instructions generated by CAD/CAM or from a programmable logic controller （PLC）。
Connectivity： The data interface capabilities between IT of a provider and customer.
CVISN： Commercial vehicle information systems and networks. The first step in establishing a national ITS （intelligent transportation system）， CVISN brings regulatory information for trucking online and integrates existing technologies to support commercial vehicle operations throughout North America. Data， accessible with a keystroke， will include safety information， vehicle credentials and tax data. In the future， vehicles will be electronically tagged and serviced by mobile communications， onboard computers and navigation monitors.
DSS： Abbreviation for “decision support system” used as a tool for analysis to reduce costs in logistics/distribution operations. Allows user to focus on inventory， warehousing， and transportation.
E-business： Involves company-to-company trading activity and data exchange. E-business activity often involves many line items per order， each with a specific delivery confirmation dates， quantities， delivery points， and shipping methods. The interface used may provide user-selected information type/content/scope and associated interaction tools， reflecting the system's greater scale， scope， and depth of functionality. E-business uses purchase orders and releases against blanket Pos and involves invoicing and payment methods. E-business includes transactions using any or all EDI protocols， Web based screens， thin-client networks， browser screens presenting system displays and interaction， faxing， and automatic interception of electronic servicing by customer response teams. E-business offers internal employee services such as access to personnel records， travel and expense reporting， and non-production procurement.
E-commerce： Involves both business and consumer activity， with emphasis on the consumer. Usually involves high order volumes， with few individual line items per order. E-commerce uses an interface and a system designed for ease of use. E-commerce buying is by credit card rather than by purchase order.
E-frame： This is a technology framework for supply chains or customer fulfillment networks and connects a company with its trading partners. The objective is to create a fast and efficient network that enables all participants to view and control the activities taking place along the supply chain in real time.
EFT： Electronic funds transfer. This can be a component of EDI.
Electronic Data Interchange （EDI）： The exchange of information between one computer and another in a format or language that is understood by both the sender and receiver. For example， information may be exchanged on shipment status between the shipper， consignee， and client. Common EDI transactions are 204=Load Tendering Form， 210=Invoice， 214=Load Status Report， and 990=Load Tender Acknowledgement. Traditional EDI is conducted through a proprietary phone line and data exchanged between trading partners is usually sent through a value-added network called a VAN. A VAN translates the data into the recipient's format and distributes forms， also called transaction sets. Also see “Web EDI”。
Enterprise Resource Planning （ERP）： Systems designed to integrate and optimize all of a manufacturer's internal operations， from materials management to accounting to sales and distribution， within a single management information system.
EIS： “Enterprise Information System”。 This is a system that scans accounts/information and also reports on KPIs （see KPI in this Glossary）。
ERO： “Enterprise Resource Optimization”。 ERP is now expanding into the supply chain and many ERP systems providers are or have incorporated supply chain planning and optimization into their core product. This will enable increased access to information， greater efficiency among functions， and better planning.
GIS： “Geographic Information Systems”； geographic based software systems used in the transportation industry to optimize route planning， dispatching， facility management and other supply chain support functions.
Global Visibility Solutions： This is a desktop end user application that enables a company to monitor， control， and report on activities throughout their supply chain or customer fulfillment network.
Global Visibility Manager： This enables users to view customized logistics activities along the supply chain， investigate order progress and associated details， and receive proactive alerts when problems or delays are expected. Global Visibility
Browsers： This enables users to view customized logistics activities using Web browsers. GPS： “Global Positioning Systems”。 This is a U.S. government owned satellite-based system that can pinpoint a moving truck with accuracy of several hundred feet. The government allows access to certain communications companies for commercial purposes and to non-profit organizations for mapping and research purposes.
HRIS： “Human Resource Information System” that records， compiles， tracks， and reports on a broad range of employee information.
Internet Logistics： This involves the utilization of Internet technologies to enhance a company's logistics process.
ITL： International Trade Logistics. Desired segment of TMS designed to meet the special international trade and transportation needs of global manufacturers and distribution companies. It is suited for companies operating global supply chains across multiple trading blocs； companies trading commodities subject to tariffs and quotas or subject to import/export licenses and regulatory controls； and for those who can claim drawbacks on the exports of components and parts on which duty was paid.
ITS： Intelligent Transportation Systems.
IT： Stands for information technology and implies state-of-the-art systems including sharing information with customers.
Legacy Systems： Existing or older software and information technology that is in place within a company not state of the art technology. These systems are often replaced by a client-server system as a result of an acquisition. The term may also be used by a third party logistics provider to refer to an existing （sometimes antiquated） customer system requiring “connectivity” to the provider's state-of-the art-IT system and the issues involved in attempting connectivity. .
LCM： Logistics Composite Model. “Method of evaluating approaches to solving logistics problems which enables logistics managers to gain a thorough understanding of current practices and system support， compare them to best practices， and make necessary changes that will improve operations. As a result， managers can determine which software tools will address the various components of their supply chains the most effectively.”
M-commerce： Defined as eCommerce conducted via cell or mobile phones. On Board Computer： A computerized unit designed for installation in tractors. These are used to monitor vehicle and driver activity and for data transmission relating to deliveries， routes， dispatch orders， and emergency messaging. Qualcomm， XATA， Rockwell， and Highway Master are a few of the key vendors in this arena.
OBT： On-board tracking （for example， via satellite， voice control cellular）。 PLC： Programmable logic controller； simple computer that codes， stores and downloads numerical control instructions to machines without using tapes or punch card readers.
Real Time： Recording data transaction at the immediate point in time that it occurs.
RFID： Radio frequency identification tracking system； one application of radio frequency tracking capabilities is for yard management. Such a system tracks vehicles' arrival and departure times， identifies locations and searches yards for lost equipment. Forklifts can be similarly tracked in warehouses. Tags on trucks can be read from as far as a quarter of a mile.
Supply Chain Technology Strategy： A strategy that supports multiple levels of decision making and gives a clear view of the flow of products， services， and information.
TMS： Transportation Management System. A software system that is off-the-shelf， customized， or proprietary that addresses comprehensive needs including such functions as dispatch， routing， tracking and tracing， equipment availability， and EDI.
Voice-recognition systems （VRS）： Allows warehouse workers to keep their hands free to do the job needed to be done. It provides the opportunity for creating a truly paperless environment. The results desired from installing a VRS are improvements in accuracy of picking or other activities and productivity. A good application for VRS is in food and pharmaceuticals， where there is high volume in handpicking. A poor candidate would be operations that are heavy with pallet picking. The three main warehousing applications for VRS are： （1） receiving， （2） voice-directed picking， and （3） inventory.
Visibility： Usually refers to IT access. Business departments and units [and customers on a defined basis， I.e.， invoicing， ASN， CAN， package or freight tracking] have access from point of order entry through confirmed shipment delivery.
Web EDI： The transmission of a message by e-mail to a Web site， which has EDI capabilities. The site reformats the message to an EDI standard and then transmits the message to the desired destination.
Information Technology is the backbone of logistics and effective supply chain management. It is the life-blood of competent logistics performance. Without a sound IT competency it will be almost impossible to seek a competitive advantage through logistics. Companies have to choose between developing this competency in-house or to outsource with IBM， EDS or similar provider. Implementation under either alternative is no quick and easy assignment and you can usually figure that it will take two to three times as long as your supplier of software or outsource vendor promises during their initial assessment.
However， the benefits can be substantial. In an effective supply chain， an increase in the flow of information can result in lower inventories， increased productivity， and improved customer service. Productivity can increase 20-30%； inventory and shipping accuracy rates can exceed 99%； inventory reductions from 25% to 60%； improvements in forecasting accuracy 25 to 80%.
A key capability needed for smooth product flow， effective distribution， and quality delivery of goods to customers is EDI transmission. Traditional EDI will eventually give way to Internet EDI communications. Again， implementation can be frustrating taking between a few weeks （unfortunately this is the exception） to six or more months. EDI can also be expensive. It is estimated that 100，000+ businesses worldwide use EDI. And， this has been driven by retailers who demand carriers utilize EDI allowing the retailers to significantly reduce time in moving products through the supply chain from manufacturers， to warehouses or direct， to the store shelves. Manufacturers use EDI so they can manage distribution networks with greater efficiency in a just-in-time production mode.
Traditional EDI software can cost between US$35，000 to US$125，000 with out-of-pocket expenses ranging from US$1200 to US$2500 for each vendor. The goal is to achieve per transaction cost of US$50 or less （US$25 is an excellent target but not always attainable）。 The new direction is to accomplish EDI type communications over the Internet. Internet systems now in place or being tested show the potential for reducing per transaction costs to US$10 or less. One project called UCCnet， a subsidiary of the Uniform Code Council， is planning its rollout in year 2000. This new standards technology will provide an infrastructure that will enable trading partners to collaborate more efficiently. UCCnet has launched a pilot program with six companies including Proctor and Gamble， Kroger （a US based grocery chain）， and PepsiCo.
Now， this writing would not be complete without a word about the Internet. We are at the dawn of the Internet Age. Corporations worldwide are struggling to jumpstart their e-commerce activities. Established players， like amazon.com， less than five years on the Web， are broadening their appeal and building a bigger gap between itself and competitors. Leading futurists predict that some businesses that are household names today will not exist tomorrow. Strategic planners are in a frenzy coping with business planning cycles that are now measured in weeks versus 12 months. In the United States， Internet penetration is estimated to be only 5%， perhaps less， but this is expected to grow on a quantum basis. However， leading firms like Sun Microsystems， IBM， and the big consulting organizations forecast the biggest growth in the use of the Internet worldwide to be in the business-to-business sector.
Dell Computer CFO Tom Meredith said， “Fortunes are won and lost in moments of transition， and the Internet is all about a moment in transition”。 Thus， it is apparent that E-commerce is here and the future is bright for those companies that can execute a good model quickly.
Now a word about how one determines if investing in a certain information technology makes sense. The answer may seem simplistic but the basic rule is to invest only in technology that addresses fully three transaction types： （1） day-to-day activities， （2） planning and decision making， （3） strategic analysis.
ASP： Abbreviation for “Application Service Provider”。 This is an emerging Internet business model that will provide for the rental of software in lieu of the purchase of software. Revenues from rentals are expected to exceed that of purchase with Microsoft， Compaq， KPMG， British Telecom and Nortel expected to be the big hitters.
CAD： Computer-aided design； design workstations that enable designers to manipulate parts diagrams and simulate operations； can be linked to CAM.
CAM： Computer-aided manufacturing； systems which facilitate manufacturing processes， including computer numerical control （CNC）， materials planning， process control and robotics.
CBO： Carrier bid optimization. Emerging TMS segment of enterprise transportation planning that provides help to logistics managers in controlling the annual process of requesting carrier bids and awarding carrier contracts.
CIM： Computer integrated manufacturing. Applies information technology to manufacturing processes and organization to streamline operations. CIM often focuses on integrating systems and processes company-wide， including order entry， scheduling， and production.
CNC： Computer numerical control； allows production machines （such as punch presses and machining equipment） to operate by numerical control instructions generated by CAD/CAM or from a programmable logic controller （PLC）。
Connectivity： The data interface capabilities between IT of a provider and customer.
CVISN： Commercial vehicle information systems and networks. The first step in establishing a national ITS （intelligent transportation system）， CVISN brings regulatory information for trucking online and integrates existing technologies to support commercial vehicle operations throughout North America. Data， accessible with a keystroke， will include safety information， vehicle credentials and tax data. In the future， vehicles will be electronically tagged and serviced by mobile communications， onboard computers and navigation monitors.
DSS： Abbreviation for “decision support system” used as a tool for analysis to reduce costs in logistics/distribution operations. Allows user to focus on inventory， warehousing， and transportation.
E-business： Involves company-to-company trading activity and data exchange. E-business activity often involves many line items per order， each with a specific delivery confirmation dates， quantities， delivery points， and shipping methods. The interface used may provide user-selected information type/content/scope and associated interaction tools， reflecting the system's greater scale， scope， and depth of functionality. E-business uses purchase orders and releases against blanket Pos and involves invoicing and payment methods. E-business includes transactions using any or all EDI protocols， Web based screens， thin-client networks， browser screens presenting system displays and interaction， faxing， and automatic interception of electronic servicing by customer response teams. E-business offers internal employee services such as access to personnel records， travel and expense reporting， and non-production procurement.
E-commerce： Involves both business and consumer activity， with emphasis on the consumer. Usually involves high order volumes， with few individual line items per order. E-commerce uses an interface and a system designed for ease of use. E-commerce buying is by credit card rather than by purchase order.
E-frame： This is a technology framework for supply chains or customer fulfillment networks and connects a company with its trading partners. The objective is to create a fast and efficient network that enables all participants to view and control the activities taking place along the supply chain in real time.
EFT： Electronic funds transfer. This can be a component of EDI.
Electronic Data Interchange （EDI）： The exchange of information between one computer and another in a format or language that is understood by both the sender and receiver. For example， information may be exchanged on shipment status between the shipper， consignee， and client. Common EDI transactions are 204=Load Tendering Form， 210=Invoice， 214=Load Status Report， and 990=Load Tender Acknowledgement. Traditional EDI is conducted through a proprietary phone line and data exchanged between trading partners is usually sent through a value-added network called a VAN. A VAN translates the data into the recipient's format and distributes forms， also called transaction sets. Also see “Web EDI”。
Enterprise Resource Planning （ERP）： Systems designed to integrate and optimize all of a manufacturer's internal operations， from materials management to accounting to sales and distribution， within a single management information system.
EIS： “Enterprise Information System”。 This is a system that scans accounts/information and also reports on KPIs （see KPI in this Glossary）。
ERO： “Enterprise Resource Optimization”。 ERP is now expanding into the supply chain and many ERP systems providers are or have incorporated supply chain planning and optimization into their core product. This will enable increased access to information， greater efficiency among functions， and better planning.
GIS： “Geographic Information Systems”； geographic based software systems used in the transportation industry to optimize route planning， dispatching， facility management and other supply chain support functions.
Global Visibility Solutions： This is a desktop end user application that enables a company to monitor， control， and report on activities throughout their supply chain or customer fulfillment network.
Global Visibility Manager： This enables users to view customized logistics activities along the supply chain， investigate order progress and associated details， and receive proactive alerts when problems or delays are expected. Global Visibility
Browsers： This enables users to view customized logistics activities using Web browsers. GPS： “Global Positioning Systems”。 This is a U.S. government owned satellite-based system that can pinpoint a moving truck with accuracy of several hundred feet. The government allows access to certain communications companies for commercial purposes and to non-profit organizations for mapping and research purposes.
HRIS： “Human Resource Information System” that records， compiles， tracks， and reports on a broad range of employee information.
Internet Logistics： This involves the utilization of Internet technologies to enhance a company's logistics process.
ITL： International Trade Logistics. Desired segment of TMS designed to meet the special international trade and transportation needs of global manufacturers and distribution companies. It is suited for companies operating global supply chains across multiple trading blocs； companies trading commodities subject to tariffs and quotas or subject to import/export licenses and regulatory controls； and for those who can claim drawbacks on the exports of components and parts on which duty was paid.
ITS： Intelligent Transportation Systems.
IT： Stands for information technology and implies state-of-the-art systems including sharing information with customers.
Legacy Systems： Existing or older software and information technology that is in place within a company not state of the art technology. These systems are often replaced by a client-server system as a result of an acquisition. The term may also be used by a third party logistics provider to refer to an existing （sometimes antiquated） customer system requiring “connectivity” to the provider's state-of-the art-IT system and the issues involved in attempting connectivity. .
LCM： Logistics Composite Model. “Method of evaluating approaches to solving logistics problems which enables logistics managers to gain a thorough understanding of current practices and system support， compare them to best practices， and make necessary changes that will improve operations. As a result， managers can determine which software tools will address the various components of their supply chains the most effectively.”
M-commerce： Defined as eCommerce conducted via cell or mobile phones. On Board Computer： A computerized unit designed for installation in tractors. These are used to monitor vehicle and driver activity and for data transmission relating to deliveries， routes， dispatch orders， and emergency messaging. Qualcomm， XATA， Rockwell， and Highway Master are a few of the key vendors in this arena.
OBT： On-board tracking （for example， via satellite， voice control cellular）。 PLC： Programmable logic controller； simple computer that codes， stores and downloads numerical control instructions to machines without using tapes or punch card readers.
Real Time： Recording data transaction at the immediate point in time that it occurs.
RFID： Radio frequency identification tracking system； one application of radio frequency tracking capabilities is for yard management. Such a system tracks vehicles' arrival and departure times， identifies locations and searches yards for lost equipment. Forklifts can be similarly tracked in warehouses. Tags on trucks can be read from as far as a quarter of a mile.
Supply Chain Technology Strategy： A strategy that supports multiple levels of decision making and gives a clear view of the flow of products， services， and information.
TMS： Transportation Management System. A software system that is off-the-shelf， customized， or proprietary that addresses comprehensive needs including such functions as dispatch， routing， tracking and tracing， equipment availability， and EDI.
Voice-recognition systems （VRS）： Allows warehouse workers to keep their hands free to do the job needed to be done. It provides the opportunity for creating a truly paperless environment. The results desired from installing a VRS are improvements in accuracy of picking or other activities and productivity. A good application for VRS is in food and pharmaceuticals， where there is high volume in handpicking. A poor candidate would be operations that are heavy with pallet picking. The three main warehousing applications for VRS are： （1） receiving， （2） voice-directed picking， and （3） inventory.
Visibility： Usually refers to IT access. Business departments and units [and customers on a defined basis， I.e.， invoicing， ASN， CAN， package or freight tracking] have access from point of order entry through confirmed shipment delivery.
Web EDI： The transmission of a message by e-mail to a Web site， which has EDI capabilities. The site reformats the message to an EDI standard and then transmits the message to the desired destination.