Chapter 3: IT

in Logistics
and SCM
3.1. IT vs. IS
3.1.1. Concept of Information Technology (IT)
Definition:

Information Technology (IT) is a broad field that includes hardware, software, services, and solutions related to the collection, processing, storage,
transmission, and security of information.

Components:
3.1.2. Concept of Information System (IS)
Definition:
Information System (IS) is an integrated system that combines IT and processes to achieve business objectives. IS is designed to effectively collect,
process, store, and transmit information, supporting business decisions and improving operational efficiency.

Components:
3.1.3. Distinguishing between IT and IS
Information Technology (IT) Information Systems (IS)
• Is a collection of hardware, software, services, • Integrated systems that combine IT and
and solutions. processes to achieve business objectives.
• Relates to the collection, processing, storage, and • Designed to effectively collect, process, store,
transmission of information. and transmit information.
• Focuses on technologies and technical capabilities. • Focuses on applying IT to solve business problems.
• E xamples: computers, computer networks, • E xamples: Inventory management systems,
software, the internet, mobile phones. human resource management systems, online
sales systems.

=> K ey Distinction: IT is the general technology foundation, while Information S ystems are the specific application of IT to
business management and operations, with a focus on supporting business processes.
Some IT in Logistics and SCM: Real-world
Examples

Warehouse Transportation Supply Chain Data Analytics

Management Management Management
Data analysis from IT
System (WMS) System (TMS) (SCM) System
systems provides detailed
WMS optimizes inventory TMS manages routes, SCM integrates processes information on supply chain
management, coordinates schedules, and and activities across the performance, enabling
warehouse operations, and transportation resources, supply chain, from raw businesses to make
tracks the flow of goods, optimizing transportation materials to product effective strategic
ensuring efficiency and efficiency, reducing costs, distribution, improving decisions.
accuracy in activities. and ensuring on-time efficiency and adaptability
delivery. to market changes.
3.2. The Role of IT in
Logistics and Supply
Chain Management
The Role of Information Technology in
Logistics and Supply Chain Management
3.2.1. Optimized Data Flow
Technology improves data flow by using advanced software systems, helping to exchange data smoothly and minimize manual
processes.
3.2.2. Streamline Warehouse Operations
Implement a Warehouse Management System (WMS)
A Warehouse Management S ystem (WMS) is software that helps efficiently manage warehouse operations, including tracking inventory, order
management, optimizing material flow, and controlling operational processes. WMS helps improve operational efficiency, reduce errors, and
optimize warehouse space utilization.

Leverage Automation to Increase Efficiency

Automation is increasingly being adopted in warehouses to boost productivity, minimize errors, and improve working conditions for employees.
Common automation technologies include robots, conveyors, automated sorting systems, and other automation solutions.
3.2.3. Ensure High Security for Data and Operations

Multi-layered Security Measures for Data and Access Control Systems to Restrict Access to
Operations Authorized Personnel Only
Multi-layered security includes physical, digital, and administrative Access control systems help ensure that only authorized personnel can
security measures to protect data, assets, and supply chain operations. access sensitive areas in warehouses or logistics facilities. This may
This may include video surveillance systems, access controls, data include the use of RFID cards, facial recognition, or other biometric
encryption, and network security measures. authentication methods.

Network Security Measures to Protect Against Data Preservation to Ensure Accuracy and Integrity
Cyber Attacks Throughout the Lifecycle
Network security measures are crucial to protect data and systems of the Data preservation is critical to ensure the accuracy and integrity of data
supply chain against cyber attacks. This may include the use of firewalls, throughout the supply chain lifecycle. This may include the use of data
antivirus software, and other network security measures. backup systems, version control, and other data security measures.
3.2.4. Manage Orders and Shipments
Order management and shipment tracking technology improves the efficiency of transportation operations.

— — —
Automate Processes Real-Time Tracking Faster Processing
Automate repetitive tasks such as data entry, Use GP S and RFID to track shipment status in Reduce order processing time, thereby shortening
inventory updates, and scheduling shipments. real-time, allowing customers to monitor delivery delivery times and improving service quality.
progress.
3.2.5. Increased Connectivity and Collaboration

Promote Information Sharing Integrate Systems to Access and Remote Monitoring and
Among Supply Chain Partners Collaborate on Unified Data Management to Optimize
Operations
Modern logistics technologies enable easy and Integrating various systems in the supply chain,
effective information sharing among supply such as inventory management, shipment Logistics technologies enable remote
chain partners, including suppliers, tracking, and order management systems, monitoring and management of supply chain
manufacturers, distributors, and customers. This creates a unified data platform. This allows operations, such as tracking shipment locations,
gives everyone in the supply chain a holistic supply chain partners to easily access and checking inventory status, and managing
view of the chain's operations, leading to more share information, improving operational employee performance. This helps optimize
informed business decisions. efficiency and collaboration. operations, reduce costs, and enhance
management effectiveness.
3.2.6. Digital Document Handling
Modern logistics technology allows for the optimization of document management, helping to reduce time, cost, and errors in document
processing workflows. Digital solutions help simplify the creation, storage, access, and sharing of documents, thereby improving the efficiency of
the supply chain.

1 2 3
Electronic Data Interchange Document Management System Optical Character Recognition
(EDI) (DMS) (OCR) for Digitizing Paper
Documents
Electronic Data Interchange (EDI) is a method A Document Management System (DMS) is a
of exchanging business information between software solution that helps manage digital Optical Character Recognition (OCR) is a
companies in the supply chain. EDI allows for documents effectively. DMS allows for the technology that enables the conversion of
the automation of document exchange, such storage, retrieval, sharing, and management paper documents into digital text. OCR helps
as purchase orders, invoices, and shipping of documents easily, helping to reduce search digitize paper documents, such as invoices,
notifications, helping to reduce errors, shorten time, protect documents from loss, and contracts, and other records, making them
processing times, and improve operational improve operational efficiency. easier to store, search, and share.
efficiency.
3.2.7. Enhanced Customer Experience

Real-time order tracking for AI virtual assistant to Integrated feedback system to

customer transparency automate customer support improve services
Customers today expect to be able to track AI virtual assistants can provide 24/7 An integrated feedback system allows
their orders in real-time. Logistics customer support, answering common customers to easily share feedback on their
technology allows for providing updated questions, handling simple requests, and services. This feedback can be used to
information on the location and status of guiding customers through processes. This improve services, resolve issues, and
shipments, helping customers feel assured helps reduce the workload on customer enhance customer satisfaction.
and satisfied. service staff and improves customer
satisfaction.
3.2.8. Faster Delivery Times

Drone Delivery Self-Driving Vehicles Predictive Analytics

Drones provide fast delivery solutions Self-driving trucks and delivery robots Using machine learning algorithms to
in urban and remote areas. Drones help reduce delivery times and forecast demand trends helps
can fly over traffic congestion, helping operating costs. Self-driving vehicles businesses prepare better. Data
to reduce delivery times. can operate 24/7, minimizing human- analysis allows for route optimization
caused errors. and efficient inventory management.
3.2.9. Total Convenience

Cloud-based solutions for Mobile applications for Data analytics dashboards

real-time data access remote management and for strategic decision-
Cloud-based solutions allow real-time
control making
data access from anywhere, anytime, Mobile applications enable remote Data analytics dashboards provide a
helping logistics businesses manage management and control of logistics comprehensive view of supply chain
operations more efficiently. activities, such as shipment tracking, operations, helping logistics businesses
inventory management, and customer make more effective strategic decisions.
communication.
3.2.10. Advanced Transportation Solutions

Route Optimization Fleet Management System Enhanced Safety

Utilize a combination of TMS Use GPS and telecommunications to Real-time alerts and driver assistance
(Transport Management System) and monitor vehicle performance, systems help minimize accidents and
forecasting algorithms to select the location, and driver behavior. ensure compliance with regulations.
fastest routes, avoid traffic
congestion, and reduce fuel
consumption.
3.3. Application of IT in
Logistics and SCM
3.3.1. Warehouse Management System (WMS)
The warehouse management system (WMS ) is software that helps optimize warehouse operations such as receiving, storing, picking, and shipping goods. WMS
integrates inventory management, order processing, and data analysis functions, helping to automate processes, increase productivity, and enhance agility to
quickly meet customer demands.
WMS Warehouse Management System
Classification
1. Standalone WMS
(Standalone Warehouse
Management System)
1 Independent Operation
Standalone WMS is a WMS system that operates independently, not
connected to other systems in the enterprise.

2 No Complex Integration Required

Standalone WMS does not require complex integration with other
management systems in the enterprise.

3 Suitable for Small and Medium Enterprises

This is a solution suitable for small and medium enterprises, where
warehouse management can be carried out independently.
2. Cloud-Based WMS (Cloud-Based Warehouse
Management System)

Cloud Platform Flexibility Rapid Expansion

Cloud-Based WMS is a warehouse With the advantage of not requiring significant Particularly suitable for businesses with a
management system based on a cloud investment in hardware infrastructure, this need for rapid expansion or operating in
platform, allowing businesses to deploy and type is suitable for businesses of all sizes, multiple locations.
scale flexibly. from small to large.
3. Supply Chain Execution Modules (Supply
Chain Execution Modules)
1 Integrated Supply Chain
S upply Chain E xecution Modules are a type of WMS that are deeply integrated into supply chain management
systems.

2 Comprehensive Management
Helps manage not only warehousing but all activities across the entire supply chain.

3 Continuous Optimization
S uitable for enterprises with complex supply chains that require continuous optimization from input to output.
4. Integrated WMS (Integrated WMS in ERP)
Integrated in ERP Multi-functional connection Suitable for large enterprises

Integrated WMS is a module integrated This system is connected to functions

into the ERP (Enterprise Resource such as accounting, human resources, This type is usually used by large
Planning) system, allowing the WMS to and production, creating a enterprises, where the connectivity and
be closely linked with other management comprehensive management system. integration between departments is very
functions of the business. important.
Technology Support in Warehouse Systems:
Barcodes & Conveyor Belt Systems
Barcodes Conveyor Belt Systems
Barcodes are used to identify and track goods throughout the Conveyor belt systems help move goods between different
storage and transportation process. This technology helps areas of the warehouse automatically, reducing the time and
increase the accuracy and speed of warehouse management. effort required for internal transportation.
3.3.2. Transport
Management System (TMS)
1 Route Planning
Optimize transportation routes to minimize time and cost.

2 Resource Allocation
E fficiently allocate trucks, drivers, and other resources to meet
transportation demands.

3 Tracking and Management

Track the location and status of goods throughout the
transportation process.
3.3.3. Fleet Management Software (FMS)
Fleet Management Software (FMS) is a tool that connects the vehicle fleet with the central management system. FMS
provides features such as storing, processing, collecting, monitoring, reporting, and extracting information, helping to
improve the efficiency and safety of the vehicle fleet.

Tracking & Maintenance Route Driver

Monitoring Management Optimization Management
Monitor vehicle location Plan regular maintenance, Optimize transportation Manage driver information,
and status, track driver manage maintenance routes, reduce time and schedules, performance
operation and activity history, reduce costs and fuel costs, improve and activities, improve
information. downtime. operational efficiency. safety and efficiency.
3.3.4. Route Optimization Software (ROS)
Initialization and Optimization 1
ROS starts by inputting delivery point data, time
constraints, customer requirements, and other
constraints. 2 Route Plan Creation
The software uses advanced algorithms to
create the most efficient route, minimizing
Monitoring and Adjustment 3 distance and transportation time.
ROS allows for real-time route monitoring,
information updates, and flexible route
adjustments when changes occur.
3.3.5. Enterprise Resource Planning (ERP) System
Integrating Business Operations Enhancing Process Efficiency
Connects and manages different departments within the Automates business processes, reduces errors, and optimizes
organization, including manufacturing, inventory, sales, finance, workflow.
and human resources.

Supporting Decision-Making Managing Supply Chain

Provides detailed information and data analysis to support Helps track and efficiently manage the supply chain from suppliers
managers in making effective business decisions. to customers.
3.3.6. Blockchain: Enhancing Transparency and
Security
Blockchain is a distributed ledger technology that securely and transparently stores information. Data is divided into blocks and linked together
chronologically, forming an immutable chain. Each block contains encrypted transaction information that is verified by multiple network nodes, ensuring
security and preventing data manipulation.

Tracking Goods Secure Transactions Increased Transparency

Blockchain allows for transparent and immutable Transactions are encrypted and secured, Blockchain creates a public transaction record,
tracking of goods from origin to destination. minimizing the risk of fraud and data tampering. allowing all stakeholders to access the
information.
3.3.7. Internet of Things (IoT) and Smart Sensors
The Internet of Things (IoT) is a network of interconnected devices, objects, and sensors that communicate through the internet to
collect, exchange, and analyze data.

1 Sensor Deployment 2 Data Collection

Install sensors on goods, transportation vehicles, and Sensors collect data on temperature, humidity, location,
devices in the warehouse. vibration, and other parameters.

3 Data Analysis 4 Alerts and Notifications

Data is processed and analyzed to monitor, manage, and The IoT system generates alerts when there are incidents
optimize logistics operations. or unusual changes.

5 Optimization
IoT data is used to optimize resource utilization, minimize waste, and improve operational efficiency.
3.3.8. Artificial Intelligence (AI) and Data Analytics
Artificial Intelligence (AI) and data analytics play a crucial role in the logistics and supply chain management industry. AI utilizes machine learning algorithms to
analyze data and make predictions, while data analytics helps businesses collect, process, and gain a deeper understanding of information to make better
decisions.

Intelligent Decision Making

AI and data analytics help predict demand,
optimize routing, and manage inventory
more effectively.

Automation
AI can automate processes, reduce order processing time,
minimize errors, and improve labor productivity.

Predictive Analysis
Data analytics helps forecast market fluctuations, optimize the supply chain,
and mitigate risks.
3.3.9. Automation with Robots: Redefining
Warehouse Efficiency
Implement Robots
1
Use robots for tasks such as order picking, packing, and order fulfillment.

Enhance Efficiency
2
Increase order processing speed, minimize errors, and improve labor productivity.

Reduce Manual Labor

3
Free up workforce from repetitive and hazardous tasks.

Create Smart Warehouses

4 Drive the development of automated warehouses and optimize
processes.
The Future of IT in Logistics and SCM
Advanced Technologies Data Analytics
The development of technologies like AI, robotics, and Big data analytics plays a crucial role in optimizing the
IoT will continue to reshape Logistics and SCM supply chain, forecasting demand, and managing
operations, improving efficiency and productivity. inventory effectively.

Customer-Centric Sustainability
Customers are increasingly demanding faster and Businesses are increasingly focused on minimizing
more flexible delivery services. Logistics and SCM environmental impact, optimizing energy efficiency,
need to adapt to these evolving customer needs. and managing sustainable supply chains.
3.4. E-Logistics vs. Smart Logistics
Criteria E-logistics Smart L ogistics

Definition Applying information technology and the Using advanced technologies such as AI, IoT,
Internet to manage and operate logistics in e- and Big Data to manage the entire supply chain
commerce. in a smarter way.

Scope of Application Mainly in e-commerce, order management, Applied throughout the entire supply chain,
inventory, and goods delivery. from production, inventory, transportation to
distribution.

Data Management Manage order information and customer data Manage and analyze data in real-time, based
through electronic systems. on sensor technology and automated systems.

Primary Objective Optimize the process of order management, Automate, analyze data, and optimize the
warehousing, and goods transportation for e- supply chain to reduce costs and improve
commerce businesses. overall efficiency.

Application Examples Delivery systems of e-commerce platforms like Amazon Robotics, smart automation solutions
Shopee, Lazada. in warehouses and transportation of DHL or
UP S .
Chapter 3 Summary: IT in Logistics &
SCM

1 1. Critical Role 2 2. Diverse Solutions

IT has become a key driver in enhancing efficiency From warehouse management systems to route
and competitiveness in the Logistics and S CM optimization software, IT provides solutions for
industry. many aspects of Logistics and S CM.

3 3. Increased Productivity 4 4. Towards the Future

IT has transformed processes, reduced errors, With the advancement of technology, the Logistics
accelerated delivery, and optimized resource and S CM industry will continue to leverage IT to
utilization. drive innovation and achieve optimal efficiency.