Explain the Principles of Logistics Information System

Principles of Logistics Information System

Availability Logistics information must be readily and consistently available. Information may be regarding order status, inventory status, etc Rapid availability is very important to respond to decisions. Information availability can reduce customer requirements and improve management uncertainties in operations and planning

Accuracy Logistics information must reflect the current status of all the activities like inventory levels, customer orders etc. E.g.: The actual level of inventories should match with the LIS reported inventory levels. However if there is a large difference between the actual inventories and those indicated by the information system inventory levels, buffer stock or safety stock would be required to cover up the uncertainty.

Timeliness The logistics information must be timely to provide quick management feedback. Timeliness is measured in terms of delay that takes place between the commencement and occurrence of an activity and when the activity is actually visible in the logistical information system. E.g.: a company may receive a certain order which a customer desires to be executed urgently. However, the database information system of the company is not fed with the details regarding the urgency of the order for whatever reasons. This will cause delay in the actual execution of the order. This delay indicates ineffectiveness in the planning process. Similar delays can occur when the goods are moved from VVIP to finished goods. All this calls for timely management controls so that corrective actions can be taken to minimize loss. Hence timely information is very necessary to reduce uncertainty.

Exception based LIS Logistics operations have to deal with a large number of customers, products, suppliers, etc. E.g.: the status regarding inventory level for each product regarding the amount of stock available, where the stock is located, etc. must be known. Another activity whose status requires to be reviewed several times is the outstanding replenishment orders. Such activities whose status requires a continuous review are considered as exceptions in the logistical information system. Other examples of exception situations that LIS should highlight are a) very large orders b) products having little or no inventory c) delayed shipments d) decrease in operating productivity

Flexibility LIS must contain the capability to be flexible in order to meet the needs of both, the system users and the customers. E.g.: A particular retailer may want invoices for each of his retail stores. Another retailer may require only one invoice for all his retail stores. The LIS must be flexible to accommodate both the retailers.

Appropriate format Logistics reports must be appropriately formatted so that they contain the right information in the right structure and the right sequence. E.g.: If a company has five distribution centers, then on one computer screen, the details of inventory at all the five distribution centers should be available. The combined data on one screen helps to make the better decisions.