The Role of IT in Supply Chain Transportation

The complexity and scale of transportation makes it an excellent area within the supply chain for the use of IT systems. The use of software to determine transportation routes has been the most common IT application in transportation. This software takes the location of customers, ship­ment size, desired delivery times, information on the transportation infrastructure (such as dis­tances between points), and vehicle capacity as inputs. These inputs are formulated into an optimization problem whose solution is a set of routings and a packing list for each vehicle that minimize costs while meeting delivery constraints.

Along with routing, vehicle load optimization software helps improve fleet utilization. By accounting for the size of the container and the size and sequence of each delivery, this software develops a plan to pack the vehicle efficiently while allowing for the greatest ease of unloading and/or loading along the route. Synchronization between the packing and routing software is important because how much is packed on a truck affects the routing, and the routing obviously affects what is packed on a truck.

IT also comes into play in the use of global positioning systems (GPSs) for tracking real­time location of vehicles and electronic notification of impending arrivals. The availability of current information also allows for real-time dynamic optimization of transportation routes and deliveries. Electronic notifications and tracking improve customer service and preparedness throughout the supply chain.

The Internet has also been used by companies such as Freight Zone Logistics and Echo Global Logistics to help match shipper loads with available carrier capacity in the trucking industry.

The most common problems in the use of IT in transportation relate to cross-enterprise collaboration and the narrow view taken by some transportation software. Given that transporta­tion is often outsourced, successful collaboration in transportation requires three or more firms to work together, making it much more difficult. Other problems arise because much of the trans­portation software is focused on efficient routings. The software often overlooks other factors such as customer service and promised delivery times, which should constrain the route selected.

Source: Chopra Sunil, Meindl Peter (2014), Supply Chain Management: Strategy, Planning, and Operation, Pearson; 6th edition.