CHAPTER 2
2.0 LITERATURE REVIEW

2.1 INTRODUCTION TO THE LITERATURE REVIEW

A research is incomplete without relevant review of literature. Before starting a research it is

necessary for a researcher to have a fair idea about what has been done earlier on the similar or
same topic of research. It gives an in-depth understanding of the topic about to be researched and
avoids any kind of repetition of the study, if any. It helps the researcher understand:
 different ways to deal with the research problem
 the research design and methodology adopted earlier
 areas where problems can arise
 kind of problems that can arise
 the precautions need to be taken during the research
 the process to formulate required hypothesis
 instruments to be used for data collection
 sample design and sample size
 various analytical tools to be used for the research
 various sources of secondary data

This will also help the researcher identify the gaps in the previous researches by virtue of which
the present study can be done. Review of literature will provide the researcher with the
theoretical base for the present study. The whole objective is to make the researcher understand
what knowledge and ideas have been established on a selected topic and what their pros and cons
are. Though there are various sources that were referred to for this purpose, a few selected and
very relevant studies, mainly research papers from various journals, were selected for the report.

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2.2 LITERATURE REVIEW BASED ON THE RELEVANCE TO THE PRESENT

TOPIC

Logistics Management

Logistics has been performed since the beginning of civilization; it’s hardly new! Implementing
best practice of logistics has become one of the most exciting and challenging operational areas
of business and public sector management. Business logistics is relatively a new field of
integrated management study in comparison to the traditional fields like finance, marketing and
production. Logistic typically accounts for one of the highest costs of doing business, second
only to materials in manufacturing or cost of goods sold in wholesaling or retailing. The
challenge is to balance service expectations and cost expenditures in a manner that achieves
business objectives. In final analysis, logical service is balance of service priority and cost. One
universal process that all firms must successfully complete is the creation of customer value.
Such value is essential in gaining and retaining a loyal customer base. One of the several
competencies required to create customer value is logistics (R. Vijayan Pillai, 2011)
 
India is a place for development; it is providing space for all the new technologies and business
models which is creating a new revolution all time every time. The outcomes of logistics
decisions influence performance in several ways. The challenges encountered by logistics
management in India are growing at a rapid speed, giving an equal competition with the actual
growth of the industry. It is also identified that Critical Inventory Logistics Services, Innovative
Packaging solutions, Special handling services, integrating management information system, etc.
are some of the areas which need to be highlighted in the modern logistics models along with
value added features so that, some of the great challenges confronting health care industries such
as transportation of time dependent and temperature sensitive drugs, Long Lead Times and
Delays in Procurement and Weak distribution infrastructure will be resolved. (Adithya D
Shetty, 2015)

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Logistics in India – present state and challenges

Logistics has huge impact on the domestic and global economy of any country. As such, the role
and importance of logistics has been elevated in many business environments. Historically, the
logistics sector was clearly separated and restricted mainly to transportation and warehousing.
The logistics management in today’s world however, covers all the aspects of value chain
including an efficient integration of transportation, distribution, warehousing, reverse logistics,
value added services such as payment collection, packaging, documentation, customer brokerage
facilities, kitting, repair management, reconfiguration etc. The present form of logistics industry
in India is still in its infancy and is highly fragmented. There are thousands of logistics
companies, ranging from the international giants to the highly localised small players in the
country. As the logistics industry in India is in nascent stage, there are a lot of logistics issues to
be improved (Viswanadham, Puvaneswari, 2004)

Broadly speaking, the Indian logistics sector, as elsewhere, comprises the entire inbound and
outbound segments of the manufacturing and service supply chains. Inadequate logistics
infrastructure has an effect of creating bottlenecks in the growth of an economy, the logistics
management regimen has the capability of overcoming the disadvantages of the infrastructure in
the short run while providing cutting edge competitiveness in the long term. The transportation
industry is fragmented and largely un-organized – a large number of independent players with
regional or national permits that carry freight, often with small fleet size of one or two single-
axle trucks. This fragmented segment comprises owners and employees with inadequate skills,
perspectives or abilities to organize or manage their operations effectively (Chandra, Jain,
2007).

Innovations in Logistics

For any industry, use of Information Technology (IT) and innovation is necessary in order to stay
ahead in the competition. The logistics industry is a classic example of the birth and development
of a vital new service-based industry. The industry has been transformed from the business
concept of transportation to that of serving the entire logistical needs. To stay ahead in the

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modern global marketplace, organizations must constantly look for innovative strategies to
improve their competitiveness. Especially, logistics service providers have to adopt and
creatively deploy up-to-date technology, because logistics industry strongly depends on
information for efficient operations. Logistics technologies refer to the hardware, software, and
network design required facilitating processing and exchanging. It includes related components
in the supply chain, such as satellite transmissions, web-based ordering, EDI, bar coding,
systems for order entry, order processing, vehicle routing and scheduling, inventory
replenishments, automated storage, and retrieval systems, etc. The correct implementation of
technologies can be a significant source of competitive advantage to the service providers
(Srinivas, Krishna, 2009).

Benefits of IT

Firm IT resources (e.g. IT Advancement and IT Alignment) facilitate supply chain capabilities
which lead to first order operational benefits and strategic marketing benefits. the competitive
business environment has led to a greater extent of usage of IT. Such usage has led to greater IT
Advancement (advanced technology utilization) and IT Alignment (with channel partners). The
impact of such IT resources is mediated by supply chain capabilities which enhance the
operational and strategic marketing benefits of the firm. These two benefits together have a
positive impact on competitive marketing performance. The extent of IT usage has a greater
influence on IT alignment of the firm with channel partners than IT advancement. IT Alignment
influences supply chain capabilities more positively than IT Advancement. Capabilities of the
supply chain like information sharing, coordination, collaboration and responsiveness are
achieved more through investing in technology to align IT with that of their downstream channel
partners (Sundar, 2010).

The issue of efficacy of new technologies in supply chains is of paramount interest to the
companies operating in networks, as well as to governments investing funds in development and
promotion of new technologies. Current key trends in logistics for application in the near future
include e-business supported supply chain management. Information technology (IT) has helped
Celestica to improve its responsiveness to customers; and thus helping, for example, its customer

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Dell maintain its delivery promise to the end-customers. In most cases the solutions used are
quite individualistic as they are developed from a single company’s point of view. Benefits of IT
in SCM are multitude and vary in the context of their implementation. Moreover, as the use of IT
is closely related to process changes, most of the benefits are overlapping and interlinked
(Auramo, et all 2005)

Role of IT in logistics

The proliferation of information technologies (IT) and the internet technologies have provided
impetus and challenges to the logistics. New technologies present new means to manage the flow
of information. IT as a productivity tool can be utilized to both increase the capability and
decrease the cost at the same time. Some of the enablers are Logistics Information System,
Electronic Data Interchange (EDI), Bar coding, Real-time Communications capability, Radio
Frequency Identification (RFID), to name a few (Gurung, 2013).

IT will remain on top of the agenda of logistics companies for the coming years and requires
proper strategic management. In this perspective, taking it as a “strategic necessity” or as a
source for “competitive advantage” or stated more simply as “a pain to cope with” or as a
“strategic opportunity” is consequential (Founou, 2002)

ICT in Logistics

Most transport/logistics firms use ICT as facilitating technologies to gather, process, and use
knowledge about the application of technologies that will help in making their business to be
more progressive and contribute in increasing the efficiency of urban goods transport. Impacts on
costs and benefits of ICT needed an in-depth research to fully measure the effect. Moderate
impact of ICT signifies that ICT is re-shaping the logistics system from traditional methods to
modern logistics. Specifically, it was supported by the current types of ICT, their uses, and the
applications as well the barriers presented (LIDASAN and OBOGNE, 2005).

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The "virtual logistics network framework" addresses services in the areas such as asset
management, logistics productivity, global reach, inventory chain optimization, distribution
management, reverse logistics, warehouse management, transport capacity matching, transport
brokerage, and real time interface with federal agencies for speedy document clearance. In
addition, if all the check posts are linked with concerned government agencies the delay could be
considerably reduced. These processes in turn increase the productivity of the truck and enhance
the profitability of operations (Diatha, 2001).

ICT developments have increasingly influenced the transport and logistics services market,
shifting the focus from a physical to a more electronic one and giving rise to new organizational
forms for these services. Information and Communication Technology (ICT) is becoming one of
the main drivers of changes in the 3PL industry, posing new strategic challenges to logistics
companies. ICT developments are more and more influencing the transport and logistics service
market and give rise to new organizational forms for these services. Accurate and timely
information allows minimizing inventories, improving routing and scheduling of transportation
vehicles, and generally improving customer service levels (Evangelista, Sweeney, 2003)

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2.3 INDIAN STUDIES
Year Author/Title/Journal Objectives Methodology Outcome Gap Identified
2015 Adithya D Shetty, Trends • To understand the transformation Descriptive It is identified that Critical The integration
and Issues of Logistics in current Indian healthcare Study Inventory Logistics Services, among the logistics
Management in Healthcare logistics. Innovative Packaging solutions, partners is missing
Industry – An Indian • To understand the challenges Special handling services,
Scenario, International confronting the Indian healthcare integrating management
Journal of Science logistics. information system, etc. are
Research and Technology some of the areas which need to
Volume 1 Issue 1, p p 30- be highlighted in the modern
37 , 15th September 2015 logistics models along with
value added features so that,
some of the great challenges
confronting health care
industries such as transportation
of time dependent and
temperature sensitive drugs ,
Long Lead Times and Delays in
Procurement and Weak
distribution infrastructure will
be resolved.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2013 Anil Gurung, A Survey to analyze the impact of Secondary The research directions that Since this is a
of Information information technologies (IT) Data research are available for researchers research based on
Technologies in Logistics on logistics by conducting a in logistics are numerous. the secondary data,
Management survey of literatures on Before companies implement there are many
academic logistics journals and new logistic information things that are
practitioner journals technologies such as RFID it missed out while
is important to assess the considering the
viability of adopting the suggestions on
technology. What would be modeling
the expected benefits? What techniques. Though
is the ROI? Researchers can the findings are
come up with various close to reality the
econometric models to facts impacting the
predict the outcomes of implementation are
adopting logistics missing
technologies. Modeling
techniques can be used to
assess the scenarios that
would be beneficial for
adopting new technologies.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2011 R. Vijayan Pillai, A • to learn about the Logistics Survey Method Implementation of Optimal The solution is
Comprehensive practices in automobiles was used, Transportation Method for offered specific to
Framework On Study Of industry in India Descriptive the transportation of vehicles an organization and
Logistics Management In • to assess the issues in study, from different factories to hence cannot be
Automobile Logistics Management Questionnaire different destinations will generalized to the
Transportation System In • to analyze the Logistics method of data bring huge amount of sector
South India Doctoral strategies and practices collection savings for Ashok Leyland.
Thesis followed by major automobile ;After applying Moving
manufacturing companies in Average method with
South India minimum MAD, robust
• to study the issues faced by Demand Forecasting Model
the intermediaries in getting the has been developed. This
vehicles from the Regional will act as an efficient tool
sales Offices for Inventory Planning for
• to study the issues being faced Ashok Leyland in the
by the transporters during coming years so as to make
transportation of Chasses Optimum Inventory Planning
• to study the various issues in leading to the reduction in
receipts and delivery of vehicles stock of Vintage and non-
at Depots moving models.
• to suggest an optional

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

automobile transportation
policy.
• to develop a model for
warehousing policy in logistics
management of automobile
transportation
• to develop a demand
forecasting model for inventory
planning
• to make a comparative study
of the various modes of
automobile transportation.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2010 S Sundar, E-business: A • To study the extent of usage Two stage and • The extent of IT usage has The cost of
study on the use and of Information Technology simple random a greater influence on IT resources required
impact of information invested by organizations in the sampling, alignment of the firm with for the alignment is
technology in the supply downstream supply chain questionnaire channel partners than IT ignored. Though
chain of Indian • To analyze whether the use of was advancement. the solution is
manufacturing sector advanced IT and IT alignment administered • IT Alignment influences appropriate, the
Doctoral Thesis with channel members impacts through e-mail, supply chain capabilities infrastructure
on supply chain capabilities. personally, more positively than IT required may be too
• To study and understand the phone calls; Advancement. expensive
influence of the extent of IT SPSS and • Capabilities of the supply
usage and supply chain AMOS was chain like information
capabilities on the operational used for data sharing, coordination,
and strategic marketing benefits analysis; collaboration and
of organizations. responsiveness are achieved
• To assess the combined more through investing in
impact of extent of IT usage, IT technology to align IT with
advancement and alignment and that of their downstream
supply chain capabilities on channel partners.
operational benefits and
strategic marketing benefits
which influence the competitive

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

marketing performance of
organizations.
2009 Kolluru Srinivas and to present a brief insight into Descriptive To stay ahead in the modern • Relationship
Kolluru Krishna, the various cost saving Study global marketplace, between ICT
Technological technologies that were adopted organizations must implementation and
Innovations in the Indian by the Indian logistics industry constantly look for reduced cost to
Logistics Industry: The (road, railways, ports and innovative strategies to customer & cycle
Case of Freight aviation) for improving the improve their time
Handling, The IUP services. competitiveness. The correct
Journal of Infrastructure, implementation of
Vol. VII, Nos. 3 & 4, technologies can be a
2009 significant source of
competitive advantage to the
service providers.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2007 Pankaj Chandra, Nimit Outline some of the key Secondary Several challenges identified • Organizations
Jain, The Logistics challenges with the help of Data research at firm level (larger cycle leveraging ICT to
Sector in India: secondary information, and time) as well as policy level understand internal
Overview and describe some interesting (issues of infrastructure and visibility is
Challenges, Working initiatives that some firms & integration of the nation's overlooked
Paper series IIMA industries are taking to compete logistics network). Use of IT
through excellence in managing for logistics management is
their logistics. largely restricted to larger
firms

2004 N.Viswanadham, To present the existing and Exploratory Technology is another Support system for
M.Puvaneswari, emerging practices in the study keyword when comes to the the implementation
Research Report - India logistics industry in India and to emerging trend in the of technological
Logistics Industry predict the future trends that are industry; The adoption of solution is missing
Technical Report likely to contribute to its new technologies such as
transformation. GPS and RFID will take
place rapidly in the future.
The defence logistics will
also emerge as an important

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

area for new technologies in
India.

2001 Diatha Krishna Sundar, Study of the present IT Exploratory The "virtual logistics The gap here is that
Working Paper on architecture, business processes study. Model network framework" the framework
Integrated Virtual of different agencies, involved building based addresses services in the doesn't address the
Logistics Network for in providing and using logistics on the data areas such as asset need for integration
Quick Responses, IIMB industry's services in India; collected management, logistics among the smaller
Developing a framework for productivity, global reach, organizations in the
"Integrated virtual logistics inventory chain optimization, logistics sector, that
network for Quick Responses" distribution too in country like
which would factor in the management, reverse India. The need is
existing processes, systems and logistics, warehouse because Indian
organizations' roles and the management, transport logistics sector is
government's proposed capacity matching, transport the most
investments in the e-commerce brokerage, and real time fragmented and
and e-governance infrastructure, interface with federal unorganized.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

and designing a technology agencies for speedy
transformation road map. document clearance.

Table 2.1 Review of Literature – Indian Literatures

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2.4 GLOBAL STUDIES

Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2013 Mirjana Kranjac, Uros Sikimic, To increase awareness of Exploratory study. Applications of IT technologies to • Relationship between
Dordije Dupljanin and Zeljko logistics' importance and to logistics systems could be within ICT implementation and
Kranjac THE USE OF ICT IN attract investments into this various processes. Refers to a good reduced cost to customer &
SUPPORT OF PUBLIC sector; To collect, organize, example of IC technology use in cycle time is not taken into
ADMINISTRATION present and make available area of logistics sector promotion account
TO THE DEVELOPMENT OF to all stakeholders,
LOGISTICS1st Logistics important logistics'
International Conference information of the
Belgrade, Serbia Autonomous Province of
28 - 30 November 2013 Vojvodina.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2011 Somuyiwa Adebambo and to analyze the impact of ICT Descriptive design was there were strong relationships Indian perspective is
Adebayo Toyin, Analysis of usage on logistics activities adopted. SPSS was between ICT usage and Logistics missing
Information and of manufacturing companies used for data analysis activities, although managers
Communication Technologies recognize the importance and need
(ICT) Usage on Logistics of ICT adoption for building and
Activities of Manufacturing enhancing their competitive
Companies in Southwestern advantage, adoption of their ICT
Nigeria Journal of Emerging tends to reduce operating costs more
Trends in Economics and than improve service levels.
Management Sciences
(JETEMS) 2(1):66-72,
Scholarlink Research Institute
Journals, 2011 (ISSN:2141-
7024)
2008 Susana Garrido Azevedo, João to highlight the importance Descriptive study A conceptual model for the The model cannot be
Ferreira and João Leitão, The of ICT on logistics and to adoption of logistics ICT is applicable to all type of
Role of Logistics Information understand the impact of proposed and is original and organizations across the
and Communication ICT on the competitiveness innovative, since it presents a country
Technologies in Promoting of firms; to present a systemic approach, by representing
Competitive Advantages of the conceptual model for the the interaction established between
Firm The ICFAI University adoption of logistics ICT by the previously referred determinant
Journal of Managerial taking into consideration factors, through several indicators.
Economics, Vol. VI, No. 3, four determinant factors— The design of the conceptual model
2008 individual, organizational, takes into consideration a set of four

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

technological/innovation, determinant factors: individual,

and environmental. organizational,
technological/innovation, and
environmental factors.
2005 Hussein S. LIDASAN and to investigate the impact of Data used in this study Moderate impact of ICT that • ICT for logistics
Marilyn H. OBOGNE; A information and was collected from a signifies that ICT is re-shaping the management is largely
STUDY ON THE IMPACT OF communication survey interview; logistics system from traditional limited to large size firms
INFORMATION AND technology (ICT) on urban random sampling; methods to modern logistics. Most
COMMUNICATION logistics system in the sample size is 114; transport/logistics firms use
TECHNOLOGY ON URBAN Philippines with focus on spreadsheets and SPSS ICT as facilitating technologies to
LOGISTICS SYSTEM; Journal the interaction of was used for data gather, process, and use knowledge
of the Eastern Asia Society for shipment, transport, and analysis about the application of
Transportation Studies, Vol. 6, warehousing industries as technologies that will help in
pp. 3005 - 3021, 2005 well as its operation and making their business to be more
management. progressive and contribute in
increasing the efficiency of urban
goods transport. Challenges
identified include the problem on
cost and financing in acquiring the
ICT and secondly there exists no
public policy that is conducive to
the efficient use of new ICT
solutions. Use of ICT is very limited
in small firms.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2005 Jaana Auramo; Jouni To provide empirical Data in this qualitative Based on the empirical studies five • Support system for
Kauremaa; Kari Tanskanen, evidence of benefits from IT study was collected propositions are presented on the success factor in IT
Benefits of IT in supply chain in supply chain management through multiple use and benefits of IT. First, implementation is missing.
management – an explorative inquiries. successful companies have
study of progressive companies This was followed by developed focused e-business
in-depth case studies to solution for improving
identify the customer service elements that are
mechanisms for most important in their business.
achieving Second, improved efficiency allows
benefits of IT in SCM. company personnel to focus more
on critical business activities. Third,
the use of e-business solutions
improves information quality.
Fourth, e-business solutions
support planning collaboration, and
improved agility of the supply
network. Finally, to gain strategic
benefits, the use of IT has to be
coupled with process re-design.

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2003 Pietro Evangelista, Edward To assess use of Survey Method was Information and Communication • Impact on costs and
Sweeney, The use of ICT by technologies in affecting used Technology (ICT) is becoming one benefits of ICT to fully
Logistics service providers and 3PL's training needs and to of the main drivers of changes in the measure the effect.
implications for training needs: provide a conceptual 3PL industry, posing new strategic
A Cross-Country perspective. framework for assessing the challenges to logistics companies.
Association of European impact of ICT on the ICT developments are more and
Transport, 2003 transport and logistics more influencing the transport and
sector. logistics service market and give
rise to new organizational forms for
these services; Accurate and timely
information allows to minimize
inventories, improve routing and
scheduling of transportation
vehicles, and generally improve
customer service levels

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Year Author/Title/Journal Objectives Methodology Outcome Gap Identified

2002 Rémi Founou, THE ROLE OF to develop a framework By building an IT will contribute to competitive There's no mention about
IT IN LOGISTICS: for anal yzing the analytical framework advantage in limited cases and that the adaptability of the
COMPETITIVE contribution of IT in the deduced from both the most often the “strategic necessity” standard ICT solution for
ADVANTAGE OR logistics sector; to apply position-based and the hypothesis will apply. (1) Logistics different logistic
STRATEGIC NECESSITY? “general, rather abstract” resource-based views, IT applications are mainly organizations. The smaller
Conference paper 2nd Swiss strategic management and then by applying it outsourced and are available on firms may find it difficult
Transport Research concepts to the assessment to identify the the market (in fact, most of the to accommodate the
Conference, Monte Verità / of specific IT solutions and conditions in which e- logistics companies who first standard solutions citing
Ascona 2002, Session Logistics in particular of e-logistics logistics develop their own systems have the financial and
solutions solutions may help switched to commercial, standard infrastructural problems
Logistics Service solutions) and therefore limits the
Providers’ (LSPs) differentiation by IT per se;(2)
creating a sustainable Although in most cases these
competitive applications are creating value by
advantage. increasing the productivity or the
quality of the operations, the gains
are difficult to keep by the logistics
company due to the industry
structure; (3) As expected the
determinant of competitive
advantage lie in the combination of
human and business resources with
IT.
Table 2.2 Review of Literature – Overseas Literatures

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2.5 LITERATURE USED

R. Vijayan Pillai, (2011)27, Logistics has been performed since the beginning of civilization; it’s
hardly new! Implementing best practice of logistics has become one of the most exciting and
challenging operational areas of business and public sector management. Business logistics is
relatively a new field of integrated management study in comparison to the traditional fields like
finance, marketing and production. Logistics adds value when inventory is correctly positioned
to facilitate sales. For individual firms, logistics expenditures typically range from 5 to 35 per
cent of sales depending on the type of business, geographical area of operation, and weight/value
ratio of products and materials. Logistic typically accounts for one of the highest costs of doing
business, second only to materials in manufacturing or cost of goods sold in wholesaling or
retailing. The challenge is to balance service expectations and cost expenditures in a manner that
achieves business objectives. In final analysis, logical service is balance of service priority and
cost. One universal process that all firms must successfully complete is the creation of customer
value. Such value is essential in gaining and retaining a loyal customer base. One of the several
competencies required to create customer value is logistics.

India is a large and diverse country, in which surface transportation is governed and administered
by a large number of agencies, whose objectives and key result areas do not necessarily coincide.
Regulation of traffic is a state subject, whilst several elements of infrastructure are controlled by
the Central Government. It is also seen that in many places, railways are competing with road
transportation system, even though this is an unequal match. Ideally these two modes of
transportation should complement each other for their service to the nation.

The four major metropolitan cities, namely Delhi, Mumbai, Calcutta and Chennai which form
the vertices of the “golden” quadrilateral are about 1500 kms apart, and there is an increasing
demand to connect these megacities, as also the other economic hubs, through a cost effective
transport system for rapid movement of passengers and freight. Road transportation consumes

27
Vijayan Pillai, R. 2011. “A Comprehensive Framework On Study Of Logistics Management In Automobile
Transportation System In South India”. Thesis submitted to Kannur University for the award of the Degree of
Doctor of Philosophy in Management Studies.

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some precious resources of the nation. It accomplishes a vital function of economy. In addition
to the large work force employed by this industry, an enormous quantity of fuel is consumed by
commercial vehicles. The damage caused to life and property through road accidents has already
assumed gigantic proportions. Some countries which have addressed themselves to these
problems have been able to contain this dribble away of precious life and property to a fraction
of Indian levels.

The auto industry is one of the key sectors of the Indian economy. The Industry comprises of
automobile and the auto components sectors and encompasses commercial vehicles, multi-utility
vehicles, passenger cars, two wheelers, three wheelers and related auto components. At present
the trend for goods vehicles is very high. During the last five years the changes have gone more
than 300 times in Total Industry Volume (TIV). While the population of our country has only
quadrupled, the number of persons living in urban areas has risen ten-fold from about three cores
in 1951 to over 30 crores, now. The industry has been growing since the opening up of the sector
to foreign direct investment (FDI) in 1993. It has deep forward and backward linkages with the
rest of the economy, and hence, has a strong multiplier effect. This results in the auto industry
being the Driver of economic growth and India is keen to use it as a level of accelerated growth
in the country.

During the last decade conscious efforts have been made to fine-tune state policy in a manner
that would help this industry realize its full potential. The automatic approval of up to 51 percent
for foreign investment in priority sectors also included the automotive industry. Freeing the
industry from restrictive environments has helped it to restructure, absorb newer technologies,
align itself to global developments and realize its potential. It has also significantly increased the
sector’s contribution to overall industrial growth in the country.

Cost reduction plays a major role in the current competitive market. Transportation is an integral
part of Logistics. An appropriate logistics system has to be evolved for cost reduction in
automobile transportation. Logistics involves the integration of information, transportation,
inventory, warehousing, material handling, and packaging. The operating responsibility of

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logistics is the geographical positioning of raw materials, work-in-process, and finished

inventories where required at the lowest cost possible.

Ashok Leyland is one of the leading commercial vehicle manufactures in South India. A study
on their vehicle movement has been initiated to understand the logistics aspects in transporting
their vehicles from the production centers to various locations.

The Research carried out with the following objectives:

• to learn about the Logistics practices in automobiles industry in India
• to assess the issues in Logistics Management
• to analyze the Logistics strategies and practices followed by major automobile
manufacturing companies in South India
• to study the issues faced by the intermediaries in getting the vehicles from the Regional
sales Offices
• to study the issues being faced by the transporters during transportation of Chasses
• to study the various issues in receipts and delivery of vehicles at Depots
• to suggest an optional automobile transportation policy.
• to develop a model for warehousing policy in logistics management of automobile
transportation
• to develop a demand forecasting model for inventory planning
• to make a comparative study of the various modes of automobile transportation.

The study has been carried out in Ashok Leyland Ltd. in two phases. Following are the two
phases of the research:
In the first phase, a survey on the automobile Transport contractors, Warehouse managers and
Managers of Dealers of Ashok Leyland were conducted. This was to study the issues faced by
them during transportation of the vehicles, the quality and conditions of vehicles received by
them etc. Descriptive Research Design has been used for this study. Census data collected by
way of administering questionnaires was analyzed and presented using Pie Chart and Bar Charts.
In the second phase, the researcher collected data associated with the Inventory Management,
Logistics Management and Warehouse Management Departments and were analyzed. Here, Case

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Study method has been applied so as to make a comprehensive study and the researcher
developed a Demand Forecasting Model, Warehouse shifting model, Transportation Model and
derived an Alternate mode of Transportation for Ashok Leyland. Statistical and Operation
Research tools such as Moving Average Method, Transportation Method and Alternative
Analysis have been used for the model development.

Major findings of the study:

The study showed very interesting results showing that application of Statistics and Operation
Research models will really deliver robust results for any organization.

Following are the major results of the study:

Demand Forecasting
After applying Moving Average method with minimum MAD, robust Demand Forecasting
Model has been developed. This will act as an efficient tool for Inventory Planning for Ashok
Leyland in the coming years so as to make Optimum Inventory Planning leading to the reduction
in stock of Vintage and non-moving models. While utilizing data of last 5 years of RSO
Ernakulam, moving average models for the year 2010-11 has been developed. Following are the
forecasted demand for various segments of vehicles:

Transportation
Implementation of Optimal Transportation Method for the transportation of vehicles from
different factories to different destinations will bring huge amount of savings for Ashok Leyland.
For arranging the transportation model, vehicles movement details from all the factories to three
RSO for the year 2009-10 has been taken and an optimum transportation model has been
developed.

Benefits under Alternate mode of Transport

• Fastest and safest mode of transport.
• Cost for carrying inventory (interest).
• Fit and finish of the vehicle would be good.

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• Cost reduction in transportation expenses.

• Reduce wear and tear of moving parts.
• Better customer satisfaction.
• Avoid wastage of diesel, which is very precious to the world.

Benefits of Warehouse Shifting

• Cost reduction in RSO maintenance expenses.
• Transits time reduced to 5 hours.

Adithya D Shetty, 201528, India is a place for development; it is providing space for all the new
technologies and business models which is creating a new revolution all time every time.
Healthcare logistics is a facility that enables the right medicines to be delivered to people who
need it most. It offers a web of services and supply options that completes the functions of
procurement of materials, conversion of these materials into intermediate and finished products,
and the distribution of these finished products to the end customers. Healthcare logistics is about
to hit the top growth heights in next decade because of its rapid advancements in technology and
strategically planning.
The outcomes of logistics decisions in the healthcare industry influences performance in several
ways. The challenges encountered by logistics management in healthcare industry in India are
growing at a rapid speed, giving an equal competition with the actual growth of the industry.
This paper focuses on the challenges and opportunities in healthcare and logistics management in
India.
The objectives of the study were:
 To understand the transformation in current Indian healthcare logistics.
 To understand the challenges confronting the Indian healthcare logistics.

The Pharma industry in India is growing at a healthy pace, and we see it growing to be in the top
10 countries in terms of exports in the next few years. And biggest challenge what healthcare
industry is facing today is with logistics. Because it is critical for providing the right medicine to

28
Shetty, Adithya D (2015) “Trends and Issues of Logistics Management in Healthcare Industry – An Indian
Scenario”. International Journal of Science Research and Technology, 1 (1). pp. 30-37. ISSN 2379-3686

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the right patient at the right time, place and dosage and most importantly at the right price. Since
business is highly competitive today, success largely depends upon the efficiency of the supply
chain.
Logistics accounts for a sizeable portion of a healthcare operations budget. It is been estimated
that around 30% to 46% of healthcare industry expenses are invested on logistical activities. The
logistics in healthcare covers a wide range of services starting from purchasing, stores, managing
transportation for variety of products as per their requirement and also providing inbound as well
as outbound supply of materials on time.
Some of the major challenges that are faced by the healthcare industry are as follows:
 Transportation of time dependent and temperature sensitive drugs
 There are too many transit points in small territory that lengthens the time taken at each
point, thereby making the process cumbersome.
 Long Lead Times and Delays in Procurement
 Weak distribution infrastructure is another challenge in healthcare logistics. The
distribution network is high unorganized and the infrastructure employed is not having
sufficient facilities to store and distribute the required drugs on time and on requirement
basis.
 Lack of proper inventory management system

Strengthened coverage, services and increasing expenditure by public as well as private players
in health care industry are some of the reasons which is giving a new opportunities for the
healthcare logistics to grow in Indian market. And this growth is expected to touch around 160$
billion by 2017. It is also identified that Critical Inventory Logistics Services, Innovative
Packaging solutions, Special handling services, integrating management information system, etc.
are some of the areas which need to be highlighted in the modern logistics models along with
value added features so that, some of the great challenges confronting health care industries such
as transportation of time dependent and temperature sensitive drugs, Long Lead Times and
Delays in Procurement and Weak distribution infrastructure will be resolved. Thus by practicing
these innovative techniques and new models of execution the major threats faced by health care
logistics can be sorted out by proper inventory management with better warehousing and
professionally managed infra-structure. It is also advisable that both public and private players

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should come with a partnership model which can bring in a revolution in Health care logistics
industries of India.

N.Viswanadham, M.Puvaneswari, 200429, Logistics has huge impact on the domestic and
global economy of any country. As such, the role and importance of logistics has been elevated
in many business environments. This report gives an overview of logistics industry in India. The
focus of the report is to present the existing and emerging practices in the logistics industry in
India and to predict the future trends that are likely to contribute to its transformation. We
highlight on the potential growth areas and expansion strategies for the logistics players in India
to becoming highly localised world-class players.

Historically, the logistics sector was clearly separated and restricted mainly to transportation and
warehousing. The logistics management in today’s world however, covers all the aspects of
value chain including an efficient integration of transportation, distribution, warehousing, reverse
logistics, value added services such as payment collection, packaging, documentation, customer
brokerage facilities, kitting, repair management, reconfiguration etc. The developments of state-
of-the-art IT in recent years have further had remarkable implications for the logistics industry.

The present form of logistics industry in India is still in its infancy and is highly fragmented.
There are thousands of logistics companies, ranging from the international giants to the highly
localised small players in the country. As the logistics industry in India is in nascent stage, there
are a lot of logistics issues to be improved.

Traditional transporters, freight forwarders and courier companies are rapidly transforming
themselves into integrated logistics service providers by incorporating other activities like
inventory management, order processing, collection of bills, sales and excise duty documentation
in order to effectively utilize their existing assets and experience.

29
N.Viswanadham, M.Puvaneswari, 2004, Research Report - India Logistics Industry, Thought Leadership White
Papers

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However, when compared with developed countries, the Indian logistics industry is still
considered to be underdeveloped. The major restrictions hindering the growth of logistics
industry in India include the poor conditions of infrastructures and transport vehicles, complex
tax laws, complexity of international trade documentation process and lack of IT infrastructure,
shortage of professionally competent logisticians and insufficient technological aids and the lack
of industry readiness. Due to these restrictions, the logistics costs in India are still higher than in
the developed markets.

The concept of logistics is continuing to gain strength in India. There are several major drivers
fuelling the growth of the industry.
 Organizations are realizing the huge potential savings that efficient logistics can offer,
and its impact on revenue growth and improved profitability.
 The increasingly demanding customers, coupled with the increasing cost pressure and
competition, there is an urge for companies to differentiate themselves from their
competitors through value added services and competitive prices.
 The globalization trend in the complex business environment worldwide also poses great
opportunities for the logistics industry in India.
 Another major driver of the logistics industry is the internet.
 The Indian government’s initiative in improving the infrastructure is a positive factor for
boosting the logistics industry.

Recommended Strategies:
 Think local, service global
 Focus on information and coordination in developing logistics solutions rather than asset
 ownership:
 Be industry specific and provide customized solution:
 Pursue alliances aggressively:
 Focus on organization building as much as strategy or operations
 Provide technological solutions

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Technology is another keyword when comes to the emerging trend in the industry. Logistics
players are increasingly using the GPS to track the movement of goods on real time basis.
Besides the GPS system that was broadly mentioned in recent past years, a new buzzword among
the global logistics players is the RFID. RFID technology uses tags or transponders (attached to
the objects, including items, cartons, pallets and containers) to transmit Electronic Product Code
(EPCs) and communicate wirelessly to readers over radio frequency waves. The benefit to
customers include improved accuracy and distribution efficiencies, shorter order cycle times,
elimination of unnecessary handling and expenses and enhanced customer satisfaction, for an
overall competitive advantage.

The growing technologies worldwide are expected to change the India logistics industry in
future. At the time, the concept of e-commerce and open buying on the internet (OBI) are still in
nascent stage in India due to the traditional mindset of the corporate and people, low awareness,
absence of strong infrastructure and secure payment system and also due to the lack of privacy
and safety on the net. However in the future, the growth of e-commerce and its logistics needs
will become inevitable and India will overcome these barriers. The increasing online sales will
force e-companies to forge strategic alliance with logistics service providers that can provide
cost effective and seamless distribution solutions. As such, India can expect a shift in the retail
logistics, B2B procurement practices and the way the distributions are handled. The adoption of
new technologies such as GPS and RFID will take place rapidly in the future. The defence
logistics will also emerge as an important area for new technologies in India.

Pankaj Chandra, Nimit Jain, 200730, Broadly speaking, the Indian logistics sector, as
elsewhere, comprises the entire inbound and outbound segments of the manufacturing and
service supply chains. Of late, the logistics infrastructure has received lot of attention both from
business and industry as well as policy makers. However, the role of managing this infrastructure
(or the logistics management regimen) to effectively compete has been slightly under-
emphasized. Inadequate logistics infrastructure has an effect of creating bottlenecks in the

30
Pankaj Chandra, Nimit Jain, 2007, The Logistics Sector in India: Overview and Challenges, Working Paper
Series, IIMA, March 2007

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growth of an economy, the logistics management regimen has the capability of overcoming the
disadvantages of the infrastructure in the short run while providing cutting edge competitiveness
in the long term. It is here that exist several challenges as well as opportunities for the Indian
economy. Service reliability of the logistics industry in emerging markets, like India, has been
referred to as slow and requiring high engagement time of the customers, thereby, incurring high
indirect variable costs. However, the Indian logistics story is one with islands of excellence
though there has been a general improvement on almost all parameters.

The Indian logistics sector has typically been driven by the objective of reducing transportation
costs that were (and often continue to be) inordinately high due to regional concentration of
manufacturing and geographically diversified distribution activities as well as inefficiencies in
infrastructure and accompanying technology. The transportation industry is fragmented and
largely un-organized – a large number of independent players with regional or national permits
that carry freight, often with small fleet size of one or two single-axle trucks. This segment
carries a large percent of the national load and almost all of the regional load. This fragmented
segment comprises owners and employees with inadequate skills, perspectives or abilities to
organize or manage their operations effectively. Low cost has been traditionally achieved by
employing low level of technology, low wages (due to lower education levels), poor
maintenance of equipment, overloading of the truck beyond capacity, and price competition
amongst a large number of service providers in the industry.

There have been several instances of firms undertaking innovative re-design of their logistics
systems or deployment of interesting business models to enhance the effectiveness of their
networks in order to deliver value to their customers. Sometimes it was done to overcome an
inherent disadvantage that may exist in the supply chain. GATI, AMUL, The
DABBAWALLAHs of MUMBAI, ITC e-choupal, were studied for this purpose.

Several challenges remain before the Indian logistics sector and its future success will depend on
the ability of the industry to overcome these hurdles. Some of these impediments are at the firm
level while others are at the policy level. For instance, if there was a nation-wide broadband
logistics IT-network then a trucker starting in Chennai (in the southern Indian State of

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Tamilnadu) could file all the papers in Chennai, get all inspections done there and move without
interruptions to say, Jammu (in the northern Indian State of Jammu & Kashmir) . Each state
entry point could have access to those papers and they could flag the truck through their check-
post as it reached there with no stoppages or delays. Changes in process technology are needed
to increase the effectiveness and responsiveness of the transport network.

While the use of IT for logistics management is increasing, it is largely limited to large size
firms. This represents an opportunity to further improve the decision making abilities across the
supply chain and reduce costs further. For instance, order processing and delivery status are two
areas that reflect a certain weakness in servicing (Chandra & Sastry, 2004). With the growth of
the IT sector in India, these are clearly areas that can gain from the IT sector’s engagement.
Truck manufacturers could integrate the tracking technology in its products and IT servicing
firms could provide information service on highways tracking movement of vehicles. This would
provide information to distribution firms and help track both the consignment as well as the truck
better.

As the concentration in the industry increases, the need to manage larger number of trucks,
routes, warehouses and customers will require decision support systems that perform dynamic
planning & scheduling. As observed by Chandra and Sastry (2004), the IT base is indeed low
and firms need to compete on the basis of real logistics costs instead of clever accounting
practices before the sector will see increased IT penetration.

The logistics industry is evolving rapidly and it is the interplay of infrastructure, technology and
new types of service providers that will define whether the industry is able to help its customers
reduce their logistics costs and provide effective service.

Kolluru Srinivas and Kolluru Krishna, 200931, For any industry, use of Information
Technology (IT) and innovation is necessary in order to stay ahead in the competition. The
logistics industry is a classic example of the birth and development of a vital new service-based

31
Kolluru Srinivas and Kolluru Krishna, 2009, Technological Innovations in the Indian Logistics Industry: The Case
of Freight Handling

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industry. The industry has been transformed from the business concept of transportation to that
of serving the entire logistical needs. The challenges of the modern technology-driven
competition, globalization of manufacturing, shorter product life cycles, increasingly
sophisticated customers’ needs and greater integration of technologies compelled the logistics
industry to develop innovative strategies and processes. The main objective of this paper is to
present a brief insight into the various cost saving technologies that were adopted by the Indian
logistics industry (road, railways, ports and aviation) for improving the services. The paper gives
a brief picture of the logistics industry in India. It also gives a brief literature survey on the topic.
The paper also describes the recently used technologies and some of the innovations that have
taken place in all the major transportation chains (road, rail, marine and aviation) and their
benefits.

India’s spending on logistics is much higher than that of the developed economies like the US,
Japan and Germany. The reasons for this huge spending can be attributed to lack of efficient
infrastructure facilities, lack of implementation of Information Technology (IT) in logistics and
delay checking points on the highways which invariably increases the transportation costs.
Another major reason could be the regulatory obstacles, which not only increases the cost of
service, but also results in frequent delays and thereby higher logistics costs.

Summary of literature review:

With reduced trade barriers and the advent of advanced information technologies, new
opportunities and global markets have become available for service providers in the logistics
industry. As organizations globalize to access new markets and achieve higher production and
sourcing efficiencies, logistics play an important role in moving materials, products, and services
through supply chains.
The concept of innovation is regarded in most organizations as an effective tool to create and
sustain competitive advantages. The logistics function is an area that is increasingly seeking
ways of adding value through innovation (Soosay and Hyland, 2004). It has transformed from
the business concept of transportation to that of serving the entire logistical needs of customers.
Several other studies that explored improving influence of innovation on logistics industry on a
widely varied spectrum of improvement areas like, quality of service production and delivery

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(Parasuraman and Grewal, 2000); research and development cost-efficiency (Rao, 2001);
transaction costs (Garicano and Kaplan, 2001); productivity, inventory and demand management
(Kaplan and Sawhney, 2000); increased customization capabilities (Yingli and Laiwani, 2007);
supply chain and relationships (Hyland et al., 2003; Kaltoft et al. 2007; and Yingli and Laiwani,
2007).

Hence, logistics organizations must constantly seek new knowledge, ‘think for the customer’,
anticipate and innovate services to meet customers evolving needs. One of the most challenging
aspects of understanding innovation in logistics management lies in the accepted wisdom that
every product has its own unique value chain. Thus, innovation is primarily a ‘pull phenomenon’
for service providers in the logistics industry.

Recently Used Technologies and Innovations:

Innovation in logistics could improve internal efficiency within a logistics organization or could
help serve customers better. The following table describes the recently used technologies in the
transport chains:

Sector Technology Used

Indian  Freight Operation Information System (FOIS), for controlling and
Railways monitoring the multifarious activities in freight operations.
 Rake Management System (RMS) for handling commercial transactions.
 RMS to track and manage freight wagons, freight-class locomotives and
other operations of the freight system.
 Implementation of Terminal Management System (TMS) to provide
information on freight at the freight terminals, status of the train and
expected time of arrival and cost of the freight to the customers.
Road  Use of geo-synthetics in improving the performance of pavement overlays.
Transport  Introduction of Geographical Information Systems (GIS) based National
Sector Highways Information System (NHIS) to overcome the traffic and
transportation problems.

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 Road Information System (RIS) for Golden Quadrilateral (GQ) project. The
RIS comprises of computerized time-series database on the national
highways information like traffic analysis, pavement condition, road
inventory and asset condition.
Marine  With an emphasis on cost reduction and to ensure optimum capacity
Sector utilization, there has been an increase in horizontal integration among the
shipping liners.
 Use of IT like Internet services to improve supply chain process, enhance
cooperation between freight carriers and their customers by enabling
communication and eliminating the heavy procedures and regulations.
 Vessel Traffic Management System (VTMS) to provide effective guidance
on navigation of ships, which is already installed at Mumbai, JNPT,
Kolkata, New Mangalore and Mormugao ports.
 Computerization of container handling operations like managing container
traffic, major ports connectivity, etc.
 Implementation of Radio Frequency Identification system for identifying
the movement of ships wirelessly using radio waves.
Aviation  Air Traffic Management (ATM) to modernize air traffic control services.
Sector Under the ATM, the following services are to be provided such as, Air
Route Surveillance Radars, Mono-pulse Secondary Surveillance Radars,
Airport Surveillance Radars, Airport Surface Detection Equipment, Radar
Data Processing Systems, Flight Data Processing Systems, Automatic
Message Switching Systems, Automatic Self Briefing Systems, 12 VORs,
DVORs with Remote Monitoring and Maintenance facility collocated with
High Power DMEs for uni-directional airways.
 Communication, Navigation and Surveillance (CNS) to facilitate and
support systems for air navigation. The CNS discharges the services like
coordination among all concerned agencies and organizations, preparation
of estimates, invitation of tenders, evaluation of technical and commercial
bids, placement of orders of equipment and its subsequent installations, etc.

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 Electronic Data Interchange (EDI) to know latest information and status of

export/import cargo via Internet.
 Flight Data Processing System (FDPS) to achieve improved automation of
air traffic services.
 Automatic Dependence System (ADS) for enhancing the surveillance over
Indian air space.
 There are also few other technologies that were proposed to be taken up for
the development of the Civil Aviation Sector in the country, such as:
• IT-based system to assess vehicular traffic volume for airport public
access.
• LED-based airport lighting and display technology.
• Intelligent digital surveillance.
• Integration techniques for information.
• Information dissemination and online payments through Internet.
• Radio frequency-based identification techniques.
• Wireless information technologies.
• Smart card technology.
• Common use IT systems.
• Online simulation of terminal congestion.
• Electronic perimeter security system and intrusion prevention.
• Explosive detection technology.
• Satellite-based CNS/ATM systems.
Table 2.3: Technologies used in different transportation modes

Conclusion:
Logistics, an extension of physical distribution management, usually pertain to the management
of the materials and information stream of business, down through a distribution channel, to the
end customers. In the Indian context, the scope and role of logistics have changed dramatically
over the years. To stay ahead in the modern global marketplace, organizations must constantly
look for innovative strategies to improve their competitiveness. Especially, logistics service
providers have to adopt and creatively deploy up-to-date technology, because logistics industry

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strongly depends on information for efficient operations. Logistics technologies refer to the
hardware, software, and network design required facilitating processing and exchanging. It
includes related components in the supply chain, such as satellite transmissions, web-based
ordering, EDI, bar coding, systems for order entry, order processing, vehicle routing and
scheduling, inventory replenishments, automated storage, and retrieval systems, etc. The correct
implementation of technologies can be a significant source of competitive advantage to the
service providers.

S. Sundar, 201032, This study explores how IT in downstream supply chain affects the
competitive marketing performance of the firm. Adopting the resource-based view of the firm as
the theoretical framework, the current study hypothesizes that firm IT resources (e.g. IT
Advancement and IT Alignment) facilitate supply chain capabilities which lead to first order
operational benefits and strategic marketing benefits. These benefits will in turn affect the firm’s
competitive marketing performance. The study assesses the impact of IT in the downstream
supply chain on the outcome variable – competitive marketing performance. This empirical
research is based on the responses from 307 managers in supply chain, logistics, sales, marketing
and operations in Indian manufacturing organizations. The research findings support the
hypothesis that the competitive business environment has led to a greater extent of usage of IT.
Such usage has led to greater IT Advancement (advanced technology utilization) and IT
Alignment (with channel partners). The impact of such IT resources is mediated by supply chain
capabilities which enhance the operational and strategic marketing benefits of the firm. These
two benefits together have a positive impact on competitive marketing performance. The
research also uncovered the critical and specific aspects of supply chain capabilities that enhance
the benefits to the firm through the dimension level analysis which identified Supply chain
responsiveness and collaboration as leading to significant operational and strategic marketing
benefits. Specific item level dimensions that have significant impact on competitive marketing
performance were identified. The implications of this research are that investment in IT
resources must aim at the creation of supply chain capabilities that will lead to improvements in
marketing performance. The findings explain how a firm’s IT resources can create an impact on

32
S. Sundar, 2010, E-business: A study on the use and impact of information technology in the supply chain of
Indian manufacturing sector, Thesis submitted to Bharathidasan University, Tiruchirapalli for the award of the
degree of Doctor of Philosophy in Management

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firm competitive marketing performance. The research thus provides an insight into the positive
impact of IT-enabled processes in the downstream supply chain.
Objectives of the research
 To study the extent of usage of Information Technology invested by organizations in the
downstream supply chain
 To analyze whether the use of advanced IT and IT alignment with channel members
impacts on supply chain capabilities.
 To study and understand the influence of the extent of IT usage and supply chain
capabilities on the operational and strategic marketing benefits of organizations.
 To assess the combined impact of extent of IT usage, IT advancement and alignment and
supply chain capabilities on operational benefits and strategic marketing benefits which
influence the competitive marketing performance of organizations.

Some of the Hypotheses tested were:

H1: Competitive business environment will lead to a greater extent of IT usage in firms.
H2a: Greater the extent of IT usage, higher the level of IT advancement in firms.
H2b: Greater the extent of IT usage, higher the alignment of the firm with channel partners.
H3: IT advancement in firms will influence supply chain capabilities positively.
H4: IT alignment in firms will influence supply chain capabilities positively.
H9.1: Information sharing impacts the operational benefits positively.
H10.1: Information sharing impacts the strategic marketing benefits positively.

Key Findings:
 The extent of IT usage has a greater influence on IT alignment of the firm with channel
partners than IT advancement.
 IT Alignment influences supply chain capabilities more positively than IT Advancement.
 Capabilities of the supply chain like information sharing, coordination, collaboration and
responsiveness are achieved more through investing in technology to align IT with that of
their downstream channel partners.

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In conclusion, the study maps the current status of the usage of IT in the supply chain by
manufacturing organizations, assesses the contribution of IT to the creation of supply chain
capabilities and the impact of such usage and capabilities on operational and strategic marketing
benefits and ultimately its impact on competitive marketing performance. Using the RBV
framework suggested by Barney (1991) and Collis (1994) and strategic management perspective
from Porter (2001), this research tested a number of hypothesis and found support for all of
them. The results indicate how a firm should utilize its IT resources in terms of competitive
marketing performance. From the IT investment perspective, firms may prefer to invest in
technology that enhances collaboration and supply chain responsiveness. Supply chain
capabilities has been found to mediate the influence of IT resources on firm performance and
firms need to focus on furthering such capabilities through technology, rather than on the
technology itself, to understand and appreciate the impact of IT resource deployment in the
downstream supply chain.

Jaana Auramo; Jouni Kauremaa; Kari Tanskanen, 200533, The issue of efficacy of new
technologies in supply chains is of paramount interest to the companies operating in networks, as
well as to governments investing funds in development and promotion of new technologies.
Hence the reason why the National Technology Agency of Finland (Tekes) commissioned a
study on which this paper is based.

Current key trends in logistics for application in the near future include e-business supported
supply chain management (Skjoett-Larsen, 2000). The use of e-business in supply chains is
allied; but in this paper it is not limited to the use of the Internet.

Prominent case-examples demonstrate potential benefits. Cisco reported savings of $500 million
by restructuring its internal operations and integrating processes with suppliers and customers
with the help of Web-based tools (Berger, 2000). Currently, 90 per cent of Cisco’s sales are
facilitated on-line (Copacino & Dik, 2001). Intel replaced hundreds of order clerks by an
automated on-line ordering application (Chopra & Meindl, 2001). Celestica, one of the world’s

33
Jaana Auramo; Jouni Kauremaa; Kari Tanskanen, 2005, Benefits of IT in supply chain management – an
explorative study of progressive companies. Published in the International Journal of Physical Distribution and
Logistics Management, Vol. 35, No. 2, pp.82-100.

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largest electronic manufacturing services company has applied a web-solution to better

coordinate its global supply base (Shore, 2001).

Information technology (IT) has helped Celestica to improve its responsiveness to customers;
and thus helping, for example, its customer Dell maintain its delivery promise to the end-
customers. Although it is commonly acknowledged that information technology is an essential
ingredient in managing logistics operations in networks, and will be an increasingly so over time,
empirical evidence of the specific benefits of IT in supply chain management (SCM) are less
clear.

This paper addresses these issues in the context of an empirical study conducted in Finland. The
paper reviews, through a series of different research settings, the benefits IT specifically accrues
for managing supply chains in practice. Concurrently, how companies use different types of IT
solutions in their networked logistics operations is examined. Finally, an answer is sought to the
question of whether there is a trend in the use of IT for supply chain management.

Summary of Literature of Review:

The literature review identifies that IT is expected to have a pivotal role in managing supply
chains, now and in the future. In fact it seems that the use of IT is crucial, especially in the fast
moving industries: particularly for managing contemporary supply networks. Moreover, the
close relationship of these two concepts, SCM and IT, make it sometimes hard to assess which
one contributes what benefits. For example, implementing a VMI-model with EDI-information
transmission can lead to substantial reduction of inventories, and at the same time increase
material availability. But could the benefits have been achieved without EDI by, for example,
exchanging information via fax? Or, on the other hand, could the information exchange even
have been possible in any other way? Finally, consideration is made of the lack of in-depth case
studies describing optimum situations and recording the impacts and benefits of IT. Extensive,
focused, quantitative surveys are also needed, but a phenomenon as non-trivial as IT in SCM
also needs a thorough examination from a more qualitative perspective, thus enabling a broader
scope of discussion.

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Key findings and conclusion:

The results of this study indicate that the operational use of IT has developed in the last five
years. In particular Internet technology and third party transaction integration services have
provided companies with increased possibilities to network with supply chain partners. However,
in most cases the solutions used are quite individualistic as they are developed from a single
company’s point of view. Of course user aspects (customer and supplier) have been taken into
consideration when planning. Furthermore, only implementing IT, as such, for example in
invoicing automation, is not likely to lead to higher-level business impacts. Stating this, it is
interesting to observe that in the SCM context the main body of companies views IT primarily
from operational perspective. A reason for this may be the relative novelty of IT, meaning that
larger scale and strategic solutions are still yet to come, and after companies have installed a
basic IT infrastructure. The case examples in this study demonstrate the multiple ways that IT
can be deployed. There is no single way of using IT and, moreover, the broader the business area
where IT impacts, the more solutions have to be customized. As applications are more tailor-
made, it is also more difficult to copy a solution from one company to another.

Benefits of IT in SCM are multitude and vary in the context of their implementation. Moreover,
as the use of IT is closely related to process changes, most of the benefits are overlapping and
interlinked. Then, it is hard to specify the origin of benefit very explicitly. Notably, strategic
benefits are only achievable when the introduction of IT is coupled with process re-design. The
ideas of BPR are then closely related to current study. Our study corroborates that business
process re-engineering skills are vital to benefiting from IT strategically in SCM. The change in
processes needs not to be total, but without any process changes, IT becomes merely an
automating force, providing efficiency benefits in a limited scope.

Anil Gurung, 201334, This paper analyzes the impact of information technologies (IT) on
logistics by conducting a survey of literatures on academic logistics journals and practitioner
journals. The literature survey and practice find that third party logistic providers have better
opportunity to leverage IT since they need to have interoperable IT systems with their customers.

34
Anil Gurung, 2013, A Survey of Information Technologies in Logistics Management

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The business philosophy of Just-In-Time (JIT) has also contributed to the impact of IT in
logistics. Further, information technologies are identified that has benefited the logistics.

The proliferation of information technologies (IT) and the internet technologies have provided
impetus and challenges to the logistics. New technologies present new means to manage the flow
of information. IT as a productivity tool can be utilized to both increase the capability and
decrease the cost at the same time (Closs et al., 1997). It has been widely accepted that firms can
achieve competitive advantage by cost reduction or differentiation with the proper
implementation of IT (Porter & Millar, 1985). Enabled by IT the logistics has become a source
of competitive advantage for many firms. The objective of this paper is to study how IT has
impacted logistics.

The physical and information flow in logistics function is well-depicted in figure that shows the
categorization of logistics functions as described by Vaidyanathan (2005). As shown in the
figure, information flows between logistics function are managed, coordinated and supported by
various logistics technologies.

Figure 2.1: Categorization of Logistics Functions

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IT enablers in Logistics:
The role of logistics information systems as operational and strategic enablers in different areas
of the firm’s supply chain has been stated in the literature (Langley et al., 1988). There has been
a shift of IT from being an enabler of operational and material handling functions to being an
enabler of decision-making and activity planning functions within the supply chain (La Londe &
Auker, 1973). Some of the enablers are listed below:
 Logistics Information System
 Electronic Data Interchange (EDI)
 Bar coding
 Real-time Communications capability
 Radio Frequency Identification (RFID)

Implication of Ecommerce on Logistics:

The growth of ecommerce poses opportunities and challenges for logistics. As internet retailing
increases the companies are accepting orders from their clientele across the borders. In many
instances the location of clients are not covered by any existing distribution system of the
companies. On such occasions the companies have no resort but to turn towards third party
logistics operators for physical flow of goods. As for the information flow, the companies need
to have capabilities for ecommerce applications. The group of technologies and processes for
coordinating logistics information flow has been named e-logistics. An important web
technology that facilitates the exchange of business data among logistics business partners across
different platforms is extended markup language (XML). For example, UPS is exploiting the
power of the web services to streamline its information flows for logistics activities such as RFQ,
shipping and tracking.

The research directions that are available for researchers in logistics are numerous. Before
companies implement new logistic information technologies such as RFID it is important to
assess the viability of adopting the technology. What would be the expected benefits? What is
the ROI? Researchers can come up with various econometric models to predict the outcomes of
adopting logistics technologies. Modeling techniques can be used to assess the scenarios that
would be beneficial for adopting new technologies.

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Rémi Founou, 200235, In this article, the authors have presented an analytical framework for
assessing the role of IT as a source of competitive advantage. This framework is derived from
the integration of two major strategic management paradigms, the position-based and the
resource-based views. They have used this model to analyze the recent development in logistics
of IT and in particular of three internet related applications, E-commerce, E-employee services
and e-global logistics. We find that to create a competitive advantage, IT must fulfill several
demanding requirements and that in practice IT tends to be a “strategic necessity”.
Indeed, the application of the analytical framework to assess IT use in logistics shows some
interesting results: (1) Logistics IT applications are mainly outsourced and are available on the
market (in fact, most of the logistics companies who first develop their own systems have
switched to commercial, standard solutions) and therefore limits the differentiation by IT per se;
(2) Although in most cases these applications are creating value by increasing the productivity or
the quality of the operations, the gains are difficult to keep by the logistics company due to the
industry structure; (3) As expected the determinant of competitive advantage lie in the
combination of human and business resources with IT.
The last point deserves further discussion because it suggests two complementary (but
distinctive) strategies depending on the IT system.
 For standard solutions (like most e-global solutions), the quality of the implementation
process is determinant. In this time-based type approach, companies aim at reaping the
short-lived “first-mover advantages” before the system turns into a “strategic necessity”.
The new system has to be marketed intensively and on the right customers. In this
context, some sort of evolving multi-disciplinary “implementation team” that combines
the thorough understanding of one’s company process, the local specificities, with a state-
of-the-art technical knowledge may be instrumental. The implementation path should be
opportunity based and focused (a company cannot be first everywhere).
 For more complex solutions (in terms of human and business resources coordination), it
calls for a holistic approach, which has to be strongly aligned with the company’s
organizational strategy. In this case, the CEO commitment is determinant and benefits

35
Rémi Founou, 2002, The Role Of It In Logistics: Competitive Advantage Or Strategic Necessity? 2nd Swiss
Transport Research Conference, Monte Verità / Ascona 2002, Session Logistics

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and costs are harder to assess (often diffuse and not immediate). Initiatives such as
employee services and knowledge management systems fall in this category. These
applications may in fact bring sustainable competitive advantage to LSPs.

This paper aimed at providing a general view and assessment of the existing and developing IT
solutions in logistics. To conclude, “IT will remain on top of the agenda of logistics companies
for the coming years and requires proper strategic management. In this perspective, taking it as a
“strategic necessity” or as a source for “competitive advantage” or stated more simply as “a pain
to cope with” or as a “strategic opportunity” is consequential.”

Hussein S. Lidasan and Marilyn H. Obogne, 200536, In general, the study aims to investigate
the impact of information and communication technology (ICT) on urban logistics system with
focus on the interaction of shipment, transport, and warehousing industries as well as its
operation and management. The study specifically is a tool to gather information about the
different types of ICT use, the application areas, the barriers and future applications from ICT
use.
The major purpose of the survey is to gather data directly from the ICT logistics users concerned
in freight logistics transport. This will capture simultaneously firsthand information, which is
essential to acquire knowledge and information regarding the diffusion of information and
communication technology and to record open-ended comments in addition to the information
called for. To obtain the significant data and perceptions about the impact of ICT on freight
logistics system for possible attainment of actions concerning its positive or negative effect,
interviews with the different key players such as ICT manufacturers, transport/logistics firms,
and the government authority is conducted.
Data used in this study was collected from a survey interview. Selections of samples were done
randomly. Direct interviews with the ICT logistics users and government authorities were done
at their respective offices guided by the self-administered survey questionnaire to ensure highly
reliable data and to maximize the data samples. The survey was also done by taking advantage of
electronic mail (e-mail) and using the fax machine for fast and easy communication.

36
Hussein S. Lidasan and Marilyn H. Obogne, 2005, A Study On The Impact Of Information And Communication
Technology On Urban Logistics System Journal of the Eastern Asia Society for Transportation Studies, Vol. 6, pp.
3005 - 3021, 2005

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Generally, the study was able to investigate the diffusion of technology that focus on the
interaction of shipment, transport and warehousing industries, as well as its operation and
management. Moderate impact of ICT signifies that ICT is re-shaping the logistics system from
traditional methods to modern logistics. Specifically, it was supported by the current types of
ICT, their uses, and the applications as well the barriers presented. Most transport/logistics firms
use ICT as facilitating technologies to gather, process, and use knowledge about the application
of technologies that will help in making their business to be more progressive and contribute in
increasing the efficiency of urban goods transport. Impacts on costs and benefits of ICT needed
an in-depth research to fully measure the effect.

Diatha Krishna Sundar, 200137, Trucking is a vital segment of the transportation system that
supports Indian Manufacturing. Trucking companies are attempting at providing such non-
traditional trucking services as warehousing, distribution, inventory management, picking and
packing – assembly operations and return goods management as part of their value added
services thus making manufacturing (brick and mortar) activity competitive in the information
(click) age. In this context, this paper attempts at:
 Study of the present IT architecture, business processes of different agencies, involved in
providing and using logistics industry's services in India, like Transportation sector
(Trucking agencies, trucking brokers and 3PL service providers), Customs & Central
Excise of India internal processes and their external interactions with EDI partners (like
Airports Authority of India, Port Trusts, Banks etc.,), Manufacturing Companies' IT
infrastructures (Small and Medium scale industries enterprise resource planning (ERP)
and supply chain management (SCM) platforms).
 Developing a framework for "Integrated virtual logistics network for Quick Responses"
which would factor in the existing processes, systems and organizations' roles and the
government's proposed investments in the e-commerce and e-governance infrastructure,
and designing a technology transformation road map.

37
Diatha Krishna Sundar, 2001, Working Paper on Integrated Virtual Logistics Network for Quick Responses,
IIMB.

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Daitha initially throws light upon Indian road transportation scenario, percentage share of freight
movement by Rail and Road, growth of vehicles, road network and population, ownership
pattern of trucks & trucking operations, and IT penetration in the transportation sector. The
author emphasizes on the need for integrated logistics model to integrate manufacturers,
transport service providers, financial institutions along with government agencies.

Diatha states: “Historically Indian transport sector is burdened with low end IT solutions, stand-
alone applications, very labor-intensive operations and lack of standard equipment usage across
the transportation companies. The low skill level of the workforce is also a major impediment in
transforming this industry into exploiting IT services. Besides these, the low profit margins,
lower yield miles per truck per month due to bad conditions of the roads are discouraging
trucking companies from exploiting the possible IT enabled services. The government agencies
involved in facilitating the material movement, like central excise and customs, regional
transport departments, toll and tax collection agencies is not yet moved into E-Governance
paradigm creating a major void in transforming the whole logistics industry into information
age.”

Diatha concludes that “The "virtual logistics network framework" addresses services in the areas
such as asset management, logistics productivity, global reach, inventory chain optimization,
distribution management, reverse logistics, warehouse management, transport capacity matching,
transport brokerage, and real time interface with federal agencies for speedy document clearance.
In addition, if all the check posts are linked with concerned government agencies the delay could
be considerably reduced. These processes in turn increase the productivity of the truck and
enhance the profitability of operations.”

Pietro Evangelista, Edward Sweeney, 200338, ICT developments have increasingly influenced
the transport and logistics services market, shifting the focus from a physical to a more electronic

38
Pietro Evangelista, Edward Sweeney, The use of ICT by Logistics service providers and implications for training
needs: A Cross-Country perspective. Association of European Transport, 2003

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one and giving rise to new organizational forms for these services. This has led to an increasing
interest in assessing the effects of ICT on the transport and logistics service industry.

Unlike other industrialized countries, the Italian and Irish transport and logistics service industry
lags behind somewhat in adopting ICT. Generally speaking, this situation can be attributed to the
following factors: the traditional resistance by owner-managers to change; the small size of most
third party transport and logistics service providers (3PLs) inhibiting investment in ICT; the lack
of user-friendly applications; technology choice difficulties as a result of ICT solutions
proliferation; and the inadequate ICT skills of 3PLs personnel.

The aim of this paper is to assess use of such new technologies is affecting 3PLs’ training needs.
This also provides a conceptual framework for assessing the impact of ICT on the transport and
logistics sector.

This paper studied the impact of ICT on Logistics and Supply Chain Management. The
following figure illustrates the timeline of the main applications in logistics and SCM since their
introduction in the 1960s, when systems of Electronic Data Interchange (EDI) were first used to
support logistics activity.

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Figure 2.2: ICT evolvement

Since then logistics and SCM have changed rapidly, to the extent that the relationship between
ICT and the supply chain now appears to be so close that it has even become difficult to establish
whether ICT is a driving force of is simply an enabling factor.

There has been a plethora of works in the literature which, from time to time, have underlined
the general aspects and specific impact of these technologies in logistics and SCM. According to
the framework reported in the figure below, the analysis will focus on the effects of ICT on 3PLs
as a detailed discussion of the impact of ICT developments on the overall supply chain is beyond
the scope of this paper.

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Figure 2.3: ICT development framework

For manufacturers and retailers, information management has therefore become as critical as the
physical movement of goods. As a result, poor ICT resource management by one or more actors
in the supply chain can have negative repercussions on the performance of the entire chain in
terms of costs, planning ability and customer service.

The delay on the part of Italy in adopting ICT has negatively affected the efficiency of the
transport system and, at the same time, has proved to be a constraint on the development of
3PLs. It should be pointed out that there are other constraints contributing to the poor
dissemination of ICT in the sector such as the low level of technological and organizational
innovation in the Italian 3PLs, the poor exposure to ICT in SMEs and the adequate ICT skills of
personnel in such companies.

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In the second survey, it was found that the willingness to invest in computer hardware and
software is generally motivated by personal reasons rather than economic considerations. A
recent study indicates that the main usage of ICT in the Irish transport and logistics sector is in
the area of EDI and e-business which is used by just over 50% of companies.

ICT tools which are regarded as essential for efficient logistics management such as automated
warehousing/sortation, direct billing, direct reader input (DTI) for customs and bar-coding are
used by one third or less number of companies. Much of the deployment of this technology is on
an incremental, ad hoc basis and the building up of SCM systems is not carried out on a
systematic strategic business basis.

The same research indicates that there is a strong correlation between the use of ICT and
company size. In particular, companies with 10 employees or less had the smallest usage of the
full range of systems while large companies in turn utilize a broad range of ICT technologies.

Effective ICT adoption has become more critical for 3PLs as the drive towards higher levels of
supply chain integration continues. This raises many issues with regard to ICT knowledge and
skill sets.

The paper states that “Information and Communication Technology (ICT) is becoming one of
the main drivers of changes in the 3PL industry, posing new strategic challenges to logistics
companies. ICT developments are more and more influencing the transport and logistics service
market and give rise to new organizational forms for these services.” The authors conclude the
paper by finding that “Accurate and timely information allows to minimize inventories, improve
routing and scheduling of transportation vehicles, and generally improve customer service
levels.”

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Mirjana Kranjac, Uros Sikimic, Dordije Dupljanin and Zeljko Kranjac, 201339,
Development of logistics in transition countries has to be supported by public administration
which must increase awareness of logistics' importance to the general country development.
Available tool is implementation of information telecommunication technologies (ICT). Not only
application of ICT technologies to logistics systems is important, but the use of ICT to improve
visibility of logistics is significant. First insight could be performed through interactive maps of
logistics' potential attached on public administration sites. The paper presents activities to create
an interactive logistics' potential site performed at Secretary for economy of Government of
Vojvodina and proposes new multimedia means for logistics' promotion.

Information communication technology is recognized as an important tool in the global economy

of today. Internet, as global computers' network is a base of global flow of information,
massages and communications. Flow of goods is closely linked with information interchanges.
This makes logistics a parallel process to the global information flow and strictly dependent on
ICT. There are more components of ICT connected to logistics, like shown in Figure:
 ICT involved into the core logistics activities, goods flow (IRFD, Video surveillance...)
 ICT in logistics information flows (database, handling with databases, interchange of
data)
 ICT which supports costumers (websites, social networks, blogs...)
 ICT in the process of long life learning for:
o employees and
o services consumers
 ICT as tool for general increase of awareness of logistics importance.

39
Mirjana Kranjac, Uros Sikimic, Dordije Dupljanin and Zeljko Kranjac, 2013, The Use Of Ict In Support Of Public
Administration To The Development Of Logistics, 1st Logistics International Conference, Belgrade, Serbia,
November 2013

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Figure 2.4: Components of ICT in Logistics

This paper refers to the role of ICT during first and the most important phase of establishing
logistics system process. This first phase is task of the political system to recognize and support
introduction and strengthening of logistics within other socio-economic systems in society. This
paper presents a project elaborated by support of the Secretary for economy of Vojvodina which
objective was to find method to involve public administration into improvement of logistics'
importance visibility. Authors’ contribution is a solution elaborated by the use of multimedia
communication platform. Interactive and attractive logistics multimedia map was an outcome of
the project.

In their literature review, the authors mention that:

Very important component of supply chain management is ICT, since “no product flows, until
information flows”. ICT is “global nervous system” which is linking suppliers with costumers.
Effective use of ICT into logistics assumes integration of logistics process participants. For
example, shippers request integration with their suppliers.... Integration demands adequate
training process which is dependent of appropriate training polices. The use of ICT tools requests
good knowledge and skills. Some authors consider that the awareness of ICT as a success factor
for logistics is evident. But, there is a low level of ICT adoption with particular reference to the
Internet and e-business tools.

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General objective of the project is:

To increase awareness of logistics' importance and to attract investments into this sector
Specific objective of the project:
To collect, organize, present and make available to all stakeholders, important logistics'
information of the Autonomous Province of Vojvodina.

In conclusion of this paper, the authors state that:

The paper refers to a good example of IC technology use in area of logistics sector promotion.
This is specially important for transition countries which are under developed in this area and
due to the fact that logistics is the final link in the chain of value creation within an economy (in
a company, region, country and globally). Applications of IT technologies to logistics systems
could be within various processes. Authors describe ICT use during a very important phase of:
logistics promotion. This phase of raising awareness about importance of logistics sector consists
the most of activities which focus on importance of: education, improving knowledge and skills
in this area. Process must have significant support of public administration. It must seriously
prepare and elaborate promotional role for logistics as a source of big value added service.

Somuyiwa Adebambo and Adebayo Toyin, 201140, The research aims to analyze the impact of
ICT usage on logistics activities of manufacturing companies. The business environment today
has been undergoing unprecedented change and many companies are seeking new ways to stand
out from the competition by sustaining their competitive advantage. In today’s highly
competitive global marketplace, the pressure on organization’s to find new ways to creating and
delivering value to customers is growing stronger. ICT is today being applied in many
organizations in a wide range and operations areas. One hundred manufacturing companies,
basically medium/large companies formed the sample of the study based on random sampling
technique. Apart from the descriptive statistics adopted, data analysis was done using SPSS to
obtain the correlation coefficient of variables. The study revealed that there were strong

40
Somuyiwa Adebambo and Adebayo Toyin, 2011, Analysis of Information and Communication Technologies
(ICT) Usage on Logistics Activities of Manufacturing Companies in Southwestern Nigeria, Journal of Emerging
Trends in Economics and Management Sciences (JETEMS) 2(1):66-72 (ISSN:2141-7024), Scholarlink Research
Institute Journals, 2011 (ISSN: 2141-7024)

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relationships between ICT usage and Logistics activities, although managers recognize the
importance and need of ICT adoption for building and enhancing their competitive advantage,
adoption of their ICT tends to reduce operating costs more than improve service levels. The
research recommends that Government should facilitate manufacturing companies’ gainful
participation in global value chains through policy initiatives in specific areas by promoting
technological upgrading and facilitating of compliance procedures through adoption of process
and products standards.

Information and Communication Technology are fast becoming one of the main drivers of
change, posing new strategic challenges (Somuyiwa, 2010). ICT is today being applied in many
organizations in a wide range and operations areas. It has provided new ways to store, process,
distribute and exchange information both within companies and with customers and suppliers in
the supply chain (Somuyiwa and Oyesiku, 2010).

It is now commonly accepted that information and communication technologies (ICT) and
systems provide many benefits to companies, including small and medium enterprises (SME), to
make them more efficient, effective and competitive (Chapman, et al, 2000; Sarkis, et al, 2004;
Fink and Disterer, 2006).

e-Logistics is an emerging area of logistics field. Alike other emerging disciplines, there is not a
widely accepted definition yet. It may be that the term defines a unique subset of ICT and
transport logistics, or that is a redundant term, which duplicates many similar terms in use. There
is a rapid development in the use of information and communications technology (ICT) in
logistics management. The application of computers, internet and information communication
systems can be seen in virtually all activity in the logistics industry, such as transportation,
warehousing, order processing, materials management, and procurement.

As an increasing number of firms are under pressure from their partners to change both their
traditional styles of operation and organization to replacing them with integrated systems that
help increase the speed and fluidity of physical and information flows, reaching this kind of
integration therefore requires investing on new Information and Communication Technologies

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(ICT). With the advancement of ICT, many companies have adopted the use of the technologies
to improve the efficiency and effectiveness of their activities (Somuyiwa, 2010).

Stan and Reynolds (2001) stated that data for a logistics management information system can
come from many sources. Also, Stock and Lambert (2001) define the most important sources of
data for the common database, which are order processing system, company records, industry
data, and management.

The faster information flows along the supply chain, the faster operational decisions can be
made. The faster material and cash flow along the supply chain, the faster a company’s money is
freed from the manufacturing or procurement cycle. One of the main areas of interest that has
emerged in recent years concerns the effects of ICT on logistics. In the literature, there are a
plethora of research that have analyzed general aspects (Long, 2003; Lambert, 2004) and specific
effects (Lovorn, 2003; ASCET, 2004) of these technologies in logistics, considering the wide
range of possible effects, the attention in this chapter is focused on the supply chain efficiency
improvements related to. ICT usage be analyzed with reference to three functions related to
information/order processing and management, Distribution and sharing of data and information,
their transfer and lastly, the processing and utilization of information for supply chain specific
technologies used as a support tool for three functions viz., Sharing of data and information,
Information transfer and Information use for supply chain planning.

The effective adoption of ICT has become more critical for manufacturing companies as the
drive towards higher levels of logistics activities integration continues. The survey however,
points to a number of key factors that inhibit the widespread adoption and use of ICT, and these
include the cost of technology, uncertainty over the business benefits and impacts, and the lack
of relevant internal ICT expertise. Day to day challenges such as dependence on external
consultants and vendors and the unreliability of systems, potentially owing to technological
obsolescence and technical complexity, were also important constraints on ICT use.

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Susana Garrido Azevedo, João Ferreira and João Leitão, 200841, In the 21st century, with
rapid growth of technology, economic society and life have changed significantly. Promoting
competitive advantages has become the most important issue for firms in this rapidly changing
and uncertain business environment. Many researches have pointed out that the adoption of
technology is the most important tool for firms to maintain their competitive advantages. The
survival of a firm in the knowledge based economy depends on how they improve their
technological capability. In this sense, firms should develop adequate methodologies, in order to
adopt, in a successful way, new technologies in the logistics field, and also to integrate logistics
into the corporate strategy for becoming even more competitive. A growing number of firms are
under pressure from their partners to change their traditional management style, both
operationally and organizationally, replacing them with integrated systems that help to increase
the speed and fluidity of physical and information flows. In order to reach this kind of integration
they are investing on new Information and Communication Technologies (ICT). This paper
considers ICT as devices or infrastructures that make communication of business information
among organizations more efficient. The present paper aims to highlight the importance of ICT
on logistics and to understand the impact of ICT on the competitiveness of firms. In this paper, a
conceptual model for the adoption of logistics ICT is presented, by taking into consideration four
determinant factors—individual, organizational, technological/innovation, and environmental.
The interaction established among the referred determinant factors may be identified through the
computation of the predominant factor, by using a selected set of adequate indicators and a
simple geometry methodology. These procedures may provide the identification of the sources of
competitive advantages of firms that adopt logistics ICT. The logistics ICT analyzed in this
paper are grouped into three types—the identification, the data communications, and the data
acquisition technologies.

An underlying structure is developed to provide a deeper understanding of the way in which ICT
are diffused in the global context faced by the firms. Innovative applications of ICT have created
an environment where the old ways of operating no longer apply and new rules have been
developed. These new rules define the conditions that firms face in making strategic choices

41
Susana Garrido Azevedo, João Ferreira and João Leitão, 2008, The Role of Logistics Information and
Communication Technologies in Promoting Competitive Advantages of the Firm, The Icfai University Journal of
Managerial Economics, Vol. VI, No. 3, 2008

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(Gharavi et al., 2004). New ICT are changing the economy and the way business is conducted in
several ways. ICT force firms to find new ways to expand the markets in which they compete, to
attract and retain customers by customizing products and services, and to restructure their
business strategy to obtain competitive advantage (Gratzner and Winiwarter, 2003).

According to Porter (2001), the basic tool for understanding the influence of ICT on firms is the
value chain that is the set of activities used to create a product and deliver it to the customers.
Because every activity involves the creation, processing, and communication of information, ICT
have a pervasive influence on the value chain. Increase in the incorporation of ICT within a firm,
directly affects the functionality of the firm, increasing productivity and profitability of the
business.

According to Langley (1986), ICT are important to logistics, since they make the right
information available at the right time and at the right place. This popular logistics paradigm,
which most often refers to physical goods, is shown to have equal relevance in the management
of information. Introna (1991) demonstrates that while the logistical system converts materials
into products, through the creation of customers’ value, the information and communication
systems convert data into information, in order to facilitate managerial decision making. Both
authors infer that information is a resource to be used for decision making that subsequently
enhances logistical effectiveness, efficiency and flexibility. In this sense, these factors provide
the possibility of firms becoming more competitive. The Global Logistics Research Team (1995)
determined ICT as one of the seven capabilities that combine for logistics process integration and
world class performance. Adoption and successful implementation of ICT are intended as
prerequisites for logistics success.

There is no doubt that ICT are playing an important enabling role in logistics. Several surveys
have been conducted to investigate the use and importance of ICT in supporting logistics
operations (Hardaker et al., 1994; Gutiérrez and Durán, 1997; and Piplani et al., 2004). Firms
should be able to manage information effectively, and integrate several logistics activities by
including inbound and outbound transportation, distribution, warehousing, and fleet

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management, in order to streamline the physical product flows of their customer firms (Lai et al.,
2005).

ICT that may be used by firms in order to improve their competitiveness can be classified into
three categories: (i) identification technologies; (ii) data communications technologies; and (iii)
data acquisition technologies.

With regard to the identification technologies, firms may appeal to barcoding and also to the
Radio Frequency Identification (RFID). The barcoding (Ellram et al., 1999; and Chapman et al.,
2003) and RFID (Twist, 2005; Kumar et al., 2006; and Choy et al., 2007) are identification
technologies that facilitate logistics information collection and exchange.

As regards the data communications technologies, firms may make use of the Electronic Data
Interchange (EDI), the fax, (Dawe, 1994; and Ellram et al., 1999), the Internet, the Value Added
Network (VAN) (Power and Sohal, 2002), the Point of Sales systems (POS) (Ellram et al.,
1999), the Electronic Ordering System (EOS) (Closs and Xu, 2000), the logistics information
system, the computer telephony integration, and the enterprise information portals (Lin, 2006).
Among data communications technologies, the fax and the EDI are the ones that have high levels
of logistics usage (Dawe, 1994).

Logistics ICT refers to the hardware, software, and network design required to facilitate
processing and exchange of data (Global Logistics Research Team, 1995). The successful
implementation of ICT to support the several logistics processes is expected to bring a number of
benefits to the firms (Lai et al., 2005). According to Hammant (1995), Gutiérrez and Durán
(1997), and Piplani et al. (2004) these benefits could be reduction in errors in the entry of data
and improvements in customer services. In fact, ICT not only improve the effectiveness and
efficiency of logistics processes, the successful implementation of ICT may also have a
significant impact on logistics strategies and on organizational structure (Bowersox and
Daugherty, 1995). Examples of recent benefits obtained by firms from the use of ICT include: (i)
quick response and access to information; (ii) better customer service; (iii) increased

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competitiveness; (iv) reduction on data entry (Lai et al., 2005); and (v) faster data collection,
processing and faster communication (Dawe, 1994).

The direct impact upon logistics organizations of the future, may be a reduction in formal
structure with an increase in the networking of specialists. Executives at many firms have
realized that it is no longer necessary to maintain total internal control over all phases of
operations. Logistics strategies can be implemented and performance goals realized through
closer interactions and boundary spanning relationships with trading partners. The adoption of
adequate ICT could make it possible. The availability of timely and accurate information will
allow firms to coordinate inter-organizational activities (Lin, 2006).

However, the process of ICT adoption could be quite difficult for firms because of its
requirements. The adoption of ICT is, usually, associated with a large investment, and firms may
not have sufficient financial resources to support the high investment in hardware and software
technology that is required (Lai et al., 2005). Another factor that makes ICT adoption difficult,
on the part of the firm, is the lack of expertise and technical support for implementing ICT
(Yeung et al. 2003).

A conceptual model for the adoption of logistics ICT is proposed. The proposal is original and
innovative, since it presents a systemic approach, by representing the interaction established
between the previously referred determinant factors, through several indicators. The
determination of the predominant factor may help to better understand the contribution of each
factor in enhancing the competitive advantages of firms. The design of the conceptual model
takes into consideration a set of four determinant factors: individual, organizational,
technological/innovation, and environmental factors.

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Figure 2.5: Conceptual model for the adoption of logistics ICT

The interaction established among the referred determinant factors may be identified through
computation of the predominant factor, by using a selected set of adequate indicators and a
simple geometry methodology. These procedures facilitate the identification of the predominant
factor that determines the firms’ competitive advantages, which have originated from the
adoption of logistics ICT.

2.6 SUMMARY OF LITERATURE OF REVIEW USED IN THIS STUDY

The literature review identifies that ICT is expected to have a critical role in managing logistics
operations, now and in the future. It seems that the use of ICT is crucial, particularly for
managing present day logistic networks. The close relationship between Logistics and ICT, make
it sometimes hard to assess which is more beneficial. But, a question arises. Can this success be
complete without the implementation of the technology? When we face the reality of the industry
in our country, the literatures find that the ICT implementation is restricted to only larger firms.

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But as depicted in the earlier studies, Indian logistics sector is most unorganized and fragmented
consisting of many small players. This number is huge when compared to larger organizations in
the industry. Finally, consideration is made of the lack of detailed studies describing present
scenario, depicting the challenges & problems and suggesting the required solution. In Indian
context, extensive and focused studies are also required. Hence the present study was carried out.

2.7 GAPS IDENTIFIED FOR THE PRESENT STUDY

 ICT for logistics management is largely limited to large size firms

Large size logistics organizations (with a fleet size of 100 and above, more than 100
employees, turnover of over Rupees 100 crore)
 Impact on costs and benefits of ICT to fully measure the effect.
Studies, so far conducted by various researchers across the world, are not able to
provide clarity on the impact of cost and benefits of ICT which poses a challenge to
measure the effect of the same on the industry.
 Support system for success factor in IT implementation is missing.
The studies have also failed to establish the availability / existence of such support system
which influence the successful ICT implementation in organizations.
 Integration of logistics function using available IT solutions
No studies so far have been conducted on integrating logistics functions by formation of
aggregators using the IT solutions.
 Relationship between ICT implementation and reduced cost to customer & cycle time
No studies are found that establishes the relationship between ICT implementation and
reduced cost to customer and the reduced cycle time. This will act as a strong contention
for ICT implementation.
 Organizations leveraging ICT to understand internal visibility
Not many studies are conducted in India to understand intra-organizational visibility
using ICT. This will help the organizations understand their strengths, weaknesses in
terms of business processes.
 Not many studies are undertaken in India with focus on logistics industry

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2.8 UNIQUENESS AND USEFULNESS OF THE PRESENT STUDY

The researcher has tried to bridge the gaps identified through the literature review. The study was
carried out by understanding the difficulties & problems faced by the industry and also by
understanding the industry expectations about how adapting ICT can address them.

This study is important for the logistics and IT industry to understand the depth of penetration of
ICT and its effective use in the organization. By knowing this, it will be help organizations to
evaluate their ICT strengths/weaknesses and can adjust the deviation, if any, for better efficiency.
Also, the organizations offering IT solutions to logistics sector will get to know the gaps between
what is been offered and what is required. The findings presented in this research will help
organizations understand the importance of ICT implementation and subsequently adapt to the
same.

Logistics firms may understand the need to manage information effectively and the importance
of integrating with other participating logistics organizations in order to achieve efficient
functioning of several activities including inbound and outbound transportation, order
procurement and fleet management, in order to streamline the physical product flows of their
customers. The study insists on the importance of ICT systems to logistics, since they make
available the right information, at the right time, at the right place, to the right person. The
findings support the fact that ICT systems are critical for managing logistics operations and lack
of timely information may lead to improper management of the above mentioned issues,
impacting the overall performance of the organization.

Academically, this research work will help the academicians and students to understand the
nuances of the logistics sector in India and the ICT implementation in the industry.

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