IS Quality: IS Quality in Relation to Logistics and Supply Chain Management

9 Feb

In my last post I discussed Business Intelligence in relation to IS Quality, I also talked about the role of IS in checkmating environmental degradation. Now I will be examining quality assurance in relation to  information system quality in logistics and supply chain management.  Although ports’ facilities and services are the main link in international logistics, however, ports have created unnecessary bureaucracies in maritime transport.   Also, the provision of quality services have been compromised by the complex internal  organisation of the ports arising from large number of different groups that take part in goods transfer between internal and external transport vehicles. It is obvious that the quality and efficiency of ports’ services has impacted on both service providers, customers, port authorities, as well as the port hinterland by way of multiplier effect on the regional economy. For the forgoing, I suggest that certification of every service provider is a means to assure quality service to customers. Hence, the main aim of logistics supply chain management is to facilitate processes and transform service approach so as to satisfy consumer preferences efficiently and effectively.

It has been observed that these processes have been marked by а steady shift from historical use of open markets to new business co-ordination mechanisms between vertically related market stages, such as those between producers and processors, and between processors and distribution channels. Internationalization of firms and markets can only succeed with a high level of performance of all activities linked with transport, storage and distribution mechanisms. In international trade, cost of logistics is very important to agrifood industry.

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Figure 1: Logistics Ship in motion

 

Quality Assurance Guarantee

Quality of port services to end customer is essential attribute in logistics provision and must be guaranteed.

To ensure an agreed and satisfactory level of service provision, port customers must ensure that price and related attributes of goods must be clearly specified as written in contracts with the service providers. The problematic situation is that, all exporters and importers can only exchange official contracts with terrestrial or maritime transporting firms and customs agents. Any other such arrangements and measures can only be done through informal contracts. However, with the absence of а formal contract, logistics agreements are only covered by minimum standards whose formulation is so vague that “principal” who wishes to avail himself of such provisions is seen as breaking the rules and is likely to incur very high enforcement costs. This restriction allows importers and exporters minimum control of port logistics activities.

Beyond the control of all parties involved are contractual conditions of stevedores and consignees, and of public sector organizations which are often capricious and answerable only to state. Every other informal logistics contracts are covered by International Commerce Terms (Incoterms).

The purpose of these rules is to facilitate international transactions, increase transparency and define rights and responsibilities of contracting parties.

Problems Encountered

There are usually some problems with Co-ordination, Control and Asymmetric Information in port services due to some service providers and other heterogenic matters. Nevertheless, the perceived relationships between service providers and their customers – ship owners and exporters and importers of traded goods – tend to be both co-operative and competitive in form. Most corporate firms often decide to outsource their logistics to principal-agents and save themselves the troubles. If logistics is outsourced, then asymmetric information may be important, especially where transport involves both bulk and container goods over long distances of maritime transport. All-in-all, principal-agent selection may sometime lead to the adverse problem and moral hazard. This is due to the fact that under settings of quality uncertainty, market prices might generate insufficient returns for high quality service provision.

Quality Solutions

Supplier of goods or services should send signal to customer regarding characteristics of service or performance of agent, this also depends on prevailing circumstances, because signal of product quality may be that of price, reputation, guarantees, or even the promotional costs.

Also, certification by а third party or acceptance of minimum quality constraints or standards of licensing is considerable. This will help to confer approval in terms of ability, excellence and good organization, to create the required confidence to undertake transactions with third parties.

Conclusions

To improve the functionality of international logistics supply chain, high quality port services provision is needed, so that processes whereby goods are transported by sea will meet expectations of final consumers in terms of punctuality, quality, reliability and price. This can only be achieved by the use of optimum standards of coordination among service providers firms. Information system can simplify the entire process by making adiquate use of Database Management System (DBMS), and ensuring that every other application is in place.

 

References:

Safwan Al Salaimeh, Computer Science Department, Irbid National University; American Journal of Scientific Research, ISSN 1450-223X Issue 1(2009), pp. 34-36; http://www.eurojournals.com/ajsr.htm

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