Computerising material release orders. Action research at ABB Transformers, Vaasa

Abstract

Purpose of this action research was to review in-house logistics in a case company and to participate in a project to develop material and information flows between project material stock and assembly lines. A short literature review on supply performance measurement and information technologies used in logistics and supply chain management was combined as a background research. Literature implies that automatic identification may benefit in more efficient material handling and assist in synchronisation of interrelated material and information flows. A reading on agency theory suggests that measurement of agent’s performance and installation of reliable information systems and reporting tools can generate system performance and support the compensation of information asymmetries.

The first phase of the actual action research included series of interviews, discussions and review on operations in order to point out shortcomings and problems of the then prevailing method of faxing the material requisition sheets. These insufficiencies related to data gathering, distribution of information and performance measurement, and an information system development project was launched in order to fix those issues. In the second phase, the author participated in requirement formulation, design, software testing, implementation and user training of the information system. This paper shortly introduces the implemented system and the barcode set-off method for deliveries. In the third phase the implemented information system is evaluated quantitatively by the means of cost-benefit analysis and qualitatively by defining the SWOTs.

The payback period for the invested system is estimated to be less than a year and the net present value was not negative within 50% error margin to any factor. The implemented system is considered to conform to set requirements, but a concomitant SAP implementation impugns the necessity of a distinct system. Also a comprehensive user survey on the system should be carried out in order to point out and fix possible insufficiencies and usability issues.