Final Report ME4072

Critical Inventory Management, Monitoring and Inventory Trend Study System for Sri Lanka Telecom PLC
By Index No. 090020R 090033J 090170B 090583T Name D.W.N.M. Amarawardana M. A. Ashroff V. H. Hapuarachchi C. C. Wijesiriwardana Marks

Dr.H.K.G.Punchihewa

Department of Mechanical Engineering, University of Moratuwa

Department of Mechanical Engineering University of Moratuwa Sri Lanka 30 December 2013

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CONTENTS 1. INTRODUCTION TO THE ORGANIZATION .................................................................................. 1 1.1 1.2 1.3 1.4 1.5 2 3 4 Company Information- Sri Lanka Telecom PLC ..................................................................... 1 Project Focus .......................................................................................................................... 1 What is critical inventory? ....................................................................................................... 1 Current Critical Inventory Handling ......................................................................................... 1 Birds Eye View of Inventory Flow ........................................................................................... 2

PROBLEM ANALYSIS .................................................................................................................... 2 DATA COLLECTION ....................................................................................................................... 3 ANALYSIS MODEL ......................................................................................................................... 4 4.1 VED Analysis........................................................................................................................... 4

PROPOSED INVENTORY TRACKING SYSTEM .......................................................................... 6 5.1 5.2 5.3 Overview of the System .......................................................................................................... 6 Illustration of the Proposed System ........................................................................................ 7 Requirement of the System ..................................................................................................... 7

6 7 8

CONCLUSION ................................................................................................................................ 9 FUTURE DEVELOPMENT ............................................................................................................. 9 APPENDICES .................................................................................................................................iii 8.1 8.2 List of Critical Inventory ...........................................................................................................iii Inventory Consumption Data................................................................................................... v

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LIST OF FIGURES Figure 1 - Present Inventory Flow Process ............................................................................................. 2 Figure 2 - Monthly Consumption Pattern ................................................................................................ 3 Figure 3 - Critical Inventory Transaction from July, 2012 to April, 2013 ................................................. 5 Figure 4 - Schematic Diagram of Inventory Tracking System ................................................................ 6

LIST OF TABLES Table 1 - Daily inventory Outflow within the Warehouse ........................................................................ 3 Table 2 - Percentages of Annual Consumption ...................................................................................... 4 Table 3 - Critical Inventory Data ............................................................................................................. 5

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1. INTRODUCTION TO THE ORGANIZATION 1.1 Company Information- Sri Lanka Telecom PLC

Sri Lanka Telecom PLC is the leading telecommunication provider in Sri Lanka with a net customer base of 8.5 million. In order to successfully provide a continuing and uninterrupted service, company handles a large variety and volume of inventory. Telecommunication sector, utilities, transportation, adequate stockholding of critical inventory becomes essential to ensure day to day work. Insufficient stocks affect overall performance and increase the operational risk. On the other hand, oversized inventories lead to inefficient use of capitol and create unwanted expenditures. 1.2 Project Focus

Since re-order levels are not properly planned ill-mannered ordering takes place. These unplanned orderings results in opportunity costs that in millions of rupees in annum. Currently the company uses an inventory monitoring and tender handling interface code named SICOS. This GUI informs procurement division of inventory shortages and on-going tender levels when prompted by the inventory management in case of an inventory shortage. This project is focused on inventory for relatively critical, and that has a high out flow rate, rather than slow moving inventory. Selected inventory that are tagged as critical inventories given as a list in the report below. Optimization criteria considered are minimization of costs, maximization of equipment availability, easy inventory tracking and the reaching of a desired stock reliability. For stock reliability, instantaneous and interval reliability calculations are to be are considered. 1.3 What is critical inventory?

Some inventories are categorized as critical inventory. Any shortage of these items will result in an immediate stoppage of work undertakings. It is required to keep detailed records of such items at all times and should be easily traceable with in the warehouses. Due to poor inventory tracking, handling and lack of trend calculation, most of critical inventory gets misplaced or remains untraced. Up to the point where management is informed by the inventory keepers of shortages, inventory in not tracked properly for early detection. 1.4 Current Critical Inventory Handling

Current critical inventories are handled by recording the gate passes in the inventory handling process which is not efficient and get misplaced sometime. The following Figure 1 shows the process flow of Sri Lanka telecom inventories.

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1.5

Birds Eye View of Inventory Flow

Figure 1 - Present Inventory Flow Process 2 PROBLEM ANALYSIS

As Sri Lanka Telecom PLC handles large variety and volume of inventory to provide an uninterrupted service, an effective inventory management system is necessary. The current inventory control method indicates the poor inventory tracking system which is performed manually by maintaining the records of gate passes. Some of the inventory equipment are categorized as critical inventory which has the highest annual consumption value compared to other inventories. Due to this poor inventory tracking system, The Company cannot recognize identical items that have been categorized as critical items. The company likewise suffer costly downtime waiting for rush shipments of equipment that already resides in their warehouse and waste maintenance technician time searching for those items. In order to identify possible solutions for this problem it is needed to perform an effective analysis and complete data are essential. A prerequisite to such analysis involves data cleansing and rationalization to uncover valuable information, such as revealing where improper re-ordering of critical items. The data and steps involved in an effective analysis include: Current inventory items Inventory age and utilization Current inventory ordering pattern Prioritization based on consumption pattern and criticality Existing inventory tracking system

The inventory of the company is characterized by a large percentage of infrequently used items, items with consistently high demand, items with demand spikes and critical items which make direct replacement in repairs (such as Network Cables). The current inventory tracking system results in an improper re-ordering of items because future demand cannot be accurately forecasted using current methods.

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DATA COLLECTION

Data was collected from the warehouse and SLT headquarters concerning ordering, handling and flow of selected critical inventory between the time periods of twelve months of the year 2012. Furthermore, in order to understand the inventory layout and process flow, SLT warehouse in Peliyagoda was visited. Data regarding monthly outflow of selected inventory was also acquired to perform trend patterns calculations and for future analysis. Most of the data were collected through job cards and gate passes that was acquired from the warehouse managers. Data was also observed that of the lag between inventory shortages and procuring that occurs seldom. Figure 2 - Monthly Consumption Pattern
20000 18000 16000 14000 12000 10000 UNITS 8000 6000 4000 2000 0 Januar Februa March April y ry May June July August Septe Octob Nove Decem mber er mber ber

Monthly Consumption 1 PSTN Phones 18851 4713 10996 18851 17280 14138 18851 10996 10996 14138 6284 10996 2 ADSL Routers 14096 7831 10964 17229 10964 12530 12530 18795 12530 14096 7831 17229

Above is outflow pattern of two selected critical inventories. Depending on the data, analysis can be performed on yearly consumption and order levels needed to fulfill the need with lowest cost. When considering the inventory flow inside the warehouse, depending on the flow and the frequency of the items movement, placements can be done for easy access. Data was acquired to analyze the flow as well. Depending on data, placement of such inventory can be strategically placed within the warehouse premises for easy access. Table 1 - Daily inventory Outflow within the Warehouse
Inventory PSTN Phones ADSL Routers Cable PVC Twin ZTE Modem CDMA Phone Sun Servers PL156 200Ah Narada battery Network CAT 5e, Normal UTP Cable CAT3 (3 Pair, UTP) UOM Pcs Pcs M Pcs Pcs Units Pcs M M Total Issues (Peliyagoda) 157,092 156,626 587,000 112,248 32,254 1,542 552 1,154,879 658,491 Average item outflow per day 436 435 1631 312 90 4 2 3208 1829

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ANALYSIS MODEL

Critical inventory of this organization often remain untraced or get misplaced due to current inventory tracking system, prioritization of the inventory is critical in order to keep reorder levels under control within the supply chain and it is required to focus on items that are most critical to the organization so that an effective analysis could be done using VED analysis model for this issue. 4.1 VED Analysis

The VED analysis can be used to determine the criticality of an item and its effect on the company services. This analysis of the items in Sri Lanka telecom inventory, can be used to classify the items into vital (V), essential (E), and desirable (D) categories. The items that are critically needed in their daily service, which must be available in the warehouse, are included in the vital (V) category. Items with lower critically need, which may be available in the warehouse, are included in the essential (E) category. The remaining items with lowest critically, the absence of which will not be essential to their daily service, are included in the desirable (D) category. So the following Table 2 shows the total annual consumption of the items and the percentage. Table 2 - Percentages of Annual Consumption

S/No 1 2 3 4 5 6 7

Item

UOM Pcs Pcs m Pcs Pcs Units Pcs m m

Total Issues (Peliyagoda) 157,092 156,626 587,000 112,248 32,254 1,542 552 1,154,879 658,491

Percentage 5.49% 5.48% 20.52% 3.92% 1.13% 0.05% 0.02% 40.37% 23.02%

PSTN Phones ADSL Routers Cable PVC Twin ZTE Modem CDMA Phone Sun Servers PL156 200Ah Narada battery 8.1 Network Cable CAT 5e, Normal UTP 8.2 CAT3 (3 Pair,UTP)

According to the obtained figures item No. 3, No. 8.1 and No. 8.2 can be considered as (V) vital or most critical items. So for these critical items a large stock of inventory is generally maintained, while for other items, a minimum stock is enough. The above critical items should have tight inventory control, more secured storage areas and better forecasts. Reorders should be frequent, with weekly or even daily reorder because avoiding stock-outs or improper reordering on V items is a priority. So, Following Table 3 shows the obtained data for critical items and Figure 2 indicates the consumption variation of these critical inventory from July, 2012 to April, 2013 period.

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Table 3 - Critical Inventory Data

S/No 3

Item

UOM m m m

Total Receipts 521,000 1,125,436 547,329

Total Issues (Peliyagoda) 587,000 1,154,879 658,491

Cable PVC Twin CAT 5e, Normal UTP 8.1 Network Cable CAT3 (3 Pair,UTP) 8.2

Figure 3 - Critical Inventory Transaction from July, 2012 to April, 2013

Consumption Pattern of Critical Items

140000 120000 NUMBER OF ISSUES 100000 80000 60000 40000 20000 0

Cable PVC Twin

CAT 5e, Normal UTP

CAT3 (3 pair,UTP)

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PROPOSED INVENTORY TRACKING SYSTEM

The objective of this system is to provide engineering principles for requirement of proper critical inventory management at Sri Lanka Telecom PLC. Therefore, the proposed system can be used not only for the tracking of critical inventories but also for other inventories as well. 5.1 Overview of the System

This system consists of Radio Frequency (RF) tags attached to the inventory equipment which are designed to track the inventory movements into and out of warehouse. These tags contain respective information of the items with a reference number and warehouse operator at the warehouse manually attaches the respective tags onto the items. The proposed system will be based on automated data acquisition basis which consists of following; RF tags Transmitters Receivers Processor Database

Therefore, this system is very useful for inventory tracking with the move towards improving operating efficiency. Currently SLT is utilizing large amount of money indirectly to track inventories in their warehouse. Proposed system can result in saving large amount of money which they spent on tracking the inventory items. The following shoes the detail diagram of the proposed inventory tracking system.

Figure 4 - Schematic Diagram of Inventory Tracking System

Communication Link

RF Transceiver

Inventory

Processor

RF Tag

Data Base

Logistic Officer Warehouse Operator Page | 6

5.2

Illustration of the Proposed System

As shown in the Figure 3 the proposed system is a Radio Frequency (RF) based automated inventory tracking system to track the inventory movements into and out of warehouse. The RF tags which are attached to the inventory items contains tracking information such as type and quantity and it transmits radio frequency signals to the receiver. Therefore these tags can be programmed prior to warehouse storage with a special device by the warehouse operator. Then these tags communicate with RF control units and sends the data to database of the pallet contents, quantity and presence for instance. The data stored and transmitted by the tags can be used to track the presence, quantity, type and age of items in the warehouse. 5.3 Requirement of the System

When designing a system for the inventory tracking criterion there are some initial requirements which need to be successfully provided by the proposed system, therefore followings are the requirements that should be provided with the system. Ability to automatically track items The tracking system must be able to track all the items with in the warehouse It should be able to track the movements of items into and out of the warehouse The tracking system must be able to function in industrial environment The system must automatically store data into the database The tags must be able to transmit and receive signals which should not interfere by the storage of the items The tracking system must provide graphical user interface for use by warehouse workers The system must be able to track items in the warehouse simultaneously without any lag The tracking system should identify the critical items in the inventory among other items The logistic officer should be able to get near real time inventory data at any instance

The primary function of the system is to track items and provide respective data which can be used to improve efficiency, reduce costs and reduce errors in the process of storing items. The end user of the system is warehouse operator and the logistic officer who are responsible the inventory items within the warehouse. The logistic officer is involved at the beginning to initiate inquires, and at the end to use the data results generated by the inquiries. The warehouse operator involves in the tag programming and inventory storing process.

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The following Figure 4 illustrates the system structure of the entire inventory management system.

Inventory Items Check in

Inspect by Operators

Program the Information

Tags Attachment

Submit Data to the Database

Transport to the Relevant Section

Store items

Check by the Operator

Verify Submitted Data

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CONCLUSION

This interim report provides the status of the present inventory flow of Sri Lanka Telecom PLC and the components related to critical inventory of the organization. While steady progress in understanding the current software based system used by Sri Lanka Telecom PLC, a new program of exploration has been done to establish a well organized and better mechanism to empower inventory system of the Organization. However, it has been decided to compress this critical inventory breakdown further and deliver a sample inventory management system due to time constraints but the project will be further expanded focusing the large domain of critical inventory system once the required level of accuracy is achieved by this sample project. 7 FUTURE DEVELOPMENT

A two-part, trade-off analysis will be performed to find an optimal solution for a design that contains multiple, conflicting inventory material criteria. The first part, Multi-Criteria Optimization, will be also performed to figure out a set of potential design solutions. The solutions will be then analyzed to identify Pareto points, which lie on the three-dimensional trade-off surface.

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APPENDICES 8.1 List of Critical Inventory

Pole Pole Concrete L 18 Pole Concrete L 22 Pole Concrete L 24 Pole Concrete L 26 Pole Concrete L 30 Guy Wire Rod Stay Complete 100mm GI Pipe 50mm GI Pipe (Earth Improvement) Nuts for 50mm GI Pipes (Earth Improvement) Bolt & Nut Bolt & Nut L 106 4"x3/8" Bolt & Nut L 114 5"x1/2" Bolt & Nut L 115 5 1/2" x 1/2" Bolt & Nut L 116 6"x1/2" Bolt & Nut L 117 6 1/2"x 1/2" Bolt & Nut L 118 7"x1/2" Bolt & Nut L 119 7 1/2" x 1/2" ADSL Splitter Staple wire cable clip 5mm RJ9 Connector RJ11 Connector RJ45 Connector CDMA Voice CDMA Phone Batterry CDMA-AIJI 3 pin Batterry CDMA-HUAWEI Batterry CDMA-ZTE non NTC Batterry CDMA-ZTE NTC Batterry CDMA-ZTE LI/ION CDMA Antenna_10 m Power Pack CDMA-5v Power Pack CDMA-12v CDMA Date Cables_ZTE USB CDMA Date Cables_Huawel USB CDMA Date Cables_Aiji USB CDMA Date Cables_Aiji Serial CDMA Date Cables_Huawel Serial Indoor Antenna-CDMA-AIJI,ETS22,ZTE-W MDF Back Mount Frame_100 PR Krone Back Mount Frame_100 PR 3M Back Mount Frame_128 PR Krone Back Mount Frame_128 PR 3M Label Holders_Krone Label Holders_3M Disconnection Module 2/10 10PR Krone Disconnection Module 2/10 10PR 3M Disconnection Module 8 PR Krone Disconnection Module 8 PR 3M Arrestor CASETTE empty (Krone) CABLE TIP UNIT 0.5mm/50PR CABLE TIP UNIT 0.5mm/100PR CABLE TIP UNIT 0.5mm/200PR CABLE TIP UNIT 0.5mm/300PR

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Wire Jumper Wire Jumper_ Black & White Wire Jumper_ Red & White Wire Jumper_ Blue & White Branch Off Kit Branch Off Kit (UG) LARGE Branch Off Kit (UG) MEDIUM Branch Off Kit (UG) SMALL Closures Doom Closures_30A Doom Closures_31A Cable Closures (Aerial)_TRAC-50/250 & 3M - 2 X 12 Cable Closures (Aerial)_TRAC-75/300 & 3M - 2 X 19 Cable Closures (Aerial)_TRAC-75/450 & 3M - 3 X 19 Cable Closures (UG)_75-15-250UG50-100P Cable Closures (UG)_122-30-300UG 400-1000P Cable Closures (UG)_122-30-500UG 400-1000P Cable Closures (UG)_160-42-500UG 1200-1500P Cable Closures (UG)_160-42-720UG 1200-1500P Cable Closures (UG)_200-50-500UG 1800-2400P Cable Closures (UG)_200-50-720UG 1800-2400P Cable Closures (UG)_43/8-200 Cable Closures (UG)_43/8-350 Cable Closures (UG)_75-15-500UG50-100P Cable Closures (UG)_75-15-650UG50-100P Cable Closures (UG)_92-25-300UG 200-300P Cable Closures (UG)_92-25-500UG200-300P Cable Grip Cable Grip Small 14mm Cable Grip Small 18mm Cable Grip Large 38mm Cable Grip Medium 32mm Cable Grip Small 22mm Connector Connector Butt T (UB 2A) Connector UR2 Connector Butt UY Fittings Terminal Fittings Fitting Aerial _Straight Fitting Aerial _Mild angle (Angle Fitting) Fitting Aerial _Sharp angle Other External C.C.T._10PR Bridal Ring Buckle 13.5mm for CCT Steel Band 10 MM Buckle 20 mm for CCT Steel Band 20 MM Hook L Drop Wire Drop Wire Connectors Drop Wire Cleat Hook C Retainer Drop Wire Station Protector Rod Earth Wire PVC Earth Staple wire cable clip 4mm

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8.2

Inventory Consumption Data

Total Item Transaction from July, 2012 to April, 2013

Monthly Consumption

s/No 1 2 3 4 5 6 7 8

Item

UOM Pcs Pcs M Pcs Pcs units Pcs M M

Total Issues 157,092 156,626 587,000 112,248 32,254 1,542 552 1,154,879 658,491

Jan.

Feb.

Mar.

Apr.

Ma.

Jun. 14138 12530 35220 6735 1935 139 50

Jul. 18851 12530 46960 8980 2580 123 50

Aug. 10996 18795 64570 7857 2258 123 55

Sep.

Oct.

Nov.

Dec.

PSTN Phones ADSL Routers Cable PVC Twin ZTE Modem CDMA Phone Sun Servers PL156 200Ah Narada battery Network Cable 8.1 CAT 5e, Normal UTP 8.3 CAT3 (3 pair,UTP)

18851 4713 10996 18851 17280 14096 7831 10964 17229 10964 46960 41090 35220 64570 46960 7857 10102 8980 10102 8980 2903 2580 2580 2903 1935 123 139 139 123 93 44 44 44 44 44

10996 14138 6284 10996 12530 14096 7831 17229 46960 46960 29350 82180 10102 8980 8980 14592 3225 2580 2903 3870 139 123 139 139 44 44 44 44

92390 92390 92390 92390 92390 103939 103939 115488 92390 92390 92390 92390 65849 52679 46094 52679 46094 59264 52679 65849 52679 59264 52679 52679

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