About Us:

Name ID Phone

Imran Hossain 01840333228

Nahid Hasan 01713111478

Rahat Bin Kamal 1220904060 01914001457

Navid Al Galib 01715238980

Sadia Hasnat 01717220499

Jannat Akbar

Abstract

This case is dedicated to an Information System (IS) solution for United Power Generation & Distribution Co. Ltd (UPGD) in order to improve its Inventory and Procurement Departments and the Communication Interface between these two departments. This recommendation is based on an ERP system with the intention of improving the operational efficiency and effectiveness of the company.

Contents

Abstract.......................................................................................................................................................1

Literature Review........................................................................................................................................3

1. Introduction.........................................................................................................................................4

2. Problem Identification.........................................................................................................................4

Table 1 : Difficulties faced by Inventory Department and Central Procurement Department.................4

3. Information System (IS) for UPGD.......................................................................................................5

4. Execution of Enterprise Resource Planning (ERP) System...................................................................6

a) Enhanced Maintenance Processes...............................................................................................6

b) Procurement and Contracts........................................................................................................6

c) Inventory Management...............................................................................................................6

Literature Review

1. IntroductionIn 2007, United Power Generation & Distribution Co. Ltd (UPGD) was born out of the necessity for ensuring uninterrupted, quality power supply to the industries housed within the Export Processing Zones (EPZ) of Bangladesh. The company has built and is currently operating a Natural Gas fired 88 MW power plant in Dhaka EPZ (DEPZ), Savar, Dhaka and another Natural Gas fired 72 MW power plant in Chittagong EPZ (CEPZ) at South Halishahar, Chittagong. The DEPZ plant consists of Four Wartsila Finland 20V34SG each having capacity of 8.73 MW, Three MTU Germany AOE20V4000L62 engines each having capacity of 2 MW and Five Rolls-Royce B35:40V20AG2 engines each having capacity of 9.34 MW, for a combined output of 88 MW. Whereas the CEPZ plant consists of Five Wartsila Finland 20V34SG engines each having capacity of 8.73 MW and Three Rolls-Royce B35:40V20AG2 engines each having capacity of 9.34 MW for a combined output of 72 MW. On top of supplying to the EPZ’s, the surplus energy is being provided to the PBS-1, Savar of Rural Electrification Board (REB) from DEPZ power plant and to Bangladesh Power Development Board, Chittagong from CEPZ power plant. In addition to electricity, both power plants have also started selling steam commercially to industries within EPZ.

To maintain smooth & continuous operation each plant has to maintain an inventory (headed by the inventory team for each plant located at site) containing over 1500 types of parts, for main engines and plant auxiliaries, as safety stock and stock for upcoming scheduled maintenances. The procurement of these parts are done by the central procurement team (located in United Group Head Quarters, Gulshan, Dhaka) in specific intervals (depending on type & requirement criticality) based on requisitions submitted by inventory teams from each plant. These parts & materials are sourced & procured from a wide variety of local & overseas suppliers and lead time required for delivery ranges from being available off-the-shelf to needing up to 4 months or more.

2. Problem IdentificationDespite such a portfolio, the inventory and central procurement departments of UPGD do not have any credible cross-department information management system to facilitate information sharing, scheduled maintenance & procurement planning, inventory control & automated requisition issue, report generation, purchase decision making, order tracking and closure, etc.

Current Problems or Established Practices are as follows:

Table 1 : Difficulties faced by Inventory Department and Central Procurement DepartmentInventory Department Central Procurement Department

1. Maintains inventory records in an excel sheet (Inventory File), stored at site in a computer with internet connection but it is not accessible by the central procurement team and management in real time, instead is mailed once every month or as per instructions from management, which makes information inaccessible in a timely manner

2. Manual record keeping in the Inventory File (upon arrival of new stock, consumption of part from inventory as requested by Operation & Maintenance team or performance tracking of individual parts) leads to data redundancy and inconsistency

1. Central Procurement Department contains of multiple personnel, who are often on-the-move to various plants (outside of UPGD but under United Group), therefore information gap exists between members

2. Whenever any requisition is issued from power plant, it is distributed manually by line manager to individuals

3. For almost every requisition, considerable time is spent in proper identification of each part due to lack of centrally available information (lack of searchable, accessible information database)

4. Again, considerable time is spent is order

3. Only PART NUMBER & QUANTITY for each part is stored, additional information is not readily available from a central database, valuable man-hours are lost looking over machinery service manuals

4. The Inventory File lacks the following: (i) Recommended stock for each item(ii) Minimum / threshold / critical quantity for

requisition issue or reorder(iii)Lead time requirement for individual part(iv)No automated alert for items which reach

minimum / threshold / critical quantity or reorder quantity

(v) Additional information like Photos, Maker, Service Manual Reference, Planning tool for next major maintenance parts requirement, safety stock recommendation (collecting these information about parts requires excess man-hours)

(vi)Running Hours tracking tool for consumable parts

(vii) Automated requisition generation5. Traditional File Processing leads to lack of

flexibility, poor security and lack of data sharing & availability. For example it is not possible to check stock of any individual part from Head Quarters without calling the store officer at power plant site. Also, quick report generation about specific parts with specific quantities is often time consuming (lack of proper training on Microsoft Excel is another contributing factor)

6. Manually generated requisitions often lead to duplicity and there is no automated way to close requisitions once the subject parts are made available by the procurement team at the power plant site

processing like quotation collection, preparation of comparative statement, vendor selection, corporate authority approval, etc.

5. Absence of quality assurance system and vendor performance management system

6. Absence of order tracking tools, any update required by the line manager results in confusion and report has to be generated by calling over the telephone, sending email from smart phones and then using a laptop to manually generate a report on order status which highlights lack of flexibility

7. Sometimes the same task is assigned to more than one individual

8. Inaccessibility to the Inventory File leads to further phone calls & emails to ensure delivery of parts to power plant site

9. Unavailability of required parts both during routine, schedule and breakdown maintenances are blamed in the central procurement department, and there is clear lack of information exchange with Operation & Maintenance (O&M) Department

3. Information System (IS) for UPGDBy analyzing the problems and difficulties currently being faced by UPGD, it is evident that an Enterprise System like Enterprise Resource Planning (ERP) business management suite is required (with specific modules for integrating the company's Inventory Department and Central Procurement Department, keeping cost constraints and time requirement in mind). With regards to UPGD, it requires a more effective purchase, store and inventory management tool in an application which will optimize these critical operational business processes, including resource management and management reporting. Also, inconsistent communication between departments (manual exchange of information which hindered decision making and created operational inefficiencies) needs improvement. UPGD requires internal communications possibly by creation of a centralized information network accessible from remote locations (example: smart phones).

4. Execution of Enterprise Resource Planning (ERP) SystemBy implementing an ERP Application, UPGD would be able to create a single database (accessible and available to all departments in real time) covering all critical business processes in the Inventory and Central Procurement Departments as well as the Operation & Maintenance (O&M) Department (example: upcoming maintenance schedules, parts requirement for those maintenances, safety stock recommendations, parts consumption trend analysis tools, incorporation of quantitative & qualitative analytical tools and inclusion of analysis results in inventory levels, additional parts information, vendor database, order tracking tools, etc.). Inclusion of the O&M department is being advised due to its close integration with the plant inventory and part requirements and ultimately the central procurement team. This will allow coherent operation and synchronization between key functions and operations of UPGD and should boost employee productivity, quality of performance and eliminate data redundancy.

The ERP Application should be implemented in the following manner:

a) Enhanced Maintenance ProcessesPlant equipment history is be stored in the solution, which will make it easier to manage routine maintenance. This shall also facilitates preventive and breakdown maintenance. the entire maintenance process can be monitored via ERP Applications, which shall automatically generate maintenance work orders if certain parameters are exceeded. This is in line with the method implemented by NHPC Project Kiran, Hydropower in India. Main benefit that can be derived from this approach by UPGD is the inventory information in the system so that managers, planners, engineers, technicians, etc. can easily see the availability and location of spare parts. Senior management shall be benefited because having fault-related data so readily accessible greatly facilitates analysis.

b) Procurement and ContractsERP Applications enable a centralized vendor database and has automated all activities from requisitions to purchase orders as well as the receipt, issue and accounting of store items and assets. This shall eradicate the need for separate Inventory and Procurement teams. Vendor evaluation parameters and Quality Assessment Protocols can be defined in the system given UPGD operates on cost and quality basis for selection of vendors and parts. With the tendering process configured in the system and made available online (more on this is explained later), Request for Quotations (RFQ) can be monitored at every stage. Similarly, having all the information in one solution shall enable UPGD to check whether each plant is progressing according to the terms of their contracts & operation schedules with alerts ensuring deviations are highlighted. Further, IFS Applications has been integrated with 3rd party e-procurement software. This is similar to what has been implemented by In State-Sector Coal-Fired Power Generation Plants in India.

c) Inventory ManagementWith all purchasing activities in the ERP Application and detailed information for equipments, spares and other inventory, it shall be easier to view and check what is in stock and where. The difficulties faced by UPGD from Traditional File Processing should be eradicated. Incorporation of bar codes for tagging and identification of each part is to be implemented where bar codes shall contain all necessary information about each part like part number, sub-system information , storage location, etc. With relevant part

numbers and vendor information codes mapped to the inventory, vouchers can automatically generated and passed along to the accounts department of UPGD. A more thorough version of a similar ERP approach has been implemented by Guizhou Qingzhen Power Plant in China.

Reference

1. Strengthening Operations and Maintenance Practices In State-Sector Coal-Fired Power Generation Plants in India. (n.d.). Energy Sector Management Assistance Program (ESMAP). Retrieved December 15, 2013, from https://www.esmap.org/sites/esmap.org/files/P105191_53006_India_Strengthening%20Operations%20and%20Maintenance%20Practices%20In%20State-Sector%20Coal-Fired%20Power%20Generation%20Plants.pdf

2. Case Study: Power Plant ERP System | ERP for Power Plant |. (n.d.). Case Study: Power Plant ERP System | ERP for Power Plant |. Retrieved December 16, 2013, from http://www.knowledgematrixinc.com/case-study-power-plant-erp-system/

3. IFS Applications Supports NHPC's Project Kiran, The First Major ERP Initiative in the Hydropower Sector in India. (n.d.). IFS Customer Story. Retrieved December 14, 2013, from https://www.google.com.bd/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCkQFjAA&url=http%3A%2F%2Fwww.ifsworld.com%2Fid-id%2Fdownload%2Fcustomers%2Ftestimonials%2Fm-s%2Fnhpc%2Fcustomer-story-nhpc.pdf&ei=2a2uUpnaB4aSrgeW44DgCw&usg=AFQjCNHxvfyUmJHUB

4. Rashid, M. A., Hossain, L., & Patrick, J. D. (2002). Chapter I. The Evolution of ERP Systems: A Historical Perspective (pp. 1-15). : Idea Group Publishing.

5. The Integration of Management and Control System in Guizhou Qingzhen Power Plant. (n.d.). HollySys. Retrieved December 16, 2013, from http://www.hollysys.com.sg/home/electric-power/power-plant-case-study/399-the-integration-of-management-and-control-system-in-guizhou-qingzhen-power-plant