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 Nahid Hasan                            01713111478

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 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. Introduction
In 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 Identification
Despite 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 Department

Inventory 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
Central Procurement Department
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 processing like quotation collection, preparation of
stored, additional information is not readily comparative statement, vendor selection,
available from a central database, valuable man- corporate authority approval, etc.
hours are lost looking over machinery service 5. Absence of quality assurance system and vendor
manuals performance management system
4. The Inventory File lacks the following: 6. Absence of order tracking tools, any update
(i) Recommended stock for each item required by the line manager results in confusion
(ii) Minimum / threshold / critical quantity for and report has to be generated by calling over the
requisition issue or reorder telephone, sending email from smart phones and
(iii)Lead time requirement for individual part then using a laptop to manually generate a report
(iv)No automated alert for items which reach on order status which highlights lack of flexibility
minimum / threshold / critical quantity or 7. Sometimes the same task is assigned to more than
reorder quantity one individual
(v) Additional information like Photos, Maker, 8. Inaccessibility to the Inventory File leads to further
Service Manual Reference, Planning tool for phone calls & emails to ensure delivery of parts to
next major maintenance parts requirement, power plant site
safety stock recommendation (collecting these 9. Unavailability of required parts both during routine,
information about parts requires excess man- schedule and breakdown maintenances are blamed
hours) in the central procurement department, and there
(vi)Running Hours tracking tool for consumable is clear lack of information exchange with
parts Operation & Maintenance (O&M) Department
(vii) Automated requisition generation
5. 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

3. Information System (IS) for UPGD

By 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) System
By 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 Processes

Plant 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 Contracts

ERP 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 Management
With 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