INVENTORY ACCURACY PROJECT
1. PROJECT DEFINITION 3
1.1 Background 3
1.2 Project Objectives 4
1.3 Desired outcomes 4
1.4 Project Scope and exclusions 5
1.5 Constraints 5
1.6 Assumptions 6
2. BUSINESS CASE 7
2.1 Problem Statement 7
2.2 Benefits 7
2.3 Options 7
2.4 Risks 7
1. PROJECT DEFINITION
UNSOS currently operates a centralized warehouse scheme in two locations at Mombasa Support Base (MSB), Kenya and Mogadishu Logistics Base (MLB), Somalia. Centralized warehouses are categorized into five (5) commodity groups headed by commodity managers, these are:
b.Communication and Information Technology Services (CITS).
The UNSOS CWS is the custodian of inventory for the technical sections, responsible for receiving, care and storage of inventory, issuance of inventory to customers, disposal of stocks and the day-to-day operations of the warehouses.
CWS supports the United Nations Assistance Mission in Somalia (UNSOM), the United Nations Support Office in Somalia (UNSOS), the African Union Mission in Somalia (AMISOM) and the Somali National Army (SNA).
Galileo Inventory Management System (Galileo) was the primary system for recording and managing inventory up to 31 August 2017 when it was decommissioned and inventory management function moved to Enterprise Resource Planning System – UMOJA Supply Chain Phase 1.
Prior to the transition to Supply Chain the inventory management was done by the SAUs, this together with the transition to UMOJA, both the physical and inventory records were not accurate. The Office of Internal Oversight Services (OIOS) audit, carried out before the implementation of UMOJA, highlighted severe discrepancies in the inventory which was not reconciled and a number of processes that were either not being carried out or being carried out incorrectly. These historic inaccuracies in the inventory were further compounded with the transition from Galileo to UMOJA due to inevitable teething problems, technical issues with the system, and user inexperience of the system.
The combination of these issues has had a severe effect on MLB Inventory/warehouse data accuracy and management of physical materials/goods.
MLB has reached the point where it can no longer operate effectively and cannot provide timely support to UNSOM, UNSOS, AMISOM and the SNA. MLB cannot provide accurate information to customers due to the current state of the inventory. The current issues have a significant financial and operational effect on the mission.
The current problems are:
- The UNSOS material/item data is inaccurate.
- Difficulties in the control and management of the container yard within limited space. Commodity groups and BIN locations are not organized in a logical way.
- Product ID (PID) Customization and data conversion/enrichment. Currently many line items with generic descriptions and multiple line items are recorded with the same PID
- Records are not properly maintained and updated (human error).
- The physical quantities of stock are unknown in many cases.
- Inventory records do not reflect the physical stock.
- UMOJA transactions are not being completed to an acceptable standard.
The above problems are having a severe detrimental effect in the entire process of tracking, monitoring and controlling, reporting and planning to respond to the operational demands.
1.2 Project Objectives
- Reconcile the UNSOS inventory managed by CWS.
- Physical reorganization of MLB container yard by commodity groups.
- BIN locations organized in a logical manner.
- Physical segregation of the different stock holdings (UNSOM, UNSOS, SNA).
- Development of a sustainable monitoring and control mechanism to maintain the accuracy of inventory records through the development of processes and SOPs, Job Aids attained to the CWS process and training of staff and reassignment of UMOJA roles.
1.3 Desired outcomes
- Full reconciliation of physical and electronic inventory through reorganizing the warehouse and BIN location in a logical and optimized way to support effective property management functions.
- To provide visibility on customers relevant information, such as aging of stock, expiry dates, inbound/outbound activities (goods receipts and goods issues/transfers), of all stock holdings to inventory owners.
- Delivery of items to customers and order fulfillment in an efficient and timely manner.
- To improve knowledge and consciousness of the importance of UMOJA inventory and warehouse management procedures and processes while entering data.
- To allow re-evaluation of requirements through identification of aged, obsolete and unserviceable UNSOS stock holdings
- Improve assets accountability and financial reporting on PP&E and inventory in compliance to FRR
1.4 Project Scope and exclusions
- The scope of this project includes UNSOS managed materials in unit stock in MLB yard. Items in use, are excluded from the scope of the project.
- Revision of operational processes which affect inventory accuracy, such as:
- Inbound Goods Process
- Inventory Goods Movement Process
- Counting & Controlling Process
- Physical reorganization of UNSOS stock holdings in terms of BIN location management and segregation of inventories.
- At the time of starting the project a large number of different materials have the same product IDs and generic descriptions in UNSOS inventory.
- There is currently a lack of available Material Handling Equipment (MHE). Additional MHE has been requested from Alpha Logistics and was due to be in place on 1st February, however, it has still not been supplied to MLB. It is likely to be the end of March before any of the unserviceable MLB MHE is repaired due to issues sourcing parts. Additional MHE is vital to the project being completed without delays as the project cannot interfere with day to day operations. A minimum of two, ideally more, MHE capable of lifting containers are required to conduct the project efficiently without interrupting daily operational effectiveness.
- Data conversion issues still pending completion.
- A new Material Master Catalogue may need to be revised with a new product hierarchy developed by the UMOJA team.
- A large number of transactions have been wrongly performed and may constitute a constraint during the implementation of the project especially if the end-users keep repeating the same mistakes.
- New Product IDs provided by the Umoja Team to replace current materials wrongly codified in UNSOS Inventory.
c. Other projects running in parallel (inventory management and optimization, and UMOJA roles, functions and daily transactions monitoring projects) are successful.
- There is full cooperation and coordination between units, sections and storage locations within Centralized Warehouse.
2. BUSINESS CASE
2.1 Problem Statement
Inaccuracy of the data of UNSOS stock holdings and repetitive shortcomings in inventory and warehouse management practices are affecting entirely the process of planning, sourcing, receiving, storage, issuing and write-off of goods. The currently the inventory is currently not segregated into commodity groups or by customer (UNSOM, UNSOS and SNA) and the current bin location assignment does not meet the requirements for segregation of stock. Consequently the main challenge is to meet the inventory accuracy targets (set at 98% for A stock, 96% for B stock and 95% for C stock).
The benefits of the project are as follows:
- a. Improve the accuracy and reliability of stock holdings for UNSOM, UNSOS and SNA
- Resolve the discrepancies between inventory records and physical inventory
- c. Establish a monitoring and control mechanism that can permit the verification of the verification of the accuracy when entering/recording material data
- Ensure the inventory accuracy targets are met and maintained
- Physical segregation of UNSOM, UNSOS and SNA stock
- Enable effective and efficient management of ABC stock (fast mover, slow movers, non-movers)
- a. Carry on as we are currently operating and accept the risks associated with the current state of inventory and warehouse management.
- b. Undertake the physical verification project with existing manpower and equipment that is currently available.
- c. Perform 100% Physical verification exercise with dedicated manpower and equipment to establish a sustainable Quality control mechanism for monitoring and control of further activities related to inventory and warehouse management.
- a. Generic material IDs and descriptions will be more evident when reconciling begins, extent of the issue may be larger than originally thought.
- b. Issues and receipts for daily operations not managed effectively in parallel with PV spreadsheet resulting in inaccurate data.
- c. Line items not updated timely in UMOJA with new descriptions and product ID’s
- d. MHE cannot be assigned to the PV exercise due to MLB daily operational requirements.
- e. Recently contracted manpower do not possess required skills to perform various PV activities.
- f. Disruption of project flow due national staff not being allowed into MIA, IDF attack etc.