An extended logistics model with the theory of constraints: Applying TOC in telecom industry

Abstract

The telecommunication industry depends on unit level mobility to respond to unexpected demands occurring over a large geographical range. If the response is not timely and comprehensive, these units may fail to meet the customer' required. Therefore, many telecom enterprises prepared abundant spare part. The arrangement provides "timely and wonderful" service while they raise the debt-to-asset ratio to an uncompromisablc level. However, the classical ERP system is far less effective in the service industry, especially in telecom. The first problem comes from the business process, the finance department debate any fixed assets is in their authority. Another problem is the risk to attempt to reduce the stock of the spare part. To make the solution, the study redefined the concept of stock and the fixed assets in telecom industry, firstly. Then the study developed an extended logistics model according to aforesaid definition. In the definition, any assets which may be redeployed belong to the stock, instead of fixed assets. And the business process was reengineered to transfer the authority of stock management to the extended-logistics department. To improve the effect of the model, the study applies the theory of constraints. The application of the model makes a good performance. © 2008 by Springer Science+Business Media New York.