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Executive Summary

The objective of this report is to identify how LanTroVision manages their inventory and
quality services. In this assignment, solutions are recommended to improve LanTroVision to
be more competitive. Over the past 10 years, this company has provided different sorts of
services, such as consultation, site survey, design, implementation, cut-over, handover
documentation, and provision of maintenance despite that LanTroVision has a very strong
cash financing and zero debts. They do collaborate with partners and supporters in providing
products service for data centre solution, provide infrastructure management software and
hardware, support manufacture, distribution of service of electronic and networking test tools
and other services. On top of that, they can build up stronger partnership to boost their
business and get a win-win situation.
Introduction
Lantrovision (S) Ltd. is an investment holding organization, which involves in the providing,
developing, installation and supply of company solutions on network incorporation and
structure wiring and those of electricians. The organization functions through the following
segments: Selling of Item, Installation Performs and Servicing Services. The Selling of Item
section offers cable products and their elements. The Installation Performs section provides
set up solutions for organized wiring techniques. The Servicing Services section provides
maintenance and support solutions for organized wiring techniques. Lantrovision was
established by Thye Yuan Chan in 1990 and is located in Singapore.

Reason to choosing topic: Managing Inventory and Quality Management


We had chosen two topics, managing inventory and quality management, for
analysing a report about the LanTroVision (S) Ltd.
Manage an inventory with effective and efficiency is very important to any company
for managing their business as it help to identify the critical cost drivers. In advance of
managing resources while knowing the exact time need to spent, where the buyers and how
many commodity managers are needed. Through identifying these resources, company can
control smoothly all the activities in management of inventory. In addition, performance of
the inventory management is directly influence the customers satisfaction, thus it need a
strike balance between inventory investment and customer service.
According to the annual report of LanTroVision, their inventory is stated at the lower
cost and net realizable value. FIFO basis is applied by LanTroVision which accounted the
raw material comprises purchase costs. Net realizable value is the estimated selling price in
the ordinary course of business, less estimated costs of completion and estimated costs
necessary to be incurred for selling and distribution.
For quality management, a business principle that ensure the products, services and
internal processes. From that, it can identify the weaknesses, faults, strengths and areas for
improvement of the products to achieve to have high quality, effective performance that

meets the customers expectations. It is very important on the LanTroVisions product as if it


has something going wrong in the quality of their product, it may cause a serious problem
like leakage of electricity.
As a result, two of these topics are the important field while manage the flow of the inventory
and determine the quality of product for achieving goals to reach the customers satisfaction.
Topic: Inventory management
Current situation on the inventory management
After we interviewed some staffs in LantroVision and read though their annual report, we
found out that their inventory management is facing some problems. First, they are actually
suffering from the inaccurate inventory information.
LanTroVision has built upon a reputation for providing best-in-class network and cable
infrastructure services (Fluke Networks, 2014). Maintaining such high standards of service
proves to be a challenge for them as customer expectations increased overtime amid the
companys budget cuts and tight project schedules. In order to cater to this change in
expectations, LanTroVision ensures that their technicians are constantly trained and equipped
with the latest technology to gain the upper hand. Apart from this, the cables provided by
them have to be of top notch quality. To achieve this, Inventory management and its IT
infrastructure is vital for LanTroVision to meet this strategy.
LanTroVision outsources its IT infrastructure to Enhanzcom, a Singaporean based IT
company which provides IT solutions to its clients. LanTroVision needed a system which
could improve their business and operations workflow as their business grew, states TyChan,
Managing Director of LanTroVision. Outsourcing allows the organization to focus on their
core operations, but it brings about certain problems such as over reliance, and total control
by the service provider. We will now examine two common problems associated with this.
1.1 Inaccurate information and data
Technology has empowered customers with the ability to source and locate products with a
click of a button, while purchasing has been made easy with the rising trend of e-commerce.
E-retailing websites such as EBay and Amazon are filled with an abundance of e-retailers
advertising their products online, and if a particular retailer does not carry the products
customers want, they can simply source and place orders from a different retailer. This then,
has made inventory management important for retailers and e-retailers alike to ensure that
final customers are kept satisfied.
Supply chains today are increasingly intricate as there are now many different channels
available for suppliers to reach their final consumers. A traditional supply chain involves four
common nodes, manufacturer, supplier, distributor, retailer and finally consumer.
Suppliers may choose to involved either one or both mediums to reach their consumers, but
there are occasions where suppliers are able to deal with their consumers directly, examples
such as Dell. The important notion here is the ability to fully integrate the different channels
to ensure that all inventories are accounted for, resulting in improved order fulfilment.

Errors in inventory management can be caused by a few problems within the supply chain,
mainly relating to supply, information, forecasting and resource which will reduce
efficiency. Each of these categories provide different challenges for the suppliers, therefore to
remain competitive, these problems have to be solved instantaneously. Such problems are
usually related to one another. An error in the supply, could lead to inaccurate demand
information, and future forecast could be affected as a result. Therefore by monitoring this
information carefully, suppliers are able to minimize errors in their supply chain.
1.2 System Error
System error is a common problem within the IT infrastructure. This sort of error brings
about certain problems such as disruption of operation workflow (Figure 1), inaccurate
information, poor planning and scheduling, all of which will lead to poor customer
satisfaction levels. As mentioned before, LanTroVision IT services are outsourced by
Enhanzcom and they are using a platform called FITPRISE EMS. Even though this system
brings about many benefits to the organization, there are occasions where the staff of
LanTroVision faced difficulties with the system itself. This could be due to lack of training in
terms of using the software or errors within the software itself. System errors are detrimental
to the organizations business workflow and in order to prevent such disruptions, there is a
need to reduce this error.

Figure 1: Typical service process of a business operation workflow (Enhanzcom, 2014)


Second, they are facing the inventory pilferage and obsolescence. The inventory pilferage is
the reduction of goods due to thievery. This problem was discovered through the interview, in
which they mentioned that sometimes the electrical wiring cables that are left at the working
places will be lost. We believe that the cables have been stolen because they are made of
copper which can be sold at a high price to resource recyclers. LantroVision can apply JIT
technique to solve the issue at hand. For example, they bring only the cables needed on that
particular day to the working places. If dividing the cables into small parts causes
inconvenience, the management may also orders the workers to return the cables daily and
meanwhile, sets up a special team to ensure that the length of cables used are compatible to
the progress of the project. This will not only be able to prevent the inventory pilferage but
also to make sure that the project can be completed within the time limit.
On the other hand, inventory obsolescence is the inventories that are unsellable or unusable in
the future. For instance, company A, which ordered 100 tons of cheese, managed to sell only
80 tons within one year and in this scenario, the remaining 20 tons will become their
inventory obsolescence. In LantroVisions case, their inventories can be divided to two types.
The first type of inventories is the remaining cables of the previous project and may be useful
for their next project. Second, they also store equipments needed for their projects such as
ladders, electric drills, screws and etc. The second type of the inventories is necessary
because those tools can be considered as assets of the company. However, the first type of the

inventories should be minimized because they will have very low commercial values when
they become inventory obsolescence one day in the future. From the interviews and annual
report, we found out that the inventories have increased in 2013.
Annual report 2013

2012

2013

Inventories

$6,493,000

$7,025,000

Furthermore, they were forced to increase the provision for inventories obsolescence due to
the increase of inventories.
Annual report 2013
Provision for inventories obsolescence

2012
$152,000

2013
$450,000

Moreover, in the annual report, the Chairman also stated that their allowance for inventory
obsolescence has increased to nearly $1,056,000, which means that they have lost about
$1,056,000 due to the inventory obsolescence.

Hence, LantroVision should manage their inventories in a more proper way. In this case, a
more accurate forecasting method is required to forecast their projects. They need to forecast
the number of upcoming projects they may be handling, the size of the upcoming projects,
the number of cables required for the upcoming projects and etc. In addition, they need to
apply the JIT technique in order to decrease the safety stocks and inventories. They should be
aware that the increase of inventories may causes an increase of inventory obsolescence and
pilferage as well as the holding cost. Moreover, they should try to reduce replenishment lead
times so that they do no need to store such a great number of inventories. Although the
company can write off the inventory obsolescence, but they still need to pay for the holding
and ordering costs. Therefore, we strongly suggest that actions are taken to reduce the
inventory obsolescence.