1. Logistics Warehousing Introduction

The Logistics & Warehousing area plays an important role in the NaaS Operator as it defines the overall process in which the different network elements are ordered, stored and transported to the final destination. Through an optimal definition of these aspects, and optimization of the working capital can be achieved and potential delays on the network deployment can be avoided.

This module guides the NaaS operator through an overview of the Logistics & Warehousing fundamentals and the imperative of its optimal definition and implementation. Furthermore, it provides methodologies and procedures to support NaaS Operators in the definition of the required design and operational processes to implement and operate their Logistics & Warehousing activities.

1.1 Module Objectives

This module will enable the NaaS Operator to stand-up, run and manage the Logistics & Warehousing processes required to deploy and operate their network. The specific objectives of this module are to:

1. Provide an information base and fundamentals to perform the tasks associated with Logistics & Warehousing.
2. Guide NaaS Operators in the Logistics & Warehousing strategy definition based on the Inventory requirements over the different phases of the project lifecycle.
3. Guide NaaS Operators to select the most appropriate Logistics & Warehousing implementation approach according to their own requirements, capabilities, and business model.
4. Provide the NaaS operator methodologies to control and manage the Logistics & Warehousing operations.

1.2 Module Framework

The Module Framework in Figure 1 describes the structure, interactions, and dependencies among different NaaS operator areas.

The Logistics & Warehousing module is part of the Supply Chain Management stream. The module interacts with other modules in the stream, namely RFx Process module and Procurement Process & Vendor Management.

Figure 1. Supply Chain Management Framework

Figure 2 presents the Logistics & Warehousing functional view, where the main functional components are exhibited.

Figure 2. Module Functional View

The rest of the module is divided into four sections. Section 2 is a high-level view of the Logistics & Warehousing (L&W) environment in the NaaS operator context. Section 3 presents the methodologies to estimate the L&W requirements that ultimately drive the strategic decisions. In Section 4, the examination of different alternatives to implement the Logistics & Warehousing operations is presented. Finally, Section 5 includes the management considerations that NaaS operators must consider when implementing the Logistics & Warehousing tasks.

2 Logistics & Warehousing Fundamentals

This section aims to introduce the overall process that describes how the different inventory elements are ordered, stored, and transported to the final destination.

2.1 Logistics & Warehousing Imperative

In the context of NaaS operators, Logistics and Warehousing (L&W) functions are responsible for the flow of the materials from the suppliers into the NaaS operator facilities, through operations within the organization and to the final destinations on network site locations.

The motivation to implement efficient and standardized Logistics and Warehousing processes are:

• The Logistics and Warehousing are expensive, and their costs can potentially comprise a high proportion of the operator’s budget. Therefore, a comprehensive strategy must be defined to reduce the overall operational costs.
• L&W operations directly affect the deployment performance of the NaaS operator. Non-standardized procedures may potentially cause materials outage or delays in the delivery dates.

2.2 Logistics & Warehousing Process Overview

Logistics & Warehousing is responsible for the movement and storage of the network equipment as they traverse from the vendor channels up to the site location. Figure 3 displays a high-level process flow of the steps related to the Logistics & Warehousing operational process.

Figure 3. High-level L&W operational process

The following subsections describe the activities performed in each of the steps. To obtain more depth in the specifics of the L&W activities, please see the Primer on Logistics & Warehousing Principles.

Procurement

The first step is initiated when a purchase order is sent to the vendor/supplier. Personnel performing this step are responsible for finding suitable suppliers, negotiate terms and conditions and organizing deliveries to get the materials into the NaaS operator.

More details of the activities performed within this step can be found in the Procurement Process and Vendor Management Module.

Inbound Transportation

In this step, the material moves from suppliers to the NaaS operator Warehousing Facility (See Section 3.2 for the different options to select the Warehousing Facilities). Most of the time, NaaS operators rely on Transportation services provided by the vendors as part of the purchasing agreements. In addition, the NaaS operator must ensure that the deliveries arrive on time.

Additional details of the activities performed within this step can be found in Section 5.2.1.

Receiving

Once the materials have arrived into NaaS operator facilities, the personnel must ensure that the materials delivered correspond to the purchase order and unload the delivery vehicles. Then, the materials must be inspected and any exceptions must be noted (e.g. damaged product, incorrect counts, wrong description).

After all the inspections are completed and the found inconsistencies noted, the NaaS Operator personnel acknowledges the material reception.

If the materials conditions do not comply with the NaaS Operator parameters (e.g. damaged product, incorrect product), the material reception can be rejected and must go back to the transportation shipper. The transportation cost of rejected materials must be covered following the conditions established in the purchasing agreements.

Storage

Before the materials are stored, an appropriate storage location must be determined. This step is important because the location of the material determines, to a large extent, how quickly and at what cost can be retrieved. Specialized tools (i.e. Stock Locator Systems) are used to track the material location within the warehouse.

Warehouse personnel need to ensure that the materials can be available quickly when needed and that the materials have the right conditions, treatment and packaging to maintain them in good condition.

Inventory Management

NaaS operators must have clear visibility of the materials in stock, as this will determine the future order sizes and order timing. Maintaining an adequate level of stock allows to avoid material shortage, which can have a significant impact on the deployment plan. Moreover, inventory stock allows to compensate for possible delays in the deliveries. In contrast, maintaining an excessive level of stock increases the storage costs as well as the risk of damages in the materials.

For these reasons, inventory management is important for the NaaS operators of any size. Further details of the activities performed within this step can be found in Section 5.1.

Picking and Prepare orders for Shipment

When a site is planned to be deployed, the Warehouse personnel must collect the material and prepare them to be shipped. Deployment Schedule Plan determines the details of the materials to be sent to the sites. In addition, the necessary shipping documentation is produced, containing the detailed information of the materials.

Furthermore, in this step, a checking process is done to verify the order completeness and accuracy. Inaccurate orders not only delay the deployment schedule, but they also generate expensive return costs.

Outbound Transportation

Outbound transportation moves the material from the NaaS operator Warehouse and delivers it into the site locations. In order to accomplish this, the NaaS operator must design the distribution routes to get the materials on time and at a reasonable cost.

For more depth in the activities performed within this step, please refer to Section 5.2.2.

3 Logistics & Warehousing Strategy

This section provides the methodology to establish the high-level Logistics & Warehousing requirements. Furthermore, guidance is provided to determine L&W strategic decisions and their impact on the overall NaaS operator activities.

3.1 High-Level L&W Dimensioning

As stated previously, NaaS operators must store different network elements (i.e. Inventory) in a designated place (i.e. Warehouse) during all the stages of the initiative. The following elements comprise the Inventory that requires to be stored within a Warehouse:

• Deployment Materials: Network elements to be deployed on the sites, including the Radio, Transmission and Power equipment. It also includes the ancillary parts that are required to install these network elements.
• Spare parts: Spare parts are interchangeable parts that are kept in the inventory to be used for the repair or replacement of failed units.

Figure 4 displays the typical behavior of the space requirements for the Inventory elements throughout the different phases of a NaaS operator:

Figure 4. Typical Space Requirements for Inventory Elements.

From Figure 4, it can be seen that the major requirement for space is during the deployment phase. After the deployment phase is completed, lower space requirements are needed to maintain the spare parts. Therefore, an estimation of the space requirements considering the necessities during the deployment phase can be performed to define the High-Level L&W Dimensioning.

The process in Figure 5 illustrates the High-Level L&W Dimensioning process that is used to estimate the number of warehouse facilities to store the Inventory during the deployment phase. In this process, Materials Forecast is performed to estimate the required material volumes to support the Deployment Plan. Then, the space to keep the materials stored is calculated, considering the schedule within the Deployment Plan. The space requirement is calculated based on the number of sites to be deployed and the equipment dimensions that conform each Site Bundle (see section 4.1.1.3 for more details). Finally, the number and type of warehouses is obtained by mapping the space requirements into standard warehouse classes.

Figure 5. High-Level L&W Dimensioning Process

NaaS operators can use the High-Level L&W Dimensioning Widget to calculate the Material forecast and the Space Requirements during the different phases of the initiative based on a general Deployment Plan. The mapping between the space requirements and the number and type of warehouse step is performed by the NaaS operator based on the warehouse offering in their region. More details regarding the design of the Warehouse (e.g., location and layout) can be found in Section 4.1.1.

3.2 Logistics & Warehousing Strategy Definition

NaaS operators must define a strategy that guides the decisions related to Logistics & Warehousing activities. The possible alternatives to implement these services are described in the following subsections.

3.2.1 Self-Managed Services

One alternative to perform the Logistics and Warehousing services is that the NaaS Operator implements them with their own resources at their own facilities. This option is only applicable if the NaaS operator already has an existing implementation of these services or if they possess enough resources to implement them. Another case that fits this strategy is for small NaaS Operators with no more than a handful of sites as little space to store equipment is required.

The implementation of this option provides greater control over the L&W operations and allows a better integration with other areas of the NaaS organization. For instance, the Warehouse can be tailored to the NaaS operators needs, in the right location, right size and can accommodate supplementary activities (e.g. Kitting). Moreover, the integration of multiple systems throughout NaaS operators, facilitates de communication among the areas.

However, this option also presents some drawbacks. Firstly, it requires an additional design phase if the Logistics & Warehousing services are not already deployed. Furthermore, it may represent additional costs such as Warehouse Facilities operational expenses (e.g. electricity to power equipment), specialized Management Systems and the personnel to run the operations.

More details on the processes related to Logistics & Warehousing design and implementation are included in Section 4.

3.2.2 Third-Party Managed Services

Another option for the NaaS operator consists of hiring a Third-party Logistics and Warehousing Company to manage these services. Typically, the NaaS operator specifies the standards and Service Level Agreements (SLAs) that the service provider must meet. In this way, the operations of these services are the responsibility of the third-party, lightening the operational workload of the NaaS operator.

In addition, this approach is appropriate when the deployment is performed over a wide area or several regions, allowing multiple service providers to be hired according to the geographical region. Finally, this approach is adequate to fulfill the L&W requirements in a very short period of time as services are ready-to-use and no design phase must be performed.

The benefits of this implementation option have to be balanced against the loss of control in the operations side. Furthermore, the cost of the operational services tend to be higher than Self-Managed services

More details on the processes related to managing 3^rd party providers for the Logistics & Warehousing activities are included in Section 5.

3.2.3 Hybrid Model

An additional implementation alternative is to combine the previous options for the L&W activities. NaaS operators can use Self-Managed Services for basic, core needs and then scale to Third-Party Managed Services as needed, as illustrated in Figure 6.

Figure 6. Hybrid approach for L&W Activities.

NaaS operators can apply this hybrid approach during the intensive deployment phase by using Third-party Managed Services to cover the necessities that Self-Managed Services cannot satisfy. When the intensive deployment phase is completed, the burden of these services will decrease so it can be covered by Self-Managed Services. In this case, the space requirement will be driven by the spare equipment.

3.2.4 Guidance for Selection

The selection between Self-Managed and Third-party Managed Services can be seen as a make or buy decision, often evaluated through a break-even analysis. On one hand, Self-Managed Services have higher fixed costs but lower unit operating costs. In contrast, Third-party Managed Services have low fixed costs but potentially higher variable costs, as displayed in Figure 7.

Figure 7. Break-even analysis for Self-Managed and Third-party Managed Services.

Figure 7 shows a simplified view of the multiple factors involved in the decision-making process. However, the main issue is to identify if a Third-party Managed Service can provide the same (or better) service for the same (or lower) cost.

In addition to operational costs, there are other factors that NaaS operator must consider to perform the selection such as the overall organizational strategy and the time horizon over which the warehousing services will be required.

4 Implementation Considerations

This section includes the description of the main alternatives to implement the Logistics & Warehousing operations: Self-Managed Services and 3rd Party Managed Services. For each alternative, the main characteristics involved in the implementation processes are examined.

4.1 Self-Managed Services

This section provides methodologies that aim to support NaaS operators in the definition and implementation of Logistics & Warehousing processes using internal resources.

4.1.1 Warehouse Planning & Design

This section examines the main components that comprise the Warehouse Planning & Design (i.e. Warehouse Location and General Layout), providing methodologies for its execution. In addition, a special analysis is performed regarding the benefits of implementing Warehouse Kitting.

4.1.1.1 Warehouse Location

Warehouse location definition involves a hierarchy of decisions. The first of them is to define the geographic region to settle the Warehouse location, which is defined by the regions where RAN sites are deployed.

After establishing the geographical region, the aim is to find the best location based on geographical distances. A simple method to find the best compromise location is to calculate the Center of Gravity of the RAN sites that will be deployed. The coordinates of the Center of Gravity can be calculated as follows:

(Eq. 1)

Where:

() are the coordinates in decimal notation of the center of gravity, which gives the center of the radius search.

() are the coordinates in decimal notation of each of the RAN sites in the analysis.

is a factor that represents the priority of the nodes. This priority can be assigned by the NaaS operator based on the number of people covered by the RAN node.

After calculating the Center of Gravity, a search radius must be established to look for nearby facilities. The size of the search radius will depend on the geographic conditions of the region and the availability of potential facilities. Figure 8 displays an example of the calculation of the Center of Gravity for the RAN sites () and its associated Search Radius using the equations above.

Figure 8. Example of Warehouse Location Calculation

This approach, based on the location of the RAN sites, is selected for the following reasons: Firstly, during the intensive deployment phase, having the Warehouse uniformly away from all the RAN sites, maintains steady the Outbound Transportation costs, as in average, all the transportation costs are similar. Furthermore, after the deployment phase is completed, the spare equipment will be kept stored in Warehouse facilities. A Warehouse location relatively close to all the RAN sites reduces the Mean Time To Repair (MTTR) times, improving the network s overall availability.

Once multiple potential facilities have been identified for Warehouse location, a comparison must be performed considering the following criteria:

• Rent rate & Taxes Rent costs are the most impactful criteria when selecting the right location of a Warehouse. In addition, special attention must be paid to local governmental regulations, tax structure and tax incentives.
• Workforce Availability, Labor Skills & Costs Workforce availability, skills, and labor costs are directly associated with local demographics. Not every geographical location offers a workforce with the right skills at the right price.
• Roads, Highways & Traffic Flow – Accessibility to roads and highways and local traffic density must also be considered, especially if trucking is the primary mode of transportation.

4.1.1.2 General Layout

The Warehouse layout describes the physical arrangement of storage racks, loading and unloading areas, offices and all other facilities within the Warehouse. The layout definition is an essential part of planning as it has a significant effect on the efficiency of Warehouse operations.

The following elements are the most important elements to be considered within the Warehouse layout:

• An Arrival Bay, where materials coming from suppliers are delivered, checked and sorted.
• A Storage area, where the materials are kept as stock. It comprises the Bulk Store and the Picking Store.
• A Departure Bay, where work orders are assembled and sent out.

The most common outline for the Warehouse considers the basic flow of materials. The materials are delivered in the Arrival Bays and moved to the Bulk Store, which is the main storage area. The different elements in the Bulk Store pass through the kitting process and moved to the Picking Store. When an order is received, the associated elements with the order are picked from the Picking Store and moved to the Preparation Area before moving to the Departure Bays.

Figure 9 illustrates the typical Warehouse layout for NaaS operators.

Figure 9. Typical Warehouse Layout

Additional elements to consider when planning a Warehousing are:

• A material handling system for moving materials inside the Warehouse (e.g. conveyors, pallet jacks, industrial trucks).
• Information systems (e.g. Warehouse Management System, Stock Locator Systems) that keep track of the materials, deliveries from suppliers, materials shipped to sites and other relevant information such as inventory location within the Warehouse.

4.1.1.3 Warehouse Kitting

The general conception of Warehouses is that they are used only to store materials. However, the overall trend for Warehouse locations is to be used for doing a range of related jobs. Among other activities, kitting has especially significance in the NaaS operators context.

Warehouse Kitting is the process of taking different yet related SKUs and combining them together to create a new SKU. Essentially, it involves fulfilling NaaS operator orders by pre-assembling individual items into kits that are ready to ship out right away, rather than picking them individually.

This kind of consolidation can go further than simply bringing together materials from different sources and store them as a group. It can also add the final packaging to present it as a single bundle, or even do a limited amount of final assembling.

In the NaaS operator context, kitting can be applied by collecting the different equipment from different vendors and technologies and create a consolidated Site Bundle. The Site Bundle includes the RAN, Transmission and Power equipment, as well as all ancillary parts required to deploy the site.

The elements included within each Site Bundle can be defined based on the Model Site Catalogue generated in the RAN and Tx LLD Process. These Model Sites include a list of the elements required to deploy each technology and can be used to define the different Site Bundles.

Kitting the Site Bundles offers a number of benefits for NaaS operator, which include among others:

• Organizes the inventory Warehouse kitting is excellent to maintain the warehouse organized and streamlined overall. When applied correctly, it can generate fewer SKUs, making it easier to organize the inventory effectively.
• Increases Warehouse Efficiency Kitting increases warehouse efficiency by making it simpler for warehouse personnel to locate all parts in one place. This is crucial in NaaS operators context as it reduces the complexity of collecting the equipment to deploy a specific site.
• Faster, more reliable Shipping Process – Kitting can ensure that shipping process is simpler and more efficient, cutting down on the risk of human error and decreasing fulfillment times.

4.1.2 Transportation Network Design

The Transportation Network is responsible for the physical movement of the materials between NaaS operator Warehouse and the final RAN site location. The Transportation Network Design seeks to optimize objectives (e.g., cost of transportation and total travel time) through the selection of appropriate modes of transportation and optimal route planning.

4.1.2.1 Mode of Transportation Definition

The mode of transportation describes the type of transport used to move the materials among facilities. There are different options (e.g., rail, road, water and air), each with different characteristics. The most common modes of transportation used by NaaS operators are examined in the following subsections.

Road Transport

In the NaaS operator context, road is the most widely mode of transportation. Its main benefit is the flexibility, as it can be used to visit almost any location. Moreover, the ability to provide an end-to-end service avoids transfer to other modes reducing the overall travel time.

Furthermore, vehicles do not have to keep such rigid timetables (compared with trains or airplanes), so they can go on journeys at short notice and with little planning. Nonetheless, travel speed can be an important consideration, especially as roads are becoming more congested and vehicles are particularly vulnerable to congestion and traffic delays.

Finally, it needs to be considered that in rural environments, most of the roads will not be paved and special considerations have to be examined for the transport vehicles.

Multi-mode Transport

Multi-mode transport involves the combination of two or more different modes of transport. In this way, the benefits of different modes can be combined, avoiding the disadvantages of the others.

Multi-mode transport is particularly relevant for NaaS operators as in most cases in rural areas, combining different modes of transport is the only way to transport the network elements to distant nodes.

The main issue is that each transfer between different modes causes delays and increases the costs of extra handling. Therefore, efficient transfers are vital to implement multi-mode transport, coordinating transport schedules to avoid additional delays.

4.1.2.2 Route Planning

Route Planning analysis is used to ensure that transport infrastructure is used efficiently, and all planned deliveries will be covered in time by defining the most effective routes for transportation.

The fundamental routing problem looks to establish the best path for a delivery vehicle that needs to visit a set of locations in their route. This problem is known as the Travelling Salesman Problem and is illustrated in Figure 10.

Figure 10. Travelling Salesman Problem

The Travelling Salesman Problem is the basic routing problem, however, NaaS operators face more complicated scenarios. Typical scenarios contain multiple factors as a fleet of different types of vehicles, different warehouse facilities and sites with different priorities and conditions for deliveries.

As it is difficult to model a complex scenario as the established before, the following methods are proposed to perform the route planning:

• Adjust previous plans A useful approach is to keep records of previous planned routes and update them based on current conditions. This approach has the benefit of being relatively easy to implement and causing little disruption. However, the routes may take a long time to be designed.
• Use of specialized systems There are specialized software in the market that can be used to generate the routes. Most of these tools use proprietary algorithms to generate optimal routes. However, the licensing cost can be a limitation for low budgets.

Alternatively, the following algorithm can be applied to generate the Route Planning. The proposed algorithm to generate the Route Planning is based on the 2-opt algorithm and is comprised of the following steps:

• Step 1. Establish a preliminary route that visits all the destinations starting by the Warehouse facility. For this, look for the closest destination and add it to the route. Follow the same approach for the next destination, going only to the closest non-visited destination. Once all the destinations are visited, return to the Warehouse facility. Calculate the total distance of the preliminary route.
• Step 2. Select randomly two locations in the route, swap their positions in the route and calculate the total distance of the route. If the total distance decreases, maintain this route and go to Step 3. If the distance increases, return to the previous route and go to Step 3.
• Step 3. Repeat Step 2 until no significant reduction in the total distance of the route is achieved.

The main idea behind the proposed algorithm is to enhance the preliminary route by taking a route that crosses over itself and reorder it, as displayed in Figure 11.

Figure 11. Proposed algorithm for Route Planning

4.2 Third-Party Managed Services

This section describes the procedures to perform the selection of vendor(s) to provide Third-party Managed Services for Logistics & Warehousing activities.

The selection of the appropriate Service Provider for managing the Logistics & Warehousing activities requires conducting an RFI/RFP (request for information and proposal) process, which analyzes the providers ability to fulfill the tasks and also obtains pricing information to fulfill the required services.

It must be noted that the L&W Managed Services RFI/RFP process benefits from the framework setup established in the RFx Process Module. It is recommended to examine the RFx process module for further details regarding the overall process. The RFx Process Module provides a general overview of the end-to-end RFx process, including the description of the activities which take place for RFx development, as shown in Figure 12.

Figure 12. RFx process

RFx are issued to obtain information, proposals or quotes from different service providers available in the market. RFx processes play an important role in the NaaS Operator organization, which as other organizations relies on the procurement of products and services from external sources.

The RFx document must clearly identify the RFx objective (obtain information, proposal and/or quotes), the scope of the technical project, the instructions to respond and applicable terms and conditions. A L&W RFI/RFP document Template is provided as part of the Runbook, including the sections described above. NaaS operators can modify the baseline format and tailor it for their specific requirements and conditions.

Before starting the RFI/RFP process, it is necessary to select the service providers that will be receiving the documentation. The following sections provide instructions to select, invite and prequalify potential bidders for the process.

4.2.1 Logistics & Warehousing: Identifying Providers

The first step is to identify potential service providers that address the Logistics & Warehousing RFx scope, with an eventual invitation to bid.

NaaS operators should invite service providers with proven experience directly with the initiative and/or with similar initiatives. In the absence of previous references, candidates may be included via web research as well as by requesting a list of Logistics & Warehousing potential partners to local partners and authorities, local Chambers of Commerce and professional associations.

4.2.2 Invitation to tender

After identifying the potential respondents, The NaaS Operator shall submit an invitation to tender to the identified service providers to inform them about:

• The Name of the RFx Process
• An abstract on the Scope of Work
• The RFx process relevant dates
• A Pre-qualification form
• A request for an acknowledgment and intention to respond

Along with the invitation to tender, potential respondents shall receive a pre-qualification form. This form provides key questions that NaaS Operators will use to determine the suitability of the potential respondent to address the project scope. This qualification form will include both technical, commercial and legal questions with the objective to short-list the proper set of service providers invited to the RFI/RFP process.

4.2.3 Logistics & Warehousing Providers Evaluation

NaaS operators must perform the selection of the L&W Service Provider from multiple vendor alternatives. The complete process to select the L&W Service Provider is included within the Procurement Process & Vendor Management Module and the RFx Process Module. This section focuses on the aspects to be considered for the evaluation of L&W Service Providers.

From a technical perspective, Table 1 displays the typical requirements that the L&W Service Provider must satisfy according to the type of transportation provided.

Table 1. Typical requirements to be evaluated in L&W Service Providers

The decision to select the L&W Service Provider is also affected by the financial constraints of the project. The final selection of the L&W Service Provider is performed during the RFx process and in conjunction with the Procurement Team.

5 Warehousing & Logistics Operations

This section describes general procedures for implementing the management processes related to the ordering, transportation, storing, packaging, and use of the NaaS operator inventory.

5.1 Inventory Management

Inventory Management refers to the process of ordering, storing, and using the NaaS operator Inventory. This section provides methodologies to perform the management of the Inventory elements in the NaaS operator context.

5.1.1 Inventory Management Methods

The most common management methods implemented in the industry are Material Requirements Planning (MRP) and Just-in-Time (JIT). However, JIT is not entirely suitable to be implemented by NaaS operators as, among other restrictive requirements, it demands minimal lead times, which is hard to obtain for telecommunication equipment, especially in rural environments. Therefore, only MRP is further examined in this section.

5.1.1.1 Material Requirements Planning

Material Requirements Planning (MRP) is a method used to calculate the materials and components required for the NaaS operator activities. It consists of three primary steps: taking inventory of the materials and components available, identifying which additional ones are needed and then scheduling their procurement process.

MRP operation consists of three primary steps summarized as:

• Step 1. Use the Deployment Plan to find the gross requirements for materials on a monthly basis. The Deployment Plan number of RAN sites and the forecasted deployment date.
• Step 2. Calculate the material’s net requirements by subtracting any available stock and orders in process, as shown below:

(Eq. 2)

• Step 3. Schedule the order with appropriate times to meet the net requirements.
• Step 4. Complement the Order Schedule Plan, adding any specific adjustments such as minimum order sizes, discounts, and the minimum stock levels.

After completing the steps above, the NaaS operator gets a detailed schedule plan for material orders. Figure 13 displays a high-level view of the MRP operation.

Figure 13. Material Requirement Planning operation

As can be inferred by analyzing the process, MRP avoids the additional costs of keeping a large inventory by relating the supply of materials directly to the demand. Furthermore, MRP can also give early warning of potential problems and shortages. For instance, if the MRP schedule shows that some materials will arrive too late, the NaaS operator can speed up the deliveries or even change the deployment plans.

More details of the methodology to calculate the exact amount of material to order and the most appropriate time to do it can be found in the following section.

5.1.2 Inventory Volume Considerations

During the Deployment Phase, NaaS operators must maintain certain inventory stored in stock to enable an efficient network rollout. In order to obtain this material, a Purchase Order (PO) must be issued to equipment vendors, which specifies the purchased material volume. The following considerations must be taken into account regarding the order volumes requested from vendors:

• Once materials arrive at Warehouse, certain activities must be performed to properly classify the inventory (e.g., labelling). The order volume directly impacts the required time to perform these activities. Inventory Systems are also mandatory for a correct process order.
• To deploy a new site, the complete bill of materials which includes equipment for different technologies (and/or vendors) and installation ancillaries must be consolidated into a single bundle (e.g. kitting). Warehouse must have the adequate personnel and abilities to comply with these activities. Otherwise, the kitting process can be outsourced to the network equipment vendor.
• Large material volumes require high average stock levels, which inherently increases the total Holding Costs and the required storage space.

For the reasons above, it is highly recommended to optimally estimate the purchase order volume. The methodologies to perform this estimation are presented in the following section.

In case that a significant volume of material is required to comply with the deployment plan, NaaS operator must take the following general considerations:

• A qualified warehouse/vendor should be considered to perform the warehouse activities. Additionally, the establishment of clear Service Level Agreements (SLA) is mandatory to achieve an efficient vendor management.
• In the self-managed and third party-managed, it is highly recommended to implement an Inventory System that oversees the inventory management activities.

5.1.3 Logistics & Warehousing Metrics Calculation

As stated in previous sections, NaaS operators need to maintain certain Inventory elements stored in stock as part of their deployment process. In particular, there are two main questions that NaaS operator faces regarding the Inventory elements:

• How much should the NaaS operator order?
  Large orders involve high average stock levels, whereas small orders imply a high cost of placing multiple small orders. The Economic Order Quantity provides guidance to address this issue.
• When should NaaS operators place an order?
  The answer to these question depends on multiple factors, among others, lead time to obtain the materials and supplier reliability. Defining a Reorder Level helps in answering this question.

5.1.3.1 Economic Order Quantity (EOQ)

The goal of the economic order quantity (EOQ) is to identify the optimal number of product units to order that minimizes the total costs related to ordering, receiving, and holding inventory. EOQ is an excellent approach to face the Inventory order issues as it is flexible, easy to implement and provides guidelines for a wide range of circumstances.

The materials are delivered in batches from a supplier who delivers after a constant lead time. Once stored, the materials are dispatched over the different sites and the stock levels decrease. There is a point where new materials need to be reordered to increase the stock level. Therefore, the stock levels within a Warehouse follows a cycle with a saw-tooth pattern, as illustrated in Figure 14.

Figure 14. Typical pattern of stock cycles.

Different costs are involved in the stock cycle, where the most important are the reorder cost (i.e. the cost of order new materials from suppliers) and holding cost (i.e. the cost of keeping the materials in stock). The aim is to find the optimal order quantity (Q) that minimizes the costs and place orders of this size, which is the economic order quantity (EOQ).

Assuming that the material demand (D) remains constant and the reorder cost (R) and holding cost (H) are all known exactly, a standard analysis shows that the economic order quantity can be calculated by using the following equation:

(Eq. 3)

Where:

Q= EOQ Units

D = Demand per unit of time

R= Reorder cost (per purchase order)

H = Holding cost (per unit, per unit of time)

NOTE: The units of time must be consistent along each of the elements (e.g. on a monthly basis).

In conclusion, by using the EOQ to estimate the order volumes, NaaS operators can minimize their costs for buying, delivering, and storing units. NaaS operators can use the L&W Metrics Calculation Widget provided as part of the Methods of Engagement to calculate the Economic Order Quantity.

5.1.3.2 Reorder Level

Every time the NaaS operator buys materials from suppliers, there is a lead time between placing the order and having the materials arrive in stock. This is the time the supplier takes to assemble the materials and prepare them for shipment, the shipping time for the materials to arrive to NaaS Warehouse facilities and the time to check the materials and put them into stock. Depending on different circumstances, this lead time can vary between a few hours up to several months.

Assuming that the lead time (L) is constant, to ensure that a delivery arrives in time as stock is running out, a new order must be placed a time L earlier. The most straightforward method to find this point is to monitor the current stock and place an order when the stock level just lasts the lead time. This means that the order must be placed when the stock falls under a certain point called Reorder Level, as illustrated in Figure 15.

Figure 15. Using Reorder Level to trigger new orders.

The Reorder Level can be calculated by using the following formula, where the demand is the same as in Eq 3:

Reorder level = lead time demand = lead time demand    (Eq. 4)

Most of the time, the Inventory control systems keep a continuous record of the available stock and send an alert when it is time to place an order of certain material. NaaS operators can use the L&W Metrics Calculation Widget provided as part of the Methods of Engagement to calculate the Reorder Levels in case there are no tools available.

5.1.4 Stock Keeping Unit (SKU) strategy

A stock keeping unit (SKU) is a distinct type of inventory item and all attributes (e.g. vendor, model, size) associated with the item type that distinguishes it. When the inventory stock is taken, the quantity of each SKU is counted.

In the overall context of Telecommunications operators, it is very common to find organizations that maintain an excessive number of SKUs in their inventory. This is mainly due to telecommunication materials like cabling, connectors and ancillaries in general are not completely standardized. The high number of SKUs adds unnecessary layers of complexity, leading to operational challenges that directly impact the operators activities.

By reducing the number of SKUs in inventory, a number of benefits for the NaaS operators can be achieved, such as:

• With fewer inventory elements to source, economies of scale can be gained through volume-based discounts.
• The procurement process takes less administrative time, enabling greater focus on the quality of the purchased materials.
• A decrease in the number of SKUs enables lower inventory, easier inventory management, and improved product quality.

In addition, the reduction of SKUs will also reduce the number of suppliers. Sourcing managers can take advantage of higher buying leverage with the selected suppliers, not just in terms of the ability to negotiate lower prices, but also in the ability to shape specifications.

The following general recommendation is provided to maintain a lower number of SKUs:

• Establish a methodology for SKU standardization: Identify SKUs with multiple suppliers and similar technical specifications, check for any differences in their pricing and order quantity, and evaluate the potential savings after consolidation. The engineering team drives the standardization decisions, while the Sourcing team facilitates the estimated cost savings under different scenarios.

5.2 Logistics Management

Logistics Management refers to the process of overseeing the movement of materials from the NaaS Warehouse facilities to their final destination in RAN site locations. It is an overarching term that includes managing multiple activities and processes.

The ultimate goal of Logistics Management is to maintain consistent, reliable and flexible transportation services. Therefore, the most important activities to be managed are the interactions between Logistics and Warehousing. These activities can be classified as: Inbound Processes and Processes.

The following subsections examine the main activities involved in the Inbound/Outbound Processes. This examination aims to assist NaaS operators in the process definition by providing general recommendations and templates that follow standardized methodologies.

5.2.1 Logistics Planning Considerations

Logistics processes are crucial for a successful deployment in time and within the planned budget. If this process is delayed, the overall deployment time can be heavily impacted as it depends on materials readiness.

As mentioned before, the required time to move materials up to their final destination comprises different activities. The following are the most time-consuming activities that must be considered by NaaS operators:

• RFx and Purchase Order (PO) Generation Time: In some cases, a new Product Order (PO) must be issued according to the Procurement procedures if the required elements are not available in stock.
• Inbound Transportation: Considers the required time to move materials up the NaaS operator warehouse facility. This step potentially includes international deliveries. The typical OEM delivery time is 12-14 weeks.
• Warehouse Processes (e.g., Kitting): Once the material arrives at Warehouse, a set of activities must be performed for materials management. The required time for these activities increases with the total volume of materials. Therefore, warehouse staff must be capable of performing these activities.
• Outbound Transportation: Considers the time to retrieve the materials from the NaaS Warehouse and move them to the respective RAN site location.

In some cases, especially in rural environments, the activities above might take several months to be completed. Therefore, NaaS operators must take into consideration the following general recommendations:

• Commercial activities (i.e., RFPs and PO) and related processes should start as soon as possible to avoid further delays on the deployment plan.
• The end-to-end process should be streamlined and planned, ahead of schedule for a correct management of the deployment timeline. This is further addressed in the Deployment Management module.
• When defining order volumes, in addition to the economic order quantity (EOQ) analyzed in section 5.1.3, the NaaS Operator must consider the capabilities at the warehouse to handle the related storage and kitting processes. This further contributes to a streamline the process and above bottlenecks.

5.2.2 Inbound Processes

Inbound process refers to the activities that bring the materials into the NaaS operator Warehouse. Therefore, it includes all the tasks required to transport, store and deliver materials from the different suppliers. Most of the time, NaaS operators rely on the equipment vendor services for the Inbound Transportation, limiting the management scope. However, certain activities need to be managed in the inbound process.

Once the materials arrive into the Warehouse facilities, they need to be checked on cosmetics and other damages, shortages, surpluses, weights and measurements. The materials documentation is also inspected, such as the waybill and invoice. Incompleteness and/or incorrectness must be mentioned on the transportation document or electronic device. In the case of damaged materials, it is required to take pictures as evidence.

All materials must be inspected at arriving at the Warehouse, however, in case they cannot be checked immediately, the inspection needs to be performed within 24 hours after receipt and a notification will be sent to the supplier about the findings.

Each delivery is normally pre-notified by email or other means. This is to inform the Warehouse personnel that the materials are on transit, enabling them to plan resources and processing instructions.

NaaS operators can use the sections of the General L&W Procedures Template concerning with Inbound Process as a base to define their own procedures.

5.2.3 Outbound Processes

Outbound process refers to the transportation, storage and delivery systems that bring materials into the final RAN site locations. The outbound process starts when the Deployment team issues a Work Order (WO), generally via email or directly into the Warehouse Management System that keeps track of the materials.

When the work order arrives at the warehouse, the materials are picked, packed and shipped based on their priority. The shipment process requires the availability of basic information such as destination address, delivery schedule, number of shipping units along with their weight and dimensions and priority type.

Every shipment needs to be packed in such a way that it can bear the travel from the warehouse up to their final destination. The materials need to be properly packed to absorb drops and falls during transportation. Moreover, each shipping unit needs to be labeled with a tracking number so it can be scanned through the transportation network for status updates via the service providers track-and-trace system.

The shipping waybill is a document containing details and instructions relating to the shipment of materials. This document can be generated by handwritten, standalone shipping systems or Internet-based tools. Each shipping unit needs to be accompanied by the appropriate documentation.

After the materials have been picked and packed, it is a common practice that a pre-notification is sent to the transportation service provider to pick up the materials. The message contains information about the cargo (e.g. shipping units, destinations, priorities) and a copy of the required documentation. The pre-notification can be sent by phone, email, or a message in a specialized system.

The delivery vehicles commonly arrive one or half an hour before the departure time to check and collect the goods. The actual time required to check the physical conditions of materials and documentation depends mainly on the volume, but it is also impacted by other elements such as type of materials, number of destinations and loading process (manual vs automated). Transportation drivers are expected to supervise warehouse personnel loading the goods and sign for receipt.

The delivery vehicle departure times depend on the service providers transportation network and transportation modes. It is recommended to contact service providers with a late order cut-off time to give NaaS operators more time to drop orders for same-day processing.

After the shipment has left the warehouse, it is up to the transportation service provider to proactively inform the NaaS operator with any status change and/or delay, including the root cause, remedial action and a new Expected Time of Arrival when applicable.

NaaS operators can use the sections of the General L&W Procedures Template concerning with Outbound Process as a base to define their own procedures.