Case Study

Turkcell

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Turkcell Saves Thirteen Percent on Annual Rework Operation Costs Using Network Optimization Model

Challenge

Turkcell, Turkey’s GSM-based mobile communication provider, is ranked among the world’s top operators in terms of the provision of international data services. The company had divided Turkey into geographical regions, with a regional partner company (BCO) assigned to each. BCOs are tasked with managing the “rework” operations in the field which includes either opening new antenna sites or upgrading existing sites whenever there’s demand surge exceeding capacity. Each BCO is paid according to their costs incurred during their rework operations. BCOs are also responsible for periodic maintenance and breakdown response.

All BCOs manage their own field teams, and the size and location of the teams are determined by the BCOs themselves. Because of these vague business rules, Turkcell had no way of knowing if a BCO had the right number of field teams. The company had to know the optimal number of teams for minimum operational cost and where to locate them in order to maximize service levels.

To calculate BCO services fees, Turkcell had depended on an analytical model developed internally over the years. However, the formulations grew very complex and it became difficult to maintain transparency on how input variables really affected the recommendations of the model. Moreover, it was not easy to modify the assumptions in the model once they were considered obsolete. For these reasons, Turkcell decided to adopt a better decision support system to resolve ongoing arguments with BCO companies on the true cost of an operation.

Solution

While the project was rated as a top priority by Turkcell management, the company tried to develop proprietary algorithms and solutions for a number of years, with little success. Finally the company invited technology vendors to recommend solutions to this unique costing challenge. Managers met with numerous solution providers experienced in supply chain and logistics. However, most of the proposed solutions were based on logic of transporting goods
from warehouses to customer sites. Turkcell needed a much more flexible solution so that it could model its operations precisely and generate results in a short period of time.

After evaluating many off-the-shelf and tailor-made solutions, Turkcell selected LLamasoft partner Dijitalis to replace the current subjective costing parameters with an accountable and transparent LLamasoft® Supply Chain Guru® modeling solution.

For the Turkcell project, many technologies in the LLamasoft supply chain modeling platform were tested and proven. A LLamasoft network optimization model was used to identify the location and number of offices to serve the antennas. Then transportation optimization was used to calculate the routes from the offices to the antennas. Simulation technology was utilized to test the workload on the field teams under the stochastic nature of antenna breakdowns.

Results

In the fewer than 12 months since adopting the LLamasoft models built by Dijitalis, Turkcell has saved thirteen percent on its annual rework operation costs. This amount of savings has made this project one of the fastest ROI projects in Turkcell history.

Supply Chain Guru enabled Turkcell to standardize the costing of each region even though their operational conditions are not alike. The company has around 1,700 different field tasks and can now identify exactly how many people and how much time is needed to complete each one of them.

Turkcell is now able to advise BCO companies on the optimum values and locations to minimize their costs. With management very happy with the results obtained on the rework operations, the company plans to expand the use of Supply Chain Guru optimization to its maintenance operations.

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