Logistics Operation Overview

in FMCG Industry

CLoCS - ITB, 16 Januari 2010

AGENDA

Customer
Supply Logistics Customer Towards Zero
Initiatives
Market & Demand Supply Chain – Service KPI –
Service Inventory Model
The Big Picture
Chain Operation
Overview Group
Distributors (GT) (TZIM)
(CSOG)
AGENDA

Customer
Supply Logistics Customer Towards Zero
Initiatives
Market & Demand Supply Chain – Service KPI –
Service Inventory Model
The Big Picture
Chain Operation
Overview Group
Distributors (GT) (TZIM)
(CSOG)
 MARKET & DEMAND
Sulawesi % of CAGR
Kalimanta % of CAGR Total (%)
Tota (%) 2010
n 2010
l
•Population 7% 1.25%
•Population 6% 1.79%
•GRDP 4% 14%
•GRDP 8% 11%
(current Rp)
(current Rp)
•GRDP/Cap
•GRDP/Cap 11.9 13.0%
28. 8.9% (Rp mn)
(Rp mn)
9

East Indo % of CAGR

Total (%)
2010
•Population 2% 1.62%
Sumatra % of CAGR •GRDP 2% 19%
Total (%) (current Rp)
2010
•GRDP/Cap
•Population 21% 1.46% 22.2 17.3%
(Rp mn)
•GRDP 23% 14%
(current Rp)
•GRDP/Cap
22.0 12.8%
(Rp mn) % of CAGR (%) % of CAGR
Java Bali & NT
Total Total (%)
2010 2010
•Population 59% 1.32% •Population 5% 1.50%
•GRDP 60% 14% •GRDP 3% 15%
(current Rp) (current Rp)
•GRDP/Cap •GRDP/Cap
20.9 12.6% 11.8 13.3%
(Rp mn) (Rp mn) Note: GRDP in Current Rp (including inflation 7%)
Source: LPEM University of Indonesia
 MARKET & DEMAND (2)
Demand Potential Ranking among regions 2006 – 2010
based on growth, income per capita, population & distribution of income (1)

GDP per Expenditure Distribution

Region Population capita per capita of income Ranking

• Jakarta 1

• Riau 2

• North Sumatra 3

• Nanggroe-Aceh D 4

• West Sumatra 5

• East Kalimantan 6

• West Java 7

• East Java 8

• Central Kalimantan 9

= Good = Not Good Source: LPEM University of Indonesia

AGENDA

Customer
Supply Logistics Customer Towards Zero
Initiatives
Market & Demand Supply Chain – Service KPI –
Service Inventory Model
The Big Picture
Chain Operation
Overview Group
Distributors (GT) (TZIM)
(CSOG)
SUPPLY CHAIN

SUPPLY Reconcile? DEMAND

(Internal company) (external company)

$$$$$

Supplier

PRODUCTION LOGISTICS COSTUMER

Information Flow
Product Flow
SUPPLY VS DEMAND: RECONCILE?
Who is right ? They both are

“If Sales gave me “I don’t know what

an accurate forecast, my customers will
we would provide want in 3 months”
excellent service”

“We can only be “If manufacturing

so flexible at were more flexible, we’ll
reasonable cost able to meet customer
requirements

Manufacturing Sales &

& distribution Marketing
SUPPLY CHAIN
Demand
Planning
Marketing SUPPLY Reconcile? DEMAND
(Internal company) (external company)

MPS

Supplier

PRODUCTION LOGISTICS COSTUMER

Information Flow
Product Flow
 Demand Planning / Forecasting

Business Decision Model

Baseline
Strategic Plan Forecast

Annual Plan
Event Forecast Forecast

Business Management
Forecast New
Product

Demand drivers
Supply
35
Demand Plan Demand Series Baseline
Demonstrated capability Event
30

Demand Supply Planning 25

Innovation

Volume
20 Event

Demand - Supply Reconciliation Innovation

15

10
Cash-up (Turnover & Costs)
5
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
Sell Source / Make History Future
Accurate forecast means higher turnover & lower cost
Demand Tracking Supply Tracking
AGENDA

Customer
Supply Logistics Customer Towards Zero
Initiatives
Market & Demand Supply Chain – Service KPI –
Service Inventory Model
The Big Picture
Chain Operation
Overview Group
Distributors (GT) (TZIM)
(CSOG)
LOGISTICS OVERVIEW

Supplier

PRODUCTION LOGISTICS COSTUMER

Information Flow
Product Flow
 TYPICAL DISTRIBUTION NETWORK
Area Demand
COSTUMER 1 Area Demand
COSTUMER 3

COSTUMER 2

Distribution
Centre 1 Distribution COSTUMER 4
Centre 2
Area Supply

Central Distribution
Centre
COSTUMER 5

Distribution
Centre 3
Manufacturing Site
(A)

National Demand
COSTUMER 6

Manufacturing Site National Supply

(B)
INBOUND LOGISTICS
 Distribution Requirement Planning
 Distribution Network Management
 How much stock to keep at every stock point
Distribution
 Inventory level  working capital
Centre 2
 How much stock to replenish
 DRP calculation
 Warehouse Management
 Stock Priority Management
Central Distribution
 Warehouse Management Centre
 Capacity planning
 Stock keeping methods
 Racking configuration
 Warehouse layout
 Throughput
 Docking capacity  unloading capacity
 Dispatch capacity  loading capacity
 Stock Flow Management Back Of
 FIFO
 FEFO Factory
 Shipment / Delivery Execution
 Transportation Management
 Transport Provider Manufacturing Site
 Shipment / Delivery Execution (B)
 Distribution Cost Saving
 Contigency Route Management
DISTRIBUTION REQUIREMENT PLANNING

Example: Forecast = 500

Safety Stock = 5000
Projected On Hand = 3000
Stock Transfer Order = 2500
STO = Forecast + SS – Proj OH

CDC DC
W0 W1 W2 W3
LT = 21 days
OUTBOUND LOGISTICS
 Customer Service
 Customer Order
 Purchase Order
 Replenishment Order
 Replenishment Model
 Inventory Level
 Order Fulfillment
 Shipment / Delivery Execution
 Billing Process
 Proof Of Delivery COSTUMER 2
 KPI  Service Quality?
 On Shelf Availability
 Casefill On Time
 Joint Initiatives
 Service Improvements
 Efficiency Improvements
Distribution
 Warehouse Management Centre 1
 Shipment / Delivery Execution Service Quality:
 Transportation Management • How much?
 Transport Provider •Is it On time?
 Shipment / Delivery Execution •In Good Shape?
 Distribution Cost Savings •Easy to Unload?
 Contigency Route Management
PURCHASE ORDER & DELIVERY
Order Expedition Send Expedition
Synchronization ERP Validation Report Report
Data interface:
• SKU/Desc
PO Electronic •-Barcode
• Price
•Total PO
• Completeness Order Processor

PO Manual
Order Entry
PO Checking:
• SKU/Description
• Barcode
• Price WHS
Principal • Qty
• Total PO
Allocation
Load Planning

Delivery Monitoring / Daily Monitoring :

Send PO • Est. Arrived
• Delivery Qty
• Fulfilment
•Total PO

Assembling &
DELIVERY Loading Picking
Customer/
Store
REPLENISHMENT ORDER

Replenishment Order = Stock Norm – Stock On Hand – Stock IT

*Inventory model manages STOCK NORM level
REPLENISHMENT ORDER & DELIVERY
Information Flow
Intransit Data ERP System Product Flow

Custome
Order Product

In-transit Stock
Sourcing Whs
Order
Sch. Date & Req. Date
FACTORY ULI WHS Etc.
MARKET
Supply
• Generate Order
• Parameter Setup
• Database
Shipment PRINCIPAL

Daily Sales & Stock

KPI: Service Quality

CUSTOMER
AGENDA

Customer
Supply Logistics Customer Towards Zero
Initiatives
Market & Demand Supply Chain – Service KPI –
Service Inventory Model
The Big Picture
Chain Operation
Overview Group
Distributors (GT) (TZIM)
(CSOG)
KEY PERFORMANCE INDICATOR
The ability to deliver goods as customer ordered = SERVICE

Arrival:
Delivery: •Is it On Time?
•Lead Time as Planned? •Qty as ordered?
•Broken Product? •In Good Shape?
•Theft? •Easy to unload?
•Return?

Distribution Delivery
Centre
COSTUMER

Delivery:
•Stock available as ordered? Major KPIs:
•Dispatched On Time?
•Problem while stock picking? 1. Service Quality
•Transportation available?
•Any order revision? 2. Cost
MEASUREMENT

 CCFOT(%) provides the Loss tree framework for capturing

Service, Efficiency and On-time Losses together
 Internal Company reporting is consistent – CCFOT
 Reducing CCFOT loss areas would drive improvement of
Customer Service KPIs

Qty Delivered On Time

CCFOT =
Customer Order

Example Of CCFOT Loss:

4.30% 0.30% 0.30%

17.40% Stock Availability

Warehousing & Transport
46.10% Not Assigned
Customer Related
Commercial Issues
31.70%
Order Management

*Figures are not actual data

AGENDA

Customer
Supply Logistics Customer Towards Zero
Initiatives
Market & Demand Supply Chain – Service KPI –
Service Inventory Model
The Big Picture
Chain Operation
Overview Group
Distributors (GT) (TZIM)
(CSOG)
INITIATIVES

Logistics is about
Cooperation
(Us…NOT you & i)
INITIATIVES
 Service Improvement
 Electronic Data Interchange
 Advance Shipment Notification
 Integrated Promotion Activity Planning
 CPFR
 VMI
 On Shelf Availability
 Efficiency
 Night Delivery – Holiday Delivery
 Palletized Delivery
 Distribution Bypass
 Backhauling
 Retailer Centralized Delivery
 Logistic Discount Agreement