Logistics Operation Overview

in FMCG Industry

CLoCS - ITB, 16 Januari 2010

AGENDA

Market & Demand Supply

Chain

Logistics
Overview

KPI

Initiatives

AGENDA

Market & Demand Supply

Chain

Logistics
Overview

KPI

Initiatives

MARKET & DEMAND

Kalimanta
n 2010

% of
Total

CAGR
(%)

Population

6%

1.79%

GRDP
(current Rp)

8%

11%

28.
9

8.9%

GRDP/Cap
(Rp mn)

Sulawesi
2010

% of
Total

CAGR
(%)

Population

7%

1.25%

GRDP
(current Rp)

4%

14%

11.9

13.0%

GRDP/Cap
(Rp mn)

East Indo
2010

% of
Total

CAGR
(%)

Population

2%

1.62%

Sumatra
2010

% of
Total

CAGR
(%)

GRDP
(current Rp)

2%

19%

Population

21%

1.46%

22.2

17.3%

GRDP
(current Rp)

23%

14%

GRDP/Cap
(Rp mn)

22.0

12.8%

GRDP/Cap
(Rp mn)

Java
2010

% of
Total

CAGR (%)

Bali & NT
2010

% of
Total

CAGR
(%)

Population

59%

1.32%

Population

5%

1.50%

GRDP
(current Rp)

60%

14%

GRDP
(current Rp)

3%

15%

20.9

12.6%

11.8

13.3%

GRDP/Cap
(Rp mn)

GRDP/Cap
(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)

Region

Population

GDP per
capita

Expenditure
per capita

Distribution
of income

Ranking

Jakarta

Riau

North Sumatra

Nanggroe-Aceh D

West Sumatra

East Kalimantan

West Java

East Java

Central Kalimantan

9
= Good

= Not Good

Source: LPEM University of Indonesia

AGENDA

Market & Demand Supply

Chain

Logistics
Overview

KPI

Initiatives

SUPPLY CHAIN
SUPPLY

Reconcile?

(Internal company)

DEMAND
(external company)

$$$$$

Suppli
er

PRODUCTION

Information
Flow
Product
Flow

LOGISTICS

COSTUMER

SUPPLY VS DEMAND:
RECONCILE?
Who is right ?
They both are
IfIfSales
Salesgave
gaveme
me
an
accurate
forecast,
an accurate forecast,
we
wewould
wouldprovide
provide
excellent
service
excellent service

I Idont
dontknow
knowwhat
what
my
customers
my customerswill
will
want
in
3
months
want in 3 months

IfIfmanufacturing
manufacturing
were
more
were moreflexible,
flexible,well
well
able
to
meet
customer
able to meet customer
requirements
requirements

We
Wecan
canonly
onlybe
be
so
flexible
at
so flexible at
reasonable
reasonablecost
cost

Sales
M an ag
er

Manufacturing
Manager

Manufacturing
& distribution

Sales &
Marketing

SUPPLY CHAIN
Demand

Marketin
g

Planning

SUPPLY

Reconcile?

(Internal company)

DEMAND
(external company)

MP
S

Suppli
er

PRODUCTION

Information
Flow
Product
Flow

LOGISTICS

COSTUMER

Demand Planning / Forecasting

Accurate forecast means higher turnover & lower cost

AGENDA

Market & Demand Supply

Chain

Logistics
Overview

KPI

Initiatives

LOGISTICS OVERVIEW

Suppli
er

PRODUCTION

Information
Flow
Product
Flow

LOGISTICS

COSTUMER

TYPICAL DISTRIBUTION NETWORK

Area Demand
Area Demand

COSTUMER 1

COSTUMER 3
COSTUMER 2

Distribution
Centre 1

COSTUMER 4

Distribution
Centre 2
Area Supply

Inb

s
gistic
o
l
d
oun

Central Distribution
Centre

Manufacturing Site
(A)

Distribution
Centre 3

National Demand
Manufacturing Site
(B)

National Supply

COSTUMER 5 cs
i
ist
g
lo
d
n
u
bo
t
Ou

COSTUMER 6

INBOUND LOGISTICS

Distribution Requirement Planning

Distribution Network Management

How much stock to keep at every stock point

How much stock to replenish

DRP calculation
Warehouse Management

Stock Priority Management

Warehouse Management

Capacity planning

Docking capacity unloading capacity

Dispatch capacity loading capacity

FIFO
FEFO

Shipment / Delivery Execution

Transportation Management

Back Of
Factory

Stock Flow Management

Racking configuration
Warehouse layout

Throughput

Central Distribution
Centre

Stock keeping methods

Distribution
Centre 2

Inventory level working capital

Transport Provider
Shipment / Delivery Execution
Distribution Cost Saving
Contigency Route Management

Manufacturing Site
(B)

DISTRIBUTION REQUIREMENT
PLANNING

Example:

Forecast

= 500

Safety Stock

= 5000

Projected On Hand
Stock Transfer Order

= 3000
= 2500

STO = Forecast + SS Proj OH

CDC
W0

DC
W1

W2
LT = 21 days

W3

OUTBOUND LOGISTICS

Customer Service

Customer Order

Purchase Order
Replenishment Order

Order Fulfillment

Shipment / Delivery Execution

Billing Process

Service Improvements
Efficiency Improvements

Warehouse Management

Shipment / Delivery Execution

Transportation Management

ry
ive
l
De

On Shelf Availability
Casefill On Time

Joint Initiatives

COSTUMER 2

Proof Of Delivery

KPI Service Quality?

Replenishment Model
Inventory Level

Transport Provider
Shipment / Delivery Execution
Distribution Cost Savings
Contigency Route Management

Distribution
Centre 1

Service Quality:
How much?
Is it On time?
In Good Shape?
Easy to Unload?

PURCHASE ORDER & DELIVERY

Synchronization
PO Electronic

Data interface:
SKU/Desc
-Barcode
Price
Total PO
Completeness

Order
Validation

ERP

Expedition
Report

Send Expedition
Report

Order Processor

PO Manual
Order Entry

Principal

PO Checking:
SKU/Description
Barcode
Price
Qty
Total PO

WHS
Allocation
Load Planning

Send PO

Delivery Monitoring / Daily Monitoring :

Est. Arrived
Delivery Qty
Fulfilment
Total PO

DELIVERY

Customer/
Store

Assembling &
Loading

Picking

REPLENISHMENT ORDER

Replenishment Order = Stock Norm Stock On Hand Stock IT

*Inventory model manages STOCK NORM level

REPLENISHMENT ORDER &

DELIVERY
Intransit Data

Information Flow

ERP System

Product Flow
Custome

ULI WHS

FACTORY

Product

In-transit Stock

Order

Order

Sourcing Whs
Sch. Date & Req. Date
Etc.

Supply
Generate Order
Parameter Setup
Database
Shipment

PRINCIPAL
Daily Sales & Stock

KPI: Service Quality

CUSTOMER

MARKET

AGENDA

Market & Demand Supply

Chain

Logistics
Overview

KPI

Initiatives

KEY PERFORMANCE INDICATOR

The ability to deliver goods as customer ordered = SERVICE
Arrival:
Is it On Time?
Qty as ordered?
In Good Shape?
Easy to unload?
Return?

Delivery:
Lead Time as Planned?
Broken Product?
Theft?

Distribution
Centre

Delivery
COSTUMER

Delivery:
Stock available as ordered?
Dispatched On Time?
Problem while stock picking?
Transportation available?
Any order revision?

Major KPIs:
1. Service Quality
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

CCFOT =

Qty Delivered On Time

Customer Order

Example Of CCFOT Loss:

*Figures are not actual data

AGENDA

Market & Demand Supply

Chain

Logistics
Overview

KPI

Initiatives

INITIATIVES

Logistics is about
Cooperation
(UsNOT 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