1. Logistics Operation Overview
in FMCG Industry
CLoCS - ITB, 16 Januari 2010

2. AGENDA
Market & Demand
Supply
Chain
Logistics
Overview
KPI
Initiatives

3. AGENDA
Market & Demand
Supply
Chain
Logistics
Overview
KPI
Initiatives

4. MARKET & DEMAND
Kalimanta
n 2010
% of
Tota
l
•Population
6%
8%
28.
9
8.9%
•GRDP/Cap
(Rp mn)
CAGR
(%)
7%
1.25%
•GRDP
(current Rp)
11%
% of
Total
•Population
1.79%
•GRDP
(current Rp)
Sulawesi
2010
CAGR
(%)
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

5. 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
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

6. AGENDA
Market & Demand
Supply
Chain
Logistics
Overview
KPI
Initiatives

7. SUPPLY CHAIN
SUPPLY
Reconcile?
(Internal company)
DEMAND
(external company)
$$$$$
Supplier
PRODUCTION
Information Flow
Product Flow
LOGISTICS
COSTUMER

8. SUPPLY VS DEMAND: RECONCILE?
Who is right ?
““If Salesgave me
If Sales gave me
an accurate forecast,
an accurate forecast,
we would provide
we would provide
excellent service”
excellent service”
They both are
““I don’t know what
I don’t know what
my customers will
my customers will
want in 33 months”
want in months”
““If manufacturing
If manufacturing
were more flexible, we’ll
were more flexible, we’ll
able to meet customer
able to meet customer
requirements
requirements
““We can only be
We can only be
so flexible at
so flexible at
reasonable cost
reasonable cost
Sales
M an ag
er
Manufacturing
Manager
Manufacturing
& distribution
Sales &
Marketing

9. SUPPLY CHAIN
Demand
Planning
Marketing
SUPPLY
Reconcile?
(Internal company)
DEMAND
(external company)
MPS
Supplier
PRODUCTION
Information Flow
Product Flow
LOGISTICS
COSTUMER

10. Demand Planning / Forecasting
Business Decision Model
Baseline
Forecast
Strategic Plan
Annual Plan
Event Forecast
Business Management
Demand drivers
Demand Plan
Demand
Forecast New
Product
Supply
Demonstrated capability
Supply Planning
Demand - Supply Reconciliation
Cash-up (Turnover & Costs)
Sell
Source / Make
Demand Tracking
Supply Tracking
Accurate forecast means higher turnover & lower cost
Forecast

11. AGENDA
Market & Demand
Supply
Chain
Logistics
Overview
KPI
Initiatives

12. LOGISTICS OVERVIEW
Supplier
PRODUCTION
Information Flow
Product Flow
LOGISTICS
COSTUMER

13. TYPICAL DISTRIBUTION NETWORK
Area Demand
Area Demand
COSTUMER 1
COSTUMER 3
COSTUMER 2
Distribution
Centre 1
COSTUMER 4
Distribution
Centre 2
Area Supply
In
istics
d log
boun
Central Distribution
Centre
COSTUMER 5
Manufacturing Site
(A)
Distribution
Centre 3
National Demand
Manufacturing Site
(B)
National Supply
bo
ut
O
d
un
lo
ics
ist
g
COSTUMER 6

14. 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)

15. DISTRIBUTION REQUIREMENT PLANNING
Forecast
= 500
Safety Stock
= 5000
Projected On Hand
Stock Transfer Order
Example:
= 3000
= 2500
STO = Forecast + SS – Proj OH
CDC
W0
DC
W1
W2
LT = 21 days
W3

16. OUTBOUND LOGISTICS

Customer Service

Customer Order


Purchase Order
Replenishment Order



Order Fulfillment


Shipment / Delivery Execution
Billing Process





Service Improvements
Efficiency Improvements
Shipment / Delivery Execution
Transportation Management




y
er
liv
De
On Shelf Availability
Casefill On Time
Warehouse Management

COSTUMER 2
Joint Initiatives


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?

17. 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

18. REPLENISHMENT ORDER
Replenishment Order = Stock Norm – Stock On Hand – Stock IT
*Inventory model manages STOCK NORM level

19. 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

20. AGENDA
Market & Demand
Supply
Chain
Logistics
Overview
KPI
Initiatives

21. 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

22. 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

23. AGENDA
Market & Demand
Supply
Chain
Logistics
Overview
KPI
Initiatives

24. INITIATIVES
Logistics is about
Cooperation
(Us…NOT you & i)

25. 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