CLoCS - ITB, 16 Januari 2010

Logistics Operation Overviewin FMCG Industry

AGENDA

Market & Demand LogisticsOverview

SupplyChain

KPI Initiatives

AGENDA

Market & Demand LogisticsOverview

SupplyChain

KPI Initiatives

MARKET & DEMAND

Kalimantan 2010

% of Tota

l

•Population

•GRDP (current Rp)

•GRDP/Cap (Rp mn)

6%

8%

28.9

1.79%

11%

8.9%

Sumatra 2010

% of Total

•Population

•GRDP (current Rp)

•GRDP/Cap (Rp mn)

21%

23%

22.0

1.46%

14%

12.8%Java 2010

% of Total

•Population

•GRDP (current Rp)

•GRDP/Cap (Rp mn)

59%

60%

20.9

1.32%

14%

12.6%

CAGR (%) Bali & NT 2010

% of Total

•Population

•GRDP (current Rp)

•GRDP/Cap (Rp mn)

5%

3%

11.8

1.50%

15%

13.3%

East Indo 2010

% of Total

•Population

•GRDP (current Rp)

•GRDP/Cap (Rp mn)

2%

2%

22.2

1.62%

19%

17.3%

Sulawesi 2010

% of Total

•Population

•GRDP (current Rp)

•GRDP/Cap (Rp mn)

7%

4%

11.9

1.25%

14%

13.0%

CAGR (%)

CAGR (%)

CAGR (%)

CAGR (%)

CAGR (%)

Note: GRDP in Current Rp (including inflation 7%)Source: LPEM University of Indonesia

Demand Potential Ranking among regions 2006 – 2010based on growth, income per capita, population & distribution of income (1)

Region

• Jakarta

• Riau

• North Sumatra

• Nanggroe-Aceh D

• West Sumatra

• East Kalimantan

• West Java

• East Java

• Central Kalimantan

PopulationGDP per

capitaExpenditure per capita

Distribution of income Ranking

2

3

4

1

5

6

7

8

9

Source: LPEM University of Indonesia= Good = Not Good

MARKET & DEMAND (2)

AGENDA

Market & Demand LogisticsOverview

SupplyChain

KPI Initiatives

Supplier

Information Flow

Product Flow

SUPPLY CHAIN

LOGISTICSPRODUCTION COSTUMER

DEMANDSUPPLY(Internal company) (external company)

Reconcile?

$$$$$

SUPPLY VS DEMAND: RECONCILE?They both areThey both are

““If Sales gave meIf Sales gave mean accurate forecast,an accurate forecast,

we would providewe would provideexcellent service”excellent service”

““If Sales gave meIf Sales gave mean accurate forecast,an accurate forecast,

we would providewe would provideexcellent service”excellent service”

““I don’t know whatI don’t know whatmy customers willmy customers willwant in 3 months”want in 3 months”

““I don’t know whatI don’t know whatmy customers willmy customers willwant in 3 months”want in 3 months”

““If manufacturingIf manufacturingwere more flexible, we’llwere more flexible, we’llable to meet customerable to meet customer

requirements requirements

““If manufacturingIf manufacturingwere more flexible, we’llwere more flexible, we’llable to meet customerable to meet customer

requirements requirements

““We can only beWe can only beso flexible atso flexible at

reasonable costreasonable cost

““We can only beWe can only beso flexible atso flexible at

reasonable costreasonable cost

Manufacturing& distribution

Sales &Marketing

Who is right ?Who is right ?

Manufacturing

Manager

SalesManager

Demand Planning Marketing

Supplier

MPS

Information Flow

Product Flow

SUPPLY CHAIN

LOGISTICSPRODUCTION COSTUMER

DEMANDSUPPLY(Internal company) (external company)

Reconcile?

Demand Planning / Forecasting

Strategic Plan

Annual Plan

Business Management

Supply

Demand

Demand drivers

Demand & Supply priorities

Customer Service (External)

Deliver (Replenish)

Demonstrated capability

Supply Planning

Demand Tracking Supply Tracking

Cash collection

Demand Plan

Sell Source / Make

Demand - Supply Reconciliation

Cash-up (Turnover & Costs)

Business Decision Model

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct5

10

15

20

25

30

35

Volu

me

Demand Series Baseline

History Future

Event

Event

Innovation

Innovation

Baseline Forecast

Event Forecast

Forecast New Product

Forecast

Accurate forecast means higher turnover & lower cost

AGENDA

Market & Demand LogisticsOverview

SupplyChain

KPI Initiatives

Supplier

Information Flow

Product Flow

LOGISTICS OVERVIEW

LOGISTICSPRODUCTION COSTUMER

TYPICAL DISTRIBUTION NETWORK

COSTUMER 1

COSTUMER 2

COSTUMER 3

COSTUMER 4

COSTUMER 5

COSTUMER 6

Manufacturing Site(B)

Manufacturing Site(A)

Central Distribution Centre

DistributionCentre 1 Distribution

Centre 2

DistributionCentre 3

Inbound logistics

Outbound logist

ics

National Demand

Area Demand

National Supply

Area Supply

Area Demand

Distribution Requirement Planning Distribution Network Management How much stock to keep at every stock point

Inventory level working capital How much stock to replenish

DRP calculation Warehouse Management

Stock Priority Management Warehouse Management

Capacity planning Stock keeping methods

Racking configuration Warehouse layout

Throughput Docking capacity unloading capacity Dispatch capacity loading capacity

Stock Flow Management FIFO FEFO

Shipment / Delivery Execution Transportation Management

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

INBOUND LOGISTICS

Manufacturing Site(B)

DistributionCentre 2

Central Distribution Centre

Back Of Factory

DISTRIBUTION REQUIREMENT PLANNING

DCCDC

LT = 21 daysW3W2W1W0

Forecast = 500

Safety Stock = 5000

Projected On Hand = 3000

Stock Transfer Order = 2500

STO = Forecast + SS – Proj OH

Example:

Customer Service Customer Order

Purchase Order Replenishment Order

Replenishment Model Inventory Level

Order Fulfillment Shipment / Delivery Execution Billing Process

Proof Of Delivery KPI Service Quality?

On Shelf Availability Casefill On Time

Joint Initiatives Service Improvements Efficiency Improvements

Warehouse Management Shipment / Delivery Execution

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

OUTBOUND LOGISTICS

COSTUMER 2

DistributionCentre 1

Service Quality:• How much?•Is it On time?

•In Good Shape?•Easy to Unload?

Delivery

PURCHASE ORDER & DELIVERY

Send PO

Customer/Store

Principal

ERP

Order EntryPO Checking:• SKU/Description• Barcode• Price• Qty• Total PO

Expedition Report

PO Electronic

Synchronization

Order Processor

WHS

Send Expedition Report

DELIVERY

PO Manual

Load Planning

PickingAssembling &

Loading

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

Allocation

Delivery Monitoring / Daily Monitoring :• Est. Arrived• Delivery Qty• Fulfilment•Total PO

Order Validation

REPLENISHMENT ORDER

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

*Inventory model manages STOCK NORM level

REPLENISHMENT ORDER & DELIVERY

PRINCIPAL

Product Flow

In-tra

nsit S

tockFACTORY

Supply

ULI WHS

CUSTOMER

ERP System

MARKET

Shipment

Order

Order

Daily Sales & Stock

• Generate Order• Parameter Setup• Database

Information Flow

Intransit Data

KPI: Service Quality

Custome

Product

Sourcing Whs

Sch. Date & Req. Date

Etc.

AGENDA

Market & Demand LogisticsOverview

SupplyChain

KPI Initiatives

KEY PERFORMANCE INDICATOR

COSTUMER

DistributionCentre

Arrival:•Is it On Time?

•Qty as ordered?•In Good Shape?•Easy to unload?

•Return?

Delivery

The ability to deliver goods as customer ordered = SERVICE

Delivery:•Lead Time as

Planned?•Broken Product?

•Theft?

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 capturingCCFOT(%) provides the Loss tree framework for capturing ServiceService, , EfficiencyEfficiency andand On-time On-time Losses togetherLosses together

Internal CompanyInternal Company reporting isreporting is consistentconsistent – CCFOT– CCFOT Reducing CCFOT lossReducing CCFOT loss areas would driveareas would drive improvement of improvement of

Customer Service KPIsCustomer Service KPIs

CCFOT = Qty Delivered On Time

Customer Order

*Figures are not actual data

0.30% 0.30%4.30%

17.40%

31.70%

46.10%

Stock Availability

Warehousing & Transport

Not AssignedCustomer Related

Commercial Issues

Order Management

Example Of CCFOT Loss:

AGENDA

Market & Demand LogisticsOverview

SupplyChain

KPI Initiatives

Logistics is aboutCooperation

(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

INITIATIVES