Corresponding Author: Meidi
Dwiyana
E-mail: [email protected]
INTRODUCTION
The heavy equipment spare parts industry will be
correlated with two things, namely an increase in sales of heavy equipment, as
well as an increase in commodity prices, of course, being one of the capitals
in after-sales service that is so important and related to an increase in sales
of parts which will have an impact on increasing revenue, increasing profits (Suwito, 2022) (MacCarthy et al.,
2022). if appropriately managed, and is essential for
achieving customer satisfaction (Persson & Saccani,
2007). PT XYZ has a special division for after-sales
service, namely a parts division for sales and support of spare parts and a
service division for unit repair services. PT XYZ's working capital management,
namely the heavy equipment spare parts inventory, is very high and requires
proper supply chain management. PT XYZ's supply chain management method to
maintain time in the entire spare parts supply and keep days of inventory low
is the supply chain control tower.
PT XYZ has implemented the supply chain control tower.
One of the towers in the Company is TAD or Tower Tanjung Area. However, its
impact on the inventory level has been insignificant. From the secondary data,
we see that the Days of Inventory (DOI) at TAD is still high in the last three
years and need to achieve the target. Furthermore, the On Time in Full (OTIF)
ratio has never reached 100% in all Lower-level areas, as seen in table 1.
Table 1 Performance Supply Chain Tower Tanjung Area
|
No
|
Performance
Tower Tanjung Area
|
Plan
|
2021
|
2022 (COD
June)
|
|
1
|
On-Time in
Full
|
90%
|
85%
|
87%
|
|
2
|
Days of
Inventory
|
50 Days
|
75 Days
|
70 Days
|
In this research, we will use Supply
Chain Operation Reference (SCOR) model to analyze the performance of the supply
chain control tower to reduce working capital inventory (Huang et al., 2005).
Qualitative interviews and quantitative data from the company will support the
SCOR analysis.
This research will answer two questions:
what is the performance of the supply chain control tower at PT XYZ, and what
improvement can be suggested from the supply chain control tower? Moreover,
this research has two objectives: to evaluate the performance of the supply
chain control tower at XYZ with the SCOR Model. In addition, the benefit of
this research is to suggest improvement strategies in supply chain control
towers
METHOD
This research
utilizes a mixed method, which is a research phase that combines two types of
research methodologies, namely qualitative and quantitative. Mixed research is
a research method that mixes qualitative and quantitative data (Supriyati, 2015).
Meanwhile, (Hermawan, 2019)
defines mixed methods as research methods that combine
two research methods, namely qualitative and quantitative, in a research
activity to acquire more comprehensive, valid, trustworthy, and objective data
(Creswell & Creswell,
2017). Using the Supply Chain Operation Reference (SCOR) Method
version 12.0, this research examines the company's supply chain performance,
particularly in the critical raw material procurement sector.
Figure
1. Research Design (Source from Researcher)
According to
the core structure of the Supply chain excellence phase (Kunovjanek et al.,
2022), this study is organized into five major stages,
which are as follows:
-
Stage
I
At this initial stage, problems are identified and formulated following
the topic of the study, namely the evaluation of supply chain performance. The
literature review referred to predetermined topics, ranging from Operations
Management, Supply Chain Management, Supply Chain Performance Measurement,
Supply Chain Operation Reference (SCOR) Methods, and Inventory Management to
the heavy equipment Industry, which is the object of this research. Data
collection is carried out according to the main stages of SCOR from levels 1 to
3.
-
Stage
II
In this second stage, an analysis began to be carried out referring to
the SCOR level method, starting from the company's Supply Chain Management
Process referring to the 6 Primary Management Processes and the corresponding
Strategic Metric Level 1. This study uses three Performance Attributes, namely
Reliability, Responsiveness and Asset Management Efficiency, with four
Strategic Metric, namely Perfect Order Fulfillment (POF) and Order Fulfillment
Cycle (OFC), which focuses on consumers, as well as Cash-to-cash Cycle Time
(C2C) and Return on Working Capital (RWC) using metric level 2, namely
Inventory, which focuses on the internal conditions of the company (Rachmatri, 2021).
-
Stage
III
This third stage describes the company's supply chain activities
according to the stages of SCOR Level 2, using a Geographic Map and Thread
Diagram. Based on the description of the company's supply chain activities, it
is determined which activities have the potential for problems in its supply
chain management.
-
Stage
IV
Referring to the activities that could be problematic in mapping SCOR
Level 2, a more detailed analysis of SCOR Level 3 was carried out, focusing on
Inputs, Processes, and Outputs. Analysis of the factors that cause the problem
was carried out using Fishbone Analysis.
-
Stage
V
In this last stage, based on the analysis of the previous three stages of
SCOR, an analysis of improvements and alternative solutions was carried out
that could be used as recommendations for the company (Kunovjanek et al.,
2022).
SCOR Level 1
SCOR Level 1
describes the scope and configuration of the upper level of the supply chain (Marimin &
Slamet, 2010). At level 1, the performance target of a supply
chain is determined as the basis for competition.
SCOR Level 1 describes the
scope and configuration of the upper level of the supply chain. At level 1, the
performance target of a supply chain is determined as the basis for
competition. The scope of discussion of SCOR Level 1 includes the six primary
management processes as follows (SCC, 2012):
1.
Plan
The planning process describes planning activities related to the supply
chain operation. This includes collecting consumer needs and information from
available resources and balancing needs and resources to define planned
capabilities and resource gaps. This is followed by the process of identifying
corrective steps against existing gaps.
2.
Source
The source process describes ordering or scheduling activities and
receiving goods or services. This process includes issuing Purchase Orders,
scheduling shipments, receiving, validating, and storing and receiving supplier
invoices.�
3.
Make
The making process describes activities related to changing material or
creating content from a service. It focuses on material conversion rather than
production/manufacturing because Make represents all types of material
conversion, such as assembly, chemical processes, maintenance, repair,
overhaul, recycling, refurbishment, remanufacturing, and all other forms of
material conversion processes.
The general guideline of this process is the presence of inputs and
outputs.
4.
Delivery
The delivery process describes creating, maintaining, and fulfilling
consumer orders. This includes receiving, validating, creating consumer orders,
scheduling order shipments, packaging, and billing processes to consumers.�
5.
Return
The
return process describes activities related to the reverse flow of products in
consumers. This includes identifying the need for returns, disposition,
scheduling returns, and sending and receiving products returned by
consumers.�
6.
Enable
Enable
process is associated with creating, maintaining, and monitoring information,
relationships, resources, assets, business regulation, regulatory compliance,
and commercial contracts to operate the supply chain.�
In SCOR Level
1, Performance Attributes and Strategic Metrics will also be determined.
Reliability is used as one of the attributes for customer-focused Performance
Attributes, with Perfect Order Fulfillment (POF) as its Strategic Metric.
Another attribute that is also customer-focused is Responsiveness and Agility,
with Order Fulfillment Cycle Time (OFCT) and Upside Supply Chain Adaptability
(UPSA) as its Strategic Metric. For Internal-focused Performance Attributes,
Asset Management Efficiency is used as the last attribute, Inventory as metric
level 2 of Return on Working Capital (RWC) as its Strategic Metric. The
calculation formulas for preset strategic measures and their modifications for
PT XYZ are shown in Table 2.
Table 2. SCOR Strategic
Metrics
|
SCORE
12.0
|
PT.
XYZ
|
|
Performance
Attributes
|
Strategic
Metric � Lv 1
|
Formulation
|
Strategic
Metric � Lv 1
|
Formulation
|
Definition
|
|
Reliability
|
Perfect
Order Fulfillment [RL. 1.1]
|
([Total
Perfect Orders] / [Total Number of Orders]) � 100%
|
POF (%)
|
[Total
quantity of TMBP received on-time]/[Total quantity
shipment plan] � 100%
|
The
percentage of the actual amount of UT parts receipts arrived on time,
according to the shipment plan, without a split shipment
|
|
Responsiveness
|
order
fulfilment Cycle Time [RS. 1.1]
|
[Sum
Actual Cycle Times for All Orders Delivered]/ Total Number of Orders
Delivered] in days
|
OFCT
(days)
|
[Actual
Received Data UT] � [On Order Lower Level]
|
Total time
required starting from publishing story order lower level to Tower arrive at
the warehouse
|
|
Agility
|
Upside
Supply Chain Adaptability
|
[Inventory
Days of Suplly] + {Days Sales Outstanding] � [Days Payable Outstanding] in
Days
|
UPSA (%)
|
Total Item
Receive / Total Item on Order � 100%
|
The total
item receives in the warehouse per total item on the order
|
|
Asset
Management Efficiency
|
Return on
Working Capital [AM, 1.3]
|
([Supply
Chain Revenue] � [Total Cost to Serve]) / ([Inventory] + [Account Receivable]
� [Accounts Payable])
|
Inventory
(MT)
|
Ratio
[Actual All Tower Area Stock]/ [Revenue Area]
|
The amount
of Tower and Lower-level Inventory expressed in amount form compared to
revenue of all lower level
|
SCOR Level 2
At SCOR Level
2, a more detailed configuration of the SCOR level 1 process is carried out,
and a determination of the capabilities of the supply chain is carried out:
Source Stocked, Stocked Product, Make-to-Stock, Make-to-Order, or
Engineer-to-Order (Ruamsuke &
Ongkunaruk, 2021). Especially in this research which focuses on the
process of procuring the primary raw materials, then for SCOR Level 2, the
discussion will focus on the configuration of the Plan and Source process (Shintira, 2021). The following is an explanation of each process
configuration for Plan and Source:
1.
Plan
The planning process is described into five types of planning, namely
Plan Supply Chain (sP1), Plan Source (sP2), Plan Make (sP3), Plan Deliver
(sP4), and Plan Return (sP5) (Jian et al., 2017).
-
Plan
Supply Chain (sP1) is developing and building a supply chain management plan
for a certain period that shows the projected use of supply chain resources to
meet supply chain needs for a long time, considering the limited supply of
resources.
-
Plan
Source (sP2) is the process of developing and building a plan at a certain period
that shows the projected suitability of material resources to meet supply chain
needs.
-
Plan
Make (sP3) is the process of developing and building a plan in a certain period
that shows the projection of the suitability of production resources to meet
production needs.
-
Plan
Deliver (sP4) is the process of developing and building a plan at a certain period
that shows the projected suitability of resource delivery to meet delivery
needs.
-
Plan
Return (sP5) is a strategic or tactical process for building and adjusting
planning in a given period that shows the projected suitability of the return
of resources and assets to meet the demands of returns, whether anticipated or
not anticipated.�
2.
Source
The source process is described into three main processes, namely Source
Stocked Product (sS1), Source Make-to-Order Product (sS2), and Source
Engineer-to-Order Product (sS3) (Pause & Blum,
2018).
-
Source
Stocked Product (sS1) is the process of ordering, receiving and transferring
raw materials, sub-assemblies, products and services based on aggregate demand
needs.
-
Source
Make-to-Order Product (sS2) is the process of ordering and receiving an ordered
(or possibly conFigured) product or material only when there is an order
request from a consumer.
-
Source
Engineer-to-Order Product (sS3) is the process of identifying and selecting
sources of supply, negotiation, validation, scheduling, ordering, and receiving
parts, assemblies or unique products/ services designed, ordered, or built on
the needs and specifications of a particular consumer order.
-
The
following is a summary of the problems that occur in the threading diagram,
Figure
2. Thread Diagram Problem Identification
The problem
occurs in 3 elements; the first is the stock availability in the principal,
marked with sS1 in the Supplier. The second problem is forecasting, where Tower
needs to be intervened in forecasting by contract items from customers, marked
with sP2. Then sS1 or low stock availability in principle. SD1 in the Tower means
there are problems due to mixed deliveries for regular LIB needs and overhaul
needs, which still need to be planned. Problems at the lower level also follow
what happened in the Tower. In this study, SCOR Level 3 will focus on problems
in the internal XYZ Tower and Lower level to provide solutions to reduce
working capital in terms of forecasting and lead time delivery.
SCOR Level 3
Based on SCOR
Level 2, a more detailed analysis was re-conducted on potentially problematic
activities. SCOR Level 3 mapping includes detailed activities, including
inputs, processes, and outputs. For the analysis of the factors that cause the
problem, fishbone analysis is used with all related elements, namely Man,
Machine, Material, Method, and Environment (Purwani &
Sudiro, 2022). Based on the SCOR Level 3 analysis, it can be determined
that an analysis of improvements can be carried out to overcome the problem.
Figure
3. Fishbone Element SE Enable Manage Performance
In Figure 3,
there is a problem from the method side that the Tower needs to be able to
accommodate the needs of the lower level. Problems also occur because there is
no standard structure in the Tower, and officially registered with the company,
so there is an authority bias. Meanwhile, in terms of technology,
digitalization is still not complete. It needs to be completed in terms of
managing the information supply chain.
In causal
figure 4, there is still a mix of steady demand with demand overhaul, hampers
the delivery lead time.
Figure
4. Fishbone Element Delivered Stocked Product (sD1)
Following the
mapping of activities in the Source Stocked Product process, an analysis was
carried out using a relation diagram to find out the root causes that caused
the planning process to be not optimal. A causal diagram is obtained based on
observations and interviews with internal users such as logistics, SPM, Tower,
and Lower Level.
Figure 5. Fishbone Element
Plan Source (sP2)
The results of
interviews and discussions regarding the causes and effects of the problem of
high Inventory in the Tower and the lower level are centred on the high demand
along with the increase in coal prices and the decrease in Covid-19 cases,
causing the demand for orders for unit repairs, project maintenance and
overhauls to be very high compared to customer needs related to parts. Heavy
equipment normally. The Tower should manage this periodic need and can be
maintained and supplied only to the lower level when needed. The unavailability
of stock at KMSI so that the readiness stock in the Tower causes perfect order
fulfilment at specific lower-level sites not to be achieved. This is
exacerbated by the inhibition of stock distribution between sites because the workforce
warehouse cannot provide optimal performance because of competence and the
amount that must be balanced with daily transactions in all warehouse towers
and lower levels.
RESULTS AND
DISCUSSION
From the Fishbone
diagram in SCOR Level 3, this research found three problems with the supply
chain at PT XYZ, shown in Table 4. The creativity for the problem is to set up
the authority of the person in charge (PIC) Supply chain control tower, replace
contract item quantity to the customer with on time in the entire contract, and
make zero inventory overhaul demand for the lower level.
Table 3. Summary Problem and Suggestion Solution
|
Problem
|
Root Cause
(What)
|
Solution
(What)
|
Objective
(Why)
|
where
|
When
|
How
|
|
Man
|
M1 � No
Organizational Structure yet in Tower
|
Make
Organizational Structure PSCE in Tower separated with lower level
|
Structure
PCSE under the parts division head office
|
Head Office
|
Continue
|
Speed up
process blueprint planning place of PSCE in team supply chain
|
|
Method
|
M2 � High
Safety stock item contract
|
Remove item
contract concept, safety stock use calculation actual lead time and circle
order with standard distribution simulation.
|
Stock level
maximum inventory area based on simulation PSCE and supply chain
|
Lower Level
& Tower
|
In 2023
|
Propose to
the customer to remove item contract readiness; UT will send measure
performance supply chain in OTIF (On time in full)
|
|
Material
|
M3 � Mixed
Deman Overhaul & Regular in the warehouse process
|
Zero stock
lower level for overhaul demand
|
Overhaul
demand prepared by Tower
|
Tower
|
In 2023
|
Overhaul
demand prepared and delivered by Tower (Dropship Concept)
|
1. Authority of PIC Supply Chain Control Tower
The person in Charge (PIC) leader supply chain control
tower is a specialist or expert, and the organizational structure is still
below a lower level. The solution to remove bias and manage the information
supply chain more independently is to make PIC Supply Chain Control Tower
independent and below the head office, not the lower level. The authority and
role position should be changed from expertise specialist to generalist or
managerial with the function manage the supply chain upstream and downstream
more effectively and impactful (Derwik et al., 2016).
Adapted from CCL; Ram Charan, Steve Drotter, Jim Noel,
"The Leadership Pipeline", 2004-2012, PIC Supply Chain started from a
specialist (managing self) and moved to the manager of others shown in the
figure.
Figure 6 Transition of Leadership Source: PPM Management
2. Replace Contract Item Quantity to Customer with On Time
In Full Contract
Comparison between the contract item quantity and average
calculation with normal distribution gives a lot of Inventory. Contract items
use flat safety stock, and distribution everyday uses actual safety stock. The complete
simulation saving Inventory with distribution normal for sampling three parts
of heavy equipment is 148.348.452 IDR. The sampling parts use ABC Analysis to
choose heavy equipment parts with three classification amounts. A Class is High
impact amount but minimum item, B Class is a medium impact amount and medium
item, and C Class is low impact amount inventory. Simulation safety stock with
regular distribution is also proven with historical data that calculation
always gives short stock or stock consistently enough for backup purchase order
customers.
3. Zero Inventory Overhaul Demand for Lower Level
Current condition, lower level has Inventory for overhaul
or maintenance planning. Maintenance planning is a demand that can be planned
and usually has many items and parts. The lower level also should be prepared
big warehouse to accommodate the maintenance demand planning. This research
suggests that the company uses a "ship to a bill to" transaction or a
popular name e-way bill drop ship transaction. As shown in figure 6, the
current condition and suggestion business process.
Figure 7. Different Method Back up
Demand Planning.
CONCLUSION
This research primarily aims to evaluate
the element supply chain control tower at PT XYZ as a stocked business product
with SCOR Model 12.0. As a company with many working capital inventories,
maintaining a supply chain is necessary for good profit while maintaining
customer service. SCOR Method is used as a method in this research. The result
shows that the performance of the Supply Chain Control Tower in Tower Tanjung
Area (TAD) does not achieve the target. However, the researcher found some
strategies to enhance the supply chain control tower in Tower Tanjung Area
(TAD), which can apply to the whole supply chain control tower in PT XYZ. For
future research, it is necessary to focus on the downstream element because the
business has the main goal of achieving service level to the customer with
fluctuation of lead time and complexity of three parties logistic company
transportation.
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