Overview Logistics Operations in FMCG
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The document provides an overview of logistics operations in the fast moving consumer goods (FMCG) industry. It discusses key aspects of supply chain and logistics such as market demand trends across regions in Indonesia, distribution network design, inventory management, order fulfillment, and key performance indicators (KPIs) like customer service quality and cost. Initiatives to improve service and efficiency are also highlighted, including electronic data interchange, advance shipment notification, and night/holiday delivery to retailers.
Overview Logistics Operations in FMCG
- 1. Logistics Operation Overview in FMCG Industry CLoCS - ITB, 16 Januari 2010
- 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
- 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
- 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
- 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
- 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