Designing of Decision Supporting Tool to Optimize Tobacco Inventory Allocation ABSTRACT

Transcription

1 Designing of Decision Supporting Tool to Optimize Tobacco Inventory Allocation Felldy Bong 1) and Ahmad Rusdiansyah 2) 1) Magister Manajemen Teknologi, Institut Teknologi Sepuluh Nopember, 2) Industrial Engineering Department, Institut Teknologi Sepuluh Nopember ABSTRACT The decision making in business is very important for a company. It applies the same for PT A, a Kretek Cigarette manufacturing company. PT A has a specific department named Tobacco Planning Department. This department deals with everything related to tobacco shipment plan and actualization. In doing the daily activity, this department needs a more structured tool for inventory allocation. This research s aim is for designing the decision support tool for Tobacco Planning Department related to the tobacco inventory allocation. The decision support tool built in this research mostly to support the allocation of tobacco as the most important material for PT A. The good decision in allocating tobacco is important as PT A has two manufacturing center which are located in East and West. The result of good allocation is the lower inventory cost especially in transportation cost. By using this decision support tool, we can have the allocation quickly. Besides, we can do the simulation as well to see whether all decision options are aligned with the company strategy. Based on the testing, the Subject Matter Expert agreed that this tool already runs properly and can be used for daily activity.. Keywords: Allocation, Tobacco Planning, Decision Support System. INTRODUCTION PT A is a leading FMCG manufacturer in Indonesia. The main product of PT A is Kretek Cigarettes. Kretek Cigarette is cigarette made with a blend of tobacco, cloves and other flavors. The word "kretek" itself is an onomatopoeic term for the crackling sound of burning cloves. Nowadays, the market share of PT A s products is around 30% in Indonesia. Tobacco as the main component of cigarette for PT A can be divided into domestic and import tobacco. The business scope of each type is unique. Domestic tobacco is sourced from across Indonesia. PT A does the business of this domestic tobacco together with the supplier starting from planting, green leaf buying, green leaf processing. After the green leaf being processed at supplier s facility, then PT A does the price negotiation with the supplier. Once the price is agreed, tobacco will be shipped to PT A and the payment process will be done. For import tobacco, PT A starts the business in purchasing negotiation then followed with the shipping and payment process. Even though the business activities are less than the domestic tobacco business flow, the import tobacco supply chain has its own complexity. The complexity is driven by the source of import tobacco is from around the world which means the lead time of the shipment could be a week up to two months. A-5-1

2 PT A has two production centers to store the tobacco. One is located in West Java and another one is located in East Java. The distance between this two production centers is about 800 km. Those two production centers have different capacity volume in both production and warehouse. The shipment treatment for those two tobacco types is different. For imported tobacco PT A does the direct shipment to each production center based on production planning. On the other, domestic tobacco is stored in the East Java Manufacturing first then shipped to West Java Production Center based on the production planning requirement. This practice is mainly driven by cost efficiency for import tobacco while for domestic tobacco is mainly because most of the domestic tobacco suppliers are located in East Java so it would be easier to handle everything about domestic tobacco at East Java Production Center. The production planning of cigarette is driven by sales forecast which can be very dynamic depends on the market situation. The changes of the production planning can be very fast and it can be changed in weekly basis. Meanwhile the tobacco stored in the warehouse is prepared for more than a year ahead. This could cause problems if the change of production plan is not followed by monitoring and split maintenance for tobacco material. The most dangerous problem is that the production centers are not able to run the production because out of materials. As a cigarette producer, PT A realizes that tobacco is one of the important commodities to keep the company survives. In order to handle everything related to Tobacco, PT A has a Tobacco Department to handle all tobacco supply chain. One division of this department is Tobacco Planning Division. The tobacco planning division is a division to handle mainly in budgeting, planning, executing, monitoring and controlling of the tobacco supply chain. Related to the shipment planning, Tobacco Planning Division deals with around 5000 trucks per year for domestic and around 2000 containers for import. The next step is executing things such as shipments, inventory distribution and etc. Besides doing the execution, PT A also monitors and controls every single activity within Tobacco Department. In doing the responsibility, Tobacco Planning division works with many spreadsheets and templates. This is driven by the reports templates are not standardize yet. Besides, Tobacco Planning also deals with many assumptions which can change within a day. This creates problem in the division because they can take a not correct decision because the assumptions used is not valid anymore. The case which ever happened is the production stopped because the tobacco is not ready when the material will be used for production. This case was driven by usage assumption used for calculation is not valid anymore. Another thing caused this happened is that the shipment assumption did not match the reality. When there are some changes in the shipment execution, the arrival assumption used for calculation was not updated. These made no warning to the Tobacco Planning Division. The case above actually could be avoided if the information was updated the information of one section was integrated with other part. Therefore, there is a need to have a system to store assumptions data and shipment monitoring updated. DECISION SUPPORT TOOL DESIGN and DEVELOPMENT Data Collection A-5-2

3 The data collection activity for this research is done by collecting secondary data, brainstorming and also interview with the stakeholders. Data that is used as the base for the decision support tool is as follows: 1. Inventory On Hand Data The inventory data is basically stored in the ERP system at the most detail level (material code). The report from ERP system is then restructured by Tobacco Planning team and the material code is grouped at the level of Group Code. The restructured report is named Monthly Tobacco Inventory which is usually generated in monthly basis. 2. Consumption Plan The consumption plan is the plan how the tobacco will be consumed. This is extracted from other application which functionality is to calculate the requirement by group code by inputting the production plan and blends into this system.the consumption plan contains the information of the usage plan by group code. The timing interval of the consumption plan is usually 36 months in MT. The consumption plan is also split based on the production centers. 3. Master Data Master data mapping is one of the important part. This contains the mapping about the type and origin of each group code of tobacco. By having the mapping of the group code versus type and origin, it is easier to know the specific characteristic of each group code. User Requirement Identification User requirement identification is a required process to know what things are needed by user so the decision support tool can be focused more on the user requirement. Whom we called user are manager and analysts from Tobacco Planning Department. User requirement identification is done by using direct interview technique. The participants are limited to manager and analysts because they are the core of Tobacco Planning Department and they do most of Tobacco Planning Department s activities. Steps of user requirement identification are: 1. Collecting name of Tobacco Planning Manager and Analyst 2. Interviewing the respecting people 3. Interpreting raw data based on interview 4. Analyzing the result of user requirement identification Based on the interview with Tobacco Planning Manager, we tried to identify what the requirement of Tobacco Planning Department. The interview and identification took place at the very beginning process. By identifying the requirement at the beginning of the research, we will be able to know which area needs to be improved and which kind of improvements can be done. Based on the interview, we know that one of the activities of Tobacco Planning Department is maintaining inventory and duration in two production centers (East and West). Concept Development A-5-3

4 Problem identification 1. Problem Statement: How to maintain the inventory duration in each production centers by optimizing the tobacco shipment allocation. 2. Scope: Tobacco Planning Department related to tobacco shipment planning Model Formulation 1. Objective: To maintain inventory duration level while fulfilling production requirement in each production center with the lowest inventory cost 2. Related entities Output : Performance measure: Inventory duration difference : Consequence: Inventory cost, total inventory per production centers Input : Inventory on hand, consumption plan per production center, inventory cost, transportation cost Influence Diagram and Flowchart A-5-4

5 A1 A2 A3 A4 Figure 1. Influence Diagram Table 1. Legend of Influence Diagram Controllable Import tobacco from supplier to East Java Production Center Import tobacco from supplier to East Java Production Center Current tobacco sitting in the East Java Production Center to be shipped to West Java Production Center Current tobacco sitting in the West Java Production Center to be shipped to East Java Production Center B1 Tobacco consumption plan B2 Sea Freight Price B3 Inland Freight Price Uncontrollable B4 Company Stock Duration Policy The figure above shows the relationship of variables, input and output. The goal is to maintain inventory duration level while fulfilling production requirement in each production center with the lowest inventory cost. A-5-5

6 Based on the above influencediagram, the flow chart of the decision support tool is as shown by Figure 2. There will be three methods to calculate the tobacco allocation. In method one and two, the support tool will provide the result based on its calculation while in the method three, user needs to determine some information first. This is meant to be the simulation tool for the decision maker before taking a decision. Figure 2. Decision Support Tool Flowchart Validation The model that we have created need to be validated whether the model is already ok and can be used to interpret the real problem in tobacco allocation area. Influence Diagram Logic Validation The influence diagram that had been created needs to be validated. The way to validate it is by asking to the manager of Tobacco Planning Department. After checking, it is confirmed that the model is already correct and based on the actual condition. This is based on the relationship of the performance measure with parameters and decision variables. Variable completeness All variables which is put in the influence diagram has been connected to others but not all is included in the model. System Testing A-5-6

7 The system that has been built is tested. The tester is the employee who does the inventory allocation in the organization. This test is meant to see the capability of the system to give the suggestion to user or business decision maker. For the testing, we use two material, one is domestic material and another one is imported material. The data used for testing is as follows: On hand inventory o T6ZD : 3,485 MT o T8CV : 1,883 MT Usage quantity Table 2. Usage Quantity for Testing EAST T6ZD T8CV EAST T6ZD T8CV EAST T6ZD T8CV May May May Jun Jun Jun Jul Jul Jul Aug Aug Aug Sep Sep Sep Oct Oct Oct Nov Nov Nov Dec Dec Dec Jan Jan Jan Feb Feb Feb Mar Mar Mar Apr Apr Apr WEST T6ZD T8CV EAST T6ZD T8CV EAST T6ZD T8CV May May May Jun Jun Jun Jul Jul Jul Aug Aug Aug Sep Sep Sep Oct Oct Oct Nov Nov Nov Dec Dec Dec Jan Jan Jan Feb Feb Feb Mar Mar Mar Apr Apr Apr Arrival Data Table Arrival Plan Data (12 Months) months) T6ZD T8CV T6ZD T8CV May Nov Jun-14-1 Dec Jul Jan Aug Feb Sep Mar Oct Apr Testing result When doing the testing, user tried the three methods available in the supporting tool. The result of each method is as follows: - Method 1 o Movement from East to West A-5-7

8 T6ZD: 367 MT T8CV: 24 MT o Arrival at West: T6ZD : 631 MT T8CV : 24 MT o Arrival at East: T6ZD : 2,064 MT o T8CV : 929 MT Ending duration: T6ZD: 26 months at West and 27 Months at West T8CV: 31 months at West and 31 months at East - Method 2 o No Movement from East to West and vice versa o Arrival at West: T6ZD : 998 MT T8CV : 239 MT o Arrival at East: T6ZD : 1,697 MT T8CV : 905 MT o Ending duration: T6ZD: 26 months at West and 27 Months at West T8CV: 31 months at West and 31 months at East - Method 3 simulation done by user o Movement from East to West T6ZD: 100 MT T8CV: 0 MT o Arrival at West: T6ZD : 876 MT T8CV : 239 MT o Arrival at East: T6ZD : 1,820 MT T8CV : 905 MT o Ending duration: T6ZD: 25 months at West and 27 Months at West T8CV: 31 months at West and 31 months at East After finishing the testing and discussing with the user (analyst and Manager Tobacco Planning), the logic and basic calculation is already ok and follow the calculation done by the team. This means that the decision support tools is already valid. CONCLUSION AND SUGGESTION Conclusion The research finally comes to the conclusion. From the overall steps in the research, the author concludes the research as the followings: 1. By doing this research, we can get the prototype design of the decision support tool for tobacco allocation in PT A 2. By having this supporting tool, the lead time in preparing the calculation is reduced and gives more time to do the analysis prior decision making. A-5-8

9 3. The prototype design of the decision support tool can also handle the simulation that helps users to identify some specific requirement or rule related to the tobacco allocation. 4. In general, this research is able to give flexibility for the company to decide the model which fit the most to the strategy of the company in a more structured and systematic way. Suggestion Based on the research that had been completed, there are several suggestion from the author as followings. 1. The company (especially Tobacco Planning Department) build more decision support tools which is not limited only to the tobacco shipment allocation since there are more activities done by the department. 2. For the next research, if possible the researches need to handle more parameters (i.e. warehouse capacity) and try to use the artificial intelligent to capture the nature of the business. Bibliography Ambangsari, R. Putri Maharani (2009), Pengembangan Rancang Bangun Aplikasi Spreadshet Untuk Perancangan Tata letak Dan Alokasi Gudang Dengan Mempertimbangkan Sifat Material, Thesis, Surabaya: MMT-ITS Chopra, Sunil and Meindl, Peter (2007), Supply Chain Management, Strategy, Planning and Operations, Third Edition, Prentice Hall. Hapsari, Shanti Indri (2008), Aplikasi Sstem Pendukung Keputusan Berbasis Spreadsheet Untuk Menganalisis Biaya Penyelenggaraan Pendidkan Di Program MMT-ITS, Thesis, Surabaya: MMT-ITS. Hariyati, Sutrisna (2009), Model Alat Bantu Pengambilan Keputusan Berbasis Spreadsheet Untuk Analisis Resiko Rantai Pasok Bahan Baku (Studi Kasus PTEI), Thesis, Surabaya: MMT-ITS. Mashudi (2007), Perancangan Prototipe Sistem Pendukung Keputusan Untuk Manajemen Fraud Pada Sebuah Operator Telepon Seluler, Thesis, Surabaya: MMT ITS. McLeod, Raymond Jr. (2005), Management Information Systems, 6 th Edition, Prentice Hall Inc. Sari, Sinta Candra (2010), Perancangan Model Credit Collection Dashboard System Berbasis Spreadsheet Untuk Pengelolaan Kinerja Perusahaan Pembiayaan, Thesis, Surabaya: MMT-ITS. Turban, Efraim; Aronson, Jay E., Ting, Peng Liang, (2005), Decision Support System and Intelligent System, 7 th edition, New Jersey: Prentice Hall. Wijaya, Adi, (2011), Perancangan Alat Bantu Pengambil Keputusan Berbasis Spreadsheet untuk Konsolidasi Pengiriman Multi Produk Multi Tujuan di PT Rutan, Thesis, Surabaya: MMT-ITS. A-5-9