20 H o w F a s t T o b a c c o C a n B e :
H o w F a s t T o b a c c o C a n B e:
T H E L O G I ST I C A L PRO C ESS A T RO T H M A N S O F PA L L M A L L IN D O N ESIA IN T H E 1997 IN D O N ESIA N EC O N O M IC C R ISIS
R .J .E . v a n d e r H e i j d e n Fo n t ys Un iv er si t y , Net h er lan d s
B .G . W a g n e r
Fo n t ys Un iv er si t y, Net h er lan d s
E . G . S u k o h a r s o n o Br a w i j a y a Un iv er sit y , In d o n esia
I n t r o d u c t i o n
Ev e r y year Ro t h m an s In t er n at io n al Gr o u p p u b lish es a g eo g r ap h ical b u siness rep ort . In t h is rep ort the d if f er en t A sian g eo g r ap h ical r eg io n s are co m p ar ed w it h one an o t h er co n cer n in g p r of it , cost s, sales et c. Bef o r e 1996, Ro t h m an s o f Pal l M a l l In d o n esia w as alw ays at t he l sl p lace co n cer n in g p rof it . T h is is b ecau se o f t he lo w cost s spent in In d o n esia. In 1996 p r of it s w er e d ecl in in g and t h eir p lace at t he hit list w as t ak en b y M al ay si a. T h is w ak en ed the m an ag em en t in Jak ar t a and M al an g . T h e Pr o f i t n um b er s w er e st ill d ecl in in g due t he h ig h er cost s t han ex p ect ed (sales m ain t ain co n st an t ). T h e cost s in cr eased in t he year o f 1996 w it h 1 0 % (u su all y b et w een
4%
and 6 %). Th o se 1 0 % t ot al f o r a RP 2,6 b ill io n : 1996. A cco r d in g t o t he m an ag em en t t h er e w er e t w o m ain causes f or t he 1996 y e a r ’ s h igh cost s :1. H ig h co n t r ib u t ion s to t he p erso n n el o f t he In d o n esian g o ver n m en t 2. Pr o d u ct io n cost s w er e h ig h er t hen ex p ect ed at t he f act o r y in
M alan g .
T h e cau ses o f t he h ig h er p r od u ct ion cost s w er e : 1. Ex t r a lab o r cost s (ap p r o x . RP 1 b il l i o n ).
2. D u e t he m aj o r ch an g es o f m an ag er s in k ey p o sit io n s t he ef f ic i en cy o f t he r u n n in g o f t he f act o r y d eclin ed .
T h e ef f i ci en cy o f t he f act o r y had to be im p r o ved . T o get a clear p ict u r e on t he 1996 sit u at ion o f the p r od u ct io n p r ocess and t o get an idea ab ou t w h i ch m ach in es and d ep ar t m en t s had to be im p r o ved an d h o w t o im p r o ve t hem , Ro t h m an s o f Pal l M a l l In d o n esia w an t ed t o h ave an an alysi s w h at w as h ap p ened w i t h t he b u siness lo g ist ics in 1997.
Usi n g Y i n ’ s case st u d y m et hod (Y i n , 1989), t he o b j ect ive o f t h is p ap er is to in vest ig at e t he 1997 lo g ist ical syst em w h er e t h is is t he st art ed t u r m o il year o f the In d o n esian eco n o m y. Ro t h m an s In d o n esia w as w o r k in g w it h o ld - f ash ion ed m ach in es and in the past t h er e had b een m ad e ad- hoc im p r o vem en t s f o r t he p urp ose o f so lvin g b o t t len eck s and p r o b lem s in t he f act o r y . Th er ef o r e ex t r a p r o d u ct io n hours w er e used.
W h a t w a s h a p p e n e d
Th e t w o m aj o r p r o b lem s m en t io n ed b ef or e in d icat e t he areas o f the lo g ist ical p r ocess in w h i ch a d et ailed in vest ig at io n had been d one. Th e f ir st w as a b o t t len eck , f l o w an alysis and t im e st ud y o f the b u siness lo g ist ics, t he second w as ef f i ci en cy m easu r em en t o f t he d if f er en t p rocesses o f t he lo g ist ical process.
H o w s h o u l d it b e d o n e
Th e o ver h ead m et hod o f the in vest ig at io n w as based on t he b lack - b ox m od el o f In 't V e l d G. T h is w as b ecause o f t he co m p l ex it y and op en- endnes o f t he p r o b lem d escr ip t io n . Th e in vest ig at io n p r ocess had t o be co n d u ct ed bot t om up b ecau se o f t he lo cat io n o f t he resear ch er s and t h eir p lace w i t h in t he o r g an iz at io n . A s a p h ilo so p h y b ehin d t his bot t om - up r esear ch t he id eas o f Go ld r at t H w er e ad op t ed . Pr o b lem s w er e h ig h lig h t ed and f u r t h er in vest ig at ed . I f the cause o f the p r ob lem co u ld not be f oun d on t he o p er at ion al level o f the o r g an iz at io n , a st u d y w as m ad e o f t he t act ical and st r at eg ic levels. T h i s k in d o f st udy w as also lik e Het lam p m od el o f Po t g en si co n cer n in g t he st u d y o f the t act ical and st r at eg ic level.
%
T h e w h o le r esear ch w as com p let ed as f o llo w s:
1. A n o ver al l v i e w o f t he o r g an iz at io n w as est ab lish ed 2. A d et ailed visio n o f t he p r od u ct ion process w as m ad e
3. Tim e/ q u an t it y st ud ies ab out r esou r ces and o ccu p at io n levels w er e co m p let ed
4. In t er est in g part s o f t he p rocess w er e an alyz ed f u r t h er (b o t t len eck and in ef f icien t r eso u r ce)
5. Co n cl u sio n s w er e m ad e and solu t io n s w er e est ab lish ed
6. So lu t io n s w er e present ed and im p lem en t ed t hem int o t he o r g an iz at ion
E x p l a n a t i o n o f t h e r e p o r t c l a s s i f i c a t i o n s
Th e lim it s o f t he st u d y are d escrib ed . A sm all d escr ip t io n o f Ro t h m an s can be f o u n d (f o r a f u ll d escrip t ion : Ap p en d i x 1). Th e st u d y also d escrib es t he m et hod s o f t he in vest ig at io n , g i vin g a d et ailed v i e w o f t h e r esear ch m et hod s and 21 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
22 H o w F a s t T o b a c c o C a n B e :
t h eir o r ig in . Th e r esult s o f t he an alysis are d escrib ed . T h e co n clu sio n s and r eco m m en d at io n s w i l l be d iscussed . Fin al l y , in ch ap t er 6 t he im p lem en t at ion o f a new p lan n in g - syst em w i l l be an alyz ed .
In t he w h o le r ep ort sm all alp h ab et ic let t ers are used to l in k b ack to the t ab le o f au t h o r it ies. In t he t ab le o f au t h o r it ies are t he sam e let t ers used, w h i ch g ives t he ex act l y in f or m at io n ab out t he source. Th e sm all n u m b er s b ehind the w or d s r ef er to f oot not es.
A r em ar k is m ad e ab out the ex ch an g e rate o f the Ru p iah . In 1996 the RP w as at 6.0 00 to t he U S d o llar , Jan u ar y 1998 t he RP r each ed an u lt im o dept o f 9.000.
T a b l e o f t e r m
Th e f o l l o w i n g is an o v er vi ew o f t he sp ecif i c ab b r eviat io n s used b y PT Ro t h m an s o f Pal l M a l l in 1997 and t h eir m eanin g .
A b b r e v i a t i o n E x p l a n a t i o n
D I D u n h ill In t er n at io n al
D IM D u n h il l In t er n at io n al M en t h o l
D ii D u n h il l Lig h t
D K S D u n h ill K i n g Siz e D K SM Bl u e Rib b o n Su p er Siz e
B L R SS Kan sas Plain
K a n P Kan sas Kin g - siz e Fi l t er K a n K F - Kan sas M en t h o l
K a n L Kan sas Lig h t
K a n M L i Kan sas M en t h o l Lig h t W H R L S Wh i t e Ho r se Lo n g Siz e
M SB M ar s Br an d Sh ag
M B P M ar s Br an d Pap er
3 RH L 3 r o w box
2 RH L 2 r o w b ox
K O O P Custom er Order Detachment Point (planning vs customer- specific) Rot h m an s PT Ro t h m an s o f Pall M al l In d o n esia
23 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
A su r vey o f t he t erm s used b y Rot h m an s and t h eir m ean in g in t he 1997.
Ban d r o l 1 ax lab el
Blen d M i x o f vario u s t o b acco ’ s w h ich m ak e sp ecif i c a brand
Cast in g Fl av o r
Flavo r Sau ce w it h t he b lend is m ix ed t o m ak e a sp ecif i c tast e
Pack ag in g D ep ar t m en t w h er e Ro t h m an s p ack ag e t he cig ar et t es int o b ox es, sleeves and car d b o ar d ’ s
Pr i m ar y D ep ar t m en t w h er e Ro t h m an s m ak e t he b lend o f t he t o b acco
St i ck Cig ar et t e
St ick - m ak in g D ep art m en t w h er e Rot h m an s p r od u ce t he cig ar et t e (w i t h the t o b acco , f ilt er and p ap er )
C r i t e r i a o f t h e i n v e s t i g a t i o n
Th e p r od u ct s t hat Ro t h m an s p r od u ces in 1997 w er e D u n h i l l and M ar s Br an d f or t he In t er n at io n al m ar k et and Kan sas Wh i t e Ho r se and Bl u e Rib b o n f o r the d o m est ic m ar k et . Th ese brands w er e av ail ab l e in d if f er en t sizes, f ilt er / n on - f ilt er , p ack ag es and m en t h o l ver sion s. T h i s t ot als t he n um b er o f b lend s at 9 and t he n um b er o f end p rod u ct s at 14. Th e t o t al an n u al r even u e o f Rot h m an s o f Pall M a l l In d o n esia w as ab out RP 100 b i lli o n w i t h ap p r o x im at ely 2 ,4 0 0 ,0 0 0 ,0 0 0 cig ar et t es p r o d u ct a year.
Th e head o f f ice o f Ro t h m an s o f Pal l M a l l In d o n esia w as sit uat ed in Jak ar t a. T h e p r o d u ct io n and st orage f o r , r a w m at er ials and f in ish ed good s in ven t o r y w as m ain t ain ed in t he f act o r y in M alan g . T h e d o m est ic t o b acco in 1997 w as 65 %. Th e rest m ai n ly im p ort ed f r om A m e r i ca and Br az i l but t h ey w er e b ought ar o u n d t he w o r ld b y Rot h m an s In t er n at io n al. Ev e r y brand had it's o wn b lend (m ix t u r e o f t o b acco ). A b lend w as m ad e f r om 15 t il l 32 t yp es o f t o b acco and f lavo r ed w i t h a cast ing . Ev e r y brand had its u n iq u e cast in g , w h ich w as im p o r t ed f r om Eu r o p e.
Fo r the p r o d u ct io n o f t he cigar et t es Ro t h m an s In d o n esia m ak es used o f 2 GLT - m ach in es, 3 b len d - m ach ines, 11 p r od u ct io n m ach in es, 11 p ack ag in g m ach in es and 60 w ar eh o u ses sp r ead in g o ver all t he In d o n esian ar ch ip elag o . Th e p eop le in the f act o r y w o r k 40 hours a w eek , f rom 7.00 t ill 16.00 w i t h a b r eak o f
1 hou r at noon.
It w as m en t io n ed that not all act ivit i es o f t he co m p an y t o ok p lace in M al an g , Jak ar t a w as t he h ead - of f ice o f Ro t h m an s. Th e Pr esid en t D ir ect o r ,
24 H o w F a s t T o b a c c o C a n B e :
M ar k et i n g D ir ect o r , Fin an cial D ir ect o r , Hu m an r eso u r ces D i r ect o r and t he co m p let e M ar k et i n g and Fin an cial d ep ar t m en t w er e in Jak ar t a. Fo r the in vest ig at io n , o n ly t he f act o r y in M alan g w as in vest ig at ed . T h e p lace o f the r esear ch er s in t he o rg an iz at ion w as d ir ect ed u n d er t h e Hu m an r eso u r ce m an ag er o f M alan g . In o rd er o f level it w as on t act ical level. Th e o r g an iz at ion ch ar t can de seen in f ig u r e 1. A l l f u n ct io n s w h ich w er e sit uat ed in M al an g w er e g r ay. Th e p o sit ion o f t he in vest ig at o r s w as sho w n in red.
Gm anf Managar Gen r* M alaga h Wvq Qp*»Hon GfOtf) 0«v*lapm «nt
Factory Um g ar
Human Raaourcas Manag* (M in g }
Engew w g lin u d c w ii Owictoi Sarvwaa Dvactaf
Eng St r wt f Pio d ct S«vc«s Duactor Manag*
F I G U R E 1: O RG A N IZ A T IO N C H A RT O F RO T H M A N S [So u r ce:,Own invest igat ion]
M al an g w as d ir ect ed b y t w o m an ag er s, t he G M M (Gen er al M an ag er M al an g ) and t he G M M O (Gen er al M an ag er M alan g Op er at io n s. T h e G M M w as r esp o n sib le f o r o r g an iz at io n al t ask w h er eas t he G M M O w as r esp o n sib le f o r the p r o d u ct io n p rocess.
T h e P r o d u c t i o n P r o c e s s
Th e m an u f act u r in g p r ocess o f the cig ar et t e w as easy. T h e r aw t o b acco leaves w er e h ar vest ed and pre dried . T h ey ar r ived at Ro t h m an s in 80 K G back s. Her e, t h ey w er e sh o r t ly st ored u nt il f u r t h er p r od u ct io n f o ll o w s. Th e f ir st part o f the p r od u ct ion w as the g r een- leaves t rashing. Her e t he leaves and t he n er ves w er e sep arat ed , w ash ed , st eam ed and d r ied , cu t and b ox ed f o r a lo n g t im e st orage. T o g ain q u alit y t he t ob acco w as n o w st ored, d ep en d in g on each brand unt il ' / 2 or 1 year .
A f t er t he lo n g t im e st orage the t o b acco w as st eam ed ag ain to m ak e sure t hat it w as not b r ok en . Th en the t o b acco w as cu t int o f in al size and m ix ed w it h t he cut n er ves and w o o d . T h is w as done b y var io u s t o b acco b r and s at t he sam e t im e in one m ach in e. Th e m ix t u r e o f t o b acco w as called a b lend . T h e b lend was cast ed w it h a f l av o r t o g ive it som e sp ecif ic tast e and d r ied . A f t er the d r yin g , the t o b acco goes f o r t ree d ays into a co ld st orage.
25 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
Th e b len d w as f ed int o t he st ick - m ak in g m ach in e at t he m ak in g d ep ar t m ent . Her e t he b lend w as r o lled int o a p ap er and a f i lt er w as g lu ed to it. Th e st ick s ag ain go int o a co ld st orage f o r t hree d ays.
Fi n al l y , the st ick s w er e p ack ed int o p ack s, sleeves and b ox es. A f t er that t he box es h ave to be st ored f o r 7 d ays f o r good q u alit y. A f t e r t hat t h ey w er e d ist r ib u t ed to the var io u s sales- point s.
Th e b asic o f t h is lo g ist ical p rocess o f the f act o r y in M al an g can also be seen in f ig u r e 2. K O O P and som e lo g ist ical co re d ef in it io n s are also present ed.
T h e L i m i t s o f T h e I n v e s t i g a t i o n
Th e in vest ig at io n f ocused on the p r im ar y p r o d u ct io n p r ocess at o p er at io n al and t act ical level (as also can be seen in f ig u r e 2 and 3 on page 13 / 14, lim it s o f the o r g an iz at ion : Th e area w it h in t he d ot t ed lin e is t he to be in vest ig at ed ar ea). T h e b asic cig ar et t e m ak in g p r ocess w as an alyz ed . H o w ever , one t h in g not t ak en int o acco u n t w as the long t im e st orage. T h is w as b ecause d ecisio n s f o r p u r ch asin g w er e m ad e b y an ex p ert gr ou p , co n sist in g o f f arm ers and g r o w in g sp ecialist s. Th e m ost im p or t an t here w as t he q u ali t y o f t he t o b acco , the ch ar act er ist ics o f a t o b acco h ar vest and long- t erm h ar vest plans. Th e in vest ig at o r s d id not k n o w ver y m u ch ab out t his t o g ive an o p in io n and leave t h er ef o r e t h is part o f the p rocess to t h eir co u n t erp ar t s in Wag en i n g en .
Becau se o f t his, t he p u r ch asin g o f r aw m at er ials w as t he lef t lim it at io n o f the in vest ig at io n .
Fu r t h er , b ecau se all st r at eg ically d ecisio n s w er e m ad e in Jak ar t a, the w o r k in M al an g co u ld o n ly span t act ical and o p er at io n al d ecisio n s. T h e r esear ch w as lim it ed to that . On som e p oint s, som e o p in io n s w er e g iven co n cer n in g the st r at eg ic level.
A t t he end o f t he process t he prod uct s w'ould be d ist r ib u t ed . So m e d eliver ies w er e g o in g d i r ect ly to 40 d ist r ib u t o r s, but m ost o f t he d eli ver i es are g oing to- a st op- point (w ar eh o u se). On ever y m aj o r islan d w as a st op- point . As ex am p le Su m at r a has 2 st op- point s. Th e islan d s Su m at r a, Ja v a , Ba l i and Lo m b o k p r o d u ct s are d eliver ed b y t ru ck . Fo r the o t h er islan d s t he p r o d u ct s are d eliver ed b y b oat f r om Su r ab aya. A l l t he d el iver i es are ar r an g ed f r om Jak ar t a and t h er ef o r e not co n d u ct ed in t his research.
To b acco Cig aret t es
[ S o u rc e : H e i j n s d i j k P j
26
H
o
w
F
a
s
t
T
o
b
a
c
c
o
C
a
n
B
e
^
-1
r<
~
i
28 H o w F a s t T o b a c c o C a n B e
M e t h o d o f I n v e s t i g a t i o n
T h e o ver al l m et hod o f research w as t he Bl a c k Bo x ap p r oach acco r d in g to In t V e Id G. T h is is b ecause o f t he co m p lex it y and open- end nes o f the p r ob lem d escr ip t io n . Becau se o f the locat ion o f the in vest ig at o r s (g eo g r ap h ical) and t h eir p lace w i t h i n t he o rg an iz at io n , t he in vest ig at io n had to be con d u ct ed ^ 0£ 0m, up A t 0 P ' d °w n ap p r oach m ay not be su ccessf u l b ecau se o f the d if f i cu lt ies o f o b t ain in g m at er ial f r om Jak ar t a (Jak ar t a- M alan g , 1200 K m ) and the secr ecy o f core- dat a. D u e to t he p h ilo so p h y b eh in d t h is bot t om - up resear ch the id eas o f Go l d r at t E w er e ad op t ed, co n cer n in g t h r ou g h p u t , in ven t o r y and op er at ion ex p enses. Th e t h r ou g h p u t w i l l r em ain const an t , t he in ven t o r y and o p er at io n ex p en ses w i l l be red uced .
The p r ocess st eps w er e in the f o llo w in g order: 1. Est ab lish in g a g lo b al v i e w o f the f act o r y
. Sp eci al iz ed v i e w ab ou t t he p r od u ct io n process
. Sp ecializ ed v i e w ab ou t t he o ccu p at ion level o f m ach in es and t he ef f i ci en cy o f t he use o f r eso u r ces
4. A n al y si s o f t he p r o b lem part s 5. So lu t io n s to the prob lem parts.
Sp ecial at t en t ion w as paid to the an alysis o f t he o ccu p at io n level o f m ach in es and m easu r em en t o f the ef f ic i en cy o f t he r esou r ces b ecau se t his is the st ar t ing p o in t f o r f ar t h er research. Gr ap h i cal l y t he in vest ig at io n can be seen in
2 9 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
f ig u r e 4: O v e r v i e w o f o u t lin e and m et hod.
Lo w e r p r o d u ct io n cost o f t he f act o r y
1f
O v e r v i e w o f the
r
Pr o d u ct io n processes
Pr o d u ct i vit y an alysis
M easu r em en t o f r esou r ces
Cap aci t y an alysis M M O
• In t er vi ew s w it h em p lo yees • Plan t tours
Bo t t len eck an alysis
• A n al y z i n g h ist o r ical d at a
• In t er vi ew s w it h em p lo yees • M M O
FIG U R E 4: O V ER V I EW O F O U T L IN E A N D M ET H O D [Sou rce Own i n v e s t i g a t e ]
Th e m et hod s o f r esear ch f o r the steps 1,2,3 and 4 w i l l be disgust .
G l o b a l V i e w o f T h e F a c t o r y
A g eneral im p r essio n o f t h e co m p an y w as est ab lish ed b y r ead in g d o cu m en t s, in t er vi ew s w i t h m an ag er s and v i ew i n g t h e f act o r y. A s a b asis f or t h is r esear ch t he "p r o cesco n t in g en t ieb en ad r ein g " acco r d in g t o Heij n sd ij k p w as used. T h e co m p let e r ep o rt o f t h is can be f o u n d in A p p en d i x 2 : K i n d o f o r g an iz at ion acco r d in g to Heij n sd ij k p Ro t h m an s is d ef in ed as a b u r eau cr at ic o r g an iz at ion in all its f u lln ess.
G l o b a l V i e w o f T h e L o g i s t i c a l / P r o d u c t i o n F u n c t i o n
T o f o cu s t he p r o d u ct io n process, a q u est io n n air e w as m ad e b ased on t he m o d el o f "We r k e n m et Lo g is t iek ", acco r d in g t o V i ss e r / V . Go o r K, co ver in g 7 m aj o r part s o f b u siness lo g ist ics. Th is q u est io n n air e d ealt w i t h t h e f o ll o w i n g head ing s:
1. Pr o d u ct io n , p lan n in g and co n t r o llin g 2. Pu r ch asin g
3. In ven t o r y m an ag em en t 4. M at er ial s h an d lin g
5. In ven t o r y co n t r o l o f f in ish ed goods 6. Dep o t s and in ven t o r y
7. Tr an sp o r t at io n d ecisio n s
Based on t he in f or m at io n ob t ained b y t he ab o ve q u est ion s, the f o l l o w i n g part s w er e co nst ru ct ed : A d et ailed f lo w - ch ar t (A p p en d ix 4 ). Th e m at er ial m o vem en t (A p p en d i x 5 ), an o v er v i ew o f t h e p lan n in g - syst em , an o v er v i ew o f depot s, m eans o f in t er n al and ex t er nal t r an sp o r t at io n , m at er ials h an d lin g and p u r ch asin g (A p p en d i x 3 ). So r r y, not f in ish ed ..
A n a l y s i s o f O c c u p a t i o n L e v e l s a n d E f f i c i e n c y o f T h e U s e o f R e s o u r c e s
T h e co r e p o in t o f in vest ig at io n co n sist ed o f t w o cl o sely co n n ect ed part s. On e w as t he b o t t len eck an alysis w h ich m easu r ed t he ef f i ci en cy o f each - st ep in t he p r od u ct io n p r ocess and the secon d w as t he p er f o r m an ce in d icat o r
w h i ch m easu r ed t he ef f i ci en cy o f all t he reco u r ses in t he p r ocess.
B o t t l e n e c k A n a l y s i s
T o g ive a st r uct u red o ver v i ew o f t he cap aci t y and t h e var io u s t ask s w it h in t he p r od u ct io n p r ocess, A ald er sA m o d el o f m ach in e use w as co p ied . Th e m o d el can be vi ew ed in f ig u r e 5.
30 H o w F a s t T o b a c c o C a n % e : ...
31 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
A v ai l ab l e p r o d u ct io n t im e, am o u n t o f p r o d u ct ion 1 0 0 %
Up t im e D o w n
t im e Real p r od u ct io n t im e Wai t i n g
t im e Usef u l p r o d u ct io n Sl ac k
t im e
FI G U R E 5: A N A L Y SI S O F BO T T L EN EC K [Sou r ce Aald er sA]
T h e q u an t it ies w h ich w er e in vest ig at ed w er e: Ho u r s a d ay f o r r ep air in g each m ach in e
Ho u r s a d ay o f w ai t in g , p r od u ct io n on r ed u ced speed o r er r or s in the
Ho u r s a d ay lost d ue to slack .
A lso , t he w ast e o f m at er ials w as m easu red w it h each o f t he ab o ve q u an t it ies.
Th ese q u an t it ies w er e m easured o ver 19 m aj o r st eps o f t he p r od u ct io n p rocess as ab st ract ed f r om the f lo w - ch ar t (A p p en d ix 4 ).
P r o d u c t i v i t y a n a l y s i s ( e f f i c i e n c y ) , t h e p e r f o r m a n c e o f t h e p r o c e s s
T h e g o al o f t h is an alysis w as to m easu re i f t he r eco u r ses f o r p r o d u ct io n w er e m in im iz ed to each step in the p r od u ct io n process. In f ig u r e 6 yo u w i l l see h o w t he r eso u r ces w er e in vo lved in the co m p o n en t s o f lo g ist ics m an ag em en t . p rocess
V o l . 12, N o . 1 Ju l y 2004 © Cen t r e f o r In d o n esian A cco u n t i n g and M an ag em en t Resear ch
32 H o w F a s t T o b a c c o C a n B e :
FIG U RE 6: C O M PO N EN T S OF [Source: Coun cil o f Log ist ics Managem ent B] L O G IST IC S M A N A G EM EN T
Per st ep o f t h e p r od u ct io n process, it w as m easu r ed h o w m an y p er cen t o f t he u sef u l p r o d u ct io n t im e w as lost due to h um an , cap it al (m ach i n e) o r nat ure (m at er ial).
T h e m ax im u m p o ssib le p r od u ct io n w as alm o st in all cases m ad e use o f the t ech n ical sp ecif icat io n s o f t he m ach in es in t hat st ep o f t he p r o d u ct io n . Th e co m p let e o v e r v i e w o f t he b o t t len eck an alysis an d t h e r esou r ces an alyses, acco r d in g t o A al d er sA , can be f o u n d in f ig u r e 7.
T h e u se o f m ach i n es
Availab le production time, amount o f production 1 0 0 %
Up time Down
time
Real production time
Wait in g time
Useful production time
Slack
Rep air Availab ilit y :
Capit al Resource Change
Sm all stops
Reduced speed Perf orm ance:
Hum an Resource Wait in g
Malf u n ct ion Starting/ Stop
- M k t f r ila f * , Resou r ce *
33 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
FIG U RE 7: A N A L Y SIS O F BO T T L EN EC K / RESO U RC ES [Sou rce Aald er sA] T h e w h o le b o t t len eck and p er f o r m an ce in vest ig at io n s are su m m ar iz ed in the ef f i ci en cy d iag r am (t h is w i l l be f u ll y ex p lain ed in ch ap t er 4 ).
E f f i c i e n c y d i a g r a m , t h e c o m b i n a t i o n o f b o t t l e n e c k a n d p r o d u c t i v i t y
a n a l y s i s
A s can be seen in f ig u r e 7. the b o t t len eck an alysis and t he p er f o r m an ce in d icat o r w er e the sam e in vest ig at io n . O n l y the n u m b er o f calcu lat io n w as d if f er en t . Th er ef o r e t hey w er e co m b in ed in the ef f ic i en cy m at r ix as sho w n b elo w in t ab le 1.
Nat ur e Nat u re Cap it al Ef f i ci en cy
Resou rces Resources Resources Sur p lus
Ef f i ci en cy Su r p lu s
Tot al Over all
Aver ag e Ef f i ci en cy
Def in e in ef f icien t resource
I A BL E 1: SU M M A RY OF EFFIC IEN C Y D IA G RA M [Source: Ow n Investigation!
T o co m p let e t his ef f i cien cy d iag r am , var io u s m easu r em en t s and calcu lat io n s w er e und ert ak en to g at her the co r r ect dat a. Th e d at a f or the ef f i cien cy d iag r am w as f or a great deal ob t ained f r om a M M O (m u lt i m om en t o p n ain e), acco r d in g to Tipp et t ,. D u r in g a t w o w eek t im e st u d y (n o r m al p r od u ct io n w eek ) w e m ad e 6650 m easu r em en t s w h i ch spread o ver 19 p rocess steps (3 5 0 m easu r em en t s per st ep). Th e o ver all o ccu p at io n level w as calcu lat ed at 3 0 %. T h e st and ard d eviat io n w as 2 .5 %. Wi t h a r eli ab il it y o f 9 5 % w e can say that tlu? true o ccu p at io n level w as b et w een 2 5 %- 3 5 %.
T h e m ax im u m avail ab le p r o d u ct ion t im es per st ep o f t he p r o d u ct ion w er e o b t ain ed b y in t er view s w it h k ey- em p lo yees at each st ep and b y lo o k in g at t ech n ical m ach in e data. Th e w ast e o f p r od u ct ion t im e d ue t o m ach in e, m at er ial and hum an u n p r o d u ct ivit y w er e sub t ract ed f r om that and t he o ccu p at io n level w as the r em ain in g .
V o l . 12, No . 1 Ju l y 2004 © Cen t r e f o r In d o n esian Acco u n t in g and M an ag em en t Resear ch Post g r ad u at e Pr o g r am , Br a w i j a y a Un iv er si t y
Task 1 % Nat ur e % Hum an % Cap it al Ef f i ci en cy
34 H o w F a s t T o b a c c o C a n B e :
A n a l y s i s o f t h e p r o b l e m s
In t er est in g result s f r o m t he ef f i ci en cy d iag r am w er e:
• Pack ag i n g d ep ar t m ent (b o t t len eck ) • Hu m an r esou rce (least ef f icien t r esou r ce) • (H i g h st o ck l evels)
Fu r t h er an alysis o f t hose t hree "p r o b lem s" w as ag ain based on in t er view s w it h em p lo yees and som e sm aller "t im e- st u d ies".
R e s u l t s o f T h e A n a l y s i s
Becau se o f t he d u al it y o f the in vest ig at io n t his ch ap t er is d ivi d ed into t w o part s. Par t one d escr ib es t he b o t t len eck an alysis, its cr it i cal p o int s and result s. Par t t w o is t he ef f ic i en cy an alysis.
T h e b o t t l e n e c k
A f t e r the co n st r u ct io n o f the ef f i ci en cy d iag r am , t h e p ack ag in g d ep ar t m en t co u ld be d ist illed (o ccu p at io n level o f 6 4 % ) as b o t t len eck . In t he
p ack ag in g d ep ar t m en t w er e 1 3 m ach in es r u n n in g f o r 9 p r od u ct s. In Ap p en d ix 7
the r esu lt o f t he w h o le f act o r y an alysis can be seen. A f t er t h is an alysis w e m ad e t he sam e k in d o f b o t t len eck in vest ig at io n lik e t he p r evio u s o n e o n l y t h is t im e is sp ecializ ed (z o o m in ) on t he p ack ag in g d ep art m ent .
In t he p ack ag in g d ep ar t m en t w as one m ach in e t he m ain - b o t t len eck . It had an o ccu p at io n level o f 1 0 2 % , it m eans t hat t he d ail y d em an d w as im p o ssib le to p r od u ce w i t h i n t he n or m al 8 h ours w o r k - t im e. T h i s m ach in e p ack ag e t he D I and D IM .
Th e o t h er m ach in es in the p ack ag in g d ep ar t m en t had an o ccu p at ion level less t han 7 0 % . S o t he d ai l y d em an d co u ld be m an ag ed t h eo r et ically. Th e r esu lt o f t h is zoom an alysis can be seen in Ap p en d i x 8.
M o n e y t a lk s
185 em p lo yees w er e i n vo l ved d ir ect l y in t he p r o d u ct io n p r ocess in M alan g , 106 em p lo yees in d ir ect ly in clu d in g t he m an ag er s on t he w o r k f lo o r . 7 2 em p lo yees w er e part o f t he st af f or w o r k i n g on high level as m an ag er s.
• T h e m in im u m w ag e in In d o n esia w er e ap p r o x im at ely FI. 800,- each year . ( R P?)
• T h e aver ag e w ag e o f em p lo yees at t he M alan g f act o r y w as FI. 2825,-each year .
• T h e aver ag e o f 1 n or m al lab or- hour cost s Ro t h m an s FI. 1,36 each person.
• T h e aver ag e o f I ex t r a lab or- hour (o ver - w o r k ) cost s Ro t h m an s FI. 3,82 each person.
In 1997 t h er e w er e 65.406 ex t ra lab o r hours. Co m b in ed w it h 260 w o r k i n g d ays a year , t hat m eans Ro t h m an s had an aver ag e o f 251 h ours a d ay ex t ra lab o r hours. Th er ef o r e all em p lo yees (d ir ect ly and in d ir ect ly i n vo l ved ) w er e w o r k in g n in e hours a day.
T h e g en er al m easu r ed out p ut in st ick s had an aver ag e o f 9 m il li o n per w o r k in g d ay (8 h o u r s). Th e aver ag e sales vo lu m e o f Ro t h m an s w as 10 m iil io n st ick s a d ay. Th er ef o r e one ex t ra lab or h ou r w as used ever y d ay t o m ak e the m issin g 1 m il li o n st ick s.
A cco r d i n g to t he in vest ig at io n cap aci t y o f t he var io u s steps in the p r o d u ct io n process, t hese cost s w er e not n ecessar y. T h er e w as o n ly one m ach in e in the w h o le f act o r y, w h ich co u ld not m at ch w it h t he d ail y d em an d , the aver ag e o f 10 m il li o n st ick s. T h e p ack ag in g m ach in e. A t t h is m ach in e t here w er e 6 em p lo yees w o r k in g . T h ey had to w o r k t h eo r et ically 1 h o u r each d ay
ex t r a to m at ch w i t h t he d ai l y d em and .
Ef f i c i e n c y
A lo o k at t he ef f i cien cy d iag r am sh o w ed yo u t hat the h um an r eco u r se w as t he least ef f icien t . See t ab le 2.
35 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
Cau se % T im e
Red u ced speed 2 4 ,8 % 2h.
Wai t i n g 2 3 ,9 % 1 h 5 5 m in.
M alf u n ct i o n o f Pr ocess
1 ,0 % 5 m in.
St art in g / St o p p in g 3 , 1 % 14 m in
To t al 5 2 ,8 % 4h 1 5 m in.
T A B L E 2: I N EF F I C I EN C Y O F H U M A N R ESO U R C ES [Source: Ow n research]
36 H o w F a s t T o b a c c o C a n B e :
Ro u g h l y 4 h ours a d ay em p lo yees w er e not i n vo l ved in act u al p r od u ct io n . A short v i e w ab ou t t he t w o m ain causes can be f o u n d b elo w (see Red u ced Sp eed and Wai t i n g T i m e)
R e d u c e d s p e e d
T h e Red u ced speed f ig u r e w as t he h ig h est w ast e p r od u cer (g o o d f or 2 hours a d ay) but had to be view ed w i t h cau t io n . Th is f ig u r e w as a co m b in at io n o f t he act u al m easu r ed n u m b er o f em p lo yees at a g iven t im e at the m ach in e and t h e speed o f p r od u ct io n . In m at h em at ical form :
100 (# p resen t em p lo yees) ^
N o r m al nr. O f em p lo yees at m ach in e * % Wo r k i n g
RS = ”
100
Esp eci al l y the w o r k i n g speed w as v er y in d icat ive. Ap ar t f r om t hat , i f the w o r k i n g speed w as view ed as a p r ob lem , one had to co n sid er the cu lt u r e o f In d o n esia, w h i ch w as not a hard w o r k i n g cu lt u r e, acco r d in g to N ai sb i t t H. T h is m ad e t he r ed u ced speed f act o r t hat w as not a m ain p o int o f int erest f o r f u r t h er in vest ig at io n . O n ly a r em ar k w as m ad e that t his f act o r co u ld be an in t er est in g p o int f or f u r t h er st ud y. A sp ecial p oint o f int erest co u ld be t he w ag e syst em o f Rot h m an s.
W a i t i n g t im e
H o li d ay at Ro t h m an s. Each w o r k i n g d ay 1 h and 55- min t he p r od u ct io n em p lo yees spend w it h w ait in g . Ro u g h l y 7 0 % o f t his t im e w as w ai t in g f or ord ers and 3 0 % f or m at er ials.
Th e w ait in g t im e f o r ord ers o ccu r r ed b ecau se the p lan n ing - syst em d id not m at ch w it h t he f act o r y d em an d (o t h er w ise t here w o u ld be no w ai t in g f o r ord ers or m at er ials, w o u ld t h er e?). T h e w ai t i n g t im e f o r m at er ials, in d icat ed p r ob lem s w it h the m at er ials h an d ling .
A n al y si s o f t he p r od u ct io n p lan n in g result ed in t he in sig h t t hat the p lan n in g - syst em had a co r r ect n ess o f 2 7 % (st d . 3 3 %), see A p p en d ix 9, and that 's am az ing .
37 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
Let 's t ak e a lo o k at t he f act o r y:
A d ep ar t m en t got its p r od u ct ion o rd ers ever y m o r n in g f rom t he boss. A s soon as t hey w an t ed to start p r o d u cin g , t h ey f in d out t hat input m at er ials w er e not avail ab le. T h ey called f o r the boss. Th e boss now' look ed in the var io u s depot 's and ch an g ed the p lan n in g ag ain. T h is ch an g e h o w ever w as not b r ief ed to t he ot her p r o d u ct io n chef s.
T h e lit t le st o r y in d icat ed t hree m aj o r p r o b lem s o f t he p lan n ing / co n t r o llin g syst em :
• T h e cen t raliz at io n o f the d ecision - au t h o r it y. • Th e f r eelan cin g o f t he vario u s d ecision - m ak er s. • A p lan n in g - syst em t hat can not co p e w i t h t his.
A ls o : Th e cu r ren t p lan n in g - syst em w as f o cu sed on p r o d u cin g to cu st o m er w ish es. Th e cu st o m er w as t ak en m u ch to f ar int o t he o rg an iz at io n . Becau se o f t he p r ed ict ab ili t y o f t he sales, an on in ven t o r y f o cu sed p lan n in g - syst em w o u ld be en o u g h f o r Ro t h m an s.
Th e ab o ve g ave t hree p o ssib le im p r o vem en t target s. Reo r g an iz in g t he d ecisio n au t h o rit y, r est r ict in g t he f r eelan cin g o f t he var io u s d ecision - m ak er s or m ak in g a p lan n in g syst em t hat co u ld h an d le t hose t w o sit uat ions.
T h e c e n t r a l i z a t i o n o f t h e d e c i s i o n a u t h o r it y7
D iscu ssio n s w it h Rot h m an s r esult ed in t he p o in t t hat it w as not w ish f u l to d ecen t r aliz e t he d ecision au t h o r it y. A l so b ecause Ro t h m an s w as a ver y b u r eau cr at ic o rg an iz at io n and t he cu lt u r e o f In d o n esia w h i ch w as not st ron g in m ak in g p erso n al d ecision s. A t t his t im e Ro t h m an s had 185 d ir ect p r od u ct io n w or k er s. 5 d ep ar t m en t m an ag er s m ad e the d ecisio n f o r t h eir d ep ar t m en t to ch an g e the p r od u ct io n p r ocess to an ot h er product . T h i s m ad e t he span o f co n t ro l on aver ag e 37 and t his f alse w it h in the span o f co n t r o l st at ed as n or m al by Heij n sd ij k p . T h er ef o r , t he d ecen t r aliz at io n o f t he d ecisio n au t h o r it y w as not r ej ect ed as p o in t o f im p r o vem en t .
T h e f r e e l a n c i n g o f t h e v a r i o u s d e c i s i o n - m a k e r s
Th e 5 m aj o r d ecision - m ak er s ch an g ed the p r o d u ct io n p lan n in g on a r eg u lar basis (al w ay s ). Th e causes t h er ef o r e w er e var io u s, st ar t in g w i t h u n avail ab i l i t y o f in p u t m at er ial, en d in g w i t h t he co m p an y p o l i cy o f m in im u m runs et c. Th e m o st h ear d ar g u m en t w as t hat t he d ep ar t m en t m an ag er s ch eck t he en d - in ven t o r y and upon t hat in f or m at io n t h ey r ear ran g ed t he p r od u ct io n process. Th e d ecision - m ak er s d id not p lan and p r od u ce syst em at ical. Th e co m m u n icat io n b et w een t he var io u s d ecisio n - m ak er s w as not o p t im al.
A p l a n n i n g - s y s t e m t h a t c a n n o t c o p e w i t h t h is
T h e cu r r en t p lan n in g - syst em w as f o cu sed on a m ar k et f o r ecast . It w as a k ind o f sim p l if i ed M RP- syst em . Ex am p le o f M R P co u ld be w r it t en in Gai t h er D. On p ap er t h is syst em w o r k ed w el l but p r ob lem s cam e aw ak e at t he d ai l y and m o n t h ly p lan n in g 's m eet ing s. T h e var io u s ch an g ed in t h e p lan n in g w er e d iscu ssed but t he f act t hat st orage t im es had t o be ar o u n d t h r ee d ays, co m p licat ed t he o v er v i ew o f t h is m eet ings. An o t h er p r o b lem w as t hat the p lan n in g - syst em w as based on a cu st o m er d em an d . T h e act u al p lan n in g at Ro t h m an s w as in t he f ir st in st an ce based on t he m ar k et in g f o recast but then m ix ed w i t h t he in ven t o r y levels. T h is o u t co m e w as t he act u al p r od u ct ion p lan n in g . Th er e w as a gap b et w een t he m ar k et in g p lan n in g (o r d er based, m ad e in Jak ar t a) and t he p r od u ct io n p lan n in g (st o ck level based, m ad e in M alan g ).
Fur t h er , ch an g es in t he p r o d u ct io n p r ocess shou ld also be ch an g ed in the p lan n in g syst em w h ic h w as m o st ly not done.
T h is in d icat ed t hat t he cu r ren t w ay o f p lan n in g d id not su p p o rt the w ay the f act o r y runs. In ef f ici en t co m m u n icat io n and a bad p lan n in g - syst em w er e the causes here f or.
C h a n g i n g t h e p l a n n i n g - s y s t e m
T o im p r o ve t he p lan n in g - syst em and im p r o ve t he co m m u n icat io n , t hree m aj o r ch o ices w er e open:
• Im p lem en t in g a co n sist en t cust om er- based p lan n in g syst em ( M R P). • Ch an g i n g to inven t o r y- b ased p r o d u ct io n .
• Im p r o vin g t he cl ar it y o f t he t ot al v i e w in t he p lan n in g 's m eet ing s.
A c u s t o m e r - b a s e d p l a n n i n g - s y s t e m ( M R P )
I f t he t rend o f t he h ead - of f ice in Jak ar t a w as f o llo w ed , it w as w ise to im p lem en t an all ord er- based p lann ing - syst em . H o w ever , t h is hacl som e m aj o r d r aw b ack s. Fir st o f all, a M R1 P syst em m eans t hat ever y cu st o m er w as not ed by 38 H o w F a s t T o b a c c o C a n B e : ...
it selves. T h i s m eans, or ver y short runs or g r ou p in g o f a lot o f or d er s on a huge p lann in g - b oard . A p ar t f r om t hat , one o f the ad van t ag es o f an M R P syst em w as t hat one ex act ly co u ld p r o d u ce w h at the m ar k et w an t ed at an y g iven t im e and t h er ef o r e al l o w i n g an in- st able m ar k et d em an d . H o w ever , t he m ar k et d em an d f o r Ro t h m an s w as ver y p r ed ict ab le and const ant . Fu r t h er t o t hat , I f on e p lan n ed p r od u ct ion to o rd ers, t he K O O P w o u ld be b ef or e p r o d u ct io n . A t Ro t h m an s the K O O P w as at t he end in ven t o r y. So all act ivit i es sh o u ld be based on p lan n in g . Fo r the ab o ve r easons, a M R I P k ind o f syst em w as rej ect ed .
I n v e n t o r y - b a s i-« l p r o d u c t i o n
In f avo r o f t he f act o r y at M al an g and the K O O P, one w o r k ed acco r d in g t o an in ven t o r y based p lan n in g . Th is w as a ver y f avo r ab le solu t io n . Sp e ci al l y , i f one t ook int o acco u n t the p o ssib ilit ies o f f ix ed p r od u ct io n runs.
I m p r o v i n g t h e c l a r i t y o f t h e t o t a l v i e w in t h e p l a n n i n g - m e e t i n g s
An o t h er p o ssib le so lu t io n w as im p r o vin g t he in f or m at io n m an ag em en t at t he p lan n in g 's m eet in g s. T h is solu t ion w as p r o b ab ly not t he m ost "b eau t i f u l" in b usiness en g in eer in g t erm s but the easiest one. It w as also t he least t im e and en er g y co n su m in g f o r Rot h m an s.
C o n c l u s i o n s
B o t t l e n e c k
Co n clu sio n s:
• Th e p r od u ct io n process at Rot h m an s had in g en er al a h igh cap acit y. O n l y 3 0 % o f t his w er e used in 1998.
• Occu p at io n levels o f the f act o ry co u ld not j u s t i f y ex t r a lab o r hours last year .
• Th e p ack ag in g d ep ar t m ent had the lo w est cap aci t y. T h er ef o r t his d ep ar t m en t w as the b ot t leneck .
• Th e D I and D IM p ack ag in g m ach in e had not en oug h cap aci t y to p ack t he d ail y d em an d in the nor m al 8 hours w o r k in g t im e. T h is m ach in e w as t h er ef o r e the m ain b o t t len eck . It had an o ccu p at io n level o f 1 0 2 %. • D esp it e ex p ect at ion s t he process sho w ed a r at h er lo w d o w n t im e and
slack f igu r e.
T h e H u m a n R e s o u r c e
A b et t er p lan n in g - syst em w o u ld r ed u ce the w ait in g t im e f o r the em p lo yees (n o w 2 hours a d ay). Th e r ed u ct io n s o f t he w ai t i n g t im e b y o n ly one 39 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
h o u r w o u l d r esu lt in a t o t al an n i h i l at i o n o f t he ex t r a lab o r co st s an d t h er ef o r e a co st r ed u ct i o n o f ap p . R I P 1 b i l l i o n a year .
40 H o w F a s t T o b a c c o C a n B e : ...
It we t ake a deeper look into the cult ure at Rot hm ans and In d o n esia in general, it was not lik ely that students or low level em p loyees g ave t heir op inio n about resp on sib ilit ies o f t heir superior. Th er ef o r e all the solutions g iven had to be im p lem en t ed by one o f the m anagers w h o had to be co n vin ced about the solution and its effect.
41 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
I m p l e m e n t a t i o n o f M o d e l
So let's t alk st ruct ured . Let 's im p r o ve the co n st r u ct io n o f t he p lan n in g at the Ro t h m an s f act o ry. Th e m ain p r o b lem s w er e caused b y t he m in im u m st orage t im e o f all st ock (3 d ay's). A f u r t h er p r o b lem w as the var io u s inp ut m at er ial (b an d r o l. f ilt er et c) and g et t ing t hem on t im e to the p r o d u ct io n .
T o st r uct u re t he m eet ing s an Ex cel sheet had been m ad e co ver in g one p r od u ct io n year. Th e m ar k et in g f ig u r es had to be insert ed int o t his. T h e lo g ist ic m an ag er t hen r eg r ou p ed t he ord ers to dat e and leavin g f ig u r es. T h en , the d ep ar t m ent m an ag er s had to g roup t he p r od u ct io n runs int o ef f icien t runs and level the seco n d ar y m at er ials to t his.
Th e w o r k i n g o f t h is sheet had been ex p lain ed to t he m an ag er s. T h ey w er e w i l l i n g to use it. I f a d ep art m ent co u ld not f u l f i l l t he p lan n in g , the p lan n in g - syst em w as ch an g ed acco r d in g to t his. A r em ar k w as m ad e t hat the st ock levels p r o b ab l y w o u ld rise, w h i ch w as t rue. Bu t it d id not m ak e an y d if f er en ce in f i n an ci al aspect s. Th e r aw m at er ials w er e lyin g f o r 1 year on st ock an yw ay.
A p oint o f r em ar k w as m ad e that t his o n l y co u ld be a t em p o r ar ily im p r o vem en t . T o sm o o t h in g the p r od u ct ion process even m ore, the w h o le p lan n in g - syst em had to be ch an g ed int o an on p lan n in g based in f or m at io n
syst em .
A long t im e im p r o vem en t w o u ld be an in ven t o r y o rien t ed p lan n ing - syst em . It w o u ld o p t im iz e its p r od u ct io n ef f ici en cy. Esp e c i a l l y w h en one t o ok int o acco u n t the p o ssib ilit y o f p r o d u cin g to a f ix ed w eek l y p r o d u ct io n sch ed u le. Th is w o u l d not o n ly im p r o ve ef f ic i en cy but also si g n if ican t ly clear t he p lan n in g and p r od u ct io n rout ine.
E v a l u a t i o n
Th e st rengt h o f t he in vest ig at io n w as the w ay t he m et hod s w er e used. Th e m et hod s f it t ed ex act ly in each ot her. Th at m ad e t he in vest ig at io n as a r eliab le in vest ig at io n . T h e r esult s o f the in vest ig at io n w er e also in co m m o n w it h t he p r o b lem d escr ip t io n .
Th e w eak n ess o f the in vest ig at io n w as t he m issin g o f a f in an cial secu r it y o f t he r eco m m en d at ion . O f co u r se Ro t h m an s lik ed to k n o w w h at the am o u n t o f cost r ed u ct io n w as i f t h ey f o l l o w the r eco m m en d at io n . In t he f irst p lace it w as hard to get t he o b j ect io n o f t he in vest ig at io n int o a q u an t it at ive
42 H o w F a s t T o b a c c o C a n B e :
num b er. A f t er the in vest ig at io n it w as d eclar ed , the r esult s o f the in vest ig at io n w er e m o re in d i cat ive t han ab solut e. T h is w as b ecau se o f t he w ay o f in vest ig at io n f o ll o w i n g Du t ch st udent s' levels.
It w as g o in g to be hard f o r Ro t h m an s to ad ap t on t he w ay the in vest ig at io n w as held and n at u r ally the result s o f t he in vest ig at io n . It w as not su it ab le w it h t he In d o n esian cu lt u r e. Th e p r ob lem lied on t he w ay h o w to ex p ress o n es cr it icism . N o r m al l y In d o n esian s d id not g ive d ir ect cr it i cism to each o t h er and m ost o f t hem f eel r eluct an t to g ive cr it icism .
Th e m o r al f o r Rot h m an s w as int erest ing. It w as t he f ir st t im e r esear ch er s o b ser ved the p r od u ct ion process. Th e k ey- em p lo yees had n ow an id ea o f h o w o u t sid er s look at t he process o f t he f act o r y in M alan g . T h ey co u ld learn f r om t h is p oin t o f vi ew .
So m e in t eiest in g lit erat u re: Ap p en d ix 11: Co p y o f n ew sp ap er m essage ab out in cr easin g t he p r ice o f cig ar et t es Ap p en d ix 12: Ho u se o f D u n h il l
R e f e r e n c e s :
A Aald er s Read er o f “ De afst udeersfase p r ak t ij k " (Pu t s) 1993
B Co u n cil o f logist ics
m anagem ent
St rat egic logist ics m anagem ent (Lam b er t s)
C Ed w ar d s St rat egic logist ics m anagem ent (Lam b er t s)
D Gait h er Pr od uct ion and operat ions m anagem ent
E Gold r at t Th e goal, the t heory o f const raint s
\ Heijn sd ij k "Vit ale organisat ies"
G In ’ t Veld "An alyse van or g an isat iep r ob lem en "
H Naisb it t Megat rend s Asia
1 Pot gens "Het lam p m od el"
J Tip p et t Read er o f Indust rial En g in eerin g (V . Vessem )
K Visser / V. Go o r "Wer k en met lo g ist iek "
T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
I o.g jjjt? ioijn sf.ra .' p m c a &s s f Ra h m a n s o f P e l l Ms<! Ind or ,93,-3
Appendix 1: The Rothmans organization
P T Ro t h m a n s o f Pa l l M all In d o n e s i a is a p ar t c f t h e Pa c i H c Re g i o n o f o n e o f e w o r l d 's m aj o r i n t er n at i o n al t o b a o c o y r o .i p s o M h e Ro t h m a n s In t er n at i o n al Gr o u p . Ro t h m a n s In t e r n a t i o n a l G r o L p n as b e e n p r o d j c m g a n d se ll in g c i g a r e t t e s f o r o v e r 1 0 0 y e a r s a n d o v e r t h o s e p ast 10 0 year s, t o ? c o m p a n y h as g ra w n o u t t o b e a m u i t i n at io n a ' o r g a n i s a t i o n t h e 4 lh l ar g est t o b a c c o se ll er c l t h e w o rid T f eir p r o d u ct s a r e so :d in o v e r 2 0 0 c o u n t r i e s an d m v o lv e w o r l d w i d e p e r a n n u T salec. of Ap p iO'< im at e y 2Q0 b I io n c i g a r e t t e s . So m e 8 0 f act o* i< !S a r o u n d :h e g l o b e ar e c o n s t an t l y i n v o l v ed i ' p r o d u c i n g 'h i s d e m a n d
T h e Ro t h m a n s i n t er n a- io Ji al G r o u p p r o d u c e s m ai n l y w h it e, n o n - k r e t ec 7 c i g a r c t t e b u t it is al s o a l e a d i n g w o rid s u p p l i e r o f c i g ar s , f in e- cu t an d p ip e t o b a c c o s T h e m aj o r t r a d e m a r k s of (h e Ro t h m a n s i n t e r n a t i o n al Gr o u p a r e Ro t h m a n s . D u n hill a n d Pe t e r St j y v e s a n : , w h i c h a r e a m o n g t h e t o p 15 i n t er n a t io n al c i g a r e t t e t r a d e m a r k s o f h e w o r l d . A p a r t f r o m t h at t h e y p r o d u c e a b r o ad r a n g e of l o cal c i g a r e t t e s an d t o b a c c o b r an d s e x p e n d i n g o n e a c h g l o b a l M t d ! K ^
To c o m p e t e in t h e g l o b al m ar k et , Ro t h m a n s In t er n at i o n al G r o u o is o r g a n i z e d in g e o g r a p h i c a l r e g i o n s an d d if f er en t Ro t h m a n s H o l d in g s Lt d . Ro t h m a n s o f Pa l l M all A u s t r a l i a Lt d . is a p u b l ic c o m p a n y t h at is o w n e d f o r 5 0 % b y t h e Ro t h m a n s In t e r n a t i o n al Gr o u p It is r e s p o n s i b l e f o r t h e A s i a Pa c i f i c c i g ar e t t e r e g io n c o v e r i n g Au st r ali a, Fij i, In d o n e s i a , Pa p u a N e w G u i n e a . N e w Z e a l a n d a n d t h e Ph i l i p p i n e s Fi g u r e 6 s h o w s h o w ‘ h e A s i a Pa c i f i c r e g io n is o r g an iz ed .
n— :z=r
n w ' . i K h » U V L R V T F W O F R O T H M A N S ' i Sl A PA< .U* 1 C' fUCWtX1- ri^ri investigation]
P T R o t f i m a n s o f P a l l M a l l I n d o n e s i a
ir )9 3 1 N V T a b a c o t m a Bo l g i u n e s t a b l i s h e d a f act o r y in M a l a n g In M a r c h 1 9 8 6 t h e t a t f u r v w a s t r a n s f e r r e d t o Ro t h i r a n s o f Pa l l M a l l A u s t r a l ia Lt d T h e y r e n a m e d it t o Pt K c t h m a n s of Pa l l M a l l In d o n e s i a a n d w a s o f f icial ly r e o p e n e d u n d e* its n e w n a m e o n t h e
1 ~11' of Se p t e m b e r 1 9 8 7 .
T h e c o m p a n y is o n e o f t h e l ar g est w h i t e c i g a r e t t e m a n u f a c t u r e r s m In d o n e s i a T h e c o m p a n y p r o d u c e s d o m e s t i c b r an d an d i n t er n at io n al b r an d s o f w h i t e c i g a r e t t e s . T h e p r o d u c t s t h at Ro t h m a n s o f Pa l l 'M a l l In d o n e s i a t r a d u c e s a r e D u n h i l l a n d M a r s Br a n d f or t h e In t e r n a t i o n a l m a r k e t a n d K a n s a s , W h i t e H o r s e a n d Gl u e Ri b b o n f or '.he d o m e s t i c n 'H 'V e t T h e s e b r a n d s a r e a v a i l a b :e in d if f er en t s i z e s p a c k a g e ?, an d m er .t h o l v e r s i o n s
T Ve n e a d o f f i c e of Ro t h m a n s o f Pa l l M all In d o n e s i a is si t u a t ed in Ja k a r t a . T h e p r o d u ct io n j n.n b t o r ag e f or r a w m a t e r i a l s a n d f in i s h e d g o o d s i n v en t o r y ar e m a i n l i n e d in t h e f act o r y
fi Wdiang
M c t e k c i g a r e t t e s c e r t a i n b 0 % t o b a c c o a n d & 3 °C k r M e k i h ^ f i l : c r o f t h e c i g a r e n e 'f . < ■* '■# « t : .n a g l c c o s e l a y e r
H o w F a s t T o b a c c o C a n B e :
Tim IvgKiiiciit pr'DCCSS Of Xpfhrnnn*. nf PaH MbIS ZnritTDiflS'd
Appendix 2: Kind o f organization according to HoijnsdijkF
T o g et a g o od im p r essio n o f Ro t h m an s an d to k n o w in w h at k in d o f d ir ect io n s t h e chancie- ac> i:ity t an g et s ar e going to be Ro t h m an s w a s ch ar act er i z ed acco r d in g t o
H eij n sd ij k
-Qu anti ties
Organization
As set s of Ro t h m an 5:
If w e t ak e a look at t h e f ix ed as s e t s of Ro t h m an s w e can s e e t h e f o llo w in g t r en d s.
• T h e f ix ed an d cu r r en t as s e t s ar e r esp ect ively d ivid ed int o 47% / 5 3 %. s e e A p p en d ix
1 0.
< T h e p ack ag in g an d st ick - m ak in g m ach in es ar e c a s e sen sit i ve. T h e o t h er m ach in es
can b e u sed f or all k in d s o f t o b acco .
• T h e d iv isron liab ilit ies t equ it y i3 1 4 % / 8 6 %. s e e also A p p en d ix ^ O.
Be c a u s e o f t h e hig h level of eq u it y Rothrr> ans c an in vest an d c h an g e r at h er f lex ib le T h e t ech n ical lay out o f t h e f act o r y al lo w s, ap ar t f rom p ack ag in g an d st ick - m ak ing , p r o d uct io n o f d if f er en t k in d s o f t o b acco .
OmanizaXianal culture
• T h e o r g an iz at i o n is h ier ar ch ies, s e a t h e Ro t h m an s o r g an iz at io n ch ar t on p ag e 9.
» f h e t ask , r esp o n sib ilit ies «^nd al lo w an ces ar e s t n d l y d ivid ed h ier ar ch ical ly
« T h er e ar e no c ar e er o p p o r t u n t ies for t n c lo w er lev els
• T h e a v e r a g e ag e of a p r od uct io n w o r k er is 41
• T h e co r e- p h ilo so p h y of Ro t h m a r s is to m ak e of q u alit y o f cig ar et t es. TTiis p h il o so p h y
m ig h t n ot t o b e feH wit hin t h e f act or y.
« T h er e ar e b r o ad p lan n in g and cont rolling sy st em Po li ce o f f icer s ar e f o u n d to co n t r o l
t h e f act o r y.
Fr o m t h e ab o v e w e c a r co n cl u d e t h at t he cult u r e o f Ro t h m an s is f o r m al, st if f an d st ro ng . Ch a n g e s in t h e can '.p an y w I h- ?ve d iff icu lt ies to g ain f oo t hold . Ch an g e s h ave to be ■ nt roduced in a s r c n g . y h ier ar ch ical m an n er
8 0 0 e m p l o y e e s a^ e in vo lved in Ro t h m an s. 3 6 3 o f t h em at t h e f act o r y in M alan g . 4D in Ja k a r t a an d t h e r est so r ead all e v e r In d o n esia f o r k i n g at d ep o t s o f Ro t h m an s. Ir gr k - <1 r iver s e t c )
Persons
T h e r e is a g r eat d i f f er en ce b et w een t h e m an ag em en t an d t h e o t h er em p lo y ee s . T h e top- m an ag er s a r e m ain ly Eu r o p e an an d A u st r ali an p eo p le (sit u at ed in Jak ar t a), t h e m id d le m an ag er s ar e In d o n esian p eo p le g r ad u at in g f rom o v e r s e a s u n iver sit y an d t h e o p er at i o n level ar e lov/ ly- f iducat ed In d o n esian s.
• All t h e p r o b lem s ar e h rst ly d i scu ssed w it h t h e first We st e r n p er so n in t h e h ier ar c h ic al
line, n o t d ep en d i n g or. t h e f u n ct ion of t h e p er so n In d o n esian s h a v e d if f icu lt ies w it h t h is p o licy.
H o w F a s t T o b a c c o C a n B e :
_____________ ___________________________T)>l kwtefctil fiiucvsx <>i K ftr.'m w rtf >-*aiY Matt {tx}(W/°$i#
Ro d m a n s d o a s n l d eli ver t o all islan d s, {e q u al t o h er co m p et i t o r s) T h e co m p et it io n b e t w ee n t h e cig ar et t es- co m p an ies is fair an d o p en . Th e m o st im p o r t an t t h ing is t o d eal w it h t h e b est m ar k et in g - m ix in st r u m en t s.
D e s i g n v a r Ja b l & s
* T h e y h av e a st rict f un ct ion - d escr ip t ion. Ever y b o d y h as h is o w n jo b an d t ask s
* T h e o r g an i z at i o n h as a f u n ct ion al st ru ct u r e.
* Ro t h m a n s is st ro n g ly h o r iz o n t ally cen t raliz ed .
» T h er e a r c n o m an y t ask s d eleg at io n
St e e r v a r i a b l e s
* T h e r elat i o n s in Ro t h m an s ar e m o st of t h em f o r m al and ar e alm o st lik e in t h e
o o lo n ist 'p er io d . In p / incioal t h ey t ry t o st an d ar d iz e t h e j o b s an d t ask s, b u t t h e cr eat iv e so u l of t h e In d o n esian s h ave m ost of t h e t im e m o r e su ccessf u l.
* T h e r e ar e h ier ar c h ies an d h ig h - h and ed p ower- ship .
* T h e r e ar e f e w in t er n al ed u cat io n p r o g r am s.
* T h e p lan n in g an d co n t ro lling sy st em s a r e st ro n g ly h o r iz o n t ally cen t r aliz ed an d f o r m al.
* Ev e r y d e l e g a t e d t as k is f r o m t h e t o p t o t h e b o t t o m .
M a n a g e m e n t f ilt e r
T h e r e is o n ly o n e o o ssib ’ lity in t h e ^ c t o r y of M alan g to ad ap t to t h e c h a n g e s in t h e
su r r o u n d in g an d evei y t h m g t hat ’fi d eleg at ed . In Ja k a r t a t h ey h a v e al so p r o b lem s wit h
t his m at t er b e c a u s e t h ey h a v e to f o llow th e lin es an d r eg u lat io n s of Ro t h m an s
In t er n at io n al.
Su m m ar y.
* T h e st r at eg ic v ar i ab l e s ar e p oint ed out in tt>e m ar k et to co n vi n c e t h e q u alit y of t h e
p r o d u ct .
* T h e d esig n v a r i ab le s ar e cen t r aliz ed an d t h e f act o r y is ar r an g ed f u n ct io n ally
* T h e st eer v ar i ab le s ar e f o r m ally an d st an d ar d iz ed , w h ich ar e d el e g at e d f r om t h e t op
of t h e m an ag em er .t .
* T h e en vir o n m en t is st ab l e an d t r an sp ar en t
* T h e o r g an iz at io n is built t op - d own
* T h e in d ivid u als ar e lo w ly ed u cat ed , not c o n cer n ed t h e co m p an y tand doc/ lc.
* Be c a u s e o f h ier ar ch ical d if f icu lt ies (M alan g - Ja k a r t a - A u st r ali a) t h e m an ag em en t
fit t er is t hick .
So w e can co n cl u d e t h at Ro t h m an s acco r d in g to Heij n sd ij k f is mos t lik ely a b u r eau cr at i c
o r g an iz at io n
47 T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
__________________ ___________________ _ _______The tog&ttcal )> t\ icvss at Rotbmaox Pv!> Mart fncku'Ptio
Appendix 3: Them oc te / o f *Werken met Logistiek'\ according io V fs s e r/ V.
G oorK
Th is m o d el c o v er s t h e 7 m ajo r p ar t s of b u sin ess logistrcs:
Production, planning and controlling
Purchasing
T h e m o st im po/ t anC r aw m at er ial s (t o b acco ) ar e m aij ily p u r c h ased b y Ro t h m a n s In t er n at io n al. Th e p u r ch asin g of p ap er , glue, filt er et c is ar r an g ed b y e m p lo y ees of t h e p u r ch asin g d ep ar t m en t in Malan g .
Inventory m anagem en t
T h e ar e a lot of in ven t o r i es in t h y p r od uct ion p r o cess. T h e level an d d u r at io n of t h e in ven t o ry ar e b as ed c n t h e q u alit y of t h e p rod uct . M easu r in g t h e q u alit y o f t h e t o b a c c o is o n Jy f o r so ec i al i s t s not for t his in vest ig at ion . Th is q u af it y m easu r em en t is esp eci all y
n t er cst in g for t h e long t im e st o r ag e. Th e t o b acco h as ;o b e st or ed t h er o for at least h alf a y e ar Thif> is an m cn ed ible bfcj in vest m en t
M aterials handling
T h e in t er n al t r an sp o r t at io n is m ain iy t r uck - d nvm g f rom an d t o t h e lon g t im e st o r ag e d ep o t s in t h e r est of t h e f act o r y ar e t h e d ep ar t m en t s c lo s e to e3 cJi o t h er T h a t m ean s
t h at t h e o ut p u t of o r e d ir ect ly t h e in ven t o r y o f t h e n e r i st ep . Fr o m t h e i w e n t o r y t o t h e
nex t st ep is m ain ly h u m an en er g y
inventory controf finished goods
t>i p in ven t o r y o f f in'&hed g o o d s rs also a cr i(j cal part o f (t ie in vest ig at io n . T h e cig ar et t es
h av e to b e st o r ed in t his h a'I for at laa&t 7 d ays, o t h er w ise t h e p r o d u ct s d o n o t h a v e g o o d q u alit y
Depots and inventory
li h e d ep o t s an d in ven t o r y o u t sid e t he f act o r y of M ala n g is o r g an iz ed b y t h e m an ag em en t in Jak ar t a.
Transportation decisions
The d el iv er ie s to t h e d ep o t s an d d ist r ib u t o r s ar e o r g an iz ed b y t h e m an ag e m e n t in
Jakarta.
V o l . 12, N o . 1 Ju l y 2004 © Cen t r e f or In d o n esian A cco u n t i n g an d M an ag em en t Resear ch
48 H o w F a s t T o b a c c o C a n B e :
. . . -AW- 'ictaw
J t \ e togmncsn p ric e s) RoUmuns o(Pul) Ma)> >n<*v,t?j0
Appendix 4: Material flow
Receiving,
En t r a n c e con t r o l
Gf<*en leaves
hashing
Fo r n icat i o n
Recf ry
Mix ing
Blen d
Cut t rng
Co o l st o r ag a
S tick-makrng
Co o l st o r ag e
Boxiog
Sl eevi n g
Ca r d b o ar d in g
St o r a g e
Or d er - p ick in g
D ist r ib u t ion
D o m est ic T o b ac co
in tern a
t ional T o b acco
i I
Fl av o r Fi lt er Pa p e r ,
Gi u e.
Ink
□
Q
Fo il, Pa p e r La b e l s Tear - st r ip Film
H o w F a s t T o b a c c o C a n B e :
iixv-tcrg.'<:>„ .W r- 'niiuss Rorh'^.^'r o' F;n7 iW^m I'r x l o n ^
A p p e n d ix 6: L a y o u t o f th e fa c to r y / M a te ria l flo w
jL 3 l u i S « r
] Fr e e ir :c J 5TtllC«i« T C n : j f - n . * .
f r
i- 'nishea
is • -»> 1 prcoc;:ir
M i x i n i . ' t © r d l u g
: . t C < P f O d u u : i u I
j;hr>^G T
-t - r o O i r g i n -t o p a c i &l-t; » y i i ^ m ^ n i r c
H F
A St o r a g e □ I Pr a ce s- s ■ T r a n s p o r t
L o n g 1i n n ( t o r t A d
r t ?« n I r a t e s ■ . r f c f c' lin si
Panr- v
U IIOfAjiil? I re-
ti J O * .*
l r v e n t n r v hertora P I D d L C l i u
^torfcyt; before .i$<»7;e
T h e I n t e r n a t i o n a l J o u r n a l o f A c c o u n t i n g a n d B u s i n e s s S o c i e t y
A p p e n d ix e s I he lo g is tic a l p ro c e s s a t R o th m a n s o f P a ll M a lt In d o n e s ia
P a c k a g i n g M a c h i n e S s l e s v o l u m e i H u m e n { N a t u r e j C a p tu t E f f i c i e n c y su r plus 0 U n i t s R e p a i rC h a n g e S m i t l a t o p # R e d u c e d s p e e d W a f t i n g M a l f u n c t i o n o f p r o c e s s 0 S t a r t i n g / s t o p J t n g 0 R e m arks K l n g s i ; e H P 8 1 % 11 8 V J 1 1 % 2 2 8 % 6 4 3 % 8 .7su c h * . 1 6 0 , 1 t.
:
7 5 6 0 0 . 4 0 1 1 2 . 6 0 .1 7 3 2 7 r n * c h ir > e s S u p e « - t 'i C ! H P 1 2 % 0 o v , j 0 Z % | 3 6 % 1 0 2 , 3 % 1 1■t ic k s 0 3 0 0 3 9 0 0 0 1 .6 0 1 0 6 i m a c h i n e N o n fin**' SP 1 6 % 2 . 5 % 0 2*Vt j 2 9 3 % £ 8 . 0 % 2 4SOCKS 1 o 0.2 01 3 6 0 1 0 1 0 1 8 0 1 0.5 1 m a c h i n e S v j p e ' J i z e S T 7 % 2 1 5 % I 0.2V, i 1 6 6% 5 9 . 7 % 1 .1 SfiCKS 1 0 0 3 0.2 3 , 0 0 0 1 0 , 3 1 .6 0 . 6 1 0 5 1 ma c h in e K j n g & ./ o S P 2 % 3 5.8 %j 0 . 2 * I 4 5 . 1 % 1 8 9 % 1 ’s t i c k s ? 7 0 . 4 0 . 2 3 . 8 0 4 0 4 0 . 7 v e 0 8 1 0 . 5 1 m a c h i n eTo tal 1 0 0 % j 18 * 1 1 4 .3sf lc K * 4 0 2 0 1 1 511 m ac h in e?
A v e r a g e 11 7 % ! 1.811 I 22HV. 6 4 3 % 1.35 l'C k » 1 4 0 2 0.1 0 0 . 1 0 . 2 0 3 1
N a t u r e (m a t e r i a l ) R e s o u r c e *
C e p i t J l { m a c h i n e ) R e s o u r c e E f f i c i e n c y s u r p l u * A v e r a g e ( w i t h o u t s t o r a g e ) 0
O f* 1 s
Repair
C h a n g * S « n « f s t o p 0
Re d u c e o s p e ed
ty tu e n 't n u c tw r i p ^ o c r v d t > v ^ e p ro d u cti o n p r o c e ss
n t u m t d by the produciton o o c*
NyfT***- 0« 14TMI9
S o n M «rt»*
T im e m at « lo st to rvpairaiQ n tac* * "* *
m * <4 tod f ee to ca* o ( nq irt« tu •
Nvrrtoer o* umu to st to s m s I 5to e s (m eto u M n cH ) T im e tc* i to m fcjco d e d u c t i o n s p e e d Tkt>* k>«i d u e lo w i t n g f<n m p u i m e te n s t T « n * h u t u i »r>wk»rtctk» » p tfte p»oc* «*
S t a r t i n g / s t o p p i n g
p r v c v u (In th o u sa n d s)