Supply Chain Innovation Initiative

1. August,19th 2020
INNOVATION IN SUPPLY
CHAIN MANAGEMENT
1
PRACTICAL APPROACH

2. Senior Manager Line Replenishment at Citilink
ISKANDAR MUDA, S.T., M.M.
2

3. PRACTICAL APPROACH
INNOVATION IN
SUPPLY CHAIN MANAGEMENT
3

4. RULES FOR INNOVATORS
1. Innovate while you still have the money (lesson from Astra Group)
2. Build the database, and run your innovation based on data
“In God We Trust, All Other Brings Data”
(Edward Deming; Quality Guru)
3. Benchmark to the best in their fields
4. Execute your Idea
“Anyone Can Steal Your Idea, But Nobody Can Steal Your Execution”
(Nadiem Makarim; Go-Jek)
4

5. SUPPLY CHAIN INITIATIVE
IN AEROFOOD CATERING SERVICES
CASE STUDY :
5

6. #1 Initiative
SATELLITE KITCHEN
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7. BACKGROUND
❑ In more than 40 years, Aerofood Kitchens are dedicated to In-Flight Catering;
❑ Aerofood Industrial Catering (AIC) didn’t have organic kitchen. They were only
operating customer’s kitchen;
❑ To seize new market and maintain back-up for customer’s kitchen, AIC need to
dedicate kitchen in the area of customer’s locations.
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INNOVATION
❑ Developing small-medium kitchen near potential area of customer;
❑ This kitchen should have flexibility to respond market condition;
❑ It should have flexible characteristics that can be developed overtime;
❑ We called it : ‘Satellite Kitchen’

8. SELECTING LOCATION
8
C I L E G O N JATA K E P U LO G A D U N G
• Each of Satellite Kitchen have been
designed its capacity up to 2,000 meals
per day
• Serving bulk meal and meal box
• Using reefer container as modular cold
room

9. #2 Initiative
STRATEGIC PARTNERSHIP WITH
NATION-WIDE RETAIL CHAIN
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10. BACKGROUND ISSUES
❑ Inconsistency of raw material quality
❑ Continuity of supplies
❑ Limited suppliers in remote area
❑ High logistic cost
❑ Limited supplier capabilities
❑ Complexed administration process
10
INNOVATION
The concept is establishment of strategic partnership between Garuda Indonesia Group
with retail market store to procure our needs of materials. We can use their resources to
cover supply chain process from sourcing suppliers, negotiation and agreement, supplier’s
SLA control, warehousing, and distributions.

11. 11
Strategic Partnership will cover:
✓ Sourcing Supplier
✓ Audit Supplier
✓ Tender
✓ Agreement with Supplier
✓ Supplier’s SLA control
✓ Warehousing
✓ Delivery
Sourcing Staff
Admin Tender
Effort for tender and
administration
Contract outstanding
Warehouse investment
Warehouse cost
Inventory cost
Vehicle investment
Vehicle maintenance
Vehicle Insurance
Vehicle license
Warehouse Labor
Distribution Labor
STRATEGIC PARTNERSHIP CONCEPT

12. 12
STRATEGIC PARTNERSHIP CONCEPT
PURCHASE ORDER
SUPPLY MATERIAL
ACCOUNT PAYABLEPAYMENT
1 5 15 10
Barang
diterima
Invoice Groserindo
+
Swipe card di HO
Cetak Tagihan
Bank Mega
Reconsile di
HO
Jatuh
Tempo
• Tanggal 1 : Barang diterima di unit AIC
• Tanggal 5 : Groserindo mengirimkan Invoice ke AIC, Swipe Card di AIC HO
• Tanggal 15 : Cetak Tagihan Mega Groserindo Card
• Tanggal 10 : Jatuh Tempo pembayaran
Rata – Rata TOP dari Invoice Groserindo : 32 hari

13. ❑ Quantitative:
A. Reduce Total Purchase Value estimated by 10%
B. Reduce Inventory Level by 30 -40%
C. Reduce Hub/Branch set-up cost for new unit in new area
D. Reduce fleet cost for distribution
E. Increase average Term of Payment from 30 to 32 days
❑ Qualitative:
A. Increase quality of raw material
B. Increase continuity supply, especially for new project in remote area
C. Cutting time for set-up logistic system
D. Increase Service Level Acceptance
13
STRATEGIC PARTNERSHIP (PROS)

14. ❑ Quantitative:
Some items didn’t get optimum price efficiency
Solution : keep the sourcing from local distributors or retailer (ex: plastic & monouse, crackers, UMKM product
❑ Qualitative:
High Dependency to retail chain partner
Solution : in-progress of seeking alternative partner to Giant and Indomart. In 6 mo – 1 yr targeted new retail
chain partner for comparison
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STRATEGIC PARTNERSHIP (CONS)

15. #3 Initiative
FROZEN FOOD PROJECT
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16. BACKGROUND
❑ Chicken whole is the largest spending on raw material
❑ Waste in chicken cutting process is about 15%
❑ Difficulties in controlling chicken consumption
❑ Not all parts of chicken can be used by customers
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INNOVATION
❑ Developing Frozen Food
❑ Developing ‘chicken parting’

17. FROZEN FOOD SPEC
❑ Cutting size 1 : 14
❑ Standard Packaging: Box @10 Kg /box; contain 5 pack @2 Kg/pck
❑ Meal : Condiment = 80 : 20
17
CHICKEN PARTING
Size 10-11 Parting 10
(Avg 100 – 110 gr/pcs)
Size 11-12 Parting 10
(Avg 110 -120 gr/pcs)
Size 11-12 Parting 12
(Avg 100 – 110 gr/pcs

18. 18
CHICKEN PARTING
(SPEC & PRICE ITERATION)

19. ❑ Trial process was implemented in W1 Aug – W2 Oct 2016 at ACS Canteen Unit.
Within the process, we have substituted chicken whole usage by 49%.
❑ During those trial phase, total chicken consumption reduced by 821 Kg or 11%.
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RESULT

20. #4 Initiative
SPECIFICATION REVIEW FOR
IN-FLIGHT SERVICE MATERIALS
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21. M I X E D N U T
BEFORE AFTER
IMPROVEMENTRESULT
✓ Reduce packaging color from two variant colors to single color usage
✓ No changes in weight, size and content
✓ Reduced price/pcs by 8%
✓ Effectively started in January 2018
✓ Resulted in efficiency of Rp. 455,759,000 from Jan 1st, 2018 – Sept 30th ,2018
Mixed Nut

22. PA P E R S N A C K B O X
BEFORE AFTER
IMPROVEMENTRESULT
✓ Remove plastic window
✓ Reducing material spec from 250 gsm to 210 gsm
✓ Size reduction
✓ Water-based paper
✓ Reduced price/pcs by 4%
✓ Effectively started on January 2018
✓ Resulted in efficiency of Rp. 593,012,129 from Jan 1st, 2018 – Sept 30th ,2018
Snack Box

23. S O F T D R I N K PA C K A G I N G
BEFORE AFTER
Coca Cola Can 330 ml Coca Cola PET 390 ml
IMPROVEMENTRESULT
✓ The increasing price of Coca Cola has reached to 5% annually
✓ The initiative of shifting to PET Bottle packaging had some advantages such as
lowering the price, decreasing the weight, adding more volume (330 ml vs 390 ml)
and serving more cups (from 2 cups to 3 cups per serving)
✓ Effectively started on Oct 1st, 2018
✓ Expected to support efficiency up to 12% per year or approximated Rp. 300 M/ year

24. M I S O S O U P
BEFORE AFTER
IMPROVEMENTRESULT
✓ Shifting from Importing Product via International Catering Partner to Local Product
Development with the same specification
✓ Reduced price/pcs by 55%
✓ Effectively started in April 2018
✓ Resulted in efficiency of Rp. 206,488,224 until Sept 30th ,2018
Miso Soup Local Miso Soup

25. E C O N O M Y C L A S S C U T L E R Y – B E N C H M A R K
CATHAY PACIFIC
MALAYSIA AIRLINE PHILIPPINE AIRLINE CHINA AIRLINE ROYAL BRUNEI
QATAR AIRWAYS EVA AIR
based on Laboratory Testing, all samples used Polystyrene (PS) as material base

26. E C O N O M Y C L A S S C U T L E R Y – M U L T I U S E P L A S T I C
BEFORE PROPOSE
Stainless Steel Cutlery Multiuse Plastic Cutlery
IMPROVEMENTRESULT
✓ Changing spec from Stainless Steel Cutlery to Multiuse Polystyrene (PS) or
Polypropylene (PP) Cutlery
✓ Expected could reduce price/pcs by 70%
✓ Expected to support efficiency Rp. 4.8 B per year from price reduction
✓ Reducing re-purchase caused by item lost and corrosion

27. S N A C K B O X
BEFORE PROPOSE
Snack Box Paper Wrap / Paper Bag
IMPROVEMENTRESULT
✓ Shifting from Ivory Paper Box to Paper Wrap / Paper Bag
✓ More environmentally friendly
✓ More efficient
✓ Expected to support efficiency up to 10% per year or approximately Rp. 1.2 B / year
Consume (FY 2017) : 12,089,950 pcs/year or Rp. 12,866,350,000 /year

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