IKEMEN TEAM

Samudra.co
Business Case

10/05/2020

Proposed by : M. Rizaldi (05211940000053)

Edward Suryaputra (05211940000118)

M. Asad Al Balad (05211940000049)

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Table of Contents

1. Executive Summary 1
2. General Project Information 2
3. Project Description 2
3.1 Business Need 2
3.2 External Economy Condition 2
3.3 Goals/Scope 3
3.4 Stakeholders 3
3.5 Risks/Issues 3
4. High-Level Business Impact 4
6. Alternatives and Analysis 7
6.2 HR Strategist 8
6.3 Finance Strategies 9
7. Preferred Solution 11
7.1 Assumptions and Constraints 11
7.2 Suggestion 12
Letter confirming an agreement to flexible furlough 13

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1. Executive Summary

Since the COVID-19 crisis struck, organizations in vulnerable sectors worldwide have seen
their revenues drop substantially in a matter of weeks — in some cases, dwindling to almost
nothing. Countless companies have taken reactive steps to ward off major losses, such as
establishing remote work arrangements, securing supply chains, reducing employee workload,
cutting costs, and applying for government support.

It has affected the condition of Samudra.co both internally and externally. As the severity
of COVID-19 spreads, companies such as Samudra.co are grappling with an inability to grasp the
company condition, due to this, Samudra.co has experienced downward trend in the company on
account of an increased in raw material costs for production and reduced demand for core products
from companies are not in line with current conditions. After a burst of frenetic activity, some
organizations finally have time to think about capturing opportunities. But where to start?

We have identified generic response strategies to match organizational infrastructure with

emerging market trends. Significant opportunities are available to those organizations agile enough
to adjust their infrastructure, employee, product/service portfolio, or their route to market.

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2. General Project Information

Table 1: Project Information

Project Name Samudra.co Pharmaceutical Company Analysis

Requested By DBCC

Business Owner Samudra.co

Contact Info. -

Desired Start Date 2020

3. Project Description

3.1 Business Need

Samudra.Co has experienced a drastic decrease of revenue. Where in the last 4 years,
Samudra.Co revenue is declining from 95% in 2017 to 30% in the first semester of 2020 from its
total net sales. This is because of the downward trend in the company cause by:

● Increasing cost of raw materials for production

● Reduce demand of core products from companies that are not in line with covid-19
pandemic conditions
● Excess number of permanent employees, reducing company’s operational productivity

Thus, the company fixed cost continued to increase while the resulting turnover decreased
significantly.To combat this situation, Samudra.Co focused on reducing its fixed cost while
retaining their existing employees, and optimizing their productivity.

3.2 External Economy Condition

During this pandemic, global economy has experience drastic recession, although
pharmaceutical industry, are one of the many industry that’s not greatly impacted by the corona
virus pandemic. Here are the summary of the overall market condition:

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1. Indonesia economic growth in second quartal has grown 5,32% negatively in year on
year.
2. Companies general and administrative costs has increased and rising faster with 15,4%
comparison to 6% of revenue growth.
3. Pharmaceutical industry in the second quartal of 2020 has grown positively around
8,65%, higher than the first quartal with 5,59%.
4. Competitors industry, such as PT Kimia Farma Tbk has made 48,57 billion rupiah of
net profit and PT Kaleb Farma Tbk has made 1,38 trillion rupiah worth of profit in the
first semester of 2020.
5. According to BPS (Badan Pusat Statistik) in 27 June 2020, health goods consumption
in Indonesia has risen around 73,3%.

3.3 Goals/Scope

This project is focusing on Samudra.Co primary objective, which is reduce costs that’s
incurred by the company, while also managing and optimizing the available employees
productivity within the company. By paying attention to several things:

● Project/solution is applicable for long term

● Improve employee efficiency and productivity
● Does not conflict with the company’s core values
● Reduce company operational fixed cost
● Retaining all of company’s existing employees

3.4 Stakeholders

Entities, components, and people that have an interest, influence on the project, and will
be impacted by its outcome:

● Permanent Employees
● Temporary Employees
● Executives

3.5 Risks/Issues

Under difficult circumstances during this pandemic, Samudra.co is one of the companies

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affected by the decline in income. Based on the observations from the data provided, there are
several essential issues of concern like excess of permanent

4. High-Level Business Impact

4.1. Tech-Enabled Cost-Reduction Approach

This approach objective is to reduce the company's indirect cost including G&A costs as
well as other costs that’s included in the indirect cost category. The tech-enabled cost-reduction
uses automation, AI, and other technologies to find new opportunities in areas like capacity
reallocation, spending effectiveness, and account receivable.

The approach based on McKinsey experience with 24 industrial companies, has

successfully cut indirects costs by as much as 15 to 20 percent in 12 to 18 months.

Here are the four stages of a rapid tech-enabled indirect-cost-reduction effort:

1. Identify areas of 2. Automate 3. Work 4. Capture

improvement Processes Smarter Impact

Description ● Benchmark ● Automate ● Perform ● Track

processes and repetitive full-scale progress and
assess indirect process steps diagnosti optimization
cost-saving ● Increase c initiatives
potential productivity ● Quantity ● Scale up
● Apply library of and employee opportuni transformati
use cases satisfaction ties by on
● Start with pilots business ● Refine road
and prove value function map
and cost
category

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End ● Process ● Delivered pilot ● Full ● Progress

Products Benchmarking programs diagnosti report
● List of ● Measures to c result ● Monitoring
prioritized use scale up ● Target of impact in
cases picture balance
and road sheet
map for
transform
ation

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Figure 1. The Use of Tech-Enabled Approach Diagram

4.2. Flexible Furlough Contract

The implementation of this project to reduce company’s operational fixed cost will be done to staff
type employee:

Staff: consist of 1756 staff employee (age ranging from below 26 to 45, with an education of
SLTP, SLTA, D3, and S1)

Staff will be given a furlough contract. Furlough is a mandatory time of work for employees

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based on the UK Government, where firms are given the flexibility to decide the hours and shift
patterns of their employees.

While on flexible furlough, employees contract of employment will be temporarily varied

based on the letter of agreement.
To summarise, this is how flexible furlough will work:
1. Employees will return to work from the given date for 13.3 hours per week. This represents
⅓ of usual working hours.
2. When working employees will be paid ⅓ of normal pay when working based on your
weekly salary of Rp per hour.
3. For the times employees are not working and are on furlough, employees will receive ⅓
of your normal pay for your furloughed hours.
4. Deductions for tax, national insurance and any pension contributions will be deducted from
the employee pay in the usual way.
5. Employee statutory rights are unaffected by this variation to your contract of employment.
Impact:

1. Eliminate redundancy of work from excessive amount of permanent employee.

2. Increase operational productivity by sharing jobs between staff employee.
3. Reduce company’s salary and administrative expenses.

6. Alternatives and Analysis

The two most effective ways to deal with business problems exacerbated by the COVID-
19 pandemic are using technology assistance and implementing human resource strategies. These
technologies can range from robotics to the use of cutting-edge software. In addition, the
implementation of a human resource strategy has also proven to be able to significantly increase
company revenues. Although the initial initiation period required a large amount of money,
gradually it did. The following is an explanation of each alternative.
6.1 Robotics Process Automation (RPA)

Robotics Process Automation (RPA) often referred to as ‘robotics’ or ‘robots’, is

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the automation of rules-based processes with software that utilises user interface, and is
able to run on any software,including web-based applications, ERP systems, and
mainframe systems.

Processes with the following criteria will provide maximum impact post-RPA
implementation:

1. High number of systems usedHigh transaction value

2. Prone to errors or re-workHigh predictability
3. Limited exception handlingSignificant manual work involved

Benefits of RPA

● High ROI
● RPA has a quick development and rollout cycle with a short payback period
● Improved quality
● Robots perform tasks with an accuracy of up to 100%•Agile workforce
● RPA can be scaled quickly and reduce reliance on recruitment to handle
workload spikes
● Improved governance -RPA is secure and provides an audit trail for all
automated activities
● Cost-effective enhancement -RPA is generally a less costly method of
enhancing existing IT capabilities
● nIncreased productivity -RPA enables 24/7 processing capabilities and an
average 75% reduction in process TAT

6.2 HR Strategist

Looking beyond this COVID-19 pandemic, strategic cost optimization is a must-have if

HR is to help the organization prepare to rebound and grow. Your first two steps in establishing a
sustainable cost optimization roadmap are:

1. Understand your cost and value baseline. Establish your current spend and efficiency.
Without a transparent cost base, you will struggle to identify clear targets or valuable
opportunities, especially when facing mandatory budget cuts and given a short time frame

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to cut costs. Benchmark your spend and efficiency against peers to identify target areas for
improvement, depending on functional and enterprise goals.

2. Identify and prioritize opportunities. Assess the likely impact and potential downside of
all cost measures in scope to ensure the best fit. Make sure to identify and prioritize
initiatives that best support your objectives. Provide transparency into the prioritization
mechanism, and engage your CFO in selecting initiatives to drive commitment and support
for your choices.

Notably, if you adopt cost optimization as an ongoing and always-on discipline, you will already
have identified the cost actions to take first in a crisis. You can also avoid some of the incessant
ad hoc budget pressure.

6.3 Finance Strategies

This note examines the vulnerability of non-financial corporations in the context of the
COVID-19 crisis. The standstill in activity implied by confinement generates a high risk of large
amounts of liquidity shortfalls and potentially of defaults of otherwise viable businesses.
According to the exercise performed, without policy actions, after one month, 20% of firms would
face a liquidity shortage and up to 40% of them after three months.

To cope with this challenge policymakers have taken a wide range of actions to mitigate
the risk of a liquidity crisis, including policies aimed at smoothing financial obligations over time
(e.g. tax deferral, extending loan maturities, temporarily suspending debt repayment) but also
direct support involving a mutualisation of losses (e.g. liquidity injection through equity
participation, direct subsidies based on past sales, subsidies for maintaining employment, grants).
Given the composition of firms’ expenditures, policies aimed at relieving wage bills are of
paramount importance to help firms addressing the liquidity shortfall.

This note emphasizes the need for a massive public intervention but it does not discuss the
several challenges related to the design of policies. In particular:

1. Country-specific dimensions. Country-specific institutional settings may shape the extent

and the efficiency of the policy response. Given the importance of labour market policies

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highlighted in the note, it is likely that countries with already well-developed labour market
support schemes are able to provide a quick response with less distortive effects. For
instance, short-time work schemes are already well-developed in many OECD countries,
in particular in Germany and Austria, and have already proven to be efficient in time of
crisis. Generous unemployment benefits schemes in France and Denmark can help curb the
adverse effect of a shock.
2. Conditionality. Certain countries condition loans forbearance and wage subsidies on the
actual reduction in payroll, with the requirement to be used to cover fixed costs only or to
rehire fired employees after the crisis. For example, in Denmark, firms only qualify for the
wage compensation scheme if they promise not to lay off workers for economic reasons
during the COVID-19 crisis, and if they can pay the remaining 25% of the salary not
covered by public subsidies. The design of transfers and subsidized loans to corporations
should ensure that firms preserve jobs and that any funds are not used to boost CEO
compensation or dividend payments, either through cash dividends or stock repurchases.
The loan guarantees in Canada, for example, include a condition that allows businesses
only to use guaranteed loans to cover operating costs, but exclude refinancing or repayment
of debt or any corporate actions related to an increase in executive compensation or
shareholder remuneration.
3. Short-term versus medium-term policy answer . In many cases, given the need of an
urgent policy response during the so-called “phase one” of the crisis, policy has not been
particularly targeted in the short term. The analysis above illustrates the broad challenges
and the impact of stylised and cross-cutting policy responses. Going forward, short-term,
cross-cutting policies might need to be refined and better targeted to ensure that public
support does not contribute to resources misallocation, for instance by propping up
unviable firms. Yet, such targeting may be premature at the current stage of the crisis.
4. Heterogeneity of the shock. Policies will also need to be refined to deal with the
heterogeneous impact of the shock. Indeed, even in the medium term, when the activity
will slightly recover, firms will not be on the same foot to face the crisis other than for
liquidity reasons; for instance, collateral availability could allow some firms to tap external
finance while start-ups and intangible-intensive firms will be relatively disadvantaged.

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Meeting these challenges would require refining the measures over time. These are issues
left for future research.
5. New normal. The extent to which the COVID-19 crisis will disrupt the economies is still
uncertain. In European countries a large set of policies, in particular in the labour market,
is tailored on the principle to protect the pre-crisis allocation of resources. In other
countries, like in the U.S., the adjustment largely hinges on payroll reduction via layoffs.
The comparative evaluation of these approaches goes beyond the scope of this note; yet, it
is worth noticing that their relative efficiency during the recovery and beyond may be
related to whether economies will structurally change coming out of the COVID-19 crisis.
If so, as the demand for some sectors might decline for a long period, policy design should
find a balance between preserving pre-crisis job matches and allowing new matches via
job reallocation. Similarly, deferring tax and debt payment will lead to a surge of corporate
debt from an already record high level. Structural change and prolonged sluggish demand
in some sectors will also change firms’ profitability prospects and ability to deal with those
liabilities. Therefore, finding a balance between debt forbearance and bankruptcy
procedures will be a critical challenge during the recovery.

7. Preferred Solution

7.1 Assumptions and Constraints

Achieving rapid reduction of operational cost optimization using technology based

approach, has been approved to be effective in a long term. Optimizing not only cost reduction,
but also operational productivity. Thanks to advancements in such technologies as robotics
automation and artificial intelligence (AI). By automating repetitive tasks, such as producing a
weekly production report and inputting master data for products into the ERP systems, the
company can hope to improve production without increasing staff.

Using the permanent and temporary staff workforce by utilizing a shift base/ part time
working method. The company can took advantage of their excessive number of employee , by
sharing jobs between co-worker maximizing their work performance, thus increasing operational

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productivity combine with a technology based business process. To ensure the success of the
project, measurements are done based on federal enterprise architecture framework, which include
types of measurement, consist of regulatory development, internal risk management and
mitigation, human resource management, financial management, information & technology
management.

7.2 Suggestion

Samudra.Co objective to reduce cost while optimizing their operational productivity can
be done through implementing technology such as Robotic Process Automation and AI to
Samudra.Co business process. To implement it, Samudra.Co can start by identifying RPA and AI
project processes, and develop RPA and AI methodologies, such as process mapping and target
definition. While also securing it’s process, by managing the program elements, including demand
management, use cases, and project reporting. As well as, developing training strategy for skill
building, agile coaching, and lean management to Samudra.Co workforce. Optimizing
Samudra.Co excessive amount of worker productivity, through training, shift based sharing task
method.

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Appendix A: Referenced Documents

Table 8: Referenced Documents

Document Name Document Location and/or URL Issuance Date

Post COVID-19Cost https://www2.deloitte.com/content/da 01/10/2020

Optimisation m/Deloitte/my/Documents/risk/my-
risk-thriving-business-post-covid19-
cost-optimisation.pdf

How industrial https://www.mckinsey.com/~/media/M 03/10/2020

companies can cut their cKinsey/Industries/Automotive%20and
indirect costs—fast %20Assembly/Our%20Insights/How%
20industrial%20companies%20can%2
0cut%20their%20indirect%20costs%2
0fast/How-industrial-companies-can-
cut-their-indirect-costs-fast.pdf

https://www.acas.org.uk/furlough- 02/10/2020
Letter confirming an
letter-templates
agreement to flexible
furlough

HR Strategies to Face https://www.talentintelligence.com/blo 4/10/2020

COVID-19 g/six-ways-to-cut-hr-costs

Finance Strategies http://www.oecd.org/coronavirus/polic 4/10/2020

y-responses/corporate-sector-
vulnerabilities-during-the-covid-19-
outbreak-assessment-and-policy-
responses-a6e670ea/

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