SUPPLY CHAIN CHALLENGES

Product Distribution in Cement Industry

CEO TALK
SEKOLAH BISNIS IPB – February 2019
 Outline

Today’s Supply Chain

Supply Chain Profile

in Semen Indonesia

Product Distribution Challenges in

Cement Industry
SECTION BREAK
Today’s Supply Chain
Insert the title of your subtitle Here
Material Flow in Supply Chain
Components Sub assemblies Manufacturer Retailer Consumer

Source Make Deliver Source Make Deliver Source Make Deliver Source Deliver Source

Supplier’s Supplier Supplier MP3 Company Customer Customer’s Customer

Process, arrow indicates material flow direction

Copyright © Supply Chain Council, 2008. All rights reserved

Supply Chain Parties & Activities
In general, SC parties can be pictured as1 :

FOCAL
SUPPLIER SUPPLIER CUSTOMER CUSTOMER
COMPANY2

Supplier’s SUPPLY CHAIN Customer’s

supplier customer
EXTENDED SUPPLY CHAIN

According to Supply Chain Operations Reference (SCOR), the activities might be categorised as 3 :

Plan Plan Plan

Source Source Source
Deliver Make Make Make Source
Deliver Deliver Deliver
Return Return Return
SUPPLIER’S CUSTOMER’S
SUPPLIER SUPPLIER FOCAL COMP. CUSTOMER CUSTOMER

1 Adapted from Seuring and Muller, 2008

2 Company that rules or governs the supply chain
3 Adapted from Hassan, 2017
 Today’s Competition
Globalisation, shorter product lifecycle and lower customer loyalty have led to an intense competition. Meanwhile, SC encompasses
information and material flow all the way from supplier to customer, which significantly contributes to organisation’s competitiveness.

Responsiveness Revenue Increase

Resilience
Cost &

Profit
SUPPLY CHAIN Customer BETTER
Inefficiency
IMPROVEMENT Satisfaction COMPETITIVENESS
Reliability

Realignment
Cost Down

... therefore, today’s competition is no longer between organisations, but BETWEEN SUPPLY CHAINS

Materials adapted from Madhani, 2017

 Industry 4.0
The industrial transformation to the next level of Cyber Physical Systems and Smart Factories

Industry 4.0
The Fourth Industrial Revolution

Source:
https://www.alj.com/en/perspective/unlocking-digital-success-combining-industry-4-0-lean-management/
https://www.youtube.com/watch?v=c3kP-jjgx1E&feature=youtu.be
 Supply Chain 4.0
“Digital transformation” has become the keywords or mantra in SC 4.0.
But what exactly does it mean?

DIGITAL
TRANSFORMATION
SC PRINCIPLE
EXAMPLE
Digital transformation is (as the Goal)
about applying digital Improve forecasting through big
MATCHING SUPPLY & DEMAND
technologies (e.g. AI, data analysis and Machine
HOW is the
Machine Learning, and Learning algorithms
supply chain
the IoT) to operational
digitally KEY FACTORS Utilization of IoT to monitor
processes and creating
transformed? machines, track performance
improvements • Demand Uncertainty
and perform predictive analysis
(summarised from McKinsey, • Production Uncertainty
Application of blockchain as a
Cap Gemini and the BCG)
• Lack of Synchronization distributed ledger, where
information is visible to all
parties and ensures a single
version of truth

Source:
https://www.industryweek.com/supply-chain/making-sense-supply-chain-40
https://www.mckinsey.com/business-functions/operations/our-insights/supply-chain-40--the-next-generation-digital-supply-chain?cid=eml-web
https://www.capgemini.com/consulting/wp-content/uploads/sites/30/2017/07/Digital_Transformation_of_Supply_Chains.pdf
SECTION BREAK
Supply Chain Profile
Insert the title of your subtitle Here
of Semen Indonesia
Semen Indonesia Group
Plant Facility Map

S
BI
Cement Product Flow
Distribution Network Scale
572
Customer Districts

2280
Distribution Lines

42 mio t/y
Goods Delivered
SECTION BREAK
Product Distribution
Challenges in Cement
Insert the title of your subtitle Here

Industry
Environmental Condition - PESTLE Analysis
POLITICAL
P Expected to be more stable compared
to 2019, in which the general election
was conducted, allowing a smoother
planning & operation
ECONOMICAL
E  Potential increase of global energy
price, including fuel
 Stable economic condition might result
in increased goods movement
SOCIAL
S Potential horizontal conflicts are
expected to be low due to non-political
year
TECHNOLOGICAL
T Potential emergence of technological-
based distribution companies with
shared-economy concept
LEGAL
L Implementation of Over Dimension
Over Loading (ODOL) regulation
ENVIRONMENTAL
E Growing trend of environment-
concerned customers might promote
tighter environment-friendly regulations
Strategy to Face the Challenges

POLICY
ADVOCACY
ODOL Strategy
ENVIRONMENTAL
CONDITION

SEASONALITY Supply Management

MANAGEMENT
Inventory Management

INTERNAL
CONDITION Planning Strategy
OPERATION
EXCELLENCE
Supply Chain Digitalization
Transportation Management System
Strategi Menghadapi Kebijakan ODOL
• Utilisasi kombinasi berbagai mode transportasi (trucking,
Multimoda railways, shipping) dalam pengiriman semen untuk
meningkatkan efektifitas dan menurunkan occupansi truk

• Mempertahankan rute existing dan pengembangan rute-

Optimalisasi KAI rute baru untuk kereta Api sebagai antisipasi penerapan
ODOL, termasuk studi untuk DC sebelumnya.

• Optimasi pengiriman transport darat dan multi moda

dengan menggunakan moda truck terbesar (trailer) ke titik
Truk trailer tujuan.
• Modifikasi axle utk pemenuhan terhadap regulasi

• Optimasi Distribution Center untuk mengakomodasi

Optimasi Distribution Center pengiriman dengan armada besar sehingga dapat
menurunkan kepadatan
Capacity Management – Seasonal Demand
Significant difference between Low and Peak Season
45% : 55%

How Semen Indonesia deals with the challenge (examples)

PROCUREMENT
Classify the materials into ABC class. Building stock for class
A materials during low season.

PRODUCTION
Schedule the maintenance in low season. Buy semi-finished
goods from other company during high season.

SALES & DISTRIBUTION

Push export sales during low season. Hire additional fleet
during high season.
LOW SEASON HIGH SEASON
Dealing with Seasonality in Semen Indonesia
 Planning Strategy
To minimise distorted information and Increase planning reliability

In Semen Indonesia, integrated planning is done in tactical level through

Sales & Operations Planning (S&OP)
CLEAR RELIABLE
INFORMATION PLANNING
Planning the achievement of S&OP seeks to ensure that Semen
OBJECTIVE
Business Plan Indonesia is able to anticipate the
real-requirement of the market and
FOCUS Forward Looking (Future)
to react in the most cost-effective
PLANNING way
ALIGNMENT M+1 s/d M+3
HORIZON
- All entities in the SC have aligned interest
- Relevant information is shared throughout the chain
Principles:
PERIOD Monthly
1. One single number/reference
Production, Distribution, 2. Cross-functional agreement
PARTICIPANT Transportation, Marketing, Sales, 3. What-if scenarios
INTEGRATED Finance 4. Linked to financial impact
PLANNING

Materials adapted from:

- Christopher, 2016
- Hassan, 2017
Planning Tools – SAP IBP
Supply Chain Digitalization

PRACTICES IN Other examples of digitalization

KEY FACTORS
SEMEN INDONESIA in Cement Industry1

In progress of implementing IBP Utilization of drones to measure the amount of raw

Demand Uncertainty (Integrated Business Planning) solution materials in open yards and to inspect the interior
for Demand Forecasting. of silos for maintenance.

Implementation of predictive maintenance solution

Production facilities have been linked embedded in production facilities, enabling the user
connected thru Production Information to optimise maintenance schedules on the basis of
Production Uncertainty predictive analysis findings
System to monitor performance and
symptoms (temperature, RPM, etc.).
Utilization of GPS to improve traceability, monitor
performance and increase service level.
S&OP (Sales & Operation Planning) is
implemented to acquire single version Implementation of paperless delivery process with
Lack of Synchronization
of truth. IBP for SNOP to be implement digital delivery notes and signatures, to increase
ed in the 2nd quarter of 2020. speed and simplify business activities

1 Source: https://www.industry.siemens.com/verticals/global/en/cement-industry/solutions-sicement/automation/Documents/cemento_4.0_ENG_baja.pdf
Transportation Management System (TMS)
IMPORTANCE Freight & Carriers Management Tool
 Enabler of seamless
logistics management RELATED
 Offers full control of ENTITIES
logistics activities
 Provides performance  Manufacturers
insights through detailed  Transporters SCOPE
analytics  3PL Providers
 Distributors
 Retailers  Route planning &
optimization EXPECTED
 Mode planning & RESULT
optimization
 Load building  Improve shipment
 Operations execution efficiency
 Order visibility  Reduce costs
 Gain real-time supply
chain visibility
 Enhance customer
service
Thank you