INTRODUCTION

The production process in a manufacturing company requires raw materials which are
procured through purchases to suppliers and then processed into finished goods and then
sales of the finished goods are made. After the raw materials are used during the production
process, it is necessary to have a report on the stock of raw materials and the stock of finished
goods produced. the process of buying, producing and selling also requires accurate reports
and is available whenever needed. On the needs of consumers expect to get products that
have an acceptable price. To realize these consumer desires, each company tries optimally to
use all its assets and capabilities to provide value to consumer expectations.

The implementation of this effort certainly causes different cost consequences in each
company, including its competitors. To be able to offer attractive products at competitive
prices, every company must try to reduce or reduce all costs without reducing product quality
or standards that have been set. One of the efforts to reduce these costs is through optimizing
the distribution of materials from suppliers, the flow of materials in the production process to
product distribution to consumers. Production activities must be fully in line with
consumption activities. Why is that? Because, if not, then economic activity will not succeed
in achieving the expected goals. Production activities are still carried out by
individuals/individuals, when human needs are few and simple, but when human needs are
diverse and available resources are limited, then production activities are no longer possible
to be carried out by individuals, but have been carried out by a group of people. or
companies, and at the present time, almost no human being is capable of self-sufficiency.

Facing competition, Indonesian industry requires preparation and competitiveness, so

that better planning, implementation, organizing and monitoring efforts are needed from
business actors or small and medium enterprises (IKM) to achieve goals and increase
competitiveness. The main characteristic and difference between small and medium
enterprises (SMEs) is the manufacturing system, which is more specific to the manufacturing
process. There is also a layout in front of the stages of the production process, which is
closely related to the production process, because it includes efficiency and efficiency in a
company or IKM business. Production factor intervention is very important because it is
oriented to the goals and objectives that have been set, so that it has a major impact on the
efficiency of the production process of companies and IKM participants. A production
process can take place continuously if the need for raw materials and the right batch for the
implementation of the production process can be met.

Therefore, in this case the application of the production system is a production

process where the provision of raw materials and the correct layout can affect the final
product of furniture in small and medium industries.

MAIN BODY

The existence of SMIs is very important for three reasons (Berry, Rodriquez &
Sandeem, 2001). First, the effectiveness of SMIs tends to be higher in creating a productive
workforce. Second, SMI often invests in increasing productivity and proactively tracking
technology changes. Third, small and medium enterprises (SMEs) are considered to have a
flexible advantage over large companies. SMEs have three or more advantages that
businesses do not have: (1) SME capital. Because of this small capital factor, many people
take risks to start a business in this field. (2) The capital is relatively small and the people are
few, so that products and production methods can be selected and managed quickly. (3) Their
small capital and improvisation actually characterize SMEs as very flexible business
organizations. Small businesses and households in Indonesia also play an important role in
absorbing labor, increasing business units and maintaining household income. As a business,
SMEs also face many challenges, both internal and external. Internal issues include capital
issues, financial management issues, recovery issues, and personal management issues.
External challenges include the business environment and limited infrastructure owned by
SMEs (Lestari, 2005). Based on these problems, the problem of capital is a classic problem
faced by small and medium enterprises (SMEs). As small and medium-sized enterprises
(SMEs), they often struggle to grow because they fail to meet the technical requirements for
credit for expansion of banks and other financial institutions.

The second equally important internal issue is the issue of financial

management/accounting. This is a very simple matter for a small business, but it is very much
attention paid to you. Unprofessional financial institutions make SMEs unable to manage
their finances professionally and effectively. The government's lack of interest in financial
management or accounting for SMEs makes it difficult for SMEs to determine production
costs and raw material prices, prepare financial and supporting reports, and access other
financial institutions. The third principle of inner product is regeneration. Small business is
also a big challenge, considering that the next generation after graduation usually prefers to
work in other companies that are bigger and more promising than the current parent business.
The fourth problem is a management problem only, and is a serious problem because the
owner, who is also the manager of the company, takes all the action. In this case, small
entrepreneurs must delegate some of their powers and responsibilities along with the
development of their business. Another issue that is no less important is an external or
external problem. An example of an external problem is the business environment that has a
significant impact on the development of small and medium enterprises (SMEs). As for the
business climate, 1) ease of licensing, 2) ease of borrowing, and 3) re-extension of the
reservation system (business preservation) so that the business fields owned by SMEs do not
interfere with other businesses. domestic company. larger scale.

The importance of regional economic development in the context of strengthening

IKM cannot be separated from the real consequences faced by most businesses, especially
small and medium enterprises (SMEs) in Indonesia. The most visible are low productivity,
low added value and low product quality. It is also acknowledged that IKM is a job
opportunity for the majority of the workforce in Indonesia, but its contribution to the
country's output is relatively small. The media is estimated to generate less than 40% of
Indonesia's GDP (Obsesi Kolaborasi, 2003). This is due to the very low productivity of
SMEs, especially in the micro and agricultural sectors (which absorb a lot of labor). If the
minimum wage is used as a parameter to measure productivity, the average wage for small
and medium enterprises (SMEs) is usually below the minimum wage. This situation reflects
that the productivity of small and small businesses is lower than that of large businesses.

One solution to increase the competitiveness of local industries is to create industrial

clusters. An industry cluster is a set of companies and organizations that are concentrated in
one area and are interconnected in certain areas to maintain competition. Clusters are not only
created by the existence of industries, but industries must be interconnected based on the
value chain. Industrial clusters can be seen as systems. Each actor (stakeholder) acts as an
institution in an industrial cluster and is interconnected in the metabolism of the value chain
which is governed by the flow of goods, services, money, information and knowledge from
one economy to another. Others are used as energy for the proper functioning of each organ.
Work, move, serve each other. The actors (stakeholders) in an industry cluster are usually
grouped into the main industry, supplier industry, secondary industry, related industries and
buyers, and secondary institutions. The terms Primary, Wealth, and Relevant refer to the roles
of actors in a particular cluster and are not related to the level of importance of actors. This
role can be played by anyone depending on the economic level of the relationship in a
particular value chain. In the study, Potter described the potential of target industry clusters
and the need to diagnose problems. Diagnosis is made by comparing the four factors that
determine competitiveness:

1. Input factors consisting of geographical conditions, natural resources, human

resources, physical infrastructure, administrative infrastructure, and innovation
infrastructure
2. Available supporting industries, such as credit schemes, transportation, packaging,
consulting services for smes
3. Demand conditions and existing demand opportunities and local demand
behavior.
4. Conditions of competition, such as barriers to entry for new players, competitive
strategies carried out by existing actors

The characteristics that hinder the production system are:

1. Raw Material

Direct materials are raw materials that are part of the resulting finished product. The cost of
purchasing raw materials is directly related and proportional to the number of finished goods
produced. Indirect raw materials, on the other hand, are raw materials that play a role in the
production process but do not appear directly in the finished product being produced. The
layout also includes the design of the parts, work centers, and equipment that make up the
process of moving from raw materials to finished products. Layout planning is the planning
phase of a company that seeks to develop an efficient and effective manufacturing system
that allows the manufacturing process to be carried out at the lowest cost.

2. Layout

The most frequent mistake made by IKM project participants in terms of layout is the use of
space, in this case the phenomenon of stacking and overlapping occurs because the storage
space for raw materials and equipment, processing space, and production storage space is not
allocated properly. Raw materials and furniture for sale have overlapping parts, and friction
occurs due to the accumulation of raw materials and furniture for sale. Due to the non-
standard layout of the IKM furniture business, paint racks and locks and handles sometimes
need to be combined to save more money by using redundant labor, such as labor on glass
shelves. for payroll. work. This knowledge is supported by previous research by Ratna
Kusumavati (2009), whose timely study of increasing company productivity shows that
production systems focus on company performance, productivity, and analyze the impact of
suppliers and production levels. In the Just In Time production system

CONCLUSION

Three programs are recommended to increase the competitiveness of SMEs. First, the
government is asked to introduce formal standards such as taxation and strict environmental
requirements to encourage SMEs to improve their performance and operations. Second,
governments and charitable organizations are encouraged to consider special vouchers and
related grant schemes that will subsidize media seeking commercial vendor assistance in
processing business license registration forms and developing long-term business strategies.
This plan replaces free government-run training. Third, governments should encourage
quality improvement service providers by activating internationally recognized accreditation
standards, enhancing relevant education and training, and facilitating access to general
information on market and technology trends. Small and medium enterprises (SMEs) that do
not yet have adequate capacity from the state have proven their ability to withstand external
shocks. However, to fight globalization, small and medium enterprises (SMEs) must increase
their competitiveness through industrial clusters to gain a competitive advantage and compete
with other commercial entities.

The production system for the IKM furniture business has not worked well,
especially in terms of raw materials and layout. First, in terms of raw materials, the sources of
available wood raw materials are very far away which affects the selling price, and because
they are not fixed, other raw materials such as paint, nails, plywood, glass, etc. can only be
obtained. from one supplier. (one shop) to monopolize prices by setting prices high enough.
Spatial planning, arrangement, division, and function of equipment that are not well
organized, result in waste or excessive costs in the IKM furniture business.
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Ramon Patrick Karamoy, P. T. (2016). IMPLEMENTASI SISTEM PRODUKSI PADA

INDUSTRI KECIL MENENGAH (STUDI KASUS PADA : INDUSTRI KECIL
MENENGAH "IKM" DI DESA TOULIANG OKI. Jurnal Berkala Ilmiah Efisiensi.

Subhan, M. (2018). Meneropong sistem produksi dalam ekonomi konvensional. Jurnal Studi
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