INDIVIDUAL MID EXAM

MM5002 Operations and Supply Chain Management

Satrio Adhipranoyo
29323413

Business Leadership Executive MBA, School of Business and Management (SBM), ITB.

Tasks:
This is an individual exam. You are required to prepare a summary of the operations
management application in your workplace (company) that you are now working or any
company (organization) that you worked in the past or any company (organization) that you
can access its data/information, for instance, from their official websites, reports, and other
documents.
a. Explain the company/organization’s business (products, services, customers,
competition). If the organization is non-profit, you are not required to describe the
competition.
b. Describe the problem you were trying to highlight as the background of your report.
c. Support with data or indicators to capture the importance of solving the problem.
d. Explain how the company approaches/solves the problem (including data, methods,
and analysis):
● detailed business process
● in terms of capacity strategy,
● including queuing analysis,
● and simulation, if necessary

Keywords : operations management, business process, strategy, queuing analysis, simulation

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Company Introduction

PT Decathlon Sports Indonesia (PT DSI) is a sporting goods retailer company in Indonesia,
part of a bigger company, Decathlon group. Decathlon was born in France in 1976 and
currently active in 72 countries with more than 105.000 employees worldwide, it is the
largest innovative sporting retail chain and brands in the world.
Decathlon competes directly with other sporting goods retailers, such as Under Armour,
Fanatics, DICK’S Sporting Goods, Sports Direct, JD Sports, etc. However, in Indonesia the
competition of PT DSI is quite different and includes local sporting goods retailers such as
Sports Station, Planet Sports Asia, Eiger, Ortus Eight.
PT DSI now has 8 offline retail stores all around Java island, and 4 online store channels
including their own Brand.com website & mobile application.

Product
Products are one of the most important commodities which a company could offer to its
customers. PT DSI products are sporting goods, its activities and services are from research
to retail, including design, production and logistics. Decathlon called its owned produced
sporting goods as their Passion Brand, and the goal is to make sports accessible to all sports
enthusiasts at extremely affordable prices for all participants, from enthusiastic beginners to
passionate professionals.
Selling more than 5000 products under its product ranges, PT DSI serves their customers
throughout all of these sports categories:
● Outdoor Sports: Hiking & Trekking, Camping, Climbing, Winter Sports, Hunting,
Fishing, Horse Riding;
● Running Sports: Run & Walk, Trail Running, Triathlon, Orienteering;
● Water Sports: Swimming, Snorkeling & Diving, Surfing, Kayak & Stand-up Paddle,
Water Polo, Aquagym;
● Gym & Fitness Sports: Bodybuilding, Cross Training, Fitness Cardio, Yoga & Pilates,
Boxing & Martial Arts, Gymnastics & Dances;
● Racket Sports: Badminton, Tennis, Table Tennis, Beach Tennis, Padel;
● Urban Sports: Inline Skates, Roller Skates, Skateboarding, Scooter, Ice Skating;
● Team Sports: Soccer & Futsal, Basketball, Volleyball, Baseball, Rugby & American
Football, Handball, Field Hockey;
● Cycling Sports: Road Cycling, MTB Cycling, Folding & Urban Cycling, Gravel & Touring
Cycling, Kids Cycling; and
● Target Sports: Golf, Archery, Billiard, Darts & Petanque.

Target Audiences
Defining target customers is a crucial part for every enterprise, this process especially needs
to be done before product creations or any other business process even start. As the world’s
largest sporting goods retailer, Decathlon has a broad target audience encompassing people
of all ages, genders, and socio-economic backgrounds. In Indonesia, PT DSI target audience

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spans widely, with stores located in urban and suburban areas, uniting people interested in
sports and active living. PT DSI inclusive approach resonates with a spirited community,
inviting them to embrace the joy of sports and embrace the athlete within.

Uniqueness
To ensure customer satisfaction and its loyalties, PT DSI propose several unique selling
propositions within their membership programs services that create differentiations toward
other competitors:
● 2-years warranty;
● lifetime return & exchange policy;
● resell old products through its Second Life program;
● customer service live chat; and
● free in-store pickup services for all online customers.
These unique selling propositions that PT DSI proposed, providing unique benefits to the
customer as seen from Figure 1 (Jürgens, 2018).

Figure 1. Unique Selling Proposition (Jürgens, 2018)

Problems Statement

One of PT DSI services are to make sports accessible to the many, with this mindset they are
also selling their sporting goods products through 4 ecommerce online store channels:
● Decathlon Indonesia website;
● Decathlon Indonesia mobile application;
● Decathlon Indonesia Tokopedia official store; and
● Decathlon Indonesia Shopee mall.
Through ecommerce, there are more steps in the process of selling goods compared to
offline physical store services. Ecommerce works on the same principles as a physical store,
customers come into your ecommerce store, browse products and make a purchase. The
difference is, ecommerce store needs additional operational process when receiving orders
coming from customers with the following steps:
1. Accept the order: The customer places an order on PT DSI website or ecommerce
platform. Next, the payment is processed, payment transactions are processed
through what is known as a payment gateway. After the sale is logged, PT DSI will be

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alerted that an order was placed.

2. Process the order: When receiving orders, PT DSI needs to fulfill the incoming order.
This fulfillment process includes picking and packing the products. After that the seller
needs to mark that the order is now complete.
3. Ship the order: The last step in the ecommerce process is shipment. PT DSI needs to
ensure prompt delivery with a trustworthy third-party logistic partner that can deliver
the products as promised within the agreed SLA (service-level agreement) time.
In order to do the business properly, these operational processes consist of a minimum 1
employee on each step, depending on the needs. The manpower configuration shows on the
details below:
1. Accept the order: min. 2 employees
a. Employee role: Administrator
b. Job description: Managing orders on each Ecommerce Dashboards (Website &
Mobile application dashboard, Tokopedia dashboard, and Shopee dashboard)
c. Operational hours: Monday to Sunday (9AM - 6PM)
2. Process the order: min. 5 employees per day
a. Employee role: Fulfillment manager, 2 Pickers, & 2 Packers
b. Job description: Managing storage warehouse products, picking ordered
products, packing ordered products
c. Operational hours: Monday to Sunday (9AM - 6PM)
3. Ship the order: min. 1 employee per day
a. Employee role: Transporter
b. Job description: Managing supplies & packages, manage relation with couriers,
handover packages to couriers
c. Operational hours: Monday to Sunday (9AM - 6PM)
PT DSI usually experienced a problem within their ecommerce order process queue whenever
a huge number of orders were placed at the same time. This occurs during peak days (such
as Double Date & HARBOLNAS) or during payday period. The company's approach towards
this problem is to add manpowers, especially for step 2, add more Picker & Packer.
Ecommerce operational process of PT DSI can be described as the model in Figure 2 below.

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Figure 2. Ecommerce Operational Process of PT DSI

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In a simple way, the ecommerce operational process of PT DSI starts from Batch 1 at 10AM
with the administrators receiving incoming orders from the ecommerce dashboard. Then, the
fulfillment manager split up orders slip to be picked by pickers, afterwards picked products
being packed at the packing table by packers.
Before cut-off time, the cycle of processing orders repeats with Batch 2 starts at 1PM and
Batch 3 starts to receive incoming orders at 3PM. After cut-off time, the transporter will
inform couriers on how many packages to be picked up, hand over all packages to the
courier at 5PM, and mark orders as shipped.
The details of daily incoming ecommerce orders data as seen in Table 1.

Table 1. Daily orders from each ecommerce channels

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To conclude, the current situation is:

● PT DSI has 8 operations employees working on normal days;
● PT DSI’s operational process details:
○ Avg incoming orders per day: 559 orders;
○ avg incoming orders per minute: 0.3882 orders;
○ avg order value: IDR372,102; and
○ cut-off time receiving orders at 3PM.
● PT DSI’s waiting line structure is a multi-channel, multiphase system. Detail of this
model shown on Figure 3 below.

Figure 3. Ecommerce Operational Process of PT DSI

Based on the figures and descriptions above, in a normal situation the total process time of
PT DSI ecommerce operational process is up to 140 mins. The time consumption details of
each steps of the process as follows:
1. Accept the order: up to 5 mins
○ Receive incoming orders (5 mins)
2. Process the order: up to 85 mins
○ Picking products at storage (up to 30 mins)
○ Bring products to packing tables (5 mins)
○ Pack orders at packing tables (up to 50 mins)
3. Ship the order: up to 50 mins
○ Put packages to loading area (10 mins)
○ Handover packages to courier at 5PM (up to 30 mins)
○ Mark orders as shipped (10 mins)

In summary, 60.71% of PT DSI ecommerce operational process time is spent in step 2

(process the order) that mainly consists of the picking & packing process. Based on the daily
ecommerce orders data, PT DSI could receive 837 orders per day during peak days period,
when the number of incoming orders are surging 49.69% more than average like this we can

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presump the ecommerce operational problems will comes into some points, such as:
● Insufficient picker; and
● insufficient packer.

Productivity Measurement
Productivity is a common measure of how well a country, industry, or business unit is using
its resources or factors of production. In its broadest sense, productivity can be defined as
(Jacobs, 2018)
𝑂𝑢𝑡𝑝𝑢𝑡𝑠
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑟𝑎𝑡𝑒 = 𝐼𝑛𝑝𝑢𝑡𝑠
..... (1)
The productivity of PT DSI ecommerce operational process is also measured in utilization
rate, to measure effectiveness of the process.
𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑅𝑎𝑡𝑒 (λ)
𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 = 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑅𝑎𝑡𝑒 (ɰ)
..... (2)
Additional measurement for this case is the average time of order in the system, to measure
the length of time PT DSI’s customer spends to wait for their order to be processed.
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 (𝐿)
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑖𝑚𝑒 𝑜𝑟𝑑𝑒𝑟 𝑠𝑝𝑒𝑛𝑑𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 = 𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑅𝑎𝑡𝑒 (λ)
..... (3)

Discussion and Simulation

Normal Situation
Based on the daily ecommerce orders data we know that the daily average of PT DSI
incoming order is 559. The normal situation simulation shown in Table 2, simulated using
these following data:
● Incoming orders of the day (simulated): 500 orders; and
● number of orders delayed from previous day (random number): 74 orders.

Table 2. Queuing time simulation and analysis on normal situation

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Based on the normal situation simulation shown on the table above, queuing time simulation
results on these several points:
● Total orders to be processed: 574 orders;
● total orders processed: 550 orders;
● incoming orders per minute (simulated): 0.3819 orders; → Arrival Rate (λ)
● avg process time per batch (simulated): 92 mins;
● avg process time per order: 0.5037 mins per order; → Service Rate (ɰ)
● number of orders delayed to the next day: 24 orders;
● productivity measurement during normal situation:
𝑂𝑢𝑡𝑝𝑢𝑡𝑠
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑟𝑎𝑡𝑒 = 𝐼𝑛𝑝𝑢𝑡𝑠
550 𝑜𝑟𝑑𝑒𝑟𝑠
= 574 𝑜𝑟𝑑𝑒𝑟𝑠

= 95. 82%;
● effectivity measurement during normal situation:
𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑟𝑎𝑡𝑒 (λ)
𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 = 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑟𝑎𝑡𝑒 (ɰ)
0.3986 𝑜𝑟𝑑𝑒𝑟𝑠
= 0.5037 𝑚𝑖𝑛𝑠

= 79. 15%;
● customer waiting time for their order being processed on normal situation:
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 (𝐿)
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑖𝑚𝑒 𝑜𝑟𝑑𝑒𝑟 𝑠𝑝𝑒𝑛𝑑𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 = 𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑟𝑎𝑡𝑒 (λ)
183.33 𝑜𝑟𝑑𝑒𝑟𝑠
= 0.3986 𝑜𝑟𝑑𝑒𝑟𝑠

= 460 𝑚𝑖𝑛𝑠.

Peak Day Situation

Based on the daily ecommerce orders data of PT DSI, the highest incoming order during
peak day is 837. The peak day situation simulation shown in Table 3, detail of the simulation
shown on these following data:
● Incoming orders of the day: 837 orders; and
● number of orders delayed from previous day (simulated): 57 orders.

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Table 3. Queuing time simulation and analysis on peak day situation

Based on the normal situation simulation shown on the table above, queuing time simulation
results on these several points:
● Total orders to be processed: 894 orders;
● total orders processed: 650 orders;
● incoming orders per minute (simulated): 0.6208 orders; → Arrival Rate (λ)
● avg process time per batch (simulated): 94 mins;
● avg process time per order: 0.4354 mins per order; → Service Rate (ɰ)
● number of orders delayed to the next day: 244 orders;
● productivity measurement during normal situation:
𝑂𝑢𝑡𝑝𝑢𝑡𝑠
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑟𝑎𝑡𝑒 = 𝐼𝑛𝑝𝑢𝑡𝑠
650 𝑜𝑟𝑑𝑒𝑟𝑠
= 894 𝑜𝑟𝑑𝑒𝑟𝑠

= 72. 71%;
● effectivity measurement during normal situation:
𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑟𝑎𝑡𝑒 (λ)
𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 = 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑟𝑎𝑡𝑒 (ɰ)
0.6208 𝑜𝑟𝑑𝑒𝑟𝑠
= 0.4354 𝑚𝑖𝑛𝑠

= 142. 59%;
● customer waiting time for their order being processed on normal situation:
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 (𝐿)
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑖𝑚𝑒 𝑜𝑟𝑑𝑒𝑟 𝑠𝑝𝑒𝑛𝑑𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 = 𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑟𝑎𝑡𝑒 (λ)
216.67 𝑜𝑟𝑑𝑒𝑟𝑠
= 0.6208 𝑜𝑟𝑑𝑒𝑟𝑠

= 349 𝑚𝑖𝑛𝑠.

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Peak Day Situation With Improvement

The highest incoming order during peak day is 837. The peak day situation simulation with
improvement shown in Table 4, detail of the simulation shown on these following data:
● Incoming orders of the day (simulated): 837 orders;
● number of orders delayed from previous day (random number): 57 orders; and
● additional 2 employees: 1 picker and 1 packer.

Table 4. Queuing time simulation and analysis on peak day situation with improvement

Based on the normal situation simulation shown on the table above, queuing time simulation
results on these several points:
● Total orders to be processed: 894 orders;
● total orders processed: 894 orders;
● incoming orders per minute (simulated): 0.6208 orders; → Arrival Rate (λ)
● avg process time per batch (simulated): 103 mins;
● avg process time per order: 0.3445 mins per order; → Service Rate (ɰ)
● number of orders delayed to the next day: 0 order;
● productivity measurement during normal situation:
𝑂𝑢𝑡𝑝𝑢𝑡𝑠
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑟𝑎𝑡𝑒 = 𝐼𝑛𝑝𝑢𝑡𝑠
894 𝑜𝑟𝑑𝑒𝑟𝑠
= 894 𝑜𝑟𝑑𝑒𝑟𝑠

= 100. 00%;
● effectivity measurement during normal situation:
𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑟𝑎𝑡𝑒 (λ)
𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 = 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑟𝑎𝑡𝑒 (ɰ)
0.6208 𝑜𝑟𝑑𝑒𝑟𝑠
= 0.3445 𝑚𝑖𝑛𝑠

= 180. 20%;

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● customer waiting time for their order being processed on normal situation:
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 (𝐿)
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑖𝑚𝑒 𝑜𝑟𝑑𝑒𝑟 𝑠𝑝𝑒𝑛𝑑𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑠𝑦𝑠𝑡𝑒𝑚 = 𝐴𝑟𝑟𝑖𝑣𝑎𝑙 𝑟𝑎𝑡𝑒 (λ)
298.00 𝑜𝑟𝑑𝑒𝑟𝑠
= 0.6208 𝑜𝑟𝑑𝑒𝑟𝑠

= 480 𝑚𝑖𝑛𝑠.

Cost Calculation
The approach taken by PT DSI to improve their productivity and effectiveness of the
ecommerce operational process is by adding 2 (two) manpower, PT DSI implements overtime
to their employees. This approach is to improve operational process during peak day period,
several data shown as below:
● Avg incoming orders per day: 559 orders;
● incoming orders during normal situation (simulated): 574 orders;
● total revenue during normal situation (simulated): IDR 213,586,548;
● incoming orders during peak day situation: 837 orders;
● total revenue during peak day situation: IDR 311,449,374;
● difference numbers of orders between peak day situation and normal situation in this
simulation: 837 orders - 559 orders = 278 orders; and
● difference total revenue between peak day situation and normal situation in this
simulation: IDR 311,449,374 - IDR 213,586,548 = IDR 97,862,826.
Profit calculation and return on investment of 2 (two) additional manpower compare to total
revenue during peak day:
● Cost of additional overtime employees per day: IDR 1,023,255;
● profit gap calculation: IDR 97,862,826 - IDR 1,023,255 = IDR 96,839,571; and
𝐼𝐷𝑅 97,862,826
● return on investment: 𝐼𝐷𝑅 1,023,255 = 95. 64.

Conclusion

PT DSI as part of Decathlon group currently is the largest innovative sporting retail chain and
brands in the world, and is still growing in Indonesia. However, based on observation, PT
DSI’s online store channel has an unproductive and inefficient ecommerce operational
process resulting from insufficient manpower; this problem occurs during peak day period.
Hence in this paper, the simulation approach that has been taken by PT DSI in order to solve
the surging incoming orders from customers during peak day period is a success.
The additional 2 (two) manpower per day in the ecommerce operational process during peak
day period will increase the quantity of orders processed per day by 244 orders which equals
an improvement of 27.29% productivity rate. By implementing this approach, PT DSI will be
able to fulfill all of the incoming ecommerce orders and match the productivity rate as the
normal situation. The investment itself is temporary, as PT DSI will only implement overtime
to their current employees on days off. This improvement will also increase the customer
satisfaction by maintaining process duration and contribute to the company's growth.

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