AN ANALYSIS OF INVENTORY MANAGEMENT OF T-SHIRT AT MAHANAGARI BANDUNG PISAN
by Nidia Jernih Olanda 19007055
Undergraduate Program of Management Study School of Business and Management Institut Teknologi Bandung 4 August 2010
VALIDATION PAGE
AN ANALYSIS OF INVENTORY MANAGEMENT OF T-SHIRT AT MAHANAGARI BANDUNG PISAN
by Nidia Jernih Olanda ID No: 19007055
Undergraduate Program of Management Study School of Business and Management Institut Teknologi Bandung 4 August 2010
Validated by
Prof. Togar M. Simatupang ID: 132 052 380
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AN ANALYSIS OF INVENTORY MANAGEMENT OF T-SHIRT AT MAHANAGARI BANDUNG PISAN NIDIA JERNIH OLANDA 19007055 Date of Final Examination: August 4th, 2010 Date of Graduation: October 23rd, 2010 Advisor: Prof. Togar M. Simatupang Undergraduate Program of Management Study, Institut Teknologi Bandung, 2010
ABSTRACT Mahanagari Bandung Pisan is a company that runs its business in designing and creating the merchandise of Bandung. Mahanagari Bandung Pisan states itself as a culture campaign company because besides generating profit to maintain and develop the business, the company also brings a social mission, which is developing the love and the sense of belonging of people towards the city of Bandung. In running the business, Mahanagari Bandung Pisan uses T-shirt as the main media to boost up its sales. From all products sold by the company, T-shirt contributes about 79% of the total sales generated by the company. Because of that, the availability of T-shirt in the retail outlet becomes very important for the company. Currently, Mahanagari Bandung Pisan faces a problem within its inventory management of Tshirt. The company produces a high number of inventories, but there is still lost sales occurred. This research is aimed for reviewing inventory management of Mahanagari Bandung Pisan and finding the root causes of the problems occurred within inventory management of T-shirt used by Mahanagari Bandung Pisan. The concept of inventory cycle is used for describing the current system implemented by Mahanagari Bandung Pisan in planning and managing the inventory of T-shirt. By describing each process within the inventory cycle, the root causes of the problem occurred can be analyzed. In managing the inventory of T-shirt, there are four main problems faced by the company. Those problems are inaccurate forecasting, unfixed schedule in ordering the T-shirt to the vendor, lateness from vendor, and the last problem is the office does not know current condition of T-shirt’s inventory. There are some proposed solution given to solve the problem occurred within the company. The first solution recommended is combining the intuitive prediction method with moving average model for getting the more accurate demand forecasting. Then, the next problem can be solved by making the timeline of the company in controlling and producing the inventory of T-shirt. The proposed solution for the third problem is by implementing periodical control system and put a clause about sanction in the contract made by Mahanagari Bandung Pisan and the vendor. Then the last problem is proposed to be solved by controlling the salesperson everyday and creating the rules about inventory recording. Key words: Inventory Management, Inventory Cycle, Mahanagari Bandung Pisan, Forecasting, T-shirt
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AN ANALYSIS OF INVENTORY MANAGEMENT OF T-SHIRT AT MAHANAGARI BANDUNG PISAN NIDIA JERNIH OLANDA 19007055 Tanggal Sidang: 4 Agustus 2010 Tanggal Wisuda: 23 Oktober 2010 Pembimbing: Prof. Togar M. Simatupang Program Studi Bisnis Manajemen, Institut Teknologi Bandung, 2010
ABSTRAK Mahanagari Bandung Pisan merupakan sebuah perusahaan yang menjalankan bisnisnya dengan merancang dan menciptakan produk-produk yang bertemakan Bandung. Mahanagari Bandung Pisan menyatakan dirinya sebagai sebuah perusahaan kampanye budaya, karena selain menghasilkan keuntungan untuk mempertahankan dan mengembangkan bisnisnya, perusahaan ini juga membawa sebuah misi sosial, yaitu mengembangkan rasa cinta dan memiliki dari masyarakat terhadap kota Bandung. Dalam menjalankan bisnisnya, Mahanagari Bandung Pisan menggunakan kaos sebagai media utama untuk meningkatkan penjualan. Dari semua produk yang dijual oleh perusahaan ini, kaos menyumbang proporsi sekitar 79% dari total penjualan yang dihasilkan oleh perusahaan. Oleh karena itu, ketersediaan kaos di toko menjadi sangat penting bagi perusahaan. Saat ini, Mahanagari Bandung Pisan menghadapi permasalahan dalam mengelola persediaan kaos. Perusahaan ini memproduksi sejumlah besar persediaan kaos, namun sayangnya kehilangan penjualan masih sering terjadi. Penelitian ini bertujuan untuk mengkaji manajemen persediaan kaos Mahanagari Bandung Pisan dan menemukan akar penyebab masalah yang terjadi dalam sistem yang digunakan oleh Mahanagari Bandung Pisan dalam mengelola persediaan kaos. Dalam penelitian ini, konsep siklus persediaan digunakan untuk menggambarkan sistem yang saat ini diterapkan oleh Mahanagari Bandung Pisan dalam perencanaan dan pengelolaan persediaan kaos. Dengan menggambarkan dan mendeskripsikan setiap proses dalam siklus persediaan tersebut, akar penyebab dari masalah yang terjadi dapat dianalisis. Dalam pengelolaan persediaan kaos, ada empat masalah utama yang dihadapi oleh perusahaan. Masalah-masalah yang dihadapi adalah forecasting yang tidak akurat, jadwal yang tidak tetap dalam pemesanan kaos ke vendor, keterlambatan vendor dalam pengiriman barang, dan masalah yang terakhir adalah ketidaktahuan kantor akan kondisi persediaan kaos. Ada beberapa solusi yang diusulkan untuk memecahkan permasalahan yang terjadi di dalam perusahaan. Solusi pertama yang direkomendasikan adalah dengan menggabungkan metode prediksi intuitif dengan model peramalan Moving Average untuk mendapatkan peramalan permintaan yang lebih akurat. Kemudian, masalah selanjutnya dapat diselesaikan dengan membuat timeline yang sesuai bagi perusahaan dalam proses pengendalian persediaan dan pembuatan kaos. Solusi yang diusulkan untuk masalah ketiga adalah dengan menerapkan sistem kontrol berkala dan menambahkan klausa tentang sanksi dalam kontrak yang dibuat oleh Mahanagari Bandung Pisan dan vendor. Kemudian masalah terakhir diusulkan untuk
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dipecahkan dengan mengontrol kegiatan sehari-hari wiraniaga dan menciptakan aturan-aturan mengenai pencatatan persediaan. Kata kunci: Manajemen Persediaan, Siklus Persediaan, Mahanagari Bandung Pisan, Peramalan, Kaos
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PREFACE
Firstly, I would like to thank God, because only God can help me finished this final project, which has a title “An Analysis of Inventory Management of T-shirt at Mahanagari Bandung Pisan” on time and without matter problem. This report was made as the partial fulfillment of completing the Bachelor Degree at SBM-ITB. Besides, this report was created to solve the problem faced by Mahanagari Bandung Pisan related to inventory management of T-shirt used by the company. In completing this final project, I was helped and supported by a lot of wonderful people. Without them, this final project cannot be finished. My highest gratitude is sent to: 1.
The greatest family ever. Mr. John Manurung and Mrs. Ria Sirait, the most amazing parents on earth, and also my superb sister Laura Manurung and brother Kevin Manurung. You all are the best family I could find. Thank you for the unstoppable support and prayers that always motivate me to finish my study and this final report. Papa, Mama, I promise to always make you proud.
2.
My beautiful grandma. Thank you Opung Boru for your unconditional prayers.
3.
Mr. Togar M. Simatupang, the best and the greatest supervisor ever. Thank you for your continuous attention, advice and guidance, and also for every funny joke you made. I do appreciate every action you take to guide me, Mr. Professor.
4.
An enormous pair with unstoppable support, patience, tolerance, and help: Nathan Hasiholan Simatupang, for always being available 24-hours per day and 7-days per week and for accompanying me in facing every happiness and difficulty.
5.
My best college friends: Ines Puti, Rinindi Filanda, Yasmin Rasyid, Mevira Munindra, Zahra Aldila, Evita Nirmalasari, and Yaya Wulandari. We share the sadness, we share the laughter. You all are more than best friends for me; you all are my best life-sharing friend and my survival kit.
6.
Mahanagari Bandung Pisan, especially Teh Siesca, my mentor during my internship program for letting me feels the “world of work”.
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7.
Bang! Company, my superb tutorial class with all lovable classmates inside, the superwomen of the class, Bang! Dharma Wanita and also the greatest DG, Living Legend.
8.
All great friends of SBM 2010! We will make it guys, BONAFIDOS 2020!
9.
SBM 2009, 2011, 2012. Knowing you all is one of my pleasures in life.
10.
Expart Satoe Indonesia, the best division of Satoe Indonesia for me. I will miss our meetings with those laughter and gossips thingy.
11.
SBM lecturers and staffs, your help and guidance make me be who I am right now. A lot of thanks, Miss and Mister.
12.
The last but not the least, Ayam Tulang Lunak Tubagus and Ayam Cobek Cisitu for being such the most loyal friend ever, accompanying me always in finishing this final project. I do will miss you both and someday I will go back to Bandung just to buy two of you.
July 22nd 2010 Nidia Jernih Olanda
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LIST OF CONTENTS
APPROVAL PAGE .........................................................................................................ii ABSTRACT ....................................................................................................................iii ABSTRAK ....................................................................................................................... iv PREFACE ....................................................................................................................... vi LIST OF CONTENTS ..................................................................................................viii LIST OF FIGURES ......................................................................................................... x LIST OF TABLES .......................................................................................................... xi LIST OF APPENDICES ................................................................................................xii CHAPTER I INTRODUCTION ...................................................................................... 1 1.1 Background ............................................................................................................... 1 1.2 Problem Statement .................................................................................................... 2 1.3 Research Objective ................................................................................................... 4 1.4 Problem Boundaries .................................................................................................. 4 1.5 Report Outline ........................................................................................................... 5 CHAPTER II LITERATURE REVIEW ......................................................................... 7 2.1 Merchandise .............................................................................................................. 7 2.2 Supply Chain ............................................................................................................. 7 2.3 Inventory Management ........................................................................................... 10 2.4 Business Process ..................................................................................................... 11 CHAPTER III RESEARCH METHOD ......................................................................... 13 3.1 Problem Identification ............................................................................................ 14 3.2 Literature Review .................................................................................................... 14 3.3 Research Method .................................................................................................... 14 3.4 Data Collection ....................................................................................................... 15 3.5 Data Processing and Analysis ................................................................................. 16 3.6 Conclusion and Recommendation .......................................................................... 16 CHAPTER IV DATA ANALYSIS ................................................................................ 17
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4.1 Company Profile ..................................................................................................... 17 4.1.1 Company History ........................................................................................... 17 4.1.2 Vision and Mission ........................................................................................ 20 4.1.3 Organization Structure ................................................................................... 20 4.1.4 Target Customer ............................................................................................ 22 4.1.5 Product of Mahanagari Bandung Pisan ......................................................... 22 4.2 Business Process ..................................................................................................... 25 4.3 Data Processing and Analysis ................................................................................. 28 4.3.1 Supply Chain Strategy ................................................................................... 30 4.3.2 Inventory Cycle in Mahanagari Bandung Pisan ............................................ 31 4.3.2.1 Forecasting ............................................................................................. 33 4.3.2.2 Requirement Planning and Purchasing .................................................. 35 4.3.2.3 Shipment and Storage ............................................................................ 36 4.3.2.4 Consumption .......................................................................................... 37 4.3.3 Information and Product Flow ....................................................................... 38 4.4 Root Cause Analysis ............................................................................................... 41 4.5 Solution ................................................................................................................... 46 CHAPTER V CONCLUSION AND RECOMMENDATION....................................... 57 5.1 Conclusion .............................................................................................................. 57 5.2 Recommendation .................................................................................................... 58 5.3 Implementation Plan ............................................................................................... 60 5.4 Key Performance Indicator (KPI) ........................................................................... 61 5.5 Topic for Future Research ...................................................................................... 62 REFERENCES .............................................................................................................. 65 APPENDICES ............................................................................................................... 66
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LIST OF FIGURES Figure 1.1 Product’s Sales Proportion at Mahanagari Bandung Pisan ............................ 4 Figure 2.1 Supply Chain Process Cycle ........................................................................... 9 Figure 3.1 Research Method .......................................................................................... 13 Figure 4.1 Organization Structures ................................................................................ 21 Figure 4.2 Business Processes ....................................................................................... 26 Figure 4.3 Comparison between the number of stock and the number of sales during June 2009-May 2010 ...................................................................................................... 28 Figure 4.4 Inventory Cycle in Mahanagari Bandung Pisan ........................................... 32 Figure 4.5 Demand Forecasting ..................................................................................... 33 Figure 4.6 Requirement Planning and Purchasing Process ........................................... 35 Figure 4.7 Information and Product Flow ...................................................................... 39 Figure 4.8 Problem Analysis .......................................................................................... 41 Figure 4.9 Demand and Forecast using Moving Average ............................................. 49 Figure 4.10 Demand and Forecast using Exponential Smoothing Model ..................... 50
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LIST OF TABLES Table 2.1 Supply Chain Strategies ................................................................................... 8 Table 4.1 Consignment Products ................................................................................... 25 Table 4.2 Lost Sales ....................................................................................................... 29 Table 4.3 Supply Chain Strategy of Mahanagari Bandung Pisan .................................. 31 Table 4.4 Current Problem and Root Causes ................................................................. 42 Table 4.5 Forecasting using Moving Average Model ................................................... 48 Table 4.6 Forecasting using Exponential Model ........................................................... 50 Table 4.7 Proposed Timeline for Problem 2 ................................................................... 54 Table 5.1 Implementation Plans .................................................................................... 60 Table 5.2 Key Performance Indicators .......................................................................... 61
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LIST OF APPENDICES Appendix A Retail Outlet of Mahanagari Bandung Pisan Pictures ................................ 67 Appendix B Design of T-shirts Pictures ......................................................................... 68
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