ANALYZING INVENTORY MANAGEMENT FOR SOFTLINE DIVISION AT HYPERMART BIP
By Gading Ramadhan Joedo 19004071
Undergraduate Program School of Business and Management Institut Teknologi Bandung 2007
VALIDATION PAGE
ANALYZING INVENTORY MANAGEMENT FOR SOFTLINE DIVISION AT HYPERMART BIP
Gading Ramadhan Joedo ID No: 19004071
Undergraduate Program School of Business and Management Institut Teknologi Bandung
Validated By
(Togar M. Simatupang, Ph.D)
”ANALYZING INVENTORY MANAGEMENT FOR SOFTLINE DIVISION AT HYPERMART BIP”
Name: Gading Ramadhan Joedo ID No: 19004071 Examination Date: 21 August, 2007 Graduation Date: 27 October, 2007 Supervisor: Togar M. Simatupang, Ph.D Undergraduate Program of Management School of Business and Management Institut Teknologi Bandung
ABSTRACT Entering the globalization and economical condition recent years in big cities, there so many retailer company grown fast. Retailer has a large of demand from every community in the world, because the role is strategic, based from the scope from the company include the producer, distributor, and consumer. Every retail company has their policies on how to give their best for the company. One of the key of success of a retail company is to manage the inventory so it could be spend as efficient and optimum as possible. The policy must be used in a correct way, so it won’t gave disadvantages to the company, since the policy about inventory will give a big influence to every business function such as general operation, marketing, and financial. Hypermart is a retail company that was involved in the sale of products satisfying the requirement for the daily life, in part; food, clothes, the household furniture, etc. Hypermart was one of the examples best practices for the other company in Indonesia. In doing the business activity, definitely the Hypermart management carried out a planning, execution, and controlled. Here the writer meant to discuss the existing management system in Softline division which carried out the business in apparel product, since the supplier in Hypermart BIP reach about 100 suppliers; as a result they have to create an excellent management. Base from the root cause analysis we recommend Hypermart BIP to implement new system called automatic replenishment. Automatic replenishment is the preparation of orders by computer that integrates information about product movement (as recorded by point of sale equipment); outside factors that effect demand (such as seasonal changes), actual inventory levels, product receipts, and acceptable safety stock levels, inventory data integrity is maintained by cycle counting. Automatic replenishment is useful for ordering process to reducing errors caused by human errors, and process errors Key word; Out of Stock, Service Level, Automatic Replenishment.
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”ANALISA MANAJEMEN PERSEDIAAN PADA DIVISI SOFTLINE DI HYPERMART BIP”
Nama: Gading Ramadhan Joedo NIM: 19004071 Tanggal Ujian: 21 Agustus, 2007 Tanggal Wisuda: 27 Oktober, 2007 Pembimbing: Togar M. Simatupang, Ph.D Program Sarjana Manajemen Sekolah Bisnis dan Manajemen Institut Teknologi Bandung
ABSTRAK Memasuki era globalisasi belakangan tahun ini pada kota besar, banyak perusahaan ritel yang berkembang dengan cepat. Perusahaan ritel mempunyai permintaan pasar yang besar pada setiap komunitas di seluruh dunia karena peran yang strategis pada perusahaan ritel berdasarkan ruamg lingkup dari perusahaan ritel tersebut yang mencakup produsen, distributor, dan konsumen. Setiap perusahaan ritel mempunyai kebijakan dan aturannya masing-masing dalam mengatur perusahaannya. Salah satu kunci sukses perusahaan ritel adalah bagaimana dapat mengatur persediaan yang efisien dan optimal. Persediaan pada suatu perusahaan ritel dapat mempengaruhi fungsi bisnis lainnya antara lain bagian pemasaran, dan keuangan. Hypermart merupakan salah satu perusahaan ritel yang menjual produk sehari-hari untuk memenuhi keinginan pelanggannya, produk yang dijual di Hypermart antara lain makanan, pakaian, alat rumah tangga, dan lain-lain. Hal ini diangkat karena Hypermart BIP mempunyai sekitar 100 pemasok, karena itu perlunya suatu manajemen yang baik untuk mengatur hal tersebut. Berdasarkan hasil analisis dari akar permasalahan perlunya suatu perbaikan pada masalah yang dihadapi Hypermart BIP tersebut. Penulis merekomendasikan untuk membuat sistem pemesanan yang baru yang dinamakan automatic replenishment. Sistem ini merupakan pemesanan melalui computer yang terintegrasi dengan informasi pergerakan suatu produk yang tercatat pada point of sale, factor luar yang dapat berpengaruh permintaan (perubahan musim), dan data tingkat persediaan. Sistem ini berguna untuk megurangi kesalahan dalam melakukan pemesanan yang disebabkan oleh faktor manusia. Kata kunci; Out of Stock, Service Level, Automatic Replenishment. iii
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PREFACE
This research is a final project which is a partial requirement of graduation for final year student at SBM ITB 2007 enrollment. For this final project completion, the researcher would like to acknowledge who gave significant contribution.
1. Allah SWT, the God Almighty for the blessing throughout this final project completion. 2. Budiarto S. Joedo and Farida Malewa; the researcher’s parents, for the unconditionally prayers and support. 3. Togar M. Simatupang, Ph.D as the supervisor, for the guidance in this final project 4. Roesdecil Anggana and Wandi for the big contribution of data from Hypermart BIP. 5. All the member in Hypermart BIP for the help in all researcher activity in the research place. 6. Siti Ruby Aliya Rajasa for being the greatest supporter. 7. Om Hasan for the continuous encouragement. 8. Harwin, Ario, Feiral, Caesar, Farhan, Ochan, Diaz for supports. 9. Mba Ida and Mba Ju for their patience. 10. Our colleagues, all the SBM ITB enrollment 2007, 2008, and 2009. 11. Other parties which not mentioned, for any support.
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TABLE OF CONTENTS
ABSTRACT ...................................................................................................................... i ABSTRAK ...................................................................................................................... iii PREFACE........................................................................................................................ v TABLE OF CONTENTS .............................................................................................. vii LIST OF FIGURES......................................................................................................... x LIST OF TABLES ......................................................................................................... xi LIST OF APPENDIX .................................................................................................... xii CHAPTER I INTRODUCTION ..................................................................................... 1 1.1 Background ......................................................................................................... 1 1.2 Core Problem ...................................................................................................... 2 1.3. Research Objectives ............................................................................................ 2 1.4. Problem Limitation .............................................................................................. 2 1.5. Report Outline ..................................................................................................... 2 CHAPTER II THEORETICAL FOUNDATION .......................................................... 5 2.1. Inventory Management ........................................................................................ 5 2.1.1 Record Accuracy ........................................................................................... 6 2.1.2. Cycle Counting ............................................................................................ 6 2.1.3. Control of Service Inventories ...................................................................... 7 2.1.4 Reorder Points............................................................................................... 8 2.1.5 Fixed-Period (P) System ............................................................................... 9 CHAPTER III RESEARCH METHODOLOGY ........................................................ 11 3.1. Problem Formulation ......................................................................................... 11 3.2. Theoretical Foundation ...................................................................................... 11 3.3. Data Collection.................................................................................................. 12 3.4. Data Analysis .................................................................................................... 12 3.5. Summary ........................................................................................................... 12 CHAPTER IV DATA COLLECTION AND ANALYSIS ........................................... 13 4.1. Company Profile ............................................................................................... 13 4.1.1. Company History ....................................................................................... 13 4.1.2. Vision and Mission .................................................................................... 14 vii
4.1.2.1. Vision .......................................................................................... 14 4.1.2.2. Mission ........................................................................................ 14 4.1.2.3. Hypermart BIP Strategies ............................................................ 14 4.1.3. Organization Structure ................................................................................ 15 4.1.4. Company Resources .................................................................................... 16 4.1.4.1. Human Resources ........................................................................ 16 4.1.4.2. Technology Resources ................................................................. 16 4.1.5. Information and Goods Flow ...................................................................... 17 4.2. Business Process................................................................................................ 19 4.2.1. Core Business............................................................................................. 19 4.2.2. Supply Chain Management......................................................................... 19 4.2.3. Distribution Process ................................................................................... 20 4.3. Information and Data Flow ................................................................................ 22 4.4. Received Product Report (LPB) ......................................................................... 23 4.5. SOH (Stock On Hand) Data ............................................................................... 24 4.6. Forecasting and Ordering ................................................................................... 24 4.7. Planogram ......................................................................................................... 27 4.8. Lead Time ......................................................................................................... 28 4.9. Service Level ..................................................................................................... 29 4.10. Inventory ......................................................................................................... 30 4.11. Out of Stock .................................................................................................... 30 4.12. Replenishment ................................................................................................. 30 4.13. Store Performance ........................................................................................... 31 4.14. Key Performance Indicator .............................................................................. 32 4.15. Data Analysis .................................................................................................. 33 4.15.1. Forecasting Analysis ................................................................................ 33 4.15.2. Root Cause Analysis ................................................................................ 34 4.16. Solution .......................................................................................................... 37 CHAPTER V CONCLUSIONS & IMPLEMENTATION PLAN ............................... 43 5.1. Conclusion................................................................................................................ 43 5.2. Implementation Plan ................................................................................................. 43 5.3. Future Research ........................................................................................................ 48 viii
REFERENCES .............................................................................................................. 53
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LIST OF FIGURES
Figure 2.1 The reorder point curve..................................................................................... 9 Figure 3.1 Research Methodology .................................................................................. 11 Figure 4.1 Organization Structures .................................................................................. 15 Figure 4.2 Information and Goods Flow .......................................................................... 17 Figure 4.3 Supply Chain Process ..................................................................................... 19 Figure 4.4 Hypermart Distribution Process ...................................................................... 21 Figure 4.5 Information and Data Flow ............................................................................. 22 Figure 4.6 Forecasting Calculation .................................................................................. 26 Figure 4.7 Planogram Socks dept M&L Softline division ................................................ 28 Figure 4.8 Display Replenishment System ....................................................................... 31 Figure 4.9 Key Performance Indicators............................................................................ 32 Figure 4.10 Tracking Signals ........................................................................................... 33 Figure 4.11 Root cause analysis ....................................................................................... 34
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LIST OF TABLES
Table 2.1 Example cycle counting ..................................................................................... 7 Table 4.1 Hypermart BIP classification base from area .................................................... 13 Table 4.2 SKU based from status..................................................................................... 18 Table 4.3 Laporan Persediaan Barang (LPB) in a million Softline division June 2007 ..... 23 Table 4.4 SOH data ......................................................................................................... 24 Table 4.5 Forecast (F) and Actual (A) data SKU 91182064 (Payung Lipat 3 pvc silver) .. 25 Table 4.6 Actual quantity sales in June 2007 ................................................................... 26 Table 4.7 Ordering schedule Softline division ................................................................. 27 Table 4.8 Planogram Socks dept M&L Softline division .................................................. 28 Table 4.9 Service level for supplier ................................................................................. 29 Table 4.10 Service level for Hypermart BIP supplier ....................................................... 29 Table 4.11 Store Performance.......................................................................................... 31 Table 4.12 MAD, RSFE, TS, and Based from forecast and actual demand ....................... 33 Table 4.13 Quantity On Hand .......................................................................................... 35 Table 4.14 Calculation for supplier service level ............................................................. 35 Table 4.15 Supplier service level categories .................................................................... 35 Table 4.16 Supplier service level ..................................................................................... 36 Table 4.17 Out of Stock Data .......................................................................................... 37 Table 4.18 Out of Stock Data .......................................................................................... 37 Table 4.19 Solution ........................................................................................................ 38 Table 4.20 Comparison between current and proposed condition ..................................... 39 Table 5.1 Implementation plan ........................................................................................ 44 Table 5.2 Implementation plan timetable ......................................................................... 47
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APPENDIX
Appendix A Sales Data.................................................................................................... 57 Appendix B Order Schedule ............................................................................................ 58 Appendix C Planogram ................................................................................................... 60 Appendix D Laporan Penerimaan Barang ........................................................................ 62 Appendix E Supplier Service Level ................................................................................. 65 Appendix F Out of Stock ................................................................................................. 69
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