Network

Design in
Supply Chain
• Perkuliahan #3 Supply Chain Strategy, Design, and Compliance
• MTI-FTI UII Jogjakarta
• Dr. Zaroni, CISCP, CFMP, CMILT
• 10 April 2021
Dr. Zaroni, CISCP, CFMP, CMILT
zaroni.umn@gmail.com
0812 1234 4693

• Praktisi logistik dan supply chain (logistics services

dan pertambangan)
• Pengurus DPP Masyarakat Ekonomi Syariah (MES)
Bidang Perdagangan dan Logistik, DPP Asosiasi
Logistik dan Forwarder Indonesia (ALFI), dan
Supply Chain Indonesia
• Board of CILT UK Branch Indonesia
• Penulis buku
• Kontributor ahli Truck Magz
• Pesepeda
Topics discussed
• Logistics and the supply chain
• Decisions related to logistics
• Network design
• Locating logistics facilities
• Case study: Pos Logistics
• Key learning
Logistics and the supply chain
• Key issues:
• What is the supply chain, and how is it structured?
• What is the purpose of a supply chain?
 • Rantai pasokan adalah jaringan mitra yang secara kolektif
mengubah komoditas dasar (hulu) menjadi produk jadi
(hilir) yang memberikan manfaat/nilai bagi pelanggan akhir,
dan yang mengelola pengembalian di setiap tahap.
• Suatu proses mengubah masukan dalam bentuk bahan dan
informasi menjadi keluaran dalam bentuk barang dan jasa.
• SCM mencakup perencanaan dan pengendalian semua
proses yang terlibat dalam pengadaan, konversi,
Supply chain transportasi, dan distribusi di seluruh rantai pasokan.
• SCM mencakup koordinasi dan kolaborasi antara mitra,
yang dapat berupa pemasok, perantara, penyedia layanan
pihak ketiga, dan pelanggan.
• Intinya, SCM mengintegrasikan manajemen penawaran dan
permintaan di dalam dan di antara perusahaan untuk
melayani kebutuhan pelanggan akhir.
 Logistics

• Logistics is the task of coordinating material

flow and information flow across the supply
chain to meet end-customer needs.
7 Rights

1
Right
Product

7 2
Right Right
Cost Data
7 Rs

6 3
Right Right
Quantity Time
OF LOGISTICS

5 4
Right Right
Condition Place

7
Supply chain: structure and tiering
Supply chain:
structure and tiering

• Pembelian dan pasokan berhubungan

dengan pemasok langsung perusahaan
(upstream).
• Distribusi fisik: mendistribusikan produk
ke pelanggan lapis 1 (downstream).
• Logistik mengacu pada pengelolaan
material dan arus informasi.
• Inbound logistics berhubungan dengan
hubungan antara perusahaan dan
pemasok, sementara outbound logistics
mengacu pada hubungan antara
perusahaan dan pelanggan.
• Internal logistics berkaitan dengan
perencanaan dan pengendalian aliran
material dalam batas-batas perusahaan
fokus.
 DECISIONS RELATED TO LOGISTICS

The problem of deciding how best to

transport goods from plants to customers is
a complex one that affects the cost of a
product. Major trade-offs related to the cost
of transporting the product, speed of
delivery, and flexibility to react to changes
are involved.

Information systems play a major role in

coordinating activities and include activities
such as allocating resources, managing
inventory levels, scheduling, and order
tracking.
Transportation
Modes
Warehouse
Design
• Cross-docking
• An approach used in
consolidation warehouses
where, rather than making
larger shipments, large
shipments are broken down
into small shipments for local
delivery in an area.
• Hub-and-spoke systems
• Systems that combine the
idea of consolidation and
that of cross-docking.
Network Design Decisions
(How many plants, DC’s, retail stores, etc. to build?)

• Facility role: What role should each facility play? What processes should be performed at each
facility?

• Facility location: Where should facilities be located?

• Capacity allocation: How much capacity should be allocated to each facility?

• Market and supply allocation: What markets should each facility serve? Which supply sources should
feed each facility?
Phase I: Strategy
Considerations
• Understand where is the main emphasis:
• Cost leadership
• Responsiveness
• Product differentiation
• Who are the key competitors at each target market?
• Identify constraints on available capital
• Key mechanisms that will support growth
• Reuse of existing facilities
• Build new facilities
• Partner with other companies (mergers and acquisitions are
potential options here)
 Cost/Responsiveness Trade-off

Cost
Total cost
SC response time

Inventory cost

Facility cost

Transportation cost

Number of Facilities
Phase II: Regional facility configuration

• Important Factors:
• Regional demand
• Production technologies and economies of scale and scope
• Tariffs and Tax incentives
• Infrastructure factors
• Political, exchange rate and demand risk
• Competitive Environment
Regional demand

• Forecast the demand on a region-by-region basis

• Need to study its
• size
• homogeneity
• Non-homogeneous demand will require a more localized network
• Frequently the final customization of a product for a particular market is done at a local
distribution center
• Labeling
• Manuals
• etc.
Production technologies and the underlying economies

• Expensive dedicated production technologies will require large production volumes and
therefore a more centralized production network (e.g., chip production).
• Lower fixed cost facilities can be duplicated more easily (e.g., bottling factories).
• In case of non-homogeneous demand, technological flexibility facilitates consolidation of
production to a few manufacturing facilities.
• The more cumbersome the transfer of raw material, the closer the facility must be to the
source site (e.g., factories processing minerals)
Tariffs and Tax incentives

• Tariffs: Any duties that must be paid when products and/or equipment are moved across international, state or city boundaries.
• High tariffs necessitate localized production.
• Presently, there is a systematic effort to open the markets to global competition through the World Trade Organization Policies (WTO) and
regional agreements (NAFTA, MERCOSUR for S. America, ASEAN for Pacific rim, etc.)
• Tax incentives: a reduction in tariffs or taxes that countries, states and cities often provide to encourage firms to locate their facilities in
specific areas.
• Free trade zones: Areas where duties and tariffs are relaxed as long as production is used primarily for export (e.g., Taiwan and China’s
GuangZhou area) Allows companies to take better advantage of low labor costs.
• Tax incentives can be focusing on certain
• Industries
• Technologies
• Regions
• Quotas: Limits on import volumes placed by different countries in an effort to protect their local industry. Sometimes there is also some
requirement on minimum local content.
Infrastructure factors

Availability of skilled labor Availability of transportation Availability of necessary utilities

facilities
Ports Power
Airports Water
Rail Sewage
Highways Telecommunications / IT
Political, exchange rate and demand Risks
• Political risks -- Need for:
• Well-defined rules of commerce
• Independent and clear legal systems
• Political stability
• Exchange rate risks: This risk arises from the fact that companies might incur their costs in one currency
and collect their revenues in other currencies. (e.g., Japanese production under an expensive Yen in the
late 80’s / early 90’s; the role of an expensive EURO these days for the American economy)
• Potential protection to exchange rate risk: Build some flexible over-capacity to the regional facilities so
that production is shifted to the lower-cost regions.
• Demand risk: Comes from extensive demand fluctuation due to regional economic crises (e.g., Asia
markets between 1996-1998) Plant flexibility is also a potential protection to this type of risk.
Competitive factors
• Positive Externalities: Instances where collocation of multiple firms benefits all of them,
since
• They share the cost of the necessary infrastructure
• And the collocation can stimulate demand for all of them
• Examples: a mall, silicon valley, industrial parks
• Locating to “split the market”: For companies that
• Do not have price control, and
• Try to maximize their market share by minimizing their distance from the customer,
collocation can allow each competing party to maximize their market share.
Phases III & IV: Selecting specific locations

• Important factors
• Infrastructure
• Costs
• Labor
• Materials
• Facilities
• Transport
• Inventory
• Taxes and Tariffs
LOCATING FACILITIES

Proximity to Business
Total Costs
Customers Climate

Quality of
Infrastructure Suppliers
Labor

Free Trade Environmental

Political Risk
Zones Regulation
Supply Chain Management: A Logistics Perspective, Tenth
Edition, John J. Coyle, C. John Langley, Jr., Robert A.
Novack and Brian J. Gibson, Cengage Learning, 2017
Pos Logistik Indonesia network design

Primer Udara Primer Darat Sekunder Delivery Indoor Process

o KTSH ex Bogor, karawang, o Primer Intra Jawa o Regional 1 o Regional 6 o Kp Jakarta Timur o PDC Tambun
o Hub Batam o Jawa - Sumatera o Regional 2 o Regional 7 o Kp Tangerang o PDC Palembang (Des
o Hub Surabaya o Jawa - BaliNusra o Regional 3 o Regional 8 2019)
o Hub Denpasar o Regional 4 o Regional 9 o Pengambilan Kirimanpos
o Pengelolaan Ground o Regional 5 Impor CGK (Oktober
Handling Kirimanpos Impor 2019)
37
Pos Logistik Indonesia network design

Outgoing HOUSEHOLD

Incoming

SME
Delivery

Handling WAREHOUSE – Lini 1 SENTRA

- Customs PENGOLAHAN
CORPORATE
- Quarantine POS

• SUB HUB/WAREHOUSE
• POST OFFICE

E COMMERCE

Bisnis Postal : Delivery

1. Primer Udara/Darat/Laut
2. Sekunder Udara/Darat/Laut
3. Indoor Proses
38
 Rute Jaringan
Jaringan Sekunder Wilayah Sumatera
Sekunder Regional I
Wilayah Sumatera
Banda Aceh - Lhokdumawe
Regional I Banda Aceh - Tapaktuan

Medan – Lhoksumawe

Medan – Rantauprapat

Medan – Sibolga

Medan – Kutacane

Regional II Tarutung – Padangsidempuan

Regional II
Padang – Payakumbuh

Padang – Dumai

Pekanbaru – Tembilahan

Sungai Rumbai – Padang

Regional II
Padang – Lubuk Sikaping

Padang – Lunang

Tanjung Pinang - Batam

Regional III
Bandar Lampung – Kota Bumi

Bandar Lampung – Muara Enim

39
 Regional IV
Regional V
Jaringan Sekunder
Wilayah Jawa Bali Nusra
Regional IV
PDC Tambun – Jakarta Pusat
PDC Tambun – Jakarta Barat
PDC Tambun – Jakarta Selatan
PDC Tambun – Jakarta Timur
PDC Tambun – Jakarta Utara
PDC Tambun – Tangerang
PDC Tambun – Bekasi
Regional VI
Regional VII
Regional V
Bandung – Sukabumi
Sukabumi – Bogor
Bandung – Banjar
Majalengka – Bandung
Purwakarta – PDC Tambun
Cirebon – Karawang
Karawang – Bandung
Subang – KTSH
Cibinong – KTSH
Bogor – PDC Tambun
Depok – PDC Tambun
Tangsel – PDC Tambun
Cikarang – PDC Tambun
Regional VIII
Regional VI Regional VII Regional VIII
Semarang – Blora Surabaya - Bojonegoro Denpasar - Gilimanuk
Cilacap - Purwokerto Surabaya - Ponorogo Denpasar - Amlapura
Surabaya - Tulungagung Denpasar - Gerogak
Surabaya - Sumenep Mataram - Bima
Surabaya - Bondowoso Ende - Larantuka
Surabaya - Banyuwangi Ende - labuan Bajo
Surabaya - Malang Kupang - Atambua
Surabaya - Pasuruan
40
Jaringan Sekunder
Regional IX
Wilayah Kalimantan Sulawesi
Banjarmasin - Batulicin

Palangkaraya - Pangkalanbun

Balikpapan - Bontang

Balikpapan - Batukajang

Samarinda - Tanjungselor

Banjarmasin - Samarinda
Regional IX
Banjarmasin - Amuntai

Banjarmasin - Palangkaraya

Pontianak - Sintang

Palangkaraya - Muarateweh
Regional X Regional X
Gorontalo - Manado

Makassar - Bulukumba

Makassar - Watampone

Makassar - Palopo

41
Key learning

STRUCTURE & TRANSPORTATION CROSS-DOCKING HUB-AND-SPOKE NETWORK DESIGN

TIERING IN SUPPLY MODES SYSTEMS
CHAIN
Referensi
• Supply Chain Management: A Logistics Perspective, Tenth Edition,
John J. Coyle, C. John Langley, Jr., Robert A. Novack and Brian J.
Gibson, Cengage Learning, 2017
• Operations and Supply Chain Management: The Core, Fifth Edition,
Jacobs, F. Robert and Chase, Richard B., McGraw-Hill, 2020
Terima kasih