“It is not the strongest or the most intelligent that survives. It is the one that is the most adaptable to change” – Charles Darwin
This last decade marks the coal price crisis in Indonesia, the coal price dropped up to 50% since this early September 2012 namely due to excessive supply to the international market which started with overstocking of coal and the reduced coal consumption in China and India caused mainly by the sluggish market of their manufacturing goods which relies on electrical machines that are fuelled by coal power plant.
The same thing also happens in the United States, after finding that shell gas is cheap where production cost are just two cents per cubic foot, the U.S. replace some fuel power plants with gas. It makes U.S. gas consumption to save 180 million tons of coal per year and resulting in the all time high stockpiles of coals in the United States. (Source: http://www.theglobalmail.org/feature/gassed-up-in-the-usa/221/#).
This phenomenon is happening everyday around the globe, not just on coal, but all other commodities such as copper, cotton, oil, they may fluctuate wildly. Abundant supply making demand falls and price plummeted, and vice versa. It is the basic principle of open market and it is imperative for us to realize that we can’t predict everything.
For companies which Rajawali Adikarya holds as clients, companies with global vision, the current volatility really is becoming a threat. Already burdened by huge infrastructure, labour and logistics problems, they now must mitigate the impact of shifting customer behaviours along with sudden and dramatic price or policy changes on supply lines. Not surprisingly, many fear they are fighting a losing battle. Many executives expressed dissatisfaction at their inability to predict future performance in the new normal of permanent market volatility and the uncertainty it creates.
It is only natural that we start to worry about the resilience of Supply Chains, and it is with good reason. “Supply Chain Integration” — this is the operations management mantra of the recent past that has helped global organizations secure key relationships across extended supply lines by tying the operations of critical business partners including their logistic support with the respective beneficiary department tightly together. By its very nature, integration means a supply chain can be only as good as its weakest link. This is where the consultants can show the teeth, Rajawali Adikarya has successfully improved its client performances by giving them the world class solution to their infrastructure and decision-making lab. Our Consultants team give key users powerful management and analytical tools that runs 24/7 even across distance to serve the clients interest in laying down business war plans to face the fluctuating market and strategically leverage them equal to the rest of the global powerhouse companies around the world.
Example from one of our recent clients, PT Cibaliung Sumberdaya, looking back from their users at the purchasing department, it is known by many that the slowest supplier defines a company’s ability to respond to demand changes. We have had many discussions about this phenomenon because the impact is real, especially with the Maintenance Dept as a beneficiary department of Supply Chain service within the company as demands from both departments are not met simply because of the different understanding on how things really work. This is more visible right after the Go-Live of Epicor ERP system within the company where PT Cibaliung Sumberdaya is seriously improving their business into high performance standards, warehouse service level monitored; supplier performance analysis is easy as flipping a switch.
Major improvement has been made since the earliest Go-Live day in PT Cibaliung Sumberdaya, warehouse requisition can now be traced, and no more take-it-for-granted requisition method. Quantity of goods requested or purchased has dropped significantly because every requisition made must be approved and it is recorded, this is a clear indication that powerful cost and budget cutting are in existence ever since day one. Integration also works really well, with all divisions lining up to do their business with one another and the transformation itself really seamless with only a brief panic moment as users are now officially using the new and more powerful tools at their disposals. Epicor ERP system after Go-Live D-Day might still look like a stranger to but it doesn’t take long for users to finally getting used to it and some are picking up fast and noticed the difference.
Now let’s go back and look at the world generally; with their business tied to those of their selected vendors and suppliers, many companies now have supply chain structures too inflexible for today’s conditions. They actually leverage supply sources that are close enough physically to allow them to carry short life inventory that depend on a short lead time for replenishment. Because they do not have the flexibility to turn to other suppliers who might be slightly more expensive but quicker to deliver in a crunch, they can run out of goods at the worst possible times—like a sudden crusher break down which happens quite often. This inflexible supply lines not only limits responsiveness, it also yields in lengthy supply chain and something must be done to rectify this problem.
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Synergy can be the solution to all life’s problem
In unpredictable world, supply chains should be designed to meet the specific needs of each department that need its service. If a particular goods / stock codes is highly sensitive to a trends, for example, we should stick to suppliers that may be willing to commit to highly flexible operation and distribution networks for the front end of the product lifecycle and then move to more cost-effective methods toward the back end or if our beneficiary department of another product really care only about cost reduction, then the supply chain for that product must ruthlessly drive out every last bit of waste or excess cost.
In short, supply chain integration has played a critical role in the success of global companies in keeping productions running smoothly. Supply chain integration has evolved from just business necessity to one of the primary focus areas for enhancing competitive advantage. From all those test case and experience that Rajawali Adikarya consultants has endured with our clients, we can also draw conclusions that cross stream integration and synergy is the key to world class performance and only with better understanding and great ideas that joined in hand with the key implementation of systemic approach using Epicor ERP system can we achieve that high performance.
Also, these are the five imperatives that would benefit us and are critical to the success of any dynamic supply chain:
- Synergy between Supply Chain and all its beneficiary department (Maintenance, Operation, & Productions)
- Risk anticipation and rapid mitigation of any unforseen threats
- Enhanced visibility with global view and transparency with profitable allocation of capacity
- Exceptional Supply Chain excellence consistent with the stated operational strategy
- Adaptability as primary culture
By adapting their supply chains to flex with the demands and the ever-changing world, we can push our clients to learn to profit from this permanent volatility and insulating them against any risk, also moving with speed and agility to take advantage of the upside and making them perform admirably especially with the presence of Epicor ERP system. I believe we need to simplify things, to respect time that are limited, I believe we need to sit down together with our clients and find ways to making it right, this way I believe we will always maintain that long term and high trust relationship.
Kontributor : Tjahjo Dirgantoro