PT Pos Indonesia: Surviving rough seas<\/p>\n
Debbie A. Lubis, Contributor, Jakarta<\/p>\n
Over a decade ago, the postman was an eagerly awaited person.
\nMost people relied on postmen to send packages, money or love
\nletters.<\/p>\n
With the rapid growth in IT, the role of \"Mister Postman\" has
\nsubsequently faded away. At present, with just the click of a
\nmouse or a few taps on your cell phone you can send a letter, a
\ndocument or even money to any part of the world.<\/p>\n
People can now stay in touch with their loved ones easily. No
\nneed to send cards or love letters. Also within minutes, a
\npenniless college student can withdraw money transferred by his
\nparents, thanks to the magic of the ATM.<\/p>\n
The changes have indeed affected the business of state-owned
\ncompany PT Pos Indonesia, which once monopolized the delivery of
\nmail, money orders and packages throughout the country.<\/p>\n
The growing number of courier companies offering express
\ndelivery services has also posed a threat to the company's
\nbusiness. At the same time, the implementation of regional
\nautonomy in 2002, which caused a sharp drop in the sending of
\ngovernment documents from Jakarta to provinces, cut down on its
\npostal and delivery business.<\/p>\n
\"The rapid change in IT technology really affected our
\nbusiness,\" said Alinafiah, the president director of PT Pos
\nIndonesia, which was, in the past, among the most profitable
\nstate-owned companies.<\/p>\n
Five years ago, PT Pos' annual profits could reach more than
\nRp 100 billion. The rapid changes in the way people communicate
\nhas turned PT Pos into a money losing company. The period of 2002
\nto 2003 was a difficult time for PT Pos. During the two-year
\nperiod, it suffered massive financial loss.<\/p>\n
The worsening of PT Pos' business was not merely caused by
\nchanges in people's lifestyle but also due to the fact that the
\ncompany has to carry on Public Service Obligations (PSO) from the
\ngovernment.<\/p>\n
The company, for example, has to maintain the operation of its
\nmoney-losing branches in remote areas in order to support the
\ngovernment's transmigration program, although, based on normal
\nbusiness calculations, the operation of such offices is no longer
\nfeasible.<\/p>\n
In the past, when the company's business was still healthy, PT
\nPos used a cross-subsidy strategy to support its operations in
\nremote areas. But the decline in overall business activities has
\nmade it difficult for PT Pos to finance its 2,000 branches in
\nsuch areas.<\/p>\n
The rough seas began to calm down in 2003 after the company's
\nmanagement decided to change business direction by transforming
\nthe company's money-losing divisions into profit-oriented
\nbusinesses.<\/p>\n
The strategy reaped good results as reflected by the decline
\nin the company's financial losses in 2003. In 2004, PT Pos'
\nbalance sheet returned to the black after two years in the red.
\nFor the year, PT Post booked a net profit of Rp 2.49 billion, as
\ncompared to a net loss of Rp 7.1 billion in 2003. This year, the
\ncompany expects a 15 increase in net profit.<\/p>\n
\"2004 was the turning point for PT Pos,\" Alinafiah said.<\/p>\n
The success cannot be separated from the company's ambitious
\nbusiness transformation program, \"Change Management Team\". The
\nprogram was introduced at the beginning of 2003, with the main
\nmission of carrying out a massive transformation of the company's
\ncore business activities.<\/p>\n
Alinafiah implemented the business transformation based on the
\nso-called \"6 R\" strategies, to be implemented from 2003 through
\n2007.<\/p>\n
The \"6 R\" strategies refer to Repositioning the company's
\nmission, Reinventing its business, Reengineering the business
\nsystem and process, Restructuring the organization, Right-sizing
\nhuman resources and competence, and Resources allocation.<\/p>\n
The repositioning of the strategy aims at making the company
\nbecome more competitive and more business-oriented.<\/p>\n
The second strategy, Reinventing, requires the company to make
\nproduct differentiation. With this strategy, the board of
\ndirectors decided to revamp the company's traditional business
\nand put more emphasis on logistics services, financial
\ntransactions and integrated network-based philately.<\/p>\n
One of the company's breakthroughs was the launch of a new
\nservice, Insured Delivery, in early 2003. With the service, all
\ngoods delivered are guaranteed by insurance. As part of the
\nservice, customers can also track their mail or documents over
\nthe Internet.<\/p>\n
In 2003 alone, the new service generated revenue of more than
\nRp 15 billion and this rose to Rp 23 billion in 2004.<\/p>\n
At present, the company does not just deliver goods to
\ndesignated addresses, but also provides packaging and warehousing
\nservices as part of its integrated logistics services. This has
\nreceived a positive response from the business community.<\/p>\n
The company also launched Next Day Delivery service in eight
\nbig cities that covers islands such as Java, Bali, Batam and
\nMedan. This mail-express system is set to compete with services
\noffered by private express companies.<\/p>\n
By the end of 2003, the company also launched Direct Mail
\nwith an investment of Rp 20 billion. With this service, companies
\ncan send information or promote their products more easily. PT
\nPos will send the data to its branches, which will then print it
\nand put it in envelopes before sending to he designated
\naddresses. This service has been utilized by several card centers
\nand also during the campaigning for the legislative and
\npresidential elections.<\/p>\n
For financial transactions, the company has cooperated with
\nforeign banks to provide \"instant\" money orders. It also
\ncooperates with a local bank to deal with money transfers by
\nmigrant workers to their families, another bank for housing
\ncredit installments and with the local Islamic bank to provide
\nbanking services.<\/p>\n
The company also provides Online Payment Point in which people
\ncan pay their telephone bills online. \"All of our strategies are
\naimed at linking the physical network of the post office with the
\nvirtual network,\" Alinafiah said.<\/p>\n
With the strategy of Restructuring, PT Pos tries to
\ncreate an efficient bureaucracy. \"In the future, the organization
\nwill be just the holding company while each business unit, like
\nDirect Mail, can be managed in partnership with private
\ncompanies.\"<\/p>\n
\"We are thinking of merging some regional offices to boost
\nefficiency. The organization will not be centralized and the
\nbureaucracy will be cut because we are open for cooperation with
\nother parties,\" Alinafiah said.<\/p>\n
PT Pos is trying to find the ideal number of employees to meet
\nits market needs. Alinafiah said that right-sizing did not have
\nto mean lay-offs.<\/p>\n
At first the company offered early retirement for 500
\nemployees, but it turned out that 1,500 employees applied. After
\ndiscussions with the company's union, all of the applications
\nwere accepted and fair financial compensation offered.<\/p>\n
In the Resource Allocation strategy, the company's assets are
\nallocated proportionately. In cooperation with a private
\ninvestor, PT Pos has, for example, transformed its one-hectare
\nsite in Bali to a house-shop complex, but still with the post
\noffice at the center.<\/p>\n
\"From 2003 until 2007, we will carry out a massive
\nconsolidation and revitalization. We hope to see some growth in
\nthe next two years. I expect our overall business can achieve 20
\npercent growth after 2007,\" Alinafiah said.<\/p>\n
The turbulence might be over for PT Pos but in this
\nincreasingly competitive market, other challenges are likely to
\nemerge.<\/p>",
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