Efficient logistics means profitable business

Efficient logistics means profitable business

Ari Darmawan
Contributor
Jakarta

The role of logistics in the business world is becoming more
and more important. Delivery of products is required to be early
and at the very least on time, otherwise competitors have the
opportunity to fill the gap and eventually grab a part of the
market.

On time delivery, besides having a positive impact on
customers, also makes it more convenient for retailers or outlets
to prepare the necessary payments and monitor the level of stock
for more efficiency.

"With today's advanced logistics method that guarantees on
time delivery, our retailers do not have to keep a high level of
stock. When previously, stock was piled up for one or two months,
today the inventory level is down to a maximum of two weeks or
even less. This way their money is not locked up unnecessarily
and they can use it to expand their business," said Agung
Surjoatmodjo, a supply manager at one of the leading milk and
milk-based manufacturers in Jakarta.

Realizing the vital role of logistics in the overall
distribution that eventually affects a company's marketing, many
major companies in Indonesia have seriously developed their
logistics divisions. Among the essential elements to be attended
to are the proper network and sophisticated information
technology. Due to the huge investment involved, however, only
really big companies are capable of developing their own
logistics departments.

Another trend has come up within the past decade or so in
Indonesia. Instead of taking all the trouble of setting up an
extremely costly logistics division, including the warehousing,
information, communications equipment, manpower and so forth, a
number of companies have turned to outsourcing. They prefer to
leave their entire logistics work to the experts, like some of
the courier or cargo companies, for example.

"In the United States, this trend started many years ago and
flourished further in the late 1970s or early 1980s. It was the
ideal solution to America's major companies' demands for
efficiency in distribution. Many of them were customers of large
courier companies, like Federal Express (FeDex) or DHL," said
Johari Zein, chief executive officer of a local courier company,
Tiki JNE.

The need of courier companies' clients has expanded, from the
previously simpler task such as sending products in smaller
quantity to keeping them in larger volume in their warehouses for
longer periods. This newer assignment for the courier companies
means more revenue from the rental of warehouse space. With the
growth of this need many courier companies have also expanded
their services in providing the required warehousing.

In Indonesia, the use of courier companies as logistics
providers initially began with foreign manufacturers operating in
the country. With the efficiency that they have experienced in
their home countries they started to look for the right courier
companies here to be their logistics "partners". Some of the
world's most renowned corporations operating here that use the
services of leading courier companies are Nestle, Sony Ericsson,
Hewlett Packard, EMC and EMI Indonesia.

EMI Indonesia distributes its musical compact discs and
cassettes throughout the nation using logistics services provided
by Tiki JNE, while the state-owned corporation PT Telkom relies
on PT Repex Wahana.

"Using the logistics service we provide, our customers can
easily calculate the related costs. Thus, making their short and
long-term business plans less complicated, plus they get what
they seek, efficiency," said Heni Purwani, Logistics Coordinator
at Tiki JNE.

Former managing director of EMI Indonesia Yohanes Teja had
similar reasons for using logistics services provided by the
country's leading courier companies. "The first reason was we did
not have our own logistics division, which would have been a huge
investment had we set up one. The next reason, obviously, was
that using a reliable and experienced courier service was more
efficient. And we could always compare quotations given by each
company and then decide on the one with most superior service,"
he said.

Yohanes added that Tiki JNE was chosen to take care of his
company's logistics due to the reasons he mentioned as well as
their good networking, competent manpower and their mastery of
information technology (IT). "The IT system that we used at EMI
was later adapted by Tiki JNE, so on this aspect compatibility
was another added value," he said.

In line with the current rapid development in technology and
marketing, today's courier companies are more than "senders" of
packages from one place to another. Presently they use state-of-
the-art information technology to enhance their entire range of
services, which is called supply chain management in marketing
jargon. Their services even include assistance on importing raw
materials, distribution nationally and globally and even after
sales service.

"To meet all sorts of customers' courier needs, IT is a must.
With our wide range of sophisticated IT equipment and facilities
plus our networking we are committed to providing a full-range,
one-stop service to each of our customers," said Andry
Adiwinarso, managing director of sales and marketing at PT Repex
Wahana.

For example for Hewlett Packard, he explained that this
customer keeps a certain amount of stock at Repex Wahana's
warehouse. With the aid of the company's IT system, delivery of
spare parts to Hewlett Packard's customers is guaranteed within
one hour for the Greater Jakarta area.

The giant telecommunications company Ericsson, meanwhile, has
been able to secure large business from PT Telkom due to, among
other things, its commitment to deliver spare parts within three
hours to most parts in Indonesia. Failing to deliver within the
stipulated time means penalties for Ericsson.

"To comply with Ericsson's commitment is only made possible by
our IT equipment and facilities, wide networking, professional
manpower and all the related logistics infrastructure, such as
warehouses, various means of transportation, including our
privately owned aircraft and so on," added Andry.

The advanced IT has made the world much smaller in a way. In
the world of business this means fiercer competition in the way
companies are forced to be more innovative and efficient in their
supply chain management. With today's highly sophisticated IT
and, naturally, "the people behind the computers", who are
required to be more professional, efficiency in logistics matters
can be achieved.

"In most areas, logistics service providers have come up with
solutions for many companies. In my opinion, this type of service
is the future of logistics service companies in general and
particularly courier companies," concluded Johari Zein.