IMPROVEMENT OF INVENTORY CONTROL Case Study: Bulk Materials in Supply Chain Division In PT. Freeport Indonesia

• Main Author: YUDISTIA 29115289, AJI
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/20888
• Institution: Institut Teknologi Bandung

Start form 2010, the total production of PT. Freeport Indonesia start decreasing, and <br /> <br /> in the end of 2015, the total production only reach 100,721 Kt per year. Means it is <br /> <br /> only reach 34% from 2009 Production. And with the last update, start January 25, <br /> <br /> 2017. Freeport no longer have a permit to export the cooper and gold concentrates <br /> <br /> (raw materials), due to Export ban related with new Government regulation (PP) <br /> <br /> NO. 1/ 2014 regarding the implementation of Mineral and Coal Business Activity <br /> <br /> (PP Minerba). Respond to the export ban, Management of PT. Freeport Indonesia <br /> <br /> decide to cut the production. Freeport Indonesia will adjust the production to the <br /> <br /> capacity of the Business unit, PT. Smelting Gresik, which was only worth 40% of <br /> <br /> Total maximum production capacity of PT. Freeport Indonesia. Respond to the <br /> <br /> export ban, Management of PT. Freeport Indonesia decide to cut the production. <br /> <br /> Freeport Indonesia will adjust the production to the capacity of the Business unit, <br /> <br /> PT. Smelting Gresik, which was only worth 40% of Total maximum production <br /> <br /> capacity of PT. Freeport Indonesia. <br /> <br /> In the other hand the inventory Value and total line items (on shelf) that managed <br /> <br /> by Supply Chain Management Division of PT. Freeport Indonesia is increase from <br /> <br /> 2012 to current inventory value. And in the end 2016 the Inventory value reach <br /> <br /> 512,252, 356.74 USD. It is contrary to the fact that the total production of PT <br /> <br /> Freeport Indonesia decreased from year to year. SCM Division has to seek several <br /> <br /> option to do cost reduction in Inventory Value, and set several plan of Inventory <br /> <br /> Control if Freeport Indonesia still has to run with 40% Production. And Bulk items <br /> <br /> is contribute 15 % of the increasing Value. <br /> <br /> By using Six Sigma, methodology DMAIC (Define, Measure, Analysis, Improve, <br /> & Control), Author explore and define the business issue. Define phase; the <br /> <br /> analysis will only focus on Critical Bulk Materials that contribute 15% to the total <br /> <br /> inventory values. On Measure phase, the current business process has been <br /> <br /> analyzed to looking the root cause. Analysis Phase; by using the Current Reality <br /> <br /> Tree (CRT), author identify the two factors as the root causes. First is “Unfavorable <br /> <br /> forecast Method”, and the second one is “unfavorable Inventory control Method”. <br /> <br /> By changing the business flow process and use a new forecast method that has the <br /> <br /> least forecast error, and continue with implement and simulate P-Model Inventory <br /> <br /> control method for all critical Bulk Materials (in Improve Phase) in 2016, the <br /> <br /> Inventory value of bulk item was decrease to 43,271,033.87 in the end of December <br /> <br /> 2016, it was only 55.51% compare to actual inventory value (bulk Inventory value <br /> <br /> in Dec 16: 77,946,557.61 USD). <br /> <br /> In Control Phase, author use FCX project management framework for implement <br /> <br /> the proposed alternative business solution to reduce Inventory value of Bulk Item <br /> <br /> in PT. Freeport Indonesia. This project management methodology is already <br /> <br /> establish in FCX site wide to help the organization on initiating, executing, <br /> <br /> managing, and controlling the project and ensure its alignment with the company’s <br /> <br /> value and the goal. There are four steps: Initiation, Planning, Execution, & Closure.