IMPROVEMENT SUPPLY PROCESS TO INCREASE SERVICE LEVEL STUDY CASE SUPPLY CHAIN DIVISION PT FREEPORT INDONESIA

• Main Author: SURYA ATMAJA TRIJAYA SITORUS 29115288, SUHARTO
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/24408
• Institution: Institut Teknologi Bandung

PT Freeport Indonesia, a subsidiary of Freeport McMoran Inc. applied two method of mine, which are open pit mine <br /> <br /> and underground mine. PT Freeport Indonesia expected the Grasberg mine, as open pit mine, will decline around <br /> <br /> 2017/2018 and following increase of DLMZ and GBC mine as underground mine. Therefore, PT Freeport Indonesia <br /> <br /> need high physical availability of equipment to accelerate future underground mine. The changes of operational model <br /> <br /> will affected the changes of commodity and type of equipment requirement. It will then lead to changes of inventory <br /> <br /> stock item. Obviously high availability of equipment also need high availability of materials, which reflected in service <br /> <br /> level indicator. Unfortunately, Supply Chain Division possess current Service Level below 78%, and need to increase <br /> <br /> the Service Level at minimum 78% per corporate target. <br /> <br /> There are two identified supply processes in this thesis that affected service level, which are internal supply factor and <br /> <br /> external supply factor. This research will focus to analyze problem in internal supply factor, which consist of <br /> <br /> warehouse issuing process, user demand characteristic, safety stock strategy, and onsite lead-time. This thesis will use <br /> <br /> operating spares inventory with fast and superfast item, because 69% of inventory value under operating spares <br /> <br /> category, and considering only 8% of operating spares are fast and superfast item that possess low service level. From <br /> <br /> internal supply factors, the main causes are identified, which are late warehouse issuing process, demand exceeding <br /> <br /> stocking plan, long onsite lead time, same/next day requirement date, and wrong issuing. The issue tree diagram <br /> <br /> develop to identify root causes that contribute to main causes. <br /> <br /> To improve supply process, DMAIC method will use to solve the root causes. The reason is six sigma as management <br /> <br /> strategy for improving product and process quality, and have been evolve from focusing in metric, to the methodology <br /> <br /> level and finally to design of entire management system. By analyze current business practice from standard procedure <br /> <br /> and policy, and conduct focus group discussion among leadership in warehouse, inventory, and customer, the <br /> <br /> researcher then develop alternative business solution. The alternative business solution will map into five categories <br /> <br /> initiative, which are people, process, communication, technology and management. The expected benefit from <br /> <br /> improvement process are increasing service level into 86%, contribute from improvement issuing process (14.9%), <br /> <br /> safety stock strategy (15.6%), demand characteristic (9.5%), reducing wrong issued (7%), and onsite lead-time (1.3%), <br /> <br /> and reducing inventory value that contribute from reducing cancelation of reservation monthly average around USD <br /> <br /> 1.13 million, and onsite lead time around USD 13.62 million. <br /> <br /> The implementation plan will divide into three period, which are short term (less than six month), medium term (six <br /> <br /> month to one year) and long term (over than one year until three year). The initiative cost also calculate which are <br /> <br /> majority cost come from installation and high density racking & build new storage facility to accommodate increasing <br /> <br /> availability of stock. <br />