EVALUATION OF INVENTORY CONTROL AND DELIVERY OF STEEL SCRAP TO SUPPORT STABLE CASH FLOW AT UD. DEDED JAYA - KUDUS

• Main Author: Gupi
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/46227
• Institution: Institut Teknologi Bandung

Steel is used in every aspect of our life: in vehicles, energy, infrastructures, and much more. Produce in every region of the world, steel generates jobs and economic growth. Steel is the most material recycled in the world. Over 25 billion tons of steel scrap have been recycled to make new steel since 1900. Indonesia has a high prospect of steel industry with steel consumption projection until 2025 amounted to 21.40 million tons. Steel scrap is still a mainstay of the national steel industry as its raw material. Therefore, the steel scrap business is even more sustainable. Deded Jaya is a trading company in the field of trade in used goods or inorganic waste which can be recycled and has economic value. The company was founded in 1993 in Kudus Regency, Central Java Province. At the beginning of this trading business, the company bought and sold used goods/scrap in the form of paper, plastic, several types of metals such as steel, aluminum, copper, and brass. Along with the development of the business, company focused on developing one of its trading commodities, namely steel scrap. Demand for steel scrap is still very high. The steel processing industry in Indonesia still lacks the supply of steel scrap so that it imports steel scrap from abroad for raw materials. This is an opportunity to improve the sales turnover of this steel scrap trading business. This steel scrap trading business requires quite a lot of cash money because all payments are based on the weighing – pay method and then pay with cash, without term of payment. Operating activities have a dominant factor that effect the company cash flow. The operating activities which can influence the cash inflow and out flow are the process of purchase and selling steel scrap. Spending to buy steel scrap is greater than the sales. Steel scrap purchases were the most dominant in cash flow outlays at around 93.97%, while the composition of cash disbursements for purchases per type of steel scrap whose largest volume are purchase steel scrap Grade BC at 86.63%, Grade D at 9.24%, Grade E at 4.13%. The second-largest operational expenditure is transportation expenses by 4.48%. Expenditures for transportation costs are linear with the amount of steel scrap sent/sold to the steel mill using the IDR/kg unit of steel scrap transported. The company uses outside transportation services for shipments to steel mills. Delay in sales results in over stock in the warehouse, this can be seen if the average steel scrap purchased and the average steel scrap sold are still far below the average daily stock level remaining. After conducting field observations, interviews with owners and some company staff, conducting literature reviews, and analyzing data that is then adjusted to the actual situation in the field, the authors find business solutions that can be used to provide solutions to company problems that have been experiencing problems not smooth cash flows using the following step: Step 1: Fish-bone Analysis, to find the root cause of the problem and make proper counter measure from each root cause. Step 2: Inventory Turn Over Analysis, to obtaining the ITR calculation results, then analyzing whether there is an opportunity to improve. In this case, there seems to be no problem with sales. The average value of inventory that is stored shows a number that is several times greater than the steel scrap that is bought or sold. So, it can be interpreted that indeed sales delay conditions result in a not smooth cash flow condition, due to excess inventory being stored. Then the daily stock reduction must be done by selling it so that the incoming cash flow is greater and can be used to smooth the buying process. After knowing what the minimum value that must be adjusted into cash flow. Step 3: Implement 7 element of value negotiation, when cash flow is experiencing problems, this must still be faced by the company by continuing to make purchases, because the process of purchasing steel scrap is a core process. And likewise, the sales process is also the final process to generate revenue for the company. So that a good negotiation method is needed to discuss with suppliers and consumers using the 7 elements of value negotiation. Based on the solution above, the author provide recommendations for improvement as follows: increase sales by reducing stock stored in warehouses, perform routine stock counts to update the actual stock conditions on the record and upgrade the Weight Bridge software, decided immediately to recruit or develop from internal candidate for additional Heavy Equipment Operator, looking for alternative solution partners for transportation