MANAGING HEALTHY INVENTORY THROUGH ABC ANALYSIS AND SALES & OPERATION PLANNING: CASE STUDY OF A SEED COMPANY

• Main Author: Heryawan, Isak
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/63527
• Institution: Institut Teknologi Bandung

Inventory is one of the most significant components of working capital, especially in seed industries. The appropriate seed stock is the main success factor since the replenishment of seed stocks takes more than six months, while the planting time depends on season and weather. In 2019, PT XYZ reserved an obsolete inventory of Rp 40 billion or 13% of the total inventory on hand. This condition was mainly due to a lack of coordination between the sales, inventory planning and seed production departments. Inventory purchases were based only on year-end plans, and periodic evaluations were not carried out jointly. Any changes in the sales or production departments were recorded in their respective sections only. In addition, the company did not consider the lead time and the right time to plant each crop, even though each crop has a different lead time and the right time for planting. Other inventories that can impact seed production (e.g., stock seeds/ parental seeds) were missed from the inventory purchasing plan because the company does not have a product tree or bill of materials. This research attempted to analyze the inventory problems in the company using a mixedmethod (qualitative and quantitative) to provide solutions that prevent significant bad stock that might occur in the future. As a result, four potential solutions are proposed for company’s inventory problems through ABC Analysis and Sales & Operation Planning (S&OP). The first is to create a product tree or bill of materials that will help the company understand the interrelated materials; thus, it would be easier to plan for the required materials. The second is to identify the characteristics of each inventory based on the previously created product tree. Based on the identification, the company can determine the appropriate inventory model (Fixed Time Inventory Model or Fixed Quantity Inventory Model) for each inventory characteristic. The third is to increase collaboration between sales and operations through S&OP. This collaboration will help the company to understand any changes to plans made by different departments and take initiatives to respond to the changes. Lastly, grouping inventories using ABC Analysis would help the company allocate its time and energy to evaluate important inventories. This grouping will help the company focus on 46 varieties and help the company mitigate the risks of excess inventory of IDR 46.7 billion and shortage inventory of IDR 77 billion.