WAREHOUSE AND TRANSPORTATION STRATEGIES: A DECISION MAKING USING AHP METHODOLOGY

The research aims to provide insights into the specific challenges faced by PT Jaya Abadi and formulate strategic recommendations to mitigate high logistics costs, thereby enhancing overall business continuity. Operational costs have remained constant despite a 14% decrease in sales, impacting Gross...

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Bibliographic Details
Main Author: Rakhmawati, Dheana
Format: Theses
Language:Indonesia
Subjects:
Online Access:https://digilib.itb.ac.id/gdl/view/79824
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Institution: Institut Teknologi Bandung
Language: Indonesia
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Summary:The research aims to provide insights into the specific challenges faced by PT Jaya Abadi and formulate strategic recommendations to mitigate high logistics costs, thereby enhancing overall business continuity. Operational costs have remained constant despite a 14% decrease in sales, impacting Gross Profit Margin, Operating Profit Margin, and Profit Margin. To respond current condition, stakeholders proposed warehouse optimization by merging lowproductivity warehouses and transportation optimization by outsourcing shipping to third parties. However, the company faces a dilemma in choosing the most suitable operational optimization plan. This research aims to guide PT Jaya Abadi in formulating an operational enhancement strategy, evaluating warehouse and transportation optimization options to achieve cost reduction, improved efficiency, and ultimately, enhanced profitability. Data collection involved detailed interviews with key personnel and representatives within the company, supplemented by company historical records and a literature review. Interviews serve as the primary tool for gathering internal insights. An important stage involves problem analysis and determining important criteria and sub-criteria for using the Analytical Hierarchy Process (AHP) method. This method guides decision making by assigning weights to criteria. The main objective of this research is to determine an effective methodology that can increase company profits, using the Analytical Hierarchy Process (AHP) methodology. This analysis focused on two critical criteria: the transportation strategy and the warehouse strategy. Under the Warehouse Strategy, sub-criteria such as Cost Facility, Warehouse Size, Geographical Position, Reliability, and Market Accessibility were evaluated. Conversely, the Transportation Strategy comprised sub-criteria including Shipping Volume, Transport Cost, Transport Distance, Delay, and Flexibility. Following analysis and AHP calculations, involving the reduction of the warehouse and adopting Combined Transportation with a Third Party, emerged as the optimal choice. This alternative secured a weight of 41.9% in the AHP calculations, signifying its superior standing compared to the other alternatives considered in the study. Proposed solution has been discussed with the company. First, company can look for third party companies that have costs that match their capabilities and shipping volumes that can be adjusted to the company's needs. Then, Company prioritizes regional warehouses that have high sales. In areas with low sales, the company can merge the closest regional warehouses. And then, company needs to carry out effective strategies to maintain operational continuity and optimize the employee’s potential. For recommendation company conduct continuous monitoring and evaluation of the strategy implementation. In monitoring, the company can create KPI for each division or unit of warehouse regional.