PROPOSED CONTRACT MANUFACTURING STRATEGY FOR BABY FOOD INDUSTRY USING KEPNER-TREGOE AND ANALYTIC HIERARCHY PROCESS (AHP) APPROACH

• Main Author: Puspita Zahara, Dhenok
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/81696
• Institution: Institut Teknologi Bandung

PT. SA is one of the national food and beverage companies whose products have been marketed in more than 15 countries and generated a gross profit of 8.73 trillion in 2023. PT. SA manages a total of 20 manufacturing locations, that located in Indonesia and overseas. One of PT. SA’s products that provides a major contribution to its business is MA brand, a baby food product that contributes 33% to total business. However, 3 baby food contract manufacturing sites are located overseas, which is highly dependent on government regulations. To reduce the import value in Indonesia, the government issued Regulation of the Minister of Trade of the Republic of Indonesia Number 20 in 2021 to reduce imported products. This will result in a risk of PT.SA's baby food products not being fulfilled in the market by 66% and a sales loss of 97 billion in 2025. The aims of this research to select the best contract manufacturing strategy to ensure sustainable growth and fulfillment of MA baby food at PT. S.A. This research will use qualitative and quantitative research methods. The qualitative approach involves conducting interview and forum group discussion (FGD) with some Subject Matter Experts (SMEs) to find out the root cause of problems using Kapner Tragoe and Why Tree Diagram analysis and to determine the criteria and alternative solution for this problem. The quantitative approach will use the Analytical Hierarchy Process (AHP) to select best alternative solution. As the result, by using the AHP method the most important criteria that can influence the decision-making process are Schedule (32.95%), Cost (30.31%), Delivery (16.44%), Capacity (8.66%), Ability (6.79%) and Quality (4.86%). The best alternative solution for short term to resolve the business issue is “Produce in existing Contract Manufacture & distribute using 3rd party trader (58,09%)”. This alternative solution will ensure fulfillment and prevent sales losses of 96 billion but with a trade-off of a 10% increase in costs. Meanwhile, the best alternative solution for long term is “Terminate existing Manufacture & Produce in Alternative Local Contract Manufacture in Indonesia (31,55%)”. This alternative solution provides cost savings equivalent to 8.8% of existing COGS, and ensure sustainable growth and fulfillment of MA baby food at PT. S.A.