DECISION ANALYSIS TO IMPROVE FIFO PRACTICES BY COMBINING PDCA-AHP METHODS

• Main Author: Raisa Khanza, Alya
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/83362
• Institution: Institut Teknologi Bandung

Cikampek Warehouse of PT Asahimas Flat Glass Tbk. requires good inventory management in its downstream. Cikampek warehouse has used the FIFO method. However, FIFO practices are not implemented effectively. Based on historical data, in 2023 the average percentage of Not FIFO is 1.69% for flat glass products. While their Not FIFO target is 0.7%. One of the impacts of Not FIFO is the presence of products that stay longer in the warehouse, they call it Slow-Moving Stock (SMS). If a product stays in the warehouse too long and past the storage period, its quality will decrease. So that the company must sell flat glass products that become NG (Not Good) at a large discount, resulting in reduced company revenue. In addition, PT Asahimas Flat Glass Tbk. will experience an increase in warehouse storage and maintenance costs which increase operational expenses that affect the company's cash flow. Another impact is that warehouse operations are hampered, making it difficult to retrieve products from the warehouse and making the process of loading finished goods for delivery late. Therefore, this research aims to identify the root causes of the ineffectiveness of existing FIFO practices, determine alternative strategies to prevent the occurrence of more FIFO notes, and provide recommendations to improve the overall effectiveness of FIFO practices. Data collection techniques are conducted through interviews, field observations and literature studies. Qualitative data processing uses 5-Whys Analysis while qualitative and quantitative analysis combines the Plan-Do-Check-Act (PDCA) and Analytical Hierarchy Process (AHP) methods. The results showed that the root cause of the ineffective FIFO practice is due to the lack of control over FIFO practices, Standard Operating Procedure (SOP) which is less detailed. The results of the PDCA-AHP method combination analysis resulted in the best alternative chosen by the company, namely the improvement of FIFO Flow (43.7%). And as a recommendation to improve the overall effectiveness of FIFO practices, with Standard Operating Procedure (SOP) through regular control and evaluation to support continuous improvement. This strategy recommendation will be formulated into a Warehousing and Delivery Control Strategy, so that it can help the company for better glass inventory management, and create operational efficiency in the warehouse as well as maintain higher revenue and prevent unnecessary operational costs.