Nusantara Logistics Chain: Linking Indonesia Logistics to ASEAN Logistics

Togar M. Simatupang & Setijadi

Indonesian Society for Logistics and Supply Chain

11 March 2013

Overview

1. Logistics versus Supply Chain

2. Indonesia’s National Logistics System

3. ASEAN Logistics Network

4. Nusantara Logistics Chain

5. Concluding Remarks

2

Logistics versus Supply Chain

3

Logistics and Supply Chain

This chart illustrates the relationship among materials management, physical distribution, logistics management, and supply chain management. Distribution is a component of logistics management, and logistics management is a component of supply chain management.

Source: Markus Hesse and Jean-Paul Rodrigue (2004), "The transport geography of logistics and freight distribution", Journal of Transport Geography, Vol. 12, No. 3, pp. 171–184.http://www.wtgblog.com/history-of-logistics-and-supply-chain-management-infographic/ 4

The Scope of a Supply Chain, Logistics Chains and Transport Chains

Source: http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/scope_supply_chain.html 5

Trade Logistics

Source: http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/tradechain.html6

Logistics Services

Source: http://www.scm-operations.com/2012/01/logistics-management-concept-literature.html

7

Layers to Logistics Services

Source: http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/layers_to_logistics_services.html8

Segmentation of logistics service providers

Source: Baumgarten, H. and Zadek, H. (2003), Segmente der Logistikdienstleister, TU Berlin Visuality. 9

Source: http://www.perceptant.com/services_supply_cas.shtml10

DHL Supply Chain Services

Source: http://www.dp-dhl.com/en/about_us/corporate_divisions/supply_chain.html

Reverse Logistics Environmental Compliance

Finished Goods Warehousing Assembly and Packing services

Procurement Services Raw Materials Warehousing Raw Materials Transportation International Supply Chain Management

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Indonesia’s National Logistics System

12

IPTEK / INOVASI

1 2

313

MP3EI

ConnectivityEconomic Corridors

National Logistics System

Economic Mission 2025Self sufficient, advanced, just, and prosperous Indonesia

Science & Tech

Improving Prosperity

Improving competitiveness

National Logistics System & Indonesia Economic Master Plan (MP3EI)

Human Resources

Logistics Infrastructure

Logistics Service Providers

Key Commodity

Information and Communication Technology (ICT)

Harmonization of Regulation

National Competitiveness

Social Welfare

Six Key Drivers of National Logistics System (NLS)

14Source: PERPRES No. 26 Tahun 2012 tentang Cetak Biru Pengembangan SISLOGNAS

Corridor Papua & Maluku

Corridor Sulawesi

Implementation Framework

Strategy, Program, and Action Plan

Program and Action Plan Ministries, Province/Regency/City

Locally Integrated and Globally Connected for National Competitiveness and Social

WellfareMP3EI

Mid Term of National Development Plan

KONSUMEN

PRODUSEN

Regulasi dan Kebijakan

Infrastruktur Transportasi

SDM SDMSDM

SDM SDMSDM

Infrastruktur Infomasi (TIK)

Regulasi dan Kebijakan

Grosir Distributor Pasar Ritel

Saluran Distribusi

Pelaku dan Penyedia Jasa Logistik

Corridor Kalimantan

Corridor Bali dan Nusra

Corridor Jawa

Corridor Sumatra

Background Substances The challenges of implementation15

Sumber: Sislognas (2012)

Indonesia’s Logistics Industry

• Frost & Sullivan predicts Indonesia’s logistics industry to grow by 14.5 percent to Rp1,634 trillion (US$168.3 billion) in 2013.

• The result of poor connectivity, processes and weak infrastructure was evident in many price differentials and transportation problems in Indonesia.

16

ASEAN Logistics Network

17

Master Plan on ASEAN Connectivity

18

19Source: http://asiafoundation.org/in-asia/2010/09/22/philippines-spearheads-asean-effort-to-establish-regional-ro-ro-sea-transport-network/

Asia-wide Partnership for Seamless Logistics

20Source: http://www.iist.or.jp/wf/magazine/0508/0508_E.html

ASEAN-Japan-India Logistics Network

21

Source: http://www.mofa.go.jp/policy/oda/white/2011/html/honbun/b1/s3_2.html

Nusantara Logistics Chain

22

Key drivers and restraints for Indonesia transportation & logistics market

Poor infrastructure development, together with unavailability of qualified professionals, will still be a major constraint hindering Indonesia logistic industry development in several years ahead. 23

Insight of Nusantara Logistics Chain

24

The concept of Nusantara Logistics Chain (NLC)

Land Use Population

Logistics Chain

Local Economic

Development

Transport System

The Environment

The development of an integrated transport system, consisting of different modes and with strong relationships between the development of the transport system, the economic development, the land use development and the environmental impacts of these developments.

Logistics Corridors

Logistics Landscape

Inclusive Businesses

Logistics Services

GreenLogistics

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The implementation of Nusantara Logistics Chain

Economic Policy:Tax incentives, subsidies and

financial aids for inclusive business, private-public

partnership

Public Awareness:Public education, promotion,

training

Legal Support:Enforceable laws and

regulation, guidelines and procedures, penalty for

violation

Infrastructure and Technology:Provision of logistics

infrastructure, Investment in appropriate

technology, standardization of practices and procedures

Public Contribution and

Participation:Forum of Development,

Institution building, Logistics Competencies Development

26

The Benefits of Logistics Improvements

Source: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/benefits_logistics_improvements.html 27

The Proposed Leverages

1. Logistics Landscape2. Logistics and supply chain for development3. Single window4. Multi modal transport system5. Coastal Logistics6. Network based logistics visibility platform7. Logistics Business Development8. Green Logistics9. Development forums for Nusantara logistics

chain at each economic corridor

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1. Logistics Landscape

Source: http://aftercity.mit.edu/?p=47929

2. Logistics for Development

Source: http://people.hofstra.edu/geotrans/eng/ch6en/conc6en/nodeslinkages.html

Nodes, Linkages and Urban Form

30

3. Single Window System

Source: http://www.insw.go.id/

Two Pillars Policy: Trade-System & Port-System Trade-System (“TradeNet”) :

Aims to improve and speed up services in export-import

documents clearance (Flow of Document)

Port-System (“PortNet”) :

Aims to support the acceleration of cargo handling in

export-import goods traffic (Flow of Goods)

Trade-System, as one of main pillars in NSW System

will exchange data through NSW Portal:

from Customs System :realization of Data

import/Export

from Trade System (GA) :licensing export Import

Port-System,as one of main pillars in NSW System will exchange data through NSW Portal:

FromCustoms System : Cargo Manifest (inward/outward) Release Approval (SPPB/PE)

FromPort System (GA) : Discharge List/Loading List Gate in/Gate out List

Customs

TradePort- import/Export Licensing

- import/Export Regulation

- Trade Information

- Info Manifest- Utilization Rep- License Reconc.

- import/ Export Declaration

- In/Outward Cargo Manifest

- Import/Export Approval

- Sea/ Air-Port Permit- Goods/Ships Handling- Loading/Disch.Goods- In/Out Goods

- Info Vessel

- Info CY/ WH

- Cont.Tracking

- Info Manifest/RKSP

- Loading/Disch.List

- In/Out Reconciliation

31

4. Multi Modal Transport System

Source: http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/multimodal.html

32

Source: http://sic.ici.ro/sic2006_2/art07.html

33

5. Coastal Logistics

Transport of resin chips between the Ehime Plant and Nagoya Plant was switched to coastal shipping routes

Source: http://www.toray.com/guideline/forcustomers/ethics/eth_002.html34

6.Networked Logistics Platforms

Source: http://www.clresearch.com/research/detail.cfm?guid=07598B62-3048-79ED-99F8-974CD7202097

35

7. Logistics Business Development

Source: http://www.scandria.eu/en/scandria-logistic-business-development-strategy.html 36

8. Green Logistics

Source: http://log.logcluster.org/operational-environment/green-logistics/index.html

Green or sustainable logistics is concerned with reducing environmental and other negative impacts associated with the movement of supplies.

37

Concluding Remarks

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Concluding Remarks

• Indonesia’s macro logistics is considered as high economy costs that prevent industrialization and new business investment.

• Bottlenecks in the transportation and logistics industry include underdeveloped infrastructure, conflicting regulation, inefficiencies in goods movement, and paper-based trade facilitation.

• Indonesia’s national logistics system has been formulated and issued by the Government. However, the system still lacks of public awareness and fragmented to the local economic development.

• Nusantara Logistics Chain is introduced to enhance interlink between logistics landscape to social and economic development for empowering the growth of inclusive business that increase value added of local resources.

• Leverages available to Nusantara Logistics Chain include: Logistics Landscape, Logistics and supply chain for development, Single window system, Multi modal transport system, Coastal Logistics, Network based logistics visibility platform, Logistics Business Development, Green Logistics, and Development forums for Nusantara logistics chain at each economic corridor.

39

Thank You

40