Distribusi & Hambatan 02

Asosiasi Logistik Indonesiawhere Indonesian supply chain & logistics professionals meet

DISTRIBUSI BARANG DAN HAMBATANNYADISTRIBUSI BARANG DAN HAMBATANNYABEKASI, 23 NOVEMBER 2012

Prepared by

BAYU SOEDJARWO

Seminar:Pengembangan Sistem Logistik dalam Rangka Peningkatan Daya SaingIndustri Dalam Negeri


ALI is a non-profit organization & open to Indonesian individuals who work in or have interest on

the field of supply chain & logistics management.

Vision of ALI:

To be the most prominent supply chain & logistics management professional association in

Indonesia.

Missions of ALI:

To enhance the quality of Indonesian human resources in the field of supply chain & logistics

management.

To act as the business & industry focal point for the field of supply chain & logistics

management in Indonesia.

ALI was introduced to public on January 2003 & starting Feb 2010 our new office at:

Location & Postal Address:

Gedung I Departemen Perdagangan Lt. 10, Jl. M.I. Ridwan Rais No. 5 Jakarta Pusat

Phone : 021 386 3936, Email: [email protected]

Website: www.ali.web.id

About About AsosiasiAsosiasi LogistikLogistik Indonesia (ALI)Indonesia (ALI)


ContentContent

Introduction

Distribution is more than physical logistics

Indonesia Grocery Distribution Model

Monopoly support in Indonesia

Impact on distribution

Informal support vs SME

Impact on distribution


Introduction: Bayu SoedjarwoIntroduction: Bayu Soedjarwo

Education Industrial Engineering ITB

IPMI/Monash MBA

Executive Development Programme in Supply Chain from Ecole Centrale Paris

EDP in Michigan State University

Working experience: P&G, Fonterra, Carrefour, LOreal. Manager to Director level.

Consulting experience: ALI, Arnotts, Power E2E, PZC

Starting up 3PL and consulting business PT. Mursmedic 3PL focusing on health care

PT. Sixmurs Perdana Consulting company focusing on regulatory and supply chain


Distribution >> Physical Distribution >> Physical LogsiticsLogsitics

Distribution is optimized per micro supply

chain, which is normally by the brand owner

Physical logistics is only within the scope of a

particular brand

Distributors work on behalf of brand owner due to

its exclusive discount

Virtually all distributors are violating


Grocery Distribution 1: Old styleGrocery Distribution 1: Old style

FactoryFactory

DCDC

DistributorDistributor

Key accounts retailers

Key accounts retailers

Provision large

Provision large

Independent modern

trade

Independent modern

tradeWholesalersWholesalers

Provision Small

Provision Small

WarungWarung


Grocery Distribution 2: New styleGrocery Distribution 2: New style

FactoryFactory

Key Accounts Retailer DC

Key Accounts Retailer DC

KA storesKA stores

DCDC

Key Account Retailer DC

Key Account Retailer DC

KA storesKA stores

Key Wholesalers

Key Wholesalers

Provision Small

Provision Small

WarungWarung

DistributorDistributor

Provision large

Provision large

Independent modern tradeIndependent modern trade

WholesalersWholesalers

Provision Small

Provision Small

WarungWarung


Impact of Modern TradeImpact of Modern Trade

Study in India by BCG and PwC: FDI in multi-brand modern retailer will: Destroy job in retail by 34 million

Create job in farm by 175 million

Reduce food waste by 30-40%

Increase farmers revenue VS retail price from 30% to 70%

Modern trade will only beneficial for: Consumers, farmers, authority, labor..

But NOT for: Inefficient traditional retailers

Big manufacturers like FMCG from UK, USA and Japanese appliance manufacturers


Love of monopolyLove of monopoly

When hypermarket started to dominate, we limit the category No access for new players, creating best profitability for existing

players

When minimarket started to expand, again we limit the category No access for new players, again

When the car market leader wants to further dominate the Indonesia market We will grant tax holiday for them (hope this is cancelled)

Support by building more toll roads

Support Indonesia-specific models so only they can produce, by having no international standard on emission, safety, etc.


Impact on distributionImpact on distribution

Super efficient distribution for monopoly

holder

Low distributor margin, low commission, low

salaries

Lack of players means also lack of job creation in

the competition

Super inefficient for competitors

A Jamu company must pay 57% distribution costs

A leading foreign FMCG company just pay 4.5%


Which one is easier for SME?Which one is easier for SME?

Expanding the business to 500,000 small

stores which only carry products from 10

suppliers on total 20 items

Expanding to 200 hypermarkets with 3 DC

which carry products from 12,000 suppliers on

total 45,000 items


Reality in distributionReality in distribution

Transportation cost subsidy has low impact

Only few big manufacturers enjoy that

Efficiencies from distribution network is much bigger

Sea transport costs should be lower

But land is lower due to fuel subsidy

Island distribution should not be an excuse if we have sea infrastructure

We dont need to invest on the sea, just the port

Should have no traffic jam on the sea


Informal support Informal support vsvs SMESME

Informal sector only exists in Indonesia

No need to comply to the law

Protected by preman

Not paying taxes

Despite billion of revenue

Costing the distribution

Only big companies can access and manage informal sectors

Barrier for SMEs, higher costs for consumers


ConclusionConclusion The barriers in distribution to some extend are:

Infrastructure, especially on make use of sea

Informal structure: Tengkulak, preman, legal TKBM

Illegal import and informal stores taking pedestrian and causing traffic

But most barriers are Trade structure

Love of monopoly Lack of development in private sectors, only milking the profit

Not much enforcement by government

Strong lobby to get monopoly protection at the expense of farmers, SMEs and consumers

Lack of modern trade development

Documents

Distribusi & Hambatan 02