Business Environment

Proposal for Japanese companies in Indonesia who are having trouble with their business systems


What are the factors that influence the way we work internally?

I have been working on business systems in Indonesia for a long time, and the business system problems that come up in conversations with Japanese customers can be summarized into the following three categories.

  • It is difficult to see which shipments are connected to the things that flow in the business flow.
  • If you try to force your business to fit into a system that doesn't fit your business, you will end up having to manage a lot of Excel.
  • There is a lot of unnecessary coordination outside the system due to the lack of inter-departmental and inter-departmental business flows.

All internal operations are connected to sales (shipping), which is the source of money in the company, and purchasing, which is the source of money out. The three points of invisibility, incompatibility, and lack of connection not only reduce the efficiency of operations, but also lead to a decrease in employees' awareness of sales costs.

A company's business is determined by what it provides for the needs of the market, and how it interacts with customers and suppliers for that business, and how its internal staff relates to it, determines how it works internally.

The following is a concrete example of how various factors determine the way the company works

  1. As the number of customers increases and the number of units of orders becomes smaller, it is impossible to see which orders are being produced on site and to answer the delivery date.
  2. As product lifecycles shorten and demand forecasting becomes more difficult, it becomes dead stock if you don't order as much or produce as much as you need for orders.
  3. If you think too much about #2 and stock too little, the line will be stopped and productivity will drop and delivery will be delayed.
  4. In order to increase the number of shared lines and increase the utilization rate, if the connection with orders is not visible, extra production will be made.
  5. Indonesia has a strong supplier and subcontractor base and needs to place orders with sufficient lead time based on accurate demand forecasts.
  6. Indonesia has a low local sourcing rate and a shortage of imported lumber can be fatal.

The business system should be defined by this way of doing business within the company, and changing the way of doing business within the company, which is determined by various factors, in order to make it a system, is, at best, standardization, at worst, a change of routine.

How to systematize internal operations in Indonesia where Excel culture is flourishing

The standard business flow implemented in major packaged software such as SAP and Microsoft Dynamics is the accumulation of long years of know-how of package vendors, and the fact that there are businesses that do not conform to this flow is ridiculous.

It can be said that this is one of the effective choices under the environment where things between customers and suppliers flow smoothly as per the contract in the supply chain, all information about transactions is reflected in the system, and the company's decision-making is realized by deductive analysis of the information accumulated in the system.

However, in an environment such as Indonesia, where internal decision-making is overwhelmed by the political agendas of individuals and departments, or where business practices with customers, suppliers, and subcontractors become complicated due to supply chain constraints, internal business practices become steeped in a unique culture, and it is easy to become a collection of partial optimizations as a result of each party involved searching for the easiest way to do things.

Excel is useful as a repairing agent to connect these partial optimizations, and even though the entire company's business is conspicuous by the use of Excel, it is oriented toward total optimization.

If you try to systemize the way of business of such Japanese companies in Indonesia, it makes sense to implement the system according to the business after summarizing the really necessary requirements from the way of business which is connected and cooperated with each other by Excel.

This is important, so once again, in an environment where things flow smoothly in the supply chain and all the information about transactions is reflected in the system, implementing a major packaged software may be the best practice, but in an environment where this is not the case, such as Indonesia, it is easier to achieve tangible improvements as a result of simply taking the requirements and implementing them steadily.

  1. The use of a customized system for internal operations that could not be handled by general-purpose packaged software improved business efficiency.
  2. It is now possible to make changes to the plan in a short time in response to changes in the delivery date or quantity of an order and maintain the plan with high accuracy.
  3. The process performance management is now visible on a large screen monitor in the field.
  4. By using a handy terminal to manage warehouse entry and exit, the system can be easily and automatically linked to the inventory management system.
  5. By affixing a physical inventory slip with an order number to each lot moving through the field, the connection between the physical inventory and the system inventory can be seen.
  6. The creation of a monthly production plan, which had taken a week, was now done in three hours.
  7. By linking orders and purchases, the required raw materials for the month have become clearer, and line stoppages due to stock-outs have been eliminated.
  8. It is now possible to make complex production plans in a short time, such as order color summary, specification summary, and day of the week summary, which could not be made with Excel.
  9. The increased accuracy of demand forecasting has resulted in the elimination of excess production and reduced in-process inventory.

As you can see, in Indonesia, there is room to improve the efficiency of the company's business by developing and introducing a system that fits the business.

What is the right business system for Indonesia?

In order to improve the problems that are invisible, incompatible, and unconnected in Indonesia as described above, the only way to do it is to put together important requirements from the way of doing business formed by the unique internal culture and implement them in the system steadily.

However, rather than developing them from scratch (developing all the elements individually from scratch), it is possible to standardize common functions as a business system, such as user privilege management, master data management, exporting or importing from Excel or CSV formats, managing incoming and outgoing transactions, and closing processes.

As you can see in the figure on the left, in our Battera we have implemented the management function in the business template HanaFirst and the planning part in the scheduler Asprova, and this is the best practice that I and Mazo can propose to Japanese companies in Indonesia after more than 20 years in the system industry.

Systems are one of the means to achieve the objective of business improvement, and if systematization improves the efficiency and accuracy of data entry and makes effective use of information through visualization, sharing, and systematization, information from the field will create a company's competitive edge.

In order to produce visible results from the system implementation, we will propose a system that focuses on how much the current business has improved and what new results have been achieved after hearing the client's requirements sufficiently.