Initiatives to Combat Corona Pandemic in the Japanese Manufacturing Industry in Indonesia
As of August 8, the total number of people infected with the new corona virus in Indonesia exceeded 120,000 and more than 2,000 new cases have been confirmed every day.
We have heard from Japanese manufacturers in Indonesia that they are taking the following measures that can be taken now, even in this time of corona ravages, using the time and man-hours left over from the decline in the operating rate.
- Inventory Review
Increase the frequency of monthly stocktaking at the end of each month to improve the accuracy of inventory. Review the optimal number of inventory days to reduce the number of days held in the warehouse and improve cash flow.
- Personnel and Organizational Review
Workforce reduction based on downward revision of revenue projections, new HR evaluations and organizational restructuring through the introduction of work from home. Currently, the most frequent topics covered in online seminars in Indonesia are related to organization and labor management.
- Field Review
To reduce the number of workers required to effectively utilize human resources by reducing the number of personnel, we have changed the number of workers to multi-skilled and the number of indirect personnel to direct personnel (making fixed costs a variable cost). Formulation of standard operation procedures (SOPs) that avoid physical contact between people and objects as much as possible in accordance with the new lifestyle.
- Supply Chain Review
Since it is difficult to change suppliers during busy seasons, we are now reviewing imports from China, where there is a high supply chain risk due to economic friction between the U.S. and China and the impact of the new corona model, in order to procure locally at a time when the utilization rate has fallen.
- Business Review
However, it is said that the probability of success for a new business is one in nine, so I think it is more realistic to be patient and wait for the time to turn around, rather than taking a risk hoping for a 10% chance.
- Cost Review
If the capacity utilization rate falls, the ratio of fixed costs such as labor costs and manufacturing overhead costs will increase as a percentage of the cost, so the ratio of fixed costs needs to be reduced by directly employing indirect personnel and reducing expenses.
However, we believe that once the above internal efforts are completed, the IT investment for the concrete implementation of the mechanism will be planned, and so we will start to create a mechanism that minimizes the physical work and operation of machines and automates the process of work in order to improve production efficiency and reduce the risk of virus infection.
People surviving Indonesia's corona pandemic with wisdom
One of the things I've always admired about Indonesians is their ability to make a living, and during the recession that followed the currency crisis of 1998 to 1999, I had many opportunities to work at a Japanese bank. The room in the systems department had the appearance of a wartime black market, which even the Indonesian manager tolerated as a matter of course.
It seems that people who were laid off or kept at home during the corona pandemic are selling everything from homemade sponge cakes and roast beef to everyday items to people connected to them by word of mouth, but the big difference this time is that delivery systems such as GoSend and GrabSend are readily available, and the trade sphere for individual side businesses has expanded significantly.
In one case, a group of housewives who had been growing vegetables in their garden to become self-sufficient after their income was reduced due to the Corona pandemic, started selling their fresh vegetables to the outside world.
— やまぞう (@yamazou) August 8, 2020
In another area, it seems that residents of the village tried to systematically grow and sell vegetables, and there have been cases of setbacks due to factors such as lack of cultivation know-how and unsuitable climate, but perhaps the secret to success was that housewives in this area were accustomed to growing vegetables, and the natural flow of vegetables they grew for home consumption was to sell a lot of them.
There is also an example of a person who ran a chicken noodle stall in a rural area who moved to an urban area with a higher income level and lowered his prices to the extreme in order to meet the corona ravages, so that he could do a great deal of business for the low-income population, which is difficult for other restaurants to enter.
— やまぞう (@yamazou) August 8, 2020
Kenichi Ohmae, a famous management consultant, once said that there are only three ways for people to change.
- Change the time allotment.
- Change your place of residence
- Change the people you associate with.
Relocating from your hometown of Solo to Yogyakarta and re-starting your business, it's easy to imagine how hard it is to start from scratch with a new living and business environment, but maybe that's about as much of a change as it takes to take on a new challenge in the corona pandemic that is low-income business.
From my experience in retailing (clothing and accessories) in the past, when you get tired of the daily work of inventory management, display management, and customer service, you will want to raise prices whether you are making a profit or not.
High prices mean fewer customers. This firm micro-business belief is not easy to imitate.
At this time of corona crisis, the environment surrounding our company is very severe, but I can't help but feel that there are hints for business in these cases of overcoming adversity with wisdom.