INCREASING OF SUPPLY CHAIN EFFICIENCY IN AUTOMOTIVE COMPANIES USING BUSINESS PROCESS RE-ENGINEERING

Abstract

Automotive companies have supply chain operations as the range of the production network to produce a finished good. During the operation, it found the problem in the main aspects of the supply chain faced by the automotive companies in 2020. The survey result has an average of the decreasing in the sales demand reached 50% with total lateness in the delivery is two weeks late than usual. This problem influences the level of efficiency, which can affect profit margins in automotive companies. Hence, improvement is needed to increase the efficiency of supply chain operations. It could begin to break down the problem into more detailed and specific problems to solve a bunch of micro-problems one at a time effectively. Why-why analysis is used to determine the significant root cause of the problem. It will be analyzed further using business process re-engineering, including process flowchart. Business process re-engineering is chosen to re-design the current conditions that aim to help the automotive companies in increasing the efficiency of supply chain operation. Business process re-engineering will be done in internal of customer, manufacturer, and supplier. To solve the problem, there are several proposed improvement ideas to reduce the lead time of the process and the cost incurred. If proposed improvements are implemented, automotive companies could saved the assumption of penalty cost with IDR 53.895.100 for the supplier’s company and IDR 15.121.920 for the manufacturer’s company. Furthermore, the lead time will be also reducted with assumption reduction is from 20-30 days to 9 days of total lead time.