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SINGLE STEP TOWARDS OPERATIONAL EXCELLENCEFINAL READ-OUT PRESENTATION14 OCTOBER 2012
October 2012
2
Agenda
Introduction
Introducing the client: Quints Logistic
“Operational Excellence” project consulting team
Problem identification
Problem Solving
Feedback from clients
Lesson Learned
3
Agenda
Introduction
Introducing the client: Quints Logistic
“Operational Excellence” project consulting team
Problem identification
Problem Solving
Feedback from clients
Lesson Learned
4
A glance about our client...
Brief explanation of Quints Logistic... Quint Logistic is a start-up company specializing in intra- and inter-cities carrier and delivery
service by employing ojek drivers Founded by Edo Wikar and Hendra Niel, two FE UI alumni, it currently employs 5 carriers and
1 admin as order-taker, based in Tebet Facing a dynamic Moving & Carrier market in Jakarta, it launches fierce competition with
established companies, such as GoJek and JNE2
Business model... QL serves in delivering any hand-carried package, such as documents, devices, and
consumer goods, between any places in Jakarta, Tangerang, Depok, & Bogor Maximum delivery time of 6 hours with 1-day pre-booked order or same-day order
How they serving the customers... 2 types of business: Package Delivery (PD) & Personal Assistant (PA) services Customer in PD gives the pick-up and destination address for QL to retrieve and deliver the
package In PA, customer can ask QL to procure the desired package from third party, ranging from
food, electronics, to tickets, and deliver it to predetermined location
5
IYS dedicated its best resources to assist Quints Logistics reaching operational excellence
Stevenlie Satryaputra
• Market intelligence at RUMA
• Experienced in consulting industry
• Univ. Indonesia
Astri Wulandari
Dito Krista
Sam Pandhega
• Experience in operational modeling
• Expert in retail and fashion
• ITB Chem. Engineering
• Extensive project mgmt. experience
• Expert in face-aura aestethic treatment
• Univ. Indonesia
• Finance analyst at RUMA
• IYS Expert in “triple bottom line”
• Univ. Indonesia
Lina Rosita Dewi
• Deep expertise on HR
• IYS expert on South Korean Market
• Univ. Indonesia
EdmondNathan
Ester Meliani
• Private Equitist, expert in back-end telco industry• IYS expert on religion and cultural study• Deep expertise on East Jakarta Area
IYS expert
• Experienced in Accounting and financial modeling
• Univ. Indonesia
Source: IYS database
6
Closely works with QL’s management team in defining project coverage
IYS team QL Management
Pre-defined hypothesis
Hypothesis verification
Open-end communication
Open communication + clear expectation are two main recipes to client engagement success
in IYS
Collaborative problem solving
with clients
Source: IYS analysis
7
Agenda
Introduction
Introducing the client: Quints Logistic
“Operational Excellence” project consulting team
Problem identification
Problem Solving
Feedback from clients
Lesson Learned
8
Joint session with QL management has identified several issue to solved
Main Issue Diagnosis Next steps
Charging QL customers
Paying QL employees
Marketing communication
Expansion plan
Questionnaire
Journey plan modellingQuestionnaire &
InterviewSalary plan
Questionnaire
Interview the management
Checking consumers’ willingness to pay
Defining the most competitive price
Determining courier’s salary:Salary benchmarking & new
salary plan
Finding and understanding what consumers’ wants and define KSF on city courier
industry
Projecting number of armada that will be added during 2012
Source: IYS analysis
9
Agenda
Introduction
Introducing the client: Quints Logistic
“Operational Excellence” project consulting team
Problem identification
Problem Solving
Feedback from clients
Lesson Learned
10
Speed is the key as most consumers use city courrier to rely on its immediate delivery
Consumer insight showed several plus-minus from city courrier services
Research showing customers has 2 key decision factors for city courrier
Adva
ntag
eD
is-
adva
ntag
e
Speed is the main determining factor on choosing city courrier
Customer tend to use referrall from friends/ family in choosing
city courrier
Speed of Delivery
Easiness to use
Transparent pricing
Time flexibility
Safety issue
No proof of transaction
Relatively costly
Notes: consumer insight survey (n=37)Source: Customer interview, IYS analysis
???“What? It is NOT the PRICE that become
the deciding factors?”
11
Recommend price discrimination to optimize revenuePeak hour and customer willingness to pay (~50k max) as main consideration
Time Analysis
H-1 Order
Flexible Time Idle Hour IDR 30.000
Fixed Time
Idle Hour IDR 30.000
Peak Hour IDR 45.000
Sudden Order
(D-Day)IDR 50.000
Level of Severity
RESULT * %Change time order 5.89%
H-1 Order, flexible (shift) 6.55%
Total 12.44%
Cheaper price to skew order towards
less busy hour
Cheaper price to skew order towards
less busy hour
Maximizing cash inflow from busy-
hour order
Notes: consumer insight survey (n=37)Source: Customer interview, IYS analysis
12
Using IYS-QL proprietary modeling to automatically best distribute the most efficient courrier allocation
Management manually allocate the courrier to meet demand daily
Auto_Journey_PlanTM helps mgmt. to automatically allocate courrier
Previously owners need to painfully allocate their courriers in daily basis
• Take 2-3 hr of management’s productive time
• Opportunity cost for mgmt to think more strategically
• Very prone to error due to its manual nature
Designing an allocation tools through alogrithm to best allocate courrier to meet daily demand:
• Decrease management’s unproductive hour by ~90%
• Reducing bias in allocating courrier
Source: QL internal data, Management interview, IYS analysis
13
More competitive salary = reason to stay at QL
Salary is the upmost important welfare factor for riderOjek monthly income is the immediate benchmark for QL rider’s salary
Randomly interviewed Ojeks across Jakarta area to study the avg. salary
More competitive offerings from QL compared to normal ojek income
Several interesting findings found from the field:
• Income level varies across location• Income is highly fluctuated• Ojek should expense his money for
‘preman cost’ apart other operational cost• Working days = ~30 days
~ IDR 2.5 MnOjek Avg.
Income
~ IDR 2.7 Mn QL
courrierAvg.
Income
Notes: (n= 10)Source: Field survey, Expert interview, QL internal data, IYS analysis
14
Need to deploy a clear marketing communication that incorporate the output of QL’s consumer insight
1. The loyal customer are emphasizing on delivery practibility
2. Low awareness on QL’s capability to deliver “all things”
3. Package trust and safety Issues 4. Customer rely on Speed of Delivery &
Friend / Family Referral
What customer says...
IYS recommend 4 aspects to be included in QL’s promo/ marketing comm:
FAST & PRACTICALas selling point
Wide servicecoverage
Publish customer
testimonials
Active BTL through soc-med
Opportunity for QL to explore even wider
customer baseSource: Consumer insight, IYS analysis
15
Opportunity to expand to larger customer group is widely exist thus need to consider operationals expansion
“Paper based” delivery package is interesting yet easy area to explore
Need to strategically plan its human capital always meet demand
Com
pany
cl
ient
Pers
onal
cl
ient
Expanding to business customers by serving their logistic needs:
• Printing company (i.e. Wedding invitation, proposal, etc.)
• Law firm (doc. Deliver)• Pharmacy delivery• Parcel delivery
Covering the ‘untapped’ courrier service area for personal customers:
• Concert/ cinema ticket delivery• Gadget service delivery
Should prioritize customer expansion from the easiest/
simplest new customers
8
6
0
3
6
9
12
15
....
+33%
Mid2012
# of courrier in service
End2012
Series
TBD
Source: Expert interview, QL internal data, IYS analysis
16
The Impact of Strategy Recommendation
27
17
0
5
10
15
20
25
30
% of QL’s profit Margin
Expected Margin
Current Margin
....
Price DiscriminationJourney PlanSalary Plan
Source: QL internal data, IYS analysis
Marketing plan
17
Agenda
Introduction
Introducing the client: Quints Logistic
“Operational Excellence” project consulting team
Problem identification
Problem Solving
Feedback from clients
Lesson Learned
18
Positive overall feedback from our client counterpartSeveral recommendation get ‘buy-in’ from client
“After having consultation with IYS for these past months, we’re honored to say thank you. IYSare helping us in creating journey plan, salary plan, pricing strategy, even making surveys and giving us recommendation for marketing strategy.”
“We are really helped on making journey plan, esp. how to assign people to do all works. Also, for the pricing strategy and salary plan you’ve made. We will use it as consideration on creating best formula in the futures.”
“Currently, we are negotiating with some printing companies as additional services. It all based on what IYS recommend us on finding new target customers. We also implement the pricing strategy that IYS creating, but maybe we will see its results in some next periods.”
Source: Management interview, IYS analysis
Hendra – Director of QL Logistics: Passage indicating client’s “Buy-in”
19
Agenda
Introduction
Introducing the client: Quints Logistic
“Operational Excellence” project consulting team
Problem identification
Problem Solving
Feedback from clients
Lesson Learned
20
Several lesson learned for IYS future projects
“For the improvement, we think IYS should create a balance scorecard to help us evaluating our works. Moreover, there should be a person from IYS as PIC (Person-in-charge) in our operational activities, for controlling our jobs easier. We will be more glad if representative from IYS always help us in decision making.”Fr
om c
lient
From
inte
rnal
INTELLECTUAL commitment
needed, not just time
Over-communicate with client is
better that not communicate
LEVERAGE IYS experts
Show CONFIDENCE/ EXPERTISE in-front of client
Investment in strong ‘human capital’ is the
most important
Engage-client early. Scoope
your project with them
Source: Management interview, IYS experience
VARIOUS set of skills needed in a
team to enrich analysis
21
Back-up Slides
22
Analysis Covered by IYS-QL team
Issue Tree
Economic
modeling
Ops. modelin
gQuant survey
Interview
Creative Brain-stormin
g
Where to learn:
YLI “Factory of Minister” in
Depok
Good institute in Bandung
with elephant
God statue
Your statistics
book +
Logic
Harco Business School
Any good schools
23
IYS stance on which one better, variable vs fixed salary
24
Slides on SALARY PLAN
Dilemma: fix salary vs variable salary in which fix salary scheme would lead to higher profit margin (currently QL provides IDR 2,000,000) but it gave significant impact to high employee turnover rate
Advantages of variable pay implementation:
- Incentive for employee to work at optimum capacity- Strategy to reduce high turnover rate
Component Senior Employee
Junior Employee
Fixed Salary (based on 50% UMR)
IDR 600,000 IDR 600,000
Comission per Order IDR 20,000Variable Income:Weekdays (20 days) IDR 1,600,000 IDR 1,200,000Weekeend (8 days) IDR 480,000 IDR 320,000
Total Salary IDR 2,680,000 IDR 2,120,000
25
IYS team in overall get a good feedbacks from our client
“After having consultation with IYS for these past months, we’re honored to say thank you. IYS are helping us in creating journey plan, salary plan, pricing strategy, even making surveys and giving us recommendation for marketing strategy.”
“We are really helped on making journey plan, especially how to assign people to do all works. Also, for the pricing strategy and salary plan you’ve made. We will use it as consideration on creating best formula in the futures.”
“For the improvement, we think IYS should create a balance scorecard to help us evaluating our works. Moreover, there should be a person from IYS as PIC (Person-in-charge) in our operational activities, for controlling our jobs easier. We will be more glad if representative from IYS always help us in decision making.”
“Currently, we are negotiating with some printing companies as additional services. It all based on what IYS recommend us on finding new target customers. We also implement the pricing strategy that IYS creating, but maybe we will see its results in some next periods.”
Hendra – Director of QL Logistics
Source: Management interview