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ICTOM 04 – The 4th International Conference on Technology and Operations ManagementDESIGN AND IMPLEMENTATION OF WAREHOUSEMANAGEMENT IMPROVEMENT STRATEGY USINGBARCODE SYSTEMS APPROACH AT PT LATINUSA TBKPengky Frusman1DermawanWibisono21School of Business and Management (SBM), Institut Teknologi Bandung (ITB), Indonesia2Visiting Professor at Universiti Utara Malaysia (UUM), MalaysiaAbstractThe availability of good warehouse management is one of important aspect should be concerned in acompany, especially for a company which engaged in manufacturing. The basic activities that are managed bywarehouse management includes receiving goods from production section, transferring them from one locationto another within same warehouse or another, delivering to customers include picking and loading activities,and physical verification activities compare to the recorded data in the system.PT Latinusa Tbk as the only one company in Indonesia that produces tinplate, raw material for cans,faced several warehouse problems, such as missed products shipping to customers, long time execution to lookfor goods in warehouse due to position of goods were not updated, any changes in goods’ specifications werenot followed by reattachment process of goods’ tickets, inaccurate data recording, and update of goods positionwas not carried out regularly. This evidence consequently decreasing low warehouse management image inwhich it will give effect on customers’ trust for the company.This paper proposed a suggestion to PT Latinusa Tbk to improve quality of warehouse managementsystem for implementing information technology approach namely Barcode System. The proposed solutionincludes: 1. Design of process warehouse management activities involve stock management, record keeping,delivery activity to customers, 2. Design of barcode format that will be used through optimization of featurefrom two-dimensional barcode format, 3. Design of systems to increase barcode solution with existing ERPSystem with necessity of estimated costs from implementation and proposed implementation time schedule. Toprovide additional insight relates to integrated barcode system solutions for the warehouse, it conducted acomparation in performances of implemented integrated barcode system in PT Frisian Flag and PT KrakatauSteel Tbk.Research shows that implementation of barcode solution can affect positively the quality of thewarehouse management both in terms of time savings, loss of income due to customers’ claims, data quality insystem, personnel’s cost, as well as company image in providing high quality delivery services to customers.Keyword : warehouse management, barcode system, goods delivery, claim, information technology.I. IntroductionPT Pelat Timah Nusantara, Tbk. or PTLatinusa, Tbk. is the first and the only onecompany in Indonesia that produces tinplate withinternationally recognized quality. It wasestablished on 19 August 1982, under the NotaryDeed of Imas Fatimah, SH, No.45, with majorityof shareholders are presently Japan Consortiumwith 55% shares, consist of Nippon Steel &Sumitomo Metal Corporation 35.0%, Mitsui &Co. Ltd. 10.0%, Nippon Steel Trading”Co. Ltd.5.0%, and Metal One Corporation 5.0%. Theremaining 45% shares are owned by PT KrakatauSteel (Persero), Tbk. 20.1%, PT Baruna IntiLestari 4.9%, and Public 20.0% (CompanyProfiles of PT Pelat Timah Nusantara Tbk,2013).Tinplate is a raw material such as packing tinsof milk cans, paint cans, batteries, and otherpackaging materials. Illustration of tinplate usageis described as follows:Figure 1. Tinplate usageMain raw material is Tin Mill Black Plate(TMBP) that will be coated by tin usingelectrolytic process with final result is Tinplatethat can be used for packing tins of milk cans,230
ICTOM 04 – The 4th International Conference on Technology and Operations Managementpaint cans, batteries, and other packagingmaterials. Tinplate is delivered into 2 types offorms that are coil and sheet. As a manufacturercompany, Latinusa’s cover all business activitiesstarts from sales up to customer t, production process, qualitymanagement,warehousemanagement,distribution and customer service management.This paper would like to concern onimprovement of performance of inventorydepartment below PPIC division, especially atfinish good warehouse because of critical areabefore the products are being delivered tocustomer.From the data of customer claim in Dec 2011– Jan 2013, it could be seen that defect andunderweight issues are the most cause of thecustomer’s claim on that period (Customer ClaimReport Summary of PT Pelat Timah NusantaraTbk, 2013).As a reliable and trustworthy producer of thehigh quality tinplates, it is important for PTLatinusa Tbk to not only maintaining the productquality but also the quality of the deliveryservice.II. Business Issue ExplorationA. Conceptual FrameworkThe paper is composed based on the conceptualframework such depicted in the Figure 2 below.Figure 3. Conceptual FrameworkFigure 2. Cause of Customer ClaimsOn the other hand, wrong specification was theleast cause of customer claim. Defect issues andwrong specification are issues relates to thecoating process and machine. Otherwiseunderweight issue is the issue relates to scaledevice. In this paper, concern will focus oninventory department issues that are wrong ticketand wrong shipment.1. Wrong TicketWrong ticket issue means the information thatshows on product ticket is not same withphysical product. This case comes due tospecification changes without reprinting theproduct ticket.2. Wrong ShipmentWrong shipment issue means the product thathas been delivered to customer did not fitwith customer’s order specification. Inventorydepartment missed to pickup the product tocustomer.The collecting cause of low performance ofwarehouse management system is carried outsince it is a root cause of problem in thecompany. Kappauf, Lauterbach and Koch(2012) define warehouse management conceptsas “Originally, warehouse systems were purestock management systems, whose goal it was tomaintain quantities and locations within awarehouse and their relation to one another. Inaddition to the elementary functions ofwarehouse management, such as quantity andlocation management, conveyance control andplanning, warehouse management also includescomprehensive means and methods forsupervising system conditions (with software andautomation technology) and a selection ofbusiness and optimization strategies”.There are five alternative solutions will beinvestigated that are evaluating current workinginstruction, providing additional training tosocialize working instruction, hiring newemployees to support warehouse activities, jobrotation, and providing barcode systems toimprove working efficiency. Analyzing of fivealternatives is conducted to select the bestalternative to improve and sustain the warehousemanagement system.B. Research Methodology231
ICTOM 04 – The 4th International Conference on Technology and Operations ManagementThe data are obtained from internal dataprocessing, external data processing in relation tothe things needed to support and completeinternal data, literature study, observations andinterviews to people that has responsibility fordaily operation in warehouse management. Tocomplete the understanding of implementationtechnology in warehouse management, a studycase to the other companies was conducted.C. Root Cause AnalysisFishbone diagram was used as tool to analyzelow performance of warehouse managementsystem issue as follows:Figure 4. Fishbone DiagramIn the fishbone diagram, several items arehighlighted:1. SOP / Work instruction socialization was notconducted regularlyThe absence of regular socialization canaffect how deep a working instruction wasfollowed by the employees.2. Most operators’ ages 45 yearsThe age factor can affect on how someonecan complete his job with or without mistake.Field activities like shipping activities needenergy and concentration to be completedsince thee lack of energy and concentrationcan lead to forgetfulness or negligence.3. Users’ carelessnessTo complete the job, the employees need topay full attention for the SOP/WorkInstruction. Users’ carelessness can lead theSOP/Work Instruction to be not completelydone.4. The procedure did not well implementedEach department has own SOP/WorkInstruction as standard for the employees tocomplete the jobs. Sometimes, the procedureis not completely processed not only due tothe procedure socialization but also inabilityof the procedure to handle actual workingactivity. Regular review is needed to ensurethe procedure is able to meet the actualworking condition.5. Design SystemLatinusa has implemented SAP System as theERP tools to support their business activitysince 2011. SAP is known as the integratedERP system, each process of SAP module isconnected to each others. One process’mistake can impact the others, and theincomplete process will make the otherprocess could not be processed. Disciplineand accuracy is the main key for the datainput in SAP System.6. There is no tools for automationAutomation tool can improve the quality ofthe data input process and the systemchecking. Without the automation tool, theuser needs to use paperwork to complete theirjob and the manual check for validation.Based on some of root cause items above, theauthor group those items into three categories ofroot cause:232
ICTOM 04 – The 4th International Conference on Technology and Operations Management Working instruction issues Human Resource issues Information Technology issuesIII.Conduct a job rotation to keep the employeeaway from the complacency and boredom oftheir routine : Job rotation is a kind of aregular activity that usually conducted inevery division. Each of Division Manager canpropose a job rotation to the HCM Division5. Provide barcode system to improve workingefficiency and to reduce human error:Barcode System can provide the real timedata execution and reduce the kind ofhuman’s error like miss typing or miss batchselection on screen.4.Business SolutionA. Business Solution AlternativesThere are some alternative solutions could beoffered to PT Latinusa Tbk to improve thewarehouse management as follows:1. Working instruction issues Evaluate the current working instruction(WI). Provide the additional training to socializeworking instruction.2. Human Resource issues Hire new employees to support thewarehouse activity. Conduct a job rotation to keep theemployee away from the complacency andboredom of their routine.3. Information Technology issues Provide the barcode system to improveworking efficiency and to reduce humanerror.B. Business Solution AnalysisTo select the best solution to be proposed toimprove the warehouse management at PTLatinusa Tbk, the analysis of each alternativesolution is needed as follows:1. Evaluate current working instruction (WI):PT Latinusa Tbk has implemented ISO 9001and has a regular program to evaluate theimplementation of SOP/Working Instructionon each division2. Provide additional training to socializeworking instruction: Each of DivisionManager has responsibility to monitor andevaluate execution of each SOP/WorkingInstruction in his/her division. They canconduct additional training to socializeworking instruction3. Hire new employees to support warehouseactivity: current employees who supportwarehouse activity have met organizationalstructure design. Most of current employees’age is more than 45 years old. Hiring newemployee can be proposed to replace thosewho will have their retirement within 1-1.5yearThis paper is not concerning on alternativesolutions related to the working instruction andhuman resources. The solution that is proposedto improve warehouse management at PTLatinusa Tbk is related to informationtechnology by using barcode system approachthat directly connects with current enterpriseresource planning (ERP) system. In thepresentation of Efficiency in Supply ChainExecution, Dr.Christoph Lebmollmann offers thebenefit of warehouse management with RadioFrequency (RF) Scanner like Easy handling andoverall visibility, Speeding up on Supply ChainManagement, Independence and Security,Reduced Total Cost of Ownership (TCO) andquick Return of Investment (ROI).C. Business Process DesignMainly, scope of barcode system implementationwill cover 2 main areas:1. Improvement of storage management atTinplate Warehouse, it consist someactivities: Moving tinplate from production area intowarehouse area. Moving tinplate among bin in warehousearea. Tinplate stock take.2. Improvement of shipment activity at tinplatewarehouse consists several activities,includes: Shipping tinplate to customers. Relocate tinplate to another Latinusa’swarehouse.233
ICTOM 04 – The 4th International Conference on Technology and Operations ManagementStartCreate & printshippinginstruction(with onfirm creditblock issueYESPrintShippingtallyCreate & print“Surat IjinMasukKendaraan” SIMK (withbarcode format)QR-Code barcode will be used to keepinformation on the following items: Shippinginstructiondocument,information keep in QR-Code: Deliveryorder document number. Surat Izin Masuk Kendaraan (SIMK),information keep in QR-Code: trucknumber, name of driver, driver license,SIMK document number, enter date, andtype of truck. Product ticket of tinplate, information keepin QR-Code is related with productspecification for example: batch number,material code, weight, thickness, temper,grade, etc. Bin information.FORWARDERReceive SIMK& ShippingtallyLoading product totruck & scan productthat will be put totruckIf credit n product to bedelivered withbarcode scannerProcess good issuewith barcodescannerFinishFigure 5. Proposed flow process of shipping Tinplateto the customersThe benefit of proposed business process design: It can avoid probability of user miss inputdata into paper work. It can avoid probability of user miss updatedata into ERP System. It can avoid probability of user miss selectbatch that does not match with delivery orderspecification. It can avoid probability wrong ticketspecification will be delivered to customers. It can avoid probability of user miss pick upbatch to truck. It can reduce time consumption of shipmentactivity and improve data accuracy.2. Barcode process designDesign of barcode system workflow and howdoes it work can be seen as follows:D. Systems and Technical DesignSystems design and technology that will be usedfor barcode implementation, includes:1. Barcode format designIn this paper, it is proposed to use twodimensional (2D) barcode because some ofproduct specifications will be put into barcodematrix. The type of two-dimension (2D)barcode that will be used is QR-Code. “Barcodes are linear one-dimensional codes andcan only hold up to 20 numerical digits,whereas QR codes are two-dimensional (2D)matrix barcodes that can hold 7,089 numericcharactersand4,296alphanumericcharacters, and 1,817 kanji characters ofinformation “ (A. Sankara Narayanan, 2012)Figure 6. QR Code234Figure 7. Flow of Design1. Users need to select menu on the barcodescanner correspond to the activity that willbe processed, for example: shipmentmenu.2. Users need to scan barcode on productticket and other barcode like barcode onshipping instruction, SIMK, or bininformation.3. Barcode program will compare productspecification stored in product ticket withproduct specification stored in thedatabase. If there is any difference foundbetween product specification on productticket and data in database, transactioncannot be processed before user fixes theproblem. This function is aimed to avoidcondition when there is a productspecification change in the system due to
ICTOM 04 – The 4th International Conference on Technology and Operations Managementany reasons and user forgets to re-print theticket.4. If there is any difference found betweenproduct specification on product ticket anddata in the database, it will be informed atuser’s screen and log the error into thedatabase.5. If there is no differences found betweenproduct specification on product ticket anddata in the database, transaction will beprocessed and corresponded with selectedmenu.6. Every successful transaction will be putinto log system3. Supporting componentsTo implement barcode system for warehousemanagement improvement, there are severalcomponents should be prepared. As researchhas been conducted by Lebow (1998) statesthat there are some design consideration inmind like system architecture, productlabeling, barcode standards, scanner, andsystem operations. Information of bin numberBin number information will be put in 2positions: the warehouse floor and thewarehouse wall. Bin installation design forwarehouse floor can be seen as follows:Figure 8. Illustration of bin number mapping onthe warehouse floor Material for TicketMaterial for the ticket is using Vinyl Yupomaterial that usually used as the barcodeprinting material. Barcode PrinterThe barcode printer is needed to print abarcode on a ticket. Barcode Scanner235Barcode scanner is the main componentfor barcode system configuration and isused to transfer information that is kept inthe barcode data and send it directly toERP System. Barcode scanner is a kind ofPersonal Digital Assistant (PDA) devicethat can connect to ERP System andexecute ERP Program directly on thedevice.Figure 9. Barcode ScannerThe illustration of how it works can beseen as follows:Figure 10. Illustration of how barcodescanner works1. Main system of application is ERPSystems. Latinusa has implementedSAP Systems since 2011. Theapplication of barcode was developedin SAP Systems.2. Telnet server is used to convertgraphical screen from SAP into thecharacter based format.3. Wireless access point is networkcomponents that is used as the gatewayto communicate between barcodescanner with telnet server.4. Barcode scanner will communicatewith the telnet server through wirelessnetwork.5. The user will see the screen that havebeen converted into the character basedformat. WirelessNetwork InfrastructureThe integration between the barcodescanner with ERP system must besupported by the wireless networkinfrastructure.
ICTOM 04 – The 4th International Conference on Technology and Operations Management SAP Barcode ProgramThe integration between the barcode datatransaction and ERP system needs tocreate a program as the interface for thedata transaction. The program is createdby using SAP Programming (ABAP code).All of the automation process will beprocessed by barcode program.Table1. Comparation Before and AfterImplementationParameterTimeMiss datainputLaborCostsRevenuelossDatacheckingFigure 11. Sample of progam screenof barcode programCorporateImage System LoggingTo monitor barcode transaction and datalogging, user can monitor directly on SAPSystem. Barcode logging system can beseen as follows:ParameterTimeMiss datainputLaborCostsRevenuelossFigure 12. Barcode Log SystemE. ConclusionBy implementation of barcode system forwarehouse management, it can provide somebenefits either for the administration purpose orthe systems control for product delivery.Research has been conducted by Connolly(2008) states that labeling technologies facilitateautomatic product identification, rugged handledcomputers with wireless communication givereal-time capability and integrate stock controlinto wider software system for efficient resourcemanagement. The comparison between conditionbefore and after barcode system implementationcan be seen in the table 1 as below:DatacheckingCorporateImageIVBeforeMore time is needed for user toupdate stock information into system.There are many possibilities formissed data input either on typingprocess or on paperwork writing.More personnel are needed to supportshipment activity. It is not just relatedwith physical activity but also dataentry activity.Some claims are related to wrongproduct shipment. It is caused byforgetfulness of PIC to double checkactivity. It can affect the revenue lossfor the company.Data checking that related to productspecification, and product delivery isneeded to be checked manually byuser.Some claims relates to missed productshipment can affect corporate image.Corporate is highly committed to ontime delivery and to meet orderspecification with high qualityproducts.AfterStock information can be updated inreal-time condition.Data will be passed through barcodescanner, there is no possibilities formissed data input.It can reduce personnel to supportshipment activity by improving somebusiness processes and data entryactivity.Case of missed product shipment shouldnot occur again because system willautomatically check product shipmentspecification with delivery order data.System will automatically conduct datachecking when user is doing someactivities with barcode scanner.By using barcode system, claims relatedto missed product shipment could beavoided.Business SolutionA. Implementation Plan236In order to deliver barcode implementationsolution to PT Latinusa Tbk, several actionsshould be prepared in implementation planthat use SAP Implementation methodology .As mentioned in SAP Guidance portal (2013),
ICTOM 04 – The 4th International Conference on Technology and Operations ManagementSAP Implementation methodology is dividedinto several phases as follows:1. Project Preparation: the project teamdefines project goals, a high-level scope,and a project plan. Custom programdevelopment and system configurationwill be delivered by SAP Consultant fromthird party.2. Blueprint: Solution and technical designsare documented in business blueprint.Current business process of warehouseactivity will be discussed and proposedbusiness process and system design will becreated.3. Realization: In realization phase, baselineconfiguration, which represents core ofbusiness process settings, is performed,tested, and confirmed. This is followedwith a series of configuration anddevelopment cycles, to implement entireend-to-end solution.4. Final Preparation: In final preparationphase, all systems are known to havefunction correctly according to alization will be taken place.5. Go-Live Support: purpose of go-livesupport phase is to move from apreproduction environment to a liveproduction operation.6. Run: primary goal of the run phase is toensure operability of the solution.Operability is the ability to maintain ITsolutions in a functioning and operatingcondition,guaranteeingsystemsavailability and required performancelevels to support warehouse operations.B. Implementation ScheduleAll of phases are planned to be completedwithin 3 months of the project exclude 1month support. Detail of that implementationschedule can be seen in the table 2 as below:Table 2. Implementation schedule237
ICTOM 04 – The 4th International Conference on Technology and Operations ManagementC. Recommendation for further researchThe present research provides technologysolution to improve the warehouse managementperformance. It focus on how technology couldreduce manual activities like data input, datachecking, data update in related with warehousemanagement. Further research could be proposedto analyze about other issues as follows:1. The availability of warehouse KPI (KeyPerformance Indicator) to help managementto evaluate warehouse activities performance.Even though, PT Latinusa Tbk is not alogistic company, the availability ofWarehouse KPI can help management tounderstand and control performance inmanaging warehouse for daily operation.Some of warehouse KPI that could beproposed to be analyzed are inventory turnover, case picking productivity, and customercase filling on time. As Schmidt Thorsten(2006) states in Warehouse Management:Automation and Organisation of Warehouseand Order Picking Systems Book that keyperformance indicators are used to give aquick overview over optimal costs andperformances and to evaluate the differentvariants.2. Propose total reward and punishment strategyto link between employees Incentive Programwith warehouse management performance.The availability of total reward andpunishment strategy can help the Volume 3 issue 7. Quoated on 15 Feb 2013 fromhttp://www.ijcst.org/Volume3/Issue7/p13 3 7.pdf.Schmidt,Thorsten,2006,WarehouseManagement: Automation and Organisation ofWarehouseand Order Picking Systems,Springer.SAP Guidance, 2013, ASAP Methodology forImplementation, Quoted on 5 March 2013 w, Jeff, 1998, Planning and implementing asuccessful barcode system: A project 6FPQ/89?accountid 31562.Christine,Connolly,2008,Warehousemanagement technologies, Quoated on 16 Feb2013 from extPDF/A108BFE673784AEFPQ/53?accountid 31562.REFERENCESCompany Profiles of PT Pelat Timah NusantaraTbk, 2013.Customer Claim Report Summary of PT PelatTimah Nusantara Tbk, 2013Jens Kappauf, Bernd Lauterbach and MatthiasKoch, 2012, Logistic Core Operations with SAP,Springer.Lebmollmann, Christoph, Presentation documentof Efficiency in Supply Chain Execution, 2001.Narayanan, A. Sankara, 2012, QR Codes andSecurity Solutions, International Journal ofComputer Science and Telecommunications238
warehouse management system carried out is since it is a root cause of problem in the company. Kappauf, Lauterbach and Koch (2012) define warehouse management concepts as "Originally, warehouse systems were pure stock management systems, whose goal it was to maintain quantities and locations within a . In addition to the elementary functions of
