IYS - End Product

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




Problem Solving


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

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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




Problem Solving


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

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Agenda

Introduction




Problem Solving


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?”

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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

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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

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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

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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




Problem Solving


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




Problem Solving


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

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Back-up Slides

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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

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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

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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

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