Wal-Mart & Carrefour in Indonesia

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Some of the key takeaways are the history and success of Walmart, challenges faced by PT TMMIN in integrating vehicle production across divisions, and principles of Toyota production system observed during the plant visit such as just-in-time and kanban.

PT TMMIN initially faced challenges related to efficiency, cost, quality across departments due to the integrated production process. This led to issues like excess stock, idle inventory, uneven workloads and defects requiring rework.

During the plant visit, principles like just-in-time, kanban, jidoka, andon and continuous improvement were observed being implemented. Strict adherence to safety, regulations and cleanliness were also notable.

WHY WAL-MART FAIL &

CARREFOUR SUCCEDD
INDONESIA
Roike Tambengi
BLEMBA 5
SBM ITB

IN

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

Chapter 1
1. Background
Wal Mart
Wal-mart was founded by Sam Walton and his brother, James Bud Walton,
in 1962. The Walton boys revolutionized discount retailing, with the result
that by 1989 Walmart was the worlds largest retailer. The Waltons
proposition was simple, deliver a wide array of merchandise at discount
prices topped up by a friendly service. By 1998, it was servicing more than
100 million customers weekly and had a sales volume of US$138 billion with
an overall operating margin of 5.8 percent (Exhibit 8 provides a financial
summary of Wal-mart Stores, Inc.).
The Walton brothers opened their first Wal-mart Discount City store in Rogers,
Arkansas, after Ben Franklin managementthe Waltons operated a number
of franchised stores from the chainrejected a suggestion to open discount
stores in small towns. The Discount City store concept consisted of servicing
small and middlesized towns at prices equal to or lower than prices in nearby
cities. In 1972 Sam Walton took the 30 existing stores public using the
proceeds of the offering to build a warehouse that allowed him to buy large
volumes of merchandise at lower prices. Due to the strategy of covering
small towns, virtually ignored by other competitors, the expansion progressed
rapidly without any substantive direct competition until the mid 1980s.
However, by 1993, Wal-mart was in 47 states and its expansion led to
competition with Kmart, Target, Sears and J.C. Penney, for which the
established players were ill prepared.
In the 1990s the company moved beyond its rural expansion strategy and
began

diversifying

into

grocery

operations

(Wal-Mart

Supercenters),

membership warehouse clubs (SAMS Clubs) and deep discount warehouse


outlets (Buds Discount City). By this time the company also felt it was now
prepared for forays outside the United States. Sam Walton led the company
until 1988, being a powerful CEO whose philosophy drove every aspect of the
business. He believed in empowering yet controlling employees, maintaining

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA


Wal-marts costs and prices below everybody elses, and aimed at logistics
excellence by maintaining technological superiority.

a. Long journey to success


1971 Inauguration of PT Toyota Astra Motor (TAM) as importer
1973
1976
1977
1982
1987
1996

and distributor of Toyota Vehicle in Indonesia


First assembly plant of PT Multi Astra
PT Toyota Mobilindo established as component plant
First launching of Kijang Toyota to Public
Engine plant of PT Toyota Engine operates
Pioneer export of Kijang to overseas
Merger of four Toyota Company in Indonesia: PT Toyota
Astra Motor, PT Multi Astra, PT Toyota Mobilindo, PT Toyota

2000

Engine Indonesia
Modern and Sophisticated Toyota Plant officially operates in

2003

Karawang
TAM converts to PT TMMIN and TAM functions as a

2004

distributor company. 1 millions of Kijang is produced


Launching of Toyota Avanza as a collaboration vehicle of
TAM, TMMIN and PT Astra Daihatsu Motor. Launching of
generation V of Kijang, INNOVA

2. Business Principles of Toyotas Way


What makes Toyota such a strong brand and long lasting company is that its
core principles have been put into practice ever since the company is
established. Laying the foundation of those principles give every elements of
Toyota of operation, marketing, human resources, technology, and finance
durable and powerful guidelines on its path to produce quality and reliable
product.
Generally, the principles are compressed into 4 main structures of long term
vision and mission, efficiency, respect for people, and continuous
improvement.

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA


Toyota believes that long term vision and mission set high achievement for
Toyota. The target of efficiency becomes its strong point to be competitive as
the real world becoming more fragile and demanding. The people of the
company are also the heart of the company that fully supports the company
to show its performance. And finally, by learning from experience, and
continually improving every aspect of the contributing elements lead the
company to perform at its best stage and therefore, realizing the goals and
achievements that is beneficial for all stakeholders.
The following pyramid comprises all the principles corresponding to the four
main structure of TOYOTA WAY.

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA


Toyota Production System (Lean Production System)

Lean Production can be defined as an integrated set of activities designed to


achieve high-volume production using minimal inventories (raw materials,
work in process, and finished goods)

Lean Production also involves the elimination of waste in production effort

Lean Production also involves the timing of production resources (i.e., parts
arrive at the next workstation just in time)

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

Chapter 2 Toyota Sunter II plant


Toyota Sunter II plant is part of integrated plant of TMMIN together with assembly
plant in Karawang. It was established on the land of 310.898 m2 with the size of
building of 175.986 m2. It produces important parts of the vehicles such as engine
body, engine, and the chassis and covers the domestic market as well as export
market of Malaysia, Thailand, Philippines, Taiwan, Vietnam, South Africa, and Japan.
The facility of Sunter Plant includes Casting Plant, Stamping Plant, Engine Plant,
Packing and Vanning Plant. In addition to that, the plant also includes engineering
and tooling division of Jig and die making. Waste water treatment is being applied
here to make the plant environmental friendly.
Due to limited of visit time, we only have schedule to explore casting plant and
stamping plant of Toyota Sunter II Plant.
Below is our brief explanation of both plants that we visited:
1. CASTING PLANT
Main production for engine body
On the area of 65.028m2, casting plant is the place where process of forming
and producing the engine component is being executed. With volume of
production of 1000 tons/month with 2 shifts of working time, the plant can
produce cylinder block of 5K, 7K, 1 TR, and 2 TR, Crankshaft 7K, Crank cap
5K, 7K, and Flywheel 14B.
Casting plant is supported by facilities to create a gigantic product (max 8
ton), such as Induction Holding Furnace with capacity of 8 ton, overhead
crane of 20/40 ton, sand blasting of 10 ton/short, sand mixer of 10/20 tons,
sand reclaimer unit of 10/20 tons per hour, vacuum sand conveyor of 10/20
tons per hour, and drying oven with four heaters and blowers capacity.
Insert pictures of casting process
Insert flow chart of casting process

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

2. STAMPING PLANT
Main production for body chassis
With the capacity of 96000 units/year, stamping plant covers the area of
64247 m2 to produce press part for some of the Toyota brand of Innova,
Avanza, and Dyna/Hino including engineering and tooling parts.
The major strengths of the plants for producing high quality components
depend on the followings:
High precision
Using the latest and sophisticated computer technology operated by

skillful professional into produce the high quality stamping results


High quality basic materials
The foundation of stamping (dies) composed of selective iron steel and
iron ore of high quality product. In the process of the dies production,
continuous monitoring and careful examination is carried out until the
last phase resulting in high precision dies.
Facility:

Press Machine :
2

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

1.500 tons
800-1000 tons
600 tons
600-1.200 tons
Machine :
o
NC Miling
o
NC Copy Miling
o
Pattern NC Machin
e
o
Vertical
Boring
Miling
o
o
o
o

o
o
o
o

500 tons
400-1000 tons
150 tons
60-110 tons
o

o
o
o
o

Copy Miling

Side Boring
Big Miling
Radial Driling
Radial Miling

Die Spotting Machine :


o
Die Spotting
Measuring Machine
o
Lay Out Machine
o
Digitizer
Trial Machine Press :
o
Press Machine

The process of stamping is depicted in the pictures below:

Raw materials being inserted into press machine

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

Quality Inspection by workers

Finished goods ready for delivery

Insert flow chart of stamping plant

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

Chapter 3 Problems or Challenges


Initially, PT TMMIN faces different kinds of challenges in operations that lead to the
issue of efficiency and cost as well as quality of finished products as the output of
one department to another. Since different parts of each vehicle is produced by
different divisions as the whole integrated process of the company, Challenges and
problems occur that require the management to efficiently and effectively
restructure and remodify the process. The management will the search for the root
cause of the problem, identify it , and make some necessary adjustment to fit the
problem.
Lots of stock, idle finished goods,
Lots of unnecessary motions
Uneven load of work
Searching for perfection through continuous improvement

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA


Defects occurring resulting in mismatch between parts, and rework of the product
(cost)
Defect reduction to below 1 percent
Difficulty in forecasting through marketing
Quality of suppliers materials

Chapter 4 critical assessment on the operation


JIT<
JIDOKU<
HEIJUNKU<
GENJI GENBUTSU<
ANDON

a Japaneese word for lantern, describe the appearance of the board


that hangs over the aisle between production lines and alerts
supervisors to any problem. In assembly, the board

KAIZEN<
Is current strategy effective?
All strategy applies very well

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

Chapter 5 Lessons from the project visit


The Toyota II Sunter Plant visit gives us a deep insight on how the stamping and
casting plant implement the Toyota management principles as part of the integrated
system with the Karawang plant. It shows us how critical the timing problem is in
the operation of Toyota vehicle production. The flow from one plant to another is so
carefully watched and monitored to ensure the perfection in production and timing
for the next phase.
We also learned how important the implementation of some principles of Kanban,
Jidoka, Just In Time, and other operation management standards in Toyota. The
disciplines and consistency of workers of Toyota also teach us how human resources
play essential roles for manufacturing company. A matter of seconds in time is a
matter of efficiency.
The plants also show us how it puts strict rules and regulations on safety and
precautions guides. We were walking on the tour in a regular manner in compliance
with the safety rules and regulations; we also observed how the workers pay
attention to this issue. The cleanliness of the plant is another plus point worth
observing.
Last but not least, the visit gives a general description on how a manufacturing
company operates for any kind of product possible. Applying strict principles and
disciplines are the main keys in the success of a manufacturing company.

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

WHY WAL-MART FAIL & CARREFOUR SUCCEED IN INDONESIA

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