Proposed contract manufacturing strategy for Baby Food Industry using Kepner-Tregoe and Analytic Hierarchy Process (Ahp) Approach
Abstract:
Purpose: The aim of this study is to select the best contract manufacturing strategy to ensure sustainable growth and fulfillment of MA baby food at PT. S.A.
Methods: This study used qualitative and quantitative research methods. The qualitative approach involves conducting interviews and forum group discussions (FGD) with Subject Matter Experts (SMEs) to determine the root cause of problems using Kapner Tragoe and Why Tree Diagram analysis and to determine the criteria and alternative solutions for this problem. The quantitative approach uses the Analytical Hierarchy Process (AHP) to select the best alternative solution.
Results: Using the AHP method, the most important criteria that could influence the decision-making process were schedule (32.95%), cost (30.31%), delivery (16.44%), capacity (8.66%), ability (6.79%), and quality (4.86%). The best alternative solution for the short term to resolve the business issue is “Produce in existing contract manufacturing and distribute using 3rd party trader (58,09%)”. This alternative solution will ensure fulfillment and prevent sales losses of 96 billion but with a trade-off of a 10% increase in costs. Meanwhile, the best alternative solutions for long term is “Terminate existing Manufacture & Produce in Alternative Local Contract Manufacture in Indonesia (31,55%)”. This alternative solution provides cost savings equivalent to 8.8% of the existing COGS and ensures sustainable growth and fulfillment of MA baby food at PT. S.A.
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Ariawan, Y., & Yudoko, G. (2023). Proposed Strategy of MRO Optimization in Cost Effective Program by Using Kepner-Tregoe Analysis and Analytical Hierarchy Process (AHP). Journal of Engineering and Management in Industrial System, 11 (2) p 105-120.
Carbone, J., (2000). What buyers look for in contract manufacturers. Purchasing,128(4), 32-38.
Chaube, S., Pant, S., Kumar, A., Uniyal, S., Singh, M. K., Kotecha, K., & Kumar, A. (2024). An overview of Multi-Criteria decision analysis and the applications of AHP and TOPSIS methods. International Journal of Mathematical, Engineering and Management Sciences, 9(3), 518-615. https://doi.org/10.33889/ijmems.2024.9.3.030
Doggett, A. M. (2005). Root Cause Analysis: a framework for tool selection. The Quality Management Journal, 12(4), 34-45. https://doi.org/10.1080/10686967.2005.11919269
Duvvuru, A & Balachandra, R. (2012). A System Dynamics Model for Studying Manufacturing Outsourcing Cost Dynamics. International Journal of Rapid Manufacturing, Boston, USA.
Goepel, Klaus D. (2013). Implementing the Analytic Hierarchy Process as a Standard Method for Multi Criteria Decision Making In Corporate Enterprises – A New AHP Excel Template with Multiple Inputs. Proceedings of the International Symposium on the Analytic Hierarchy Process, p 1 -10.
Govindaraju, R., & Sinulingga, J. P. (2017). Pengambilan Keputusan Pemilihan Pemasok di Perusahaan Manufaktur dengan Metode Fuzzy ANP. Jurnal Manajemen Teknologi, 16 (1), 1-16. https://doi.org/10.12695/jmt.2017.16.1.1
Hwang, C.L., & Yoon, K. (1981). Multiple attribute decision making-methods and applications a state-of-the-art survey. Springer Berlin, Heidelberg. ISBN: 978-3-540-10558-9. https://doi.org/10.1007/978-3-642-48318-9
Kannan, V. R., & Tan, K. C. (2003). Attitudes of US and European managers to supplier selection and assessment and implications for business performance. Benchmarking: An International Journal, 10(5), 472–489.
Kepner, C., H &Tregoe,B., B. (1997). The New Rational Manager. New Jersey: Princeton Research Press.
Pandya, E & Shah, K. (2013). Contract Manufacturing In Pharma Industry. Pharma Science Monitor an International Journal of Pharmaceutical Sciences, 4, 123.
Puspitasari, N. B., & Febriani, V. (2024). Integration of the AHP-TOPSIS approach in material supplier selection. E3S Web of Conferences, 517. https://doi.org/10.1051/e3sconf/202451706005
Rahim, Z.A., Voon, B. H., & Mahdi, R. (2016). Exploring the Dimensions of Contract Manufacturing Service Quality for the F7B Industry. Procedia : Social & Behavioral Sciences, 224, 76-83. https://doi.org/10.1016/j.sbspro.2016.05.403
Saaty, Thomas L & Vargas, Luis G. (2008). Models, Methods, Concepts & Applications of the Analytic Hierarchy Process (2nd edition). New York: Springer.
Serrat, O. (2017). The five Whys technique. In Springer eBooks (pp. 307–310). https://doi.org/10.1007/978-981-10-0983-9_32
Taherdoost, H., & Brard, A. (2019). Analyzing the process of supplier selection criteria and methods. Procedia : Manufacturing, 32, 1024-1034. https://doi.org/10.1016/j.promfg.2019.02.317
Zhang, L., Li, W., Zhang, C., & Wang, S. (2023). Outsourcing strategy of an original equipment manufacturer in a sustainable supply chain: Whether and how should a contract manufacturer encroach? Transportasion Research. Part E, Logistics and Transportation Review, 174, 103132. https://doi.org/10.1016/j.tre.2023.103132
- Ariawan, Y., & Yudoko, G. (2023). Proposed Strategy of MRO Optimization in Cost Effective Program by Using Kepner-Tregoe Analysis and Analytical Hierarchy Process (AHP). Journal of Engineering and Management in Industrial System, 11 (2) p 105-120.
- Carbone, J., (2000). What buyers look for in contract manufacturers. Purchasing,128(4), 32-38.
- Chaube, S., Pant, S., Kumar, A., Uniyal, S., Singh, M. K., Kotecha, K., & Kumar, A. (2024). An overview of Multi-Criteria decision analysis and the applications of AHP and TOPSIS methods. International Journal of Mathematical, Engineering and Management Sciences, 9(3), 518-615. https://doi.org/10.33889/ijmems.2024.9.3.030
- Doggett, A. M. (2005). Root Cause Analysis: a framework for tool selection. The Quality Management Journal, 12(4), 34-45. https://doi.org/10.1080/10686967.2005.11919269
- Duvvuru, A & Balachandra, R. (2012). A System Dynamics Model for Studying Manufacturing Outsourcing Cost Dynamics. International Journal of Rapid Manufacturing, Boston, USA.
- Goepel, Klaus D. (2013). Implementing the Analytic Hierarchy Process as a Standard Method for Multi Criteria Decision Making In Corporate Enterprises – A New AHP Excel Template with Multiple Inputs. Proceedings of the International Symposium on the Analytic Hierarchy Process, p 1 -10.
- Govindaraju, R., & Sinulingga, J. P. (2017). Pengambilan Keputusan Pemilihan Pemasok di Perusahaan Manufaktur dengan Metode Fuzzy ANP. Jurnal Manajemen Teknologi, 16 (1), 1-16. https://doi.org/10.12695/jmt.2017.16.1.1
- Hwang, C.L., & Yoon, K. (1981). Multiple attribute decision making-methods and applications a state-of-the-art survey. Springer Berlin, Heidelberg. ISBN: 978-3-540-10558-9. https://doi.org/10.1007/978-3-642-48318-9
- Kannan, V. R., & Tan, K. C. (2003). Attitudes of US and European managers to supplier selection and assessment and implications for business performance. Benchmarking: An International Journal, 10(5), 472–489.
- Kepner, C., H &Tregoe,B., B. (1997). The New Rational Manager. New Jersey: Princeton Research Press.
- Pandya, E & Shah, K. (2013). Contract Manufacturing In Pharma Industry. Pharma Science Monitor an International Journal of Pharmaceutical Sciences, 4, 123.
- Puspitasari, N. B., & Febriani, V. (2024). Integration of the AHP-TOPSIS approach in material supplier selection. E3S Web of Conferences, 517. https://doi.org/10.1051/e3sconf/202451706005
- Rahim, Z.A., Voon, B. H., & Mahdi, R. (2016). Exploring the Dimensions of Contract Manufacturing Service Quality for the F7B Industry. Procedia : Social & Behavioral Sciences, 224, 76-83. https://doi.org/10.1016/j.sbspro.2016.05.403
- Saaty, Thomas L & Vargas, Luis G. (2008). Models, Methods, Concepts & Applications of the Analytic Hierarchy Process (2nd edition). New York: Springer.
- Serrat, O. (2017). The five Whys technique. In Springer eBooks (pp. 307–310). https://doi.org/10.1007/978-981-10-0983-9_32
- Taherdoost, H., & Brard, A. (2019). Analyzing the process of supplier selection criteria and methods. Procedia : Manufacturing, 32, 1024-1034. https://doi.org/10.1016/j.promfg.2019.02.317
- Zhang, L., Li, W., Zhang, C., & Wang, S. (2023). Outsourcing strategy of an original equipment manufacturer in a sustainable supply chain: Whether and how should a contract manufacturer encroach? Transportasion Research. Part E, Logistics and Transportation Review, 174, 103132. https://doi.org/10.1016/j.tre.2023.103132