Objective To study financial implication of possibility outsourcing distribution activities in order to converting some fixed cost to variable cost. This include determining which function could be transferred to third party, how much Return on Capital Employed (RaCE) will improved using internal simulation model, and addition benefit could be take into account with selling fixed assets (trucks). To analyze possible risks on implementing third party logistics especially when considering there are uncertainties in term of distribution fees request by contractor and implication on sales volume performance.

Scope of Work Data were collected from interviews, company reports and studies about outsourcing. The primary source of information was from Coca Cola Distribution Indonesia. The study has been given opinion on the Company idea to outsource distribution activity to third party provider. The recommendation may not be justifiable from a total cost-benefit point- of-view, because the costs of future intangible assets are not clearly defined.

.

Recommendation:

(CDI recommended to with distribution outsourcing with several action plans have to be considered:

.Form a dedicated outsourcing planning team

.Develop an outsourcing roll-out plan across Indonesia

.Any extra redundancy cost can be funded from the sale of assets (warehouse/truck) at market value

.Liaise with Labor Union to determine the best way in transferring the redundant headcount to 3PL

.Develop concise contracts between CCDI and 3PL

.Define the acceptable 3PL service-level performance

.3PL to fully understand firm policies and business requirements .Maintain an integrated information system with 3PL





Research Location : Coca Cola Distribution Indonesia

Supervisor : Alex Iskandar Munaf

Accepted : September 30, 2006



Read at Library Only.