The 3 International Indonesian Forum for Asian Studies

INTERNATIONAL INDONESIAN FORUM

  proceeding rd The 3 International Indonesian Forum for Asian Studies

borderless communities

& nations with borders

Challenges of globalisation

  Universitas Gadjah Mada & Universitas Islam Indonesia Yogyakarta

  

borderless communities

& nation with borders rd The 3 International Indonesian Forum for Asian Studies

  Challenges of globalisation th

  February 8-9 2017 | Gedung Lengkung UII Yogyakarta proceeding

  

welcome address

International Indonesian Forum for Asian Studies

  The International Indonesian Forum for Asian Studies (IIFAS) is an organically grown academic network to enhance the study of the Asia-Paci c region. It was initiated by several doctoral students from Indonesia, Australia and several other countries with the aim to provide an

opportunity for young academics in their start-up phase of their career and established academics

to meet together in academic exchanges. Sharing research ndings and opening discussion in an

interchange of knowledge at renown academic venues was the desire for the founding members.

Building on a series of successful conferences and public lectures of some of its initial members has made IIFAS grown considerably.

  After receiving a keen invitation from two hosting partners, Universitas Gadjah Mada (UGM) and

the Universitas Islam Indonesia (UII), IIFAS has come to Yogyakarta in 2017. The Forum is dedicated

to friendly and open exchanges in a truly academic tradition, thus actively welcoming participants

from Asia, the Paci c and the rest of the world. The call for papers was circulated in May 2016 and

by request extended till the 15th of January 2017. IIFAS is aware of the difficulties some far away

students might face to present a paper in person at the conference venue in Yogyakarta. As a result

of those difficulties, some presenters have been permitted to prepare a poster or absentee presentation at the conference.

  

I wish to thank the generous UII and UGM rectors, deans, heads of departments, lecturers, staff and

volunteer students for the outstanding facilities granted and services provided at this 3rd IIFAS Borderless Communities and Nations with Borders: Challenges of Globalisation Conference. I encourage all delegates and guests a constructive time in creative exploration of innovative interdisciplinary research ideas. I wish you an enjoyable time at the conference, a wonderful experience meeting the Yogyakarta residents and visiting the magni cent sites of interest that virtually stretch between the beach of Parangtritis and the top of Mount Merapi volcano. Welcome and thank you for your endeavours meeting here together.

  Johan Richard Weintré Chairperson of the Forum

  

Foreword

Center for Southeast Asian Social Studies (CESASS),

Universitas Gadjah Mada

  We are pleased to welcome all the honourable speakers, guests, and participants to the heart of Java in Yogyakarta, Indonesia, a city of arts surrounded by traditional ambience as a source of Southeast Asian treasure.

Universitas Gadjah Mada, through its CESASS, promotes a social transformation in Southeast Asian

epistemic community based on how Southeast Asian see themselves, and to be a hub for its studies network in global scale. CESASS was also pointed as a Center of Excellence (PUI) in social

science by Ministry of Research and Higher Education of the Republic of Indonesia since 2016. By

this mandate, the Center prioritizes to develop advanced research management and to promote

inclusiveness in reconstruction of Southeast Asian studies.

  In regard to those roles, the Center aims to bound an epistemic community of Southeast Asian studies for knowledge transfer and scholars networking. 3rd IIFAS Conference is one of the

signi cant agendas from CESASS, as well as our partners; IIFAS and UII, to deliver that purpose. By

gather all the scholars to discuss a discourse in the studies, it might be useful for our research development near future. I do hope that you will take this opportunity to explore the potential knowledge and broadening your network.

  

We are glad for meeting you in this Conference and wish you have fruitful forums. Hopefully, it can

contribute to the development of Southeast Asia and Social Studies.

  Hermin Indah Wahyuni Director of the Center

  

Foreword

International Relations Department,

Universitas Islam Indonesia

  

Welcome or selamat datang to the 3rd International Indonesia Forum for Asian Studies (IIFAS). This

year the 3rd IIFAS Conference is held in Yogyakarta and co-hosted by the Department of International Relations of Universitas Islam Indonesia (UII) and the Center for Southeast Asian Social Studies of Universitas Gadjah Mada (PSSAT UGM). We are delighted to share with you the city of Yogyakarta, a well-known academic magnet for many students of the Indonesian Archipelago and international visitors alike who visit Indonesia every year. The city is a host to

several hundred institutions of higher education and also truly one of the most important centers

of Javanese culture. Therefore, Yogyakarta ought to be a perfect spot for this conference event and

for us to meet at this occasion. The two host universities of this year's conference have both their own uniqueness. It is not very well known but UII holds the title of the oldest national private university in Indonesia, while our

partner in this conference, UGM, holds the title of the oldest state university here in Yogyakarta. UII

has committed itself to provide study opportunities in the many elds of sciences and the religion

of Islam for the bene t of the society. This IIFAS conference is one of UII efforts to ful ll its commitment in sciences and to provide a greater understanding of our particular religious' feelings. The conference has opened an opportunity for a greater interaction among academics and guests. As the conference theme indicates, we hope in these two days to explore and share ideas on how borderless communities interact in a eld of nations with xed borders. We hope

that the conference will expose signi cant results for the development of knowledge and society.

  Irawan Jati The Head of the International Relations Department

  TABLE OF CONTENTS

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Facing Asean Economic Community Opportunities and

Challenges by Optimizing Distribution Route

• – A Case Study at X Logistic SDN BH Audria Ineswari and Ratih Hendayani, S.T, M.M.

  

Facing Asean Economic Community Opportunities and

• – Challenges by Optimizing Distribution Route

  

A Case Study at X Logistic SDN BHD

  1

  2 Audria Ineswari and Ratih Hendayani, S.T, M.M.

  

  

ABSTRACT

  X Logistic Sdn Bhd is one of the logistic company located in Malaysia. Its service is to deliver Fast Moving Consumer Goods (FMCG) to all over Malaysia and some other South East Asia countries (Singapore and Brunei). The establishment of the ASEAN Economic Community (AEC) allows participating countries to make easier transactions so that market competitivesness will be increasing. On the other hand, Indonesia retail market is now experiencing growth. This phenomena leads enterprises to produce more FMCG products, therefore not only the quantities of products that is increasing but also the variety, especially, food and beverage products. Due to the interesting variety, foreign people imports Indonesia‘s products, including Malaysia. In the last 2015, Indonesia‘s ambassador for Malaysia, Herman Priyatno said that the import rate of Indonesia to Malaysia is increasing up to 14,08% every year. X Logistic Sdn Bhd saw this phenomena as a business opportunity. The company delivers FMCG products including Indonesia‘s product to more than 150 retailers in Malaysia, Singapore, and Brunei. Unfortunately, X Logistic Sdn Bhd does not implement any distribution method which leads company to losses because of its service. Therefore, company needs to implement a method to improve its service. Delivery route optimalization can be implemented using saving matrix method. The point is to arrange shortest and fastest delivery route to prevent delays. The result of this research is X Logistic Sdn Bhd is able to save 4.070,63 Ringgit Malaysia. Now, company can compete with other logistic companies in facing AEC as a manifestation of economic globalisation.

  Keywords : logistic, AEC, routes, productivity, efficiency, globalisation.

1. BACKGROUND

  Asean Economic Community (AEC) started in early 2016 is a program designed to form a single market in Southeast Asia. In the develompent of AEC, Indonesian retail market is experiencing growth. This phenomenon leads companies to produce Fast Moving Consumer Goods (FMCG) products. The number of FMCG produced is increasing and also the variety of products sold. These variative products attract foreign community to consume Indonesian products, including Malaysian. In 2015, Indonesian Ambassador to Malaysia, Herman Prayitno said that food and beverages market originated from Indonesia in Malaysia has increased by 14,08%.

  There was Malaysian company that saw this phenomenon as a business opportunity. X Sdn Bhd is a logistic company which its main business is distributing FMCG products, mostly from Indonesia to hundreds retailers located throughout Malaysia. Unfortunately, X Sdn Bhd has transportation problem. X Sdn Bhd does not apply any specific distribution route, so there is a possibility that the distribution route used is not the shortest route and company should pay more for fuel cost. This problem leads company to distribution delays, impacting the company‘s losses. Final loss felt by company is, X Sdn Bhd is forced to raise its price of products offered so the prices set are not a competitive price.

  Saving matrix method is used to find the shortest distribution route so company is now able to reduce its fuel cost because the distribution distance will become shorter. In addition, these new distribution routes help company to predict distribution time because the routes are fixed. Therefore, the authors conducted a study in order to find the shortest routes. The purpose of this study beside finding the shortest routes, is also determine the productivity of delivery service and cost efficiency that will be earned by company after applying the saving matrix method.

2. METHOD

2.1. Theories

  1. Giri (2012) wrote a journal titled ―Routing and Scheduling Analysis Using Saving Matrix Method for Modern Trade Area Delivery in Desc Kimberli Indonesia‖. Eventhough there is no routes improvements, Giri made a delivery schedule and transporters testing. The result of this study is the discovery of the shortest route and transporter costs decreased by Rp. 1.2375 million.

  5. Putranto & Hendayani (2014) published a journal entitled "Distribution Route Optimization by Utilizing Saving Matrix: Case Study In. Limas Raga Bandung Inti ". The result is routes

  4. Ikfan and Masudin (2014) wrote a journal entitled ―Saving Matrix for Determining Distribution Route‖. The research subject was shuttlecock manufacture. This research discusses the application of saving matrix method to solve XYZ company distribution problem. . Results from this study is the distribution cost is saved up to 10.94% in each period. This research also did not implement any improvement method.

  3. Machmudah et al (2013) conducted a research entitled ―Design of Information Systems Determination of Routes and Transport Costs in New Sehati SMEs‖. SMEs New Sehati is the Small and Medium Enterprises (SMEs) that produce home-cooked chips. SMEs New Sehati is the Small and Medium Enterprises (SMEs) that produce home-cooked chips. SMEs did not have a distribution method so that the transportation costs incurred quite high. After saving matrix method was applied, SMEs was able to save its distribution costs by 30%. This study does not propose delivery schedule.

  What makes this study different is Fahmi added Generalized Assignment method. Both methods are compared and the result that is saving matrix method produced a shorter distance compared with with generalized assignment method.

  2. Fahmi (2013) conducted a study titled "Capacitated Vehicle Routing Problem (CRVP) Completion Comparative Study Using Saving Matrix and Generalized Ass ignment Methods‖.

  1. Operation Management Krajewski, Ritzman, dan Malhotra (2010:24) defined Operation management as a sistematic design, directions, and control of a process that changes input into products or services for consumers. While the operation itself is a group of sources that do all or some parts of processes. These processes can be combined into a supply chain which connects internal and external processes of company.

  2. Supply Chain Management According to Hiezer dan Reinder (2014:468), Supply chain management is a coordination between all supply chain activities, started with raw materials and ended with a satisfied customer. Thus, a supply chain is consisted of suppliers, factories, distributor, retailers and/or wholesalers who ship products and/or services to the end customer. The purpose of supply chain management is to coordinate the activites of the supply chain to maximize its competitive advantage and benefits to consumers.

  ( ) 2.2.

  = ( )

  5. Productivity Acoording to the OECD Compedion of Productivity Indicators (2015), productivity measures how efficient inputs of a production such as labor and capital which are used to produce an output. This research measures productivity of the new routes compred with the old ones. The formula is

  ℎ

  = ℎ

  4. Efficiency According to Horngren (2008) in Hapsari, Saputra, dan Rismadi (2013), efficiency is the amount of input used to achieve a certain level of output. Thus, efficiency value reflects how many inputs required to produce a given outputs. In this research, the percentage describes the efficiency of fuel costs after implementing the new routes. The formula used is:

  3. Saving Matrix Wongso (2012) in Putranto and Hendayani (2014) stated that saving matrix is a tool do determine distribution routes based on customers coordinate and transporter capacity.

  Related Literature productivity generated by 85.11%. Unlike the others, Putranto and Hendayani calculated routes improvements.

  Table 1 Related Literature Giri Fahmi Machmudah Ikfan& Putranto & Ineswari

  Study (2012) (2013) et al (2013) Masudin Hendayani (2017)

  (2014) (2014) Operation Management

  ✔ ✔ ✔ ✔ ✔ ✔ Route Determination

  ✔ ✔ ✔ ✔ ✔ ✔

  Saving matrix

  ✔ ✔ ✔ ✔ ✔ ✔ Customers Location

  ✔ × × ✔ ✔ ✔ Determination

  × × × × × ×

  Scheduling Routes Improvements

  × × × × ✔ ✔

  Research Object

  × × × × × ✔

  (Logistic Company) This research is done based on the related literatures by Giri (2012), Fahmi (2013), Machmudah et al (2013), Ikfan (2014), and Putranto & Hendayani (2014).

2.3. Research Method

  There are some steps to determine the routes:

  1. Identify matrix distance The purpose of this step is to calculate the distance between customers. The formula to identify matrix distance is: _{2 2}

  ) + ( ) 1,2 = ( ^{1 − 2 1 − 2} Where:

  X1 is X coordinate for customer 1 X2 is X coordinate for customer 2 Y1 is Y coordinate for customer 1 Y2 is Y coordinate for customer 2

  2. Identify saving matrix First, it is assumed that every customer will be exclusively visited by one transporter. So, there will be distance reduction if some customers are visited by the same transporter at once. Saving matrix takes place in combining these customers. If customer 1 and customer 2 are visited seperatedly, the total distance will be the distance from warehouse to customer 1 and vice versa, summed with the distance from warehouse to customer 2 and vice versa. On the other hand, if these two customers are visited at once, the total distance will be the distance from warehouse to customer 1, customer 1 to customer 2, and customer 2 to warehouse.

  3. Alocate customers into distribution routes The calculation in this step is based on the calculation result on the preveious step. Customers will be divided into some routes by considering the saving matrix distance and also the capacity of each transporter used. A route will be categorized as a feasible route when the number of total customers do not exceed the limit of transporters and the total demand can be carried by one transporter. This step is started by sorting the saving matrix value between two different customers from the biggest to the smallest. Then, those customer will be placed into some transporters which are able to carry all the demands. If the capacity of the transporter is full, then the next customer will be placed in a different transproter which also be the different route.

  4. Sort customers on route into a correct order There are two similar ways to create optimal customers orders, nearest insert and nearest neighbor.

  a. Nearest neighbor First thing to do in this step is identify the nearest customer from warehouse. Then, that customer becomes the first visited customer in the route. After that, identify the second customer which has the shortest distance to the first customer. That customer will be the second visited customer and so on.

  b. Nearest insert The ordering concept of this method is by sorting the distance of customers from the nearest to the farthest from warehouse.

  5. Calculate improvement method to the selected routes Eventhough the optimal distribution routes have been obtained, the distance still can be reduced using 2-opt and or-opt method.

  a. 2-opt This method moves two paths on the existing route, then reconnects the path with a different point. The analysis technique can be seen in the following figure b. Or-opt

  Or-Opt method is identical to 2-opt method. The difference is, the number of paths that can be removed and added are more than two. The basic concept of this method is to relocate several nearby customers.

  2.4. Data Collection

  1. Primary Data The primary data is collected by doing an interview with X. Logistic Sdn Bhd director and operational manager. The first writer also did an observation while doing an internship at the company.

  2. Secondary Data The data is collected by reading, understanding, and studying the object from other media; literature, company‘s documents, and books. The secondary data gathered are company profile, vission, and mission from its website, distance among customers from Google Maps, and some information about research methods from books, thesis, papers, and other references.

  2.5. Framework of Thinking

  Naik and Glickfeld (2015) stated that distribution system efficiecny reflects retailers ability to maintain, operate, and control the distribution system. Putranto and Hendayani (2014) declared that as an effort to increase sales, company needs to make a system or route that well managed to ease distribution process. Therefore, saving matrix method is used to obtain the optimal routes. After calculating the saving matrix method, there is two additional methods, 2-opt and or-opt to get the shortest routes as the output. These methods are proved by Baldacci, Battara, and Vigo (2008) to produce better service by providing shortest routes. While Indrawati (2014) stated that in the VRP, achievable goal is to find the shortest route distribution using a minimum number of vehicles.

  This objective of this research is to create system efficiency. This efficiency can be obtained by determining the most optimum distribution routes. This research can be said successful in meeting system efficiency if only the routes created genereate better calculation. Routes can be said as a better ones if only the fuel cost of the new routes is smaller. The first step of this study is formulizing the vehicle routing problem. Then, saving matrix method was chosen because this method suits the real condition of the company. After calculating the saving matrix, the calculated routes are improved using or-opt and 2-opt method on Vehicle Routing Problem (VRP) Solver ver 1.3. The result of these improvements is used as a reference to compare the distribution cost before and after the saving matrix method is applied. The smallest will be used by company to reduce its distribution cost.

3. DISCUSSION

  X Logistic Sdn Bhd main business activity is to distribute FMCG products to its customers which are seperated among Malaysia. The transporters used is Proton trucks with 3000 cartons capacity. The distribution area is divided into four main regions; Central, Southern, Northern, and East Coast. There are some sub regions in every region. The main calculation is using saving matrix methode. This method can be done only if the data required are complete, there are: total demand (in carton) of each sub region, the coordinate of each sub region that was obtained using Google Maps, and the distance between each sub region to X Logistic Sdn Bhd‘s warehouse which also obtained using Google Maps. Saving matrix method created delivery routes and the order of customers that will be visited. The results are divided based on the main distribution regions:

  1. Central Table 2 Calculation Result for Central Region

  

Route Customer Total Distance (km)

  G-3-4-46-45-44-41-43-40-42-51-21-

  1 286.23

  54-56-53-55-19-26-52-49-48-50-47- 36-34-G

  2 122.29

  G-6-8-7-2-9-29-5-23-G G-20-22-16-18-17-27-25-24-30-33-

  3 149.04

  32-G G-28-31-35-37-38-39-15-10-14-11-

  4 119.68

  12-13-G

  Total 677.24 For the Central region, before saving matrix method is implemented, the total distance is 625.63 kilometers. After combining or-opt and 2-opt method, the total distance became higher which is 677.24 kilometers with the productivity level of 108,24%. The maximum level of productivity is only 100%, so it can be concluded that the new route is less productive than the old one. So, the Central region will use only the saving matrix method without the combination of or-opt and 2-opt method.

  Figure 1: Central Region Routes Visualization The visualization is created by VRP Software ver 1.3. Each color represents a single route. First route which is warehouse-customer 3-customer 4-customer 46-customer 45-customer 44-customer 41-customer 43-customer 40-customer 42-customer 51-customer 21-customer 54-customer 56-customer 53-customer 55-customer 19-customer 26-customer 52-customer 49-customer 48-customer 50-customer

  47-customer 36-customer 34-warehouse is indicated by dark blue line. Second route which is warehouse- customer 6-customer 8-customer 7-customer 2-customer 9-customer 29-customer 5-customer 23- warehouse is indicated by red line. Third route which is warehouse-customer 20-customer 22-customer 16-customer 18-customer 17-customer 27-customer 25-customer 24-customer 30-customer 33-customer 32-warehouse is indicated by green line. Last route which is warehouse-customer 28-customer 31- customer 35-customer 37-customer 38-customer 39-customer 15-customer 10-customer 14-customer 11- customer 12 –customer 13- warehouse is indicated by light blue line.

  2. Southern Table 3 Calculation Result for Southern Region

  

Route Customer Total Distance (km)

  1 G-3-6-5-2-9-4-7-8-G 159.87

  2 G-10-G

  83.65

  3 G-11-14-15-22-28-17-G 452.82

  4 G-12-16-G 231.82

  5 G-13-G 139.23

  6 G-19-25-20-19-21-23-24-29-27-26-G 388.77

  Total 1456.16

  The second region is Southern. Before saving matrix method is implemented, the total distance is 3945.40 kilometers and the total routes is seven. After combining or-opt and 2-opt method, the total distance and routes were reducing to 1456.16 kilometers and six routes. Then, the productivity level of this region is calculated. The result is 37.09%.

  Figure 2: Southern Region Routes Visualization

• – First route which is warehouse-customer 1-customer 3-customer 6-customer 5-customer 2 customer 9-customer 4 –customer 7-customer 8-warehouse is indicated by dark blue line. Second route which is warehouse-customer 10-warehouse is indicated by red line. Third route which is warehouse- customer 11-customer 14-customer 15-customer 22-customer 28-customer 17-warehouse is indicated by green line. Fourth route which is warehouse-customer 12-customer 16-warehouse is indicated by light blue line. Fifth route which is warehouse-customer 13-warehouse is indicated by purple line. Last route which is warehouse-customer 19-customer 25-customer 20-customer 19-customer 21-customer 23- customer 24-customer 29-customer 27-customer 26-warehouse is indicated by yellow line.

  3. Norhtern Table 3 Calculation Result for Northern Region

  Route Customer Total Distance (km)

  G-6-9-15-16-20-22-23-25-24-21-18-19-14- 1 13-8-19-7-G 649.63

  2 G-5-2-3-4-12-11-17-G 519.02

  Total 1168.65

  The third region is Northern. The or-opt and 2-opt method did not reduce the total routes but reduce only the total distance. Before saving matrix method is implemented, the total distance is 1880.91 kilometers. After combining or-opt and 2-opt method, the total distance is now 1168.65 kilometers with the productivity level of 62.13%.

  Figure 3: Northern Region Routes Visualization Dark blue line represents the first route which is warehouse-customer 6-customer 9-customer

  15-customer 16-customer 20-customer 22-customer 22-customer 23-customer 25-customer 24-customer 21-customer 18-customer 19-customer 14-customer 13-customer 8-customer 19-customer 7-warehouse. While the red one represents the second route which is warehouse-customer 5-customer 2-customer 3- customer 4-customer 12-customer 11-customer 17-warehouse.

  4. East Coast Table 5 Calculation Result for East Coast Region

  Route Customer Total Distance (km)

  1 G-4-G 256.13

  2 G-5-6-9-G 363.88

  3 G-7-2-19-13-15-21-18-20-16-8-10-G 686.94

  4 G-11-12-14-17-3-G 1399.64

  Total 2706.59

  The last region is East Coast. The or-opt and 2-opt method did not reduce the total routes but reduce only the total distance. Before saving matrix method is implemented, the total distance is 5175.91 kilometers. After combining or-opt and 2-opt method, the total distance became 2706.59 kilometers and the productivity level is 52.59%. On the other hand, there are some factors that may affect this productivity level such as warehouse stocks, traffic, and the employers itself.

  Figure 4: East Coast Region Routes Visualization The first route is represented by the dark blue line which is warehouse-customer 4- warehouse. The red line represents the second route which is warehouse-customer 5-customer 6- customer 9-warehouse. The green line represents the third route which is warehouse-customer 3- warehouse. The last route is indicated by the light blue line which is warehouse-customer 11-customer 12-customer 14-customer17-customer 3-warehouse.

  4. CONCLUSION

  This research object is located in X Logistic Sdn Bhd, Subang Jaya, Selangor, Malaysia. The study was conducted for approximately four months, from September 2016 to December 2016. X Logistic Sdn Bhd has more than 300 customers, spread all over Malaysia. However, the company refused to give all the customers data. Therefore, the location of customers which belong to the same sub region seen as a single distribution poin that represents that sub region. While the quantity of demanded products is accordance with the original conditions. Due to the limited data given by company, there are some assumptions applied in this study; paths used are two-way roads so the distance from origin (warehouse) to destination (customers) and vice versa are the same, all customer orders can be fulfilled by the company, customers demand is fixed and known in advance, the distance from customer A to B equals the discance from customer B to A, and the diesel price is stable at 2.05 Ringgit Malaysia (RM)/Liter.

  From the calculation that had been done, it can be concluded that the distribution routes that should be taken by X Logistic Sdn Bhd is divided into four major regions. For the Central region, the routes that should be implemented is the route before improvements. There are four routes and the total distance is 625.63 kilometers. For the Southern region, the improved routes that should be implemented. There are six routes, the total mileage is 1456.56 kilometers. The best routes for Northern region are the result of improvements method, the total routes are two and a total distance is 1168.65 kilometers. The last region, East Coast also should implement the improved routes. The total distance is 2706.59 and the total routes are four. The other things that can be concluded is the productivity level. Productivity of Central region is 108,24%, Southern region is 37,09%, Northern region is 62, 13%, and East Coast region is 52.29%. While the distribution cost efficiency that successfully obtained is 30,37%, equals 4.070,63 RM.

  There are also some suggestions for future studies, which are: future studies should compare and combine saving matrix method with other VRP method to create shortest routes and also. Future research should also help company to implement distribution routes periodically.

  5. REFERENCES

  Anonymous. (2014). Thirst Quenching: Indonesia‘s Food & Beverage Industry. [online].

  Availab 24 September 2016. Fahmi. (2013). Studi Komparasi Penyelesaian Capacitated Vehicle Routing Problem (CVRP) dengan

  Metode Saving Matrix dan Generalized Assignment

• – Jurnal Jurusan Matematika, 1. Taken from Universitas Brawijaya Journal.

  Giri. (2012). Analisis Routing dan Scheduling dengan Menggunakan Metode Saving Matrix untuk

  Pengiriman Area Modern Trade (Mt) di Desc-Kimberly Indonesia - 1. Taken from Universitas

  Muhammadiyah Surakarta Online Journal. Hapsari, Saputra, and Rismadi. (2013). Evaluasi Efektivitas Pengendalian Biaya Produksi dan Efisiensi Biaya Produksi (Studi Kasus di PT. XYZ). JAMS – Journal of Management Studies Vol. 02, No.

  01. 41. Diambil dari Research Gate. Heizer and Render. (2014). Operations Management: Sustainibility and Supply Chain Management.

  New York: Pearson Education Limited. Ikfan, Noer dand Ilyas Masudin. (2014). Saving Matrix untuk Menentukan Rute Distribusi - Jurnal

  

Ilmiah Teknik Industri, 2 (1), 14. Taken from Jurnal Ilmiah Universitas Muhammadiyah

Malang.

  Ilham. (4 May 2016). Produk Makanan Indonesia Digemari Warga Malaysia. [online]. Available:

  Krajewski, Ritzman, dan Malhotra. (2010). Operations Management: Process and Supply Chains. New York: Pearson Education Limited. Machmudah, dkk. (2013). Rancang Bangun Sistem Informasi Penentuan Rute Dan Biaya Transportasi

  pada UKM New Sehati – Jurnal Sistem Informasi, 2 (2), 49. Taken from STIKOM Surabaya Journal.

  Putranto, Rizal dan Ratih Hendayani. (2014). Distribution Route Optimization by Utilizing Saving

  

Matrix: Case Study In. Limas Raga Inti Bandung – European Journal of Economics and

Management, 1 (2), 167. Taken from Research Gate.

  Secretary-General of the OECD. (2015). OECD Compendium of Productivity Indicators 2015. Paris: OECD Publishing. Wongso, Teodora. (2012). Optimalisasi Penentuan Rute dengan Pendekatan Forecasting dan Metode Saving Matrix Serta Perancangan Sistem Informasi Pendistribusian Barang pada Tirta Bintaro.

  Thesis at Universitas Bina Nusantara.

I-FOCUS Model: Today and Future OOH Media Industry

• – Ethical Consideration Jimmy Lizardo, Yosef Dedy Pradipto

I-FOCUS Model: Today and Future OOH Media Industry

• – Ethical Considerations

  1

  2 Jimmy Lizardo , Yosef Dedy Pradipto

  1 Doctor of Research in Management / Bina Nusantara University, Indonesia,

  2 Psychology Department, Faculty of Humanities / Bina Nusantara University, Indonesia,

ABSTRACT

  Out of home media as part of the creative industry is a business that has huge growth potential, even the out of home media penetration in Indonesia become the second highest after television. However, this growth leads to changes in the out of home media industry that become a phenomenon in the strength of industry competition and affect the business performance of the out of home media industry. This study examines the strategic management as an alternative model (I-FOCUS Model) of the solution in improving the business performance of the out of home media, which is based on four aspects: the implementation of Digital Innovation, an adaptation of the Forces Driving Competition, increasing the Core and Unique capabilities. The process of I-FOCUS Model in the business of Out of Home Media must think about the ethical side, because creativity in advertising content is shown in digital out of home media that is personal and fulfill the current ethics.

  Key Words : Business Ethics, Digital Innovation, Strategic Management I.

   Introduction

  Currently, there is a major transformation in the world economic order. Business persons are required to have insight, imagination, and high creativity to generate a competitive advantage in generating an economic added value. To succeed in the intense competition and rapid changes in the global economy the competition is no longer limited to the efficient management of raw material, service standard, and development of technology. The ability to focus on the power of innovation and seize every opportunity to offer products and services produced in a creative, artistic, and always foremost with brilliant ideas will gain a major place in the present.

  That phenomenon has been explained partly by some of the classic modern theory in the period of 1950 - 1960; Walt Whitman Rostow pioneered one of them in The Stages of Economic Growth (1960). Modernization theory by Rostow shows that every stage of development can be attributed to the change from an agrarian society with traditional culture into the society of rational, industrial, and focuses on the service economy. In the last stage of development, the consumption is no longer limited to the necessities of life but has turned to a higher need. There were changes in the orientation of production and economic surplus that is not solely used for investments but also used for social welfare and sustainable development.

  Economic development that had been providing increased prosperity for mankind portrayed by Pink (2005) went through several stages. Development of the world economy begins with the growth of the agricultural sector, followed by the industrial era, the dominance of information technology, up to the current conceptual era. Figure 1.1 shows how from time to time there has been a shift in the global economic order of the agricultural era to the conceptual era which in parallel followed by increased Affluence (prosperity), technology and globalization (ATG) in that era. This indicates that there is a positive correlation between the developments of the world economy with the increased of ATG as described in the classic modern theory.

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  Figure1.1

  World Economy Experiencing Shift and the 21st Century is a ―Conceptual Age‖ Source: Daniel H. Pink, A Whole New Mind, New York, Riverhead Books, 2005

  The agricultural era in the 18th century has the lowest level of ATG; there were a lot of local and regional only products with the use of simple technology so that the level of prosperity in the era was limited. The 19th century was the century of industry; in 1876 a steam engine was introduced that resulted in the revolution of the system of manufacture goods to become bulk and faster. This era showed a higher level of ATG because of advances in technology and the ability to market goods become more widely thanks to the application of steam engines on ships.

  The 20th century is the information era. At this time, a microprocessor began to be created for a computer device that plays a significant role in encouraging the exchange of data and information through the Internet, so that space and time to access the information became unlimited. The opening of opportunities in accessing information data encourages faster economic growth, so capitalization is growing and has caused the rising of ATG in all regions of the world.

  The 21st century or present time is a conceptual era. The new idea to make people more prosperous becomes the primary focus in the development of the world economy. Innovations, inventions, and creativity are the main assets to enhance the excellence and provide an opportunity to lead the global economy. ATG value in this era is higher than ever because technology and globalization are the main requirements so that a country's prosperity becomes unlimited. When the era of labor or skilled worker intensive then it takes about 10,000 or 100,000 people for 100 industries, hence the knowledge-creative intensive of a person will contribute economically start from himself up to other elements of the industry. The industry with conceptual and creativity basis is known as the creative industry.

II. Theoritical Framework Creative Industry, Advertising Industry and Out of Home Media

  The creative industry has been around since the era of the agricultural, industrial, and information. But, at that time the level of human needs and the level of social interaction have not reached its present state, so in the era before the creative economy, the industry was not the center of attention or focus in the industrial development which is believed to contribute positively to the economy of a nation. This was revealed by Peter Drucker (2000) that "The success and failure of each country will be decided by the cultural industries in the 21st century. The final battleground is the cultural industry ".

  The unlimited innovation opportunities in the creative industry had also been formalized by the Indonesian government through Presidential Decree No. 6 of 2009 on the Development of Creative Economy and Creative Economy Development Plan 2009-2015, as well as the Development Plan of 14 sub-sectors of creative industry 2009-2015 by the Department of Tourism and the Creative Economy. Indonesian Ministry of Trade has also developed Guidelines for Development of Creative Economy Indonesia towards 2025

  Creative industry can provide added value in several aspects of life, not only from the point of view of economics but can also provide a positive impact on other aspects. For example improving the image and identity of the nation, foster innovation, and creativity of the nation, promotes the environment-friendly industry because using renewable resources, as well as having a positive impact in improving social relationships between people. Due to these reasons, it is very necessary for the creative industry to be developed in Indonesia.

  Creative industry today which is growing rapidly is the digital technology-based creative industry. The future of the creative industry cannot be separated from the ability of the digital creative industry players in the use of Information and Communication Technology (ICT). Technology plays a significant role in the digital creative industry to stimulate the development of new product and service, distribution channel, business model, and even the possibility of expansion into the new sector of the economy. The example of ICT great role for the digital creative industry is in distributing content and software application by establishing a market for the digital industry players.