THE IMPACT OF INCREASING CUSTOMER SERVICE LEVEL MEASURED BY OTIF (ON TIME IN FULL) THROUGH NEW SUPPORT POINTS FROM AN EFFECTIVE PARTS SUPPLY CHAIN DISTRIBUTION DESIGN ON SPARE PARTS SALES AT PT XYZ MEDAN BRANCH

Abstract

This study aims to boost sales at PT XYZ, especially at the Martabe Site. A problem was found with the customer service level measured by OTIF (On-Time In-Full) rates because there are no support points at the Martabe Site. So, this situation risks delaying delivery due to the long distance (367 km or 12 hours by land transportation) between Medan and Martabe. Low OTIF rates align with the low availability of parts at PT XYZ. Availability of parts is the ability to supply demand with PT XYZ's stock. So, customers buy from other competitors, which is ready on site. This study designs new support points based on accurate demand forecasting and feasibility assessments of this investment based on the Internal Rate of Return (IRR) index. As a result, new support points guaranteed the availability of parts to make the item In-Full and decrease lead time delivery to make the item On-Time. Thus, this improvement enhances the customer servicelevel measured by OTIF rates to minimize lost deals and get repeated orders. After building a new support point at the Martabe site, sales increased by 74% and contributed to the growth of sales in the Medan area by 44%.