1

THE ANALYSIS OF EFFECTIVENESS IN PURCHASING DEPARTMENT

(A CASE STUDY: SHIPPING DIVISION OF PT.COSL INDO)

THESIS

BY

Mi Bo

005200800023

Presented to

The Faculty of Economics, President University

In partial fulfillment of the requirements

For

Bachelor Degree in Economics, Major in Management

President University

Cikarang Baru – Bekasi

Indonesia

December 2011

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DECLARATIONDECLARATIONDECLARATIONDECLARATION OFOFOFOFORIGINALITYORIGINALITYORIGINALITYORIGINALITY

I declare that this thesis, entitled ““““THETHETHETHE ANALYSISANALYSISANALYSISANALYSIS OFOFOFOF

EFFECTIVENESSEFFECTIVENESSEFFECTIVENESSEFFECTIVENESS ININININ PURCHASINGPURCHASINGPURCHASINGPURCHASING DEPARTMENTDEPARTMENTDEPARTMENTDEPARTMENT ((((AAAA CASECASECASECASE

STUDYSTUDYSTUDYSTUDY :::: SHIPPINGSHIPPINGSHIPPINGSHIPPING DIVISIONDIVISIONDIVISIONDIVISION OFOFOFOF PT.COSLPT.COSLPT.COSLPT.COSL INDO)INDO)INDO)INDO)” is, to the

best of my knowledge and belief, an original piece of work that has

not been submitted, either in whole or in part, to another university to

obtain a degree.

Cikarang, Indonesia, 16 December 2011

Mi Bo

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ABSTRACTABSTRACTABSTRACTABSTRACT

Effectiveness is a very important term in business. By being efficient, it can bring

a lot of benefits to people; people can know a lot from it. People can know the

factors influence the purchasing effective in PT. COSL INDO. People can know

the importance of the purchasing effectiveness for one Service Company,

especially for oil service industry. People can learn a lot from it. Base on

researcher’s deeply survey, people can see a lot of shortage in PT. COSL INDO;

finally, people can know the importance of purchasing effectiveness for one

company, especially for service industry.

This research is focusing in Chinese Oilfield companies in Indonesia where there

are at least three main reasons; the researcher as one purchasing staff in shipping

division, PT. COSL INDO. It is not so hard to get relevant primary data, the topic

is suit with the researcher’s job, can more easily get original data, can know the

weakness from the procedure process. Second, modern society is an effectiveness

society, we should be increasing our working effectiveness, and otherwise, you

will be fire out by this society. This is a special case, we can learn a lot from it,

base on this research, for the researcher, for the company, all can get more

experience and more good advises to improve the effectiveness of purchasing.

The theory build up this research is Qualitative method, the researcher use the oral

interview, observation, documentation, confirmation four ways to analyze this

case, analyze the factors which can make the purchasing process in purchasing

department become more effectiveness, can be have a further impact on the

purchasing department in PT. COSL INDO, especially for shipping division.

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ACKNOWLEDGEMENTACKNOWLEDGEMENTACKNOWLEDGEMENTACKNOWLEDGEMENT

First of all I would like to thanks to my lovely parents. Even though they are in

China, they had given me many suggestions and encouragements through phone

and letters every day. When I had met some difficulties about my study and thesis,

they never blamed on me.

Thanks to my respondents in PT.COSLINDO which had helped me a lot for my

data collections, show me a lot of things, the employees were really helpful with

great patience and encouragement, continued to offer me an opportunities to get

good papers on excellent research topic entitled ““““TheTheTheThe analysisanalysisanalysisanalysis ofofofof EffectivenessEffectivenessEffectivenessEffectiveness

InInInIn PurchasingPurchasingPurchasingPurchasing DepartmentDepartmentDepartmentDepartment ((((AAAA CaseCaseCaseCase Study:Study:Study:Study: ShippingShippingShippingShipping DivisionDivisionDivisionDivision ofofofof PT.COSLPT.COSLPT.COSLPT.COSL

INDO)INDO)INDO)INDO)””””....

I would also like to take this chance to thank all the people who have contributed

to this completion of my thesis writing, especially to:

1. Mr.Irfan, the Head of Management Study Program President University.

2. Mr.Purwanto, the excellent lecture gives me many good suggestions for my

Thesis.

3. Mr.Vasu and Mr.Sonny, my lecturer and my advisors for whole their

knowledge.

4. My entire great lecturer in President University for great experiences during

my study in President University.

5. All my friends in President University, Thank you very much for you selfless

help and Taught me a lot of new lessons

MiMiMiMi BoBoBoBo

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TableTableTableTable ofofofof ContentContentContentContent

THESIS ADVISER..........................................................................................................................1DECLARATION OF ORIGINALITY..................................................................................................2ABSTRACT...................................................................................................................................3ACKNOWLEDGEMENT................................................................................................................ 4Table of Content......................................................................................................................... 5CHAPTER I...................................................................................................................................8INTRODUCTION.......................................................................................................................... 8

1.1 Research Background................................................................................................... 81.2 Problem Identification and Statement....................................................................... 101.3 Research Scope and Limitation.................................................................................. 121.4. Research Objectives.................................................................................................. 131.5 Research Benefits....................................................................................................... 131.6. Research Method...................................................................................................... 14

CHAPTER II................................................................................................................................15LITERATURE REVIEW.................................................................................................................15

2.1 Theories About Purchasing........................................................................................ 152.2 Customer Feedback and Service Recovery.................................................................17

2.2.1 Understanding Customer Responses To Service Failures................................ 182.2.2 What do customers expect once they have made a complaint?.....................182.2.3 Customer Responses To Effective Service Recovery........................................20

2.3 Service Quality............................................................................................................212.3.1 The Components of Quality Service................................................................ 212.3.2 Improving service quality and productivity.....................................................222.3.3 Measuring and improving service quality....................................................... 23

CHAPTER III...............................................................................................................................24METHOD OF DATA PROCESSING AND COMPANY’S EXISTING CONDITION...............................24

3.1 Research Method:...................................................................................................... 243.1.1 Source of Data:................................................................................................ 25

3.2 Company’s Existing Conditions...................................................................................273.2.1 About COSL......................................................................................................273.2.2. Company’s Operate and Organization Structure............................................293.2.3 Some Existing Conditions inside PT. COSL INDO’s Routine Operation.............30

CHAPTER IV.............................................................................................................................. 35ANALYSIS AND EVALUATION.....................................................................................................35

4.1Purchasing Existing Condition Analysis....................................................................... 354.2Why Purchasing Management is so important?......................................................... 354.3 The Analysis of Delivery Process in PT COSL INDO.....................................................394.4 The Analysis of Relevance between Customer’s Complaint and APTR Related toPurchasing Effectiveness.................................................................................................. 44

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CHAPTER V............................................................................................................................... 47CONCLUSION AND RECOMMENDATION.................................................................................. 47

5.1. Conclusion................................................................................................................. 475.2 .Recommendation............................................................................................ 49

5.2.1 Suggestion for PT. COSL INDO......................................................................... 495.2.2 For further researcher..................................................................................... 49

BIBLIOGRAPHY..........................................................................................................................50Appendix.................................................................................................................................. 52

ListListListList ofofofof TableTableTableTableTable 1.1 Show The Oilfield Service Market Share In The World. .........................2

Table 2.1 Depicts the Customer response categories to service failures.................. 10

Table 2.2Three Dimensions of Perceived Fairness in service Recovery.................. 12

Table 2.3Components of an Effective Service Recovery System.............................. 14

Table 4.1 is the existing purchasing in PT. COSL INDO.............................................30

Table 4.2 Purchasing outline figure base on the discussion with Shipping

Purchasing Department.

..................................................................................................................................................32

Table 4.3 The Material Tracking Document in PT. COSL INDO.............................. 34

Table 4.4 PT. COSL INDO (Shipping) Barge Cargo Manifest...................................35

Table 4.5 Outstanding Requisition....................................................................................37

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ListListListList ofofofof FiguresFiguresFiguresFiguresFigure 3.1 to show the brief history of China Oilfield Service Limited (COSL)... 22

Figure 3.2 Organization Structure of PT. COSL INDO............................................................24

Figure 3.3 is the brief flowchart of Purchasing Department.......................................... 25

Figure 3.4 is the barge’s downtime statistic related to purchasing speed................. 26

Figure 3.5 is the APTR’s performance.............................................................................27

Figure 3.6 The Relevance Between Customers’ Complaints And APTR.................28

Figure 4.6 Shows the typical example of Customer’s Complaint from CNOOC

Regarding to Purchasing Speed Issue.

..................................................................................................................................................38

Figure 4.7 The Effective Service Recovery System ................................................... 39

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CHAPTERCHAPTERCHAPTERCHAPTER IIII

INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION

1111.1.1.1.1 ResearchResearchResearchResearch BackgroundBackgroundBackgroundBackground

Oil Exploration and Production is a complex process, and each step of the oil

supply chain involves specialized technology. Oil reservoirs are identified through

geological field work, geological modeling, seismic imaging and exploratory

drilling. Oil is then extracted with production equipment and transported in

tankers and pipelines. Oil refineries refine crude oil into various marketable end

products including gasoline, diesel fuel, jet fuel, marine fuel, petrochemical

feedstocks and other chemicals. Most oil companies, even vertically integrated

giants like Chevron and Exxon Mobil, don't build the equipment needed to

complete all of these difficult and costly tasks. Instead, oil companies turn to

engineering and industrial firms that build and operate the oil rigs, tankers, and

pipelines that are the backbone of the industry. These oilfield services companies

provide the infrastructure, equipment, intellectual property and services needed by

the international oil and gas industry to explore for, extract, and transport crude oil

and natural gas from the earth to the refinery, and eventually to the consumer.

These companies deal in a wide range of oilfield services, allowing them access to

markets ranging from seismic imaging to deepwater oil exploration. They are

Schlumberger, Halliburton, Baker Hughes, and Weatherford international; they are

the leading oilfield service companies in the world.

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BelowBelowBelowBelow TableTableTableTable 1.11.11.11.1 ShowShowShowShow TheTheTheThe OilfieldOilfieldOilfieldOilfield ServiceServiceServiceService MarketMarketMarketMarket ShareShareShareShare InInInIn TheTheTheTheWorld.World.World.World.

(Source: http://www.wikinvest.com/industry/Oilfield_Services)

This graph shows market share for the United States' contract onshore drilling

market in FY 2007. Market share is determined by the number of rigs owned and

operated by the respective drilling companies.

Oilfield services companies provide the equipment and services used in the

exploration for and extraction of oil and natural gas. Companies that provide

oilfield services such as Blowout Preventer (BOP) Testing include K & K Energy

Services, LLC and others.

There are some world-class oilfield service companies who owned business in

Indonesia market. For example, Haliburton Company from USA, Schlumberger

Company from USA, Baker Hughes from USA, Medical Energi, and PT. COSL

INDO.

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China oilfield service limited (COSL) is the biggest offshore oilfield service

company in Asia. It is the unique company who own a chain of completed oilfield

service procedures. It is Including Drilling, Seismic Vessel, Oil field Chemical,

Production Optimization, Welltech Service, Marine Shipping support. PT. COSL

INDO is one subsidiary company of COSL who established in 2005, the office

address is in Prudential Tower, 21st floor, Jl. Jend. Sudirman Kav.79 Jakarta

Selatan 12910. The Biggest clients in Indonesia market including Pertamina, Shell

Indonesia, Mobil Sumatera, CNOOC (China National Ocean Offshore

Cooperation), Petro China International, Total Bapua and so on.

The Researcher’s position in PT. COSL INDO is purchasing assistant, since from

internship. So the researcher knows all the purchasing procedures during the

process. So, the researcher can collect the primary data and seek other information

easily. PT. COSL INDO is an oil service company. For the researcher, who works

in shipping division, so, all the purchasing procedures are same. The researcher

can collect all the data soon and keep it validity. PT.COSL INDO is a Chinese,

National company, it is a typical case. If PT. COSL INDO can increase its

effective, it can help it increase its contract implementing process. Can be mange

a good relationship well and build a good loyalty with our clients. Try to help PT.

COSL INDO keep and develop a good word of mouth in oil service industry. It

can help PT.COSL INDO achieve more marketing shares in Indonesia market.

The researcher thinks that choose PT COSL INDO as the research objective has

more meaningful for later researchers further research.

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1111.2.2.2.2 ProblemProblemProblemProblem IdentificationIdentificationIdentificationIdentification andandandand StatementStatementStatementStatement

The problems may be various symptoms such as, weaknesses in management

control, problem in operating system or procedures, performance trend in several

periods or at the end of a period, and problems in marketing or finance. They may

also be a description about the problems because of the implementation of new

technology or new management system. The Other management problems in an

organization, Researcher must state the problems that below:

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Should be answered or solved by this research. Therefore they may be stated in a

question form such as;

1. What are the factors which can make the purchasing process in purchasing

department become more effective?

The researcher think above question is the core question during the procedure of

purchasing. If above questions can be solved, the researcher believes for the

purchasing procedure can be done more efficiency than before. Can be make

purchasing department not a weakness in PT. COSL INDO; PT. COSL INDO can

implementing the service better than before, can get a good award from the clients,

and can be done projects well. As a result, it can be improve the management

level and inter-control system.

1.31.31.31.3 ResearchResearchResearchResearch ScopeScopeScopeScope andandandand LimitationLimitationLimitationLimitation

The scope of the researcher is in PT. COSL INDO, shipping division. What the

researcher focus is purchasing speed. For this thesis, the researcher just focus on

the factors which can make the purchasing process in purchasing department

become more effective in PT. COSL INDO.

TTTThehehehe limitationslimitationslimitationslimitations forforforfor thethethethe researcherresearcherresearcherresearcher areareareare statestatestatestatedddd below:below:below:below:

The researcher limits the study only focus on what are the factors which can make

the purchasing process in purchasing department become more effective.

Although there is various of factors impact on the purchasing effectiveness, the

researcher had done with the best effort and contribution to have this research

done effectively.

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1111.4..4..4..4. ResearchResearchResearchResearch ObjectivesObjectivesObjectivesObjectives

The objectives of this research are:

1. To analyze how to make the purchasing processes in purchasing department

become more effective.

1111.5.5.5.5 ResearchResearchResearchResearch BenefitsBenefitsBenefitsBenefits

Research benefits are the benefits that can be obtained by management of the

company, the researcher, and other researchers or readers.

PT. COSL INDO

Since the researcher chooses PT. COSL INDO as my research company, all of the

data comes from PT. COSL INDO. From this research, can be provide a good

reference for PT. COSL INDO regarding to the response to the customers on time

and improve the purchasing management level. (Purchasing speed direction)

President University

This research is about the study of the factors which can make the purchasing

process in purchasing department become more effective; a case study in PT.

COSL INDO. From this thesis, it can be found how to practice what students have

learnt into their practice, how to collect data and processed them as the thesis

material. For the data be collected can be treated as President University’s

resources for the forward research for service quality related topics.

Students

This research contains the knowledge of purchasing effectiveness in PT. COSL

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INDO. It can provide some references for students who are interested in

purchasing effectiveness topic, especially for students who want to get more

information about Chinese Oilfield Service Industry. They can get an overall

knowledge about the current situation.

1111.6..6..6..6. ResearchResearchResearchResearchMethodMethodMethodMethod

In this qualitative research –Analysis the impact of purchasing effectiveness in

purchasing department on service quality (case study: PT. COSL INDO),

researcher really do the field research in order to get primary data. The PT. COSL

INDO being researcher so that research can get primary data by using types of

evidence instruments, which are:

Inquires of the client

Observation

Documentation

Confirmation

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CHAPTERCHAPTERCHAPTERCHAPTER IIIIIIII

LITERATURELITERATURELITERATURELITERATURE REVIEWREVIEWREVIEWREVIEW

2.12.12.12.1 TheoriesTheoriesTheoriesTheoriesAboutAboutAboutAbout PurchasingPurchasingPurchasingPurchasing

Purchasing refers to a business or organization attempting for acquiring goods or

services to accomplish the goals of the enterprise. Though there are several

organizations that attempt to set standards in the purchasing process, processes

can vary greatly between organizations. Typically the word “purchasing” is not

used interchangeably with the word “procurement”, since procurement typically

includes Expediting, Supplier Quality, and Traffic and Logistics (T&L) in addition

to Purchasing.（Resources: http://en.wikipedia.org/wiki/Purchasing）

In more specific terms, today's purchasing departments are responsible for:

• coordinating purchase needs with user departments

• identifying potential suppliers

• conducting market studies for material purchases

• proposal analysis

• supplier selection

• issuing purchase orders

• meeting with sales representatives

• negotiating

• contract administration

• resolving purchasing-related problems

• maintenance of purchasing records

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Above are the completed processes about purchasing. The researcher can have a

basically understanding about purchasing. These are all the completed sections for

purchasing. If the purchasing efficiency want to be improved, should be know all

the sections well and work together with the fact, try to get one best solution.

(Resources: http://en.wikipedia.org/wiki/Purchasing)

A comprehensive list of objectives for purchasing and supply management

personnel would include:

• to support the firm's operations with an uninterrupted flow of materials

and services:

• to buy competitively and wisely (achieve the best combination of price,

quality and service);

• to minimize inventory investment and loss;

• to develop reliable and effective supply sources;

• to develop and maintain healthy relations with active suppliers and the

supplier community;

• to achieve maximum integration with other departments, while achieving

and maintaining effective working relationships with them;

• to take advantage of standardization and simplification;

• to keep up with market trends;

• to train, develop and motivate professionally competent personnel;

• to avoid duplication, waste, and obsolescence;

• to analyze and report on long-range availability and costs of major

purchased items;

• to continually search for new and alternative ideas, products, and materials

to improve efficiency and profitability; and

• To administer the purchasing and supply management function proactively,

ethically, and efficiently.

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(Resources: http://en.wikipedia.org/wiki/Purchasing)

2.22.22.22.2 CustomerCustomerCustomerCustomer FeedbackFeedbackFeedbackFeedback andandandand ServiceServiceServiceService RecoveryRecoveryRecoveryRecovery

One of the surest signs of a bad or declining relationship is the absence of

complaints from the customer. Nobody is ever that satisfied, especially not over

an extended period of time (Theodore Levitt). Customers will be have a response

and feedback base on your service, just like to err is human, to recover, divine.

(Christopher W.L.Hart, James L. Heskett and W. Earl Sasser JR.2005)

These are the customer response options to service failures, below; table 2.1

depicts the Customer response categories to service failures.

1.Take some form of public actions(Including complain to the firm or to a third

party such as a customer advocacy group, customer affairs or regulatory agency,

or even civil or criminal courts)

2. Take some form of private action (including abandoning the supplier)3. Take no action

ServiceEncounter IsUnsatisfactory

Take Some Form ofPublic Action

Take Some Form ofPrivate Action

Take No Action

Complain to the ServiceFirm

Complain To a ThirdParty

Take Legal Action toSeek Redress.

Negative word ofmouth

Defect (switch provider)

Any one or a Combination of these Responsesis possible

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(Source:Bernd Stauss,”Global Word of Mouth,” Marketing Management,1997)

It is important to remember that any one or a combination of any of the

alternatives may be purchased by the customers. Managers need to be aware that

the impact of a defection can go far beyond the loss of that loss of that person’s

future revenue stream. Angry customers often tell many other people about their

problems. The internet allows unhappy customers to research thousands of people

by posting complaints on bulletin boards or setting up web sites to publicize their

bad experiences with specific organizations (Bernd Status, “Global Word Of

Mouth”, Marketing management, 28-30, 2005)

2.2.12.2.12.2.12.2.1 UnderstandingUnderstandingUnderstandingUnderstanding CustomerCustomerCustomerCustomer ResponsesResponsesResponsesResponses ToToToTo ServiceServiceServiceService FFFFailuresailuresailuresailures

To be able to effectively deal with dissatisfied and complaining customers,

managers need to understand key aspects of complaining behavior, staring with

the questions posted below:

1. Why do customers complain?

2. Where do customers complain?

Above are all the processes and contents included. From in total 2 questions, we

can know the customer responses to service failures clearly. It can be help the

executives to find the dominant factor of customer response.( Service marketing

in Asia, P417. Second edition; Christopher Lovelock, Jochen Wirtz, Hean Tat Keh,

Xiongwen Lu. 2005)

2.2.22.2.22.2.22.2.2WhatWhatWhatWhat dodododo customerscustomerscustomerscustomers expectexpectexpectexpect onceonceonceonce theytheytheythey havehavehavehave mademademademade aaaa complaint?complaint?complaint?complaint?

Whenever there is a service failure. People expect that they be adequately

compensated in a fair manner. However, recent studies have shown that many

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customers feel that they were not treated fairly and did not receive adequate

justice. When this happens, customer reactions tend to be immediate, emotional,

and enduring.(Kathleen Seiders and Leonard L Berry, “ Service Fairness: what it

is and why it matters,” Academy of Management Executive 12, 1990,8-20)

Tax and Brown found that as much as 85 percent of the variation in the

satisfaction with a service recovery was determined by three dimensions of

fairness show in table 2.2

Complaint Handling and service

recovery

Procedural Justice Outcome Justice

Customer satisfaction with

the Service Recovery

dhddhdhdhh

Interactive Justice

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(Source: Stephen S. Tax and Stephen W.Brown,” Recovering and Learning from

Service Failure,” Sloan Management Review 49, no.1 (fall 1998):75-88.)

2.2.32.2.32.2.32.2.3 CustomerCustomerCustomerCustomer ResponsesResponsesResponsesResponses ToToToTo EffectiveEffectiveEffectiveEffective ServiceServiceServiceService RecoveryRecoveryRecoveryRecovery

Service recovery is an umbrella term for systematic efforts by a firm to correct a

problem following a service failure and to retain a customer’s goodwill. Service

recovery efforts play a crucial role in achieving (Or restoring) customer

satisfaction. (Tsung-Chi-Liu, Chi-Tsun-Huang, and Chi –Hsun Lee;

International Journal of service industry Management 14, P436-457; Anna S.

Mattila and Paul G. Patterson, Journal of service research6, P336-346, 2003).

Effective service recovery requires thoughtful procedures for resolving problems

and handling disgruntled customers. It is critical for firms to have effective

recovery strategies, because even a single service problem can destroy a

customer’s confidence in a firm under the following conditions:

� The failure is totally outrageous( for instance, blatant dishonesty on the part of

the supplier)

� The problem fits a pattern of failure, rather than being an isolated incident.

� The recovery efforts are weak, serving to compound the original problem

rather than correct it.

Resources (Leonard L. Berry, on Great Service: A Framework for action (New

York: The free press, 1995) P 94

When one firm gets complain from customers, the first feedback is how to

response it and make customers satisfy. How we can be making it easy for

customers to give feedback? Enable effective service recovery, and establish

appropriate compensation levels. How can make it easy for customers to give

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feedback? How can managers overcome unhappy customers’ reluctance to

complain about service failures? The best way is to directly address the reasons

for their reluctance. Table 2.3 provides an overview of potential measures that can

be taken to overcome the reasons the researcher mentioned before.

(Source: Adapted from Christopher H. Lovelock, Paul G. Patterson, and Rhett

Walker, Service Marketing: Australia and New Zealand(Sydney:Prentice Hall

Australia,1998),455.

2.32.32.32.3 ServiceServiceServiceService QualityQualityQualityQuality

“The very tight competition nowadays causes the emergence of the demand

to produce high customer satisfaction by improving service

quality”(Sureschandar; 2002)

2.2.2.2.3333.1.1.1.1 TheTheTheThe ComponentsComponentsComponentsComponents ofofofof QualityQualityQualityQuality ServiceServiceServiceService

Quality service can maintain loyalty, the credibility of a brand, and can make

customers still buy the products or services offered by a company although

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they have been disappointed before, or experienced a problem with the

company. This has been proven through a research conducted by the

Technical Assistance Research Program (TARP), Washington D.C., and was

reported in a magazine” The Bottom Line Implications of Unmet Customer

Expectations”.

To render quality service, the customer has to be treated special. The service

staff has to give a friendly smile, keep eye contact, know the customer by

name, be professional and give courteous and sincere comments every

possible time.

2.3.22.3.22.3.22.3.2 ImprovingImprovingImprovingImproving serviceserviceserviceservice qualityqualityqualityquality andandandand productivityproductivityproductivityproductivity

1) Quality is the transcendent view of quality is synonymous with innate

excellence-a mark of uncompromising standards and high achievement.

2) The product-based approach sees quality as a precise and measurable

variable.

3) User-based definitions start with the premise that quality lies in the eyes of

the beholder.

4) The manufacturing-based approach is supply based, and is primarily

concerned with engineering and manufacturing practices.

5) Value-based definitions define quality in terms of value and price.

Because of the intangible, multifaceted nature of many services, it may be

harder to evaluate the quality of a service compared to a good.

Base on the subsequent research, found a high degree of correlation between

several of these variables and so consolidated them into five broad

dimensions:

TangiblesTangiblesTangiblesTangibles (appearance of physical elements)

ReliabilityReliabilityReliabilityReliability (dependable, accurate performance)

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ResponsivenessResponsivenessResponsivenessResponsiveness (promptness and helpfulness)

AssuranceAssuranceAssuranceAssurance (competence, courtesy, credibility, and security)

EmpathyEmpathyEmpathyEmpathy (easy access, good communications, and customer understanding)

(Source: Service Marketing In Asia, Second Edition,2005)

2.3.32.3.32.3.32.3.3 MeasuringMeasuringMeasuringMeasuring andandandand improvingimprovingimprovingimproving serviceserviceserviceservice qualityqualityqualityquality

Without measurement, can’t be sure whether service quality gaps exist.

Measurement is needed to determine whether goals for improvement are being

met after changes have been implemented.

It is been divided two parts. Soft measures of service quality; hard measures of

service quality.

For the soft measures, we can use ongoing surveys of account holders by

telephone or post, using scientific sampling procedures to determine customers’

satisfaction in terms of broader relationship issues. Customer advisory panels to

offer feedback and advice on service performance; employee surveys and panels

to determine perceptions of the quality of service delivered to customers on

specific dimensions, barriers, to better service, and suggestions for improvement.

For hard measures, refer to operational processes or outcomes. They include data

such as uptime, service response times, failure rates, and delivery costs.

Enhancing service quality and improving service productivity are often two sides

of the same coin, offering powerful potential to improve value for both customers

and the firm. A key challenge for any service business is to deliver satisfactory

outcomes to its customers in ways that are cost effective for the company. Service

process redesign was presented as an important tool increasing service

productivity. Value, quality, and productivity are all of great concern to senior

24

management .as well as in helping to achieve significant improvements in all of

them.

CHAPTERCHAPTERCHAPTERCHAPTER IIIIIIIIIIII

METHODMETHODMETHODMETHODOFOFOFOFDATADATADATADATA PROCESSINGPROCESSINGPROCESSINGPROCESSINGANDANDANDAND COMPANYCOMPANYCOMPANYCOMPANY’’’’SSSS

EXISTINGEXISTINGEXISTINGEXISTING CONDITIONCONDITIONCONDITIONCONDITION

This chapter will cover the methodology and procedures of the research. The

methodology and procedures will be used in determining the oral interview and

discussion, selecting respondent and determining research instrument. In order to

do this research, there are a couple of steps that need to be followed, while at the

same time, using the high criteria to make sure that study fulfills certain standards.

Furthermore, the methodology and procedures will lead the whole contain of this

chapter.

3.13.13.13.1 ResearchResearchResearchResearchMethod:Method:Method:Method:

Since the purpose of this research is simply finding out the factors and issues to

make purchasing department of PT. COSL INDO become more effective; what

benefits of PT. COSL INDO will be got from this research in the future, the

researcher would be like to use Qualitative Method as a useful tool to do the

research.

A study based upon a Qualitative process of inquiry has been the goal of

understanding a social or human problem from multiple perspectives. Qualitative

Research is conducted in a natural setting and involves a process of building a

25

complex and holistic picture of the phenomenon of interest (Creswell, J.W. 1994.

Manson, J. 1996). Qualitative Research involves analysis of data such as words

(e.g. from interviews), pictures (e.g. video, or objects (e.g. an artifact).

Qualitative Research means “An unstructured, exploratory research methodology

based on small samples that provides insights and understanding of the problem

setting” (Malhotra and Peterson, 2002)

3.1.13.1.13.1.13.1.1 SourceSourceSourceSource ofofofof Data:Data:Data:Data:

This research is conducted from collecting two types of data, they are:

1.1.1.1. PrimaryPrimaryPrimaryPrimary Data:Data:Data:Data:

Primary data is “Data originated by the researcher for the specific purpose of

addressing the research problem” (Malhotra and Peterson, 2002). It is the

information that is developed or gathered by the researcher especially for the

research project on hand.

It refers to the field research conducted in this research, where the data

collected is used for the purpose of testing the hypothesis. In this research, the

primary data is directly collected by interviewing, mailing and phone, direct

observation, and historical/legal documents. In this case study, all research

data is collected and processed through some procedures such as;

� Inquires of the client

In this procedure, researcher asks for oral information (through interviews

and discussion) from the management/staffs, especially in business

development division of the company being researched. From this method,

26

researcher obtains invalidated information that need to be validated through

other procedures.

� Observation

This observation includes the process of gathering data by seeing, hearing,

and feeling to assess certain activities. Through observation, the researcher

can obtain some information such as company condition, working

environment, and process of internal discussion among some divisions in PT.

COSL INDO, includes finance department, administration department,

planning, auditing department and procedures department.

� Documentation

The documentation is the process of tracking down evidences either internal

or external evidences of activities being researched. Researcher should state

evidences (documents) being researched and the function who authorized

them, where they are distributed, and the use of the evidences (those

documents)

� Confirmation

This process is for getting verification about certain information from third

party. This study case is done under supervision by China Oilfield Service

Limited Indo (COSL INDO). The company has confirmed that researcher has

done his/her research in the company during period’s time, and has discussed

that content of his/her thesis, including the findings and recommendations.

27

2.2.2.2. SecondarySecondarySecondarySecondary Data:Data:Data:Data:

Secondary data is “Data collected from some purpose other than problem at

hand” (Malhotra and Peterson, 2002). Actually, secondary data is used for

exploratory study, but more formalized studies are typically structured which

clearly stated hypothesis or investigative questions which are known as

descriptive studies. The purpose of descriptive itself is to describe, explain, and

validate findings. Descriptive research has a definition describes data and

characteristic about the population or phenomenon being studied. Descriptive

research answer the questions of who, what, where, when, how and why. The

secondary data is data collected from other sources that your own such as

reference books or the internet.

3.23.23.23.2 CompanyCompanyCompanyCompany’’’’ssss ExistingExistingExistingExisting ConditionsConditionsConditionsConditions

3.2.13.2.13.2.13.2.1AAAAboutboutboutbout COSLCOSLCOSLCOSL

PT.COSL INDO is an oilfield service company in Indonesia. It was founded in 1st,

August, 2005 as one of the subsidiaries of China Oilfield Services Southeast Asia

(BVI) Ltd which was established 9th, May, 2005. PT.COSL INDO is an oilfield

service company in Indonesia. While China Oilfield Services Limited (COSL) is

an all-round offshore oilfield service company with integrated functions and

bundled service chain in China and even in the world. Its services cover each

phase of offshore oil and gas exploration, development and production. Its four

core business segments are geophysical services, drilling services, well services,

marine support and transportation services

28

COSL’s services not only cover offshore China but also extend to Southeast Asia,

Australia, Middle East, America, North Africa, and North Europe etc. It already

have 11 oversea branches until now, which includes Libya Office, COSSA(BVI)

Ltd, PT.COSL INDO, COSL Myanmar Limited, COSL (AUSTRALIA) PTY LTD,

COSL Drilling Europe AS, PT. Samudra Timur Santosa, COSL Drilling

Pan-Pacific Ltd, COSL Middle East FZE, COSL Mexico S.A.DE C.V., COSL

America, Inc. while PT. COSL INDO is one of the subsidiaries in Southeast Asia.

PT. COSL INDO is also supervised by the Indonesia MIGAS, and Indonesia oil

and gas ministry.

COSL’s history dated back to some 40 years ago, operating in accordance to

international practice since 1982, became an integrated oilfield service

company by merging and restructured from 7 subsidiary companies

of CNOOC in 2002.

BelowBelowBelowBelow isisisis thethethethe figurefigurefigurefigure 3.13.13.13.1 totototo showshowshowshow thethethethe briefbriefbriefbrief historyhistoryhistoryhistory ofofofof ChinaChinaChinaChina OilfieldOilfieldOilfieldOilfield ServiceServiceServiceService

LimitedLimitedLimitedLimited (COSL(COSL(COSL(COSL).).).).

(Source: Marketing Department of PT. COSL INDO)

29

3.2.3.2.3.2.3.2.2222.... CompanyCompanyCompanyCompany’’’’ssss OOOOperateperateperateperate andandandand OrganizationOrganizationOrganizationOrganization StructureStructureStructureStructure

PT. COSL INDO is an oil service company. It has 5 divisions. Oil field chemical,

production optimization, well tech service, drilling service, shipping division.

Actually, PT. COSL INDO is an administration department. It has finance

department, HR department, purchasing department, and marketing department.

All the finance statement and purchasing information should be report to its own

headquarter department. Every division has its own budget, own finance process

staff, own purchasing staff, own technical engineer and supervisor. All the

division activities should be report to own headquarter division. Every year, there

are dispatch from headquarter to auditing, survey, and evaluate project. The

president director is the nominal leader of all the divisions, all the divisions’

actions and activities should be report to its own division. The basic company

operation like below.

FigureFigureFigureFigure 3.23.23.23.2 OrganizationOrganizationOrganizationOrganization StructureStructureStructureStructure ofofofof PT.COSLPT.COSLPT.COSLPT.COSL INDOINDOINDOINDO

30

CHEN ZONGJIANGDIRECTOR

RETNOHR Manager

PURBO WAHYUDIOps &

HSE Manager

SUN GANG Oilfield Chemical

ManagerGeophysical

Services

ZHAO SHUYUWell TechServices Manager

Fang GuoyinWork over &Stimulation Specialist

WANG XIAOHUAMarketing Manager

LIU SHUWUPurchasing

Manager

YU QIFANGCommercial Manager

LI ZIYANFinance Manager

Offshore/Onshore

Drilling RigServices

PT.PT.PT.PT. INDOINDOINDOINDO

Fu Lin SongMarine Shipping

(Source:(Source:(Source:(Source: PT.PT.PT.PT. COSLCOSLCOSLCOSL INDO)INDO)INDO)INDO)

Above are the clear mainly organization framework. From above name list, we

can know the operation scope clearly, have a tridimensional recognize about PT.

COSL INDO.

3.2.33.2.33.2.33.2.3 SomeSomeSomeSome ExistingExistingExistingExisting ConditionsConditionsConditionsConditions insideinsideinsideinside PT.PT.PT.PT. COSLCOSLCOSLCOSL INDOINDOINDOINDO’’’’ssss RoutineRoutineRoutineRoutine OperationOperationOperationOperation

The research is focus on the factors what influence purchasing effectiveness, to

make sure the purchasing department of PT. COSL INDO becomes more effective.

The research objective is purchasing department in shipping division; the

purchasing department is the core, necessary department for one company’s

logistic, especially for one offshore character oil service company.

BelowBelowBelowBelow figurefigurefigurefigure 3.33.33.33.3 isisisis thethethethe briefbriefbriefbrief flowchartflowchartflowchartflowchart ofofofof purchasingpurchasingpurchasingpurchasing department.department.department.department.

31

Get the material application list from barge

print it and do the confirm and signature, scan it make document

send to three relevant technical suppliers and Get feedback from them.

do the purchasing procedures, arrange suppliers delivery goods, check thegoods and sign the delivery order( if the goods are suit with ourspecifications, good condition).

Arrange transport boat send to barge, Process the supplier’s invoice

(Sources: Purchasing department of shipping division, PT. COSL INDO)

To provide more complete information about purchasing procedures information,

PT. COSL INDO finish all the operating and product target according to one

completed, health purchasing system. Purchasing speed is one important indicator

of whole purchasing procedures. Currently, there are several existing conditions

and information in shipping division of PT. COSL INDO regarding to the

purchasing effectiveness (purchasing speed direction), Downtime Table and

Achieved Purchasing Target Rate.

1.1.1.1. DowntimeDowntimeDowntimeDowntime TableTableTableTable RelatedRelatedRelatedRelated ToToToTo PurchasingPurchasingPurchasingPurchasing SpeedSpeedSpeedSpeed

32

Downtime Table is the information for monitor regular production; make sure

relevant projects can be implemented smoothly. It is the indicator for project

performance. Commonly, the situation like this: there are two operation

supervisors from our client (CNOOC) in every barge; the responsibilities of them

are monitoring the daily normally drilling operation. As a result, it comes with

downtime in case of the problem of our barge. For example, the marine crane

cannot support the normal workover service because of some spare parts broken.

There is half an hour limited for inspection and change the spare parts, make sure

the machine can be recovery normally. Above half an hour, it will be calculated

for downtime; the price is 250 USD per hour.

BelowBelowBelowBelow figurefigurefigurefigure 3.43.43.43.4 isisisis thethethethe bargebargebargebarge’’’’ssss downtimedowntimedowntimedowntime statisticstatisticstatisticstatistic relatedrelatedrelatedrelated totototo purchasingpurchasingpurchasingpurchasing speedspeedspeedspeed

BargeBargeBargeBarge’’’’ssss downtimedowntimedowntimedowntime statisticstatisticstatisticstatistic onononon 2010-20112010-20112010-20112010-2011

0

5

10

15

20

25

D o w n lo ad tim e s h o u rsD o w n lo ad tim e s h o u rsD o w n lo ad tim e s h o u rsD o w n lo ad tim e s h o u rs

Barges's Downtime StatisticBarges's Downtime StatisticBarges's Downtime StatisticBarges's Downtime Statistic

Barges's Downtime Statistic

(Source: PT. COSL INDO)

Because of delay and cannot deliver the relevant material and spare parts go to the

barge on time. It comes several downtimes and lost a quite amount of money;

33

2.2.2.2. AchievedAchievedAchievedAchieved PurchasingPurchasingPurchasingPurchasing TargetTargetTargetTarget RateRateRateRate ((((APTR)APTR)APTR)APTR)

Achieved Purchasing Target Rate (APTR) is one standard to evaluate purchasing

process, it is an important indicator of customer’s feedback. It is made by

customer supervisors on barge. For purchasing department, it can be getting one

truly purchasing target rate report from barges. It can be monitor the purchasing

process, make sure the project’s operation can be run smoothly. It is one important

index of customers’ satisfy.

BelowBelowBelowBelow figurefigurefigurefigure 3.53.53.53.5 isisisis thethethetheAPTRAPTRAPTRAPTR’’’’ssss performanceperformanceperformanceperformance isisisis followingfollowingfollowingfollowing below.below.below.below.

(Source: PT. COSL INDO)

Above is the Achieved Purchasing Target Rate performance of shipping division,

PT. COSL INDO on 2011, it is easy to see, the performance is not meet with PT.

COSL INDO clients’ standard(Above 90%)..

3.3.3.3. FigureFigureFigureFigure 3.63.63.63.6 TheTheTheThe RelevanceRelevanceRelevanceRelevance BetweenBetweenBetweenBetween CustomersCustomersCustomersCustomers’’’’ ComplaintComplaintComplaintComplaint AndAndAndAnd APTRAPTRAPTRAPTR

34

(Source: Shipping division of PT. COSL INDO)

Above Figure shows the relevance between Customer’s Complaint and APTR.

From above broken line graph, it can be getting the result like this: the more

complaint from customers, the lower APTR; the less complaint from customers,

the higher APTR. The Customer’s Complaint is inversely proportional to that of

APTR.

35

CHAPTERCHAPTERCHAPTERCHAPTER IVIVIVIV

ANALYSISANALYSISANALYSISANALYSISANDANDANDAND EVALUATIONEVALUATIONEVALUATIONEVALUATION

4.1Purchasing4.1Purchasing4.1Purchasing4.1Purchasing ExistingExistingExistingExisting ConditionConditionConditionConditionAnalysisAnalysisAnalysisAnalysis

After doing the research at PT. COSL INDO, according to the oral interview,

observation, documentation and confirmation, the next step is processing the

primary data and secondary data. Base on this thesis, the researcher only focus on

the purchasing speed direction. Inside this field, downtime table and achieved

purchasing target rate is the two important indicators base on the research

objective of purchasing effectiveness, more detail is purchasing speed direction.

The researcher uses the method of qualitative research to analyze and evaluate the

existing condition in PT. COSL INDO. According to a serious of analysis, the

researcher can know the core of the problems and try to provide his/her

recommendations base on the research.

4.24.24.24.2WhyWhyWhyWhy PurchasingPurchasingPurchasingPurchasingManagementManagementManagementManagement isisisis sosososo important?important?important?important?

Purchasing management is no longer seen as 'just a Part’ of logistics or marketing,

but as a strategic factor in the entire organization. According to the recent research

production companies purchase nowadays approximately 70% of their turnover,

service companies purchase approximately 40% of their turnover. While many

companies understand the importance of purchasing and its strategic impact on

the whole organization, purchasing process still requires a more intensive

management. (Source: A Good Knowledge to Purchasing, second edition,

A.Parasuraman, L, Meuter, 2004)

ActualActualActualActual PurchasingPurchasingPurchasingPurchasing ManagementManagementManagementManagement ProblemsProblemsProblemsProblems

36

In many companies and organizations, the purchasing process goes hand in hand

with mounds of paperwork, faxes and even handwritten ordering sheets. Managers

waste a lot of time on data searching and transmitting, status meetings, reminding

each other about important tasks, personal conversations for delegating tasks to

employees and controlling them, manually creating reports etc.

BelowBelowBelowBelow tabletabletabletable 4.14.14.14.1 isisisis thethethethe existingexistingexistingexisting purchasingpurchasingpurchasingpurchasing inininin PT.PT.PT.PT. COSLCOSLCOSLCOSLINDO:INDO:INDO:INDO:

(Purchasing Employee) Gets theMaterial Application from Barge

Confirmed, and then send to 3Technical suppliers. Ask themfeedback in 3 days.

Waiting for 3 quotations fromsuppliers (Sometimes above3 days)

The MR bereminded by barge

After completed 3 quotations,done the purchasingprocedures, submit the copeto procedures’ department.

Material/spare parts arrivalin warehouse.

Smoothly, Materialbe arranged sendto barge

Forget until be remindedby barge / officepurchasing employee.

Process the invoicefrom supplier

Process

minimum

1

week

37

(Source:(Source:(Source:(Source: ShippingShippingShippingShipping divisiondivisiondivisiondivision ofofofof PT.PT.PT.PT. COSLCOSLCOSLCOSL INDO)INDO)INDO)INDO)

From above purchasing flowchart, the purchasing procedures are just like the

common project, not pertinence and characteristic; it is not meet with the

professional purchasing standard. The researcher focus on the purchasing speed

direction, the objective in this thesis is how to improve the purchasing

effectiveness, improving the purchasing speed. From above purchasing

procedures flowchart, there is no clear mark for the detail information, like:

import, urgent, ex-stock etc important words, that is a quite big obstacle for

achieve the purchasing target on time. No any monitor words can be described in

above process flowchart. For the purchasing staff, no any monitors/ indicators

from the relevant flowchart, base on the discussion with the purchasing director at

PT. COSL INDO. The purchasing procedures’ outline like below:

TableTableTableTable 4.24.24.24.2 PurchasingPurchasingPurchasingPurchasing outlineoutlineoutlineoutline figurefigurefigurefigure basebasebasebase onononon thethethethe discussiondiscussiondiscussiondiscussion withwithwithwith shippingshippingshippingshipping

purchasingpurchasingpurchasingpurchasing department.department.department.department.

38

(Purchasing Staff) Gets theMaterial Application (MR)from barge

Very Urgent General

Confirmed MR,then telephoneto the technicalsupplier directly

NoStock

Ready Stock At Least2 Quotes

No Quote/one quote

Confirmed MR, then sendto 3 suppliers, asks themfeedback in two days

NoQuote/one quote

At Leasttwo Quotes

Oral quote theprice, DeliveryPlace etc

If the price isacceptable,push it deliverysoonest.

Arrange thesupply boatsend tooffshore bargedirectly whilematerial arrivalin warehouse

PPPPrrrroooocccceeeessssssss1111ddddaaaayyyy

Get the officialquote, donethe purchasingprocedures

Confirmed done thepurchasing procedures,send to purchasingmanager’s office andapproval directly.

Email/fax the POto the supplier byself

Tele supplierconfirms the POand push itdelivers on time,better earlier

Arrange the supplyboat send to bargeand monitormonitormonitormonitor thedeliver processwhile the goodsarrival inwarehouse

Process the invoice

PPPPrrrroooocccceeeessssssss2222ddddaaaayyyyssss

Confirmed, then do the purchasingprocedures; send the completed,cope procedures to proceduredepartment

Get the PO cope from proceduresdepartment, monitor relevantsupplier delivery on time.

Arrange the supply boat send tobarge, monitormonitormonitormonitor the deliver process,and while the goods arrival inwarehouse.

Process the invoice from Supplier

PPPPrrrroooocccceeeessssssss3333----4444ddddaaaayyyyssss

Confirmed MR,then send to 3suppliers, asksthem feedbackin one day

Urgent

Process the invoice

39

(Source: Discussion with Shipping division, PT. COSL INDO)

From above figure, it can be clear knowing that: every category has its functions.

The researcher focus on the purchasing effectiveness, the purchasing speed; it has

a clear indicator for the date, supplier, and product etc information. Purchasing

department can arrange the relevant purchasing process appropriately and exactly.

If the purchasing procedures above can be implemented smoothly, it can reduce

the downtime amount, it can save a lot of money and energy. The most important

point is can maintain a good relationship with clients, win a good reputation. It

has a meaningful influence for Shipping’s next bidding and further more projects’

implementation.

Recommendation:Recommendation:Recommendation:Recommendation:

From the analysis above, it shows that the existed PT. COSL INDO’s purchasing

procedures has more worthy points compared with the discussion figure one. Thus,

it can be proposed that the discussion figure is a meaningful research for shipping

purchasing department tries to solve the problem of purchasing effectiveness.

4.34.34.34.3 TheTheTheTheAnalysisAnalysisAnalysisAnalysis ofofofof DeliveryDeliveryDeliveryDelivery ProcessProcessProcessProcess inininin PTPTPTPT COSLCOSLCOSLCOSL INDOINDOINDOINDO

In analysis the delivery process analysis in PT. COSL INDO, it need to be

explained first the form of existing. A good delivery and logistic system is a

precious fortune for one firm (John, Hendiuter. 2001). Especially, for one offshore

oilfield service company, a strong logistic transportation system is the best support

for relevant project. Base on the discussion with the manager of shipping division,

there are two steps for the whole existing delivery process. The first step is the on

duty warehouse keeper sends the material and spare parts to port, sign one

40

material tracking document; after arrival in barge, there is a material cargo

manifest signed by captain, and feedback to office. Here is two tables show the

existing delivery process in shipping division, PT. COSL INDO.

TableTableTableTable 4.34.34.34.3 TheTheTheTheMaterialMaterialMaterialMaterial TrackingTrackingTrackingTracking DocumentDocumentDocumentDocument inininin PT.PT.PT.PT. COSLCOSLCOSLCOSL INDOINDOINDOINDO

(Source(Source(Source(Source:::: ShippingShippingShippingShipping divisiondivisiondivisiondivision ofofofof PT.PT.PT.PT. COSLCOSLCOSLCOSL INDO)INDO)INDO)INDO)

41

AnalysisAnalysisAnalysisAnalysis andandandand Recommendation:Recommendation:Recommendation:Recommendation:

From the figure above, it shows that the material tracking documents send to

barge. It is clear for all the basic information, but the word” as per attached list”,

actually, base on the researcher’s observation, lots of them no attached files for the

material tracking documentation. Thus, it is confused for the purchasing

department base on the detail delivery lists; cannot monitor the delivery process

and there are no any indicators for the whole material tracking documents. Base

on the researcher, it should be have a serious of completed documents for the

delivery processes, all the delivery items clear, make sure the purchasing

employees can be monitor the whole delivery process until the relevant material

and spare parts arrival in barge in a good condition.

TableTableTableTable 4.44.44.44.4 PT.PT.PT.PT. COSLCOSLCOSLCOSL INDOINDOINDOINDO ((((SHIPPING)SHIPPING)SHIPPING)SHIPPING) BARGEBARGEBARGEBARGE CARGOCARGOCARGOCARGOMANIFESTMANIFESTMANIFESTMANIFEST

(Source:(Source:(Source:(Source: ShippingShippingShippingShipping divisiondivisiondivisiondivision ofofofof PT.PT.PT.PT. COSLCOSLCOSLCOSL INDO)INDO)INDO)INDO)

42

AnalysisAnalysisAnalysisAnalysis andandandand Recommendation:Recommendation:Recommendation:Recommendation:

From above figure, it shows the barge cargo manifest from barge. The question is

there is no any serious number in attached figure. Base on the discussion with the

manage executive, the previous material tracking document should be match with

the barge cargo manifest. All the references numbers and delivery serious numbers

should be same. But from above barge cargo manifest, the situation is not same

with the standard. Base on the discussion with manage executive, authorized scan

the relevant documentation and careful observation, the recommendations from

the researcher like this:

� Have a good checking and record before documents issued; make sure the

relevant information is completed, truly.

� Build a good tracking system during the whole delivery process; make sure all

the items are same and complete from material tracking documents to barge

cargo manifest.

� All the barges try to make an outstanding requisition weekly, it is a indicator

for purchasing department to monitor its delivery process and increase its

purchasing speed.

� For some urgent material/spare parts with small size, it can be hand carry by

change crews (there are 2 crew change boat schedule every week), make sure

relevant urgent material or spare parts can be arrival in barge on time.

43

TableTableTableTable 4.54.54.54.5 OutstandingOutstandingOutstandingOutstanding requisitionrequisitionrequisitionrequisition

(Source: Shipping of PT. COSL INDO)

Above documents shows some weaknesses of delivery section during of

whole purchasing process regarding to the Purchasing effectiveness. The

researcher thinks above some advises maybe is a good test and research for

PT. COSL INDO to improve its purchasing speed and improving its

service quality.

44

4.44.44.44.4 TheTheTheTheAnalysisAnalysisAnalysisAnalysis ofofofof RelevanceRelevanceRelevanceRelevance betweenbetweenbetweenbetween CustomerCustomerCustomerCustomer’’’’ssss ComplaintComplaintComplaintComplaint andandandand

APTRAPTRAPTRAPTR RelatedRelatedRelatedRelated totototo PurchasingPurchasingPurchasingPurchasing Effectiveness.Effectiveness.Effectiveness.Effectiveness.

Base on the research result in Chapter III, the Customer’s Complain is

inversely proportional to the APTR. According to the discussion and

observation inside PT. COSL INDO, the usual way of complain is via

email. Below figure 4.6 Shows the typical example of Customer’s

Complaint from CNOOC Regarding to Purchasing Speed Issue.

(Source: Shipping Division of PT. COSL INDO)

According to the email, it is one complaint from Customer what’s the

name CNOOC regarding to the purchasing speed. Base on this issue, PT.

COSL INDO can be take action to feedback actively, make sure the

relevant service can be recovery soonest. According to Christopher and

Paul Patterson’s Service Recovery Theory, The Effective Service Recovery

45

System shows below figure 4.7:

(Source: Chirstopher H. Lovelock, Paul G.Patterson, Service Marketing:

Australia and New Zealand, 1998)

From above flowchart, it can be as a good reference for PT. COSL INDO

to deal with the complaint from clients, and find the best solutions for the

Service Recovery; yet the deep factor is the effectiveness of working.

There are no or few complaints from client with the excellent service

effectiveness. Base on the research, increase the Purchasing efficiency is

the best solution to deal with the case of customer’s complaint and APTR

for PT. COSL INDO. On the other hand, the customer’s complaints are the

motive power to the APTR; push the purchasing department of PT. COSL

INDO to increase its purchasing speed and effectiveness.

Recommendation:Recommendation:Recommendation:Recommendation:

Base on the discussion with the executive of shipping division; the

researcher thinks PT.COSL INDO maybe need to monitor the monthly

46

customer’s complaints, feedback to purchasing department soonest; to

make sure the service can be recovered in a shortest time. Also, the

customer’s complaint is one important indicator to APTR, PT. COSL

INDO maybe need to pay more attention to deal with the customer’s

complaint, try best to achieve the purchasing goal and stimulate

purchasing department to increase its purchasing efficiency.

Above are the researcher’s basic researches in PT. COSL INDO; the

research field is the purchasing speed. From above research, the researcher

finds out several factors which can make the process in purchasing

department become more effective.

47

CHAPTERCHAPTERCHAPTERCHAPTERVVVV

CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSIONANDANDANDAND RECOMMENDATIONRECOMMENDATIONRECOMMENDATIONRECOMMENDATION

5.1.5.1.5.1.5.1. ConclusionConclusionConclusionConclusion

Base on the research that has been done, the researcher take conclusion that

Improving purchasing effectiveness and management has a big impact on the

service quality of PT. COSL INDO in Indonesia.

The researcher use the qualitative research method, have a more detail explain in

chapter III and chapter IV, the researcher use the oral interview, documentation,

observation three methods to prove the topic, base on the finding problems,

achieve a lot of good advises. The researcher gets more experience. As a result,

PT COSL INDO can improve its purchasing effectiveness and implementing its

service better than before.

In this thesis, the researcher focus on the problem of PT. COSL INDO has been

unable to response to the customer’s complain on time (Purchasing speed

direction), the researcher analyze the factors inside PT. COSL INDO what have a

negative impact on working efficiency and purchasing effectiveness. From the

purchasing procedures figure, material tracking document, cargo manifest. We can

know the reasons of why shipping division’s purchasing effectiveness is not meet

with standard, follow after is some recommendations from the researcher. It

maybe can help PT. COSL INDO improving its purchasing effectiveness,

especially for shipping division.

48

Improving purchasing effectiveness can bring significant benefits for PT. COSL

INDO. According to the researcher’s suggestions and recommendations, it has an

active impact on the purchasing effectiveness of PT. COSL INDO; saving a lot of

cost and energy, can be win a good word of mouth from customers. On the other

hand, it can help PT. COSL INDO maintain a good customer relationship, win a

good reputation, it is helpful for PT. COSL INDO to win the next bidding with a

wonderful performance, furthermore, it can help PT. COSL INDO occupy more

marketing shares in Indonesia market and speed up its globalization process.

A good, professional purchasing system can help COSL to develop other regions

market in Southeast Asia; Because Indonesia is the largest economy in Southeast

Asia, it is a strong demonstrate that Indonesia has a abundant of oil and gas

resources, especially for the offshore. If PT. COSL INDO can improve its internal

management and its service quality level; PT. COSL INDO can be the typical

example in the oilfield service industry in Indonesia market, same stage

competitive with Haliburton, Schlumberger, it can push forward COSL to achieve

its world-class oilfield contractor dream.

49

5.25.25.25.2....RecommendationRecommendationRecommendationRecommendation

The recommendation that the researcher could give based on this research are as

follows:

5.2.15.2.15.2.15.2.1 SuggestionSuggestionSuggestionSuggestion forforforfor PT.PT.PT.PT. COSLCOSLCOSLCOSL INDOINDOINDOINDO

1. For PT. COSL INDO, especially for the shipping division need to improving

its purchasing speed, do some improvement for its purchasing process, material

tracking documentation, and barge cargo manifest. Previous recommendations

maybe is a good research for PT. COSL INDO to do the improvement of

purchasing effectiveness.

5.2.25.2.25.2.25.2.2 ForForForFor furtherfurtherfurtherfurther researcherresearcherresearcherresearcher

1.The researcher just focus on the problem of purchasing speed, the reasons

cause it have so many, the researcher just focus several of them; the material

tracking document, the barge cargo manifest, the purchasing process flowchart.

2.For further researcher, if want to continue this topic and have a deeper research,

my recommendation are have a more detail observation and oral interview , try to

get more primary data for research. Can choose how to increase the effectiveness

of purchasing, what is the deeply factor impact on the effectiveness; try to get one

good solution to fix this problem. On the other hand, for further researchers, it can

be not only focusing in the purchase speed, but also enlarge its research scope.

50

BIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHY

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(Malhotra and Peterson, 2002)

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and J.G Barnes(Chichester,UK:Wiley 1995), P57-89.

“The Journal of service marketing” 278-293; Gordon H.McDougall, Terence

Leverque and Peter VanderPlaat.

Tsung-Chi-Liu, Chi-Tsun-Huang, and Chi –Hsun Lee; International Journal of

service industry Management 14, P436-457; Anna S. Mattila and Paul G.

Patterson, Journal of service research6, P336-346, 2003

52

AppendixAppendixAppendixAppendix

53

PanelPanelPanelPanel Discussion:Discussion:Discussion:Discussion:

TheTheTheThe factorsfactorsfactorsfactors whichwhichwhichwhich cancancancan makemakemakemake purchasingpurchasingpurchasingpurchasing /speed/speed/speed/speed inininin purchasingpurchasingpurchasingpurchasing

departmentdepartmentdepartmentdepartment becomebecomebecomebecome moremoremoremore effectiveeffectiveeffectiveeffective inininin PT.PT.PT.PT. COSLCOSLCOSLCOSL INDOINDOINDOINDO

1. How do you think the purchasing speed in shipping department?

IIIItttt hashashashas aaaa goodgoodgoodgood trendytrendytrendytrendy inininin total;total;total;total; allallallall ofofofof ourourourour projectsprojectsprojectsprojects areareareare offshore,offshore,offshore,offshore, itititit isisisis differentdifferentdifferentdifferent

withwithwithwith otherotherotherother divisions,divisions,divisions,divisions, sosososo itititit hashashashas aaaa lotlotlotlot ofofofof notnotnotnot forecastingforecastingforecastingforecasting conditionsconditionsconditionsconditions existedexistedexistedexisted

duringduringduringduring thethethethe wholewholewholewhole purchasingpurchasingpurchasingpurchasing process.process.process.process. FFFForororor example,example,example,example, weather,weather,weather,weather, bargebargebargebarge’’’’ssss

location,location,location,location, supplysupplysupplysupply boatboatboatboat scheduleschedulescheduleschedule etc.etc.etc.etc.

2. Could you give me some descriptions about purchasing procedures in shipping

division?

TTTThehehehe purchasingpurchasingpurchasingpurchasing proceduresproceduresproceduresprocedures inininin shippingshippingshippingshipping divisiondivisiondivisiondivision areareareare samesamesamesame withwithwithwith otherotherotherother

divisions.divisions.divisions.divisions. OOOOurururur shippingshippingshippingshipping divisiondivisiondivisiondivision isisisis laterlaterlaterlater openopenopenopen businessbusinessbusinessbusiness thanthanthanthan otherotherotherother divisionsdivisionsdivisionsdivisions

inininin IndonesiaIndonesiaIndonesiaIndonesia,,,, sincesincesincesince 2009.2009.2009.2009. WWWWhenhenhenhen startingstartingstartingstarting business,business,business,business, asasasas aaaa result,result,result,result, itititit followsfollowsfollowsfollows thethethethe

existedexistedexistedexisted purchasingpurchasingpurchasingpurchasing proceduresproceduresproceduresprocedures ofofofof PT.PT.PT.PT. COSLCOSLCOSLCOSL INDO.INDO.INDO.INDO. NNNNow,ow,ow,ow, wewewewe areareareare tryingtryingtryingtrying totototo

improvingimprovingimprovingimproving thethethethe proceduresproceduresproceduresprocedures effectiveness,effectiveness,effectiveness,effectiveness, searchingsearchingsearchingsearching thethethethe purchasingpurchasingpurchasingpurchasing systemsystemsystemsystem

suitsuitsuitsuit forforforfor shippingshippingshippingshipping division.division.division.division.

3. How do you think the downtime statistics and APTR (Achieved Purchasing

Target Rate)?

Absolutely,Absolutely,Absolutely,Absolutely, thethethethe reasonsreasonsreasonsreasons whatwhatwhatwhat causecausecausecause downtimedowntimedowntimedowntimessss areareareare aaaa lot,lot,lot,lot, likelikelikelike,,,, emergencyemergencyemergencyemergency

incidentincidentincidentincident duringduringduringduring thethethethe operation,operation,operation,operation, badbadbadbad weather,weather,weather,weather, somesomesomesome safetysafetysafetysafety problems;problems;problems;problems; butbutbutbut

thethethethe mostmostmostmost dominantdominantdominantdominant issueissueissueissue isisisis thethethethe downtimedowntimedowntimedowntime becausebecausebecausebecause ofofofof corecorecorecore machinemachinemachinemachine’’’’ssss stopstopstopstop

operation.(likeoperation.(likeoperation.(likeoperation.(like marinemarinemarinemarine crane,crane,crane,crane, CumminsCumminsCumminsCummins mainmainmainmain generator,generator,generator,generator, waterwaterwaterwater makermakermakermaker etc.)etc.)etc.)etc.)

TTTThehehehe detaildetaildetaildetail reasonreasonreasonreason forforforfor corecorecorecore machinemachinemachinemachine’’’’ssss stopstopstopstop operationoperationoperationoperation mostlymostlymostlymostly isisisis thethethethe orderingorderingorderingordering

54

MMMMaterialaterialaterialaterial /spare/spare/spare/spare partspartspartsparts cannotcannotcannotcannot arrivalarrivalarrivalarrival inininin bargebargebargebarge onononon time.time.time.time. ButButButBut now,now,now,now, ourourourour

downtimedowntimedowntimedowntime isisisis reducingreducingreducingreducing stepstepstepstep bybybyby stepstepstepstep withwithwithwith staringstaringstaringstaring newnewnewnew purchasingpurchasingpurchasingpurchasing

procedures.procedures.procedures.procedures. AboutAboutAboutAbout APTR,APTR,APTR,APTR, wewewewe stillstillstillstill havehavehavehave aaaa littlelittlelittlelittle distancedistancedistancedistance fromfromfromfrom ourourourour clientsclientsclientsclients’’’’

targettargettargettarget ((((90%);90%);90%);90%); butbutbutbut wewewewe havehavehavehave confidenceconfidenceconfidenceconfidence totototo achieveachieveachieveachieve thatthatthatthat goalgoalgoalgoal inininin thethethethe nearnearnearnear

future.future.future.future.

4. As you mentioned before, for the new purchasing procedures system, have

you already started it?

NotNotNotNot yet.yet.yet.yet. WWWWeeee areareareare justjustjustjust finishedfinishedfinishedfinished thethethethe projectprojectprojectproject evaluationevaluationevaluationevaluation,,,, wewewewe areareareare planningplanningplanningplanning totototo

startstartstartstart itititit onononon FebruaryFebruaryFebruaryFebruary,,,, 2012.2012.2012.2012. IIIItttt cancancancan bebebebe playplayplayplay aaaa veryveryveryvery importantimportantimportantimportant rolerolerolerole forforforfor usususus totototo

achieveachieveachieveachieve customercustomercustomercustomer’’’’ssss goal.goal.goal.goal. YYYYearearearear 2013201320132013 isisisis veryveryveryvery importantimportantimportantimportant forforforfor us,us,us,us, itititit isisisis startingstartingstartingstarting

nextnextnextnext biddingbiddingbiddingbidding forforforfor nextnextnextnext 5555 yearsyearsyearsyears serviceserviceserviceservice contract.contract.contract.contract. WWWWeeee havehavehavehave fullfullfullfull ofofofof confidenceconfidenceconfidenceconfidence

totototo winwinwinwin thisthisthisthis bidbidbidbid withwithwithwith thethethethe backgroundbackgroundbackgroundbackground ofofofof excellentexcellentexcellentexcellent performanceperformanceperformanceperformance.... YYYYes,es,es,es, itititit needneedneedneed

allallallall ofofofof ourourourour employeesemployeesemployeesemployees workworkworkwork togethertogethertogethertogether andandandand improvimprovimprovimproveeee ourourourour serviceserviceserviceservice qualityqualityqualityquality stepstepstepstep

bybybyby step.step.step.step.

5. Base on the feedback related to the APTR from barge, do you have some plan

to improve it?

YYYYes.es.es.es. NNNNow,ow,ow,ow, wewewewe areareareare startingstartingstartingstarting totototo reportreportreportreport outstandingoutstandingoutstandingoutstanding materialmaterialmaterialmaterial applicationapplicationapplicationapplication

weeklyweeklyweeklyweekly fromfromfromfrom ourourourour firstfirstfirstfirst bargebargebargebarge asasasas aaaa test.test.test.test. IIIItttt isisisis aaaa goodgoodgoodgood monitormonitormonitormonitor andandandand directiondirectiondirectiondirection

forforforfor ourourourour purchasingpurchasingpurchasingpurchasing departmentdepartmentdepartmentdepartment totototo modifymodifymodifymodify itsitsitsits purchasingpurchasingpurchasingpurchasing schedule.schedule.schedule.schedule. FromFromFromFrom

thethethethe currentcurrentcurrentcurrent 2222 monthsmonthsmonthsmonths APTRAPTRAPTRAPTR’’’’ssss statistics,statistics,statistics,statistics, thethethethe APTRAPTRAPTRAPTR hashashashas aaaa riseriseriserise trendy.trendy.trendy.trendy. IIIItttt

demonstratesdemonstratesdemonstratesdemonstrates thatthatthatthat implementimplementimplementimplement outstandingoutstandingoutstandingoutstanding materialmaterialmaterialmaterial applicationapplicationapplicationapplication hashashashas aaaa

activeactiveactiveactive impactimpactimpactimpact onononon thethethethe APTRAPTRAPTRAPTR project.project.project.project.

6. How do you monitor the material delivery process related to the purchasing

effectiveness?

55

Now,Now,Now,Now, wewewewe areareareare startingstartingstartingstarting thethethethe materialmaterialmaterialmaterial tracktracktracktrack documentdocumentdocumentdocument andandandand bargebargebargebarge’’’’ssss cargocargocargocargo

manifest.manifest.manifest.manifest. TTTThehehehe operationoperationoperationoperation theorytheorytheorytheory likelikelikelike this:this:this:this: thethethethe materialmaterialmaterialmaterial trackingtrackingtrackingtracking documentdocumentdocumentdocument

andandandand cargocargocargocargo manifestmanifestmanifestmanifest cancancancan havehavehavehave aaaa comparecomparecomparecompare,,,, makemakemakemake suresuresuresure thethethethe purchasingpurchasingpurchasingpurchasing

employeesemployeesemployeesemployees cancancancan monitormonitormonitormonitor thethethethe processprocessprocessprocess ofofofof materialmaterialmaterialmaterial applicationapplicationapplicationapplication fromfromfromfrom barge,barge,barge,barge,

avoidedavoidedavoidedavoided re-ordering,re-ordering,re-ordering,re-ordering, omittingomittingomittingomitting andandandand otherotherotherother conditionsconditionsconditionsconditions happen.happen.happen.happen.

7.7.7.7. How do you think about the Complaints from Clients related to purchasing

speed and any systemically solutions for it?

TTTThehehehe CustomersCustomersCustomersCustomers ‘‘‘‘ComplaintsComplaintsComplaintsComplaints areareareare veryveryveryvery headacheheadacheheadacheheadache forforforfor us.us.us.us. IIIItttt isisisis notnotnotnot justjustjustjust thethethethe

complaints,complaints,complaints,complaints, butbutbutbut anananan importantimportantimportantimportant symbolsymbolsymbolsymbol ofofofof serviceserviceserviceservice quality.quality.quality.quality. Now,Now,Now,Now, wewewewe areareareare triedtriedtriedtried

bestbestbestbest totototo reducereducereducereduce thethethethe amountsamountsamountsamounts ofofofof complaints,complaints,complaints,complaints, improvingimprovingimprovingimproving ourourourour purchasingpurchasingpurchasingpurchasing

speedspeedspeedspeed andandandand serviceserviceserviceservice quality.quality.quality.quality. UntilUntilUntilUntil Now,Now,Now,Now, notnotnotnot yetyetyetyet aaaa systemicallysystemicallysystemicallysystemically focusfocusfocusfocus onononon thethethethe

customercustomercustomercustomer’’’’ssss complaint.complaint.complaint.complaint. TTTThehehehe solutionsolutionsolutionsolution wewewewe taketaketaketake nownownownow isisisis processprocessprocessprocess thethethethe

complainedcomplainedcomplainedcomplained materialmaterialmaterialmaterial applicationapplicationapplicationapplication listlistlistlist soonest;soonest;soonest;soonest; butbutbutbut IIII thinkthinkthinkthink itititit isisisis justjustjustjust oneoneoneone

temporarytemporarytemporarytemporary way,way,way,way, cannotcannotcannotcannot bebebebe longerlongerlongerlonger existing.existing.existing.existing. IIIInnnn mymymymy opinion,opinion,opinion,opinion, thethethethe thoroughthoroughthoroughthorough

waywaywayway totototo solvesolvesolvesolve thisthisthisthis problemproblemproblemproblem isisisis totototo buildbuildbuildbuild oneoneoneone completedcompletedcompletedcompleted purchasingpurchasingpurchasingpurchasing systemsystemsystemsystem

soon.soon.soon.soon.

8. Do you have other plans regarding to purchasing effectiveness excluding

Mentioned before?

YYYYes,es,es,es, stepstepstepstep bybybyby step.step.step.step. LLLLater,ater,ater,ater, wewewewe havehavehavehave aaaa long-termlong-termlong-termlong-term planplanplanplan totototo improveimproveimproveimprove ourourourour

inventoryinventoryinventoryinventory managementmanagementmanagementmanagement andandandand warehousewarehousewarehousewarehouse management,management,management,management, totototo makemakemakemake suresuresuresure ourourourour

purchasingpurchasingpurchasingpurchasing departmentdepartmentdepartmentdepartment notnotnotnot aaaa shortageshortageshortageshortage inininin shippingshippingshippingshipping division;division;division;division; stimulatestimulatestimulatestimulate

PurchasingPurchasingPurchasingPurchasing departmentdepartmentdepartmentdepartment cancancancan playplayplayplay aaaa veryveryveryvery importantimportantimportantimportant rolerolerolerole inininin thethethethe wholewholewholewhole

serviceserviceserviceservice process.process.process.process.

56

Confirmed by,

(Name and Signature of Interview/Discussant)

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