p–ISSN: 2723 - 6609 e-ISSN: 2745-5254
Vol. 5, No. 4 April 2024 http://jist.publikasiindonesia.id/
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 4, April 2024 1806
Lean Six Sigma to Reduce Dead Stock at PT Globalindo
Intimates
Annandhita Kharisma Putri
1*
, ⁠Dessy Isfianadewi
2
Universitas Islam Indonesia Jogja, Indonesia
Email: [email protected]
*Correspondence
ABSTRACT
Keywords: Dead Stock;
Lean Six Sigma; DMAIC.
PT Globalindo Intimates is a manufacturing company that
produces underwear in the garment sector. In the long run,
dead stock accumulation in the warehouse becomes an
unused company asset, making inventory management
ineffective and inefficient. This study aims to identify and
analyse the factors that cause dead stock materials and
provide solutions as an improvement effort in minimising
dead stock in the future to increase the effectiveness and
efficiency of PT Globalindo Intimates. The method used is
Lean Six Sigma with the DMAIC approach model. The data
collection technique is done by observation, interview, and
documentation. The results of this study explain that the
factors that cause dead stock materials are man, method,
environment, and material factors, the causes of which
include less careful human resources, lack of understanding
related to material handling, less than optimal ordering
practices, overstock, damaged / defective goods, poor
material storage, and low demand. The improvement efforts
that can be made to minimise the occurrence of dead stock
in the future so that it is not sustainable include making
regulations related to the management and handling of dead
stock, managing the inventory management system more
effectively, optimising the application of 5S practices in the
warehouse, and conducting training for employees.
Introduction
In the current industrial era, 4.0, competition in the industrial sector is very tight,
where they compete to maintain their market share (Laureani & Antony, 2019).
Moreover, the manufacturing industry's growth is growing and showing rapid progress,
so companies must continue to improve their effectiveness and efficiency (Trilaksono &
Damayanti, 2022). One of the manufacturing industries that is experiencing very rapid
development is the textile and garment industry. The textile industry is increasingly
competing globally because it is competitive from upstream to downstream. In addition,
its products are also known for superior quality to compete in the international market
(Trilaksono & Damayanti, 2022).
Lean Six Sigma to Reduce Dead Stock At PT Globalindo Intimates
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 4, April 2024 1807
PT Globalindo Intimates is a manufacturing company engaged in the garment
industry that produces women's underwear with export quality. PT Globalindo Intimates
is a company that uses the Make Order system in its production process so that inventory
becomes the most critical asset or resource that must exist to support production activities.
The strategy of achieving a company's competitiveness will depend heavily on effective
and efficient resource management. Inventory owned by a company plays a crucial role,
where the availability of raw materials owned by the company will be interdependent on
the company's operational activities (Hidayat, Pramono, & Afdulloh, 2019).
The problem faced by the company is that there is a significant accumulation of
immovable stock, where this dead stock is a company asset that has no value in the long
term. Dead stock is no longer an active inventory and has only been stored in warehouses
for a long time (Singh & Rathi, 2019). Of course, this becomes ineffective in inventory
management because of the large number of dead stocks that accumulate and do not move
on the storage shelf for a long time. The changed inventory paradigm from valuable to
valueless assets encourages companies to develop innovations in their business processes
(Sugiono & Alimbudiono, 2020). The accumulation of dead stock in PT Globalindo
Intimates' warehouse is one of the wastes that needs improvement efforts in reducing or
even preventing further dead stock to improve the company's best performance in
effective and efficient stock management and avoid future business disasters.
The Lean Six Sigma (LSS) method is one of the strategies used to improve business
performance processes that integrate superior principles of Lean and Six Sigma. Many
academic experts have recommended this strategy over the past twenty years
(Komkowski, Antony, Garza-Reyes, Tortorella, & Pongboonchai-Empl, 2023). Lean is
oriented toward eliminating elements that have no added value and reducing waste.
Meanwhile, Six Sigma is a tool that focuses on continuous performance improvement by
identifying and eliminating waste during the improvement process (Trilaksono &
Damayanti, 2022). By integrating these two principles, it is hoped that this study can find
the factors that cause dead stock and improvement efforts that can be made to minimise
waste dead stock that occurs at PT. Globalindo Intimates.
The main contribution of this research study is to represent efforts for continuous
improvement and improvement through the application of Lean Six Sigma, namely the
DMAIC (Define - Measure - Analyze - Improve - Control) method, which is used to
analyse the company's inventory condition and provide improvement efforts to reduce
dead stock on an ongoing basis so that operational performance in the inventory
movement system becomes more effective and efficient (Ramadhanti & Hardati, 2021).
In Lean theory, excess inventory can be considered the most common form of
waste. If resources cannot be used effectively, they are considered a waste. According to
(Tampubolon and Purba, 2021), Lean is a concept that is applied to reduce waste and
eliminate processes or activities that do not provide added value. Another goal is to
improve the efficiency and effectiveness of the company's operations. When implemented
correctly, implementing lean can majorly impact businesses, including increased
efficiency, reduced time cycles, lower costs, and increased competitiveness. The main
Annandhita Kharisma Putri
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 4, April 2024 1808
focus of lean is to eliminate waste, that is, elements that provide no value; also explains
that Lean is an ongoing effort to eliminate waste, increase product value-added, and
provide customer value through radical continuous improvement to achieve Six Sigma
performance standards.
Research Methods
The research method used in this study is qualitative, which is analysed
descriptively. The data collection process used in this study is as follows:
Interview Techniques
The interview is a data/information collection technique involving communication,
where there is a dialogue between two parties, namely the interviewer who asks questions
and the interviewee who responds. The purpose of conducting interviews is to obtain
information that cannot be observed or obtained through other methods.
Observation Techniques
Observation is observing and recording a phenomenon or event under study.
Through observation, we can understand the behaviours that arise in certain social
situations. The author applied a direct observation approach in this study as his research
methodology. The author makes direct observations by supervising all activities and
interactions within the company environment (Heryadi & Sutopo, 2018).
Documentation Techniques
Documentation is a data source used to complement research, such as written
sources, films, photographs, drawings, and monumental works, all of which provide
relevant information in the research process. The documentation techniques carried out
in this study aim to obtain information and data that will be used to support phenomena
relevant to this research.
Results and Discussion
Tahap Define
The problem that the author encountered in the warehouse of PT Globalindo
Intimates is the accumulation of immovable stock or "dead stock." Dead stock in PT
Globalindo Intimates' warehouse is no longer used but remains in the storage room long.
The dead stock reported from the company's database has found as many as 102 items
with a total quantity of 25,235,229 divided into two groups: dead stock comes from
material items, and dead stock comes from accessories items (Sugumaran & Sukumaran,
2019).
Tahap Measure
This stage is the collection of data that is analysed to measure, know, and evaluate
the conditions in the company. After analysis, dead stock in PT Globalindo Intimates'
warehouse is separated into two items: dead stock of material items and accessories items.
Table 1 shows that most of the dead stock came from material items, which accounted
for as many as 80 items or 78.43% of the total dead stock. The total quantity value of
material items reached 19,567,229, or 77.54% of the total quantity value of dead stock.
Lean Six Sigma to Reduce Dead Stock At PT Globalindo Intimates
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In contrast, dead stock derived from accessories items only contained 22 items or 21.57%,
with a total quantity value of 5,668 or 22.46% of the total dead stock.
Table 1
Description of Dead Stock Results per Item Group
Stock
Total
Item
Total
Nilai Qty
Per cent by
Item
The per cent
by Nilai Qty
Material
80
19.567,229
78,43%
77,54%
Accecories
22
5.668
21,57%
22,46%
Total
102
25.235,229
100%
100%
Source: Processed Products, 2024
Companies can focus more on the main aspects with the highest level of problems
through the Pareto chart. Thus, solutions can be developed to address critical factors that
significantly impact the problem, aiming to reduce or eliminate it. Referring to Table 1
above, the data that has been analysed shows that as much as 78.43% of dead stock comes
from the material item group, while 21.57% comes from the accessories item group.
Therefore, dead stock derived from material items is valued higher, so it will be the main
focus to identify the causes of material and dead stock and find solutions to reduce or
even eliminate these problems in the future.
Figure 1
Diagram Pareto Dead Stock
Analyse Stage
This stage uses a fishbone diagram to analyse the factors that cause the continuous
buildup of dead stock material in the warehouse of PT Globalindo Intimates. Diagram
fishbone is an analytical tool that provides a systematic view of cause and effect caused
or contributed rather than an effect. The fishbone diagram analysis below grouped the
discussion results related to the factors causing deadstock material.
Annandhita Kharisma Putri
Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 4, April 2024 1810
Figure 2
Diagram Fishbone Dead Stock Material
Man Factor: The Man factor is one factor that has a vital and influential role in
organisational performance because it is an actor in this matter. Lack of accuracy or
unfocus on the part of the operator/admin is fatal because it results in errors in inputting
data, so often incompatibility occurs between actual data and data in the system. Another
factor that causes this problem is the lack of understanding and knowledge of employees
when handling materials. As a result, sometimes, there is a tendency for employees to be
negligent in placing materials that do not match where they should be. This condition can
raise concerns about the possibility of material loss that causes a stock of goods
challenging to find and end in obsolescence.
Method Factor: The practice of suboptimal ordering methods is one of the
potential causes of dead stock at PT Globalindo Intimates. The ordering method applied
by the supplier is to provide a minimum order limit with a specified limit, so this is one
of the things that causes many unused goods to eventually expire and become dead stock
goods because the inventory condition has an amount greater than the amount of demand
needed. So, this is considered less optimal and effective in ordering materials.
Environmental Factors: Environmental factors are essential for storing and
managing material stocks. Poor storage of goods is one of the causes of damage to goods
before use. As a result, inventory items damaged before use or production will eventually
fall into the category of deadstock goods. In addition, fluctuating customer demand is also
one of the things that cannot be controlled. PT Globalindo Intimates is a manufacturing
company whose production strategy is make-to-order, meaning it will produce goods
when customers demand them. In this case, when the company experiences low demand
or no longer accepts orders from customers, the stock in the warehouse will not be used
to shorten the life of the quality of the material.
Material Factors: Overstock is one of the causes of potential dead stock materials
in PT Globalindo Intimates' warehouse. This overstock usually occurs when the
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procurement party orders material needs with a large amount exceeding demand, so the
potential for leftover goods that are no longer used is vast and ends in obsolescence. In
this case, it can be said that the prolonged overstock at PT Globalindo Intimates is one of
the factors causing the accumulation of dead stock material. In addition, damage to goods
experienced after the checking process by Quality Control, such as goods suddenly
defective, torn, or decreased quality in terms of colour, is one of the causes of dead stock.
Of course, with the damage to the material, the goods cannot be reused because the
company emphasises high quality, so damaged or defective goods will no longer be used
and ultimately fall into the category of dead stock goods.
Tahap Improve
This stage identifies improvement efforts as recommendations for problem-solving
to improve company performance and be more effective and efficient in reducing or even
preventing dead stock problems in the long term from recurring in the future. The
improvement efforts that the company can develop to reduce and even prevent dead stock
problems from recurring are as follows:
1. Making Regulations for the Management and Handling of Dead Stock
PT Globalindo Intimates can make regulations and conduct socialisation related to
the management and handling of dead stock material so that it does not continue to
accumulate to fill the storage shelves. An alternative mechanism for managing dead stock
accumulated in PT Globalindo Intimates' warehouse can be anticipated by continuing to
sell the deadstock so that dead stock goods in the warehouse do not accumulate to fill the
warehouse storage area and not harm the company. Carrying out a dead stock sales
strategy is one of the most effective steps because it directly impacts and can significantly
reduce the accumulated dead stock.
2. Set Up an Inventory Management System
Companies need to implement an inventory management system to achieve
effectiveness and efficiency. Purchasing planning and material control should be done as
well as possible. In addition, the use of the FIFO system in PT Globalindo Intimates'
warehouse can be emphasised more in the inventory management system. This FIFO
method applies the First In, First Out system, where the first goods to come are the first
items to be issued. The application of a more organised FIFO method can be increased
by adding facilities such as FIFO support racks that can facilitate storing goods in a
structured manner. This is expected to minimise all possible problems and make the
company's business processes run more smoothly.
3. Optimizing 5S Implementation in the Warehouse
According to (Hafidz and Soediantono, 2022), 5S is an effective lean manufacturing
tool to help companies reduce waste and increase profits. 5S practices become an efficient
basis for various improvement efforts aimed at eliminating waste and improving
organisational performance on an ongoing basis. Optimising the implementation of 5S
that already exists in PT Globalindo Intimates' warehouses consistently and sustainably
will improve employee productivity and company performance.
4. Conducting Training for Employees
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Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 4, April 2024 1812
Training (training) for employees aims to improve the mastery of various skills and
mastery techniques in the implementation of specific work tasks. Holding training and
routine activities in the form of mentoring can help update employee insights and skills,
which are very important in improving the performance and productivity of the workforce
itself. In addition, supervisors can also provide feedback to their employees so that
employee performance can run more optimally.
Control Stage
This stage is designed to ensure that the proposed repair solution can be maintained.
This stage is essential to oversee the process to ensure that the changes implemented can
reduce dead stock in the long term and prevent it from happening again. In addition,
improved employee performance can ensure the successful implementation of changes.
Thus, there are proposals in the form of improvement efforts that have been
recommended; it is hoped that the company's management will be able to control and
supervise the improvement efforts that have been implemented.
Conclusion
Based on the results of the analysis and discussion, it can be concluded that the
condition of dead stock in PT Globalindo Intimates' warehouse reached a total quantity
of 25,235,229, with a total of 102 items, consisting of 80 material items and 22 accessories
items. Pareto's analysis shows that dead stock material items are valued more than
accessories, so they are prioritised. Factors that cause dead stock include inadequate
human resources, lack of understanding related to material handling, suboptimal ordering
practices, overstock, damaged/defective goods, poor material storage, and low demand.
To overcome this problem, it is necessary to make improvement efforts such as making
regulations related to dead stock management, increasing the effectiveness of inventory
management systems, implementing 5S practices in warehouses, and training employees.
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