Regional Distribution Center

Regional Distribution Center with every government forms a body to control the stock of the public’s needs. If there is scarcity in a basic need, it will be very difficult to control the stability of prices.

The state through the Government has an interest in the solution to the problem of stock scarcity. Price disparity and fluctuations in the price of goods, especially basic commodities.

The government categorizes the following 14 commodities as the most needed. Staples of the community namely is:

  • Rice
  • Raw material soybeans
  • Tempeh
  • Chili
  • Shallots
  • Sugar
  • Cooking oil
  • Wheat flour
  • Beef
  • Broiler meat
  • Chicken eggs
  • Milkfish
  • Mackerel
  • Tuna

The issue of scarcity of stocks, disparities and fluctuations in basic commodities are a serious concern of the Government. Scarcity of stock occurs when an area has difficulty or even cannot obtain basic commodities. How continuously to meet the public consumption of these basic commodities.

Many factors are the causes of the scarcity of these stocks, including: crop failure for agricultural commodities, natural factors, and weaknesses in distribution management.

A good logistic management system will ensure the smooth distribution of staple commodities from producer regions to consumer areas at all times, all the time on an ongoing basis.

Price disparity occurs when there is a very significant price difference for a certain commodity price between regions. Price disparity will have the effect of “injustice” in inter-regional prosperity.

Disparity Regional Distribution Center

The same basic commodities, such as onions and chillies, residents in the Kupang regions, will pay a price five times more than the population in Kudus to get onions and chillies.

Both Indonesian citizens, who live in the realm of independence, but must spend more money, then reduce the level of satisfaction in consuming an item. Citizens need the presence of the State to overcome the problem of the disparity in the prices of these basic commodities.

Again, the weakness of the distribution system is thought to be the cause of this price disparity. The effects of the weakness of this distribution system have a simultaneous impact on stock scarcity and price dispartias. Why? Scarcity of stock will trigger price increases and price increases will widen price disparities.

Smooth distribution will guarantee the accuracy of the stock and be able to control the disparity and fluctuations in commodity prices of basic commodities. In addition, fluctuations in prices of basic commodities also contributed significantly to regional inflation rates
and national. Fluctuating inflation rates, especially tend to be high, will have an impact on overall economic stability.

The solution of the national logistics system through the improvement of the distribution system of basic commodities is a serious concern for the Government, to prove that the State is present in the midst of its citizens in overcoming the problem of stock scarcity, disparity,
and fluctuations in commodity prices of basic commodities needed daily by residents.

Solution Regional Distribution Center

The core of logistics activities is the management of goods movements, both the movement from raw material suppliers to manufacturing (known as inbound logistics or upstream), as well as the movement of goods from manufacturing to consumers (known as outbound logistics or downstream).

In addition, logistics management also manages the return of goods from consumers to retailers (retailers), from retailers to wholesalers, and from wholesalers to companies, and from companies to suppliers. In the context of supply chain management, distribution channels are one of the strategic decisions.

Indeed, distribution channels are one of the marketing strategies, to ensure that the company’s products reach consumers through efficient distribution channels.

Companies can establish distribution systems in the form of direct distribution channels or indirect distribution channels.

The company uses direct distribution channels when companies sell their products directly to end consumers. In this case the company does not need a distributor in the form of a wholesaler or retailer.

Companies use indirect distribution channels when selling their products, companies use distributors.

The development of e-commerce encouraged companies to choose the direct distribution channel strategy by using last-mile delivery to cut distribution costs, even though it was not purely direct distribution.

Companies that implement the direct distribution strategy still need “distributors” in the form of cooperation with e-commerce management companies or 3PL companies that manage warehousing and distribution.

Managing Commodities Through Distributors

This is reasonable because companies that implement strategies without distributors require that they connect with many customers. With the use of distributors, companies simply have to deal directly with their distributors.

To prove the “presence of the State” in overcoming the issue of distribution of basic commodities, the Ministry of Trade has built Regional Distribution Centers in several potential locations to support the implementation of the National Logistics System (Sislognas) and MP3I in the context of developing Indonesia’s economic corridors.

This Regional Distribution Center (PDR) is one of Sislognas strategic initiations in the context of national goods logistics infrastructure. Besides the PDR, the Ministry of Commerce also built a Provincial Distribution Center (PDP).

In accordance with the Regulation of the Minister of Trade of the Republic of Indonesia No. 48 / MDAG / PER / 8/2013, the Distribution Center is a place that serves as a buffer for the main commodities to support the smooth flow of goods both between districts and cities and between provinces for domestic and foreign markets.

The Regional Distribution Center is a distribution center that functions as a main commodity buffer in several districts and cities that have a population, accessibility, consumer areas, which can be collectors, and have the potential to be developed into inter-island trade centers.

Regional Distribution Center (PDR) is one of the network subsystems that basically functions as a support for the Provincial Distribution Center (PDP) in each province in terms of fulfillment and distribution of needs and production area. PDR is under the auspices of the Ministry of Trade.

Hierarchy Regional Distribution Center

In the Minister of Trade Regulation also explains the organizational governance of PDR and PDP. Judging from the hierarchy between each level of the distribution center, the Regional Distribution Center has a direct relationship with the Provincial Distribution Center in the regional.

The pattern of the relationship between PDR and PDP in the national distribution system in detail can be explained as follows (Ministry of Commerce, 2013):

1. The Regional Distribution Center will collect data on commodity needs in each service province.
2. Commodity inventory data at the Provincial Distribution Center in each province are collected and aggregated into regional inventory data and subsequently reported to the Ministry of Trade.
3. The Regional Distribution Center will look for supplies to cover supply shortages in the provinces it supports.
4. The Regional Distribution Center becomes a center of consolidation in terms of ordering commodities when the booking quota at the Provincial Distribution Center in need is insufficient to order independently.

In each region there is basically only one Regional Distribution Center to service these regional needs. However, there is a possibility that in one region there are more than one Regional Distribution Center.

Chain System Support Regional Distribution Center

In principle, the Distribution Center (PD) as an institution or buffer agency that can handle supply chain systems for basic commodities carry out the following activities (Ministry of Trade, 2013):

1. Collector
Buy products from farmers, breeders, or fishermen and process them (handling, shelter, cutting, and packing) into products that are ready for sale to consumers.
2. Marketers (marketers)
Market staple commodities to target domestic and foreign market (export) markets.
3. wholesaler
Hold consumer goods and production facilities for the needs of farmers, breeders, or fishermen from manufacturers or wholesalers and distribute them to farmers, ranchers and fishermen through available outlets.
4. Logistics service providers
Handle logistics activities for both transportation and warehousing and inventory.

Effectiveness of the Regional Distribution Center

Being a question, is the implementation of the Regional Distribution Center effective enough to provide solutions for distributing basic commodities?

So far there have been no studies that have comprehensively evaluated the effectiveness of the implementation. The concept of regional distribution centers and provincial distribution centers.

PDR locations have been identified based on criteria: population, accessibility, consumer areas (not producers and not producer regions), can function as collectors (consolidation centers) and distributors, are located near the main port, and have the potential to be developed into trade centers Inter-island.

Based on these criteria, the Ministry of Commerce determines the location of the PDR as follows in Indonesia

  • Sumatran islands in Kuala Tanjung Padang, and Palembang,
  • Javanese islands in Jakarta, Semarang and Surabaya,
  • Borneo Island in Banjarmasin,
  • Sulawesi islands in Bitung and Makassar,
  • Nusa Tenggara Island in Larantuka,
  • Papuan islands in Sorong and Jayapura.

Objectives of Establishing a Regional Distribution Center

The establishment of the Regional Distribution Center which is defined as the place of the physical id pro distribution or warehouse actually acts as a market. Both the wholesale market and the retail market, which holds goods from suppliers or producers from various regions.

The difference with the market, PDR provides integrated transportation and warehousing services and value-added services such as packaging, labeling, and insurance, which are provided by PDR according to customer needs.

As a physical distribution, PDR is a marketing channel that brings together producers and consumers in the market place. As a market place, the role of PDR can also be done by other distribution channels, such as wholesalers, retailers, traditional markets, and modern trade.

Logistics Integration Equity Solutions

The value of the superiority of PDR that must be created is the flow of information (information flow) for the movement of goods that enter, exit, and goods available (stock). If at a certain time it is estimated that there will be a shortage or excess surplus (surplus). Will be immediately resolved through the fulfillment (if shortage) of the other Distribution Centers which have a surplus.

Conversely, if a PDR experiences a surplus, then the transfer or delivery of goods immediately to the PDR will experience shortages.

Data accuracy and updated information will be able to provide solutions to minimize stock scarcity or excess stock, both of which have implications for price fluctuations. Scarcity of stock has implications for increasing prices, while excess stock will have an impact on price reductions.

Logistics integration solutions can also overcome the problem of price disparity. Price disparity can be minimized through the application of the same retailer price.

Even Distribution Costs

Here there will be cross subsidies. In this case, “fairness” obtains affordable prices of basic commodities at prices that are relatively similar between regions.

The main function activities that must be carried out in the PDR are warehousing, inventory management, transportation, information management, banking services, insurance, guarantor institutions, and quality testing institutions. Warehousing activities in the PDR include the activities of receiving goods, put-away, storing, picking, and staging.

Inventory management will ensure the availability of goods that are able to balance between carrying costs and storage costs. Implementing just-in-time inventory management systems will allow low inventory costs.

The characteristics of basic materials which are generally very vulnerable with expiration. Much require accurate and reliable inventory management information.

The choice of type of transportation will affect the product price, shipping performance and the condition of the goods when it arrives at the destination.

Collaboration with truck transport business associations (such as Aptrindo). Will ensure the transportation performance of goods shipping from suppliers to PDR and from PDR to consumers. At the same time empower truck transport entrepreneurs who generally come from the micro and medium business sector.