Eighth Symposium (Presentation of Tanjung Perak : Tanjung Perak Indonesia Port Corporation III）

Competing in the Global Business Marketplaces

INTRODUCTION
Port of Tanjung Perak is the principal port in Surabaya and the second biggest port in Indonesia. Supported with its strategic location and the burden hinterlands, the port becomes one of the main gateways in Indonesia especially for East Java Province as well as the whole Eastern region of Indonesia. The Port of Tanjung Perak therefore has a significant role in accelerating the growth

Before becoming a modern port, the Port of Tanjung Perak was a traditional port, in which, the vessels discharged its cargoes directly along the small river called Kalimas. Due to the growing of trades and increasing demands of shipping lines to call at the port, the facilities at that time were inadequate to serve the demands. In 1910, the more realistic plan and idea to develop a more modern Port of Tanjung Perak was began and since then the port was officially opened and declared as the public port to accommodate all types and sizes of the commercial shipping lines.

Today, the business environments are changing very quickly and challenges facing the Port of Tanjung Perak are much more complex than ever before and therefore, the continuous port development and availability of its supported facilities is imperative in order to respond to the changing customer’s needs and expectations. The demands of the international shipping lines now are characterized by the main pillar such as efficiency, efficient, secure and the speed of cargo distribution around the globe (in- time delivery).

VISION & MISSION
Port of Tanjung Perak has a great vision to be “a world-class port operator” by placing itself into international port network. While the mission are to provide the high quality of services, to foster the profitability through professional port management and maximum use of science and technology as well as to contribute to shareholders in particular and public in general.

This vision and mission has been inspiring all employees to contribute their best performances. Building team works and using the resources as maximum as possible are becoming a habit to accomplish the company’s objectives. Moreover, customer satisfaction is the main philosophy for every people in organization. Many strategic programs are set up to support and achieve the vision and mission.

PORT MANAGEMENT & ORGANISATION

In Indonesia, the ports have been divided into two types namely private and public port (commercial port). In order to manage and operate such commercial ports, the government established special entity, which is called PT. (PERSERO) Pelabuhan Indonesia I, II, III & IV (State-Owned Enterprises).

Port of Tanjung Perak is the principal port managed and operated by PT.(PERSERO) Pelabuhan Indonesia III, with Headquarter (HQ) in Surabaya. The remaining entities are PT. (PERSERO) ) Pelabuhan Indonesia I, with HQ in Meda, North Sumatera, PT. (PERSERO) ) Pelabuhan Indonesia II with (HQ) in Jakarta, and PT. (PERSERO) Pelabuhan Indonesia IV with HQ in Belawan, Makasar, South Sulawesi respectively. Since a 100 per cent of the shares owned by State, Ministry of Finance, the company is fully controlled by Government. Meanwhile, technically, the port operation is managed under the Ministry of Transportation and Ministry of State-Owned Enterprises (SOEs).

The organizational structure applied within the company has ever changed frequently. It is in line with the rapid external business developments, which need a quick response. The formulation of the structure is usually tied to the changing business environment. The klthe communication system within and outside organization could run smoothly especially in accommodating the customer needs.

The following are the management members of the Port of Tanjung Perak :
General Manager : Sumardan Marzuki
Deputy General Manager (Operational) : Masrin Adi
General Affairs & Personnel Manager : Bill L. Yuller
Finance Manager : Swastanti
Technical Manager : Basori
Diversified Business & Property Manager : Achwan
Vessel Service Manager : Utopo
Terminal Manager : Didiek Harijanto
Commercial Manager : I Putu Ariawan
Information Technology Manager : Surjono
Head of Port Security (In Charge) : Wagiyo

BUSINESS VALUES & ETHICS
The government committed to implementing the Good Corporate Governance (GCG) principles in all business practices in Indonesia, which consist of Transparency, Accountability, Responsibility, and Independency. It is hoped that the applying of these principles of GCG will bring about positive impact especially in altering the behavior of people in particular in doing business in Indonesia. It is also occurred in the company, in which the company’s culture has been changing steadily. The GCG turns a bureaucratic culture into a more corporate culture that focus on the customer satisfactions.

The Good Corporate Governance principles and practices is expected to be the “major driving forces’ both for our people and employees. The corruption, collusion, nepotism principles, therefore should be avoided in modern business practices so that the company will be able to survive in the current and future global business competition.

In a bid to support the GCG implementation and achieve our corporate vision or mission, the management committed to applying a number of business values and ethics such as excellent customer service, innovative and creative in business areas as well as continuously improves the quality of our level service.


STRATEGIC ISSUES

The Port of Tanjung Perak has a number of major problems. The following are among the major problems that need to be solved immediately.

The first issue is the limited port facility. At the moment, both International and conventional port have limited facilities especially related to the dept of water which is only –9 LWS and the length of terminals. This is becoming serious problem for the Port of Tanjung Perak amid the increasing demand of shipping lines to berth and discharge the cargoes or containers. On the other hand, the size of vessel is likely to become bigger and bigger. The existing dept of water and the required terminal facilities are inadequate in accommodating and satisfying the customer’s growing needs.

The second problem is the crucial need for every member of company to improve the knowledge and skills capacity especially in the emergence of the knowledge-economy, where the human capitals are increasingly becoming major factor in creating a company’s competitive advantage. So, the capacity building of the company would become our main attention in developing corporate strategy. The port operator around the globe is trying to create smart employees, who have a high competency, innovative and creative in the workplace. What about Port of Tanjung Perak?

The third problem is Information Technology. The more sophisticated of technology to support the port operations as well as administration are needed. Since the emergence of e-commerce in the port and shipping industry has helped the trade around the world growing tremendously. The Port of Tanjung Perak as the second biggest port in Indonesia must be prepared itself to apply the most sophisticated technology so as to create the competitive edge in business world where the competition among the port operator is so fierce.

The ship’s call and cargo handling are rising significantly. The latest data for instance indicated that the average of general cargo handling has reached 30 million ton a year. As a comparison, in 1997 the container traffic was only 863 TEUs, in 2005, the number increased to 1,2 million TEUS. While, the ship call was 15 thousand in 1997 and it rose to about 16 million in 2005. In the upcoming year, the container throughput will rise dramatically and it is estimated that in 2025, the container traffic handled by the Port of Tanjung Perak will account for 50–60 million TEUS. In such circumstances, the strategies related to port development aimed at satisfying and meeting the demand both domestic and global trends of shipping lines are urgently required.

Seemingly, the capacity of the company, in terms of knowledge and skills in particular are not enough any more to compete in this global business environment, in which, the expectation of customer is always changing with the characteristic of efficient, effective, secure and a low cost as well. What is more is the fierce competition among the port operators will be undeniable. In such situation, what the best strategy should be done related to improvement of the quality of workforces might be a key factor for any single company or port operator to be able to stay ahead and sustain in the current and future competition.

THE WINNING BUSINESS STRATEGY
A. Current Business Strategy

In order to capture and maintain the existing market shares, in terms of the number of ship’s call and cargoes handling, the management has undertakes a number of business strategies.

One Stop Service is established to simplify the procedure of ship and cargo handling services. Lengthy bureaucratics and procedures applied previously are removed and then simplified. All related parties required in accomplishing ship and cargo document requirements are no longer needed since with this new system the requirements are available in one building. Customer is no necessary to meet many people concerned with port services as it is time consuming. The new method has reduced the time and cost as well. The services can be offered much faster than before. This model has not only benefited the shipping lines but also many other stakeholders since the port service is becoming much more efective and efficient.

In response to the customers demand especially to provide port service anytime, all other related port services, such as the Fresh Water Supply, Bunkering, Pilotage & Tug Boat Service, Health Service, and Fire Fighting Services are also available in a 24 hour basis. Our employees are also standby and always ready to serve the customers any time, 7 days a week.

For almost a decade (since 1997 until 2006), Port of Tanjung Perak has achieved and maintained the International Standard for Quality of Services, such as ISO 9001: 2000. Moreover, the most recently, the Port also got ISO 14001: 1996, an international certification for environment accomplishment. This achievement has showed that the port of Tanjung Perak is highly committed to providing the quality of services and caring to corporate social responsibility, creating a environmentally-friendly port.

While, in order to ensure that the Port of Tanjung Perak is secure and safe from any irresponsible activities such as terrorist attacks, since 2004, the International Ship and Port Facility Security (ISPS Code) has been implemented at the Port of Tanjung Perak. Indeed, with this ISPS Code, all customers both domestic and international shipping lines can safety transit as well as discharge their cargoes within the Port of Tanjung Perak areas.

Human Resources Development (HRD) program as integrated part the company’s strategy is now becoming more and more important in supporting the vision to be “a world-class port operator. The Education and Training activities are conducted regularly to equip as well enhance the member of organization or employees with the required knowledge and skills. Hence, the management has encouraged the employees to participate in a number of training activities since the Port of Tanjung Perak realized that unless the needed competencies of workforces are fulfilled, the competitive edge of the company would not be developed.

Moreover, the Human Resources Information System or HRIS is set up in order to support the required uptodate HR data associated to HRD activities. The presence of HRIS as well as HRD programs altogether is absolutetly needed to identify the connection between the company’s goal with the HRD strategies applied.

Meanwhile, the Finance and Business Information System is also established to link between the business activities with finance record system. ABC system or Activity –Based Cost is also applied to make an efficient use corporate budget based on the real activity conducted in the company. These system altogether are expected to ensure the tranparancy of financial management.

B. Future Winning Strategy

To be able to stay ahead and compete in the global competitive landscape, it is important for every business organization including the Port of Tanjung Perak to explore new ways and strategies in doing its business. To anticipate the increasing demands as well as to be able to compete in the highly future global business environment, the new winning strategies should be formulated and immediately implemented. In addition, the Port of Tanjung Perak should adapt and respond quickly to the global business- changing environment. Otherwise, the existing and the sustainability of the port will be collapsed.

Builds New Terminals

It can be predicted that in a near future, the port of Tanjung Perak will be congested unless the new and more representative port is developed as soon as possible. A recent Conference on Shipping and Maritime 2006 in Malaysia, for instance, showed that as a result of the global business expansion of the new economic force such as China and India, the request on container terminal would be double in the upcoming eight years, from 400 million TEUs in 2006 to 730 million TEUs in 2014. If the global trend is not anticipated properly, the sustainability of business especially for the Port of Tanjung Perak might be in trouble.

Again, in the next 10 years, the technology of ships construction will be much more advanced so that the dept of port basin is needed to be deepen to about 15 – 15 LWS. Otherwise, the big size of ocean going vessels with more than 5,000 TEUs capacity could not enter into the Port of Tanjung Perak.

The company has prepared to construct a truly international port. The new port development will be situated at Kali Lamong Bay, a 15 kilometer away from the existing Port of Tanjung Perak. The new port which will be called a selfgenerating port as it will be equipped and supported with a number of modern port facilities such as industrial area 64,51 hectares, container terminal 79, 14 hectares, cargo terminal 49,58 hectares, parking area 18,35 hectares and public facilities 25, 58 hectares, green area 28,79 hectares, recreation areas 51,08 hectares and so forth. It is estimated that the construction of the new port requires a 6,5 trillion Rupiah. The project of this sea infrastructure will be opened to local as well as overseas investors.

Upgrade Efficiency and Capacity (Modern Technology)

Another future winning strategy is providing an excellence terminal. That is why upgrading the existing terminal and increasing its container handling capacity is needed. Since the Port of Tanjung Perak has a limited capital and area to be developed, the strategy to upgrade the efficiency and capacity can be done by equipping the existing terminal with the latest and modern gantry crane or container handling equipments supported by the usage of high technology like digital radio communication as well as wireless technology. It is designed to make a smooth and speed container-handling operations.

The port of Tanjung Perak will always adopt the newest cutting-edge technology to be applied at all operated terminals. E-Port application or Electronic Port Business, for instance, should be immediately implemented so as to create an effective and efficiency in the port administration and operations. This paperless system might be the alternative solution in helping the current administration and communication system within the Port of Tanjung Perak. The implementation of an online business transaction and the application of an interactive communciation system between port operator and the customers such as E-Commerce as a modern business tool is inevitable in this global marketplaces.


Create A Knowledge-Based Organization

We realized that Human Capital is now becoming more and more important resource compared to other company’s resources in creating company’s competitive advantages. It is especially true in this global business competition landscape. The winning strategy in the future will be the knowledge–based company, where the company has knowledge-workers. To do so, the organization should create a climate or environment that supports continuous and active learning activity for every member of organization. We will endeavor to introduce a concept that ‘Smart Employees, Successful Organization”.

Building a new culture, Learning Organization, is our major strategy so as to strengthen capacity and capability of Port of Tanjung Perak in competing in the tight global business competition. The only organization, which promotes learning to continuously improve the required knowledge and skills of the members in responding to the ever-changing business environment, will become the winner in the global competition.

To be able to sustain as well as win in future competition, it is necessary for the Port of Tanjung Perak to star designing a strategic HRD (Human Resources Development) program intended to ensure that competencies and capabilities required are fulfilled. This strategy is called a knowledge–based organization. We do believe that the only winner in the current and future global business competition is a learning organization.

Be Always Creative and Innovative

Peter Drucker, an internationally recognized management guru said that innovation is a key source of competitive success and central to the creative process in the economy and to promoting growth, increasing productivity. By referring to this concept, it is obvious that to be able to success in the highly competitive environment, Port of Tanjung Perak should create a new working climate that support and encourage the innovative activities. Creating a new service intended to satisfy the customer in today’s marketplace is a good strategy to capture a new market or at least to retain our existing marketplace. Be always creative and innovative in providing ways to better service or serve differently will pave away to enhance company’s competitive advantages and ultimately generating new customers and revenues as well.

The Port of Tanjung Perak is planning to implement a most renowned and effective business improvement system aimed at transforming change from a nuisance into a core competency and increasing port service assurances-customer focused, defect free and financially successful. This system is called DFSS (Design for Six Sigma). The next challenges for the Port of Tanjung Perak management is how to build Six Sigma levels of Excellence into new and renovated process, products and services. DFSS is a proven, robust approach to designing new products and services and redesigning the flaws out of existing offerings. More ambitiously, DFSS can be applied to building new competitive capabilities that go beyond current customer expectations.

While Six Sigma is certainly about solving problems, reducing defects, delighting customers and boosting profits, DFSS is more than that. By implementing the DFFS, the port of Tanjung Perak plans to stay in business in for a long- always adapting to new customer demands, changing economic condition and new technologies. Therefore, we have to know what to change, when and then being able to sustain the result, being able to fix, upgrade and continuously improve existing processes, and services, having the insight and creativity to create new processes, products and services as well as to abandon and redesign those that become obsolete or incapable of meeting current needs.

While the foundation of Six Sigma principle is DMAIC (Define, Measure, Analyze, Improve & Control), which focus on the improvement of processes and services, the DFSS principle is all about exploring exciting new ways to create processes that operate at exponentially higher levels of efficiency and effectiveness.



Corporate Social Responsibility (CSR) Program

Indeed, the issue of Corporate Social Responsibility (CSR) should be handled more seriously in the future as the investor especially international investor remain concerned toward the extent to which the company is implementing the Corporate Social Responsibility. How successful the CSR program within the company will become one of the major factors for investor to help invest their shares to the company.

The CSR is exactly the program focusing on the community development, and caring to the environmental aspect of the organization. The Port of Tanjung Perak will continuously build a more environmental-friendly port through Eco and Green Port, Small and Medium Scale Enterprises Partnership and Scholarship for Education programs. It would be expected that the successful CSR program will undoubtedly enhance the good image of company and ultimately will lure foreign investors to invest in infrastructure sector in Indonesia in particular for future Port of Tanjung Perak development program. The program of CSR will help the Port of Tanjung Perak in achieving the ultimate goal to make a balance between generating profits, caring to people and creating environmentally-friendly planet, or 3P program (Profit, People and Planet).

Establish International Strategic Alliance

Jointing into the INAP is expected to enable Port of Tanjung Perak staying in touch with global or international port network. With other members, an international strategic alliance can be established to create a truly profitable business cooperation. This INAP organization hopefully can be created as our international strategic alliance designed to facilitate a more direct ship’s call among INAP members and increase the international trade.

It is hoped that a strategic alliance among this international ports will bring about some positive impacts on the strengthening and widening business opportunities. The exchange information of the port development and technology, know-how, marketing, the application of the best business practices among the INAP members as stipulated in the INAP charter, therefore, should be enhanced so that the capacity building, especially among the members can be improved and increased continuously. The profitable strategies applied in one of INAP members can be communicated or transferred to others in order to create “sustainable port” amid the fierce of global port business competition.

Again, a more realistic program of INAP, therefore, should be implemented. For example, the marketing strategic alliances program through INAP promoting activity in respective countries will obviously market the member to the globe. A special port tariff application among the INAP members can be applicable as soon as possible to bolster more direct ship call to and from the port affiliated in INAP organization. The exchange of human resource and its expertise to learn each other is another idea to help improve the INAP member’s capacity and capability in competing in the future competition.