Publications

This research attempts to identify the causes of excess and obsolete materials arising from the logistics function in contractors and to find the most appropriate solutions to mitigate buildup of excess materials in the future. Research has been conducted using the latest data, which is surplus and dead stock balance as of 31 December 2014 in all contractors. In this qualitative research, a combination of primary data (field observation and in-depth interviews to respondents from contractors and SKK Migas management) and secondary data (journals, books, papers and reports) was utilized to perform a comprehensive analysis that can be applied to reduce the number of cost recoveries from logistics function. Based on data collection, there are two main causes of surplus and dead stock, which are the PSC contract provision that allow non-capital inventory to be charged to cost recovery at such time as the materials arrive in Indonesian port of imports, and the lengthy time and procedure of the write off process, which significantly reduces efficiency in the logistics sector. Subsequently, several alternative solutions are examined to obtain the optimal solution for controlling the number of surplus and dead stock in the future. These include: Consignment, vendor/managed inventory, parts pooling, application of bar code and Radio Frequency Identification (RFID), outsourcing of the logistics function, implementation of OEM, parts. Results from the criteria-based decision matrix show that changing the PSC contract provision at the process of PSC renewal, and implementing a special government regulation to accelerate the write off process can greatly increase efficiency in the logistics sector. In the end, savings from cost recovery will be greater because the cost of holding materials can be reduced. Keywords: material management, cost recovery, write off process, Indonesian oil and gas industry.