MARKET LEADING DIGITAL TRANSFORMATION
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PT SEMEN INDONESIA: INSIDE THE DIGITAL TRANSFORMATION OF A MARKET LEADER
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PT SEMEN INDONESIA
ACHMAD THOLCHAH, GENERAL MANAGER OF IT AT PT SEMEN INDONESIA, DISCUSSES THE COMPANY’S PLANS TO MAINTAIN ITS POSITION AS A MARKET LEADER
T
he world is changing. As markets are disrupted and reshaped by new technologies, methodologies and players, existing
leaders must constantly adapt in order to survive and, hopefully, thrive. In Indonesia, the country’s cement production industry is facing a two-fold challenge: new enterprises entering the market, 04
alongside increased production by existing players, has driven up supply and seen consumer demand decrease by 0.6%. “As a result, the average utilisation rate of cement producers in Indonesia has continued to decrease,” explains Achmad Tholchah, General Manager of IT at PT Semen Indonesia (Persero) Tbk (Semen Indonesia). Tholchah predicts that, while demand is beginning to grow again, constantly increasing competition is inevitable. “This combination of excess supply and decreasing demand for cement has led to increased competition in the market and pressure on pricing, reducing the average price by around 6.5%.” With major new entrants to the market, particularly from China, and ever-increasing impetus to compete, Semen Indonesia is taking a number of steps, not only to ensure its position as a market
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$2.25mn Approximate revenue
1957
Year founded
10,000
Approximate number of employees w w w.se me ni ndo ne s ia . com
PT SEMEN INDONESIA
“PT SEMEN HAS CONSIDERED ALL OPPORTUNITIES, AS WELL AS RISKS THAT COULD MAKE THE CEMENT BUSINESS MORE CHALLENGING” 06
— Achmad Tholchah, General Manager, IT, PT Semen Indonesia
leader in the region, but to drive growth and profit. We spoke with Tholchah in detail about the new pressures facing the industry and explored the ways Semen Indonesia deploys its strategic acquisitions, supply chain optimisation and the next phase of its Internet Communications Technology Master Plan (ICTMP) in order to not only endure current challenges, but emerge stronger than before and position itself as the region’s market leader for decades to come. “Semen Indonesia has considered all opportunities, as well as risks that could make the cement business more challenging,” explains Tholchah. “Through its Marketing and Supply Chain Directorate, we have initiated a series of strategic marketing initiatives to ensure optimal sales volume for the company, as well as strengthening its position as a leader in the domestic market.” Originally inaugurated in 1957 by the first President of the Republic of Indonesia, Semen Indonesia has since grown into the country’s largest cement manufacturer. The firm’s annual production capacity has expanded from 250,000 to 3.9mn tons, while in Vietnam Thanglong
CLICK TO WATCH : ‘SEMEN INDONESIA’ 07 Cement (a subsidiary of Semen
Semen,” explains Tholchah. “The
Indonesia Group) contributed 2.3mn
acquisition will help us maintain a domi-
tons. In order to diversify its product
nant role in the Indonesian market, cre-
portfolio, increase penetration into new
ate significant operational synergies in
verticals and reach a larger customer
centralised procurement, logistics and
base, Semen Indonesia consistently
maintenance, and finally catalyse and
works to expand through a series
enhance our strategy with scale-based
of strategic acquisitions. In January
benefits along the value chain.”
2019, the company purchased a major-
The acquisition also brings new
ity stake in fellow building materials
technology to the table, as the com-
manufacturer, PT Holcim Indonesia,
pany operates processes for produc-
for a total consideration of US$917mn.
ing energy from waste, which can be
“Holcim (which has rebranded as Solusi
deployed across Semen Indonesia
Bangun Indonesia Tbk) contributes
Group’s facilities to further increase
strategic and operational value to
company-wide efficiency. This is w w w.se me ni ndo ne s ia . com
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particularly useful as the combined entity resulting from the purchase will be one of the largest domestic coal consumers in the country, with an estimated consumption of 10mn tonnes per year. Tholchah’s role in this transition process is to facilitate a seamless merging of the two companies’ IT infrastructure. “Some of the challenges we’re facing are the integration of supply chain processes, financing and distribution, mapping the products, materials and data that are expected to
“ THE ACQUISITION OF HOLCIM INDONESIA WILL HELP US MAINTAIN A DOMINANT ROLE IN THE INDONESIAN MARKET” Achmad Tholchah, General Manager, IT, PT Semen Indonesia
flow between the companies, and aligning employee functions,” he explains.
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E XE CU T I VE PRO FI LE
Achmad Tholchah Achmad Tholchah, a graduate of the Bandung Institute of Technology in 1995, began his career in the cement business as a plant engineer at PT Semen Padang, the oldest cement company in Southeast Asia. His interest in Information Technology began when he was assigned to develop the system information for plant maintenance. Subsequently became a project manager for the implementation of ERP system. After successful implementation, the duty was continued to develop the IT system for Semen Indonesia Group, which is the holding company of PT Semen Padang. After graduated master degree from a business school, served in the company’s business strategy for several years, before returning to the IT division again.
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PT SEMEN INDONESIA
Overcoming these challenges – alongside the company’s continuing goals of maintaining its market position and enabling growth – are being aided by PT Semen’s ongoing digital transformation according to its ICTMP. “ICTMPs last between three and five years. ICTMP I, which covered the 2008-2013 period, concentrated on providing a single ERP platform system that enabled the company to standardise its business processes among cement subsidiaries. ICTMP II, which covered the 2014-2018 period, 10
focused on revitalising and upgrading the core ERP modules and expanding its capabilities to support the implementation of Customer Relationship Management (CRM) and Supply Chain Management (SCM). CRM and SCM are the key to enhancing the company’s competitiveness in both domestic and regional markets,” says Tholchah. This year, Semen Indonesia embarks upon a new stage of its ICTMP that focuses on the company’s customer base. “Our main concern is using technology to enhance the customer experience,” he says. “By shifting our focus and paying more attention to what customers want, service is
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PT SEMEN INDONESIA
12 improved consistently across all touchpoints and channels.” The continuing digital transformation of Semen Indonesia operations will, Tholchah asserts, allow the company to pursue accurate market segmentation, consolidate its operations and draw increasingly accurate insights from its analytics. “New technology enables businesses to discover more adaptive and agile models based on customer parameters that were impossible to uncover and/or track in the past,” he elaborates. “The introduction of cost-effective, customer-focused
CLICK TO WATCH : ‘SEMEN GRESIK’ 13
“ OUR MAIN CONCERN IS USING TECHNOLOGY TO ENHANCE THE CUSTOMER EXPERIENCE”” Achmad Tholchah, General Manager, IT, PT Semen Indonesia
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PT SEMEN INDONESIA
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“THERE’S MORE DATA TO COLLECT THAN EVER, AND FAILING TO MEASURE THE RIGHT DATA COULD END IN DISASTER” Achmad Tholchah, General Manager, IT, PT Semen Indonesia
digital tasks streamlines business workflows and eliminates overheads associated with outdated solutions. Of course no transformation effort is without its challenges.” Tholchah acknowledges that as the ICTMP moves forward, the company needs to ensure that new analytics strategies are measuring the appropriate data sets to draw actionable insights. “There’s morewdata to collect than ever, and failing to measure the right data would lead to disaster,” he warns. Tholchah also notes that transitioning from legacy systems presents its own w w w.se me ni ndo ne s ia . com
PT SEMEN INDONESIA
Partners “It’s vital that we have very skilful and experienced partners to help us,” says Tholchah. PT Semen Indonesa enjoys fruitful partnerships with the following organisations: SAP “SAP Solutions are mission critical to the way we run our business operation system.”
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IBM “IBM Services partners with us regarding project planning, project management and risk planning. They are also a strategic partner that brings international industry best practices, while understanding regional and local intricacies and, of course, top tier technology offerings.”
Huawei “They provide us with a complete Data Centre solution, from servers to storage and other core network hardware.” Amazon Web Services “AWS provide us with that essential IT infrastructure cloud services.”
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problems: “a business relies on prod-
bility in analytics and mobility, as well
ucts and principles that have allowed it
as utilise social networks and cloud
to survive up until now, but sometimes,
technology.” Should the next stage of
legacy can be more of a burden than
its digital transformation be success-
an asset.”
ful, PT Semen will be in an enviable
While the road ahead is challenging
position to leverage its market-leading
and uncertain, Tholchah is very much
position in the Indonesian market to
aware that it holds potential opportu-
not only survive market-wide disrup-
nity for success, growth and longev-
tion, but benefit from it.
ity. “The success of these projects is critical for us; we can’t afford to fail,” he insists. “We believe it is necessary to adapt to industry 4.0 by enhancing ICT usage to improve the company’s capaw w w.se me ni ndo ne s ia . com
Gedung South Quarter Tower A, lt 19-20 Jl. R.A. Kartini Kav 8, Cilandak Barat Jakarta Selatan T +62 21 5261174-5 www.semenindonesia.com