CHAPTER 1

INTRODUCTION

1.1 Research Background

Logistics is defined as a strategic process of moving and storing goods, spare parts, and
finished goods from suppliers to customers. Logistics can also be interpreted as a strategic
processing process in the acquisition, movement, and storage of materials and services within
an organization. The logistics sector includes the sub-sector of warehousing, transportation
support services, postal and courier services. The logistics sector also includes transportation
sub-sectors per mode, namely: land, sea, air, rivers, lakes, and crossings

In general, the logistics system in Indonesia currently have various kinds of problems
that have an impact on the non-optimal performance of the national logistics sector which is
reflected in the high costs of logistics and services that are not yet optimal, so this affects the
competitiveness of the business world. in the global market. Based on a survey conducted by
the World Bank in 2012 - 2018 which was then stated in the Logistics Performance Index
(LPI), the overall position of LPI Indonesia was ranked 51 (forty-seven) out of 167 (one
hundred and sixty-one) countries.

Based on the LPI survey from the World Bank in 2007 and 2010, Indonesia's logistics
performance in a period of 3 years appears to be declining, along with the decline in
Indonesia's LPI ranking from 43 (forty-three) in 2007, to 75 (seventy-five) in 2007. 2010.
Meanwhile, in 2018 Indonesia's logistics performance increased according to the 2018 LPI
survey and was ranked 46th out of 160 countries, but still below Singapore, Malaysia,
Thailand and Vietnam. Meanwhile, according to the report of Doing Business 2011, the time
required to import goods from abroad is 27 (twenty-seven) days, much longer than some
other ASEAN countries. In addition, in terms of domestic logistics costs, Indonesia's position
is ranked 92 (ninety-two) out of 150 (one hundred and fifty) countries. The LPEM UI study
in 2005 stated that the percentage of logistics costs in Indonesia compared to production costs
was 14.0% (fourteen percent) of which inbound was 7.2% (seven poin two percent), Industry
2.9% (two poin nine percent), and 4.0% outbound (four percent).

One of the most important issues that cause some of these problems is in the field of
information and communication technology which has not been used optimally for the
integration of the national logistics system, in addition to the limited coverage of non-cellular
service networks, and still accustomed to using a manual system (paper based system) for
logistics transactions are also the cause of these problems.