Strategic Inventory Management For Cost Reduction in PT PLN (Persero): A Business Model Perspective

PT PLN (Persero) faces pressure to improve inventory efficiency, as stock levels constrain working capital and overall operational performance. This study aimed to identify the root causes of inefficiencies in Main Distribution Material (MDU) procurement and logistics, select an appropriate inventory management strategy, and formulate an implementation roadmap. A mixed-methods design was employed by combining transaction and inventory data with surveys of 29 practitioners, expert judgments from 12 specialists, focus group discussions, policy reviews, and pilot validation at UP3 Cikarang. Kepner–Tregoe analysis and a Current Reality Tree were used for problem diagnosis, while Value-Focused Thinking and the Analytic Hierarchy Process (AHP) were applied to evaluate strategic alternatives. The findings showed that inefficiencies resulted from material planning that was not regularly recalibrated based on actual consumption patterns and weak coordination across the distribution network. Dynamic reorder point/reorder quantity (ROP/ROQ) achieved the highest AHP priority score at 50.01%, outperforming Vendor-Managed Inventory (VMI) at 33.27% and existing practices at 16.73%. Pilot calculations for power cables, kWh meters, and miniature circuit breakers indicated a potential working-capital release of IDR 2.39 billion while maintaining a 95% service level and a 14-day lead time. Therefore, PLN should institutionalize Dynamic ROP/ROQ through monthly recalibration, integrated information systems, clear governance mechanisms, and gradual expansion across distribution units. Long-term sustainability requires continuous monitoring through the Plan–Do–Check–Act (PDCA) cycle.