Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

Operations and Innovation Management

Perodua Otomobil Kedua Sdn Bhd

1. Company Business Background

Perodua Otomobil Kedua Sdn Bhd, Perodua established in 1993, is a joint venture company
between Malaysian and Japanese partners. The shareholders of Perodua are UMW
Corporation Sdn Bhd (38%), MBM Resources Berhad (20%), Daihatsu Motor Co. Ltd
(20%), PNB Equity Resource Corporation Sdn Berhad (10%), Daihatsu (Malaysia) Sdn Bhd
(5%), Mitsui & Co. Ltd (4.2%) and Mitsui & Co. (Asia Pacific) Pte Ltd (2.8%).

The company started operations in 1994 and the popular Perodua Kancil was introduced to
the Malaysian market in August the same year. Perodua plant are Perodua Kancil
(August 1994), Perodua Rusa (Mac 1996), Perodua Kembara (August 1998), Perodua
Kenari (Jun 2000), Kelisa (Jun 2001), Myvi (May 2005), Viva (May 2007), Nautica 4WD
(May 2008), Alza (November 2009), Axia (September 2014) and Bezza (Julai 2014).

2. Customer Benefit Package (CBP)

A Customer Benefit Package (CBP) is a clearly defined set of tangible (goods-content) and
intangible (service-content) features that the customer recognizes, pays for, uses, or
experiences. Combination of goods and services configured in a certain way to provide value to
customers, consists of a Primary Good or Service, coupled with Peripheral Goods and/or
Services and sometimes a Variant. Examples: personal checking account (primary service),
with designer check and special credit card (peripheral goods), and online bill payment
(peripheral service).Primary good or service-core offering that attracts customers and responds
to their basic needs. Peripheral goods or services- core offering that are not essential to the
primary good or service, but enhance it. Variant- customer benefit package attribute that
departs from the standard CBP and is normally location or firm-specific.
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

Special offer toddler

Financing and leasing
isofix child car seat

Replacement Free drink

parts (Coffee and tea- service
outlets)
Perodua
(CBP)-
Pre Own Vehicle Vehicle High Speed Internet
(Fully refurbished (Service Outlets)
Inspected)

Waiting room service Extended Warranty

(airconditioners / (up to 18 month)
book@paper@magazine to read)

Perodua Customer Benefit Package (CBP)

3. (a) Draw current company value chain

SUPPORT AND GENERAL MANAGEMENT PROCESS

P
O
S
Design
S T
U
P Raw Material S
P sourcing A
L L
I Manufacturing E
E Process
R S
S E
Finish car
R
Marketing, V
distribution, and post I
sales C
E

MEASUREMENT AND FEEDBACK

Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

Value chain covers the entire range of activities from the conception of the product to its final
delivery into the hands of a customer. A value chain analysis helps analyse where there are
problems down the value chain to make improvements. Generally a value chain analysis begins
with the identification of the various processes that are a part of the production process.

3 (b) Draw pre and post service value chain and analyse benefit.

SUPPORT AND GENERAL MANAGEMENT PROCESS

Gaining customers Value creations Keeping the customers

Preproduction Process Core Process Postproduction Services

- Licensing and certification - Management and - Marketing

- Customs administration administration - Advertising
- Product safety standards - Personnel and human - Distribution
- Environmental quality resources - Retail
- Design - Insurance - After-sales services
- Prototyping - Financial services
- Intellectual property - Accounting
management - Legal services
- Repairs and maintenance
- Cleaning
- Facilities services (water,
electricity, gas, sewage)
- Security services
- Packaging and labelling
- Transport
- Communications

MEASUREMENT AND FEEDBACK

Preservice chain value company do are customise and team oriented product design,
consulting services, contract negotiation, product, and service guarantees, customer financing
to help purchase the product, training customer to use and maintain the product, purchasing
and supplier services, and others types front end services.
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

After post service, there are six steps company post service remarkable & customer satisfaction
:-
1. Connect with your customer – establish rapport and begin a relationship with customer
2. Discover what they want – asking pertinent question and paying attention to the answers
3. Know what you cant do- choosing the customers who best fit what you can do well by
knowing what you can do best.
4. Do it – Execute well convert your customer wants into actions you can measure
5. Follow up- plan a follow up contact and do it consistently
6. Thank them –make sure they know you are grateful for business

4. Determine company internal and external measure

Performance
Performance Measure Performance Measure
Measurement
(Organizational –Internal) (Operational –external)
Category
Financial - Revenue and profit - Labor and material cost
- Return on asset - Cost of quality
- Earning per share - Budget variance
* Malaysian automotive industry expanded in
terms of sales, production, employment and local
content (Wad & Govindaraju, 2011)
*Based on expected TIV of 579,600 for 2016,
Perodua’s market share hit an all time high of
35.7% last year
(https://www.thestar.com.my/business/business-
news/2017/01/18)
Customer and - Customer satisfaction - Customer claims and
market - Customer retention complaints
- Market share - Type of warranty failure and
* Perusahaan Otomobil Kedua (PERODUA) upset
(founded in 1994) have conquered the
automotive industry, commanding 29% of the
- Sales forecast accuracy
local market share for the year ending March *For minor repairs, the services will
2011 (Nurul Fadly, Anis Fadzlin, Nursyazwani, Nor be free (Jump star & changes
Azrin, & Mohamed Nor Azhari, 2015) puntured tyres only).For breakdown
services the towing fee is free up to
100KM or RM300 whichever comes
first.

* According to Perodua Sales

managing director Datuk Dr Zahari
Husin, vehicle owners who “perform
any alteration to the vehicle via a
third party” will result in their vehicle
warranty being null and void. Keep in
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

mind that this is standard practice for

many car brands, as unwarranted
modifications can result in unwanted
liability.

Instead, he suggested that those who

are looking to customise their
Perodua vehicle should opt for
current accessory items listed in
Perodua accessories’ catalogues

* the Myvi and Alza previously came

with a three-year/100,000 km factory
warranty, with the option of a two-
year/50,000 km extended warranty
package.

Quality - Customer ratings of goods and service - Defects/ unit of error/

product recalls Opportunity
- Service representative
courtesy

Time Speed Flow processing @ cycle time

Reliability Percent of time meeting
promised due date
Flexibility Design Flexibility Number of engineering
Volume Flexibility changes
Assembly line changeover
Innovation and New product development rates Number patent application
learning Employee satisfaction Number of improvement
Employee turn over suggestion implemented
Percent of workers trained on
statistical process control
Productivity and Labour productivity Manufacturing yield
operational Equipment utilization Order fulfilment time
efficiency
Sustainability Environment and regulatory compliance Toxic waste discharge rate
Product related litigation Workplace safety violation
Financial audit Percent of employee with
emergency preparedness
training
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

5. Based on company value chain, identify performance measurement at each stage and
explain

Performance measurement is generally defined as regular measurement of outcomes and

results, which generates reliable data on the effectiveness and efficiency of programs. Input.
Resources (human resources, employee time, funding) used to conduct activities and provide
services.
 Market
share/growth/loyalty/
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013) revenue per target share
Achievement of
strategic objective

Finance/General Management/Legal/
Research and
Procurement of raw Development/Advertisement
materials/Logistics/Storage /Utilities/Other related services

Quality, price, SUPPORT AND GENERAL MANAGEMENT PROCESS

deliver, service
P
O
Production Administration/Services S
Supporting factory daily/Services T
Design
S from/Worker- related services government
U regulation
requirements S
P Raw Material
operations A
P sourcing
L
L Delivery to wholesaler/ retailer
requirements operations /Sales E
I Manufacturing Services / Sales/After-sales
E Process Customer services S
R E
S R
Finish car
V
Marketing, I
distribution, and post C
sales E
(Conception and design of
product/Industrial design/Patent
filing and acquisition)
MEASUREMENT AND FEEDBACK

Customer satisfaction, price,

goods quality, service quality,
timeliness
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

6. Identify Company competitive priorities and determine core competency

Core competitive company is on manufactured inputs into the car production assembly. There
are several local suppliers of parts and indirect suppliers for paints, and chemicals that are
locators in around Malaysia. Their sales to the case study firm are considered domestic sales.
Examples of these first tier supplies include:
• manual transmission
• switches
• machines parts
• transmissions and engine gears

Inspection and quality control are carried out at different stages of the manufacturing process
and at the end for each finished automobile according to the strict specifications provided by
the Head Office. The final stage of the value chain for the production of the car is the post-
production phase of marketing and distribution.

The activities in the production or manufacturing phase of the value chain carried out in the
firm’s assembly plant include the following:
• pressing & stamping (shaping metal);
• welding;
• painting;
• assembly;
• chassis assembly conveyor and the body shell conveyor meet at this stage of production
• inspection & testing for quality control

Once the car is assembled and passes quality control, and distributed to the franchise outlet or
dealership in various parts of the Malaysia.. The value chain studies ends with sales at one of
the retail outlets and post-sales servicing.

7. Operations strategy to achieve competitive advantage

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is aiming to sustain its current 30% domestic
market share, further enhancing its quality, cost-cutting and delivery (QCD) strategies to remain
competitive in the domestic automobile market. “Perodua are looking into various measures
such as putting quality as first priority and ensuring zero wastages and downtime, and training
our staff to be as committed as we are. Operation strategy defines as how an organization will
execute its chosen business strategy.
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) focuses on infrastructure which there are build
plant and manufacturing operations factory area (64000 square metres). Facilities included
there are Casting, machining, engine assembly (CMK), Logistic, Training centre/Quality audit,
Stockyard, Body Shop, Paint Shop, Assembly Shop, Pre-delivery inspection (PDI) and Parts
warehouse.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) focuses on R&D. R & D focuses on
developing our capabilities in automotive technologies ranging from basic testing, design and
styling engineering to manufacturing engineering skills. The activities include styling/modeling,
concept car development and the ability to undertake major facelifts. Perodua has invested
substantially amount in manpower and IT software for its R&D activities. The main activities of
the R&D are localisation of car parts and components, styling and modeling of future models
and facelifts of current product range. Other R&D facilities are the chamber, engine test lab and
test course.

The manufacturing capabilities of PERODUA and local Malaysian component manufacturers

have resulted in achieving 75 LMCP (Local material component points) in the manufacturing of
the Kancil i.e. an optimal level for localisation given economies of scale requirements.In-house
localisation Press parts Engine Parts (intake manifold, cylinder head, camshaft, crankshaft,
cylinder block)

8. a) Analyse role of technology to help operation strategy in company

Perodua corporate mission is to be a world class automobile company renowned for excellent
quality and reliability through and Efficiency in utilising technologies and available resources.
Examples A system called Electronic Excellence System (EES) developed by Dagang Net
Technologies Sdn. Bhd. it has deployed the Perodua headquarters with the Royal Customs and
Excise Department (JKED) and the Road Transport Department (JPJ). EES aimed at speeding
up the registration process of all its vehicle up to less than a day compared to the previous
manual system usage. This system also paperless compare previous paper documents that not
only slow the vehicle registration process and excise taxes, but also cost a lot. EES
electronically can process the verification of Documents Excise 7 and excise tax payments that
have taken over a week now can be settled in less than a day
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

8 b) Internet as a tool understand voice of customers

Internet is a good tool to understand voice of customers because the need to get feedback from
one’s customers is not a new imperative in the quest to improve the customer experience and
gain competitive advantage.

What has changed, as illustrated above, is the range of ways to capture customer feedback;
some customer feedback tools are traditional but others are increasingly tapping into latest
voice of the customer technology to both capture and analyse the data:

 surveys and requests for feedback on web sites

 e-mailed requests for feedback
 SMS
 smart phone surveys
 IVR [phone]
 touch screen surveys.

As well as the broader social media space.

The benefits to customers of electronic data capture include:

 timeliness i.e. ability to give feedback when it is fresh in the customers’ minds; when a
more prompt and meaningful resolution can be achieved

 convenience of giving feedback e.g. in the palm of my hand as in the case of SMS

 the choice given to customers in how they wish to give their feedback e.g. some brands
provide a wide range of feedback routes e.g. comment cards, SMS, phone, web site.

8. c) Some benefit and challenges when company adopting and implementing technology
to support business operations

i ) Using Electronic Excellence System (EES) - speeding up the registration process of all its
vehicle up to less than a day compared to the previous manual system usage. Perodua
headquarters use this system which link with the Royal Customs and Excise Department
(JKED) and the Road Transport Department (JPJ).
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

ii) Perodua also use internet tool (email ) and social media (facebook/twitter) to get feedback
from one’s customers is not a new imperative in the quest to improve the customer
experience and gain competitive advantage.

iii) Perodua was pursuing the metal-free liquid feed cell technology as the current green
technologies were too expensive not only to the manufacturer but also to consumers.
The company is pushing for more improvements for its internal combustion engine by
replacing its cast iron engine parts to full aluminium components in the first stage of
its roadmap

iv) Perodua use advanced technologies in new Myvi which known as Advanced Safety
Assist (ASA), which has the following features:—
a. Pre-Collision Warning - Alerts the driver when it detects the risk of a frontal collision.
b. Pre-Collision Braking - Applies the brakes when it detects an increasing risk of collision
with the vehicle ahead.
c. Front Departure Alert - Alerts the driver when the front vehicle has moved away by more
than 3m.
d. Pedal Mis-operation control - Suppresses engine output when the driver accidentally
steps on the accelerator pedal.

9. Company decided to do offshoring or reshoring strategy to expands its business.

Offshoring is the practice of obtaining products or services from another country or relocating
production to another country. There's many advantages to offshoring, like cost savings and the
opportunity to acquire skills or equipment not found in your company's home country. Let's
explore some of these advantages in more detail.

Firstly is Cost Savings - The main reason that companies choose to offshore is to save money.
Moving production to a country with a lower hourly wage and few employee benefits, like health
care, will definitely save a company money. If a company moves part or all of production to
another country that's got a large population of workers, then the company won't have difficulty
in finding employees. Since Mr. Cotton's competition is offering a comparable product for a
lower price, then offshoring to a country that has lower labor costs may help him reduce the cost
of his own clothing so he can win back some of his customers and attract new ones.
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

Secondly are Opportunity to Acquire Specialized Skills or Equipment. In some cases, the skills
needed to perform a job are not readily available in a particular country and a company needs
to go to another country to find employees who can do the job. In other situations, a specialized
piece of equipment might only be available in another country. A company would be able to get
up and running more quickly in the country that has the specialized equipment or employees as
it would take additional time to acquire equipment and train employees locally. Mr. Cotton may
determine that there are few employees with the specialized embroidery skills he needs to
manufacture his clothing locally. Moving production to a country where these skills are plentiful
will save him training time.

Disadvantages of Offshoring are increase unemployment,. Let's investigate these

disadvantages.

Increase Unemployment

The biggest criticism versus companies that offshore is that it increases the level of
unemployment of the local economy. The aforementioned companies Caterpillar and Nike have
been accused of taking away jobs from Americans and displacing their existing work force in
favor of other nationalities. These companies argue that by offshoring they are able to improve
profitability by lowering costs and increasing revenue. Thus, the increased profits can be used
to improve facilities and programs of the principal company

Cultural and Social Differences

The client will be immersed in the culture and social practices of the host country. This may
have an effect on productivity and communication. Unlike outsourcing, time zone differentials
may work against the offshoring company because production could end up being delayed due
to changes in manpower availability.

Security Issues

Whenever you are sharing, transmitting data to another party, you are always at risk of security
breach and compromised data integrity. There will always be transfer issues when it comes to
data even when there is shared space collaboration. The decision on whether you should
outsource or offshore will depend on the size and complexity of your operations, the scope of
work that you need transferred and of course, your resources.
Aimy Rohaiza bt Ahmad Rakhli (Individual Assignment Project –OJMP 6013)

References

Collier, D. A., & Evans, J. R. (2015).Operations management (5th ed.). U.K: Cengage Learning.

Hojung Shin, Collier. D. A & Darryl D. W. (2000). Supply management orientation and supplier
buyer performance. Journal of Operations Management, 18, 317–333.

Nurul Fadly Habidin, Anis Fadzlin Mohd Zubir, Nursyazwani Mohd Fuzi,Nor Azrin Md Latip, &
Mohamed Nor Azhari Azman.(2015). Sustainable Performance Measures for Malaysian
Automotive Industry. World Applied Sciences Journal, 33 (6), 1017-1024.

Slack, N., Chambers, S., & Johnston, R., (2007). Operation Mangement (5th ed.). U.K: Prentice
Hall