Case Study Company E

The following table summarises the type of data collected and its data collection methods for Case Study E – Company E.

Types of Data Collected

Primary / Secondary Data Data Collection Method Case Study Discussion Section

Case Study Discussion Subsections Company

Background

Business nature Secondary Data Company Website Mission/Vision/Strategy Secondary Data Company Website Organization Hierarchy

Structure

Secondary Data Company Website Procurement

Influence in Management

Discussion on the Importance of Chief

Procurement Officer (CPO)/ Procurement Director/ Procurement Manager/ Procurement Specialist/ Procurement Office and the Interviewee’s roles and responsibilities within the company

Primary Data Interview

Procurement Management

Core / Supplementary Business

Primary Data Interview The Management of

Procurement / Purchasing

Primary Data Interview Centralized / Decentralized

Procurement System

Primary Data Interview Services Categorization Primary Data Interview Services Expenditure Primary Data Interview Procurement

Team

Discussion on the size of the procurement team and the trainings provided Secondary Data and Primary Data Company Website Interview Procurement Difficulties Various Procurement Difficulties Identified in Different Case Study

Primary Data Interview

Procurement Process

Discussion on Standard Procurement Process, the importance of Standard Procurement Process, the common procurement processes, the different processes between the procurement of

product/goods/raw materials and services

Primary Data Interview

Procurement Future

Discussion on Procurement Future and Outlook, The Plan of Procurement within the organization

Primary Data Interview

Table 4.6: Summary of Data Collection & Methods for Case Study E Source: Author

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4.5.1 The Background of the Company

4.5.1.1 The Business Nature

Company E is a serviced based organisation that was incorporated in the 1978. The company was established as one of the instruments of the New Economic Policy (NEP) to help rectify the economic imbalance in the Malaysian society. The company has emerged as one of the country’s premier investment institutions and is also one of the unique investment organisations in the world, with a diversified portfolio of interests that include asset management, unit trusts, institutional property trusts and property management. Through the company a substantial shares acquired in major Malaysian corporations were transferred to a trust fund and sold to the Bumiputeras (son of soil) in the form of smaller units by the company’s subsidiary. By employing this innovative investment model, the company ensures that these shares are retained by the community while also resulting in the cultivation of widespread saving habits and development of entrepreneurship and investment skills of Bumiputeras (son of soil).

4.5.1.2 Mission / Vision

Company E’s vision is to be a world-class investment organization, distinctive and successful in everything that it does. The company’s mission is to be the premier investment organization that is committed to facilitate the economic wealth of the bumiputera’s community. The organisation hopes to contribute towards the growth and prosperity of the nation that benefits every Malaysians Company E’s core value is to shape a culture of modern and progressive organisation. The company has formulated a set of values that reflects the rich tradition and dedication to excellence that the company passionately believed in and to uphold all times.

4.5.1.3 Organizational Hierarchy

Company E is a government-link company. The company’s hierarchy structure consists of a Board of Trustee, Board of Directors, a Syariah Advisory Board and Senior Management. The senior management group is lead by the President and Group Chief Executive, Deputy President Corporate and International, Deputy President Unit Trust, Chief Investment Officer (CIO), Chief Financial Officer (CFO) And Chief Strategy Officer (CSO).

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There are four major divisions within the organisation, namely: the accounts department, the finance department, the investment processing department and the procurement department. The investment processing division manages the investment activities and processes. The finance department is involved in identifying and validating the potential investment. The Chief Strategy Officer (CSO) manages all business related strategies for the company as well as its subsidiaries. The procurement department is reporting to the Chief Finance Officer (CFO).

Figure 4.5.1 briefly illustrate the organization hierarchy or organization structure for Company E as below:

Figure 4.5.1: Organizational Hierarchy for Company E 4.5.2 The Procurement Influence in Management

The company recognised the importance of the procurement department. The interviewee manages all procurement/ purchasing activities, as well as the

Board of Trustee,

Board of Directors,

Syariah Advisory Board

Senior Management

President and Group Chief Executive, Deputy President Corporate and

International, Deputy President Unit

Trust,

Chief Investment Officer (CIO),

Chief Financial Officer (CFO)

Chief Strategy Officer (CSO)

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procurement policies and procedures. The interviewee design, plan and amend the company’s procurement policies and procedures yearly basics. When requested, the interviewee will transfer the knowledge to its subsidiaries, total fourteen of them.

4.5.3 The Procurement Management

4.5.3.1 Core & Supplementary Business

Company E’s core business is to provide a platform for the Malaysian to have the opportunity to invest and increase the wealth. Despites the core business, the company manages several services through its subsidiaries. The main services include the property services, the hotel services, the automobile services, bank and finance services. These are the major revenue generator for the company, particularly on the property services and hotel services. Some other supplementary services include security services, Close-circuit Television monitoring services, queue numbering services, clinic services, cleaning services, pest control services, office equipment services, maintenance and repair services, printing and photocopy services. The company contracts the services to the services provider reduce the maintenance cost. The company claims that it would be more costly to hire the actual person in managing these activities internally. The interviewee added, it is important to include maintenance support solution when the company is purchasing a raw materials/goods/products or services. The interviewee believes that it will be more cost efficient to have maintenance support services at the point of purchase. When any issues arise, the company can contact the supplier/services provider quickly. This allows the company to contrite on its core business. In addition, add hoc maintenance support services can be expensive. Besides maintenance services, the company outsources the human resource recruitment process. The company acquire third party recruitment agent to search for the hidden talents whom with high potential to grow with the company. The recruitment agent will source for the designated positions while the human resource in company E will filter the candidates and setup the interview sessions. Company E also outsources the talent fulfilment services and employee payroll services.

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4.5.3.2 The Management of Procurement / Purchasing

According to the interviewee, the procurement team practices both open and close tendering process. The procurement for the subsidiaries is managed by the parent company. This includes the major purchasing decision that involves services contracts. However each subsidiary has their own procurement team to manage several smaller purchases. One of the subsidiaries’ procurement team, the hotel management has been granted an appropriate budget yearly to manage their daily purchases such as the groceries, office equipment, printing or photocopying services and etc.

According to the interviewee, there are several types of purchases are considered simple. These purchases are finalised within one to two weeks. Having said that, a purchase that involves higher value may take a longer time to validate and approved, which can take several months. The company has outsourced the design, construction and building of new property development project. This project can take months or years of planning, monitoring and controlling. The procurement process starts when the developer started the construction of the buildings, thus the renovation of interior design, the purchase of equipment and furniture fittings, flooring. According to the interviewee, the construction project also involves consultation services. The consultation services are essential as it conceptualise the idea, the types of renovation for the company’s consideration.

As stated, the procurement team manages the procurement department through the standard procurement policies and procedures. These procurement policies and procedures are reviewed and updated yearly. It consists of six hundred pages approximately and requires at least a month to review. Several meetings are setup to discus the newly developed policies and procedures. It is compulsory to discuss among the procurement team with the procurement leader and Chief Finance Officer (CFO) before presenting to the board of directors for approval. Occasionally, the procurement team will seek advice from the company’s legal advisor. The procurement team also work closely with the quality assurance department to contribute in the procurement policies and procedures. According to the interviewee, the procurement policies and procedures require to be critically reviewed and enhanced. These policies and

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procedures are reviewed based on the practically and applicability in the procurement process. Both the internal and external auditor evaluates the procurement policies and procedures.

Services providers are evaluated in every year depending of the services contract. However, the company faces challenges, as the procurement team did not receive services evaluation from the internal end users. However, when issues arise, the internal end users tend to escalate the problems to the top-level management. This causes plenty of misunderstandings and inconveniences. Therefore the company encourage all the internal end users require to submit the evaluation report. If the services provider is not evaluated, the eligibility to renew the contract is abolished.

The interviewee highlighted that managing sole services provider is tricky. The services provider recommends lengthening the services contracts with the suppliers or the services providers. The main concern is the services rate. Suppliers and services providers recognised their own strength in the industry as the sole providers. Most of the times, services contracts are revised yearly basics. The renewal may cause prices increase in the services rate. In order to maintain the same services rate, the company suggests that if any company is dealing with sole services providers, the company is recommended to lengthen the services contract terms to maintain the services rate, provided this services is essential and important to the company.

4.5.3.3 Centralised / Decentralised Procurement System

The company manages the procurement of raw materials/goods/products and services centrally, including its subsidiaries.

4.5.3.4 Services Categorization

According to the interviewee, there is no specific categorization for all types of services in this company. The company treats every purchase as important.

4.5.3.5 Services Expenditures

Unfortunately due to confidentiality, the services expenditure could not be reviewed during the discussion.

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4.5.4 The Procurement Team

The procurement team in company E is built up of thirteen personnel. The procurement team is well equipped with the procurement and supply chain knowledge. The company recognises the importance of the procurement department and has strongly encourages the procurement team to attend procurement related courses internally or externally. According to the interviewee, different procurement personnel manage different services types. Each procurement staff is assigned to manage several types of purchases. Although every procurement staff is assigned with specific purchases, they can still discuss related issues and purchasing matters among themselves. The procurement team is tightly knitted. When one of the procurement staff is absent, the other procurement staff can temporarily manage the purchases.

4.5.5 The Procurement Difficulties

The interviewee claims that managing services procurement is rather complicated and difficult. The main reason is that services procurement involves dealing with people. The measurement of services begins when a services provider is appointed. The measurement of services is rather subjective and services provided could not be undone. Unlike products, if a specification is not met, the company can request for a replacement of product or material. However, it is not possible to change the services provider during services procurement process. The following briefly describes the concerns raised by the interviewee with regards the management of services generally.

4.5.5.1 Concern on Sole Service Providers

One of the concerns that the organization encounters is the dealing with the sole services providers in the publication industry. Bloomberg and Bernama Portal are well established and well recognised for its social networks. With the reputation and establishment in Bloomberg and Bernama Portal, the company believes that the company can gain great publicity through their networks. Unfortunately, the Malaysia based services provider tends to be ignorant and tension arises. The services providers realize their strengths, as they are the sole providers in the Malaysia market. According to the interviewee, the services provided by these Malaysia-based publishers are neither excellent nor satisfying.

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However the organization maintains the subscription due to their established network and reputation.

4.5.5.2 Critical to be facilitated through Technology and Information System

In earlier years, the work in procurement was more complicated due to the limitation in the information system (IS). As a result, some of the employees had to work even during the weekends to handle the important and urgent matters. However, with the advancement of technology, the procurement team able to access the work email 24/7 anywhere they are, when they are connected to the Internet and network. Now the procurement team able to attend to urgent requests and issues instantly.

4.5.6 The Procurement Process

Company E practices standard procurement procedures and policies for all types of purchases including services. Every purchase requires the approval from the procurement committee. The procurement committee consist of the main and sub committee. The sub-procurement committee meets every week to discuss about the procurement needs and requirements. The sub-committee personnel include the fund management personnel and the senior managers. Every purchase requisition raised is reviewed and approved by the sub-committee. The procurement committee only finalizes the purchasing decision when the purchasing amount reaches a certain amount. Formal validation and approval are essential as it greatly affect the organization’s cash flow.

The procurement process is initiated when the procurement team receives the purchase requisition. The procurement team will notify and send the purchase requisition to the sub-procurement committee for approval. Sourcing process is initiative while waiting for the approval from the sub-procurement committee. The interviewee states that to procure strategically, it is important for a company to collaborate with the services provider. It is crucial for the company to identify several qualified services provider from time to time to build up the supplier network.