Assignment on writing Report on Midfields Garments (M) Sdn Bhd
Midfields Garments (M) Sdn Bhd is a medium sized factory
located in a light industrial area in Batu Pahat, Johore. The Company has been
established since the early 1970s and its business is in the garment making specializing
in school uniforms. While the office staffs are Malaysians, the workers in the
shop floor are mainly foreign workers who are not organized (unionized). Due to
the nature of the business, most of the factory workers are ladies. The factory
lines are divided into the cutting department, pattern and design and the sewing
compartments; front and back pieces; sleeves; collar and yoke; cuffs and
buttons panels.
The Quality Assurance Department has recently raised the
issue of sub-quality garments materials used in the shirts made during the
period from January to March this year, following complaints from the overseas importers
of Mid-fields UK uniforms.
Senior Management is very concerned about the quality of
materials used as it is the company’s policy of using the best materials. One
possible cause could be stock pilferage through substitution of good materials with
inferior quality materials through the supply chain. There were also there
staffing and security management problems at the shop floor. The Senior
Management has approached you as the Administrator to investigate and report on
the matter.
Please select any ONE (1) of the following issues and
write a report advising the Senior Management on the selected issue:
(a) Stock control management at the factory
(b) Workers misconduct and indiscipline
(c) Workers absenteeism and insubordination
(d) Violence in the workplace and theft and dishonesty
(e) Selling on work-time, sexual harassment, personal use
of business equipment and negligence.
In your report to the Senior Management, apart from
highlighting the occurrence and reasons/cause(s) of such incidents, advice on organizational
and individual security and the relevant employment law provisions regulating
disciplines and procedures at the workplace should be included.
The report should include recommendations for the
appropriate security management and human resource tools for the administration
of employees in the relevant issues which you have selected for discussion
Suggested Solution: Only Focused on Stock Control Management at the Factory.
Midfields Garments (M) Sdn Bhd.
04/11/2018
To The Senior
Management
From: Corporate
Administrator
Re:
Stock control management issue at the factory
Executive
Summary:
The
investigation was about the quality of the materials used in the supply chain
of Midfield Garments (M) Sdn Bhd. The primary information that served as a
basis for this inquiry was provided by the senior management, who was
pretentious of stock pilferage as a one of the reason of being subordinate
quality product. There could be few other issues in the supply chain which
results inferior quality product.
The
investigation was focus on the documents started from January to March 2018. As
the main complain came from the importer of Mid-fields UK uniforms on a
specific garments item that is Shirt, so, it is required to check more
precisely in this sectors. As per the concern further investigation was done to
other sectors of supply chain to find further problems. This report aim is to
find other problems despite of stock pilferage and reasons of happening such
incidents and also provide suggestions to control stock pilferage and build
strong supply chain management in order to stable the quality of the product.
For
this interrogation a special silent audit team was created from each department
of supply chain to discover and provide solution to the problem. The study was
done on the basis of the report provided by the special silent audit team. For
the opinion and the conclusion was provided with the help of past cases experience
and law provided by MAICSA.
Following
are the probable problems identified and will also be provide the solution for
that;
1.
The
Midfields Garments (M) Sdn Bhd. was established 48 years ago in 1970. It is
consider that due to the popularity and fame, the company was not that concern
about the uses of new technology. Basically a company thinks to change its
policy when needed as they do not want to increase the cost.
2.
Stock
pilferage which is basically replacing of quality product from the stock by the
employees. There are many reasons for stock pilferage one of the reasons could
be the lack of training and education of the employees. Moreover, the security
of the shop is aloes not up to mark and also due to the weakness in the supply
chain management.
3.
As
it is a matter of stock pilferage so in order to confirm it more accurately it
is required to check the whole supply system.
4.
Uncultured
diversification in the work place is one of the reasons of stock pilferage. As
the employees who are in charge of stock control are the people of same group.
So a unity factors works in this place.
Solution to the
manager:
Inventory
is the life blood of any organization where it is small or big. Inventory is a
crucial asset of an organization because the turnover of inventory basically
denotes the revenue generation and ensuing earnings for the company’s
shareholders. That means, without the tide of inventory the business perishes. Inventory
management is one of the phases of supply chain management (SCM). The supply
chain is the heart of any company’s operation. The main goal of SCM is to have
better control over the inventory via Networked Inventory Management. This is
done by keeping tighter control of internal inventories, internal production,
distribution and sales. SCM is so important because of its impact on costs.
The basic
supply chain of garments sector consists of:
Ø Raw material
supplier
Ø Manufacturer
Ø Wholesaler/distributor
Ø Retailer
Ø Customer
Therefore
for the above diagram we can identify that the stock pilferage was done in
between suppliers (Person delivering Raw
materials) to work in progress (Partial assembled goods). Strong control is needed in the material
management sectors of the SCM in order to find the culprit. Different approach
need to be taken from the senior manager in order to solve current problem. Following
are the few suggestions given to the senior manager in order to control current
issue.
1.
Implement
the Information Technology and Security Cameras.
2.
Train
and hire employees
3.
Implementing
business models.
Implementing
Information Technology (IT) and Security Cameras.
“Reliance
on information is key to its performance and existence”- (Carter& Price).
So, to find error free information the uses of technology is wordless.
Technology plays an important role in the current business world. For the
convenience of material manager and the senior manager inventory tracking
system need to be implemented which will automatically provide whole data of
inventories that is they can monitor the movement of the inventory. Most of the
recent companies use automated inventory tracking in workflow. By which they
were able to increase operational proficiency, develop tracking precision and
overcome different human error which was caused due to the manually tracking
inventory.
There
are several inventories tracking software which can be implemented in order to
have proper control in inventory. As the case did not mentioned any use of
technology by the company so, to it was considered that company uses cardex or
card system (manually written on item’s cards) to keep record of the
inventories. This method is relatively unproductive and time consuming in a
sense that continuous monitoring is required to keep the inventory up to date
and sometimes the system is called an old school method. Due to the manual
system of recording it was more flexible for the employees to do the stock
pilferage. Following are the suggestions
of technological instrument addressing to management:
1. Enterprise Recourse planning system (ERP): The most crucial system of the company is the ERP. By developing a
good ERP system a management can sort out every problem in the company. ERP is
the unified organization of fundamental business processes, often in real-time
and arbitrated by software and technology. Below is the modules of ERP:
3.
Barcode
Reader: This
technology consists of barcodes which basically provide automatic
identification of inventory. This is one of the common used inventories
tracking purpose and is known as Universal Product Code (UPC). The barcode
scanner is used to scan the barcode and keep in track of inventories the
management can implement this process where a stock pilferage can be
controlled. Every time any employee wants to get a roll of cloths they need to
scan the barcode by which the system will record the items picking by whom and
details of the items. This basically helps in avoid human interface mistake and
save both time and money.
4.
Radio-frequency
identification (RFID):
This is another effective technology where a tag (contains of electromagnetic
field in which information of goods stored) attach to the items which basically
provides the details of the information of the goods. This technology comes in
two forms active RFID and passive RFID. Active RFID used in such environment where
security issue matters on the other hand passive RFID used in the environment
where security issue does not exist. So about the case the management needs to
choose active RFID to control the stock pilferage. RFID reader provides users
the full details of the goods and enables real-time inventory reflectiveness
and precision. This tag sometimes called the anti-theft tags because it can
fight against theft and misplaced inventories in the warehouse. This system is
used to optimize workflow in the inventory management.
5.
QR
Code: This is the
new trend in controlling the inventory. Basically this system is useful for the
field service operation. When a product is dispatched from one place to another
the employee only need to scan it through smart phone scanner by which the
inventory system will be updated.
6.
Install
of Surveillance Equipment:
Installing cameras basically change the environment of the workplace. Most of
the time it is seen that the work efficiency incases after installing
surveillance camera. It is makes the life easier for the management to make any
decision about employees or any other official security perspective. There are
two ways of installing surveillance cameras which are:
a.
Fake
surveillance cameras:
this is very inexpensive way to use camera to prevent the stock pilferage. Only
top management will know that the camera is not functioning. This basically
works as the video surveillance camera system. The casing will be there but
won’t function. These types of camera are installed due to the cost factor.
Several cameras can be installed in the factory for making aware to employees.
b.
Video
surveillance system: These
types of camera are realistic camera where everything is recorded. The monitor
is installed either in security room or in the manager room. In which the
managers can look at any issues happened in the organization including stock
pilferage. The advance type of surveillance camera are called premium video
surveillance in which the employees also can see themselves in the camera as
the monitor are installed beside cameras so that it makes so difficult for the
employees to do any unethical issue.
7.
Access
control system: Management
should build restriction of access for the employees so that factory level
works have not the access to the top level office. Practicing such the control
over job increases and employees are serious in their job. Any losses from the
warehouse or any other place are liable to the specific person in charge.
Before applying
the above system the management should be aware of the following costs:
Ø Hardware and
Software cost
Ø Maintenance and
Operating cost
Ø Installation
and Training cost
Train and hire
employees
Before
hiring employees the management should be careful with the labor laws of
National labor advisory council (NLAC). Making contact with the employee should
be in accordance with the Contract Law 1950 provided by the country and in
accordance with the constitution of the company. NLAC act as the supervisor of
the full employment policy and allows the labor productivity and promote good
work ethics. Act 353 applies for hiring non-citizens so, to hire foreign
workers the management need to abide by the laws provided.
Before
providing the training to the employees the management should aware the new
changes in the contract of service (employment contract) and in constitution of
company. In order to change the constitution of the business, the management first
needs to issue a special resolution under in section 31 of companies’ act 2016
where they need to mention about the consequences of misconduct done by
employees. After the resolution is passed from both stakeholders and from court
the management can implement in the contact of the employee.
Educating
employees is the best way to prevent employee’s theft. The main purpose of
providing training is familiar with the new changes and aware the new
implementation of technologies. Basically employees are allowed to work within
their boundaries of creative, physical and intellectual. Therefore, in
accordance to the strengths and weaknesses it the duty of the management to divide
and delegate employees.
1.
The
company should assign a Martial manager who will be in charge of
purchasing, planning and scheduling, transportation and warehousing functions.
This will basically optimize the performance of the materials system and will
the full control over the following departments:
a.
Production
control
b.
Inventory
control
c.
Purchasing
d.
Transportation
e.
Warehousing.
Which
will basically reduce the stress of the senior manager as the work load is
divided under single person. Therefore, it will be the duty of the materials
manager to keep track of the inventory and provide report on day to day basis
of inventory and other related departments. Despite of having inventory
management software the manager should also need to do the periodically need to
audit the inventory manually. This regular reconciliation in vital because
sometimes there could be some technical difficulties so, in that perspective
manual counting will act as the backup of for the data. There are several
methods that manager can pursue to do regular counting of inventories:
v Physical
inventory count: Basically
this type of continuing is done once a year for the accounting and filling
income tax. Therefore, if the physical counting was done on monthly basis the
work load could be less at the end of the year. So manager can these steps to
make sure all the inventories are safe.
v Spot checking: checking certain goods or inventories from the whole in order to
make sure that the goods are up to the mark.
v Cycle counting: This type of counting is done in a cyclic motion that is one
product is checked on a rotating schedule. This process could be faster than
the other two in terms of counting physically. However, the expensive product
is needed to be count frequently.
2.
The
management also needs to hire an experienced Quality Control Manager. He
will be in charge of overall supply chain cycle. In the case it was mentioned
that the Midfields Garments company gets complain from the overseas importers.
So to avoid this the quality control manager do some pre final inspection that
is after 25%, 50% and 75% of garments produced
and packed to make sure the quality of the shirt is up to the mark beforehand
over to the customer . Moreover, he also can have a mini quality control check
every day.
3.
Hiring
a stock controller will help a huge margin for the management to control
the current issues. His prime job will be to keep update to the inventories and
issue the raw materials need to the employees and keep record of them. He also
need to process the purchase order, received delivers and match the order with
the reports.
4.
The
management should also need to hire During Production Check (DUPRO) Inspector
who will inspect and audit and make the report of the work in progress and the
materials used in the product. By hiring this kind of inspector the employees
will be more concern of their job and perform the duties in proper manner.
5.
Due
to the nature of the business most of the employees are women the management
should hire as uniformed professional lady security guard. So, it will
be easy for checking the employees before entering and exiting from the
workplace. Moreover, the management should also need a uniformed men
security guard for the male employees. The management also can hire plainclothes
guards (look like regular customer are very suitable for catching thief)
for a shorter period of time to control the current situation.
6.
For
training and operating of new technology the management needs to hire Information
Technology (IT) specialist who can provide both training and operate the
system. The other option could be outsourcing staffs which basically will be
much cheaper than hiring an individual.
7.
The
board should hire a professional store accountant in order to keep track
on inventory turnover which will basically give an idea of stock density.
Keeping large amount of stock in the warehouse allows the employees to do stock
pilferage.
8.
The
management also need to hire an external auditor on time to time basis
and prior job will be to check the internal controls of the supply chain
management and provide a report to the BOD. Therefore, taking such inactive is
employee will be careful while doing unethical activities.
9.
Organize
the office environment is one of the crucial part of any organization.
As in the case mentioned that all the office staffs are Malaysian and the shop
floor are all foreign workers. So this is one of the reasons why unethical
activities take place. According to the Employment Act 1968 (Act 353) there is
certain restriction of hiring foreign workers. Therefore, the management should
hire different people of different nationalities and keep the working
environment balanced.
Implementing
Business Model:
The
business model will also help the management to control the stock pilferage.
Following are some related examples of business models for case perspective:
1.
Just
in time: This method allows
a company to purchase stock when it’s needed. The benefits for implementing
this model are that to cut down cost and protect goods from damaging or being
theft. As before mentioned that due to higher quantity of stock in the
warehouse attracts the employees to do the stock pilferage. Therefore, the
company can implement JIT method to control of current issue.
2.
Vendor
managed inventory (VMI):
when the goods or inventory ends the vendor fills it back which means the
vendor has control over the inventory of the customer.
3.
Customer
Managed Inventory (CMI): It
basically works same as JIT but the only difference is customer order from the
supplier the raw materials and provide the company for assembling.
So, from the
above discussion these are the three best options that management can think
about for controlling stock related problems.
Measures
Taken for Controlling Stock pilferage
The
employer and employees affiliation is monitored by the Employment Act 1955 and
some part of Industrial relations Act 1967 in Malaysia. According to law there
are some reasons behind the termination of employment contract; one of them is
if employee is found remorseful of misconduct (Improper behavior or doing wrong
thing internationally). There are mainly 3 kinds of misconduct in accordance
with award no 95/197 that is misconduct relating to duty, discipline and
morality. The above case related to the misconduct relating to duty because
stock pilferage falls under this sector. Moreover, the weight of misconduct is
categorized into major misconduct and minor misconduct. Place and situation
plays are the big factor to justify the major misconduct and minor misconduct.
As the case related to the garments industry and the stock pilferage was done
in a little manure so it is up to the manager to decide what kind of misconduct
the stock pilferage is.
The employment act 1955 made easier for the management to take decision
for such misconduct. However, it is not allowed for manager to accuse an employee
without having any evidence. It will be expensive for the manager if the
employee sues for doing such pestering. Moreover, the management should also
keep in mind that it is not possible to fire any employee directly as the
employee are also protected under law under security of tenure. After
collecting the necessary evidence the management should notify the about the
incidence. If employee agrees then the management can take necessary actions
according to the law. But the problem occurs when the employees did not agree
the misconduct done by him. In those circumstances the management should take
the following steps which are shown in the following flowchart:
So,
after receiving complain from the department head the management should set up inquire
by inter alia interviewing. If the employee did not found guilty then the case
will be closed otherwise the show case letter need to prepare against the
employee for the termination. While pursuing this process the management can
suspend the employee for two weeks paying half wages under section 14(2) of EA.
However, Managers are suggested to suspend the employee in full pay. Later the
case move for the domestic inquiry if it goes for the company then the employee
will be bought under disciplinary authority. In every measure the manager
should documented the status.
Conclusion:
There is no doubt
that inventory is the ornaments for any type of organization. So, management
should control it before it is stolen by someone. Implementing technologies,
training and hiring new employees and use of different business models can help
the Midfields garments to control their inventories.
So, to conclude
while implementing technologies the management should keep in concern about the
latest computer technologies as they do not became obsolete too quickly. There
is proverb that “you can lead a horse to water but you can’t make him drink”
that means you can hire, train and keep on tide people for the controlling
unethical activities but if the employee did not try to rectify himself then
you cannot do nothing except terminating from the job. The management also can
implement the communities to practice (COP)’s where each members can share a
concern, knowledge of different topics and solve it together which basically
helps the employees to be discipline in work as indiscipline lead to negative
and adverse effects which leads poor productivity. The management also can
rotate the employee so that unity factor reduces.
I therefore,
request for the approval from the management to implement the above initiative.
Regards,
Muhammad Mahdi
Billah
ID: 1807233
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