UKAM 4024

Integrated Case Study

Case Presentation 1
PCI Sdn Bhd
Presentation Group : 7

Isaac Wong Joo Sing

Choo Wei Wei

Loh Jia Wen

Ngeow Sook Han

Goh Yan Yi

See Pei Chiou

 1.0
INTRODUCTION
 1.0 Introduction
Founded in 1957
Private Limited Co.
Competitive Industry
Manufacture & distribute a wide range of
power cable
Vision :
 2.0
SWOT ANALYSIS
Strengths
Adopt continuous improvement,
quality work culture, expertise and
technology
Managing Director which is sensitive
and able to detect fault
Manufacture various type of pilot
cables according to TNB specification
Quick on identifying the problem
faced and able to move forward by
embracing change
SWOT
Analysis
Opportunities
Memorandum of Understanding with
PLP Australia
Setting up companies in overseas and
venture into global market
Hiring foreign talents or getting
professional advise for their company
Weaknesses
Increases in cost of goods sold and
inventories
Dilemma in establishing and
maintaining profitable supplier
relationships, confronting the problem
of price increases and ensuring supply
quality.
Downward pressure on prices
Threats
Having more than 135 companies
competing with them
Redundant in new technology
Suppliers passing on increased cost to
them
 3.0
FLOW CHART
Flow Chart
Flow Chart (cont)
 4.0
RATIO ANALYSIS
 Year 2006 Year 2007
Gross Profit Margin 6.83% 16.12%

Net Profit Margin -5.22% 10.94%

ROCE -77.96% 72.58%

ROA -8.71% 25.21%

Fixed Assets Turnover 4.7 8.9

Inventory Turnover 6.01 5.49

Average Collection 81.15 days 60.51 days

Period
Current Ratio 0.73 1.15

Quick Ratio 0.44 0.60

Debt to Equity Ratio 0.09 0.03

Debt Ratio 88.83% 65.27%

 5.0
MAJOR PROBLEMS
 5.1 Purchasing System

Human
Error

Employee
Reluctant to High Cost
change Manual
System

Longer
More Paper
Process
work
Time
 5.2 Management Issue

Tall Line of
Reporting
Improper
Unclear Job
Job
Description
Allocation
Management
Issues
Inefficient in Poor
Collecting Inventory
Debt Management
Work
Overload
 5.3 Internal Control
No Proper Invoice Processing
Segregation of Duty Lack of Account Payable Department

No Supervision Purchasing Process

Should not confirm Purchase Order must be sent to

order through Phone vendor to confirm order

Quotation should be Avoid fictitious quotation

Black & White Filing and checking

Improper Hierarchy
Approval for Purchase Order
of Authority
5.4 Supplier Relationship

Dilemma in
Supplier pass
establishing &
increased cost of
maintaining
raw material in the
profitable Supplier
form of higher price
Relationship

Hard to monitor No centralised

Supply Quality Supplier Selection
 6.0
RISK ANALYSIS
6.1 Purchasing System

Error

Time

Cost

Profit

Tracing & Verification become

difficult to be carried out

A lot of Paper work

 6.2 Management Issue

No Clear Guidance or Instruction of

certain process

Employees do not know their

responsibilities

Overburdened

Demotivated

High Turnover
 6.3 Internal Control

Manipulation of Accounts

Misappropriation of Asset

No proper planning, budgeting &

controlling of Stock Replenishment

No proper tracking on payment to suppliers

& receipt from debtors
 6.4 Supplier Relationship

Poor Raw Material Quality &

Unprotected against Price Fluctuation

Affect Products Price & Quality

Customer Satisfaction

Company Reputation

Stakeholders Confidence
 7.0
RECOMMENDATION
 7.1 Purchasing System

Training
Assign task to
experience IT Department
staff

Purchase /
Develop E-
Procurement
System

ERP EDI
 7.2 Management Issue

Use Functional
EOQ Structure

Define & Cash

Communicate Management
Job Scope clearly

Top
Management
Support
 7.3 Internal Control
Proper Segregation Establish Credit Control Department
of Duty Account Payable Department to handle invoice

Finance Department monitor & supervise Audit

Supervision & Internal Control

Confirm order Purchase Orders are sent to confirm order

through PO

Quotations in Black Avoid fictitious quotation

& White Filing and checking

Create Hierarchy of Approval for Purchase Order

Authority
 7.4 Supplier Relationship
Leverage
Establish long-
purchases across
term supply Strategic sourcing
the corporation
agreements
via agreements

Form cross-
Comprehensive
functional teams Create a supply
review of supply
to determine wish list
chain process
business needs

Practise separate Use of commodity

purchasing teams to
contracts for centralize
service parts supplier selection
End