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Semester 2, 2022
Final Assessment – Part B
Instructions:
1. This Part B of Final Assessment represents 30% of the overall assessments
for this unit.
2. There are TWO (2) case studies in this Final Assessment.
3. Answer ALL questions for each of the case studies.
4. Use Times New Roman, font 12 and 1.5 spacing in all your answers.
5. Please state the word count, in brackets, at the end of each part of your
answer.
6. If needed, state and justify your assumptions clearly in you answer.
7. You are required to submit your answers together with your signed
Assessment cover sheet on or before midnight on 12 th^ November.
8. Before submitting, please check for plagiarism via Turnitin (you need to
give yourself time to do this, preferably the night before the due date)
Semester 2, 2022 Adlassian Microchips Ltd (60% shareholding; 40% owned by Die Spitze AG) Adlassian Clothing Ltd (100% shareholding) Adlassian Corporation (Holding company)
Case Study One: Adlassian
Adlassian Corporation (Adlassian) is a company listed on Bursa Malaysia (stock exchange) with its financial year end on 31 October. It was established by Ms. Udezue 25 years ago. Adlassian has two major businesses, namely retail clothing and microchip manufacturing. The following chart shows the structure of Adlassian group of companies. Figure 1. Adlassian Corporation Group Structure Adlassian Clothing Ltd (ACL) Udezue learned about clothing trading from her grandparents who migrated from India to Malaysia in the 1960s. Adlassian Clothing Ltd (ACL) was officially set up 20 years ago for this purpose. ACL operated 28 shops throughout the country, selling a variety of clothing. Some of the clothing were imported while others were sourced locally. Ten years ago, ACL set up a website selling the clothing to consumers throughout Malaysia. Over the past five years, ACL had slowly transitioned its business to its website and had sold 23 of its physical shops, taking advantage of an increase in the property prices. 30% of the funds from the disposal of the shops were re-invested into the business for the expansion of the online business while the balance was remitted to Adlassian for the purpose of setting up a company that manufacture microchips, i.e., Adlassian Microchips Ltd (AML). The strategic objectives of ACL were to offer a wide range of products to customers and provide excellent customer service. The board feels that while performance has been good compared to other retailers in general, it is lagging behind the growth of the online retail clothing sector. It is felt that many of the systems and processes have yet to adjust to the new reality of web-based business. As a result, Catherine Smith, the chief executive officer, has been asked to review the customer performance in order to identify areas for improvement.
Semester 2, 2022 example, purchasing, warehousing and logistic, and sales and marketing, will now all work on a common technology platform. Her plan is to move more decision making to individual managers of cross-functional teams who will work on all aspects of a given selection of product lines, such as women’s or sports clothing. For example, purchasing will now liaise more closely with sales and marketing in order to ensure that the best possible and most profitable product range is available. It is hoped that this will flatten the organisational hierarchy, hence improving the operational efficiency and reducing non-value-added activities. Adlassian Microchips Ltd (AML) In 2018, Adlassian set up a microchip manufacturing company, Adlassian Microchips Ltd (AML) in partnership with Die Spitze AG (Spitze), a well respected microchip manufacturer from Germany. The objective was to reach out to some of Spitze’s key customers in the country, with shorter delivery time and better customer support. The management of Spitze feel that this move was necessary as many microchip manufacturers have either relocated their plants from other South East Asian countries to Malaysia or setting up a new plant in Malaysia. Adlassian saw this as an opportunity to venture into high-tech industry. This could be a form of diversification. As Spitze has years of experience in the microchip manufacturing, Adlassian has copied Spitze’s quality control systems into its plant. The objective was to accelerate the attainment of quality standards in order to remain competitive. Adlassian manufactures microchips based on the product specifications from its customers. These customers are manufacturers of computers and handphones. Although there are different brands, the structure of the microchips for products, e.g., handphones, laptops, etc, could be substantially similar. Figure 1. An example of a microchip
Semester 2, 2022 Note: For a better understanding on the manufacturing process of microchip, you are advised to refer to the following video: https://www.youtube.com/watch?v=_VMYPLXnd7E The accountant of the Microchip division has produced the following quality cost report (Table
- and presented in the recent divisional management meeting. ‘I don’t understand why the quality control costs need to be calculated as a percentage to sales. I don’t see any relationship between sales value and the quality control costs’ , commented Anna Lisa McGowan, the sales manager. ‘Furthermore, why are we spending so much on supplier quality certification. Isn’t it the suppliers’ responsibility to ensure the materials that they sent to us are of good quality? Why must we conduct a formal study to determine our suppliers’ overall quality performance pertaining to delivery performance, product quality and process capability?’. She added. The quality assurance manager, Robert Brown, believed that the quality performance of the company for these two years have improved. ‘The percentage of the quality control costs has dropped by 20% of sales to 16.67% of sales. Don’t you think this is good?’ , remarked Robert. 2020 % of Sales 2021 % of Sales Prevention Costs: Quality Training for staff
Supplier quality certification
Total 1,140,000 3.17% 2,400,000 6.67% Appraisal Costs: Process inspection 0 300, Incoming material inspection
Product inspection 300,000 180, Total 660,000 1.83% 720,000 2.00% Internal Failure Costs:
Semester 2, 2022 (c) Regarding the implementation of ERP system, discuss the objectives of any ERP systems and explain how Adlassian could benefit from it. You need to draw some relevant examples from the case to demonstrate your answers and make any needed assumptions. (Max 400 words; 10 marks)
Semester 2, 2022
Case Study Two: KMCL
KMC Ltd (JVCL) is an independent manufacturer of printed circuit boards (PCBs). PCBs are made-to-order according to customer specifications. Most of the PCBs are multilayer boards. The main components of PCB are laminates, prepregs (a kind of resin), aluminum and copper foils. The manufacturing involved several dry and wet processes. You are strongly advice to watch how a PCB is made through this link: https://www.youtube.com/watch?v=YJr-kHy6STg Figure 2. A typical PCB Figure 3. The structure of a PCB and its major Components Source: https://resources.altium.com/p/pcb-fabrication-process-what-every-design-engineer- needs-know-part- 2
Semester 2, 2022 (FG). All these are international suppliers of aluminum and copper foils but the location of their plants are dependent on the supply of their raw materials, i.e. aluminum and copper. DI is an American company with the nearest plant in Shenzhen, China. SA is a Spanish company with the only plant in the Southeast Asian region located in Laguna, the Philippines. FG is a new but fast-growing Indonesian company with the nearest plant in Surabaya, Indonesia. The following table shows the supplier performance index and the related cost drivers needed for each supplier. DI SA FG Activity No. of activities No. of activities $ No. of activities $ Order material 40 5 000 48 6 000 30 3 750 Receive order 40 3 600 60 5 400 38 3 420 Inspect order 40 6 000 60 9 000 38 5 700 Return material 5 550 4 440 15 1 650 Invoice processing 12 1 140 48 4 560 12 1 140 Dispute invoices 2 560 0 0 13 3 640 Total supplier costs $16 850 $25 400 $19 300 Unit purchase price $10.30 $10.20 $9. Purchase volume 58, pieces 73, pieces 38, pieces Performance index 0.029 0.034 0. Table 4. Supplier Performance Index and Activities Required: (a) (i) Explain the term Activity-Based Management (ABM) and discuss briefly how ABM could help to reduce the costs per unit of the PCB. You do not need to refer to Table 3 in the case to answer this part. (5 marks) (ii) Identify any FIVE activities in the batch-level and product-sustaining activities in Table 3 above that could be reduced or restructured in order to reduce the costs per unit and explain how these can be done by using some examples from the case or relevant sources. (10 marks) (Max 500 words; Total: 15 marks) (b) Comment on the performance of the three suppliers, paying attention to the activities for each cost pool. Suggest how the purchasing practices could be revised in order to improve its efficiency. (Max 400 words; Total: 10 marks)
Semester 2, 2022
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