MASTER OF BUSINESS ADMINISTRATION (MBA)

ARSHAD AYUB GRADUATE BUSINESS SCHOOL (AAGBS)

UNIVERSITI TEKNOLOGI MARA SHAH ALAM

BRM 701

A STUDY OF POTENTIAL ISSUES IN FOOD QUALITY - A CASE

STUDY ON SATE FAMILI SDN BHD

Prepared By:

Izzarul Shazwan bin Khairul Azizan (2020931215)

Khairulbariah binti Md Yunos (2020740115)
Rosizatun Najwa binti Rosli (2020999461)

Prepared for:

Dr. Nor Irvoni Binti Mohd Ishar

 ABSTRACT

In food industry, the market has become more competitive, because it has opened the
opportunity for new competitors. This challenge relates to the need to create greater consumer
loyalty to products and services, greater suitability of the product to the consumer’s needs and
greater concern about the social impact of the company. Information required for this study was
gathered through qualitative method. A semi-structured interview was held with one of
company operation manager. Data was also collected by tabulating customer’s feedbacks from
Google Review and Facebook Review. Through our analysis, we found out there are four main
areas (manpower, machine, method, and materials) that may directly impact this company’s
operation in terms of managing quality. These four areas were then disseminated to identify
further reasons that are affecting quality of end product produced by the company. We seek to
validate each of identified causes and provide comprehensive recommendation in managing
the overall quality. By practising recommendations laid in this study, the company will gain
added value in managing quality of its product and directly will provide better experiences for
their customers.

1.0 Introduction (ZARUL)

1.1 Background of Study (in general)

As the food sector expands and develops, ensuring food safety and quality has become a
significant concern. Because of the intricacy of the food supply chain, various risk variables
affect product safety and quality, especially low-temperature food. [CITATION Jha21 \l
17417 ].

In Malaysia and other countries, Food and Beverage (F&B) industries must involve in
producing, processing, packaging, delivery and distributing the last product. The F&B industry
is one of the world's largest industries with regards to both revenue and employment.
Nusantoro (2018) stated that people is capable with the high level of knowledge, skill,
coordination and strength of obtaining challenging food resources and transform them into a
high quality food products. Production of food is the earliest part of F&B process where it has to
be more specifics in term of cleanliness and healthcare.

The F&B industries have their unique production challenges which where demand is a primary
factor in production. Demand can lead to implication of operational F&B production strategies
where it can contribute to the change in amount of product being consume (Planet Together,
2018). Planning and control in the F&B production based on consumer’s demand is nearly
impossible. Hence, production can never stop when it pertains to F&B industry and that is why
quality management is very important in continuing the quality of the non-stop productions.

Food is usually produced in different places and environments. The general standard of food
production is the quality control in food industry. The standards in the food industry have
pressure the food producers to improve more on their quality processes. Draus (2017) has
specified that Quality Assurance (QA) is an activity to ensure the quality of the production
processes. It is a practical process which aims to avoid any defects by focusing on the
production process to make the product. The goal of QA is to increase the development and
processes so that any defects will not occur when the product is being produced. The quality
can be achieved by establishing a good quality management system and assessing its
adequacy (Draus, 2017). It is proven, that by implementing an inspection system in the
production line, it can develop the ability to meet the requirements that F&B chains are
demanding.

Meanwhile, another management of quality in F&B production is Quality Control (QC). Draus
(2017) define QC as a set of actions to ensure quality in products by finding defects in the real
products produced. It is a process which aim is to identify any defects in the finished products.
QC involves the aspect of inspection in quality management and usually will be the
responsibility of a specific team which tasked is to check the products for any defects. This
shows that appropriate quality measures are highly necessary in food productions.

The food industry deals with highly perishable products which is one of the important roles in
the quality standards maintenance and following to quality requirements standard (Elixir,
2020). When it comes to food products, consumers will usually tend to buy the same brand
repeatedly due the quality. In the case of F&B industry, a small incident regarding product
quality issue could tarnish the image of the company. The quality requirements in food and
beverages production and distribution face great challenge in meeting customer expectation
due to the fact quality may also has significant impact on brand name. This concludes that
quality standards in F&B production process have significant impact on meeting customer
expectation.

Okwachi (2019) studied about the service quality relation with the concept of consumer-
perceived quality. It is the action of the customer responses through the hospitality’s
restaurant food and beverage in achieving a suitable meal experience. In reality, customers in
food and beverage sections of the hospitality examine the service quality to institute the
satisfaction level. Zhong and Moon (2020) conducted their study on what drives customer
satisfaction. From their research, food quality is very important in identifying customer
satisfaction and loyalty. A high level of food quality is a main important key in marketing
approach which can satisfy customers and provide a good experience for them.
Numerous studies indicated that food quality can influence customer’s satisfaction positively
(Zhong and Moon, 2020). The behaviour of customer in term of purchasing decisions is actually
related with their evaluation of the overall experience of quality of the foods. High levels of F&B
production in quality management can lead to high customer satisfaction. Unfortunately, if the
quality performance fails to meet customer’s expectations, dissatisfaction of the customer’s
experience will occur. Ahmad (2015) also has conducted the same study to determine the
relation between service and food quality and customer satisfaction. The study then assumed
that both service and food quality have a positive impact on customer’s satisfaction, which
positively affect customer satisfaction and loyalty.

Karki and Panthi (2018) carried out a study on how food quality, price, ambiance and service
quality effects customer satisfaction. The scope of food quality, according to this study is
adopted from five dimensions of food quality which are the smell, taste, variety of menu items,
nutritious of food and the freshness of the foods serving. At the end of the research, they have
found out that customer perceived values are indicated by food quality and food performance.
Hence, quality management in food processing is very important and critical to be applied to all
F&B industry.

1.2 Background of the industry

1.3 Background of the company

Sate Famili Sdn Bhd is a registered company since 1989. The company was formed as a result
of family partnership and cooperation. In 1988, they started operating by selling satay on a small
scale and to date has grown into a company that can be categorized as a commercial satay
business. In 2016, Sate Famili has a restaurant operating in Klang, Selangor. Sate Famili is also
a leading satay supplier to several catering companies including Kuzie catering, Keningau
catering, other caterer and also small distributors. Sate Famili has 36 workers where 17 of the
workers are work for their factory in manufacturing process and the rest work for management
as well as in restaurant. They have several small stall branches near Meru, Klang area.

Their main dish product is Sate which has several types of satay such as chicken satay, beef
satay, mutton satay and beef intestine satay. They also have served lontong and peanut sauce for
the gravy. There is a new product introduced which is they commercialize into frozen satay
which have two types of frozen such as fully cooked frozen satay & raw frozen satay. It makes it
easy for customers to enjoy satay regardless of time, place at anywhere. It can be applied by
heating method by steaming, reheating by using "magic pens" or microwave for 2 minutes.

Sate Famili is one of the companies monitored and guided by Klang District Veterinary
Department, Selangor since 2010 until now. They will choose selective vendor of their
suppliers from Klang District Veterinary advised. Sate Famili has mission to integrate nutrition
into national development policies and programs. Their vision is to become a Leader in
traditional food to the global level which they have a strong team and always strive to
complete the quality of work and effort as much as possible to demand from customers.

1.4 Problem Statement

- CUSTOMER COMPLAINT
- Potential Issues
- -Customer Complaint
- -Manual Labour
- -Quality check (Inspection of food)

The term food industries cover a series of industrial activities directed at the processing,
conversion, preparation, preservation and packaging of foodstuffs all those activities are our
focus in quality management in this industry is a must win. It is defined as the management of
product quality and product safety, consisted the obligatory systems and voluntary systems
(Chin, 2016). The food industry today has become highly diversified, with manufacturing
ranging from small, traditional, family-run activities that are highly labour intensive, to large,
capital-intensive and highly mechanized industrial processes. In food and beverages (F&B)
industry, factors such as safety, efficiency and reliability all affect the quality of a product and
ultimately influence overall customer satisfaction. This study will be done by specifically
investigating on the issues arise in quality of food of this company in order to fulfill their
customer satisfaction and managing their quality control in the production process. For Sate
Famili, it is essential to have adequate controls for a quality satay production. Even more so the
business has received from customer complaints on their food serves. In addition, the business
is heavily operated by manual workforce which highly expose to human errors . This is crucial
aspect that needs to be identify on the quality of product itself from customers views as these are
opportunities to improve the customer experience and prevent potential churn.
 1.5 Research Objective

To investigate the potential issues that have influence in food quality in Sate Famili

Dependent Variable: Quality of Food

-Appearance Factors: size & shape, color & Gloss, consistency
-Textural Factors: Measuring Texture, Texture Changes

-Flavor Factor: influence of color & texture, Taste panels,

-Quality Standard: federal grade standards, planned quality control
Independent Variable: Potential Issues
-Customer Complaint
-Manual Labour
-Quality check (Inspection of food)

1.6 Research Question

How may the potential issues influence quality of foods in Sate Famili?

1.7 Scope and Limitation of the study

1.8 Significance of the study
1.9 Definition of Terms
Chapter Summary
 2.0 Literature Review (NAJWA)

2.1 DV – Outsourced Logistic Function

2.2 IV’S – Management orientatition, Utilized Strategies, Utilized information &

partnership

2.3 Strategic Tools

- SWOT Analysis
-TOWS Matrix

2.4 Research Framework

2.5 Acedemic Construct

Chapter Summary

3.1 Methodology (BARIAH)

As our research questions have main focus on understanding the influence between logistics
outsourcing and supply chain management. Aims to analyse the potential influence of
outsourced logistics function on supply chain management in Pharmaniaga Berhad from a
strategic perspective. A survey can be said as the most suitable research strategy for our thesis.

3.2 Research Design

In this master thesis the research design can be classified as a mix of both structured
and unstructured manner, primarily a comprehensive theoretical framework is
observed which becomes more structured and narrow in constraint to reach the
problem area.

-Purpose of study

Investigate how logistics outsourcing may influence supply chain management from a
strategic perspective.

-Type of study
-Unit of Analysis in the study (Manufacturing companies in Malaysis)

The units of analysis identified for this study are electrical and electronics firms in Malaysia. According to MIDA
(2011), the electrical and electronics firms in Malaysia can be categorized into four sections—consumer electronics,
electronics components, industrial electronics and electrical. As recorded by MIDA (2011), the electrical and
electronics industry in Malaysia is leading in the manufacturing sector and contributes 31 % to manufacturing
output, 48.7 % for exports and 33.7 % for employment. This data reflects the importance of electrical and
electronics firms in generating economic growth in Malaysia. (contoh)

-Time horizon of the study

The units of analysis to identify one of the largest pharmaceutical company in Malaysia for
this study is Pharmaniaga Berhad. The ambit of their business interests ranges from
warehousing and distribution of pharmaceutical and medical products; generic
pharmaceuticals
manufacturing; marketing and sales; research and development; trading and installation of
medical and hospital equipment. The Group has also successfully harnessed the synergies of
our businesses to expand into the community pharmacy segment.

3.3 Sampling Design

-target Population (Manufacturing companies in Malaysis)

The population of this study refers to the electrical and electronics firms in Malaysia registered with the Electrical
and Electronics Association of Malaysia

-Sampling Technique
-Sample Size

3.4 Instrument Design

-interview Guide
-Survey Questionnaire
3.4.1 Primary Data
To attain a set of reliable primary data, this study used a questionnaire method to collect the
information from respondents concerning the determined units of analysis. As stated in the
literature review, there is a wide range of logistics practices outsourced by companies to
logistics service providers. There are eight (8) main outsourced logistics function categories
that were selected as the focus in this study which are transportation or shipment, warehouse,
information technology, custom brokerage, inventory control, order processing product
assembly or labelling, and product return or reverse logistic.

There are three (3) sections in this web-based survey:

Section 1 – This section is to collect the basic information from the companies such as
company’s name, location, and size. This part of the survey was optional as certain companies
can choose to participate in this research and remain anonymous for confidentiality reasons.
 Section 2 – This section is a polar question or general part where companies can indicate what
logistics options they outsourced. This was a mandatory section.
Section 3 – With the purpose of analysing how outsourced logistics functions influence
firms’ logistic strategies and directions, professional of the sectors were asked to rate several
statements on the Likert scale survey questions.

3.4.2 Secondary research data

Secondary data refers to the data recorded in books, journals, or any other previously existing
sources before the current study. These data will be mainly in areas that are related to the
research or to the theories that explain the various variable and relationship in the study. The
external data relies on academic journals, articles and books, online database as well as
internat sources while the internal sources were gathered from company’s website,
company’s profile and all available recorded data.

3.4 Fieldwork and Data collection

This study utilized self-administrated questionnaires for collection of data from managers from supply chain,
procurement, purchasing, contract manufacturer management and planning of electrical and electronics firms in
Malaysia. The questionnaires were distributed through postage as well as hand distribution to increase the support
of responses from the respective respondents, since the response rate of the mailing questionnaires are typically low
in Malaysia. A cross sectional study is applied with the data collection ceased after three months after its
commencement

3.5 Data Analysis

This study used the partial least squares (PLS) technique of structural equation modelling using SmartPLS Version
3.0 to test the research model. This technique was selected owing to the exploratory nature of the study (Hair et al.
2011). SPSS version 22.0 was used to conduct dessciptive analysis and to test non-response bias. As recommended
by Hair et al. (2013), this study applied a two-step approach for data analysis. In the first step, the measurement
model was analysed. In the second step, the structural relationships among the latent constructs were assessed (see
Zailani et al. 2015a). This approach was used to determine the reliability and validity of the measures before the
structural relationship of the model was tested.

3.6 Application of Strategic Tools

Chapter summary

Factor 2: Food quality (FQ)

FQ 1 The food was delicious 0.76 8.41
FQ 2 The food was nutritious 0.84 NA F
Q 3 The restaurant offered a variety of menu items 0.62 7.12
FQ 4 The restaurant offered fresh food 0.65 7.23
FQ 5 The smell of the food was enticing 0.70 7.85
FQ 6 The food presentation was visually attractive 0.74 8.32
Factor 3: Service quality (SQ)
SQ 1 Employees served me food exactly as I ordered it 0.73 9.23
SQ 2 Employees provided prompt and quick service 0.77 9.50
SQ 3 Employees are always willing to help me 0.65 NA
SQ 4 Employees made me feel comfortable in dealing with them 0.78 9.55