AGC 604

OPERATIONS AND SERVICE MANAGEMENT

Semester 1 Academic Session 2021/2022
Graduate School of Business

Universiti Sains Malaysia

Group Project:

Operation Management of Sime Darby Auto Engineering

during COVID-19 Pandemic
Presented by Group 5

Date of Submission: 24th January 2022

Group Member Matric No.

MOHD SYUKRI OMAR P-GSM0146/21
WU CHEN P-GSM0065/21
LIU MENG LEI P-GSM0028/21
LIU QINGGUO P-GSM0184/21
HISHAMUDDIN BIN MOHD SAID P-GSM0078/20

Prepared for:

Assoc. Prof. Dr. Tan Cheng Ling

Dr. Kavigtha Mohan Kumar

Table of Contents

No. Description Pages

1. Executive Summary 1
2. Introduction 2
2.1 Sime Darby Auto Engineering - Company Background 3
2.2 BMW Engine Assembly – Operation Background 6
2.3 BMW Engine Assembly - Supply Chain Overview 8
3. Problem Statement / Study Purpose 10
3.1 Covid-19 Impact on Supply Chain 11
3.2 Covid-19 Impact on Daily Operation 13
4. Solution Implementation / Design / Methodology 14
4.1 Logistics’ Operational Excellence 15
4.2 Assembly Operation Adaptation to Covid-19 19
5. Discussion on Alternative Solutions 31
6. Recommendation 33
7. Conclusion 37
8. Contribution Value 38
9. References 39
1. Executive Summary

Sime Darby Auto Engineering Sdn. Bhd. (“SDAE”) is a Sime Darby Motors company that
is based in Malaysia. It is a company who specialize in assembly of automotive components for
some famous automobile manufacturers such as BMW, Hyundai, Peugeot, etc. At the beginning
of 2020, the COVID-19 was declared as a worldwide pandemic by WHO. Under the influence of
the pandemic, the operations and practices on SDAE was forced to change and improve to cope
with the tough situation. Due to this, introducing some rational methods of operation management
into SDAE will be the smartest way of ensuring operational efficiency and achieving
organizational goals within the industry. The aim of this project is to understand some theories and
methods of operation management in business today and how them help SDAE dealing with
difficulties caused by COVID-19 effectively and efficiently. And it’s expected that the current
operation modes used by SDAE can provide reference to the other companies in the automobile
industry and even other industries. And based on the case of SDAE, this project also supplies
recommendations related to operation management to not only SDAE but also other companies
who are facing with the same difficulties for further development during the pandemic.

This project mainly consists of the analysis of the SDAE’s operation management before
and after the COVID-19. Firstly, using the operation of BMW engine assembly as the example,
the project introduces the normal process operated in SDAE. Secondly, the impacts brought from
COVID-19 on SDAE are introduced, especially focus on two impacts on supply chains and daily
operation. Next the implementation of the operation management methods to deal with the two
impacts is further discussed in this project, and how the methods has made the work process flow
in SDAE effectively and efficiently. Furthermore, based on the analysis of SDAE’s operation
management during the COVID-19, some recommendations are given to improve the operations
of SDAE better and provide reference to related to related industries.

In order to understand operation management and identify essential issues brought by

COVID-19, analysis based on operation management theories is discussed in this project. The
opportunities that the organization has to develop the business further and the profound threats to
the organization are identified and analyzed accordingly. There are two mentioned issues, based
on the impact on supply chain, the project introduces supply chain management, logistic
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management, global strategy, inventory and layout management and some other related theories
to explain and solve the issue, and leads to further actions to be taken. In terms of the impact on
daily operation, the process design focus on standard operation procedure (SOP) is mainly
discussed. Every organization has its own SOP, however during the specific period of COVID-19
pandemic, a certain SOP to avoid threats come from COVID-19 is essential to all organizations.
So this project introduces the SOP of SDAE during the pandemic which can further enhance the
operation’s capabilities in getting into survival and development, and serve as the model to other
companies.

2. Introduction

Sime Darby Auto Engineering Sdn. Bhd. (“SDAE”) is a Sime Darby Motors company
who specialize in assembly of automotive components. It owns manufacturing license of vehicle
component assembly, such as internal combustion engine (ICE), door module, frontend module,
axle module, powertrain module, front corner module and instrumental panel module. Their
business model is being a contract assembler of “local content module” which is regulated under
Malaysia’s Ministry of International Trade and Industry for an automotive Original Equipment
Manufacturer (OEM) to enjoy tax incentives for their business in Malaysia. It means SDAE is only
focusing on the business-to-business (B2B) approach and their operation is well defined and
agreed by their customer at the entire supply chain.

SDAE’s main customer is BMW AG in which they are assembling and testing the internal
combustion engine, before the finished goods will then be sent to vehicle contract assembler,
Inokom Corporation Sdn. Bhd. Furthermore, SDAE also currently assemble less complicated
module like Door Module, Instrumental Panel and Front Corner for Peugeot and Hyundai, and has
a few new module assembly projects in the pipeline.

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 Nevertheless, we will be focusing on their BMW Engine Assembly Operation for the case
study to observe:

1. How Covid-19 pandemic has affected their operation at the entire supply chain?

2. How SDAE manage the new norm and their strategy to recover the issues impacted
by Covid-19?

We will then further discuss on their solutions based on methodology covered under
Operations and Service Management. Any required improvement of the strategy taken by SDAE
will be recommended after our detailed analysis in this case study.

2.1 Company Background

Sime Darby Auto Engineering Sdn. Bhd. (“SDAE”) is established in 2016 and is
strategically designed to be main player for Sime Darby Motors to tackle the growing market
demand for automotive components assembly. SDAE is 100% owned by Sime Darby Motors
which is a main company under Sime Darby Berhad that focusing on automotive sector.

Figure 1: SDAE’s relation to Sime Darby Motors and Inokom Corporation

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 SDAE is located in Padang Meha, Kulim on the same land lot with another manufacturing
and assembly company under Sime Darby Motors, Inokom Corporation Sdn. Bhd (“Inokom”).
Inokom is a subsidiary of Sime Darby Motors whereas 51% of their shares is owned by the
company. In comparison to SDAE, Inokom is focusing on vehicle assembly and is currently
assembling BMW and Mini, Hyundai, Mazda, Kia and Porsche vehicles at their facility. The
location is not only strategic due to its close proximity to Penang Port, but also on the same location
with Inokom, where the complete assembled finished goods to be sent to for the above mentioned
vehicles that are assembled at Inokom.

Sime Darby Motors is involved in retail, distribution and rental apart from manufacturing
and assembly. It appears in 9 markets across Asia Pacific region and represents automotive
premium brands such as BMW and Mini, Rolls Royce, Jaguar Land Rover, Ford and Porsche.

Figure 2: Sime Darby Motors’ appearance across Asia Pacific region

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 Through a strong business partnership between Sime Darby Motors and various automotive
brands, it opens a big opportunity for SDAE to explore and expand assembly business from those
automotive companies. In order for these companies to enjoy tax incentives and tax exemptions
under Malaysian Ministry of International Trade (MITI), an automotive Original Equipment
Manufacturer (OEM) company is required to comply to localization requirements which are
regulated under latest review of National Automotive Policy2. A local value added of 30% is
required to be achieved for an automotive OEM company and this requirement is to be reached
under local assembly of modular components like Door module, Axle module and Frontend
module.

The strategy to establish SDAE to explore local content modular assembly business is
proved to be successful after Sime Darby Motors and BMW AG have partnered in a RM 132
million investment for a BMW Engine Assembly Plant. A bespoke facility is built on a 7500 m 2
piece of land in Padang Meha, Kulim, just next to Inokom Corporation Sdn. Bhd, where the BMW
vehicles are assembled. The BMW Engine Assembly Plant was successfully launched in April
2018 with

Other assembly businesses are keep coming for SDAE and they were awarded Door
Module Assembly in 2017 and Frontend Module Assembly in 2018, both from Hyundai. In 2020,
SDAE expanded their business with new customer Peugeot with Front Corner Module and
Instrumental Panel Assembly, and the business again keep growing in 2021 with introduction of
Door Module for Kia and Porsche respectively, as well as the development phase of Powertrain
Module under BMW AG. The milestones overview of the company could be referred below:

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Figure 3: Milestones of SDAE

2.2 BMW Engine Assembly – Operation Background

SDAE’s BMW Engine Assembly Operation started its operation in April 2018. The
bespoke facility is built on 7500 m2 piece of land in Padang Meha, Kulim. It is equipped with state-
of- the- art assembly and testing equipment which was developed together with BMW AG. Most
of the equipment are imported from Germany and were fabricated by BMW’s approved equipment
supplier.

Apart from assembly hall and logistics warehouse, SDAE’s BMW Engine Assembly
Operation has two level office building, cafeteria, employees’ open space such as locker room and
prayer room as well as testing area. According to BMW’s quality standard, the complete assembled
engine has to run through two main testing facility:

1. Cold test: engine testing without engine firing

2. Hot test: engine testing with engine firing

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 The machineries and equipment for both testing facilities were also join-developed by the
SDAE and BMW AG team and were fabricated by BMW’s approved equipment supplier in
Germany. A series of training has been conducted at supplier’s location as well as at BMW’s
engine plant in Steyr, Austria and Thailand to ensure the knowledge and technological transfer
could be done at the highest level.

Since the start of operation in April 2018, SDAE’s BMW Engine Assembly Operation has
launched all engine derivatives, not only for BMW vehicles for Malaysian market, but also for
BMW vehicles that were exported to ASEAN region; Thailand, Vietnam and the Philippines. The
BMW engines that are assembled and tested at the facility are:

1. B38 – 3-cylinder gasoline engine

2. B48 – 4-cylinder gasoline engine
3. B47 – 4-cylinder diesel engine
4. B58 – 6-cylinder gasoline engine

Figure 4: SDAE’s BMW Engine Assembly Plant Overview

BMW Engine Assembly Plant were equipped with assembly equipment and system with
design capacity at 40 units per day (UPD). The plant is equipped with latest tightening system
technology integrated with tightening data and material data collection. The data is compiled
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together through a traceability system and could be traced back easily on a web based platform. It
has a main assembly line that was equipped with 14 main assembly station and a 9 stations’ sub-
assembly line. The components such as cylinder head, pistons and injectors are assembled at the
sub-assembly line before it would be sent to main line for further assembly process.

After more than 3 years’ operation, the team has managed to do various process
improvements that lead to increase in daily output capacity. Design capacity at 40 UPD could be
linked to 12 minutes of cycle time, considering working hours of 8 hours or 480 minutes. By
focusing on cycle time improvement activities at several bottle-necks stations as well as other
process improvement activities, cycle time is now reduced to 10 minutes. That means, the current
capacity of engine assembly plant is at 48 UPD.

2.3 BMW Engine Assembly – Supply Chain Overview

As a contract assembler, SDAE has to comply to requirements defined by the Principal,

BMW AG. The requirements include quality requirement, process requirement, logistics
requirement as well as material resourcing requirement. All materials required for BMW Engine
Assembly operation such as assembly raw material also known as Complete Knock Down (CKD)
kits and consumable are approved by BMW AG’s Central Material Purchasing in Munich,
Germany. Most of the material especially CKD kits are originally from Germany and will be sent
to Malaysia normally via sea freight and in special case such as claim order via air freight.

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Figure 5: Overview of Supply Chain of SDAE’s BMW Engine Assembly Operation

The diagram above shows the overall overview of material supply chain of BMW Engine
Assembly operation at SDAE. SDAE will channel the information regarding the material order to
BMW’s Central Material Purchasing in Munich, Germany and the information will be sent further
to BMW Material Packing Plant in Wackersdorf, Germany. After that, the ordered material will
be sent to Malaysia vis sea freight and this normally will take around 32 days. In case of special
claim or emergency order, the material could also be sent via air freight and it will take around 5
days to arrive Malaysia. Upon arrival at the Malaysia’s sea port or airport, the material is processed
for import clearance and once it complete, the material is ready to be sent to SDAE’s Logistics
Warehouse. The custom clearance and inbound transportation to SDAE are run by a same logistics
service provider. The whole process required clear arrangement and planning to ensure a quick
action could be taken in case of any issue of supply chain interruption arise.

After the material arrived SDAE, it will be stored at the warehouse until it will be collected
for assembly according to production schedule. The material is batched in a lot with 24 units and
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the unpacking process for the assembly will be done at lot by lot basis. Once the material was sent
to Production for assembly, it will be going through the complete assembly and quality check
processes until it finished as a complete assembled engine or Finished Goods. Once it completed
all the required packaging process, the finished goods again will be sent back to Logistics
Warehouse. The complete assembled engine will be placed on the engine racks and will be
packaged to be ready for outbound transportation to vehicle plant at Inokom. The finished goods
then will be delivered to Inokom at lot by lot basis according to Lot Calling-In defined by their
Production Schedule.

Figure 6: Complete assembled engines are placed on Engine Racks for storage and delivery

3. Problem Statement

The related profit figures of the Covid-19 pandemic have affected economies around the
world, with all sectors of industry being severely impacted. Many industries faced interruptions in
production, shutdowns and even closures. The New Crown Pneumonia pandemic has had a rapid
and severe impact on the globally integrated automotive industry. SDAE, the company studied in
this paper, specializes in the assembly of automotive components and is closely linked to the
automotive industry. Under the epidemic, they faced many challenges. Not only did the epidemic
disrupt or even interrupt the supply chain, but it also led to a series of problems such as internal
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work stoppages and excess warehouse capacity that urgently needed to be addressed.

The main theme of this case study is to analyze what problems SDAE is currently having,
how to solve the above problems, how to adapt and comply with the new norms and standards of
procedures (SOPs) set by the government, and how SDAE can increase production to meet demand
during the crisis. To know the answers to these questions, it is first necessary to carry out an
analysis to identify the problems that currently exist.

3.1 Covid-19 Impact on the Supply Chain

In the previous chapter, we have identified the overview of supply chain of the BMW
engine assembly operation in Malaysia. Most of the raw material including CKD kits and
consumable will be exported from Germany before it will be assembled as a complete engine. The
finished goods will then be delivered to BWM Vehicle Assembly at Inokom.

Covid-19 Pandemic has resulted in operation interference for the most of logistics operator
in the world. Logistics operation has been identified as an essential service in Malaysia and instead
of total stoppage of the operation, they are still allowed to resume the operation with certain
limitation. On the other hands, the shipment of the material from Germany also have been
interrupted due to various limitation related to Covid-19 by several countries along the supply
chain.

While the shipment and logistics operation still could be run, the production of the engine
however we forced to close by Movement Control Order that were regulated by Malaysian
Government. There are few periods that the operation has to be stopped, depends on the Covid-19
condition in the area. But we will be focusing on the period early June until end of July 2021,
where the assembly operation has to be closed except for few maintenance works, that has resulted
in interruption of finished goods delivery. Since the operation stop were enforced to the whole
automotive sector, the vehicle assembly at Inokom has been affected as well.

In order to sort out the impact of the epidemic on the SDAE supply chain, we will be
focusing on four main stages of the supply chain and its main issues:

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Stage 1: CKD kits shipment from Germany unable to transport to SDAE

According to the latest figures released by the Robert Koch Institute, Germany's federal
disease control agency, more than 60,000 new confirmed cases were diagnosed in a single day.
The German Health Minister has warned that the current epidemiological situation in Germany is
deteriorating dramatically. German companies, which are currently hardest hit, are also in the
automotive industry. Figures show that according to the current situation, the German automotive
industry is losing around 72 million euros per day. As a result of the epidemic, many factories have
been forced to shut down and production capacity has fallen, making it impossible to produce
enough CKD kits. Existing components cannot be transported to Malaysia due to the disruption of
shipping routes.

Stage 2: The blockage of import clearance at the Port

There was some limitation to get the CKD parts and other material to be processed on time
for import clearance. Customs officials were mostly forced to work from home or there was some
period of time in which the customs office who are responsible for the importation clearance were
forced to close for few days due to Covid-19 spreading at their office.

Stage 3: Inbound transportation to SDAE warehouse

The materials that have successfully passed the port clearance will be transported to the
SDAE warehouse, however, the warehouse is a long way from the port and access to the warehouse
is a challenge due to inter-state restrictions and movement control orders.

Stage 4: Production Scheduling

Since the materials was then in excessive quantity and SDAE warehouse achieved its
capacity, an additional external warehouses had to be engaged to store the materials. SDAE had a
number of external warehouses at different locations. This had resulted in further planning and
arrangement of production scheduling to ensure there is no production stoppage that could
interrupt finished goods supply to the BMW vehicle plant at Inokom.

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 Another challenge in production scheduling was to ensure assembly operation is running
at higher daily output. Since the operation was forced to stop for more than 2 months during the
Movement Control Order (MCO) period, BMW vehicles’ delivery to the market has stopped as
well. Due to this reason, as well as to rapidly decrease the excessive material, the operation was
requested to be scheduled at higher capacity.

Stage 5: Outbound transport of Finished Goods

After the engine was completely assembled, the finished goods will be delivered and
transported to BMW vehicle plant at Inokom. This stage is very interdependent to the previous
stage. A well planned production schedule could ensure no interruption in finished goods delivery.
Since the location for the delivery is not far away, the only risk for outbound transportation was
the availability of the driver. SDAE has outsourced the outbound transportation to a logistics
company and certain commitment and agreement with that company had to be reached to minimize
any risk that could lead to finished goods supply interruption.

3.2 Covid-19 Impact on Daily Operation

Malaysian Government has introduced National Recovery Plan (NRP) as a roadmap to

safely exit the Covid-19 pandemic in July 2021. The roadmap is planned as four phase of
restriction relieve based on 3 main indicators for each of the state: daily new cases, vaccination
rate and ICU utilization. Automotive sectors are only allowed to be operated at Phase 3 where the
Covid-19 daily cases are required to be below 2000 cases, the vaccination rate for the adult
population to be above 40% and ICU utilization to be at adequate level.

Kedah State as to where SDAE is located could only be declared to be at Phase 2 starting
from August 2021. SDAE was finally allowed to resume the whole operation back starting from
16th of August with few restrictions and limitations as regulated by Malaysian Government. The
new Standard of Procedures (SOP) for automotive industry business to resume the operation was
introduced and reinforced to minimize the risk of further spreading of Covid-19.

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 SDAE were then required to run the assembly operation and at the same time, complied to
the SOPs that were regulated by the government. According to latest delivery schedule from BMW
Malaysia at the time, SDAE would require to jumpstart the operation rapidly and try to produce
the engine at higher output level, since the market demand for BMW cars was still at high level
and the raw material for the operation was already oversupplied. The logistics warehouse at SDAE
were already over the limit and some of the CKD kits required to be stored at external warehouse.
Although BMW has agreed to cover the additional cost for the external warehouse, they also have
pushed SDAE to run the operation with higher daily output to ensure the oversupplied material
will be reduced, overcapacity condition at SDAE warehouse could be improved and there will be
no more utilization of external warehouse by October 2021.

We will be focusing on the main challenges faced by SDAE during this time: to run the
operation at higher daily output and at the same time to comply to new norms of SOPs as regulated
by the authorities. This includes how SDAE planned their operation in case of report of positive
cases among their employees at the plant and how they would recover any daily output loses in
case of operation interruption by Covid-19’s positive cases.

4. Solution Implementation

The shipment of material from Germany to Malaysia are done in lot basis. Based on
delivery schedule that was defined by BMW AG, the material will be packed at BMW’s
Centralized Packaging Plant in Wackersdorf, Germany and as mentioned, it will be packed in lot
basis and the material that is packed in a month will be declared in a Packed Month (PM). Normally
BWG AG will send in average, around 40 lots of CKD kits in a PM to Malaysia.

It was planned that the material from any Packed Month would be assembled in the next 2
months at SDAE’s Engine Assembly Plant. This is to ensure that the shipment and all necessary
logistics processes will be done smoothly to avoid any interruption of the supply chain. For
example, CKD kits from PM March 2021 will be assembled as complete engine earliest in the
month May 2021.

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 During the Movement Control Order that was started in June until July 2021, there were
around 100 lots of CKD kits were shipped to Malaysia. PM05, PM06 and PM07 were arranged
for shipment and the material are required to be received at any case. SDAE were expected to face
warehouse capacity issue and rapid measurement to increase warehouse capacity up to certain
level as well as the necessity to get an external warehouse were quickly discussed with related
stakeholders.

4.1 Logistics’ Operational Excellence

4.1.1 Warehouse Capacity Improvement

SDAE’s logistics warehouse is utilized to store CKD kits, consumable, finished goods and
it is also used as unpacked and commissioning area before the material will be sent to the
production hall. The diagram below showed the overview of area arrangement at SDAE’s
Logistics Warehouse for BMW Engine Assembly Operation.

Figure 7: Area arrangement of SDAE’s Logistics Warehouse

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 The designed capacity of the logistics warehouse is to store maximum of 40 lots of CKD
kits and 15 lots of assembled engine as finished goods. The capacity is agreed between SDAE and
BMW as part of business costing and basically based on the area space available at the warehouse
and the average lot quantity that were shipped in a Packed Month. The warehouse was therefore
designed to capture the maximum demand of 1-month production.

The Covid-19 has changed the normality of logistics planning at SDAE and logistics team
were required to receive around 100 lots starting from July till August 2021. Although BMW
agreed for SDAE to engage an external warehouse provider to store the additional capacity, there’s
a need for SDAE to maximize and improve current warehouse capacity. Few actions have been
taken to achieve the target of at least 10 lots capacity improvement:

1. Maximize stack capacity of engine racks

Original design of engine rack that is used for finished goods storage as well as for delivery
to customer has stack capacity of 3 units of racks. That means 1 unit of engine racks has
the capacity to have 2 fully loaded engine rack to be stacked together upon it. Due to safety
reason, only 1 fully loaded engine rack is allowed to be stacked on, and this is what has
been practiced from the start of operation. In order to maximize the warehouse capacity, it
is proposed that the fully occupied engine racks to be stacked as 3 units of racks. Since
there is no issue with the original design and there is no risk for the rack to be broken and
caused the engine to be damaged, SDAE only need to tackle the issue at the safety point of
view. For this reason, a special training for forklift driver has been organized and the ability
for them to stack the engine rack up to 3 units has been observed and approved by the
Operation Safety Officer and SDAE Management. The measurement has resulted in
additional space that could be utilized to store up to 3 lots of CKD material.

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 Figure 8: Engine racks were stacked up to 3 units for area capacity improvement

2. Make use of space available at Assembly Area

In order to get the target of space availability improvement of 10 lots, SDAE also focused on
utilizing the idle or unused area within the plant. Every available space is considered to be the
additional area for temporary CKD storage as well as Finished Goods storage area. There was
still unutilized space especially at the air-conditioned and humidity controlled assembly area.
SDAE has decided to use this area as additional CKD storage area and around 7 lots additional
storage capacity has been added to existing 40 lots.

Due to these measurements, SDAE has increased their warehouse capacity and an additional of 10
lots of CKD material could be stored in the warehouse.

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4.1.2 Logistics Planning and Material Movement Visualization

As already mentioned in the previous chapter, Covid-19 situation in Malaysia as well as in

Europe has led to an irregular situation at SDAE. The logistics operation especially needed details
planning and quick decision making to avoid any unnecessary cost as well as supply chain
interruption. Movement Control Order (MCO) that has been declared by Malaysian Government
to curb the spreading of Covid-19 has forced SDAE operation to stop for more than 2 months.
Although there were some restriction and other hindrance the materials that were shipped from
Germany had arrived Malaysia and the materials could no longer be stored at SDAE warehouse.

The maximum capacity that could be added was only 10 lots and there was still a need for
a space to store around the same amount, 50 lots of CKD kits. SDAE and BMW had agreed to
engage few external warehouse to store those materials. SDAE was not only operation that was
affected by MCO and at the industrial area such as Kulim, there were many other industrial
operations that had to face similar logistics issue as what happened at SDAE. So it was another
challenge to get additional external warehouse at one location and SDAE finally managed to store
the materials at 4 different locations around Kulim.

Once the operation was allowed to be reopened in early August 2021, it was so crucial to
get the overview of all the material that was stored at different places as well as what already at
SDAE Warehouse. Since the assembly operation will get to be resumed, in addition to a well-
planned production scheduling, SDAE had to have a detailed overview of material movement
tracking. The materials tracking normally was done by using SDAE’s own software, iWMS. The
Enterprise Resource Planning (ERP) system that was developed by internal IT department
however only limited to material that already stored at SDAE location. SDAE in the other hands
was required to have overview of the material at the entire supply chain for advanced planning
purpose.

SDAE has developed a new manual board to track the material as soon as it arrived Penang
Port. The board was sectioned into few categories representing their location and supply chain
stages. The Kanban card is then used to represent any lot of any engine model and the colour of
the cards also was differentiated based on their Packed Month (PM).
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Figure 9: CKD material movement status board

The board was quickly developed and setup for the planning purpose and due to several
factors such as time constraints and other financial factors, it was decided that the board was
implemented manually. Nevertheless, the foundation of the material movement tracking was
successfully implemented and there is a plan to improve it further using automatic feed on web
based platform.

4.2 Assembly Operation Adaptation to Covid-19

4.2.1 Compliance to Covid-19 SOPs

Automotive industries were allowed to resume their operation at Phase 2 of National

Recovery Plan as regulated by Malaysian Government. Kedah State was declared at Phase 2
starting from early August 2021 based on 3 main indicators: vaccination rate among adult
population, ICU bed’s capacity as well as daily positive cases rate. Although the business
operations were allowed to resume the operation, still there were several Standard of Procedures

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(SOP) and guidelines from Malaysian Ministry of Health that were required to be complied. We
are going to observe what kind of additional activities and programs that SDAE has to run, in order
for them to resume BMW Engine Assembly operation and how the managed it.

Main concern from the government’s point of view was always the spreading of the Corona
virus and they were committed to ensure only minimum movement as required would be allowed.
Still, to put all people at home was not a long term solution and government need to find permanent
solution to ensure everything could slowly back to normal, socially, physically, mentally and
economically. National Recovery Plan was the perfect answer for all the concern and Malaysian
Government has defined a structured roadmap for recovery. Once the business operation was
allowed to start back the operation, it was a big responsibility for management team to ensure all
guidelines and SOPs shared by the government to be followed by all employees. SDAE
Management team in this case has to plan and manage all possibilities that could risk the operation
as well as the most important thing, to ensure the health and safety of all employees.

There were several SOPs that were required to be complied to all business premises that
were given permission to resume the operation. The main focus from the government perspective
was to ensure there would be enough tracking data in case of positive cases and further to ensure
no Covid-19 patients including their close contacts to be allowed to be present at business premises.
All employees and business partners that operated on SDAE location such as cleaning service and
cafeteria worker are required to scan their attendance with mysejahtera- Application. SDAE has
prepared the required QR code for this purpose.

Then, all employees need to do body temperature check, sanitized their hands and wear the
face mask during their time at the SDAE location. SDAE also were required to ensure that social
distance among the employee could be kept at more than 1 meter from each other. Regular
communication with Ministry of Health’s officer were also required and any inquiries from their
side were quickly replied and few visits were arranged to guarantee that SDAE’s BMW Engine
Assembly operation was complying to Ministry of Health’s regulation.

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Figure 10: mysejahtera Application’s QR code for employees to scan

In order to make sure all the SOPs and requirement from government easily to followed by
the employees, SDAE also has taken additional measurement, especially to guide the employees
in keeping their social distance. At the crowded area such as entrance, cafeteria and work station,
SDAE has put all separation wall and floor markings as well as awareness posters to help and
remind the employees to their responsibility.

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Figure 11: Floor markings as guidance for social distancing

SDAE also had simplified temperature check procedure. The employees normally need to
go through a long queue for temperature checks and hand sanitization prior entering the business
premise. This situation created further risk of employees not keeping the social distance of 1 meter
from each other. An automatic face recognition plus automatic temperature check were purchased
and the equipment were directly integrated with turnstile so that every movement in and out could
be controlled and monitored effectively.
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Figure 12: Automatic face recognition and temperature check at entrance’s turnstile

4.2.2 Additional Covid-19 SOPs and Program from SDAE

Surely it was a difficult and challenging situation for all business operations to resume the
operation during Covid-19 pandemic. It was not only about compliance to all SOPs from the
government but more important is to ensure all employees in a good health condition, physically
and mentally. There was still a lot of confusion, lacks of information, fear and other mental
condition that could lead the employee to refuse or reluctant to be present at workplace. Mostly
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this group of employees were having a difficult time seeing and experiencing their families, their
neighbors or friends that were affected by Covid-19 during that period. It is also very important to
have a clear communication channel for management team to give information that related to
Covid-19 situation as well as for all employees to give feedback and raise their hands in case of
questions and suggestions. SDAE management team has setup their own Covid-19 awareness
channel using Telegram application as well as a dedicated digital group using Whatsapp
application to channel down all information regarding Covid-19 situation quickly. All employees
also could raise their concern and questions in the Whatsapp- group and any feedback could be
directly communicated and answered by the management team. Communication is essential during
this period of time and it could help to arrange and coordinate the necessary programs that related
to Covid-19 SOPs.

Apart from comply to all the necessary SOPs and guidelines from Ministry of Health,
SDAE management team also has planned additional measures to establish a structured process to
make sure the operation could be run as planned. First of all, SDAE has arranged all of their
employees to get the Covid-19 vaccination. It was a requirement from the government for each of
business operation to at least get vaccination rate among their employees at 80 percent and above
for them to be allowed to operate. SDAE has taken further step to ensure all of their employees to
be vaccinated and special arrangement with Ministry of Health was conducted to get all of them
to get both doses of vaccination as soon as SDAE reopened in early August 2021.

SDAE also has arranged a regular self-test to ensure all employees that present at the
workplace were not Covid-19 positive. SDAE has purchased self-test kit and distributed to all
employees and business partner every week and all of them were required to submit their result
before entering the premise on Monday. This was a precautionary measure to avoid any employees
that were infected with Covid-19 during the weekend to enter SDAE location and start the
spreading. The program was successful to filter out Covid-19 positive employees and they were
then sent to panel clinic for further checks to confirm the result. The positive case would then be
reported to Ministry of Health and the condition of the employee would be monitored. Since the
employee was then being put under quarantine and not allowed to go out of their house, SDAE has
regularly sent food aid, so that the employee could be well taken care of.
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 SDAE also has restricted their employee to leave the business premise during office hour.
This includes visit to customer, business meeting with suppliers and Friday prayer. Any urgent
needs required to be approved by Plant Manager and the employee would be directed to go straight
home after that. This is to limit and minimize their movement so that any intervention with any
Covid-19 patient could be avoided. Visits from outside also was limited and most of the business
meetings with suppliers were advised to be conducted online. Even regular meetings among the
employees at the office were also restricted and most of the meetings were carried out online.

The communication elements would always be the key to ensure all the arrangement and
program to adapt the business operation to be complied to Covid-19 SOPs would be running
smoothly and effectively. Awareness among employees was needed to be at high level and they
were need to be reminded at following the guidelines as keeping the social distance or wearing the
face mask. Regular morning briefing was used to be a platform to remind the employees of the
Covid-19 situation to create awareness and to remind them of the necessity to comply to Covid-
19 SOPs. SDAE Management team also has then setup an incentive program to reward and
recognize the employees who were following the rules and regulation related to Covid-19.

The program was called Covid Free Environment Program and its main objective was to
get every employee to work together in fighting the Covid-19. Under this incentive program, any
employee could be rewarded to maximum RM 200, if all the SOPs and guidelines related to Covid-
19 are well followed. The total amount of RM 200 will be awarded if the employee completed the
vaccination, comply and follow all the SOPs and was not infected with Covid-19 during the period
starting from November 2021 until May 2022. In case of breaching of SOP, a demerit point will
cost an employee RM 50 and the employee could only be awarded with balance of the incentive
by the end of the campaign. This program has helped the company to monitor the SOP compliance
as well as to continuously create awareness among the employee about the Covid-19.

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Figure 13: Covid-19’s initiative program to gather support and awareness among employees
towards SOP compliance

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4.22 High Daily Output Production Strategy

During all the hustles with regards to Covid-19, SDAE were still required to face the
challenge of producing the engine at higher capacity as requested by the customer. The daily output
was required to be increased from normal rate of 50 UPD to 90 UPD. It was already almost double
the normal daily output of BMW Engine Assembly operation. The easiest way would be running
an additional shift with the same amount of manpower. But, BMW has already made clear that the
production ramp-up need to be done quick and the setup of a new set of workforce for second shift
would not only cost additional amount of money, but also would take a long period of time. SDAE
needed to consider recruitment process time, additional Covid-19 procedure time as well as
training time until the whole team is capable of assembling the BMW engine. There were high
quality risk and supply chain interruption risk if all of necessary processes could not be done
effectively and other solution was certainly required to be implemented to get higher daily
production output up to 90 UPD.

BMW Engine Assembly process is running at cycle time of 10 minutes that could able to
produce the total of 50 units in total of 8 normal working hours. Daily overtime allowed was 3
hours and theoretically daily production output could be done at 68 UPD. Before a right strategy
to get higher production output at 90 UPD could be established, SDAE was quickly implemented
the 3 hours’ overtime to get the operation constantly produce around 68 UPD as early as August
2021. Based on production schedule from Inokom’s BMW vehicle plant, the demand peak would
be happening during November and December 2021 where there would produce more than 100
cars every day. The daily production output at BMW vehicle assembly operation was still at
modest rate in August and SDAE would take that opportunity to increase the finished goods
inventory so that they would be much prepared in coming months. Since the material are already
available, SDAE only required advance production scheduling from BMW vehicle plant to
assemble the engine weeks ahead and increase the finished goods inventory.

The complete assembled engine will be stored and be delivered on the engine racks. In
order to increase the finished goods’ inventory, SDAE was required to consider the storage
capacity as well and currently there was around 14 lots of finished goods only could be stored.

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Referring to production scheduling from BMW Vehicle Assembly operation, SDAE was required
to increase finished goods’ inventory to 18 lots to achieved safety stocks, especially to cater high
demand in November and December 2021. Alternative to engine racks was to store the engine on
a special built boxes. SDAE has decided to purchase the special boxes from BMW in order to
increase the finished goods inventory up to 18 lots.

Figure 14: Finished goods stored on special boxes due to lacks of engine racks

It was then decided that for month August until October, SDAE Production would be
focusing on constantly working with 3 hours of overtime and trying to slightly improve their daily
output to 70 UPD. The situation still has high risk since the manpower especially at production
and logistics would slowly feel the fatigue of working 3 hours of overtime on a long period of time.
An advanced planning especially for the overtime was needed to ensure the employees were
committed to work on overtime and help the company achieve the daily output target. Furthermore,
there were still uncertainties regarding to Covid-19 that could lead a group of manpower to be
quarantined for a long period. The dependence to manpower commitment for working at normal
working hours or with additional overtime are at high level and SDAE management were forced

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to find an alternative source of manpower as backup plan.

As already mentioned in company introduction chapter, SDAE also has other operation
that doing the assembly for less complicated components such as door module, corner module and
instrumental panel for various customers. These customers were quite heavily impacted by
economic downturn caused by Covid-19 and the operation was slowed down due to less volume
demand. SDAE has decided to use a group of manpower from this operation as backup plan and
they were sent to BMW Engine Assembly operation for on job training, before they could be
released to work independently at a dedicated work station. They were so much needed at BMW
Engine Assembly operation to help high volume production and as manpower backup to those
who were no longer able to commit to daily 3 hours’ overtime.

The availability of this group of manpower has opened up a new opportunity for SDAE.
Although the operation was smoothly running and the finished goods inventory were constantly
could be kept up at good level, SDAE still needed to prepare for high peak in November and
December in which daily output of minimum 80 UPD will be required. A new shift model called
Overlap Shift was proposed to ensure the BMW Engine Assembly operation could be run for a
longer working hours, thus more daily output. An additional 3 working hours would be sufficient
to reach more than 80 UPD output. The manpower at logistics and production were then divided
into 2 working group, where the first group will be working at normal shift: starting from 8:00 am
until 5:30 pm for normal working hours, and until 8:30 pm for those who were doing 3 hours of
overtime. The second group on the other hand will start their shift starting from 1:45 pm until
11:15 pm for normal working hours. Instead of working overtime after normal working hours, the
second group are required to turn up 3 hours early and it would be counted as overtime. Their
attendance 3 hours earlier starting from 10:45 am was to make sure there would be longer overlap
period between those 2 shifts. This would enable more manpower at certain period and the
operation would less dependent to commitment of employees to work overtime.

The main focus was to ensure the main production line continuously running and during
the period where no overlap is taking place, the operator not required to run the sub-assembly line.
Since the material inventory that was produced at sub-assembly lines was always at high level it

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even has seen as waste in lean manufacturing methodology. So, the idea was to eliminate the
excessive inventory waste at sub-assembly line and during the 2 and half hours at the beginning
and at the end of shift, the production required to focus only on main assembly line.

Figure 15: Overlap Shift’s schedule

The introduction of Overlap Shift has enable SDAE to achieve higher production daily
output up to 85 UPD. In addition to that the operation was not really dependent on overtime
commitment of their employee that already caused unrest and fatigue among their operational
employees. A rotation system for the overtime has been integrated to overlap shift pattern to ensure
every employee would have enough rest for them to work in a good condition.

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5. Discussion on Alternative Solution

Based on the details that was described in the Chapter 4, it has to be acknowledged that
SDAE has reacted and planned to the Covid-19 issue very well. The focus on the supply chain and
daily operation even before the operation could be resumed was essential for the business
preparation in adapting to challenges of new normal.

Nevertheless, there would always be room for improvement and within this chapter, we
would try to analyze the issues further and discuss on the alternative solution that could improve
SDAE’s operation during this challenging times.

1. Supply Chain Interruption

A supply chain is a sequence of facilities, functions and activities between organizations

involved in the production and delivery of a product or service. The supply chain includes both
external and internal to the organization. The external components of the supply chain provide raw
materials, parts, equipment, supplies and/or other inputs to the organization and deliver outputs as
finished goods to the organization’s customers. The internal parts of the supply chain are part of
the operation function itself, providing parts and materials to the operation, performing work on
the product and/or service and passing the work on to the next step in the process.

Both the external and internal parts of SDAE's supply chain are experiencing problems to
varying degrees, particularly the external supply chain. According to the previous analysis, the
impact of the epidemic on SDAE's supply chain was severe. The external supply chain was
interrupted and at certain period of times it was impossible to get the CKD material to be shipped
out from Germany. Even when the material arrived, there were restriction and limitation to process
the goods due to various factors commonly related to Covid-19. The internal supply chain had
similar problems, with long distances between warehouses potentially causing delays in the
production process. Many workers were also unable to enter the factory to work because of the
quarantine due to the epidemic and it would give high risk for the operation to stop.

Alternative solution is to have a service contract with many logistics company as business
panel. The purpose is to provide backup and support in case of any problem with delivery or

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shipment. The contract can be short term and long term contract and the scope also could be
extended depends on SDAE’s requirement.

2. Inventory management needs to be strengthened

Inventory is the material used to meet customer demand or to support the production of
services or goods. It is one of the most expensive assets in many companies, accounting for
approximately 50% of total invested capital. Achieving a satisfactory level of customer service
while maintaining inventory costs within reasonable limits

During the epidemic, assembly operations came to a standstill while raw materials from
Germany continued to arrive at the SDAE warehouse. This situation resulted in the warehouse
being overflowing and unable to hold more parts that needed to be assembled. This indicates that
SDAE did not have a good inventory control management plan for special situations.

Kulim is strategic location for assembly of automotive components which is near to Penang
Port and Bayan Airport in Penang. Warehouse services is always available to provide temporary
storage for shipment from all over the world. For short term solution it is proposed that SDAE can
rent external warehouse with security to prevent from theft and the warehouse equipped with a
special box as required by BMW AG.

3. Low risk resilience with no corresponding mitigation policy in emergency

More reliance on the supply chain means that we will face more risks and fewer suppliers
will increase reliance, for example we can only import ancillary equipment from Germany.
Globalization and the complexity of logistics increase the risks in the supply chain, especially
epidemics, natural disasters, etc. It is particularly important to build up the reliability and quality
risks of suppliers, but also to consider political risks and currency risks, etc.

SDAE usually does not have a corresponding mitigation policy, resulting in a hindered
supply chain. BMW AG may have their authorized supplier or have a joint research and
development of the BMW’s product in certain country. It can be an alternative supplier to SDAE
during epidemics or natural disasters rather than totally depended on BMW’s home country.

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4. Layout and location decisions need to be strengthened

Location decisions are one of the most important decisions a company makes, with a
significant impact on fixed and variable costs, and the goal is to maximize the benefits of the
company's location. It is increasingly global in nature and SDAE is such a global company with
import and export activities, as described earlier. Location long term decision making is a long
term activity as once identified to a location many resource and cost issues are difficult to change.

The sudden outbreak of this epidemic revealed the flaws in SDAE's layout. The warehouses
were spread out from each other and could not deliver goods in a timely manner. This led to delays
in production. SDAE is located in Kulim Hi-Tech Park is an industrial park for high technology
enterprises. Many multinationals company make an investment in this area with complete facilities,
infrastructure and also plenty of spaces. SDAE should have a backup plan if there is any sudden
outbreak on the warehouse especially for the complete assembled product. Alternative solution is
to rent empty space with neighboring industry which are decrease production during outbreak.

6．Recommendation

6.1 Supply chain challenges and strategy

Supply chain involves in the activities and functions for producing goods or services from
the beginning of raw materials or component supply till the end of finished goods delivered to
consumer, so, it is very important even crucial to companies with global strategies, especially
during the special period of Covid-19 pandemic. The fragile interdependence of global supply
chain was revealed by pandemic shortages, and it forces firms or organizations in all industries to
face the assessments of comprehensive risk.

SDAE has learnt from this case, as a BMW AG’s contract assembler needs to import most
of the material especially Complete Knock Down kits which are originally from Germany, and
needs to organize the logistic/transportation from Port Penang to its warehouse after finishing the
import customs clearance. Most of the importing materials are delivered by sea freight, only a very

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small fraction of them, mainly claimed materials and components, are delivered by air freight.

6.1.1 Sea freight bottlenecks and strategy

Due to the impacts of Covid-19 on workforces like dockworkers and ship’s crew and
logistics, the global ocean cargo companies suffered from port congestion and shipment delays,
and will likely continue the suffering. In addition, some new regulations by governments also
impact the fragile global supply chain. These result in the sea freight bottlenecks. To address the
issues because of sea freight bottlenecks, the following strategy or methods are recommended:

6.1.1.1 Building stronger cooperate relationship with several global ocean cargo
companies

Taking the advantages of BMW brand influence, and increasing large quantities of raw
materials, components, finished goods, SDAE or together with BMW AG, or request
BMW to negotiate the cooperation with several large global ocean cargo companies, like
A.P. Moller-Maersk A/S, Mediterranean Shipping Company S.A., China Cosco Shipping
Group, and Hapag-Lloyd Container Line GmbH, through short term contracts and strategic
cooperation agreements, stronger cooperate relationships and close partnerships can be
built. This, in turn, will strength the company’s supply chain in terms of ocean freight. And
the alternative partnerships with several global ocean cargo companies give a backup to
the supply chain.

6.1.1.2 Redesigning the schedule of delivering materials from BMW AG in Germany

As mentioned in previous chapters, the shipment of raw materials and components from
BMW AG in Germany to Malaysia is organized on lot basis, and BMW AG packs the
materials and components in lot basis monthly, that is called Packed Month (PM). As
planned, the material from any Packed Month would be assembled in the next two months
as SDAE’s assembly plant. During the normal period without the impacts of Covid-19
pandemic, the interruption of the supply chain would rarely occur because the shipment
and all necessary logistics processes could be smoothly done, and this Just-In-Time could
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 reduce the inventory cost and maximize the profit. However, the situation changed during
the special period of Covid-19 pandemic, Just-In-Time more likely results in the
interruption of raw material supply, and the stoppage of SDAE assembly plant, As a result,
not only the could the overall cost be increased, but the interruption of supply of assembled
or finished goods could occur. That means the supply chain of providing finished goods
could be affected. Hence, the schedule of delivering raw materials and components from
BMW AG in Germany should be redesigned carefully. As per the actual situation and
authority forecast of ocean freight, port congestion, logistics, and Covid-19 pandemic,
SDAE and its supplier partner BMW AG need to add more flexibilities to the delivering
raw material from Germany to Malaysia to increase buffer and safety stocks, in order to
avoid any interruption of the supply chain, and raw material shortage to SDAE assembly
plant.

6.1.1.3 Corresponding mitigation policy in emergency

In terms of supply chain risk, fewer suppliers and more reliance should be warned. As
BMW AG’s warehouse in Germany is the only source of raw materials and components
for SDAE, and the uncertainties are increasing rapidly during the pandemic period, like
factory lockdown, port congestion, logistics from BMW AG’s warehouse to Germany sea
port, SDAE is facing more challenges and risks of supply chain. As the analysis in chapter
5, BMW AG probably has its authorized suppliers or subsidiaries in other places or cities
in the world, SDAE needs to communicate with BMW about the alternative suppliers in
other cities or countries. This will be of much help to reduce the risks and dependence of
only one supplier or source, and to enhance SDAE’s supply chain.

6.1.2 Ensuring smooth and quick delivery from Port Penang to SDAE’s warehouse

Upon raw materials’ arrival at Malaysia’s sea port Penang from Germany, the import
customs clearance should be processed, and once it is completed, the raw materials are ready to be
delivered to SDAE’s warehouse. The import customs clearance and transportation from Port
Penang to SDAE are processed by a same logistics service provider. The provider should have the

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ability of not only making clear arrangement and planning to the regular processes, but also taking
quick actions in case of special situation resulting in supply chain interruption. For ensuring
smooth and quick delivery of the imported material from Port Penang to SDAE, the company
needs to pay close attention to the risk and dependence of only one logistics service provider,
especially during the special period of Covid-19. To reduce the risk and dependence, SDAE needs
to choose another one or two professional logistics service providers which have the abilities as
mentioned above. Thus, the inbound transportation, as one part of the supply chain, can be ensued
in the long run.

6.2 Inventory management and warehouse improvement

Inventory management plays an important role in many companies, as well as in SDAE.

As mentioned in 6.1.1.2, SDAE should not only to pay attention to Just-In-Time to reduce the
inventory cost, but also pay much attention to Just-In-Case (increasing buffer stocks of raw
material and components) to avoid any interruption of supply chain and material shortage.
Therefore, the inventory management is required to follow the dynamics and become more flexible,
pay close attention to the trade-off between inventory cost and risks of supply chain interruption.
For more materials imported from Germany and finished goods, the warehouse needs to be
improved.

6.2.1 Maximize the stock capacity of the warehouse

Not only does SDAE need to maximize the utilizing of warehouse space in horizontal
direction, but also utilize the space in vertical direction. Due to the issue in terms of safety, some
training for employees including forklift drivers should be organized.

6.2.2 Make use of idle area within the plant

Unused areas and idle spaces within the plant can be utilized for temporary warehouse, in
which additional lots of CKD material could be stored.

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6.2.3 Renting external warehouse to overcome the difficulties in terms of supply chain

As analyzed in chapter 5, Kulim is an ideal location which is near to both Penang Port and
Bayan Airport in Penang, and there is no shortage of warehouse services. In the short terms at least,
SDAE can rent one or more external warehouses which meet the requirements of BMW AG. This
will help overcome the difficulties of supply chain interruption and raw materials shortage.

7. Conclusion

Sime Darby Auto Engineering Sdn. Bhd. (“SDAE”), as a company who focus on
globalized development, during the COVID-19 pandemic, it shows a professional and well-trained
attitude to make changes in its operation management actively. The implementation of operation
management methods and theories helps SDAE overcome the difficulties brought by COVID-19
and survival in the automobile industry. To deal with the issues of supply chain especially in
logistic and inventory management, the SDAE improved its inventory capacity mainly through
maximum the stack capacity of engine racks and make use of space available at assembly area in
its own warehouse. And SDAE also cooperate with the third party warehouse located on rational
layout where not only extends the inventory capacity but also dispatches effectively.
Besides the inventory capacity, SDAE also improved its visualization of logistics planning
and material movement. Based on the normally using of Enterprise Resource Planning (ERP)
system, a new manual board was developed to track the material as soon as it arrived Penang Port
for advanced planning purpose. The implementation of these methods solved the issues caused by
irregular logistic and help SDAE achieving logistic operational excellence. In terms of the daily
operation, SDAE reinforced the COVID-19 standard operation procedure(SOP) based on national
standards and enforced the SOP strictly in daily operation to ensure “zero infection” in workplace.
And in order to achieve the high daily output production strategy, Overlap Shift was introduced to
ensure the production operation could be run for a longer working hours to produce more daily
output.
As a result of the implementation of improved operation management, SDAE has achieved
effective and efficient operations during COVID-19 pandemic. But to achieve operational

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excellence, SDAE still faces with lots of challenges. The supply chain is still vulnerable and even
broken, the current pandemic all over the world may lead the standstill of logistic, distribution, etc.
at any time. And so far, SDAE’s inventory management just can remain normal, but if more there
are more inventories storage demand, SDAE has to seek for more warehouses. Besides, SDAE
locates in an industry area, even the SOP of SDAE is operated well and strictly, but if cases occur
in other nearby companies, SDAE also faces with the risk of standstill. So SDAE should figure
out the other rational layouts to deal with possible threats. And because of the additional SOPs,
the costs are also increasing, so SDAE should also try to control the costs to a lower level. In
conclusion, for now, SDAE has implemented an effective operation management to cope with
current situation during COVID-19 pandemic which deserves referred by other companies,
however in terms of possible threats will occur in the future, SDAE still has low risk resilience to
unpredictable emergencies which also existing among similar companies. But we believe that the
SDAE has confidence to improve better and gets through the tough time by exploring more
operation management theories.

8.Contribution Value

According to the latest report, the positive cases of COVID-19 is still increasing not only in
Malaysia but also all over the world, and the situation still cannot be controlled effectively.
Therefore, in terms of companies are struggling with negative impacts brought by COVID-19, it
has profound significance to understand the operation management.
This project aims to help companies suffer from the COVID-19 pandemic understanding how
operation management theories and methods can be used into practices to survive from the tough
time. Based on the case of SDAE, the project combines theories of supply chain management,
inventory management, process design, capacity planning, etc., with practices in SDAE’s
operations, explains the advantages and disadvantages of SDAE’s operation management. It’s
hope that the case can serve as a model of effective operation management during pandemic to
other companies especially the manufacturing companies. And the project further introduces some
recommendations which are committed to help companies improving operation management.

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9. References

Sime Darby Motors’ Official Website. (n.d.).

https://www.simedarbymotors.com/our-businesses/assembly

Ministry of International Trade and Industry’s official website; Review of National Automotive
Policy (n.d)
https://www.miti.gov.my/index.php/pages/view/1449

National Recovery Plan (NRP) Official Portal untuk Negeri Kedah. (n.d.).

https://pelanpemulihannegara.gov.my/kedah/dashboard.html.

Heizer, J., Render, B., & Munson, C. (2019). Operations Management: Sustainability and

Supply Chain Management (13th ed.) [E-book]. Pearson.

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