Analyzing Factors That in Uence Maxell Tohshin (Malaysia) Sdn. Bhd. Satisfaction Towards Suppliers

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Analyzing factors that inﬂuence Maxell Tohshin (Malaysia) Sdn. Bhd.

satisfaction towards suppliers.
Thesis · August 2015

DOI: 10.13140/RG.2.1.2336.4081
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ANALYZING FACTORS THAT INFLUENCE MAXELL TOHSHIN
(MALAYSIA) SDN. BHD. SATISFACTION TOWARDS SUPPLIERS.
SITI SURYATI BT BAHARI

(2011737473)
1
NOORHAFIZAH BADALEHSHAH
(201170253)
Table of Content Pages
Acknowledgement i
Executive Summary ii
CHAPTER 1: INTRODUCTION 1
1.1 Background of the Industry 2
1.1.1 Background of MTM 2
1.1.2 Product and services 3
1.1.3 Background of study 4
1.2 Statement of Problem 5
1.3 Objective of the Research 7
1.4 Research question 8
1.5 Scope of study 8
1.6 Significant of the study 8
1.7 Limitation of the study 9
1.8 Definition of terms 9
CHAPTER 2: LITERATURE REVIEW 11
2.1 Supplier Management 11
2.2 Satisfaction of company 11
2
2.3 Supplier performance. 12
2.4 Supplier performance issues and concerns. 12
2.6 Cost of the product 15
2.7 Delivery Performance 15
2.8 Quality Performance 16
2.9 Services Performance 17
2.9 Supplier Evaluation Matrix (SEM) 18
2.10 TOWS Matrix 19
CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY 20
3.1 The Research Design 20
3.2 Data Collection Method 20
3.3 Sampling Method 24
CHAPTER 4: ASSESSMENT AND FINDINGS 28
4.1 Reliability analysis 28
4.2 Demographic profile 29
4.3 Means and standard deviation of the important elements in
satisfactions of MTM towards suppliers. 31
4.4 Ratings score for MTM satisfaction 32
4.5 Means and standard deviation on MTM satisfaction towards cost. 33
4.4 Means and standard deviation on MTM satisfaction towards quality. 34
3
4.5 Means and standard deviation on MTM satisfaction towards delivery. 35
4.6 Means and standard deviation on MTM satisfaction towards service. 36
4.7 Means and standard deviation on MTM satisfaction towards environment 37
CHAPTER 5: ANALYSIS & FINDINGS 38
5.1Supplier Evaluation Matrix (SEM) 38
5.2 TOWS Matrix 41
CHAPTER 6: CONCLUSION AND RECOMMENDATION 44
REFERENCES 55
APPENDICES 58
LIST OF TABLES
Table 3.2 Section in survey question 21
Table 3.2.1 Summary of past supplier study 22
Table 3.3 Date of distributed and collected questionnaire 25
Table 3.4 Research objective and academic tools used. 27
Table 4.1 Indication table for Cronbach Alpha. 28
Table 4.1.1 Reliability Analysis 29
Table 4.2 Distribution of the respondents at MTM Sdn. Bhd
4
By demographic factors. 30
Table 4.3.0 Indicator for mean level. 30
Table 4.3.1 Means and standard deviation of the important elements
in satisfaction of MTM. 31
Table 4.4 Ratings score for satisfaction 32
Table 4.5 Means and standard deviation on MTM satisfaction
towards cost. 33
towards quality. 34
towards delivery. 35
towards service. 36
towards environment. 37
Table 5.1 Supplier Evaluation Matrix (SEM) 39
Table 5.2 TOWS Matrix 41
LIST OF FIGURES
Figure 3.1 Academic construct frameworks for MTM satisfaction towards its
suppliers performance. 26
5
CHAPTER 1
INTRODUCTION
A global economy is emerging end resources are becoming concentrated on

core business activities rather than diversification, which is why there is a move
towards outsourcing. As a result, outsourcing increased from $91 billion to $416
billion in the last 20 years (Tunstall, 2002), and it is expected to increase further. In
2009 the value of outsourcing deals alone in the logistic area were estimated to be
$80 billion (Hyatt, 2009). Due to the liberal use of suppliers, buying companies have
to rely on their suppliers to deliver defect free product in a timely and cost effective
manner. Customer satisfaction is a key factor in formation of customer‟s desires for
future purchase (Mittal & Kamakura,2001). Furthermore, the satisfied customers will
probably talk to others about their good experience. Although satisfaction has been
defined as the difference between expectation and performance, but there are
differences between satisfaction in element of cost, delivery, quality, services and
environment regulation. For example, Parasuraman et al. (2003) say that satisfaction
is a decision made after experiences the supplier offered. On the other hand, in
satisfaction literature, expectations for goods is “would”, while in service and quality
literature, expectations for goods is “should”. another group of factors known as
neutral factor say that experience is needed for evaluating the cost, delivery, quality,
services and environment regulations can be evaluated on the basis of the
knowledge about service provider, while satisfaction is an inner view, resulted from
customer‟s own experience to gain the desirable requirement. In return, firms expect
significant benefits from contraction with suppliers offering high value.Based on the
research findings, the customer satisfaction plays the role of a mediator in the effects
of supplier improvement action in order to fulfill the customer requirement. These
6
findings are further explored the element of satisfaction for the MTM Sdn Bhd,
towards its supplier according to survey.
1.1 Background of Industry
In Malaysia, the manufacturing industry started in late 1970s. The government

introduced First Industrial Master Plan (IMP1) to transform Malaysian economy from
agricultural-based to manufacturing-based industry. However, in year 1996 to 2005,
the „Second Industrial Master Plan‟ (IMP2) is formed to drive Malaysian
manufacturing industry from low-value added, cost competitive to high-value added
operations. The activities include logistic, marketing, services and R&D. Due to this
interesting scenario which is the development of manufacturing industry for almost
two decades, the researcher and the authors believe that it is necessary to identify
the practical method and practice for supplier selection criteria in Malaysia especially
in the manufacturing sector.
1.1.1 Background Of Maxell Tohshin Malaysia Sdn. Bhd. (MTM)
MTM was formed in 1 January 2006. It is an integration of company between

Maxell Electronic(M) Sdn Bhd & Tohshin Precision(M) Sdn Bhd. MTM are a
subsidiary of Hitachi Maxell Ltd Japan, a member of the Hitachi group Companies.
MTM started with the Plastic Injection Molding of components for camera
parts such as manufacturing optical lenses, processing lens coating and assembling
of‟ Micro-Camera‟ lens unit. MTM also manufactured the 3.5 inch Floppy Diskettes,
assembling and certifying the DVD-RAMs, under the renowned name of Maxell. In
addition to this, MTM also punches Disk Sheets ‟(cookies) for the 3.5 inch floppy.
7
Maxell has been the leader, since 1961, in developing and introducing cutting- edge
products in the industry. The business began with dry cell batteries, the origin of the
company name "Maxell" was derived from the phrase, "maximum capacity dry cell",
which has now become a renowned brand name in superior optical and magnetic
memory media products. Since its inception, Maxell has always been devoted to
providing customers with the finest quality products and services through the most
advanced technological and innovative ideas. In order to keep pace with the ever-
changing needs in the current multimedia era, Maxell continues to uphold their
corporate mission: "To maximize memory capacity and mobility" by continuously
investing tremendous resources into research and development of key devices in our
fields of expertise: data, energy, and sound and Vision.
1.1.2 Product and Services
i) Injection Manufacturing Product- Lens Moulding
MTM believes that human‟s minds are the source of all progress. To respond
appropriately to the new wave of technology which is advancing rapidly day by day,
MTM employs a seasoned staff of professionals who are highly skilled in their
respective fields that work in modern plants equipped with highly advanced facilities.
As a result, they have built up a strong position as a pioneer of the industry. High-
quality products produced are due to support by a totally reliable manufacturing
system and successful marriage between the dreams of the engineers and the
creative power of the production technology.
ii) Mold Die Making
As a company that‟s in touch with the future, Maxell is supported by the

cooperative activities of creative people working in an environment conducive to
8
creativity. Over the years, they have developed an aptitude for solving technical
problems and flair for original design. These talents are complemented by a
consistent production system that utilizes sate-of-the-art technology. Backed by the
rich human and technology resources they can confidently count themselves among
the world‟s leaders in the field of advance production.
iii) OPTO Component Manufacturing –Optical Component
In the optical component, MTM particularly emphasise on mini camera lens unit
such as L35, L248, and optical pickup lenses. They have already commercialized
those products and sales volume are increasing. The optical design and
development capabilities, with high production capacity and fully integrated design
system are the strong advantages for the Maxell Groups.
With these advantages, Maxell Tohshin enables to rapidly produce highly

functional products. The uses of optical components are expanding in line with the
technological advances. In particular, MTM expect increasingly heavy demand for
camera lens units, which is needed for cellular telephones and others data terminals
with the cameras, industrial production equipment, and automobile.
1.1.3 Background of study
The case study of this research is centered on Maxell Tohshin Malaysia Sdn
Bhd. (MTM; one of the companies who specializes in electronic product, reported to
Hitachi Maxell Limited (HML), Japan. As today‟s Maxell Tohshin (M) Sdn. Bhd.
(MTM) focus on their core competences, and supplier commitment and performance
which influence MTM satisfaction towards the element of quality and cost
improvement, delivery performance, services, and environment and meet ever-
increasing competition. Therefore, this research is mainly to explore, observe, and
9
analyse, the Maxell Tohshin Malaysia Sdn Bhd satisfaction towards its supplier and
how this organization can together cooperate with the supplier to improve their
performance in order meet the customer satisfaction. The outcome could help to
strengthen MTM position in electronic product, in order to achieve the company
goals.
1.2 Problem Statement
Satisfaction of customer in terms of meeting up with their time schedule, their

specified requirements and many other challenging issues, suppliers more often get
blamed for non-compliance and customer dissatisfaction; yet at least fifty percent of
the root cause of the problem is non-communication between the customer and the
supplier. Clearly defined requirements help to communicate performance targets for
suppliers which can lead to inventing a way to strengthen the relationship between
the customer and the suppliers, Omokehinde Solomon (2013).
According to Koppelmann (2000), the procurement team of a company need
to specify their needs and requirement before supplier identification. Therefore, the
procurement team of MTM can consider and search for potential suppliers who can
deliver the desired procurement objectives.
This is the process whereby the procurement team of MTM will identify,
evaluate and contract the suppliers. According to Beil (2009), the supplier selection
is one part of the value chain that is considered to deploy tremendous amount of an
organization‟s resources. For this reason, much is expected from the supplier in
terms of high value in delivery, quality, cost, services and environment. These are
part of what is today called supply management in the supply chain management
function in an organization.
Ariba (2013) define Supplier Performance Management (SPM) facilitates the
definition, measurement and collaborative enhancement of supplier performance to
10
meet business needs, improve supplier relationships, and minimize risks within the
supply base. Typical criteria for supplier performance could be price structure,
delivery which entails timeliness and cost, product and services quality. It is the
ongoing process of evaluating process to find a supplier of essential goods and
services required in an organization for normal operations.
However, according to Ms Tan Bon Ai, the purchasing manager, MTM
management, in the procurement team area is currently facing difficulty with some of
the current supplier because they unable to fulfil the company demand. Due to this, it
causes interruption to the manufacturing plan which will directly affect the company‟s
performances. MTM is very concern on services performance, environment, delivery
performance and quality o its supplier. The suppliers have to meet certain standard
to comply with the Hitachi Maxell Limited (HML) requirement and to avoid any
interruption that effect production in MTM business.
Through the supplier performance, one of the common scenarios that exist in
MTM is quality, which is based on track record; the total rejected item has increased
substantially. Due to this issue, MTM consumed extra time for sorting activities and
will affect the company performance. The prices offered by the suppliers keep
increasing according to the market price, due to the fluctuation of market price,
especially for the commodity item, such as resin. In delivery element, MTM need
supplier to proceed the delivery according to the schedule to avoid any disruption of
the company operations and affect its performance. The actual scenario under
quality element can be view through the MTM Sdn Bhd „Supplier Quality
Performance‟ report which the quality issue at MTM recorded individually by its
supplier. The percentage nearest with 0.02% within 2 months.
Besides quality, MTM is also facing problem with uncontrollable cost of the
product from the supplier. The prices offered by the suppliers are not satisfactory to
MTM. This is due to the prices offered which can be considered high and still
increasing. Hence, MTM need to negotiate with the supplier. Somewhere in October
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or November, MTM will send the cost down letter to supplier and try to get the
response before a certain date. Based on the result, not all the supplier gives a good
response due to market price which is not flexible, especially for the commodity item,
such as resin. Mr Peter Teo, the general manager of MTM Sdn Bhd did forward the
„Cost Down‟ letter to the supplier,somewhere in October 2013 for their consideration
of cost reduction due to the current economy situation is very tough and challenging,
The desirable prices can obtain the satisfaction for the MTM management and the
selling prices to the MTM Sdn Bhd customer as well.
In order to achieve company objectives, MTM needs a strong and consistent
support from their suppliers. MTM procurement team deal mostly with its major
supplier. For instance they prepare the documentation, choosing the correct supplier
for each material and follow up with the supplier in order to ensure that they follow
the agreed due date. This is to ensure success in business by producing quality
product and cost effective. Based on the records, the delivery from the supplier is
„out‟ from the schedule. One of the examples is the incoming from Hitachi Hi-Tech,
which were late deliver in almost 3 weeks after the due date. Committed date from
the supplier is very important because supplier helps to improve an organization‟s
performance by follow the incoming schedule for the customer.
Hence, this research is to find the MTM satisfaction towards their suppliers as
in this case, MTM Sdn. Bhd, Batu Berendam Melaka.
1.3 Objective of the Research
i) To identifies factors that influence MTM Sdn. Bhd. satisfaction towards suppliers.
ii) To identifies competitiveness among major suppliers at MTM Sdn. Bhd.
ii) To recommend strategies to increasing satisfaction of MTM Sdn Bhd towards its
supplier.
12
1.4 Research question.
1. What are the factors that influence the MTM Sdn. Bhd satisfaction towards the
supplier?
2. What is the competitive position among the major supplier of MTM Sdn Bhd?
3 What are the strategies that can be used by MTM in increasing its satisfaction
towards its supplier?
1.5 Scope of Study

The study was conducted in Maxell Tohshin industries located on plot industries area
Batu Berendam, Melaka. 60 questionnaires were distribute to employees of MTM,
who are involved in the procurement process and have close interaction with the
suppliers.
1.6 Significance of Research
This study will be served as an input for a better understanding to

manufacturing industry especially MTM Sdn. Bhd. In addition, the researcher can
investigate the key variables that influence the industry‟s development in suppliers
performance from the perspective of employees. This study also aims to contribute
towards better understanding about supplier performance and its effect on
procurement process. The research study has been carried out to identify several
significant outcomes. They are as follows;
1.6.1. The outcomes of this study will help the MTM Sdn. Bhd. to improve supplier
performance.
1.6.2. The outcomes of this study will assist the existing industry to conduct future
study to review the supplier performance.
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1.6.3. The outcomes of this study will help facilitates the researcher to gain
experience in the research work.
1.6.4 The outcomes of this study will act as repository wealth of knowledge for the
university.
1.7 Limitations of the Study
The study is limited by convenience sampling methods were used due to

unavailability of a sampling frame. The survey was carried out only in MTM, Batu
Berendam, due to time constraint which causes problems to generalize the results to
the whole population.
The Competitors information is only gathered from the secondary data which is in the
websites.
1.8 Definition of Terms
Satisfaction- an act of satisfying; fulfillment; gratification.
Perception - is the organization, identification and interpretation of sensory

information in order to represent and understand the environment.
Employees- An employee contributes labor and/or expertise to an endeavor of an

employer and is usually hired to perform specific duties which are packaged into a
job. An Employee is a person who is hired to provide services to a company on a
regular basis in exchange for compensation and who does not provide these
services as part of an independent business.
Criteria Is a principle or standard by which something may be judged or decided.
14
Supplier A party that supplies goods or services. A supplier may be distinguished
from a contractor or subcontractor, who commonly adds specialized input to
deliverables. Supplier also called vendor.
Business Performance This relates to the business‟ independent criteria to assess

its overall outcomes, in relation to its own goals.
Business Strategy is the means by which it sets out to achieve its desired ends
(objectives). It can simply be described as a long-term business planning. Typically a
business strategy will cover a period of about 3-5 years (sometimes even longer).
Supplier Performance Management (SPM) is a business practice that is used to

measure, analyze, and manage the performance of a supplier‟s performance in an
effort to cut costs, alleviate risks, and drive continuous improvement. The ultimate
intent is to identify potential issues and their root causes so that they can be resolved
to everyone‟s benefit as early as possible
A free trade zone (FTZ) is a specific class of special economic zone. They are a
geographic area where goods may be landed, handled, manufactured or
reconfigured, and reexported without the intervention of the customs authorities.
ISO- International Organization for Standardization
An organization, the International Organization for Standardization, that sets

standards in many businesses and technologies, including computing and
communications.
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CHAPTER 2
LITERATURE REVIEW
2.1 Supplier Management

Supplier management are defined as a series of activities, which comprise of
planning, implementing, developing, and monitoring company relationships with
current and potential supplier. It functions to organize the optimal flow of high quality,
value for money materials to manufacturing companies from a suitable set of
innovative supplier (Wagner, 2003). An involved management practice includes
establishing a systemic process that involves people; providing appropriate level of
empowerment and an interdependent organization structure. The core practices
required are usually information sharing, skill of supplier, accountability and
processes (Krause et al., 2000). Supplier management practices are important for
suppliers' performance as they served as motivations for further commitment.
2.2 Satisfaction of company

No one can observe directly how satisfied a person is with a certain situation
or procedure. One can, however, ask this person to verbalize the psychological
processes they are experiencing. However, it is clear that non-formalized information
on the mental processes of different reference persons is difficult to compare and, as
a result, would be very difficult to express in objective terms, if the assumption did
not seem justified that the same phenomena are effective in the psyche of all people
although the intensity and levels of these vary between individuals.
The theoretical construct of company satisfaction is a complex phenomenon which
can be broken down into attribute components and dimensions. To establish these,
researcher have analyzed existing studies on the basis of theoretical considerations.
On the basis of these data, the MTM satisfaction towards supplier is determined by
several elements, Hardock and Ohwlein (2000).
16
2.3 Supplier Performance
In real practice, supplier performance is defined according to the objectives of
the buying organization (Wisner et al., 2009). These include accounting
measurement such as cost, first pass yield, asset management. Others prefer to use
a basket of integrated measurement including delivery reliability, responsiveness,
flexibility, cost, assets management efficiency, customer service, productivity and
quality (Supply Chain Council, n.d.; Gunasekaran et al., 2001; Lambert and Pohlen,
2001). In this study, we will focus on three supplier performance metrics, which are
quality, cost, delivery, services and environment.
2.4 Supplier Performance Issues and Concerns

Performance of suppliers is an important issue to a manufacturing in meeting
the customer needs. In addition, the selection of a raw material product is equally an
important problem and could involve many criteria, including the technical
requirements of service specifications and cost, etc. Not only the equipment cost, but
also the cost of operating the equipment, cost of equipment maintenance, upgrade
and support costs, need to be considered in selecting a particular system. It is
important to consider these cost factors carefully to ensure the low cost delivery of
service. Similarly, performance related criteria such as reliability, availability and
service ability must also be assessed to meet the service levels as set in service
specifications and to increase customer satisfaction, Supplier Performance
Monitoring (2014).
According to a number of studies, supplier performance is measured by
various criteria. Several key competitive factors were broadly used to assess the
supplier performance. For examples, product quality, delivery performance, price,
physical distribution, services, flexibility, relationships are considered to be important
factors for measuring the supplier performance (Simpson, et al. ,2002; Prahinski and
17
Benton, 2004; Modi and Mabert, 2007; Humphreys et al, 2004; Gil and Ramaseshan,
2007). The supplier performance improvement was used as the key indicator for the
success of supplier development strategies (Watts and Hahn, 1993). Based on the
review of previous work and field interview with the purchasing managers in
electrical components industry, this study focuses on MTM Sdn Bhd satisfaction
towards its supplier.
2.5 Supplier Development
A number of studies have described strategies that buying firms should adopt
in order to improve the rate of supplier performance (Monczka et al, 1993;
Vonderembse and Tracey, 1999; Carr et al, 2008; Krause, 1997). Previous
researches addressed that organizations increasingly involved in supplier
development programs to improve their supplier performance and build competitive
advantage (Modi and Mabert, 2007; Alaez-Aller and Longas-Garcia, 2010). Supplier
development was defined as any effort of a buying firm on a supplier to increase the
performance and capabilities of the supplier to meet the buying firm’s short and /or
long-term supply needs (Krause and Ellram, 1997b). According to Krause, et al
(2000), the supplier development strategies were categorized into two groups as
follows;
Externalized supplier development strategies represent externalized activities

or indirect supplier development (Monczka et al, 1993) that buying firms employ
external market to encourage supplier performance improvements. These strategies
encompass with competitive pressure, supplier evaluation and supplier incentives.
Competitive pressure is the strategy to create competition among suppliers in

terms of quality, delivery or some area of supplier performance required by buying
firms (Modi and Mabert, 2007).
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Supplier evaluation is the strategy to effectively evaluate and give feedback on
supplier improvements, and ensures the perception of suppliers on their current
performance compared with the buying firm’s expectations and its competitors as
well as motivate suppliers to improve their performance (Modi and Mabert, 2007,
Prahinski and Benton, 2004).
Supplier incentives is strategy encourages suppliers to improve their performance

including increased business volume, priority consideration for future business, and
recognition of good supplier performance in the form of awards or certificate
(Monczka et al, 1993, Krause and Ellram, 1997b).
Internalized supplier development strategy which is the direct involvement strategy,

represents a direct investment of the buying firm‟s resources in the supplier or direct
supplier development (Monczka et al, 1993). Direct involvement is the strategy to
engage buying firms into the supplier development activities such as providing
training and education for the supplier‟s personnel, allocating the buying firm‟s
personnel to the supplier site, having representatives of suppliers in our product
design teams (Vonderembse and Tracey, 1999) including investing in capital and
equipment in relation to supplier operations (Monczka, et al., 1993) However,
according to the previous works, the competitive pressure was not found to be a
major factor for improving supplier performance (Krause et al, 2000; Modi and
Mabert, 2007). Therefore, this study focuses on the externalized or indirect supplier
development strategies, including supplier evaluation and supplier incentives.
19
2.6 Cost of the product
One of the main criteria when choosing a supplier is their price or cost of the
product. Price is one important supplier performance elements used in traditional
approaches. Price have often been given the main emphasis; “the choice of lowest
price is perhaps one of the most defined characteristics in purchasing”. It is important
to analyse the total purchase cost which include ordering, transport and inventory
cost as well as the potential for prices reduction.
Cost criteria is the most obvious cost associated with a product such as
purchase prices, transportation prices as well as taxes. Operational expenses may
also be included for instances transaction processing and cost rejection (Kahraman
et. al., 2003).
Normally, the total cost is related to the quality, delivery, and services and is
expressed as proportions of firms purchase prices. To look at the data of existing
supplier and fix the ideal prices is one of the alternative approaches. Besides that,
the lowest prices offered by the supplier with the desirable quality are one of the
points for consideration (Lasch et.al 2005).
2.7 Delivery Performances
Delivery is one of the factor and important elements for the company
satisfaction towards supplier performance. It is the first thing considered if the
provider requires a minimum order to work with them. Delivery which is rated the
third most important by the Chinese manager is also the next most important
criterion (Chao et.al., 1993). Delivery is top element according to Lehman et.al.
(2004).
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Beside technology and quality, delivery is also important in overcoming the
“upstream” uncertainties, such as supplier default on delivery and performance, high
cost production, and quality reject (Ndubisi et. al. 2005). Delivery is divided into three
which are compliances with quantity, due date and packing standard. Compliances
with quantity refer to the supplier‟s compliances with the predetermined order
quantity within the tolerances limits. Benyoucef, et al (2003) found that compliances
with due date is the supplier‟s compliances with predetermine order due date within
the tolerances limits while compliances with packaging standard means the supplier
compliances with the packaging such as dimension and labelling.
2.8 Quality Performance
There a few number of supplier performance elements but quality is one main
to be considered when looking into satisfaction towards supplier. According to Goffin
et.al (1997), quality looks at the conformances point of view such as if the supplier‟s
quality sample met the current required level, and whether this is acceptable. In
order to select a supplier, an organization should not only look at the quality but also
at the quality records. Quality record is best defined as their potential for further
improvement.
It is found that quality is more important compare to the technology, cost and
delivery performances. Chao et al (1993) states that quality and prices combined
were rated as the most important elements in the elements of satisfaction towards
supplier. Quality however, is rated as top among the three factors. In the other hand,
Kahraman et. al. (2003) found that the quality is based on the degree in which it is
related to customer requirement, developed with inputs from a consensus with work
group, specific, easy to understand, practical to implement and able to drive desired
21
behaviour. Quality focuses on the product attributes such as failure rate and
durability.
2.9 Services performance
A firm should always include services criteria in its evaluation. While

assessing the fitness of services, a firm may need to examine four areas in customer
support which includes accessibility, timeliness, responsiveness and dependability.
Customer satisfaction is also value-added. Follow up services also need to be
considered to keep customer informed and verify their satisfaction. According to
Kahraman et. al (2003), another service criteria to be considered is professionalism
which refers to knowledge, accuracy, attitude as well as reliability.
According to Chao et.al (1993), services or responsiveness is an important

criteria placed by the Chinese managers in Malaysia. Service includes additional
item such as after-sale services (Lasch et.al 2005). Post-sales primarily evaluate the
supplier guarantees given and what the guarantee period. After-sale services also
refer to the training of supplier.
Celebi & Bayraktar (2008) pointed out that service are defined sub-
performances measures such as responsiveness, flexibility, dependability and
technology. Responsiveness refers to the degree of cooperation shown by the
supplier, while flexibility is the supplier‟s ability to support changes. Dependability is
the suppliers overall ability to make constant improvement in quality, cost, and
delivery as well as loyalty during difficult time. Finally technology defines as the
supplier‟s ability to advance the state of the art in its products.
Services also include personal manner of supplier such as how nice his
secretary is when purchaser are calling to order or complaint, and how does the
22
employees of the supplier bother to inform the company of important information.
Special offer, gifts on holidays, sends “hello” now and then can also be considered
as other parameter under services.
2.10 Supplier Evaluation Matrix
According to Debra. L Stubbings (1999) evaluation & measurement of

Supplier's performance is an intricate part of a business relationship. This
presentation will show the How, What, What & Who of Supplier Evaluation, across
many aspects of a business relationship, putting into effect the "What gets
measured, gets done" concept. It is an extremely important management tool for
those using Strategic Alliances, Partnering or Supplier Development.
Supplier assessments provide an opportunity to view a Supplier's
performance across many aspects. When applied to many Suppliers across several
categories it will allow each rating to be compared to a best in Class Achievement. In
this way, researcher can actually create competition between Suppliers without
having the Suppliers compete in the same industries or categories. Assessments or
Evaluation Matrixes are used predominantly to establish a means to accurately
assess Suppliers or Business partners and provide a framework for ongoing Supplier
Development and effective Supplier.
Matrixes are not intended to be used for all Suppliers, only those within your
Supplier Development Program, however an organisation should measure Delivery
and Quality performance for all Suppliers. The data is collated by the Purchasing
department with input from Quality and Production regarding their specific areas.
The Matrix can then be used to further improve the Business relationship across
many broad areas, and becomes the driver for ongoing Cost reduction programs. A
typical example of a Rating System. There are four key areas in the Matrix which is
cost, quality, delivery, services, and environment.
23
2.11 Threats, Opportunity, Weakness, Strength (TOWS) Matrix
TOWS application is analyzing a situation, that from the threats to a plan and
the opportunities available at the time. It allows evaluating the limitations and
opportunities of position before identifying weaknesses and strengths. TOWS can be
used when to discover competition has expanded its product line, for example, and
want to develop a response. It is particularly useful in evaluating the potential impact
of sudden events or developments. It is an matching tools used to identify and
understanding company‟s internal factor consists of company‟s strengths and
weaknesses and external factor which is the company‟s opportunities and threats
(Fred, 2007)
In this study TOWS analysis has been used in a way to know what is the
relationship between threats, opportunities, weaknesses, and strengths. Four types
of strategies which are SO (strengths-opportunities), WO (weaknesses-
opportunities), ST (strengths-threats) and WT (weaknesses-threats). SO strategies
use the strength of the company to take advantage on the external opportunities.
WO strategies focus on improve the company‟s weaknesses to capture the external
opportunities. ST strategies use the strength of the company to avoid or reduce the
threats that face by the company. WT strategies are reducing the company‟s
weaknesses as well as avoiding the external threats.
According to H.Weihrich English (2003), word threats (in the environment),
Strength (of the organization) should be placed in this order to make the emphasis
on problem solving sequence in the process of strategy formulation.
24
CHAPTER 3
RESEARCH DESIGN AND METHODOLOGY
3.1 The research design
This chapter will focus on discussion about the research design and
methodology. The research employed and utilized descriptive research design.
According to Greener, 2008 the choice of these designs was informed by the ability
of descriptive method to profile respondents categorically. Evidence from Adams,
Khan, Raeside and White (2007), Remenyi (2002 & 2005), and Pallant (2005) have
demonstrated that survey-based research which required grouping is best organized
and analyzed with descriptive approach.
First step in conducted the research started with the development of problem
statement based on secondary data sources from purchasing department and
administrative department report 2014.
Second step is development of Supplier Evaluation Matrix (SEM) in
comparing the key elements of MTM satisfaction towards its suppliers.
Last step is development of Threats, Opportunity, Weakness, Strength
(TOWS) Matrix as strategic matching tools use to formulate strategies which then
can propose some recommendations from the strategies for MTM in improving their
satisfaction towards suppliers performance.
3.2 Data Collection Method

The crucial method while gathering the information is the data collection
method. The researcher need to determine the relevant and right data gained for
better understanding of the problem at hand.
25
3.2.1 Primary Data Sources
One of the types for the primary data sources is the survey, which the
researcher has distributed to respondents who work at MTM. The researcher also
interview the purchasing manager Ms.Tan Boon Aii to get the real situation that MTM
is facing currently.
3.2.2 Survey
All the respondent‟s answers and perceptions are gathered to get the relevant
information in the survey question. A survey is a question which can extract
information that the researcher requires. The use of survey in the study is to know
what are the criteria of a good supplier in the case of MTM Batu Berendam.
Table 3.2 : Section in survey question

Section
A The researcher want to know the background of the respondents –
Demographic Profile gender and position in MTM.
B Element in MTM Researcher wants to know elements of supplier needed by MTM to

Satisfaction towars fulfill their satisfaction.
suppliers
26
C: The employees of MTM in a few departments which is puchasing,
Satisfaction towards and administrative are choose as the respondents. They were
suppliers performance. requested to rate the level of satisfaction for each the order MTM
satisfaction towards suppliers based on a five-point Likert scale.
The respondent need to answer through rating from 1-5.
1- Very unsatisfied
2- Unsatisfied
3-Neutral
4- Satisfied
5- Very unsatisfied
Statements of questions in section three of this research questionnaire have been

constructed based on the sample questionnaires done by other researcher in
satisfaction towards suppliers and supported by literature review in chapter two in
this research.
Table 3.2.1 Summary of past suppliers study
Hartley et. al ( 2005) Price is one of the important element in supplier
Kumar et. al (2009) Price, transportation cost, quality, goodwill reliability,

experience, lead time, and buffer stock.
Sim et. l (2010) Cost, quality delivery, service and supplier relationship.
Garfany (2011) Cost, quality, service, organization relationship and cycle

time.
27
Wagner et. al (2003) Innovative supplier
Krause et. al (2000) Information sharing, skill of supplier, accountability process.
Hardock Petra (2000) Relationship building for satisfaction.
Yushan Zhao (2006) Supplier involvement influence buyer satisfaction and trust.
Wisner et. al (2009) Objective of buying in organization.
Gunasekaran et. al Basket of integrated measurement delivery reliability,

(2001) responsiveness, flexibility cost, assests management
efficiency, customer service, productivity, and quality.
3.2.3 Secondary Data
Secondary data is the data that has been already collected for some purpose
and readily available from other sources. Such data are cheaper and can be located
quickly obtainable rather than the primary data. Secondary data can be divided into
two categories.
3.2.2.1 Internal Sources
Internal secondary data were collected at procurement department and

administration of the organization itself. The researchers get some information of the
business activities and staff experienced in the organization (administrative
department). Its help in provided necessary information to support the study
especially in developing the research problem statement. Corporate material and
newsletter from Hitachi Maxell (HML) homepage were also used to get information of
the company.
28
3.2.2.2 External Sources
The external sources of secondary data are information from the books,
journals, articles, newspapers and website. From these secondary data, its help
researchers in getting information on the current issues and also give supporting
idea in the literature review part. Several books are used as references to organize
this study in especially in understands the academic tools use in this research.
Journals and articles from Emerald insight, Pro-Quest and Ebscohost give much
information on the past study and research regarding the study in the same topic.
Researcher also gets the information regarding the studies from the website like
Google, Yahoo, Wikipedia and others bank website.
3.3 Sampling Method
3.3.1 Sample
Sample population in the study were the Maxell Tohshin (Malaysia) Sdn. Bhd,
Batu berendam Melaka.
3.3.2 Sample Technique
The researcher used the probability convenient sampling technique due to it is

most convenient, least expensive and least time consuming reasons. The sample of
study has consisted 50 respondents from 50 sets of questionnaires. The
questionnaires have been given for satisfaction of MTM towards suppliers
performance, Batu Berendam. Permission were gained from place and the
distribution were conducted as follows:
29
Table 3.3 : Date of distributed and collected questionnaire.
Date of questionnaire Date of questionnaire

No. Premise Time
has been distributed has been collected
Maxell Tohsin
(Malaysia) Sdn. Bhd. th st
1. 20 Octoberr 2014 1 November 2014 10 days
Batu Berendam,
Melaka
3.4 Procedure of Data Analysis
The Statistical Package for the Social Science (SPSS) 12.0 has been used to
analyze the data from the questionnaires. The result from using SPSS will be
reported in the form of frequency, means and standard deviation. The researchers
use frequency analysis in order to determine percentage of demographic profile of
the respondents from the probability convenient sampling technique. Mean been
used to interpret data from the SPSS output because mean show the average of a
set of figures. Standard deviation explain on data average distance to the mean.
Supplier Evaluation Matrix (SEM) is constructed to compared and set as

benchmark on MTM‟S supplier‟s performance. This tool is important for MTM in
order to help them decide which suppliers are more competitive towards its
competitors.
Finally, TOWS Matrix is used to generate strategies for MTM so then MTM
will improve their satisfaction towards suppliers. The strategies then will be used as
basis for the research recommendations in Chapter Six.
30
Academic Construct Framework
Below are the academic flowchart and tools used by the researcher in conducted the
research:
Survey on MTM satisfaction towards its suppliers

performance.
Descriptive analysis
Suppliers Profile Matrix (SPM)
TOWS MAtrix
Recommendations and
Conclusions
Figure 3.1 Academic construct frameworks for MTM satisfaction

towards its suppliers performance.
Below is the academic tools used by researcher to answer the research objectives.
31
Table 3.4 : Research objective and academic tools used
No Research Objective Academic Tools
1 To identifies factors that influence MTM Sdn. Bhd. Descriptive Analysis

satisfaction towards suppliers
(SPSS)
2 To identifies competitiveness among major suppliers Supplier Evaluation

at MTM Sdn. Bhd. Matrix (SEM)
3 To recommend strategies and recommendations SWOT

which can proposed for MTM Sdn. Bhd. in order to
improve supplier.
32
CHAPTER 4
ASSESMENT & DATA INTERPRETATION
This chapter presents the result for the analysis of data obtained from the
respondents which had answered the questionnaires. Researcher used the
Statistical Package for Social Science (SPSS) to calculate and analyse the data.
Each data is presented in the form of tables and figures. All the results, findings and
interpretation are shown in this chapter. As mentioned in the previous chapter, an
employee at Maxell Tohshin Malaysia Sdn. Bhd. has been selected as research
respondents for this study. A total of 60 questionnaires were distributed to the
respondents and 50 questionnaires were returned.
4.1 Reliability analysis.
Table 4.1 Indication Table for Cronbach’s Alpha
Alpha Coefficient Range Strength of Association
<0.600 Poor
0.600 to <0.800 Acceptable
>0.800 Good
33
Table 4.1.1 Reliability Analysis
Study Variables Cronbach Alpha No. of items
Satisfaction towards suppliers 0.642 8
Quality performance 0.712 5
Cost (Price) 0.685 5
Delivery performance 0.657 6
Services 0.734 5
Environment 0.700 5
The reliability analysis above is based on the value of Cronbach‟s Alpha. It will
tell us how well items measuring the variables and positively correlated to another.
According to Sekaran (2003) stated the reliability less than 0.60 considered poor,
0.70 until 0.80 is acceptable and those over 0.80 are good. From the table, the
dependent variable MTM business performance is 0.859 which is considering as
high. Cost reading for Cronbach Alpha is the highest 0.734 with items were asked to
respondents referring to descriptive analysis for each elements.
4.2 Demographic Profile

The basic findings related to demographic profile of respondents in MTM
Sdn. Bhd. Base in Batu Berendam, Melaka in are given in table 4.2.
34
Table 4.2: Distribution of the respondents at MTM Sdn. Bhd, Batu Berendam,
Melaka by demographic factors
Demographic Categories Frequency Percents
Gender Male 28 56.0
Female 22 44.0
Position Staff level 23 45.1
Management level 27 52.9
The employees who handle with suppliers in MTM Sdn. Bhd. Batu Berendam
Melaka. 56% of the respondents are male while 44% of other respondents are
female. Majority of the respondent is at management level which is 27%. The
remaining is staff level which is 45.1%.
Next analysis will answer the research objective question number one which
the researcher want to identifies factors that influence MTM Sdn. Bhd. satisfaction
towards suppliers.
Table 4.3.0 Indicator for Mean level
Values Level
1.00 -- 2.33 Low
2.34 -- 3.67 Medium
3.68 -- 5.00 High
Source: Sekaran & Bougie (2013)
RO1: To identifies factors that influence MTM Sdn. Bhd. satisfaction towards
suppliers.
35
4.3 Means and standard deviation of the important elements in satisfactions of
MTM towards suppliers.
Table 4.3.1 Means and standard deviation of the important elements in
satisfactions of MTM towards suppliers.
N Mean Std. Deviation

Element
Statistic Statistic Statistic
DV Satisfaction Towards Supplier 50 3.52 0.839
Cost Of the Product 50 4.12 1.1
Quality Performance 50 4.3 1.093
IV Delivery Performance 50 4.48 0.931
Services Provided 50 4.08 1.104
Environmental Requirement 50 3.6 1.195
The mean score for overall satisfaction is 3.52 which is in „medium‟ level. It
shows that MTM suppliers need to focus more on their customer satisfaction
especially in MTM Sdn. Bhd. As per above result, under the „high‟ level of mean level
are cost, quality, delivery, and services. However, the „Delivery‟ performance of the
suppliers is the highest score 4.48. The highest level position is the major element
that contribute for the MTM Sdn Bhd satisfaction towards the supplier. Followed by
quality performance equal to 4.3. The third one is cost of the product offered by
suppliers which is score 4.12 and service offered by suppliers score 4.08 which
36
means that the elements of is under the „high‟ level as well. Elements of environment
score 3.60 which is in „medium‟ level, which is intermediate important elements for
MTM Sdn Bhd to achieve the satisfaction from the supplier.The elements of quality,
service, delivery and cost of the product support by studies Bhutta and Hug (2002)
which is satisfaction towards suppliers.
4.4 Ratings score for MTM satisfaction.
Table 4.40 Rating score for satisfaction
Values Level
1 Very Unsatisfied
2 Unsatisfied
3 Neutral
4 Satisfied
5 Very Satisfied
37
4.5 Mean and standard deviation on MTM satisfaction towards cost.
Table 4.5 Mean and standard deviation on MTM satisfaction towards cost.
Descriptive Statistics
Mean Std. Deviation
Statistic Statistic
Cost of the product 4.12 1.100
C1.Product offered at lower price 4.06 .913
C2.Free distribution /logistics cost 4.02 .958
C3. Free after sale service 4.06 .935
C4. Discount for bulk order 4.22 .840
C5. Discount for early payment 4.00 .969
Valid N (listwise)
Table 4.4 indicates the means and standard deviation for MTM satisfaction
towards cost offered by suppliers. The mean for the elements of cost is 4.12 and
standard deviation is 1.100. This is because it is one of the important elements in
satisfaction towards suppliers. Overall the score the elements of cost is satisfied.
Discount for bulk orders score the highest mean which is 4.22. Product offer at low
price and free after sale service score the same mean which is 4.06. The fourth
highest score is free distribution and logistics cost 4.02. Discount for early payment
is 4.00. All of the statement of elements of cost in satisfaction is being supported by
study Kotabe and Murray (2001).
38
4.6 Mean and standard deviation on MTM satisfaction towards quality.
Table 4.6 Mean and standard deviation on MTM satisfaction towards quality.
Descriptive Statistics

Quality 50 4.30 1.093
Q1. Meeting minimum standard 50 4.06 1.114
Q2. Long durability (life) of the
50 3.94 1.316
product
Q3. ISO Certified 50 4.00 .969
Q4. Low rejection and return rate 50 4.26 .777
Q5. Provide sample before product
50 4.00 .969
testing.
Valid N (listwise) 50
Table 4.5 is a mean and standard deviation on MTM satisfaction towards

quality. The mean for quality is 4.30 and the standard deviation is 1.093. Overall
under the elements of quality. The highest score is low rejection and return rate of
the product receive with the score 4.26. It also indicates that MTM satisfied regarding
low rejection and return rate. Secondly it followed by meeting minimum standard
which is 4.06. ISO certified and provide sample before product testing score the
same mean which is 4.00, satisfied. Below satisfaction is 3.94 which is long durability
(life) of the product. The elements of quality is important in satisfaction towards
suppliers. It being supported by study of Tracey and Tan ( 2001) and Bhutta and Huq
(2002).
39
4.7 Mean and standard deviation on MTM satisfaction towards delivery.
Table 4.7 Means and standard deviation on MTM satisfaction towards delivery.
N Mean Std.
Deviation
Delivery 50 4.48 .931
D1. On time delivery 50 4.36 1.045
D2. Short delivery lead time 50 4.14 .904
D3. Reliable delivery methods 50 4.16 .997
D4. Good packaging for delivery 50 4.14 1.107
D5. Product receive in good
50 4.44 .837
condition
D6. No error in product type and
50 4.32 .999
quantity
Table 4.6 indicate that means and standard deviation on MTM satisfaction
towards delivery. The mean for delivery is 4.48 which is in between satisfied and
very satisfied, and standard deviation is 0.931 which is close to 1 (important
element). The highest score is product receive in good condition with the score 4.44
(satisfied). Secondly followed by on time delivery by suppliers with the score 4.36.
No error in product type and quantity receive score 4.32 (satisfied). Good packaging
for delivery and short delivery lead time score the same mean which is 4.14.The
element of delivery is important for satisfaction towards suppliers and it being
supported by the study of Tracey and Tan (2001) and Bhutta and Huq (2002).
40
4.8 Mean and standard deviation on MTM satisfaction towards service.
Table 4.8 Mean and standard deviation on MTM satisfaction towards service

Services 50 4.08 1.104
S1.Prompt response to the inquiry/
50 4.18 .850
need
S2.Prompt response to the complaint 50 4.08 .986
S3.Professional knowledge of the
50 4.12 1.003
marketing elements
S4.Courtesy and helpfulness of the
50 4.06 .913
marketing personnel
S5.Effective counter measure/
50 4.02 .915
recommendation
Table 4.7 indicate the mean and standard deviation on MTM satisfaction
towards service by supplier. The mean is 4.08 while the standard deviation is 1.104.
Prompt response to inquiry or need score the highest mean with 4.18. Secondly it
followed by professional knowledge of the marketing elements with the mean score
4.12. Prompt response to the complaint score 4.08 while courtsy and helpfulness of
the marketing personnel score 4.06. Effective counte measure score 4.02. Overall
under the elements of service, MTM satisfied with the current performance with all
the score 4.00 and above. Elements of service is important for suppliers and being
supported by the study from Bhutta and Huq (2002).
41
4.9 Mean and standard deviation on MTM satisfaction towards environment.
Table 4.9 Mean and standard deviation on MTM satisfaction towards

environment.

Environment 50 3.60 1.195
E1.Environmental activities provided by
50 3.62 .855
suppliers.
E2.Action plan for Environmental
50 3.76 .981
Management System (EMS).
E3.Positively address environment
50 3.48 1.015
protection activities.
E4. Construct the system properly by
50 3.70 .886
controls chemical substance.
E5. International environmental certification 50 3.72 1.089
Table 4.8 shows that the mean score for environment is 3.60 and the
standard deviation is 1.195. Overall the score for MTM satisfaction towards
environment is in between 3 (neutral) to 4 (satisfied). It means that all is still not
achieve MTM satisfaction. The highest score which means close to satisfaction is
3.76, action plan for Environmental Management System (EMS). Secondly followed
by international environmental certification 3.72. The third highest score is construct
the system properly by controls chemical substance, 3.70. Environmental activities
provided by suppliers score 3.62. Positively address environment protection activities
score the lowest among others with score 3.48.The element of environment is an
important element in satisfaction towards suppliers. It being supported by the study
of Choi (1996).
42
CHAPTER 5
ANALYSIS & FINDINGS
From interview and discussion with MTM management as well as the findings
in Chapter 4, the researchers have gathered the information to be further analyse
using strategic management tools which is Supplier Evaluation Matrix (SEM).
5.1 Supplier Evaluation Matrix (SEM)

Supplier Selection Matrix (SEM) is a Six Sigma tool used to list the various
evaluation points that will be used in the supplier comparison, agreed to importance
weightings and scoring completed by internal stakeholders involved in the selection
decision. This analysis will create a weighted supplier ranking that can be used to
drive which supplier is more competitive.
Below is the Supllier Selection Matrix (SEM) for three major suppliers for
MTM Sdn. Bhd. The major suppliers are G-Shank Sdn. Bhd., Hitachi Hi Tech Ltd,
and Nissho Precision.
43
Table 5.1 Supplier Evaluation Matrix
Critical success Weigh G-Shank Hitachi Hi-Tech Nissho Precision

factor t
Rating Score Rating Score Rating Score
Price (cost of product) 0.20 3 0.60 3 0.60 3 0.60
Delivery (on time) 0.21 4 0.84 3 0.63 2 0.42
Ability to meet Quality 0.20 3 0.60 3 0.60 4 0.80

program guideline
Ability to meet 0.20 4 0.80 3 0.60 3 0.60

customer services
Environment 0.19 4 0.76 4 0.76 4 0.76
Total 1.00 3.6 3.19 3.18
Referring to table 5.1 among the MTM major suppliers, G Shank is the highest
score which is 3.6 compare to the other two major suppliers which is Hitachi Hi Tech
and Nissho Precision. Hitachi Hitech score 3.19 while Nishho Precison score 3.18. It
Shows that among all, it clearly shows that G-Shank is the most competitive and can
meet MTM special demand and requirement by MTM. Elements of ability to deliver
on time, price (cost of the product), ability to meet quality guideline, and ability to
meet customer service standard requirement is the elements that MTM strongly
focusing at with high weighted score 0.20 except for delivery 0.21. While
environment is only 0.19 weight. Nissho precision can improve more on delivery on
time since the weighted score is high, 0.21 to get improve in MTM satisfaction.
44
Based on the result, G-Shank scores the highest ranking for the overall
element, which is scored 3.6. Followed by Hitachi Hi Tech, scored 3.19 and not
much different with Nissho Precision which the scorer 3.18. It shows that G-Shank
(total score of 0.84) have relative perform well as compared to Hitachi Hi-Tech (total
score of 0.63) and Nissho Precision (total score of 0.42) in the aspect of delivery on
time. G-Shank also did well when the scorer for the service element is the highest
scorer (total score of 0.80) compared with the others two company. For the quality
wise, Nissho Precision score the highest rating (total score of 0.80) compared with
the G-Shank (total score of 0.60) and Hitachi Hi-Tech (total score of 0.60). However,
in terms of prices, all the 3 supplier are equal with score 0.60, but for the
environment element, this 3 supplier able to rely on the environment regulation which
the MTM required the supplier to follow the requirement, with total score 0.76. In
order to remain competitive in manufacturing lenses in Malaysia MTM make an
improvement on the above element, especially in the weakness poin to encaurage
the MTM satisfied with product received and service provider.
45
5.2 TOWS MATRIX
Table 5.2 TOWS MATRIX
46
TOWS Analysis, is a strategic planning tool used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. The aim of any TOWS analysis is to identify the key internal and external
factors that are important to achieving the objective and include the specific of
objectives for the business venture and identify the internal and external factors that
favourable and unfavourable wise. Two main categories for the SWOT analysis
groups key pieces of information:
i) Internal factors – refer to the organization strengths and weaknesses internally
ii) External factors – refer to the organization opportunities and threats presented
by the external environment.
There are 3 stages of TOWS analysis
Stage 1- Identification of opportunities and threats
Stage-2. Identification and analysis of strengths and weaknesses
Stage -3. Determination of strategic position and directions of business development
It is the guidelines for company, especially MTM to derived from the TOWS
analysis are simple but difficult in execution in practice which the MTM‟s should
avoid threats, the MTM‟s should exploit the opportunities, the MTM need to
strengthen its weaknesses and last but not least, the MTM should base important
activities on its strengths.
There are four basic strategies depending on the prevalence of the analysed
group of factors (positive or negative) in the environment and within the company:
SO situation - MTM can apply with using the dominant strength in the
environment and opportunities in the company. This situation corresponds to the
maxi-maxi strategy: strong expansion and diversified development
47
WO situation - In this situation the MTM Sdn Bhd has the more vulnerability -
weaknesses, but its environment gives more opportunities to develop the strategy by
using of these opportunities while reducing or correcting weaknesses within the
organization.
ST situation- The source of development difficulties for the company are

unfavourable external conditions (prevalence of threats). The MTM Sdn Bhd may
use large internal strengths in attempt to overcome threats from environment.
WT situation- MTM Sdn Bhd in this case is devoid of any development opportunities.
It operates in hostile environments, and its potential for change is small. It does not
have significant strengths, which could withstand threats. Mini-mini strategy boils
down to a pessimistic version of the liquidation or in optimistic situation - to strive for
survival, or merger with another potential organization..
Maxell Tohshin Malaysia TOWS may tend to persuade companies to compile

lists rather than think about what is really important in achieving objectives. The
resulting lists also uncritically and without clear prioritization.
48
CHAPTER 6
CONCLUSION AND RECOMMENDATION
From the research, it can be conclude that the „Delivery‟ is the critical element
in influencing MTM satisfaction towards its supplier.
In terms of competitiveness among its major suppliers, G-Shank has been

able to satisfy MTM where it has successfully fulfil all the elements of delivery, cost,
quality, services and environment. This is the evident that the Supplier Evaluation
Matrix (SEM) is the tools that can give a result to identifies the competitiveness in
satisfaction of the MTM supplier.
Research objective three (3) is to recommend strategies to increasing

satisfaction of MTM Sdn Bhd towards its supplier. By using the TOWS matrix, MTM
Sdn Bhd is able to analyze and evaluating the strength in increasing its satisfaction
towards supplier. The following are some of the recommendation.
S/O Strategies
SO1- Improving the Delivery Services by Develop the “Delivery Tracking

System’ (S7, O3)
Since the delivery is the highest ranking during the survey, the
recommendation to improve the delivery services is needed to increase the
satisfaction between MTM and the supplier. Delivery process is the point for the
MTM interacts directly with the supplier. These elements able to improve by the
supplier and give the customer or client a choice or estimate time for the delivery. If
the customer able to choose a suitable time for shipment, it gives them a great level
of control over the delivery process. It will make the client more conveniences to
dealing with if the time request follows accordingly.
49
The MTM have a strong growth in revenue and profit. Here, MTM can invest
some of money and develop the sophisticated delivery and tracking system.
Tracking allowed the MTM to follow up their shipment progress and feedback for
their curiosity of shipment date. Having this level of transparency in a delivery
service creates trust and puts customer‟s mind at rest. The lateness of the delivery
from the supplier can be reduce due to the system will trigger the purchaser if any
incoming lot still pending or over due date. Also the system able to advise 1 week
earlier or 3 days earlier from the incoming date.system can implement through the
machine or technology gadget, but still, the communication to the supplier is needed.
The system or software also give a time frame to the supplier to follow after order
release. G-Shank did the very well in the delivery wise among the 3 other major
supplier. After checking, G-Shanks did continue follow up with the MTM before,
during and after delivery to meet the delivery on time.
MTM do have the Inventory control software. There are possibility that the
MTM can develop the software for delivery tracking which work together with the
inventory control level system. The cooperative supplier by provide the details and
details quotation influences for MTM to improve the Just In TIme (JIT) to the
production ,storage and handling practices. Here, MTM also can discuss and advise
the supplier by informed under which element the supplier need to improve together
with strategies.
Communicate before, during and after the delivery is very important.

Communicating with the client and letting them know the progress of their purchase
is essential throughout the delivery process but it should not end with the delivery
itself. Follow up with an e-mail to make sure that the parcel got to its destination and
the client happy.
50
W/O Strategies
WO1- Establish the Key Performance Index (KPI)(W1,W3,W5, O3)
It is essential that the KPIs and the performance measurement approach (e.g.
supplier assessment, procurer assessment, and client assessment) are finalized
before the contract price is agreed and the contract signed by the MTM. The
improvement in the supplier KPI, encourage the satisfaction for MTM if the supplier
able to meet of MTM requirement The MTM can develop a system for performance
measurement. There are some fundamental qualities associated with good
performance measures. Supplier performance targets should be measurable,
achievable, relevant and controllable which is within the control of the supplier‟s
organization.
For the good characteristics of a good KPI, when deciding how a supplier‟s
performance should be measured, the MTM should ensure that the KPIs meet the
criteria of completeness that all significant aspects of the goods and service should
be included in the measurement of performance. Next is clarity where the procurer
and supplier should have the same understanding of the performance measures to
be used in order to fulfil the MTM requirement. Finally the measurability, where
required the expressed in measurable terms and should be based on data which it is
possible to gather in a cost effective manner. In the focus criteria, the specifications
should be focused on the agency‟s procurement objectives and (which translate to
outputs and outcomes), not on processes.
What to monitor or measure
Some examples of the dimensions of MTM Sdn Bhd gain the satisfaction
towards the supplier that the agency may want to measure include the contractor
meets minimum service standards, number of customer complaints , reporting
against key criteria as required by the contract and benchmarking of performance
51
with other providers.Other comparative performance activities such as quality of
regular stakeholder meetings, financial management aspects, information
technology aspects and other performance measures specifically applicable to the
procurement
Dealing with poor service from the supplier
There are a number of strategies that the MTM able to approach to dealing
with a supplier‟s poor services. These include the progress meetings and reviews,
agreed problem-solving mechanisms and dispute resolution processes ,enforcing the
terms of the contract, including through legal action and as a last resort, terminating
the contract and seeking damages from the supplier. Effective monitoring should
provide the contract with a timely warning if the supplier is having difficulty in meeting
the terms of the contract or the agreed to rely on MTM standards. MTM need to take
the prompt action if monitoring reveals that supplier services does not meet the
agreed standards. Early intervention may prevent a potential problem from
escalating into a full-blown dispute. It also protects the value for money objective.
Suppliers should be made aware of any shortcomings in their services soon they
occur. For most service problems, particularly for more serious or recurring
problems, suppliers should be given a formal warning by the MTM that their current
level of service performance is not satisfactory, an explanation of why this is the
case and details as to what changes are required in order to meet the performance
expectations. This enables the services performance issues to be identified clearly
and addressed by all parties and provides an opportunity for the supplier to improve
performance to a satisfactory level before more serious actions are taken.
Communication between the MTM with the supplier should be increase, more
frequent milestones should be set and closer monitoring should occur. It may be
necessary to renegotiate some elements of the contract. The supplier should be
informed, when appropriate, that termination of the contract may be considered and
52
must be made fully aware of any changes in their service performance that they are
required to make if they wish to avoid having their contract terminated. MTM need to
align with the legal advice and sought prior to acting on any breaches of the
conditions of contract and satisfied with the offer from the supplier.
A good service management process produces good contract management

records. These can be used for verification of performance and can be referred to
when a contract is ready for extension or renewal. In extreme cases, these contract
management records can be used as justification for the termination of a contract
due to the supplier‟s failure to perform to the standard expected.
Dispute resolution
Contractual disputes arise when the parties cannot agree upon areas of
contract interpretation. Disputes can occur, for example, over the interpretation of the
contract conditions, the project specification, the performance of either party under
the contract, or the effects of unexpected events. Contract managers can minimize
the likelihood of disputes by ensuring that they maintain close liaison with the
supplier throughout the contract period and by effectively dealing with small
problems when they arise to avoid escalation. Alternative contractual dispute
resolution procedures provide a mechanism to resolve disputes without the expense,
delay and publicity associated with recourse to lawyers and the courts. There are
numerous alternative mechanisms that can be used to assist both parties to resolve
their differences. These include the negotiation, mediation, expert
appraisal/determination and arbitration.
53
S/T Strategies
ST1- Value Engineering Cost (VEC)- Cost Weight Analysis(Best of the

Best)(S4,T1)
Under this method, required the „Cost Simulator‟. The cost simulator has their
own software but in the early stage, need to compile and gather all the information
from the supplier before proceed the „Best of the Best‟ figure. The cost simulators
allows user to make a comparison between of each supplier under the same item or
material. HML did implement this method and strategic in term of evaluate their
satisfaction towards supplier service, which more to the Japanese supplier and
electronic product. Part prices are generally acquired by first presenting
manufacturer with the quotation condition such as the specification and quantities,
and then spending a period of time checking the returned quotation. A lot of working
hours are expanded in sending request for, and collecting quotation. To make thing
worse, the reality is that the above process is repeated over and over again in the
development phase because the component specifications are likely to change
during that period, posing the bottleneck to the timely acquisition of cost information
in the pursuit of an optimal design. MTM able to get the latest quotation from the
supplier and the element break into few categories. The proper management of the
supplier will show completely on how the man power allocate, transportation
charges, the machine maintenance and many more.
In addition, when the purchasing under the above circumstances,

experiences and technical knowledge are required to assess whether the prices
quoted by the manufacturer are appropriate, as well as to set appropriate target
prices for negotiation. One of the MTM strength is the strong in the negotiations.With
this strategy, the „Negotiation Power, is needed, and normally the top management
will get involved in this stage. However, the rest of team need to provide the data for
them to hit the target mission and also to negotiate with the new supplier to gain
54
desirable prices and improve the satisfaction towards the supplier based on their
support.
Cost simulators was developed as a support tools to help the procurement

department to select the reliable supplier and to further negotiations, in terms of
costs and technical support .This method is configured the best possible combination
prices. The team that involved under this strategy beside of the procurement team
are engineering team, quality assurances team, tooling and maintenance team and
the management staff. Together need to gather the information to hit the final result
and negotiate with the supplier for the satisfaction in terms of best price offered.
Here, based on the quotation, the team able to choose the „Best of the Best‟,
by each element and further with the negotiation. For the Price cost analysis,
involved with 3 areas;
Organize cost details for each part and supplier- based on the item to identified
for selecting supplier
Cost Dimension Analysis –element that influences prices the most is chosen to be
dimension, then the relation of the element and the cost is plotted into graph.
However, the relation still can be viewed through the table of calculation.
Cost Simulation Analysis- explain the usage method of cost simulators. Also to
calculate and perform variances analysis on theoretical cost/ideal cost by using the
cost simulator.
55
W/T Strategies
WT1- Frequent Quality Audit Schedule To The Supplier Side (W3,W5,T7, T4)
MTM Sdn Bhd rely to the environment regulation. The supplier need to
declare for the ISO, and Green Procurement. The IQC and OQC of the MTM team
have a schedule to audit the supplier yearly. However, the „gap‟ from the first audit
date to the next audit date, has a very long duration. MTM need frequently audit the
supplier after next 2 to 3 month, to show the MTM is very seriously in the audit
element which can support MTM. Currently, MTM only audit the supplier twice a
year, in January and in July. With the proper schedule, element or criteria to audit,
the supplier will perform very well especially in the quality area.
The MTM audit team will liaise with the supplier only during the audit day. The
arrangement for this team to audit the supplier will be done by the procurement
member and based on the result, procurement team will feedback to the supplier.
Due to the long duration feedback from the MTM audit team, the supplier also take
an action very slow and not seriously. The proper management and view only can
display during the audit day, and the real scenario back to normal after the audit
finish.
Here, the frequent audit need to proceed for the supplier seriously adapt the
feedback or audit result for their company performance and satisfied the customer at
the same time. The fast action to improve their performance into certain element can
be planning and make the customer satisfied of their services. The element that can
improve is quality and environmental issue.
56
Supplier Monitoring Management Checklists.
During the audit, MTM Sdn Bhd should have a proper checklist. The MTM
able to monitor the supplier service and performance by using the supplier
management checklist. The following checklists are intended to provide a starting
point for the types of issues that should be monitored if a supplier‟s performance is to
be effectively managed. Officers should add to these lists with additional monitoring
issues that are appropriate to the nature of the procurement being undertaken.
Under the „Delivery‟, its consider whether the supplier delivers on time.the
delivery on time needed for the client manage the production schedule. The
incoming from the supplier is one of the element for the planner plan the production
plan. The supplier need to meets due date nicely without expediting and offers a
competitive lead time. However, the important matter is the supplier must make sure
to delivers correct items and correct quantities with provides accurate
documentation and information. If there is any issue, they need to responds to
emergency delivery requirements.
Under the „Pricing‟, will consider the factors of competitiveness. Means the
prices is equal with product offering. The price stability help the MTM to maintain the
selling price to the customer. This is because, if the material prices fluctuate, the
selling price to the MTM client will keep changing time to time to cover the cost of the
manufacturing and material prices. The supplier of MTM shall offer the very good
discount in terms of volume or other discounts if the MTM purchase with the big
volume.The supplier also need to introduce the manner in which price changes are
introduced.
Under the „Customer Service‟ element, MTM will consider the factors for each
supplier by compliance with contract terms and conditions. Terms and condition is
the contract that the both parties agreed and follow the guidelines stated in the
57
contract. Besides that, supplier representatives have sincere desire to serve. From
the heart, will showed through the face.the sincerity to serve well encourage for the
business relationship long last and maintain year by year. The better supplier will
provides feedback to the procuring organization from factory or the manufacturer
effectiveness of sales support and the advice the market insight. The better supplier
performance will offer and provide the training on equipment or products. MTM much
more appreciate with this kind of supplier that will continue assistance for the product
knowledge and understanding. The supplier needs to support on professional or
technical matters and administrative efficiency (including order acknowledgment and
accurate invoicing) for MTM feel convenience to dealing with. However, the supplier
need to adherence to their company policies and adherence to their company quality
systems. Means the company rely to the company prestige and rules and regulation.
Under the „Product‟ element, MTM will consider these aspects relating to the
product or service being procured strongly meets with the specifications. This is
because, the final customer will more reliability and durability onto their services and
entertain the customer like a „King‟. The supplier can acknowledge there in the
market if the product or contract service quality is available to convince the
customer. The quality and availability of documentation with the clear instructions is
needed to manage the complaint or feedback from the customer.
Using past performance in future procurement decisions
MTM also can using past performance as an evaluation factor in the

procurement process can allow MTM to better predict the quality and likely degree of
customer satisfaction with future work. It also provides a strong incentive to suppliers
to maintain high levels of performance. Effective supplier performance monitoring
that is properly integrated with the procurement process can provide agencies with
considerable insight into supplier capabilities, strengths and weaknesses.
58
Past performance measures that can be recorded (preferably on a corporately
controlled data base) and referred to in future procurement decisions must, wherever
possible, be objective. Some areas of performance that should be recorded include
the conformance with specifications and standards of quality . The containment and
forecasting of costs also help the MTM to predict and notify the customer of the price
trend in future for their preparation. The MTM also need to double check whether the
supplier is adherence to contract schedules, including administrative aspects of
performance. The history of reasonable and cooperative behaviour and overall
business-like concern help the MTM to analyze the supplier performance few years
back for the interests of the customer. The services to the end user of the goods or
services need to review and advice for the supplier concern.
59
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APPENDICES
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Siti Suryati Bahari

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Table of Content Pages

1.1 Background of the Industry 2

1.1.1 Background of MTM 2

1.1.2 Product and services 3

1.1.3 Background of study 4

1.2 Statement of Problem 5

1.3 Objective of the Research 7

1.4 Research question 8

1.5 Scope of study 8

1.6 Significant of the study 8

1.7 Limitation of the study 9

1.8 Definition of terms 9

CHAPTER 2: LITERATURE REVIEW 11

2.1 Supplier Management 11

2.2 Satisfaction of company 11

2.4 Supplier performance issues and concerns. 12

2.6 Cost of the product 15

2.7 Delivery Performance 15

2.8 Quality Performance 16

2.9 Services Performance 17

2.9 Supplier Evaluation Matrix (SEM) 18

2.10 TOWS Matrix 19

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY 20

3.1 The Research Design 20

3.2 Data Collection Method 20

3.3 Sampling Method 24

CHAPTER 4: ASSESSMENT AND FINDINGS 28

4.1 Reliability analysis 28

4.2 Demographic profile 29

4.3 Means and standard deviation of the important elements in

satisfactions of MTM towards suppliers. 31

4.4 Ratings score for MTM satisfaction 32

4.5 Means and standard deviation on MTM satisfaction towards cost. 33

4.4 Means and standard deviation on MTM satisfaction towards quality. 34

4.6 Means and standard deviation on MTM satisfaction towards service. 36

4.7 Means and standard deviation on MTM satisfaction towards environment 37

CHAPTER 5: ANALYSIS & FINDINGS 38

5.1Supplier Evaluation Matrix (SEM) 38

5.2 TOWS Matrix 41

CHAPTER 6: CONCLUSION AND RECOMMENDATION 44

Table 3.2 Section in survey question 21

Table 3.2.1 Summary of past supplier study 22

Table 3.3 Date of distributed and collected questionnaire 25

Table 3.4 Research objective and academic tools used. 27

Table 4.1 Indication table for Cronbach Alpha. 28

Table 4.1.1 Reliability Analysis 29

Table 4.2 Distribution of the respondents at MTM Sdn. Bhd

Table 4.3.0 Indicator for mean level. 30

Table 4.3.1 Means and standard deviation of the important elements

Table 4.4 Ratings score for satisfaction 32

Table 4.5 Means and standard deviation on MTM satisfaction

Table 4.6 Means and standard deviation on MTM satisfaction

Table 4.7 Means and standard deviation on MTM satisfaction

Table 4.8 Means and standard deviation on MTM satisfaction

Table 4.9 Means and standard deviation on MTM satisfaction

Table 5.1 Supplier Evaluation Matrix (SEM) 39

Table 5.2 TOWS Matrix 41