Accelerat ing t he world's research.
QMT725 OPERATIONS
MANAGEMENT CASE STUDY
99SPEEDMART
Fitri Ishak
Related papers Download a PDF Pack of t he best relat ed papers
QMT725
OPERATIONS MANAGEMENT
CASE STUDY 99SPEEDMART
FACULTY & PROGRAMME : SCIENCE COMPUTER & MATHEMATICS (CS771)
SEMESTER : PART 1
GROUP MEMBERS : MUHAMMAD FITRI BIN ISHAK (2019618258)
SITI FARAH NURFAEIZAH BT MOHAMED
(2019606866)
SITI AISYAH BINTI KHALID (2019601448)
LECTURER’S NAME : DR. MUHAMMAD ROZI BIN MALIM (ASSOC.
PROF)
1
TABLE OF CONTENT
INTRODUCTION ........................................................................................................................................ 3
1.1 History........................................................................................................................................... 3
1.2 Management ........................................................................................................................................ 5
OPERATION ................................................................................................................................................ 6
2.1 Outlet................................................................................................................................................... 6
2.2 Distribution Centre.............................................................................................................................. 7
ISSUES OR PROBLEMS IN THE OPERATION ..................................................................................... 10
IMPROVEMENT ....................................................................................................................................... 12
FINDINGS .................................................................................................................................................. 14
REFERENCE .............................................................................................................................................. 15
2
INTRODUCTION
99Speedmart mini markets have more than 3000 kinds of groceries offered and highly
organized environment easier for customers to choose and find the desired item themselves.
They will put these mini markets strategically positioned in close proximity to residential areas
and neighborhood customers to facilitate their daily expenditure.
Nowadays 99Speedmart supported by three distribution centers with a size of 80,000
square feet, 65,000 square feet and the third distribution center with size of more than
100,000 square feet. 99Speedmart able to achieve economies of scale in bulk purchasing of
goods, thus helping to improve efficiency and reduce costs. At 99Speedmart, they always offer
low prices every day and customer also can save. This store started in 1987 as a small grocery
store and up to now have more than 300 branches throughout Malaysia.
1.1 History
Starting at year 1987, 99Speedmart with form of a traditional “mom and pop” sundry mart
called Pasar Raya Hiap Hoe by Mr. Lee Thiam Wah in Tepi Sungai Klang. Mr.Lee starts a
business with very humble beginning and only through personal interaction with suppliers and
customers. After doing business for 5 years, which is in 1992, the first store of that name 99
opened in Klang Utama. Pasar Mini 99 named by Mr. Lee with a move for realizing the vision to
build an integrated chain. Selection of number 99 symbolizes longevity and continuity in
Chinese is the underpinning philosophy behind his vision.
With sheer dedication and hard work, Mr. Lee expands Pasar Mini 99 to eight other outlets
in Klang ala chain store format within six-year operation in year 1992 to 1998. branches were
opened at the time was at Klang Utama, Taman Sentosa, Bukit Kapar, Taman Eng Ann, Sri
Andalas, Kampung Jawa, Port Klang, and Pekan Meru. In 2000, in the midst of the glory that
3
lifted 99 mini markets in the eyes of all, 99Speedmart launched with the opening of its new
branch in Batu Belah, Klang. To make the chain increase their market penetration and share, they
have their own intensive expansion strategy.
99Speedmart also use the approach in rural areas and set-up to enhance comfort as well as
ease of shopping around the area residents gets their daily convenience. A new distribution
center was conceived in the October 2002 at a cost of RM6.5 million to meet the logistics
demands of the rapidly expanding chain of 99Speedmart outlets. This warehouse is an 80,000
square feet facility complete with centralized stacking, storage and warehousing capabilities. In a
year 2006, 99Speedmart made their history when they receive its first Consumer Choice Award
from the Ministry of Domestic Trade, Malaysia. This milestone marking award is evidence for
99Speedmart’s success in winning customers’ hearts and minds.
Second distribution center was conceived in late 2007, and completed in July 2008. After
running the business around 11 years, on 1st November 2008, 99Speedmart launches its 100th
outlet in Pinggiran Batu Caves.
99Speedmart's 200th outlet in Bandar Baru Selayang, Batu Caves is opened on 27th, June at
year 2010. As planned during 2009. Finally, 3rd warehouse locate at Balakong Jaya been
successfully start operate on 14 October 2011. 300th outlets open at Banting Sg Emas at 25th
December 2011. Until now, 99Speedmart empires have expanded to several states in Malaysia,
including Selangor, Kuala Lumpur, and Negeri Sembilan with 300 outlets and 3 distribution
warehouses.
4
1.2 Management
Figure 1 Organization Chart 99Speedmart
5
OPERATION
2.1 Outlet
99Speedmart are open from 10am and closed in 10pm in the evening. The outlets of
99Speedmart are equipped with staff that can handle the outlets and served as to fulfill their
customers need. For your information, each outlet is equipped branch manager, storekeeper,
cashier and also cleaner.
As for the supply of the product, 99Speedmart practice the culture of cutting cost as much
as they can in order to get the cheapest offered price for consumers. Below is a figure of how
they supply their product to each outlet:
Figure 2 Logistic Operation
6
2.2 Distribution Centre
99Speedmart has about 1,522 outlets in Malaysia and the logistics activities are being supported
by 11 Distribution Centers around Malaysia. All these Distribution Centers (DC) are operating
individually and assigned to manage certain outlets.
Warehouse 1 - Jalan Kapar Warehouse 6 - Gopeng
Lot P.T. 33198, Batu 4, Jalan Kapar, Lot 213095, Jalan Industri 1/1, Kawasan
Mukim Kapar, 42100 Klang, Selangor Perindustrian Gopeng, 31600 Gopeng,
Darul Ehsan. Perak.
Warehouse 2 - Jalan Kebun Warehouse 7 - Yong Peng
Lot 201, 202, 203, Lorong Seri Gambut 3, Lot 31723, Mukim Tanjung Sembrong,
Kawasan 7, Bandar Putra Klang, 41000 83700 Daerah Batu Pahat, Johor Darul
Mukim Klang, Selangor Darul Ehsan. Takzim.
Warehouse 3 – Balakong Warehouse 9 – Batu Kawan
Lot 22A, Taman Industri Bukit Minyak,
Lot 5203, Jalan Perindustrian Balakong
14100 Simpang Ampat, Pulau Pinang.
Jaya 1/3, Kawasan Perindustrian Balakong
Jaya, 43300 Seri Kembangan, Selangor
Darul Ehsan.
Warehouse 4 – Rawang Warehouse 10-East Malaysia Integrity
Office & Distribution Centre
Lot 4326, Jalan Mohd Taib, Kawasan
No. 6, Lot 12, KKIP Industrial Zone 7 (IZ7),
Industrian Sungai Choh, 48000 Rawang,
Phase 1, Lorong 2A, KKIP Timur, 88450
Selangor Darul Ehsan.
Kota Kinabalu, Sabah, Malaysia.
Warehouse 8 – Sungai Tua, Gombak Warehouse 11-Sipitang Warehouse
NT.1844, Batu 1, Jalan Mesapol, 89850
Lot 46222, Jalan Manggis, Batu 9, Sungai
Sipitang, Sabah, Malaysia
Tua, 68100 Batu Caves, Selangor
7
Warehouse 5 – Chembong
Lot 1616, Jalan Perusahaan Utama,
Kawasan Perindustrian Chembong, 71300
Rembau, Negeri Sembilan.
Table 1 List of Distibution Centre
Figure 3 Logistic Flow
Refer to table 1, in average, every one of distribution center, it needs to support 138
retails outlet per daily. 99Speedmart operates started when the manager in the retail outlets make
an order to the headquarter (HQ). Thus, the purchasing department in the HQ will submit the
order to the warehouse. After that, the manager from warehouse will complete the order by
distribute all the goods ordered by outlets manager to the retail outlet as per requested. For the
warehouse stock, the manager in the warehouse will submit the order to the HQ then the
purchasing department will issue the purchase order to the suppliers. After that, the suppliers will
8
receive the orders and will send the orders to the warehouse. These processes always repeat in
the cycle.
Distribution can make or break a company. A good distribution system quite simply
means the company has greater chance of selling its products more than its competitors. The
company that spreads its products wider and faster into the market place at lower costs than its
competitors will make greater margins absorb raw material price rise better and last longer in
tough market conditions. Distribution is critical for any type of industry or service. The best
price product, promotion and people come to nothing if the product is not available for sale at the
points at which consumers can buy.
9
ISSUES OR PROBLEMS IN THE OPERATION
According to the normal operation, some of the process quite complicated and could raise a few
circumstances in the future. The first issue will be focused to the number of the distribution
center. On the paper, we already can see the number of distribution center is already less than the
total number of retails outlet. Moreover, from the recent study, about 27 new retail outlets will be
launching in this November. We can see the trend is increasing in the total number of retail
outlet. However, the number of distribution center is remaining constant. From the table below,
the distribution of the DC and retail outlet numbers are not synchronizing.
State Number of Store Number of DC
Kuala Lumpur 181 -
Selangor 637 5
Negeri Sembilan 115 1
Melaka 27 -
Perak 177 1
Johor 194 1
Pahang 29 -
Pulau Pinang 20 1
Sabah 140 2
Sarawak 2 -
Total 1,522 11
Table 2 Number of Outlet for each state
As we can see from the table 2, the locations of the warehouse or distribution
center are not enough to cover the retails. For Sabah and Sarawak, 2 warehouse it already
enough to cover for 142 outlets. Compared to Perak and Johor which has 177 and 194
10
outlets respectively, 1 distributor center is not enough to cover for all outlets. They should
increase the number of distributor center to reduce cost of transportation and also avoid
delivery problem.
The table also shows that currently Kuala Lumpur, Melaka, Pahang and Sarawak
has no distribution center. This is because, Kuala Lumpur outlet supported by Selangor
distribution center, Melaka supported by Negeri Sembilan and Johor distribution. From
the view, Melaka and Kuala Lumpur is small state. Therefore, there do not need
distribution center since there are another centers located nearby to this state.
We have conducted an interview to the manager from one of the 99Speedmart’s
outlets. Second important issue for this case is we found that there is a delay in stock
distribution, which is from distribution center to outlet. This delaying of this distribution
is not only impact in managing the inventory. However, it also gives an impact to
cleanliness to the outlet and store room. This is because when all stock has been delayed
came together and causing the full store room and messy space and rack since the
employee not enough time to manage the stock.
Besides that, based on the interviewer itself, the manager mentions that the store
holds high volume of stock. This is because the ordering stock handling by headquarters
or warehouse instead of by outlet. It causing the incorrect stock quantity and incorrect
item or product received.
11
IMPROVEMENT
A company's performance can be measured in many ways to determine if it is doing well. The
most common ways is to look for their gross profit or net profit. However, this is not always a
reliable way to determine a company's performance.
Operational performance goals are the areas of operational efficiency that a company is
trying to improve in order to fulfill its corporate strategy. There are five main operational
performance objectives: Speed, Quality, Costs, Flexibility, and Dependability.
After doing some research on 99Speedmart, we think that not all the performance
objectives were fulfilled. Here are some improvements that they must improve in order to
achieve those performance objectives. From the discussion previously, we found that,
there are three main issue for 99Speedmart. Which is not enough distribution on certain
region, delay on stock distribution and lastly holding of high volume of stock at outlet.
These three issues need to manage since all this issue effect on performance objective.
Several improvements need to consider.
Firstly, they can improve their operational performance objectives in term of
dependability. Dependability is measures how dependable the company is when it comes
to timely delivery of products to its customers, in accordance with planned prices and
costs (N.Lamarco, 2019). Since there is a problem related to the distribution, hence they
need to consider to open new distribution center especially at East Coast Region.
Currently, retail outlets at Pahang are fully depending on the distributor from Johor and
Selangor. Thus, they need to pay for the high price for transportation to continue the
operation. If there are some mistakes or unpredictable incident happened during delivery,
it will take some more time and this will lead to delay stock. Thus, it will disrupt the
operation to become smooth.
Since the distribution center’s sole mission is to provide outstanding service to
99Speedmart outlets, with the most efficient and cost-effective methods which makes
99Speedmart able to achieve economies of scale and also reduced costs, hence increasing
12
the number of distribution center will help them to achieve their goals and fulfills the
objectives performance.
This new location will serve three location, Pahang, Kelantan and Terengganu.
The total size of these three states is 65,975 𝑘𝑚2 . The best location, which can minimize
the cost can be represented by the weighted center of gravity of all points to and from
which products are transported. By applying this center of gravity method, we can
determine the best location for a new warehouse to be built in at East Coast Region. At
the same time, 99Speedmarts can penetrates their market to the Kelantan and Terengganu
State. Hence, the new warehouse are the best solution to solve all the distribution
problem.
Flexibility is another performance objectives that need to be improvise to this
operational for 99Speedmarts. This is related to the second issue which is previously,
every time the outlet ran out the stock, hence the manager will inform the purchasing
department in HQ. If there’s a mistake with the order, the manager itself need to go to the
HQ or to the warehouse to make the amended. The process is complicate, not efficient and
waste time to much. The 99Speedmart need to upgrade is their system of ordering so that
the system will be more systematic in others to make sure all the business can operates
well and can save costs.
Flexibility means a company being able to change the operation in some way. In
order to enhance their business, the ordering process from outlet supposed directly contact
to the warehouse manager. This means that they do not need to pass through the HQ.
Furthermore, this can avoid misunderstand from third party. Besides, for any correction in
the order, they just need to use the email to inform to another person without been hassle
to go to the outlet. They need to change their old method style and used all the modern
technology in doing the operation. Automatically, it can save time and cost indirectly. All
the order to the suppliers can be directly attach to the purchasing department in the HQ.
To make a better operation, the management should always make visits to the warehouse
to ensure all the process and works in the warehouse working smoothly.
13
FINDINGS
In the last few years there have been many new retail stores in Malaysia. Hence it is
important for a business to improvise their operation to make sure that can be survived in the
market field. The 99Speedmart has been in market for many years. They have a steady market
demand and they keep on providing the goods to consumers continuously. This makes them
specialized in their business and there should be only little room for improvement. They can
improve more in terms of operational managements. Even though it already succeeds achieve a
lot of award for their credibility, however, to ensures their continuous successful in their field,
they need to make some improvement especially in their operations. Instead of focusing on
business expansion, 99Speedmart should make sure all the existing retails outlet had working
smoothly. They need to analyze the cost of operation and should think an alternative how to
overcome this cost at the same time increase the efficiency of business. As we discussed from
above, the performance objective in term of dependability and flexibility should be improvise.
Adding a new warehouse in the East Coast region can reduce the cost of transportation,
avoiding the delaying distribution and decrease the number of loss customer. It’s a great idea
since it will give a chance for 99Speedmart to make a great offer and can attract many loyal
customers. Besides can provide more job opportunity to the society, they also can keep expand
their business in East Coast Region. It will benefit the 99Speedmart by killing two bird with one
stone.
For the flexibility, the management should make an investment in the technology to
improve their operation. Nowadays, using the technology in the operation management is
important since it can reduce cost and saving time. They need to train all their workers to
acknowledge the IT and also provide training so that everyone in the company able to use the IT
very well.
Last but not least, based on the company performance the company has a bright future
and is expanding wisely throughout Malaysia. If all the improvement can be applied to the
Operation Manager, it is not impossible for 99Speedmart to keep expand their business and
penetrate the market to others country one fine day. To keep their survival in this field, a small
change is needed so that they will continuous grow rapidly.
14
REFERENCE
1. (n.d.). Retrieved from The Economic Times:
https://economictimes.indiatimes.com/definition/distribution
2. (2019, December 9). Retrieved from 99 Speedmart: http://www.99speedmart.com.my/
3. Cai, X., Chen, J., Xiao, Y., Xu, X., & Yu, G. (2013). Fresh-product supply chain management
with logistics outsourcing. Omega, 752-765.
4. LaMarco, N., & Seidel, M. (2019, September 9). Retrieved from smallbusiness.chron.com:
https://smallbusiness.chron.com/objectives-operational-performance-77937.html
5. Slack, N., Brandon-Jones, A., & Johnston, R. (2013). Seventh Edition Operation Management.
United Kingdom: Pearson Education Limited.
6. Verma, M., & Verter, V. (2010). A lead-time based approach for planning rail–truck intermodal
transportation of dangerous goods. European Journal of Operational Research, 696-706.
15
