The Proton Vendors Association (PVA) are moving towards consolidation as part of efforts to increase competitiveness, increase economies of scale and reduce wastage as well as optimum utilisation of investment.
Currently over 260 vendors supply parts and components to Proton, and 150-160 are PVA members.
Apparently there is currently about 20-30% wastage because of flaws in design with the component manufacturing, specially with components which involve metal stamping. Even with 20-30% rejected, somehow bad QC components still make it to the production line. It’s hoped that with consolidation, it would be easier for vendors to meet QC standards.
Proton managing director Syed Zainal Abidin Syed Mohd Tahir said Proton would be forced to terminate the contracts of vendors which fail quality standards consistently.
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> It’s hoped that with condolidation, it would be easier ..
Don't you mean 'consolidation'?
Wah, …. awfully, a whopping 20% – 30% wastage/rejected.
Statistically unacceptable as simple normal distribution allowed for 95% +-5% only. Means "maximum" 5% rejected, what a joke.
If follow Japan QC concept, it is Part Per Million (PPM)! What a failure, yet still can go into production line! What a shame! P1 suck, P1 Joker, P1 super duper! sucker!
vendors really need to step up their game. Before, they might have some sort of "protection" from"a guy who know some guy" but now, the whole industry is moving. so, for the sole of their existence, it is a simple choice : change or die…
Yeah.. just terminate.. dont wait… many ppl suffer oredi.. i think this move is parallel with proton intention to get new partner…it looks like goin to be a high profile partner.. sure not from china…
ps:Want to see proton produce reliable cars one day… just need the right attitude…
"Proton managing director Syed Zainal Abidin Syed Mohd Tahir said Proton would be forced to terminate the contracts of vendors which fail quality standards consistently."
Joe Ooi – "…..Proton would forced to terminate………" What is mean by "FORCED" here, in any normal commercial contracts, there is always termination clause. It should be "Chopped" off long ago.
this sounds more promising. hope the "biasa la, proton.." phenomenon will finally come to an end.
but i still think the quality problems rooted from current vendors. maybe need to terminate them all.. hehe.
Ala.. relax la Joe.. u know la msian factory… i work for a factory oso… many proton vendors belong to chinese towkeys oso…. u know la our malaysian chinese towkeys standard.. they r learning to produce better product everyday.. but at least these towkeys can still cari makan, even though not tip top quality.. if no proton, towkehs oso susah cari makan lorr…. give some face lah….
wahlaueh….
Sure will have high fallouts… if…
machine's part keep on using without proper maintenance (maintain & chg new one when part worn out), sure got a lot of reject. Prices after so many discount & quote at prices include under table $$$… not enough margin for machine parts maintenance thus…more rejects.(i guess lah…ok… no harm for the guessing ok….haha…)
If the machine is in perfect condition then still have 20-30% fallouts, there must be somethings wrong somewhere. The scrap cost will charge under P1 or vendor own cost remain unknown here???…. may be claim under table… i am not from the components field & just base on my common sense opinions.
Ai yo yo…apa sudah jadi ni? vendors to buck up? Oh…vendors kasi parts & components tak standard disuruh buck up tapi P1 sendiri keluar kereta tak standard tak apa…got fair kah?
Pada mulanya, siapakah yang bertanggungjawab ke atas kewujudan vendor-vendor sedemikian rupa?
P1 P1..sampai bilakah u baru sedar? segala masalah bukan berpunca daripada luar tapi…
Not only vendors with poor quality should be terminated by P1, but P1 also have to seal quickly "strategic alliance" with undisclosed party to come up with new model. Current QC campaigne will be a failure if the effort is limited to components improvement only. The aging models like Iswara and Wira overall is not a safe car by today standard, so it shall be cease productions with immediate effect. The P1 partner hopefully is not come from Dragonland but Deutchland! Customers need is not limited to resolving power window failure, shortlive absorber, burning bulb, aircond, etc, on current aging models, but most important come up with new model(s) with latest technological gadgets, safe, reliable and value for money! Let it be VW, not Dragonland.
Aiya, motorhead you ask me relax, What we want is international standard, not Chinese tauke standard. If Chinese tauke want to continue cari makan with current standard, then better supply to bullcart at Kedah for the farmer to work on their paddy field! This is not monkey biz, …….
joe,
now u need a lesson in metal stamping or plastic injection. A rule of thumb said if you take 30% profit for each part (industry standard for med-high volume parts) then you need 20000 part to break even, considering capital cost (1x) and labour cost. So without a long term contract in the case of Proton (low volume mfr) nobody can afford to set-up the plant, as the bank will like to see your customer.
kody
Designing molds is very difficult process; its an art. Thats why the towkays is trying hard to get profit from whatever mold they acquire. Basically the most expensive one from Japan, Korea (30% cheaper) and Hong Kong (40-50% cheaper). Locally produce is marginally better then Chinese made one but the Chinese made is 30-50% cheaper. Local mold is restricted in size.
kody
rejected parts are being borne by vendor and in the case of Gen2 vendor also charged RM2000 for each minute production lost. This is how they manage to reduce rejection rate from 40-50% to 15-20% now.
higher rejection rate from iswara/wira line as their mold are much older. Some still use the donated mold from mitsu when proton 1st conceived.
Joe.. sometimes our msian chinese towkays standard not too bad you know.. in some area made in msia is much better than made in china..
agreed with you, Joe.
atleast may be we pay what we get from P1. i observed the Wira AE 1st few batch come with rear disc brake… but than when my time…. replace with drum brake for save cost. with the car weight ~1 tonne, P1 only use standard braking similar to ISWARA (lighter car), so i always need to keep some distance & unable to feel safety when drive too close to front car.
**VIOS(1.5E) use 14" front disc & rear drum, thus more gripping power.
**WIRA use 13"front disc & rear drum….so almost same weight for these 2 cars but you will feel more confident for VIOS safety & stopping power.
Wah motorhead, like that ah, then I have to retract back my statement!
Kody, this is my personal observation only, I am quite frequently saw accidents almost on weekly basis on KL road, especially Lebuhraya Puchong-Sg. Besi. There are too many accidents occured, especially few cars (some time more than 5) pile up one another, or "kiss backside". To a certain extent, it is due to driver fault of like to tailgate! But what I observed are it is mostly involved P1 cars, Iswara and Wira. Do other contributing factor to this kind of accident is due to unsafe braking system (no ABS and ineffective drum brake) in which the car are unable to break "on time" to avert this!
Ya lorr.. for instance, which one better, our msian amoys or china dolls??
We have international standard what.. hahaha..
Let me try to explain the concept of BREAKEVEN both in Accounting and Finance terminology.
Accounting:-
Selling price : $10 per unit
Variable cost : $6 per unit (Variable cost is cost that related to the level of production, if you produce 5 units, it’s 15, 30 units then it’s 90) Paham semua?
Fixed cost : $200 (Cost that is independent of the level of production, i.e. you buat 1 units kah, 5 units kah, 30 units kah, cost remains at $200, of course, this is a very naive assumption, for simplicity, macam nilah, nanti sampai besok tak siap explaining pulak)
Break-even point is = $200/($10 – $6) = $200/$4 = 50 units.
When you sell 50 units,
Sales = 50 x $10 = $500
Variable cost = 50 x $6 = $300
When Sales – Variable cost = Margin = $500 – $300 = $200
Kasi tolak fixed cost = $200
U have untung KOSONG. This is BREAK-EVEN point, 50 units, my fren.
U will have untung when your production volume exceeds 50 units.
This whole thing is very much ada hubungan dengan “economy of scale”. Malas nak explainlah, bukannya tak tahu, tapi MALAS. I believe everyone here can relate break-even with economy of scale.
Joe, sorry, u actually got a little mixed up there when u say breakeven in accounting related to timeline, from the above, it’s about UNIT or PRODUCTION VOLUME. Wah, I feel so proud with myself, I win U Joe. Let me win this time lah, OK?
Back to Finance, BREAK-EVEN is also related to internal rate of return, IRR or hurdle rate, try give u an simple example,
I lend Joe 100 today, I trust Joe, that’s Y I lend to him my money, Joe promises to pay me back 110 exactly 1 year from today, the BREAK-EVEN is 10%, it’s a percentage, I would lend Joe the 100 as long as my expected return is less than 10%, tak paham? If someone else can give me 11% instead, U think I will lend to Joe? So, 10% is the Break-even rate or IRR or hurdle rate for me to lend to Joe.
Another example about timeline when come to Break-even, it’s called “Payback period”, I invest $100 to open a business, this business generates a profit of $25 every year, so after 4 years, all my initial investment recouped, so the payback period of this business is 4 years. Normally, we don call break-even year, but if you do also canlah.
Thank u.
biggie,
agreed with what u had told. But, there is no initiative to improve all those 'problems' condition when P1 run the business for so long.
Only until recent market share drop then only realised the problems…. But, i may have some confident on the Mr Syed to turn P1 image to positive one. Time will proves.. haha… the 2 TM are running monkey biz with G protection..with don't worry & NATO(no action talk only)until when all shits have passed to successor. poor Mr Syed…
Atleast I am happy to say that this new CEO seems promising. He seems to be doing a lot to improve quality. All proton needs now is a nice budget MPV using the 1.6l campro engine priced around 60k and proton will deffinately get lots more sales. So what if this affects gen.2 and waja sales. Money enter right pocket or left pocket also same lah.
Variable cost : $6 per unit (Variable cost is cost that related to the level of production, if you produce 5 units, it’s 15, 30 units then it’s 90) Paham semua?
should read “if you produce 5 units, it’s $30, 30 units then it’s $180)”
Too eager to impress…should be more humble next time
Millions appologies…
motorhead said,
April 14, 2006 @ 3:56 pm
Ya lorr.. for instance, which one better, our msian amoys or china dolls??
We have international standard what.. hahaha..
i said: AngMohChaBoh better lah.. bigger spot lights….
a bit off too far from topic….
Joe, i tried my friend VIOS 1.5E, the breaking was responsive & good. Even i feel the ISWARA is better breaking power than WIRA. P1….quickly improve & make the ABS become standard.
i thought i heard some news that G want all new cars to install ABS as standard… but then now..no more news ha…
biggie said,
April 14, 2006 @ 3:37 pm
joe,
"now u need a lesson in metal stamping or plastic injection. A rule of thumb said if you take 30% profit for each part (industry standard for med-high volume parts) then you need 20000 part to break even, considering capital cost (1x) and labour cost. So without a long term contract in the case of Proton (low volume mfr) nobody can afford to set-up the plant, as the bank will like to see your customer."
Wah, Biggie if your "biz model" here is working, then many giant corporation want you to be their CEO, with GBP 6 figures salary per week just like EPL top of players pay cheque, make tonne of money!
20,000 parts x 30% = 600,000% profit to break even! what is this rule of thumb? or "hole in the tomb"?
or the calculation is like this, say each unit cost RM 1.00
30% rejected but make 30% for each unit. So,
30% rejected = 20,000 x 30% = 6,000 units x RM 1.00 rejected = RM 6,000.00
Therefore, profit is = 14,000 x 30% = RM 18,200 – RM 20,000 (cost) = RM (RM 1,800), still losing money around 9%. Not to be make more "funny calculation".
Biggie – do you really understand what is "BREAKEVEN"? From accounting perspective, breakeven is related to timeline rather than no. of units to recover your cost of investment. For example, if your investment is RM 100K and your rate of return is 8%, then your breakeven is at year 12.5 (100/8). Anyway, anyone have better explanation as I am not an accountant!
biggie – To elaborate further, what I know from economic perspective, volume is more related to achieve economy of scale. Economy of scale is means the minimum nos. of units need to be produce in order to achieve lowest cost per units. For example, in auto industry, the minimum units of each models to be produce to achieve economy of scale is 500,000 (lowest price per unit). Therefore, none of Proton model ever achieve economy of scales, and is not price competitive, in fact sold at relatively high price even under protective market.Those models achieve economy of scale is Toyota Corrolla, sold for approx. 26 Millions units worldwide (refer to Guiness World of Record)!
Kody,
Your friend's Vios broke???? Whats breaking power?? Kuasa Pecah??
on the short term, this campaign will backfire proton's sale.. people will wait till they can get their hands on models which are being manufacturered april 2006.. in the long term, customer's perception and most importantly, confident, will improve..
this IS the way forward, although ,if only they can turn back time…………….
wow, u guys really expert in analysing the circumstance in proton QC… anyway, this is good move by the proton management team. welldone.. let's hope proton will take this issue seriously.. terminate those vendors producing substandard parts and replace with those really mean business.. i think there is a lot of potential vendors willing to work with proton..
eliminate those ' biasalah' attitude for the sake of malaysian 'face'….
motorhead said,
April 14, 2006 @ 3:56 pm
Ya lorr.. for instance, which one better, our msian amoys or china dolls??
We have international standard what.. hahaha..
kody said,
AngMohChaBoh better lah.. bigger spot lights….
a bit off too far from topic….
Joe Ooi said,
I believe I can give better comments and outdo both of you!
M'sia amoy – "huh, very aksi and sometime jual mahai macam mas, tapi dia tu ikan masin"
China Doll – "a bit tasty but not juicy,……."
AngMohChaBoh @ gweilol moi @ western girls – hei, kody like spot lights normal lah, the "best standard" is like head, I means sexy AngMohChaBoh with "THREE (3) HEADS" @ the "XXL spot lights" same size with head. Anyway,
I wonder why Prince Charles chose to drink "expired milk"! he, he, …….
Anyway, not in the topic.
terenceloh said,
April 14, 2006 @ 4:40 pm
Kody,
Your friend’s Vios broke???? Whats breaking power?? Kuasa Pecah??
hey ternceloh bro, i mean ability to stop, stopping power lah… if my grammar was wrong, welcome to correct me…TQ..ha….ha…
i'm tired of posting relevant on topic stuff in this blog already. no matter what the topic is, even if it was about dinosaurs and elephants, it will all boil back down to the same things..
Down with P1, down with cartax dreamland aka bolehland..etc. !!!!
Change the G and their fuel price raising conspiracy theory!!!! :) I wanna buy a new honda civic at RM65,000….!!!!
Joe… ok lah your descriptions are better… :)
So say somethings related to topic…
P1 just keep up & do better.hoohooo….
Joe.. the conclusion is.. our products have their very own standard… hope things will improve for proton, our towkays & our ah mois as well (they juai mahal, bcoz they got class), hahaha….
Maybe proton should change from car maker to car producer. Naza is thriving. What is there to pride if the product is not worth boasting.
Dear Paul,
Tot u might be interested in checking out Kosmo Motor. A local assembler of commercial vehicle in m'sia n region. They r comin out with Beiqi Futon trucks and busses locally. Also they just bought a stake (26%) in Loremo AG, Germany and will be displaying their L22 and CNG busses at Klims 2006 soon. L22 especially is marvelous product coming out 2010. Jus tot u might wana share wif public. www.loremo.com
On dis topic bout PV consolidating, no comments coz it's not gonna do any good overnite. takes few yrs 2 bear result. If any….
boooo…!!
consolidating vendors?!!!! hahaha… that's a good one.. sorry mr. syed. not gonna happen. most vendor got contract from p1 because they pay their dues to the "Godfathers" in this contry. i'd like to see him try though..
Sigh Potong always say say only la……their pen is not powerful one…..see lar if i m not mistaken, in the future when u buy Potong car sure we all will complaint again about the "music" that their car make. :P
Wow, 20-30%! That's so freaking many parts gone to waste. Talk about inefficiency. These guys need not buck up, they need to WAKE up!
The political drama involving govts, potong, vendors and the godfathers look like a good basis to make soap opera like the Dallas series yang popular in the 80's.
Occasionally, supporting actors come and go.. like the various soon-to-be strategic partner, CEO, potong advisor and geng, EON, etc.
sure can make at least 300 episodes.
release by potong pictures and produced by wayang potong productions.
good way to get extra $$. then can use the $$ to cover losses due to sliding market share.
somemore could license the drama to international tv station for more $$.
Bingo, Intermilan
The previous Proton management should have highlighted on this problem. If Proton had took the initiative to minimise such problems years ago, then it would be a hell lot better for them. Well its good to see that they are finally doing something about it. I guess more audit on their vendors are required.
well said guys, guess i dunnit to put any comment. respect-man!
Wah.. now we can get accounting lessons from these guys..
Proton terminating a vendor? U think they dare? Talk cock sing song stories… nothing is new from Proton.
black list his own "rasuah employees" first then quality from its vendors will automatically be good. trust me
acbc
they have terminated vendors before, but they cannot terminate the vendors that have boardroom presence. Go figure.. who holds the cards.
joe
its a rule of thumb. need not be right always but its something that you can present to get loans.
and Joe .. yes I have enough money made from presenting those figures, of course the rule of thumb is not as simple as the one paragraph expalaination provided. Enough money that I can spend my time here without worrying about work or cars.
needgoodcar
thank you for the calc, yes you factor in metal stamp operating cost/labor/maintenace etc…etc… as item in variable cost. I've written a software specifically for plastic injection mold ROI.
To: biggie
Thank for your info on rule of thumb matter!
To: NeedGoodCar
Also thank you for info on breakeven and economy of scale matters.
joe ooi
its available in any good 101 mold & die text book
biggie – joe, its a rule of thumb. need not be right always but its something that you can present to get loans.
and Joe .. yes I have enough money made from presenting those figures, of course the rule of thumb is not as simple as the one paragraph expalaination provided. Enough money that I can spend my time here without worrying about work or cars.
Joe Ooi – Thing like rule of thumb might applicable to you or small biz/endeavor. But say bridging loan for "cyclical project", "rule of thumb" is not necessary applicable. What u need is highly mathematical "calculated risks" in cash-flow projection to deal with all potential threat and unknown cost at the time of projection (normally put under miscellaneous). In the event u apply "rule of thumb", your project might get stuck and it go into "hole of tomb" – your project become white elephant!
joe,
calculated risk = rule of thumb with conditionalities. Just some kind of conditional probability in simple term. 'Complex maths' is the term on how industrial consultant make money.
Industrial consultant will only be called if one is investing millions for multi-million deals… its no small business. Minimum for plastic injection mold (low quality) will set you back 400K in capital (excluding land). A typical Proton set-up 1-2 mil capital. GO FIGURE.
Try to read their reports (consultants), its basically based on many 'rule of thumbs' that you can make if you understand the eng/marketing book that you're reading.
Biggie – This is my understanding after read through so many references and books regarding risks management in respect to "uncertainty – rule of thumb" and "risks"
a. Rule of thumb – normally deal with "uncertainty" which may take place in our daily decision making process. It is quite "subjective" and outcome depend on "posibilities" which required individual experience and jugdement skills to make decisions. This "uncertainty" normaly can't be quantified by statistical approach.
b. Risks – risks is known as probable outcome which normally can be quantified statistically and can be solve mathematically.
The relationship between rule of thumb and risk at best – once we understand more background on the rule of thumb – the "uncertainty – chances" can be turn into "risk – probability". Normally when come to make decison, especially highly technical and "big" project, then "calculated risks" always take precedent or "rule of thumb". Anyway, it is still a matter of appropriateness as when to use "rule of thumb" or "risk management", depend on nature and complexity of decision. We have to use rule of thumb when say choosing good durians (with condition cannot open the durian) and of course need proper and highly mathematical "calculated risk" when actuarer formulating and produce insurance policy product.
Below is typical example of "risk" and "uncertainty" for Insurance and gambling: –
Insurance means the policyholders paid certain premium to insurance company to cover particular risk with specific sum insured subjected to the terms and conditions as stipulated in agreement sign by both party. Risk just like energy can’t be “destroyed†but can be “transferred†from one party to another. Risk is known probable outcome, could be quantified and most likely could be solved statistically.
Uncertainty is unknown and can’t be solved by statistics. As more data available, uncertainty may be “converted†into risk. Normally, uncertainty is unpredictable; therefore it is always excluded from insurance coverage, e.g. civil commotion, civil unrest, outbreak of war (i.e. force majuere), flood, lightning, earthquake (I.e. act of god), human error, negligent, etc. Insurance likes gambling, operating in same mode – “play with figuresâ€. In gambling, you are gambles your money. In life insurance, you are “gambling†your life and money. All terms and conditions are devised based on highly mathematical calculation and statistical solutions of probability, and of course not any possibility. Insurance just like gambling is “money makes money†business.
Insurance “admitting†customers with least risk and optimum return, inter alia, “the healthiest and the strongest.†Insurance coverage normally ups to limit of 65 years. This is because after 65, you are normally retired (i.e. non-productive) and the probability of incurred medical cost is very high. This in turn will make the insurance business venture not viable because the calculated risk is very high.
For gambling, they welcome those people who are always lost. The same philosophy of maximize profit prevailed. If you were “god gamblerâ€, you would be “blacklisted†and barred from entering casino. The conclusion is insurance welcome the most “luckiest†persons and gambling welcome those who are the most “unluckiestâ€. Both insurance and gambling have its same customer base – but “different segment and oppositeâ€. If you have particular disease under exclusion clause in the health insurance scheme, the life insurance company would reject you straight away. Same as gambling would not welcome those who are always win?
joe
just read the reports or project analysis studies (can be googled) all are based on the termed called calculated risk. But the essence of the rules made are similar from – the rule of thumb or if u want to make it technical its called heuristics.
rule of thumb is the basis for decision making based on empirical evidence.
Heuristics are valid for empirical data (variance and probability added to it) as opposed to mechanistic rules (based on physical evidence). then u build up an empirical model to simulate possible outcomes.
aiyoo this will be very long but its in your statistics 101 textbook probably 2nd yr eng. its also valid in recent mgt studies but for eng. or scientific appl. its has been the basis for designing experiment from the 15th century.
biggie – basically "rule of thumb" is the "art" of decision making and "risk management is the "science" of decision making!