Pirates of the Silverland (Oil Piracy)

In: Business and Management

Submitted By anuratha
Words 551
Pages 3
Problem statement
Quality and quantity of CPO delivered
The root problem encountered in this case is the quality and quantity of the CPO delivered. Palm Haul Sdn Bhd’s (PHSB) major client Oilene Refineries Sdn Bhd is unhappy with their service mainly because the CPO delivered is either contaminated or short delivered.
The CPO delivered to Oilene is contaminated with either sludge or water. This is due to unethical behavior of tanker drivers who involve in oil piracy by siphoning the CPO and selling them to syndicates. The CPO that is being siphoned is replaced with either water or sludge so the end user will not realize the theft. Further, this situation prevailed as the oil piracy during the time period of 2009 was robust with a record of approximately RM 325 million of CPO production lost annually. This hence triggered the tanker drivers to actively involved in this illegal activity. Apart from that, delivery of contaminated CPO has a negative impact on Oilene operation as they have to shut down the plant to clean the sludge almost every week and thus affects their delivery time and the quality of oil produce. Besides, the consignment from PHSB is causing more problem than other transporter which gives a competitive advantage over their rivals and might risk losing their contract to Oilene.
Apart from that, the CPO delivered to Oilene does not match with the numbers in the delivery order; which means they are being short delivered. This has incurred a high cost in the operation of PHSB as they have to compensate for the amount that is being short delivered.
On a bigger picture, Malaysia being one of the largest oil palm exporter will be affected if this situation persist thus give the competitive advantage over their rival Indonesia and further put Malaysia’s reputation at stake.
Solution
It is recommended that PHSB install Fleet Management System…...

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