1.manufacturing best

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BIJ
18,3 Manufacturing best practices
in Malaysian small and medium
enterprises (SMEs)
324
Afdiman Anuar
Department of Automotive Technology,
Advanced Technology Training Center, Melaka, Malaysia, and
Rosnah Mohd Yusuff
Department of Mechanical and Manufacturing Engineering,
Universiti Putra Malaysia, Serdang, Malaysia

Abstract
Purpose – The purpose of this paper is to investigate the current level of best manufacturing
practices in Malaysian ISO 9000 certified small and medium enterprises (SMEs).
Design/methodology/approach – The authors conducted a survey on 270 ISO 9000 certified
manufacturing SMEs. Based on an extensive search of literature on performance requirements, eight
areas were identified. Thus, the questionnaire was designed consisting of the eight areas which are
management, human resources development (HRD), technology and product innovation, marketing
strategy, quality, production process, supply chain management (SCM) and customer focus. Data were
analysed using the SPSS software.
Findings – The results showed that among the eight areas, customer focus is the most implemented
area with the highest mean of 4.16, followed by quality (3.92), management (3.78), SCM (3.56),
HRD (3.27), marketing strategy (3.05), production process (3.02) and technology and product
innovation with a score of 2.95. The results showed that the level of best manufacturing practices can
be improved further, especially in the area of technology and product innovation.
Research limitations/implications – Only the companies certified with ISO 9000 were selected.
The questionnaire only covered eight areas of benchmarking and was analysed using descriptive
statistics.
Practical implications – The paper provides knowledge in assisting the SMEs to identify the areas
that they have to improve to achieve best manufacturing practices.
Originality/value – This is the first attempt to benchmark best manufacturing practices in some
Malaysian ISO 9000 certified SMEs. The paper provides some useful insights and can help Malaysian
manufacturing companies to implement best practices and benchmarking to improve their practices.
Keywords Malaysia, Small to medium-sized enterprises, Benchmarking, Manufacturing systems,
ISO 9000 series
Paper type Research paper

1. Introduction
Small and medium enterprises (SMEs) have been the backbone of economic growth of an
economy in driving industrial development (Normah, 2006). SMEs play a big role in
Benchmarking: An International national economies by providing job opportunities and supporting the big industries.
Journal Facing increased competitive pressure due to globalisation and increased quality
Vol. 18 No. 3, 2011
pp. 324-341 requirements from their customers, SMEs manufacturers must increase their productivity
q Emerald Group Publishing Limited and competitiveness in order to survive and prosper (St Pierre and Raymond, 2004).
1463-5771
DOI 10.1108/14635771111137750 Companies can gain competitiveness by increasing the productivity of manufacturing

operations and fulfilling the changing needs of customers and employees. Thus, the Best practices
manufacturing organizations must not only become increasingly advanced in their in Malaysian
manufacturing process but also adopt world-class manufacturing practices. The increased
competition will enhance the demand for more customized products. SMEs
In Malaysia, the SMEs are under increasing pressure to improve their performance level
(Normah, 2006). Globalisation, shortening product life cycle, increasingly sophisticated
consumers, increasing labour cost and volatility in input prices has created an 325
environment where manufacturers must be flexible, adaptive, responsive and innovative
(Sohal et al., 1999). Companies used to compete based on price and quality, but now they
have to compete across all competitive aspect including flexibility and responsiveness in
the current economic environment (Gunasekaran, 2003). Thus, it is necessary to identify
the current manufacturing practices of the Malaysian manufacturing companies and
compare with the manufacturing practices of world-class companies. This will enable the
companies to identify and direct their focus on the areas that require improvement. Also,
the companies will become more aware of the manufacturing practice that will help
increase their performance and competitiveness. With best manufacturing practices,
SMEs will be able to improve their business performance and expand their company
assets, providing work opportunities, and indirectly boosting the growth of the SMEs
(Government of Malaysia, 2006) and contribute to Malaysia’s economic development.

2. Materials and methods
The research involves a questionnaire-based survey. Though there are weaknesses in
this mode of survey such as difficult to obtain co-operation, it was deemed best for this
study as it is generally low cost; respondents can consult with others and can reach a
larger sampling.

2.1 Questionnaire
The questionnaire was developed after reviewing the literature on benchmarking and best
manufacturing practices. The areas and indicators were then validated by Malaysia’s
Enterprise 50 winners. Eight areas were found to be dominant (Table I). The authors found
that some of the researcher mentioned about the same area of manufacturing practices
towards performance. The eight areas were related to quality (Ahire et al., 1996; Taninecz,
1997; Kasul and Motwani, 1995), management (Solis et al., 2001; Kasul and Motwani, 1995;
Collins et al., 1996; Sohal, 1998; Lagace and Bourgault, 2003), human resources
development (HRD) (Rao et al., 1999; O’Sullivan et al., 2002; Taylor, 1995; Solis et al., 2001),
marketing strategy (Boone and Kurtz, 2005; Gooze and Harms, 2006), production process
(Lagace and Bourgault, 2003; Grando and Belvedere, 2005), technology and product
innovation (Collins et al., 1996; Grando and Belvedere, 2005), supply chain management
(SCM) (Corbett, 1998; Stevenson, 2005) and customer focus (Kasul and Motwani, 1995;
Taylor, 1995; Jasri, 2003). The respondents were asked to rank from a scale of 1 – being the
least implemented/practiced to 5 – as the most implemented/practiced.
For this study, small and medium manufacturing companies that have been certified
with ISO 9000 as listed in the Federation of Malaysian Manufacturers (FMM, 2005)
directory and Small and Medium Scale Industries Development Corporation (SMIDEC,
2006) web site has been selected. ISO 9000 certified manufacturing companies were
deemed as the best choice as respondents since according to Taninecz (1997) they
implement various manufacturing practices and portray yield improvements and quality

BIJ
Practice Metrics Author
18,3
Customer focus Time delivery Kasul and Motwani (1995), Taylor
Customer satisfaction (1995) and Jasri (2003)
Customer retention Deming (1986) cited in Agus and
Hassan (2001)
326 Quality Quality control, quality policy and plan, Kasul and Motwani (1995)
quality function deployment (QFD)
and quality cost
Top management commitment Taninecz (1997)
Supplier and customer relationship Taninecz (1997) and Stevenson (2005)
Management Top management commitment Kasul and Motwani (1995) and Solis et al.
(2001)
Employee involvement Sohal (1998) and Lagace and Bourgault
(2003)
Organizational culture Collins et al. (1996) and Sohal (1998)
SCM Supplier involvement Sridharan et al. (2004)
Facility control Corbett (1998) and Stevenson (2005)
Resource management and flexibility Beamon (1999)
Vendor and material management, Kasul and Motwani (1995)
inventory levels and quality of the
materials
Human resource Skill development Taylor (1995) and Solis et al. (2001)
development Giving rewards and employee satisfaction Rao et al. (1999), Cassell (2002)
Production Production process flexibility Lagace and Bourgault (2003) and
process Elimination of waste and response time Grando and Belvedere (2005)
Marketing Product strategy Boone and Kurtz (2005) and Gooze and
strategy Marketing plan Harms (2006)
Distribution strategy Collins et al. (1996), Sohal (1998),
SMIDEC (2005) web site
Table I. Technology and New technology Kasul and Motwani (1995)
Summary innovation Setup time, change over time and lead SMIDEC web site and Grando and
of benchmarking time reduction for equipments Belvedere (2006)
practices metrics Innovation

performance improvements in the company. The companies were contacted by telephone
and e-mail to notify them about the questionnaires, to verify their address and identify the
persons responsible in this area at managerial levels. The self-administered questionnaire
was then mailed to the managers of the selected companies with a cover letter requesting
that the questionnaire to be answered by those in the managerial position and have
knowledge in this area. Several ways for follow-ups such as e-mail, telephone calls and
company visits were made to remind the respondents of the questionnaires.

2.2 Data analysis
The data were analysed using statistical package for the social science (SPSS) software.
Descriptive statistics analysis has been done to analyze the data. The descriptive
analysis displays univariate summary statistics for several variables in a single table
and calculates standardized values and can be ordered by the size of their means
(in ascending or descending order). By sorting the means in ascending order, the level
of manufacturing practices and vital practices implemented in companies were
identified.

3. Results and discussions Best practices
Based on the total of 270 questionnaires distributed, 60 usable questionnaires were in Malaysian
identified which represent 22.2 percent response rate. The questionnaire was answered
by operation managers, quality managers and others of similar positions or higher. SMEs
The replies to the questionnaire have been analysed and the results are presented in the
following sections of the paper. Since a score from 1 to 5 have been used, the weighted
mean average score for each answer is presented. 327
3.1 Customer focus
Fulfilling customer needs and requirements has become vital for modern enterprises to
ensure competitiveness. One of the most talked about challenges of organizations is
customer satisfaction (Denkena et al., 2006). Zairi (1994) regards it as a culture change
that can yield to competitive outcomes of the highest order. Customer satisfaction is just
one of the key practices to improve performance (Denkena et al., 2006). The overall mean
for customer focus is 4.16. Table II showed that all the practices scored above 4.0 except
for integrating customer satisfaction into company’s vision and goals (3.95) and having
a channel for customers’ to complaint and give suggestion (3.82). Having a company
policy to deliver product on time for customer has the highest mean at 4.35. Underdown
and Talluri (2002) cited in St Pierre and Raymond (2004) reported that manufacturing
practices is judged to be important in terms of delivery, quality and price. It is followed
by the organization’s commitment to satisfy customers, monitoring customer
satisfaction and using customer requirements as the basis for quality having a mean
score of 4.33 each. Rosnah (2004) highlighted that to improve the level of customer’s
satisfaction, customer’s complaints have to be responded quickly.
Table II also shows the significant levels for each customer practice. Although most
of the practices were highly implemented, only using customer requirements as the basis
for quality and employee always increases interaction with customers and suppliers
were significantly correlated at 0.003 and 0.005, respectively. Sinclair and Zairi (1995)

Practices Mean Sig.

Customer practices
There is a policy to deliver product on time for customers 4.35 0.563
Using customer requirements as the basis for quality 4.33 0.003
Monitoring of customer satisfaction 4.33 0.979
Level of organization’s commitment to satisfy customers 4.33 0.507
Usage of customer feedback in new product design 4.27 0.321
All the complaints and suggestions are documented and implemented to improve
customer satisfaction 4.18 0.346
The company increases personal contacts with customers 4.17 0.431
Employee always increases interaction with customers and suppliers 4.15 0.05
Customer meetings are viewed as opportunities for improvement 4.13 0.509
Working more closely with suppliers 4.12 0.376
There is a procedure to measure customer satisfaction level (interview, survey, call, etc.) 4.10 0.890
Marketing department actively seeking customer inputs to determine requirements 4.05 0.917
The integration of customer satisfaction into company’s vision and goals 3.95 0.275
There is a channel for customers to complaint and give suggestion 3.82 0.199 Table II.
Overall mean 4.16 Customer focus practices

BIJ showed that from their survey, using the customer requirements as the basis to improve
18,3 quality of product and services will enhance the customer satisfaction level. The results
indicated that even though some practices were highly implemented (. 4.00), these
practices did not have a significant impact on performance where their significance
levels are above 0.05. For example, although the policy to deliver product on time for
customer is the most implemented compared to the other practices, its level of
328 significance is only 0.563 indicating that the practices do not give impact and related
towards customer focus performance level.

3.2 Quality
In manufacturing, quality of the products produced is the main factor of competitiveness.
Quality is an important aspect to measure performance of an organization (Kasul and
Motwani, 1995). It refers to the ability of a product or service to consistently meet or exceed
customer expectations (Stevenson, 2005). Table III shows the mean value for quality
practices of the SMEs surveyed. The overall mean for quality is 3.92. Quality is divided
into three categories namely management responsibilities, quality tools and quality
control and procedure. Among these three categories, quality control and procedure
scored the highest at 4.24. Nearly, all the practices listed under this category scored above
4.0 indicating that the practices were highly implemented. Process control was
identified and planned, including documented work instructions had the highest score
of 4.37. All the practices scored above 4.00 except for establishing, documenting and
maintaining procedures for handling, storage, packaging and delivery products. Having
high scores on process control and procedure will ensure their products meets the
specified requirements and prevents defects and scrap occurring (Kasul and
Motwani, 1995).
To achieve high-quality standards, it is necessary for commitment from the top
management to improve the organization’s quality performance. Management
responsibilities have a mean of 3.96. Under this category, four practices were highly
implemented which are quality policy is defined and implemented in the company (4.22),
followed by all the personnel assigned for quality purpose are trained (4.20), level of
company’s commitment to implement IS0 9000 (4.17) and a documented quality
management system exists to ensure that the product conforms to specified
requirements (4.10). Top management commitment is necessary to improve an
organization quality performance. The implementations of quality policies such as
ISO 9000 will improve quality performances, yield improvements and decrease customer
reject rate (Taninecz, 1997). The other practices scored below 4.00.
Even though quality tools can help in solving various problems or helping improving
company performance (Goetsch and Davis, 2003), it is the least implemented in the SMEs
surveyed. Only continual improvement showed that it is highly implemented (4.04) by
the companies. It is followed by problem solving and decision making and implementing
total quality management (TQM) with mean values of 3.73 and 3.72, respectively.
It is a fact that benchmarking is known as an excellent management tool that lead
to better performance. However, benchmarking practice only scored 3.22 and at the
bottom of three together with just in time ( JIT) (3.18) and Six Sigma (2.70). Since
benchmarking requires accurate benchmarking metrics, formal strategy, time, money
and commitment, it has to be done correctly. If it is not, it may be disastrous to company’s
performance (Davies and Kochhar, 2002).

Practices Mean Sig.
Best practices
in Malaysian
Quality control and procedure SMEs
Process control is identified and planned, including documented work instructions 4.37 0.105
All purchased products conform to specified requirements 4.35 0.215
The quality document are reviewed and approved prior to use 4.32 0.365
There is a procedure to ensure verification during a process 4.30 0.714 329
There is a procedure for final inspection testing 4.30 0.000
There is a procedure to control all quality documents 4.28 0.678
There is a procedure for verification, storage and maintenance of a purchaser-supplied
product 4.27 0.226
There is a procedure for products to be identified during all stages of production,
delivery and installation 4.27 0.172
There is a procedure to control, calibrate and maintain inspection measuring and test
equipment 4.27 0.327
There is a procedure to ensure an incoming product is not used until it has been
inspected or otherwise verified as conforming to specified requirements 4.20 0.455
There is a procedure to ensure that products which do not conform to specified
requirements are controlled 4.15 0.431
There is a procedure to investigate the cause of a non-conforming product and the
corrective action needed to prevent recurrence 4.10 0.047
Procedures for handling, storage, packaging and delivery products are established,
documented and maintained 3.98 0.098
Mean 4.24 0.295
Management responsibilities
Quality policy is defined and implemented in company 4.22 0.924
All the personnel assigned for quality purpose are trained 4.20 0.389
Level of company’s commitment to implement IS0 9000 4.17 0.766
An established and documented quality management system exists to ensure that the
product conforms to specified requirements 4.10 0.001
A top executive decision to commit fully to a quality program 3.97 0.504
Require supplier to meet stricter quality specifications 3.97 0.275
There is warranty cost for each customer reject 3.95 0.295
The design requirements are reviewed with the customer 3.90 0.585
Level of company’s commitment to implement TQM 3.85 0.350
Level of company’s commitment to implement other quality technique (Six Sigma,
5S and JIT) to control defect rate 3.80 0.904
Require suppliers to adopt a quality program 3.77 0.109
Increased employee involvement in design and planning 3.60 0.312
Mean 3.96 0.451
Quality tools
Continual improvement 4.02 0.914
Problem solving and decision making 3.73 0.720
Implementing TQM 3.72 0.339
Total quality tools (Pareto chart, cause-effect diagram, check sheets, histograms,
scatter diagrams, run charts, control charts, etc.) 3.60 0.318
Optimizing and controlling through statistical process control (SPC) 3.35 0.200
QFD 3.22 0.066
Benchmarking 3.22 0.276
JIT manufacturing 3.18 0.261
Six Sigma 2.70 0.103
Mean 3.42 0.355 Table III.
Overall mean 3.92 Quality practices

BIJ Regression analysis was performed by taking performance as dependent variable and
18,3 quality practices as independent variable, only three practices were found to be
statistically significant with quality performance. They were highly implemented by the
respondents. The practices were final inspection testing procedure (0.000), procedure for
investigating the cause of a non-conforming product and the corrective action needed to
prevent recurrence (0.047) and an established and documented quality management
330 system exists to ensure that the product conforms to specified requirements (0.001).
These practices can help improve quality performance as reported by Kasul and
Motwani (1995) that quality control and procedures are needed to achieve plant zero
defects and improve quality performance.

3.3 Management
Management has always been identified as the most important essence in achieving
excellent quality level (Taninecz, 1997) and as one of the major determinant of successful
TQM implementation, Dale and Plunkett (1984). Management is necessary to achieve
excellence performance. It is one of the most important factors for management practice
adoption and many researchers unquestionably recognized this factor (Thiagarajan and
Zairi, 1998; Agus and Hassan, 2001; Chen, 1997; Sohail and Teo, 2003; Kasul and
Motwani, 1995).
Table IV shows the mean value for management practices of the SMEs surveyed. The
overall mean for management is 3.78. Among the practices listed, senior management
always co-operate with the operational departments (4.15) and with customers and
suppliers for improving company’s performance (4.13) are highly implemented. Having
top management commitment to collaborate with other parties can improve company’s
performance (Sohail and Teo, 2003; Solis et al., 2001). The result showed that only two
out of six practices were highly implemented. Naturally, top management is responsible
in guiding all activities of the company towards quality excellence. If the management
goes bad, it will create unsatisfied employees and customers. For employees, it will lead
to low interaction between employees and top management and affecting the employees’
morale towards the job. While for customers, they will lose their trust over the company
and naturally will impinge on the company’s performance level.
Only senior management always co-operate with the operational departments practice
is highly statistically significant at 0.000. Top management have to guide all activities

Practices Mean Sig.

Management commitment
Senior management always co-operate with the operational departments 4.15 0.000
Senior management always co-operate with customers and suppliers for improving
company’s performance 4.13 0.318
The management of the company is carried out collectively by senior managers and
with employee participation 3.72 0.972
The management of the company is carried out in person by the managing director 3.67 0.476
The management promotes a set of company values to its employees 3.67 0.318
The organizational culture is open and trusting 3.60 0.071
Table IV. The top management conducts training in problem solving for department leaders 3.50 0.099
Management practices Overall mean 3.78

of the company towards quality excellence through co-operation between employees, Best practices
customers and suppliers and create a trustful organizational culture (Sohal, 1998). in Malaysian
SMEs
3.4 Supply chain management
SCM seeks to enhance competitive performance by closely integrating the internal
functions within a company and effectively linking them with the external operations of
suppliers, customers and other channel areas (Kim, 2006). SCM is a concept involving the 331
integration of all the value – creating elements in the supply, manufacturing and
distribution process. It consists of all parties involved in fulfilling a customer request
whether directly or indirectly (Chopra and Meindl, 2004) in the flow and transformation
of goods and services from material stage to the end of user (Russell and Taylor, 2000).
The supply chain not only includes the manufacturer and suppliers, but also
transporters, warehouses, retailers and customer themselves. Table V shows the supply
chain practices of SMEs with each score, respectively. The overall mean for SCM is 3.56.
SCM is divided into five groups namely supply chain policies, supply chain functions,
and the involvement of suppliers, company and customer involvement in SCM process.
Supply chain policies group has the highest mean at 4.20 compared with the other
four groups. All the practices scored above 4.00, with products delivered on time scoring
the highest at 4.34. Jasri (2003) reported that on time delivery is always being used as a
measure of quality management excellence. For the supply chain functions, the mean
was 3.66. Among the practices listed under this category, communication (4.10) and
information sharing (4.05) were highly implemented compared with the others.
Managing supply chain means controlling all the functions over a facility including
inventory management, communication and information sharing between suppliers and
customers, transportation and products manufacturing (Stevenson, 2005).
The supplier, company and customer involvement all scored above 3.00 with company
involvement the highest (3.64), followed by customer and supplier involvement at 3.23 and
3.08, respectively. Inventory management in company involvement has the highest score
(4.05) indicating that the practices were highly implemented. Beamon (1999) reported that
resources management efficiency is an important aspect in supply chain measurement.
Resources are generally measured in terms of inventory levels. Settlement and payment
process is the most important process in supplier and customer involvement with
their means at 3.63 and 3.82, respectively. Merchandising was the least concern for all
types of involvement. Each type of involvement showed different priorities in the SCM
process.
In supply chain policies, all the practices were highly significant except for products
were delivered on time and customer’s products that have met the order specifications
upon delivery at 0.069 and 0.352, respectively. Although products were delivered on time
is highly implemented by the respondents, the practices were not related to supply chain
performance. Most of the practices under supply chain functions category were
statistically significant with performance at significance levels ranging between 0.000
and 0.001. The score indicated practices such as reducing customer returns/rework
(0.000), maximizing customer service (0.001), reducing transportation costs (0.000),
planning and deploying inventory effectively (0.000), reducing warehouse costs (0.000),
decreasing manufacturing cycle time (0.001), reducing item procurement cycle time
(0.000), reducing inventory costs (0.000), having product in stock (0.000) and providing
predictable delivery performance (0.000) were significant to supply chain performance.

BIJ Practices Mean Sig.
18,3
Supply chain policies
Products delivered on time 4.34 0.069
Number of supplies delivered on time 4.18 0.000
Customer’s products that have met the order speciﬁcations
332 upon delivery 4.27 0.352
Customer orders that were rejected has not expressed as a
percentage of the total sales 4.13 0.012
Supplies that were rejected does not recognized as defective 4.11 0.001
Mean 4.20 0.087
Supply chain functions
Communication 4.10 0.309
Information sharing 4.05 0.581
Coordination 3.97 0.671
Reducing customer returns/rework 3.90 0.000
Maximizing customer service 3.73 0.001
Reducing transportation costs 3.65 0.000
Planning and deploying inventory effectively 3.63 0.000
Reducing warehouse costs 3.63 0.000
Decreasing manufacturing cycle time 3.63 0.001
Innovating new products and services 3.58 0.835
Vertical integration (owning and controlling your own
supply chain) 3.53 0.141
Reducing item procurement cycle time 3.50 0.000
Reducing inventory costs 3.33 0.000
Having product in stock 3.32 0.000
Providing predictable delivery performance 3.28 0.000
Mean 3.66 0.169
Supplier involvement in SCM process
Settlement/payment process 3.63 0.934
Demand management (forecasting) 3.33 0.000
Transportation management 3.22 0.000
Inventory management 3.20 0.037
Promotional planning 3.17 0.667
Production planning 2.98 0.807
Product development 2.97 0.377
Merchandising (retail only) 2.15 0.105
Mean 3.08 0.366
Company involvement in SCM process
Transportation management 3.88 0.000
Product development 3.72 0.488
Mean 3.64 0.442
Customer involvement in SCM process
Table V. Product development 3.52 0.001
SCM practices (continued)

Practices Mean Sig.
Best practices
in Malaysian
SMEs
Transportation management 3.02 0.901 333
Mean 3.23 0.493
Overall mean 3.56 Table V.

As for different level of SCM process involvement, transportation and demand
management process in both company and supplier involvement has 0.000 significant
levels. In customer involvement, the processes that were positively related to supply
chain performance were product development and promotional planning with
significant levels at 0.001 and 0.000, respectively. Supply chain functions include
forecasting, inventory management, information management, production scheduling,
distribution and customer service were needed to achieve excellence in supply chain
process (Beamon, 1999; Stevenson, 2005).

3.5 Human resources development
Baharun et al. (2004) stated that human resource dimension is very important to achieve
total quality in organization. HRD involves the training, educating and developing
people for the purpose of contributing towards the achievement of individual,
organizational and societal objectives (Wilson, 1999). Table VI shows the mean value for
HRD practices of the SMEs surveyed. The overall mean for HRD is 3.27. HRD is divided
into two groups, namely top management as a motivation to human resource and
employee involvement.
Top management as motivation to human resource has a mean of 3.29. All the
practices were not highly implemented and scored slightly above 3.00 except for amount
of time the people in department spend regularly together planning for the future with a
score of 2.95. Top management role in human resource is important although the
practices were not highly implemented among the respondents. It has been seen as a
vital human development needs to empowering employees to change and raise the desire
for achieving company’s goals (Chan, 1993).
Employee involvement had a mean of only 3.25, which suggested that it can be
improved further. According to Agus and Hassan (2001), employee involvement and
increase in quality awareness among employees are important to achieve world-class
manufacturing. All the practices scored above 3.00 except for employee’s satisfaction for
their career advancement in HRD and employee resistance to changes in the company
with means of 2.98 and 2.92, respectively. Cooperation between co-workers to get the job
done had the highest mean of 3.58 compared to the other practices within HRD practices.
Empowering the employees through skill development activities such as performing a
task as a team will develop an encouraging workplace environment (Taylor, 1995).
Coaching provided by management to prepare employees for future responsibilities,
frequency of recognition employee receives for doing a good job and employee
understanding of vision and strategic plans of HRD are significant at 0.000. Solis et al.

BIJ
Practices Mean Sig.
18,3
Top management as a motivation to human resource
Willingness of senior management to accept improvement suggestion 3.55 0.311
Responsibility of the people in company for accepting the success or failure of the
products or services they produce 3.50 0.283
334 Coaching provided by management to prepare employees for future responsibilities 3.47 0.000
Willingness of management to reward taking risks 3.37 0.569
Amount of credit management gives to people when they deserve it 3.37 0.971
Senior management sets an example of quality performance in day-to-day activities 3.37 0.075
Level of acceptances of new policies and procedures within each department 3.20 0.306
Likelihood of new ideas quickly being approved for trial implementation 3.12 0.913
Level of flexibility within HRD to change management methods 3.02 0.569
Amount of time the people in department spend regularly together planning for the
future 2.95 0.940
Mean 3.29 0.494
Employee involvement
Level of cooperation between co-workers to get the job done 3.58 0.081
Level of opportunity for employees in the company to exchange information with their
supervisor 3.48 0.890
Opportunity to improve employee’s skills in their present job 3.42 0.207
Amount of information each employee receive through official communication channels
to do their job 3.38 0.290
Frequency of recognition employee receives for doing a good job 3.32 0.000
Level of pride the people in company have in their work 3.30 0.403
Level of agreement among all employees concerning HRD’s division, strategic plan and
day-to-day operational priorities 3.20 0.305
Level of employee’s commitment to improve procedures in HRD 3.15 0.399
Employee understanding of vision and strategic plans of HRD 3.00 0.000
Level of employee’s satisfaction for their career advancement in HRD 2.98 0.885
Level of employee resistance to changes in the company 2.92 0.004
Table VI. Mean 3.25 0.315
HRD practices Overall mean 3.27

(2001) highlighted that integration of training, development of career and organization
vision will improve individual and organizational effectiveness. Cassell et al. (2001) also
found that employee recognition and performance appraisal encouraged the employees
to perform well in their work. Employee’s resistance to change in the company scored
2.92 is the lowest mean compared to the other HRD practices, but has a significance level
at 0.004. Although the practice is the least practiced among the respondents, the analysis
found that the practice gave an impact towards human resource performance.

3.6 Marketing strategy
Marketing strategies consist of promoting; distributing and positioning the product in
the market and create services that satisfy individual and organization objectives (Boone
and Kurtz, 2005). Marketing strategy was selected as one area of manufacturing practices
in this study since it is closely related to customer needs and expectation. For example,
a new product was manufactured with an excellent prospect and superb quality.
If the news about the product does not reach the consumer, there will be no sales. Hence,
it will have an affect on company’s performance. Thus, marketing strategy is needed to
introduce the product to the public at the right place and time. Table VII shows the results

Best practices
Practices Mean Sig.
in Malaysian
Marketing policies SMEs
The company thank the customers for their business 3.93 0.293
The company regards the customer as always right and deals with this effectively to
gain businesses 3.88 0.296
The company knows the customers’ wants and desires 3.83 0.000 335
The company has a unique selling proposition for the business 3.83 0.000
The company gives special privileges to loyal customers and regards them as the
business greatest asset 3.82 0.004
The company gives the customers both emotional and rational reasons to buy their
products 3.75 0.835
The company ensures that they are ahead of their competitors in offering products and
services to their customers 3.68 0.457
The company has a policy of reducing risk to the customers 3.62 0.000
Mean 3.79 0.236
Advertisement method
Catalogues 3.47 0.349
Internet 3.33 0.200
Newspaper advertisement 2.35 0.083
Magazines 2.25 0.295
TV commercial 1.75 0.354
Mean 2.63 0.256
Forecasts method
Moving average 2.42 0.086
Weighted moving average 2.40 0.000
Trend equation 2.30 0.891
Exponential smoothing 2.18 0.862
Native method 2.05 0.817 Table VII.
Mean 2.27 0.531 Marketing strategy
Overall mean 3.05 practices

of the marketing strategy practices of SMEs with each score, respectively. The overall
mean for marketing strategy is 3.05. Marketing strategy is divided into three category
namely marketing policies, advertisement methods and forecasts method.
Marketing policies have a mean of 3.79. Company thanking the customer for their
business scored the highest (3.93) compared with the other practices listed within
marketing strategy practices. All the practices within marketing principles are at
moderate level of implementation. Although the practices were not highly implemented
by the respondents, marketing policies are good starting point for developing marketing
plan (Cohn, 2008). Understanding customers’ needs, understanding and keeping ahead
of competition and communicating effectively with its customers to satisfy customer
expectations were also found to be essential to the success of all businesses (Revision
Notes. Co. UK, 2008). Several practices such as company knows the customers’ wants
and desire (0.000), company has a unique selling proposition for the business (0.000),
company gives special privileges to loyal customers and regards them as the business
greatest asset (0.004) and company has a policy of reducing risk to the customers (0.000)
were statistically signiﬁcant indicating to performance. It is very important to
understand the needs and wants of customers (Kasul and Motwani, 1995). The needs of

BIJ customers may vary between different groups of people. Customers’ needs may include
18,3 the after sales service and the service provided when the purchase of the goods is made.
Advertisement methods have a mean of 2.63. Using catalogue (3.47) is a more popular
method of advertising compared with the internet or using newspapers, magazines and
television since it involve lower cost, yet effective. The forecasts method category has a
mean of 2.90. All the practices within the group such as moving average, weighted
336 ¨
moving average, trend equation, exponential smoothing and naıve method were hardly
implemented by the respondents. Taking performance as dependent variable and
marketing strategy practices as independent variable, nearly all the practices were not
related to marketing strategy performance except for weighted moving average with
significance levels at 0.000 indicating that the practice is related and give impact
towards performance. The companies may want to consider the importance of
implementing some forecasting techniques as forecasting is important to marketing
practitioners and one of the most important aspects of company’s successes (Armstrong
and Brodie, 1999) and also forecasts were used to form marketing plans (Dalrymple,
1987 cited in Armstrong and Brodie, 1999).

3.7 Production process
The ability to adapt today’s production to rapidly changing market conditions is
essential to ensure competitiveness (Denkena et al., 2006). Table VIII shows the
production process practices of SMEs with each score, respectively. The overall mean
for production process is 3.02 with the production by order system scoring the highest at
4.11. Some of the technologies that can be found at production line such as
manufacturing cells, numerical control machines, automated machines and system have
low scores. This showed that technology integration or usage is lowly implemented
among the Malaysian SMEs and has been identified as a major factor restraining SMEs
growth and expansion. So far, Malaysian SMEs are dependent on their own technology
and have to automate their production (SMIDEC, 2004).
Regression analysis showed that three practices were found to be statistically
significant towards performance. Production by order system, automated production
line and automated material handling system are positively significant at 0.000, 0.002
and 0.000 significance levels, respectively. Lagace and Bourgault (2003) stated that
by increasing production flexibility, it can substantially increase an organization’s

Practices Mean Sig.

Production practices
Production by order system 4.11 0.000
Manufacturing cells 3.15 0.980
Numerical control/computer numerical control (NC/CNC) machines 3.03 0.710
Automated in-process inspection 2.94 0.213
CAD or CAD-CAM system 2.86 0.850
Automated production line 2.83 0.002
Computer-integrated manufacturing (CIM) system 2.83 0.734
Automated quality control system 2.81 0.405
Table VIII. Automated material handling system 2.69 0.000
Production process Overall mean 3.02

ability to response towards elimination of waste, economies of scope and response time Best practices
which coherently increase the production capacity. in Malaysian
3.8 Technology and product innovation SMEs
Technology usage can help improve the organization’s performance to cope with problems
such as insufﬁcient manpower, lack of skilled workers and unvarying production efﬁciency
(Crick and Jones, 1999). Table IX shows the mean value for technology and product 337
innovation practices of the surveyed SMEs. The overall mean for technology and product
innovation is 2.95. Technology and product innovation is divided into three categories
namely investment for new/improved product, technology costing and technology
implementation.
Investment for new and improved product has a mean value of 3.29. Lager and Horte
(2002) found that to be successful in-process industries, development of new and
improved product is needed. Customer needs for new product ideas scored the highest
mean of 4.11 and was highly implemented by the respondents compared to the other
practices within the technology and product innovation practices. Customers appeared

Practices Mean Sig.

Investment for new/improved product
Customer needs for new product ideas 4.11 0.940
Employee training 3.63 0.731
Machinery and equipment 3.45 0.004
Marketing the introduction of new goods or services 3.45 0.651
In-house research and development 3.33 0.095
Marketing research for new product ideas 3.29 0.603
Research and development research for new product ideas 3.06 0.429
Industrial design 3.05 0.003
Purchase of other external technology (e.g. licenses and trademarks) 2.93 0.300
External research and development 2.63 0.842
Mean 3.29 0.460
Technology costing
Manufacturing/production cost 3.17 0.328
Quality control/inspection cost 3.07 0.199
Packaging/transportation/delivery cost 2.66 0.142
Marketing/advertising cost 2.63 0.243
Machine tools setup cost 2.58 0.315
Maintenance cost 2.53 0.594
Design phase cost 2.39 0.039
Marketing research cost 2.09 0.316
Simulation cost 1.96 0.000
Mean 2.56 0.242
Technology implementation
Product design technology (i.e. CAD, SPC, etc.) 3.25 0.828
New marketing technology (i.e. web site and e-commerce) 3.18 0.083
ICT (i.e. internet and intranet connection) 2.95 0.000
Manufacturing process technology (i.e. supply chain system) 2.93 0.529
Integrated technology (CAD&CAM, CIM, etc.) 2.52 0.002 Table IX.
Mean 2.97 0.288 Technology and product
Overall mean 2.95 innovation practices

BIJ as the biggest influence to the success of the company’s products (Goetsch and Davis,
18,3 2003). The company should be proactive to satisfy customers’ needs and their product
must be beyond the buyers’ expectations. All the practices were not statistically
significant except for industrial design and machinery and equipment with significance
levels at 0.004 and 0.003, respectively.
Technology costing has a mean of 2.56. Manufacturing or production cost and quality
338 control or inspection cost scored 3.17 and 3.07, respectively. All the practices were not
highly implemented by the respondents and not significant related towards technology
performance. Except for design phase and simulation cost, the practices were positively
significant towards technology performance at 0.039 and 0.000 significance levels,
respectively, although they being the least concern among the respondents.
Technology implementation has a mean of 2.97. All the practices were not highly
implemented. Product design technology had the highest score of 3.25 within the group.
Only information communication technology (ICT) and integrated technology were
positively significant at 0.000 and 0.002, respectively. Although integrated technology is
the least concern among the respondents, the practices are actually related to technology
performance.

4. Summary of eight areas of manufacturing practices
Table X shows the overall mean for each area of manufacturing practices, indicating
that the customer focus had the highest score of 4.16, followed by quality, management,
SCM, HRD, marketing strategy, production process and technology and product
innovation the least implemented. The results clearly showed that there are
opportunities for the SMEs to improve their manufacturing practices.

5. Conclusion
This study is an effort to investigate the current level of manufacturing practices
implemented in Malaysian ISO 9000 certified SMEs and how they affect performance in
each area. Since these companies are certified, they would be able to show better
performance than other SMEs. However, the results clearly showed that these
companies also fall short of some practices which may help them to be more competitive
such as technology and product innovation. Though customer focus has the highest
mean and can be concluded that the area was deemed important, the companies should
also focus on the other areas which are as important to achieve improvements in
business performance. The results also indicated that in some areas, the companies were

No. Manufacturing practice Overall mean

1 Customer focus 4.16
2 Quality 3.92
3 Management 3.78
4 SCM 3.56
Table X. 5 Human resource development 3.27
Summary 6 Marketing strategy 3.05
of manufacturing 7 Production process 3.02
practice overall mean 8 Technology and product innovation 2.95

focusing on certain practices (highly implemented) that do not inﬂuence performance in Best practices
that area. The companies should be able to evaluate their practices and identify the in Malaysian
relevant areas that will positively affect their performance. By continuously monitoring
their practices with best practices through benchmarking, the companies can improve SMEs
the level of competitiveness of their manufacturing organizations.
There is some limitation to the study due to the sample size. A bigger sample will
give a clearer picture of the practices and that the companies can benchmark their 339
practices not only between but within the industry. However, this study has provided
some insights on the manufacturing practices of some ISO certiﬁed SMEs and this
maybe a beginning of their journey towards continuous improvement.

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Corresponding author
Rosnah Mohd Yusuff can be contacted at: rosnah@eng.upm.edu.my

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