Better Asset Management for Cost Minimisation By Hafizah Sith

U niversiti Kebangsaan Malaysia (UKM) established itself as the first Malay language based institution for all subjects in Malaysia in May 1970. UKM has

since seen significant growth in being able to provide an increasing number of places of learning for the people undertaking research in various disciplines and fields of study. It now has 13 faculties, a Graduate School of Business (GSB-UKM), as well as 16 research institutes of excellence in education. All these developments in the past 45 years have built about better confidence among its employees to continue striving for excellence through creation, preservation, transfer and application of knowledge in a conducive, healthy and supportive environment provided by the university. For more than a century, UKM has educated

and worked with outstanding people to deliver knowledge in order to fulfill the social, cultural and economic obligations for the country. UKM is built up of its main campus which is located in Bangi, a health campus and UKM Medical Centre (UKMMC) which are both located in Kuala Lumpur. UKMMC comprises of UKM Hospital, Faculty of Medicine and UKM Medical Molecular Biology Institute which is seen as the heart of imparting knowledge, skills, and values required for the students to establish a successful and gratifying career as a physician. It is also committed to provide preeminent medical services on patient’s treatments as more researches are being carried out to ensure critical cases are simultaneously resolved. It also plays an imperative role to broaden the boundaries of knowledge.

Inefficiency in asset budget application process Creativity fuels the engine of discovery at UKMMC, where more than 5,000 employees are encouraged to generate ideas for improvement. It does not end there as the staff of UKMMC are encouraged to transform their ideas into reality. Innovation and Creative Circle (ICC) activities are viewed as the medium to make this happen. Hence, this requires appropriate approaches and tools to ensure any innovative project succeeds with tremendous achievement. The Finance Department of UKMMC has used this platform to enhance work efficiency and productivity of their staff. Currently, this department is responsible in managing UKMMC’s financial administration including budgeting, income generating, payment, purchasing, store management and yearly account as well as financial report. In 2013, a team of eight members known as One Touch, investigated problems occurred in their workplace which hindered the department to perform better. About 15 problems were listed from the brainstorming activities. The team used five ICC tools to identify the most prioritised problem that needed immediate attention and solution. This included Affinity analysis, plot graft, validation on theme selection, problem verification and validation and matrix analysis of benefit. The inefficiency of asset budget application process was selected in line with the mission of Finance Department which adhered to its belief; ‘Achieving excellence and being advance in financial management services, fastest, transparent and cost effective’. The problem occurred due to the lack of specific procedure on budget application review by Cost Centre Department and the Finance Department that does not have screening process for asset purchases. Furthermore, the final decision for budget approval was based only on self-assessment from the Budget Committee, and was subjected to first come and first serve basis. UKMMC recorded a loss of RM20 million in purchasing unutilised and unused assets from 2008 until 2012. A total of 5,510 applications had been endorsed by the Finance Department, amounting to RM126 millions for the same period of time. The Key Performance Indicator (KPI) in processing the budget application was also unable to achieve 85 percent of budget allocation. Furthermore, in 2010 to 2012, it was recorded that UKMMC only achieved 67 percent of assets which were useful for less than 10 years in which was unable to reach the KPI targeted by UKMMC Strategic Plan (2008-2018) of 80 percent. More complaints were received by the Finance Department with a total of 13 in 2012. All these have resulted in the UKMMC management team to support entirely on the implementation of ICC project of resolving the problem of inefficient on asset budget application process.

The flow chart on budget application process before the ICC project.

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The impacts of inefficiency in asset budget application process.

One Touch team Member with full support from UKM top management.

The implementation of the screening budget asset (eKBBA) system to improve services at Finance Department, UKMMC The Strategic Planning 2020 by the Ministry of Education had highlighted on the importance of managing critical resources (finance) efficiently and effectively towards all its agencies including UKMMC. In addition, the necessity of effective asset management has been extended by the government in the Comprehensive Asset Management Manual (2009) which states that there should be a need to assess each purchase of asset to provide a good return and cost-benefit to the organisations. These requirements had further urged the team to investigate all possible root causes that contributed to the problem using the Why-why approach and Ishikawa diagram. The first root cause was no standardisation of submission of information by Cost Centre. Secondly, it was unavailability of screening mechanism for asset budget application and lastly is unavailability of guideline on application verification. Nine solutions had been tabled out from the brainstorming activities and the Strength, Weakness, Opportunity and Treat (SWOT) analysis was then being conducted to determine the best solutions to be applied by the team. The improvement actions taken by the team are as follows:

The eKBBA system that accelerates the asset budget application process.

An evaluation form which can be accessed online.

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Root Cause Proposed Solution

Action Taken

No standardisation

of information to

be submitted by

Cost Centre

Department

Develop budget asset screening and evaluation form that can be accessed online

eKBBA system (Sistem Penyaringan Bajet Aset) which is developed included three proposed final solutions.

The Budget Screening Calculator can only be used for screening and evaluation of medical equipment.

New SOP for screening budget application established known as Garis Panduan Penyaringan Permohonan Bajet Pembelian Aset.

Unavailability of

mechanism for

asset budget

application

Develop a new screening mechanism for budget applications known as Budget Screening Calculator

Unavailability of

guideline on how

to verify the

application

Establish new, complete and comprehensive Standard of Procedure (SOP) for screening asset budget application

The budget screening calculator for screening and evaluation of medical equipment.

The eKBBA system is able to solve the problem as all asset budget applications will be assessed and screened for recommendation. Thus, the Budget Committee is now able to make decision accurately in order to prevent UKMMC from purchasing of idle assets.

Analysis of ICC project in UKMMC The initiatives from ICC project are beneficial to UKMMC in overcoming all the hitches in accelerating the asset budget application process. This ensures UKMMC in being more organised and systematic in managing the process of asset budget application. With this, it is needless for Finance Department to refer to applicants as all information is included in the new budget asset screening and evaluation form. Furthermore, all applicants are able to receive prompt reply on the status of their applications. Consequently, UKMMC will be able to save time in work processing and customer response time by 5,076 minutes in a month with the implementation of eKBBA system. This has resulted in the increase of customer satisfaction to 78 percent from 52 percent previously. In terms of cost saving, this project managed to save RM4.2 million in 2013 and 2015 as the approval of asset budget allocation must be referred to certain criteria specified in the Garis Panduan Penyaringan Permohonan Bajet Pembelian Aset. The outcome of the project was remarkable as the eKBBA system was able to simulate and identify the potential of unused asset and this has

Description Before After

Time taken to obtain status of application (minutes/month)

5,076 Prompt reply

Customer satisfaction rate (%)

52 78

Total cost saving after the implementation of e-KBBA system (RM)

0 5.1 mil

Extra space (m2) 0 370

Matrix before and after ICC project:

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brought UKMMC to save a total cost of RM812,408. On top of that, the eKBBA system was developed by UKMMC’s staff and this alone has resulted in the saving of RM168,490 on IT expenses which has led to a total cost saving of RM5.1 million to UKMMC.

Currently, unutilised assets are much easier to be disposed and an extra space of 370m2 is found available after the implementation of the ICC project. Hence, the implementation of the ICC project at UKMMC has succeeded in getting the right things done, making work simpler, eliminating wastages and ultimately increase productivity.