High absenteeism

The high absenteeism of the drivers which is mainly due to exhaustion from the long

distance they had to travel. The irregular routes and the days away from home are also
lead to this issue.
Medical cost
One of the reasons of drivers absenteeism is due to the health problem. As you all know
transporting CPO take hours of journey. So the drivers have to induce illegal substances to let
them stay awake during their journey. Due to that, it will affect their health and then they claim the
medical expenses to the company.

Recommendation
Implement good and thorough record system
The company should record the date, duration and reason for each case of absenteeism and
distribute it to employee. This will make them aware that they are being monitored and make them
more likely to think before take a sick day.
Properly inform & regularly updates the employee about standard and policies
In the absenteeism policy, the company needs to clearly state which absences are allowed and

which behavior will subject the employee to discipline. Example, not showing up for their shifts
and taking sick leaves when well.
This policy should be clearly written and distributed to the employees.

Give reward
For example give employees bonus for having unplanned absences in a 12 month period. Another
tactics provide adequate paid time off so employees have option of planning for absences by
using a predetermined bank of hours.
Peer pressure

Offer incentive to all employees if absenteeism is kept below a certain amount. Find a reward that
employees will be excited about. So, they will pull together to reduce absenteeism. For example, the
company treats them for dinner or gives a pen engraved with company name.

High compensation & high petrol

High compensation paid by PHSB to Oilene due to the amount that PHSB short-deliver to

them. The quantities delivered are short although the tankers are loaded with the amount stated in
the delivery order. Another reason is the tankers do not reach refineries instead found
abandoned by the roadside and empty.
High petrol/ fuel cost
It increased because the driver heads to the hotspot where the siphoned of CPO usually takes
place. This hotspots normally located in the suburbs. So it consume to the high petrol usage.
This medical cost, high petrol and high compensation lead to the lower GPM.

Recommendation
To overcome this problem the company needs to implement Fleet Management System.
There are high possibilities that the company had to bear 10% increase in fuel cost if the drivers head to
the hot spot, which normally located in suburbs.
By implementing FMS, the risk of oil piracy can be minimized and the increase in oil consumption can be
eliminated because this system can track the drivers whereabouts.
The system record the date and time the tankers enter a hotspot and how long they stop at the rest
area and eating shops. It also allowed the company to locate more than 70 hot spots in the peninsula
where CPO siphoning was rampant.

High directors fees

Directors fees should be maintained as previous year until the net profit achieved the certain level.
Cost benefit analysis
Initial investment = RM 1920 per fleet. Installation cost = RM 320 per fleet
Total cost for 80 fleets= RM 153.600. Total cost = RM 25,600
Total cost estimated to be saved is 10% RM 44,510 per month (RM 4,005,793 / 9 months x 10%)
PHSB is expected to save at least 50% of compensation cost amounting to RM 114,686 per month
due to the software ability to monitor and track fleets.