Question

Malaysia’s Top Glove Corporation Berhad, the world’s largest glove maker, expects a product shortage as demand from Europe and the United States spikes because of the widening Covid-19 coronavirus outbreak is exceeding its capacity. The company has extended shipping times to cope with the almost double demand surge based on the company’s production capacity. Top Glove can produce 200 million natural and synthetic rubber gloves a day. The demand increased to 100 percent more, the company only can increase 20 percent of their production so there is a shortage of about 50 percent to 80 percent. The exceptional buying momentum could last another three months but orders are expected to remain strong for up to nine months even as demand from Asian markets has started to slow slightly.

Top Glove said its supply chain is well-diversified and was optimistic it would not have issues sourcing materials in the next few weeks. Malaysia has approved some manufacturers in the essential goods sectors to continue operating under specific conditions during the nation’s lockdown that ends on 9 June 2020. As operation manager, you are responsible in logistical arrangement to ensure the sufficient supply of rubber gloves to global demand. Write an assignment of this case study to analyse the situation critically and discuss the following issues.

Discuss the key issues facing by Top Gloves Corporation Berhad in meeting the increase of rubber gloves global demand. (10marks)

Answer 1

Top Glove the surgical gloves maker in Malaysia has taken on a crucial global role in helping doctors, nurses and other health care professionals confront the coronavirus crisis. Top Glove's 44 factories and 18,000 employees are working around the clock to try to meet a massive upsurge in demand amid the spiraling health crisis, in which gloves are a vital barrier against coronavirus transmission. Orders have more than doubled. As a result, Top Glove already the world's largest supplier of nitrile and latex medical gloves is on track for a bumper year. COVID-19 has focused the world's attention on supply chains for everything from hand sanitizer to masks and medical gloves -- putting Malaysia's key role in this vital but often overlooked part of the health care industry in the spotlight.

In order to cope with demand, Top Gloves have upped their utilization close to 100%, while their lead time has increased from 30 days to as much as 150 days. They also balancing orders with keeping the company on track stepping up internal housekeeping and taking the chance to review stock levels, pricing and payments.

Top Glove was also having to deal with concerns about the spread of the coronavirus, and with the lockdown decreed by the government to try to curb transmission rates. Malaysian companies are unable to source additional foreign workers an impediment for Top Glove, where foreign labor makes up about three-quarters of the workforce. They are currently unable to hire any workers in view of travel restrictions imposed. To overcome this, they are exploring to hire local workers, especially for factories near Kuala Lumpur where there is a critical shortage, and have started working with recruitment agents to increase the candidate pool. Top Glove needs at least a thousand more workers to match the expected output, or it will face delays in production and shipments.

Top Glove's vendors, such as packaging material suppliers, were required to close during the lockdown period. Top Glove is working very closely with their suppliers to overcome the issue and also seeking cooperation and understanding from the customers and it is good that many suppliers had received approval to operate after they and Top Glove wrote to the Ministry of International Trade & Industry. It is important for all suppliers to be able to work with Top Glove to ensure timely production and delivery of gloves, which are essential items, especially during this critical time.

Even before the coronavirus outbreak, Top Glove had aggressively invested in automation and digitalization to try to ensure the business is future proof, with innovations including robotic arms and more automated packing. Challenges such as worker shortage are external and not within the control. At Top Glove, their approach to overcoming challenges has always been to focus on internal factors which are within their control.

Another issue for Top Glove is whether demand for its medical gloves remains structurally higher once the coronavirus pandemic is contained. There should be higher demand for gloves due to increased awareness of hygiene standards especially in developing countries that only consume about 30% of total global supply. It estimated that developing regions including India and Africa use less than 10 pieces of gloves per capita per annum, compared with more than 100 pieces per person annually in the U.S. New users who have started using gloves during this period are also expected to continue usage even after the outbreak recedes, having gained an appreciation of their importance in protecting lives.

Protective equipment for healthcare workers is crucial to the fight against coronavirus. Earlier, the World Health Organization (WHO) urged businesses and governments to act swiftly to boost supplies of protective equipment, including gloves, medical masks, and respirators, for healthcare workers on the frontlines combating COVID-19, the disease caused by the new coronavirus. To meet rising global demand, the WHO estimates that manufacturers must increase production by 40%. Top Glove in Malaysia may already be supplying three in every five pairs used globally, but they are banking on increasing hygiene standards and awareness, healthcare reforms, and the world’s ageing population to drive growth in the industry. And those are promising prospects for which Top Glove is laying the groundwork.