SUSTAINABLE PRODUCT INNOVATION IMPLEMENTATION: A CASE AT PERODUA SDN BHD Nurfazliyana Jamaludin1 Noor Hidayah Abu2 School of Technology Management & Logistics, College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah [email protected], [email protected] ABSTRACT Innovation is very important in business, either for large firms and Small and Medium Enterprises (SME) especially in new products development process. Hence, many companies in Malaysia are directly involved with innovation process, especially the automobile industry. Perodua Sdn Bhd already operates for 26 years which has launched various vehicle models starting from Perodua Kancil and latest Perodua Aruz. Perodua makes innovation as the basis for product development. However, based on Malaysia Sales Satisfaction Index 2018, Perodua at the bottom ranks among 10 automotive companies based on that article. Based on customer feedback, at the early stage of operation several weaknesses have been identified in relation to product innovation produced such as design features, relationships with suppliers and safety aspects. Consequently, Perodua has taken drastic steps to improve innovation while enhancing customer satisfaction. In view of that, the main purpose of this study was to explore the innovation activity and sustainable product innovation implementation at Perodua Sdn Bhd. In this study, qualitative method based on interview was implement with Service Manager who has 10 year experience at Putrajaya Presint 14. The results of the study revealed that design, performance, features, safety serviceability and quality tool and technique that have strong relationship to achieve sustainable product innovation implementation. This paper is able to be a guideline especially for automotive company in order to achieve kaizen in their business operation and for the future researcher for the reference. Keywords: innovation, product innovation, automobile industry, Perodua, innovation activity, Kaizen INTRODUCTION The word innovation is often being confused with the word invention. The word innovation is originated from Latin word, “innovare” which means “to make something new”. The dimensions and constructs of innovation which are mostly used by many studies in various fields. Therefore, it has been proven that the constructs below can be adapted in many studies in order to measure the degree of firms’ innovativeness. This is because the combination of both technological and administrative innovation could give a holistic view to what extent the firm could innovate thus indirectly shows its performance. The new product innovation literature emphasizes the importance of introducing new 38 products on the market for continuing business success. Its contribution to the growth of the companies, its influence on profit performance, and its role as a key factor in business planning have been well documented. New products are responsible for employment, economic growth, technological progress, and high standards of living. In the last few decades, the number of new product introductions increased dramatically as the industry became more aware of the importance of new products to business. Scientists and different industries used a different approach from many perspectives regarding the definition of innovation, including radical or incremental changes in products, processes and markets. Defining innovation determines the degree and nature of innovation in a particular organization. This fact highlights a number of critical implications for organizations and creates a new order for the management of innovation. In order to build an organization able to carry on its activity on long term, it is important to understand the key role of soft part of the organization within the innovation process. Automotive industry in Malaysia is consists of 27 vehicle producers and over 640 component manufacturers. The Malaysian automotive industry is the third largest in Southeast Asia, and the 23rd largest in the world, with an annual production output of over 500,000 vehicles. The automotive industry contributes 4% or RM 40 billion to Malaysia's Gross Domestic Product (GDP), and employs a workforce of over 700,000 throughout a nationwide ecosystem. Automotive industry both in the year can see increasingly in total production volume, total industry volume, GDP. With the update on the automotive industry 2018 the growth of the Malaysian automotive market. Perusahaan Otomobil Kedua Sdn Bhd, PERODUA, established in 1993, is a joint venture company between Malaysian and Japanese partners. In Malaysia Perodua is second automobile manufacturer which after Proton. The presidents and CEO of the PERODUA is Datuk Aminar Rashid Salleh. Perodua does not contend with Proton for the similar market niche because Perodua mostly produce small-compact cars. Since end of 2009, Perodua has sold some 1.67 million units of vehicle of a variety of models. Perodua also sell overseas their cars to UK, Singapore, Brunei, Fiji, Nepal and Sri Lanka. Myvi has been release on May 2005. The model was consider as best-selling model. In 2018 Perodua produce a variety of new model of Myvi. Due to that demand from customer towards new Myvi was increase drastically. Unfortunately, at the same time, Perodua facing with some big problem when one of its vendor unable to fulfil its requirement. It were resulted 3,000 customers who were supposed to be scheduled to receive their vehicles unable to register their new Myvi before the end of that particular year. To avoid customer satisfaction decrease and to sustain the customer service, Perodua provide appropriate compensation and contact customers through branches throughout Malaysia. More than 68,000 units of Myvi have been handed over to their owners from the 120,000 orders received since the launch of the model in November last year (Berita Harian, 2018). Figure 1 from J.D. Power has announced its 2018 Malaysia Sales Satisfaction Index (SSI) Study, which is a comprehensive analysis of the new-vehicle purchase and delivery experience based on responses from 2,477 car buyers who bought their cars between September 2017 and May 2018. The six weighted factors that affected overall 39 customer satisfaction with the new-vehicle purchase experience. These include dealer sales consultant (26%); dealership facility (25%); delivery process (19%); working out the deal (14%); paperwork completion (14%); and dealership website (2%). This problem show that customers are not only looking at the price of buying but emphasizing on other factors and aspects of the car's long-term use such as design, performance, features, safety and serviceability (J.D Power, 2018). Figure 1 Malaysia Sales Satisfaction Index 2018 Research objectives usually clarify about the main topic of my research. It will elaborate more about the idea of this research. Basically it is all about on what researcher want to achieve and measure in the research. This study to investigate sustainable innovation services implementation a case at Perodua Sdn. Bhd. Therefore, the main objectives of this study is: To explore the relationship between innovation activity and sustainable product innovation implementation at Perodua Sdn. Bhd. The findings of this study to help Perodua who wish to enhance the productivity of the company in the ongoing development. In addition, this study helps company take action on some aspects of the shortage to improve and continues increase profits and customer trust. Then, help Perodua find out the reasons and factors why some of the aspects studied need to be improved and enhanced so Perodua can be more competitive with competitor. Lastly, in this research Perodua's company is one of the largest car- manufacture companies in Malaysia and the innovations undertaken by Perodua to 40 increase sales and eventually move in tandem with other car brands in the future by using the latest technology. This study can provide Perodua the information on changes that can be implemented by the company. Therefore, the development of Perodua companies can provide a positive change and become the biggest contributor to the country's economic growth. LITERATURE REVIEW Innovation According to Tiwari (2008), an innovation is the implementation of a new or significantly improved product either to produce a good or service, or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations scope for the innovation is too big and not only focus on the product but can be internal of the management for the company. Meanwhile, innovation from a European Commission Perspective means, innovation is the successful production, assimilation and exploitation of novelty in the economic and social spheres (Spinoglio, 2015). Innovation activities are all scientific, technological, organizational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations. Innovation activities also include research and development (R&D) that is not directly related to the development of a specific innovation (Tiwari, 2008). Because of that according to Jabbari (2012), every company should has innovation process from creation to playing, when a product enters growth step, the company must play a change in product for supplying to market, because, another companies have reached the technology for producing a new product or improve an existing product to being a better one and make a product that has a value and benefit by