MSM Malaysia Holdings Berhad Annual Report 2019

Other key challenges observed were the risk of daily business disruptions due to reliance on train systems that are out of our direct control and unforeseen stock management glitches with high and long stockholding period for slow moving variants and added warehousing when customers do not observe requested order dates. These require more perceptive forecasting and greater customer engagement initiatives going forward. Building on customer relationships, an audit was conducted and a review held to identify service gaps so as to be able to fulfil expectations better. Ensuring Continuous Growth With increased focus on product diversity going forward, MSM continues to be proactive in planning responsive distribution and logistics strategies to meet future market challenges. A Supply Chain Blueprint for the next five years has been outlined towards identifying the best way forward in identified areas of our operations such as Stock, Distribution, Warehouse and Customer Service. Dynamic demand and supply planning with stocks produced based on demand has seen less wastage and better stock management and thus will continue to be implemented and enhanced going forward. For raw sugar, just in time stock strategy will continue to be practiced so as to save on warehousing costs for purchase loading. For refined sugar, MSM is working to harmonise packing formats to reduce inventory of dedicated stock-keeping units (SKUs) for specific customers and save on packing material. Greater packing efficiency is also being sought by collaborating more closely with packers. While we continue to seek more competitive warehouse rates, warehousing cost is to be better managed by optimising internal warehouse via a racking system and reducing pallet rental costs by keeping pallet management as an option for customers. New distribution strategies are in the pipeline with possible exploration of using barges in addition to the current trucking and railway systems, direct delivery to door-to-door customers, direct coverage to consumer market segment instead of retailers, and further refinement of the demarcation exercise. Last but not least, improvement to customer forecast are being planned through the introduction of new requirements. Achieving Operational Excellence MSM has set the ball rolling for further improvements in operational excellence through better integration of supply chain activities and by upgrading systems and processes. Standard operating procedures have been implemented and will be enforced towards business improvement and in ensuring better governance and transparency. These will positively impact selection and performance of third party logistic providers and other vendors. In addition, several communication matrixes have been established to improve collaborations between our sales, distribution and logistics teams as well as with customers. At the same time, reviews with external parties in our chain of activities are ongoing to seek better alignment and in coming up with effective contingency plans. 39 MANAGEMENT DISCUSSION & ANALYSIS 03