MSM Malaysia Holdings Berhad Annual Report 2020

MAINTAINING MARKET LEADERSHIP The core objectives for Supply Chain Management in 2020 was to improve on delivery timeframes, reduce downtime, heighten cost savings through Just-in-Time arrival of Raw Sugar stock and optimise stock holding for refined sugar. There was continued focus on optimum warehouse management which ensured improvements on stocks in hand. More enhancement initiatives for warehousing are in the pipeline for 2021 to enhance operation issues. These include installation of an open shade to the loading-unloading area of MSM’s main distribution centre, the Sungai Buloh Warehouse (SBW), for continued operations even during raining season; and the upgrade of the railing siding for wagon deliveries under KTM Berhad (KTMB). This shall increase present daily deliveries of about 1,000 tonnes or an average 37 wagons per day to 45 wagons per day. Plans are also underway to enhance SBW’s accessibility by having two access ways for better handling of incoming and outgoing deliveries. This will improve traffic management and control at this main Distribution Centre. Towards increasing warehousing capacity, MSM intends to build a new warehouse at the present Sungai Buloh premise to increase storing capacity by up to 25,000 tonnes. The Group has also engaged an external warehouse managed by Pos Logistics Berhad (Pos Logistics) to handle 24 hour delivery operations. Non deliveries during the year were reduced by maintaining effective communication within business divisions and collaborations with external supply chain partners such as KTMB, Pos Logistics and co-packers. Strategies are in place to maximise deliveries window time to gain more deliveries to the customer and enhance integrated supply chain support for train transfer from Prai and Pasir Gudang to SBW in the future. These external collaborations are essential in reducing the current delivery window time as they directly impact for more efficient and professional transport management as well as production quality. ENSURING CONTINUOUS GROWTH Towards ensuring continuous growth, in 2021 MSM will focus on heightening customer satisfaction by ensuring quality products are delivered at precise times. For warehousing, the goal is to have 30 days’ stock at hand to be able to readily respond to customers’ needs. Mindful that emerging lifestyle trends towards reducing sugar consumption will impact the Wholesale market, the Group is also consciously diversifying into more products choices and expand its share in the Industrial market. This is because within the Industrial sector, the consumption of sugar is still required for the processing of food and beverage items. New developments are in store for supply chain management as the Group begins to handle logistics for liquid sugar from Tanjong Langsat and export of cordial and sugar syrup. For the domestic market, the delivery of liquid sugar has commenced on March 2021. ACHIEVING OPERATIONAL EXCELLENCE In 2020, the Group replaced wooden pallets to plastic pallets after doing a thorough study on customer preferences and long term viability. Even though wooden pallets are cheaper to rent, the overhaul led to some cost savings as hidden costs were identified and eliminated. Another improvement identified was the switching of product transfers from Prai to SBW from road to rail. Railway transport costs have proven to be more competitive for long distant transfers. Henceforth in managing supply chains, road transport shall focus on domestic areas with smaller amounts of capacity transfer. On the packaging front, the Group has also noted that OEM co-packers are more cost effective in terms of human resource and welfare, and maintenance of the machineries. Greater efficiency is being realised by having more than one OEM co-packers to pack our products and through contracts with wholesalers like TESCO to pack under their brand. Another avenue for cost savings going forward is to enhance current weighing and data systems to reduce human manipulation and eliminate product variances. By installing more reliable weighing systems that interface with MSM’s M3 systems, cost savings can be recorded on a monthly basis. BUSINESS REVIEW MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 44 CHAIRMAN’S STATEMENT DELIVERING VALUE MSM OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS GROUP FINANCIAL REPORT