By transferring East Malaysia’s volume supply to MSM Johor in October 2021, the Group has increased MSM Johor’s domestic volume contribution and eased complexity at MSM Prai, allowing MSM Prai to focus on domestic volume for Peninsular Malaysia while maximising export. Another benefit of the transfer is that the relocation of East Malaysia’s supply point from Penang Port to Pasir Gudang Port leads to a significant freight cost reduction of an estimated RM1.2 million per annum. Efforts to streamline logistics from source points for efficient cost to serve have paid off. Freight cost has also reduced due to direct delivery to a few main industrial customers from the refinery, which has removed the need for multiple handling at the central distribution centre. A more efficient cost to serve is targetted through a new tactical strategy for centralised delivery that the MSM Logistics operation fleet will introduce in the fourth quarter of 2021. STRIVING FOR CONTINUOUS GROWTH Towards ensuring continous growth, MSM is working on cost optimisation initiatives and this includes group volume consolidation negotiation, reduction of multiple handling, increasing direct to customer delivery (reducing touch points) and process control enhancement. In line with plans to develop new products to meet emerging lifestyle trends, MSM is committed to ensure supply chain readiness for value added products from sourcing to delivery execution. The execution of demarcation strategy to increase MSM Johor’s refining capacity by transferring East Malaysia distribution volume through Pasir Gudang Port is an important step towards growing the Group’s capabilities. It frees up MSM Prai to focus on growing export and central business volume while ensuring MSM Johor starts sweating the refinery’s underutilised assets. On the service front, the kick-off of Service Level Agreement review with key suppliers for supply and service sustainability marks the Department’s commitment towards meaningful engagements that can drive win-win benefits for our stakeholders. Other than process control improvements in Supply Chain operation, achievements in cost efficiencies realised during the year include centralisation of tender processes to leverage on Group volume and bring cost benefits through better negotiation. Higher volumes have created opportunities for MSM in value added services from service providers which are similar to services received by other big industries in Malaysia. ACHIEVING OPERATIONAL EXCELLENCE Moving forward into FY2022, MSM will focus on introducing a customised customer distribution network model for northern, central and southern regions; harnessing digitalisation and IR4.0 technologies for the Group’s planning module, warehouse management system and fleet management system; and exploring commercialisation of the logistics function and the centralising of inland transport planning. Towards improved operational excellence, a benchmarking exercise on best practices with industry leaders will be conducted, and MSM intends to strengthen partnerships with reputed logistics peers within the FGV group, such as FGV Transport Services. Internally, talent upscaling will be conducted via Supply Chain Operational Excellence workshop and a drive by MSM Logistics to attain certification on ISO 9001. Further engagements with customers will also be sought, such as through the planned launch of a Good Warehousing Practices (GWP) programme with key wholesale customers. Sustainability Step-Up Supply chain sustainability initiatives and monitoring schedule in FY2022 for CO2 gas emission and biofuel. SUSTAINABILITY JOURNEY HOWWE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 91
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