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SUSTAINABILITY JOURNEY HOW WE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 91

By transferring East Malaysia’s volume supply to MSM Johor Other than process control improvements in Supply Chain
in October 2021, the Group has increased MSM Johor’s operation, achievements in cost efficiencies realised during
domestic volume contribution and eased complexity at MSM the year include centralisation of tender processes to
Prai, allowing MSM Prai to focus on domestic volume for leverage on Group volume and bring cost benefits through
Peninsular Malaysia while maximising export. Another better negotiation. Higher volumes have created opportunities
benefit of the transfer is that the relocation of East Malaysia’s for MSM in value added services from service providers
supply point from Penang Port to Pasir Gudang Port leads which are similar to services received by other big industries
to a significant freight cost reduction of an estimated in Malaysia.
RM1.2 million per annum.

Efforts to streamline logistics from source points for efficient ACHIEVING OPERATIONAL EXCELLENCE
cost to serve have paid off. Freight cost has also reduced due Moving forward into FY2022, MSM will focus on introducing a
to direct delivery to a few main industrial customers from customised customer distribution network model for northern,
the refinery, which has removed the need for multiple central and southern regions; harnessing digitalisation
handling at the central distribution centre. A more efficient and IR4.0 technologies for the Group’s planning module,
cost to serve is targetted through a new tactical strategy warehouse management system and fleet management
for centralised delivery that the MSM Logistics operation system; and exploring commercialisation of the logistics
fleet will introduce in the fourth quarter of 2021.
function and the centralising of inland transport planning.

STRIVING FOR CONTINUOUS GROWTH Towards improved operational excellence, a benchmarking
exercise on best practices with industry leaders will be
Towards ensuring continous growth, MSM is working on conducted, and MSM intends to strengthen partnerships
cost optimisation initiatives and this includes group volume with reputed logistics peers within the FGV group, such as
consolidation negotiation, reduction of multiple handling, FGV Transport Services.
increasing direct to customer delivery (reducing touch
points) and process control enhancement. In line with plans Internally, talent upscaling will be conducted via Supply
to develop new products to meet emerging lifestyle trends, Chain Operational Excellence workshop and a drive
MSM is committed to ensure supply chain readiness for value by MSM Logistics to attain certification on ISO 9001.
added products from sourcing to delivery execution. Further engagements with customers will also be
sought, such as through the planned launch of a Good
The execution of demarcation strategy to increase MSM Warehousing Practices (GWP) programme with key
Johor’s refining capacity by transferring East Malaysia wholesale customers.
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 Sustainability Step-Up
review with key suppliers for supply and service sustainability Supply chain sustainability initiatives and
marks the Department’s commitment towards meaningful
engagements that can drive win-win benefits for our monitoring schedule in FY2022 for CO gas
2
stakeholders. emission and biofuel.