51 ANNUAL INTEGRATED REPORT 2021 ADDITIONAL INFORMATION HOW WE ARE GOVERNED REINFORCING SUSTAINABILITY GROUP PROCUREMENT FGV has become more vigilant on procurement spending and introduced measures to minimise leakages. As a result, we realised 16.6% in savings from procurement activities in FY2020 that translated to RM176 million. This result was the outcome of improved processes and negotiation strategies. The biggest savings were achieved in fertiliser procurement and estate and mills expenditure. The Group continued with this effort in FY2021 and achieved RM134 million or, 134% in savings against the Group’s internal target of RM100 million, despite the COVID-19 pandemic that reduced procurement activities. We will continue to rigorously monitor our procurement expenditure as part of our approach to lower our operating costs. STRATEGIC SOURCING • Smarter spend with “buy what we need when we need” approach to eliminate wastage. • Lowest sourcing cost model to buy from lowest global/regional/local sources without compromising quality and service. • Mega sourcing projects that consolidate volume, requirements of common items and services across the Group, resulting in a procurement plan that is more efficient and eliminates duplication. • Technology focus to manage Group’s demand such as paperless workplace via automation and digitalisation to increase speed to market. • Collaborate and leverage with key strategic partners for win-win benefits to drive supply cost efficiency and enhance customer experience. • Integrity as a procurement fundamental, with zero tolerance for non-compliance and consequence management. COST SAVINGS • Against the Group’s internal target of RM100 million, we delivered RM134 million or 34% above the target, in cost savings in 2021. OPERATIONAL EXCELLENCE • Internal Programmes to Upskill Procurement Personnel Conducted multiple Procurement knowledge sharing within Group Procurement, Corporate Centre, intercompany as well as other professional organisations. The objective is to promote perspectives at the same time entrench a deep understanding of procurement processes and manage compliance issues. This initiative has proven to be one of the best method of upscale that helps to connect, improve performance and increase competency as procurement professionals. • Procurement Process Digitalisation Implemented several eProcurement system improvements, process governance/control and database integration within the existing Enterprise Resource Planning (ERP) system. This digitalisation initiative is to enable automation, improve turnaround time, enhance data quality and process transparency, which helps to streamline procurement paperless end-to-end cycle. Achieved 17% Cost Saving from Procurement Activities in FY2021
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