FGV Annual Report 2020

Group Financial Review Achieved 17.3% Cost Savings in 2020 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 + services across the Group, resulting in a procurement plan that is more efficient and eliminates duplication. • Technology focus to manage Group 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 RM150 million, we delivered RM176.3 million or 17.3% in cost savings in 2020, despite the Covid-19 pandemic. Operational Excellence • Recommenced Procurement Champion Programme in July 2020. Conducted multiple Procurement Process Refresher Learning Series to entrench deep understanding of procurement processes and to minimise compliance issues. Also conducted knowledge sharing sessions with external parties to acquire new knowledge on procurement processes, systems and best practices. • Cluster Approach where we introduced several categories that were grouped and managed as clusters. The objective is to reap economies of scale, optimise outcomes, secure greater savings, use resources efficiently and gain a better understanding of the market. GROUP PROCUREMENT FGV has become more vigilant on procurement spending and introduced measures to minimise leakages. As a result, we realised 16.7% in savings from procurement activities in 2019 that translated to RM175 million. This result is 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 2020 and achieved RM176 million or 17.3% in savings against the Group’s internal target of RM150 million, despite the Covid-19 pandemic that saw a slowdown in procurement activities. We will continue to rigorously monitor our procurement expenditure as part of our approach to reduce our operating costs. 50 FGV HOLDINGS BERHAD Annual Integrated Report 2020