Chemical Company of Malaysia Berhad Sustainability Report 2019

PROCUREMENT PRACTICES AND SUPPLY CHAIN PARTNERSHIP [102-9, 204-1] The practice of sourcing locally is indispensable in order to insulate a business from the risks and challenges that may arise from procuring from abroad. Here at CCM, we acknowledge the significance and benefits of spending on local products and services. These benefits include the efficiency of logistics arrangements, the cost savings and the shorter lead time that only local suppliers can provide due to their close proximity as compared to overseas suppliers. The following table highlights the reasons why we prefer to procure locally. 1. Flexible and quick delivery arrangements Local suppliers can be more flexible in terms of delivery arrangements as compared to suppliers from abroad. Product deliveries are quicker as local suppliers are able to coordinate logistics with ease as opposed to the hassle of administrating shipments from across the globe. 2. Responsive and timely communications When working with foreign suppliers, the difference in time zones sometimes emerges as a problem when we require a quick response or assistance in any matter. This can be avoided when procuring locally as most of our suppliers are readily reachable within the same time zone and via many channels such as email, phone call or text messaging. 3. Better control and monitoring Before we finalise our business dealings, or for any other matter during the procurement process that will allow us to address concerns and ensure all purchases meet our standards, we may want to conduct visits to the suppliers’ factory, warehouse or manufacturing plant. Working with local suppliers serves an advantage as we can easily access their operating floors to survey their product offerings and monitor our purchased supplies, if required. This is not always the case with overseas suppliers. 4. Cost reduction Local sourcing results in cost reduction as the amount of money that our Company spends on logistics, specifically on shipment and warehousing, is significantly lesser than when procured from outside the country. 5. Supporting the Bumiputera Vendor Development Programme (BVDP) The Bumiputera Economic Empowerment Agenda is a national initiative that the Company has been supporting from the establishment of the CCM BVDP in 2007. The CCM BVDP is implemented in our business operations and is one of our key performance indicators as a Government-Linked Company (GLC) and Government-Linked Investment Company (GLIC). Sourcing locally, especially from Bumiputera suppliers, will boost the creation of genuine Bumi-entrepreneurs who are reliable and competitive, encourage research and development for products and services as well as contribute to the economic growth of the communities that we operate in. Team 2 fromCCMChemicals Shah Alamwas declared the champion of the CCM IC 2019. The winning team then went on to represent CCM at the Permodalan Nasional Berhad or PNB Group Innovation Challenge (PIGC) 2019 that was held on 24 October 2019 at the Sime Darby Convention Center and became one of the top 3 winners at the competition. ELEVATING OPERATIONAL EXCELLENCE We continue to uphold a strong Operational Excellence (OE) culture throughout our organisation. As at 31 December 2019, a total of 7 OE projects with total savings of RM7.12 million was recorded by the Polymers business, while 2 OE projects with a total saving of RM5.83 million was recorded by the Chemical business. Altogether, these two divisions garnered total savings amounting to RM12.96 million in FY 2019. To date, a total of RM80.54 million in savings has been garnered from all OE projects since 2012. 35 SUSTAINABILITY REPORT 2019