TELEKOM MALAYSIA Transforming procurement for greater proficiency
T
TELEKOM MALAYSIA redefining procurement for supply chain success WRIT TEN BY
DA LE BENTON PRODUCED BY
CHARLOT TE CL ARK E
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Through a full-scale transformation journey, Telekom Malaysia redefines its procurement function
H
istorically, procurement has
business needs and strengthening
always been perceived as
supplier relationships to deliver shared
a support function. Over the
value to the organisation,” says
last decade however, there has been
Mohamad Mohamad Zain, Chief
a considerable shift as more and more
Procurement Officer, TM.
businesses around the world are
With a career spanning over 20
investing heavily to create greater
years, working in a number of roles
alignment between procurement and
within TM from insurance management
the strategic direction of the company.
to enterprise risk management,
For Telekom Malaysia Berhad (TM),
Mohamad has seen first-hand the
Malaysia’s Convergence Champion,
changing role of procurement and feels
procurement has evolved far beyond
his experience finely positions him to
its traditional function and is now
lead TM’s transformation journey.
pivotal in the success and future growth of the business. “Procurement has indeed played
Procurement was identified as one of the key pillars to the company’s Performance Improvement Plan (PIP)
a pivotal role in ensuring speed to
3.0, which focuses on delivering value
market, improving customer stickiness
via total cost ownership savings,
via quality products and services while
increased speed of procurement
also assuring supply sustainability to
process to support speed to market
support all year-round dynamic
and be more responsive to the
“The Group Procurement vision is to optimise productivity,” says Mohamad, “while also building an organisation that has a sustainable competitive advantage towards “Procurement Made Easier” with stable, effective and efficient sources of supply” — Mohamad Zain, Chief Procurement Officer, TM
dynamic business needs across the wider TM Group. “The Group Procurement’s vision is to optimise productivity,” says Mohamad, “while also building an organisation that has a sustainable competitive advantage towards “Procurement Made Easier” with stable, effective and efficient sources of supply.” Through his role, Mohamad is w w w. t m . c o m . m y
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“ We are expecting the Industrial Revolution 4.0, and so the future of procurement will largely dependent on technology, robotic and Internet of Things (IoT). Through our journey, we are laying the foundations in order to be ready for this future� — Mohamad Zain, Chief Procurement Officer, TM
BIO
Mohamad Zain Chief Procurement Officer, TM Mohamad, 54, gained vast experience in insurance services while serving a UKbased insurance company for six years, including as Officer in charge for agency and direct client underwriting, claim management and re-insurance, designing insurance for credit card company and bank assurance, serving both domestic and Multinational Corporation clients. He joined TM in 1993 as an Assistant Manager and has been tasked with managing the corporate insurance programme and implementing the Enterprise Risk Management programme for TM in 2001. In 2007, he was appointed GM entrusted with an expanded portfolio of Group Business Assurance covering Enterprise Management, Revenue Assurance, Fraud Management, Insurance Management, Credit Management Policy & Monitoring, Corporate Compliance, Business Continuity Management and Enterprise Business Management. He was promoted to VP, Group Business Assurance, a position he held from 2011 until his appointment as Chief Procurement Officer on 1 September 2014.
part of the senior management committee, something he feels enables him to change the perspective of procurement. One of the key changes that he has implemented, in order to measure the success of this strategic transformation, is the addition of optimising the supply chain and procurement management as the Group’s key performance indicators. What this does is present a challenge that Mohamad must continue to overcome; continue to demonstrate to stakeholders the true value of the new procurement
understanding the already identified gaps in the
model in contributing positively to
Company’s basic procurement function.
the Group’s profitability. “I need to continue to show how
These gaps allowed TM to anchor its transformation with three key pillars; value creation and
procurement can assist our
expansion, responsive to business dynamics and
marketing team on speed to market
speed in procurement process and execution.
with competitive product and
The pillars will enable TM to implement
services,” he says. “This can then
a best-in-class procurement model, but any
ensure that our suppliers can fully
transformation journey is not without challenge.
apprise on the overall objective of our new procurement model.” TM’s transformation journey
For Mohamad, he views challenge as an opportunity to continue pushing forward. “I look across our transformation to date, the
began in 2013, overseen by
results that we can point to, and it gives me the
Mohamad’s predecessor. Moham-
additional adrenalin I need to keep on pushing for
ad took over in 2015 and immedi-
better results,” he says. “Whilst we have success-
ately worked across the Group on
fully established a cross functional category w w w. t m . c o m . m y
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management team, improved
But Mohamad is a firm believer in not standing still
governance to allow speed of
and is already looking at the next step in order to
procurement approval, and
continue to improve, with technology and
strengthened supplier relationship
embracing digital procurement a clear goal.
management, there is still room
While Mohamad looks to the future
for improvement, including
of technology, that’s not to suggest that technol-
embracing technology.”
ogy hasn’t played a defining role in this transfor-
The transformation by its very nature is defined by improving
mational journey. “To support the procurement transformation,
performance. Mohamad’s
technology has and will be fundamental in the
sentiment of continuous learning is
delivery of speed and efficiency in our processes,”
shared across the Group. Four
he says. “As such, we have embarked on PINTAR
years into this journey and TM can
project, designed to provide data analytics on
already point to RM1.0 billion
spend analysis for our category managers.”
(USD250 million) TCO savings
PINTAR, or the Procurement Institutionalisa-
through the expansion of value
tion of Technology Applications and
creation, as well as expanding its
Resources, specifically enables greater
strategic vendor portfolio and
efficiencies across spend analysis, online tender
improving overall governance and
and quotation, supplier performance manage-
control in order to achieve faster
ment and contract management and repository,
procurement process.
amongst other key areas. w w w. t m . c o m . m y
With technology redefining industries all around the world this brings upon a challenge that is not unique. The global technology conversation is defined by Artificial Intelligence, Automation, Big Data, but are these terms simply turning into buzzwords? What work does Mohamad and TM do to ensure that the Company is implementing the right technologies for the right reasons and not just following trends? “As a technology company, technology and digitalisation have been part of our business DNA from the very start,” says Mohamad. “TM has its own R&D team, Network & IT Technical Committee and Chief Digital Officer that continue to provide advisory across the Group on new technology and digitalisation plan. At the same time, we also benchmark with peers across the globe and in some instances securing advice from our key suppliers who have implemented robust supply chain management system.” As a supply chain and procurement function, having a strong supplier network is crucial. In the journey of implementing a new procurement model, that supplier network proves more vital than ever. Mohamad admits that a transformation of this scope is not one that can be completed alone, with the strengthening of supplier relationships in itself a core pillar of the journey. TM has redefined how it approaches supplier and vendor management, with expanded collaboration with mega
“ Whilst we have successfully established a cross functional category management team, improved governance to allow speed of procurement approval, and strengthened supplier relationship management, there is still room for improvement, including embracing technology” — Mohamad Zain, Chief Procurement Officer, TM
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suppliers (foreign and domestic) and those local vendors nurtured via its Bumiputera-Vendor Development Programme (BVDP). To date, we have over 9,200 vendors registered with us with close to 4,400 Bumiputera vendors. At TM, we have a robust and transparent procurement process; and we adhere to industry’s best practices. We are committed to maintaining the highest degree of integrity, transparency and accountability in the conduct of our business and operations. At least 42% of our projects are based on tenders and we also award projects that require economies of scale to our long term and strategic partners. The BVDP is designed to stimulate the activity and involvement of local suppliers across Malaysia in tenders and other procurement activities. These activities can be stand-alone or through collaborating with foreign partners, with the goal of sharing technology and knowledge to the local suppliers in order to develop the capabilities of the local supplier network. “This programme will not only support the capability building of local vendors who will then be able to compete for regional business needs through tenders,” says Mohamad. “For TM, based on our BVDP framework, the entry level would be the Entrepreneur Development (ED) and Blue Lane (ED programme specific for ICT-based or start-up technology company companies) levels. Once the vendors show
improvement in their processes and capabilities, they will then be upgraded to Strategic Partners, and then elevated to become a Corporate Champion and finally to a National Champion. This journey may take three to five years.” TM has already amassed a strong portfolio of both foreign and local strategic suppliers such as Huawei, Fiberhome, Nokia as well as Opcom, Dura Mine and Lite Cable. As the title implies, this procurement journey is one of continuous improvement. Procurement as a function will continue to change and evolve and TM must continue to evolve with it in order to continue to deliver success. “The future will see TM begin to better embrace new technology, organisational and process redesign, and continue to push for cultural change in supporting this changing space,” says Mohamad. “We are expecting the Industrial Revolution 4.0, and so the future of procurement will largely dependent on technology, robotic and Internet of Things (IoT). Through our journey, we are laying the foundations in order to be ready for this future.”
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Menara TM Jalan Pantai Baharu Kuala Lumpur Malaysia, 50672 T +603-2240 9494 www.tm.com.my