Level 2 – P.O. Generation And Fulfillment

1. Level 2 – P.O. Generation And Fulfillment Level 1– Procure to Pay Level 3 – Generate P.O. Level 3 – Select Buying Channels Level 4 – Create Requisition

2. Identify Need 0010.41 Select Buying Channel Fulfill P.O. 0010.44 Monitor Status 0010.42 Generate P.O. Accept / Confirm P.O. 0010.43 Generate Requisition Release Close P.O. SAP SAP 0010.4 a P.O. Generation and Fulfillment $10k per month, $1k per, annual $2.5, no stock or maint. Mostly admin. Card – account no. CT 1 Requestor $10 million 25,084 trans $398 / trans. 53% Opp <$5k Pro-card Pcard Designated Transaction Requisition Required Release Required 113,000 P.O. 32,000 <$5k 152,000 Trans. Buyer CT 1 Materials Materials SAP Requisition Selected Vendor Services Services SAP P.O. (Fax, Auto Fax Email) Vendor Selection Q 2 Q 1 Q 3 No Selected Vendor 60-70% of Transactions Settle And Pay Acceptance / Confirmation SAP MRP Requisition 11 Received Order System Receive Material 117,696 Invoices On Time 86% Disc Taken 76% SAP PM Work Order 10% EDI Trans. 24 Supplier Fulfilled Order P.O.

3. Identify Need Select from BOM or look up material number. Draw From Zone Stores/submit replenishment order Complete request for material number (J-Sheet) Draw From Stores 0010.4.2 Generate P.O. 0010.43a Generate Material Requisition Maintenance Planning SAP SAP SAP 0010.41 - Select Buying Channel - Materials (Does not apply to Services) Note 1 Pro-card 20 Requestor Yes 9 Note 1 1 26 No No No No Material Tracking Required? No Zone Store? Storehouse Stock? BOM Purchase? Procard Item? Yes Yes Yes Yes Is Material No. Needed? 3 25 6 Material No. Exists? No Yes 16 Phase II Buyer SAP Requisition SAP MRP Requisition SAP Requisition SAP PM Work Order System SAP Requisition 1 Policy and Accountability Issues Process and Enablers System Related Supplier Pro-card 16 9

4. 0010.41 Select Buying Channel 0010.44 Monitor Status Create and Process P.O. Contact Requisitioner or Manager for Approvals and Update P.O. Buyer: Contact Supplier 0010.43 Generate Requisition Release Accept / Confirm P.O. Transmit P.O. SAP Workflow CM Workflow 0010.42 – Generate P.O. – Materials No PO Approval Requestor 13 25 PO Approval 25 5 Vendor Selection Selected Vendor 13 22 Yes No No No 20 No SAP Requisition Requisition Requires Release? No Vendor Determined? Yes Auto P.O. Activated? No P.O. Confirmed? Yes Price Change? Yes Yes Buyer Over DOA? 7 19 Yes 21 17 8 12 SAP MRP Requisition P.O. 14 SAP P.O. (Auto Fax Email) Confirm / acknowledgement EDI/xml System 2 SAP PM Work Order Phase II Add more E-transactions 1 Policy and Accountability Issues Process and Enablers System Related Supplier 16 9

5. Fulfill P.O. Monitor Status Start. Close P.O. SAP 0010.44 – Monitor Status - Materials Requestor Tips and Tricks Resolve Issues Buyer 21 18 Settle And Pay Received Order Receive Material System 1 Policy and Accountability Issues Process and Enablers System Related Supplier P.O. Fulfilled Order 16 Invoice 9

6. Involve Buyer early in this process Get more Info (Contract Requester or View w/o) Contact Buyer Define Requirement Transmit P.O. 0010.43 Generate Requisition Release Accept / Confirm P.O. Create and Process P.O. Monitor Status P.O. Start. Vendor DB SAP Workflow CM 0010.42 – Generate P.O. – Services Requestor Approver 13 PO Approval Approver 10 7 Outline Agreement Exists? No 25 13 Yes Vendor Selected SAP Requisition SAP Work Order 5 Vendor Selection /OA Search Yes 3 6 21 Buyer 20 Requires Release? No 25 19 4 8 SAP P.O. (Auto Fax Email) System 2 P.O. (Auto-Fax or Email) 12 P.O. Acknowledgement 14 1 Policy and Accountability Issues Process and Enablers System Related Supplier 16 9

7. Product or Service delivered 0010.1 Mail or email Invoice 0010.2 Receive Invoice & approve for payment 0010.4 Scan invoice 0010.6 Index invoices From Queue 0010.5 Scan Invoices, Load Queue With images 0010.5 Scan Invoices, Load Queue With images C-House database C-House database SAP SAP SAP SAP Settle and Pay 0010.3 Mail invoices to Cleaning-house Vendor No Plant Site SCAN Invoice ? Yes Clearing House 0010.8 Invoice posts for payment Accounts Payable PO Invoice ? Yes Invoice passes System checks ? Yes 1 Policy and Accountability Issues Process and Enablers System Related 0010.9 Invoice enters Workflow for resolution 18 No 16 0010.7 Park for Approval No END 9 Systems

8. 3.1.1 Requisitions for Purchase Orders A PO must originate from a requisition that has been properly reviewed and approved by an authorized person. The requisition and/or PO must be reviewed by the approver to ensure that the right supplier is designated, that the quantity or accurate service description is listed, and that there is a correct delivery/service date given. Requisitions must include an SAP material and/or service material group number. The requisition must also include the appropriate tax code based on the item or service being purchased. PO tax codes start with a “P” or “Q”. The SAP system will determine the taxability of the item based on the material / service group and the tax code selected, along with the taxing jurisdiction of the cost center. If the approver needs help determining the appropriate tax code, the approver should contact the Tax Department for guidance. The following are the only allowable PO purchases that do not require a requisition: • Freight • Restocking fees • Hot Shot fees • Fuel surcharges • Expediting fees • Finished products - (Finished Products refers to those items being purchased, generally by the Supply Chain group for direct resale. Examples - Resin, Ethylene) • Feedstocks - (Feedstocks are defined as raw materials required for an industrial process. In the chemical industry, common feedstocks include natural gas liquids such as naphtha, gas oil, and ethane. Benzene, ethylene, propylene, and other olefins are examples of feedstocks used as the building blocks for the production of value added petrochemicals. In general, the product must be a building block for creating another product and it must be changed (reacted) in the process.)

9. 3.2 Procurement Card The ProCard provides delegated purchasing authority by allowing non-procurement personnel to purchase targeted materials and services (when a contract is in place) for use in the course of conducting company business without Procurement Personnel’s involvement. This process is cost effective for CPChem because orders are placed directly with the supplier and the handling of purchase orders, invoices and checks are eliminated. The following are the guidelines for use of the Procard. Unclear transactions considered for the ProCard should be discussed with Global Procurement for the requested commodity or the ProCard Administrator prior to purchase. Certain Materials (TBD) Certain Vendors (TBD) Certain Situations (TBD) For further details, consult the policy portal for the Procurement Card Polices and Procedures Manual. On site receiving issues – who does it belong to? Numbering system for these contracts? Off line types

11. 3.1.3 Approvals • Appropriate approvals should be obtained prior to making commitments to third parties. A PO must be reviewed and approved by an authorized person who has been delegated the appropriate authority as defined on the Delegations Summary (DOA) document. All personnel should reference their respective delegations summary document prior to authorizing the PO. • Purchase Order signature is limited to delegated authority of the responsible person signing. Electronically issuing or outputting a Purchase Order constitutes an electronic signature. A signature also constitutes approval up to the signer’s delegated authority. 3.1.4 Change Orders or Changes to Existing Orders • There are situations where changes to Purchase Orders are necessary. If the projected spend, overall limit in SAP, for an existing order or new order exceeds the amount authorized on the requisition; it will be necessary to notify the requester for the purpose of securing authorization to increase the committed funding. When the total value of a Purchase Order is being increased, the Procurement approval required is based on the new total commit value.

12. 5.10 Zone Stores • Zone Stores are “point of use” stores. The purpose of a zone store is to provide easy access to high usage parts at or near the point of use. Zone stores increase productivity by eliminating the travel to and from the warehouse and eliminating system process requirements. There are two primary types of zone stores: • • Vendor managed: A representative from the vendor monitors the zone store, enters replenishment orders and insures that the replacement stock is delivered. • • Plant managed: Plant personnel provide these services. • Materials set up in a zone store should be high volume, low cost. The rules for establishing zone store stocking levels are the same as those used to add items to Stores. The plant MRF must be used for approval even though a material number may not be required. The vendor’s representative for vendor managed inventories needs to follow the same protocols or provide justification for stocking levels calculated by other means and obtain approval from Procurement. • Zone stores are to be replenished direct from the supplier, not from the Store-stocked materials. Each zone location must be clearly marked for the item it contains and access to Zone Stores is to be limited as much as possible to the users of the materials. • Stores or Procurement must randomly select a minimum percentage of the material and count it to verify that the material quantity matches the packing slip.

13. Generate Requisition - Materials

14. Auto P.O.

15. MRP Process

16. Add Workflow “approval reminders” Requisition Release Inform requester of who has to approve it New Release Codes MRNZ NY 50k Need a general Review and update Auto from PM Material Return Service Return

17. P.O. - Materials Inform requester of who has to approve it Add Workflow to approval And “approval reminders” Add supplier confirmation

18. Transmit P.O. Up to date info Vendors prefer edi Target high volume Materials Return Services Return

19. Involve the Buyer Early in this process Vendor Sourcing

20. Involve the Buyer Early in this process P.O. Services Generate P.O. Return Monitor Status Return

21. 0010.43a Phase II – Punch out – Round Trip Procurement

22. Material Number Decision From Marian RuizPort Authur

23. Time Sheets and Work Approval

24. Workflow with CCTS CCTS Validates POs WOs, Contractor Rates And Gate Log Contractor Enters Time (L,M,E+ 3rd Party) in CCTS Contractor Performs Work Contractor & Owner Approve Transactions Auto Interface to CMMS & Posted to POs, WOs, & G/L Auto Interface To A/P Contractor Paid by EFT Required human intervention