Raaj Unocal Standard Operating Procedures Procurement

1. Raaj Unocal Standard Operating ProceduresProcurement

2. Key Sub-Processes 1 Buying 2 Vendor Management 3 Ordering Procedures 4 Receipt of Material 5 Payment

3. Legend

4. Procurement Organogram

5. 1. Process Flow: Procurement Planning 2 3 1 Current MDM Levels Expected Sales Plan Average Lead Time Report Indent based planning is done . Refer to indenting process for details No Is the material a direct material? Production In-charge 1 Basis expected sales order for n+1 month , material requirement is calculated Start 2 Stop Chief Executive Officer 3 For key materials: Plan is created basis MDM norms and current lead time. Yes A Chief Executive Officer A Procurement Plan

6. 1. Process Flow: Vendor development 2 1 Indent for new material Procurement Plan Is it a packing material or raw materials ? 1 Identifies materials for which vendor development procedure needs to ne carried out . Identifies vendors for the list of material from both internal and external sources. Receives a list of preliminary information such as price, specs, quality etc Start 2 A Chief Executive Officer Purchase Officer Production In-charge Approves Quality audit for vendor is performed . Report is sent to GM commercial Post approval, submits list of potential vendor to CEO. Stop Yes B No A B List of materials for vendor development List of potential vendors

7. 1. Process Flow: Vendor Code Creation 1 Vendor Code Creation Form Approves ? Reviews adequacy of form ? 1 Fills in vendor code creation form for creation of new vendor code and sends to CEO for approval. Post approval send it to Finance Executive for code creation Start 2 A Materials Manager Production In-charge No Yes Reviews to ensure there is no existing codes Resends request to the purchase officer with details of missing information Creates vendor code in tally Stop Yes Finance Executive Finance Executive No A Vendor creation form

8. 1. Process Flow: Vendor Evaluation 2 1 Vendor service quality file Quality Reports / NCR 1 2 Sends form to quality department for overall quality score Basis input reports Materials Manager creates vendor evaluation form. Adds quality score and sends the same to CEO Moderates and gives final score . Sends it to the Materials Manager Start A Materials Manager Materials Manager Quality Head CEO No Is any rating below satisfactory? Vendor identification process Files the vendor evaluations Stop Yes Materials Manager No A Vendor evaluation

9. 1. Process Flow: Vendor Evaluation 2 1 Vendor service quality file Quality Reports / NCR 1 2 Sends form to quality department for overall quality score Basis input reports Materials Manager creates vendor evaluation form. Adds quality score and sends the same to CEO Moderates and gives final score . Sends it to the Materials Manager Start A Materials Manager Materials Manager Quality Head CEO No Is any rating below satisfactory? Vendor identification process Files the vendor evaluations Stop Yes Materials Manager No A Vendor evaluation

10. 1. Process Flow: Order Process Approved Vendor ? Checks availability of the stock. Approves Indent if stock is not available and forwards to purchase officer Prepares an indent for required material and sends to stores in charge Evaluates if it is to be purchased from approved vendor or from new vendor Start Yes A Stores In Charge Production In Charge Materials Manager No Invites minimum 3 quotations for material. Prepares comparative statement. Endorses vendor and comparative statement and sends to CEO . Selects vendor in consultation with quality and sends it to Materials Manager Raises PO and sends to CEO along with previous PO price. C B Materials Manager Materials Manager Materials Manager CEO Materials Manager Signs off PO. Raises the PO and updates PO File Stop D CEO Materials Manager A B C D Approved Indent Request for Quotations Comparative Statement Approved Purchase Order

11. 1. Process Flow: Open PO Monitoring CEO evaluates if PO Has to be closed? Performs root cause analysis for all open PO. Generates a list of pending purchase orders at the end of the month Forwards file to CEO Start Yes A Materials Manager Materials Manager Materials Manager No Sends list to Materials Manager for follow-up with vendors Sends list to Materials anager for short closure of PO. CEO Materials Manager Stop A List of Open POs

12. 1. Process Flow: Receipt of Material 1 Receipt of Material Is material Quality Passed ? Post unloading of material performs quantity check and prepares a material receipt note (3 copies) with actual quantity 1 Prepares a gate entry for material Transfers material to goods under inspection area Start A Stores In Charge Security Guard Stores in Charge Yes No Files quality report in along with one copy of MRN in a material wise file. Puts quality approved stamp on 2 MRN copies and send s to Store Incharge Attaches one copy of MRN to Accounts and one copy of MRN to Materials Manager Updates inventory status sheet basis duplicate copy of the MRN RTV is formed. Refer Quality SOP – Rejection Process B C Quality Executive Quality Executive Stores In Charge Materials Manager Stop A B C Approved Indent Material Receipt Note Updated Inventory Status Sheet

13. 1. Process Flow: Vendor Payment 1 Material Receipt Note Is material Quality Passed ? 1 Receives Approved MRN from Stores-in-Charge Processes invoice in Tally for partial amount and passes debit note for balance amount No Start Accounts Executive Accounts Executive Yes Processes invoice in Tally Stop Accounts Executive

14. 1. Process Flow: Balance Confirmation 1 Vendor’s Ledgers from Tally Is there a variance? Balance confirmation in done by comparing the vendor ‘s ledger and ledger as per the books 1 Sends a mail to all vendors asking for their ledger books in hard / soft copy Gets balance confirmation from the vendor No Start A Accounts Executive Accounts Executive Accounts Executive Yes Discusses with the vendor and resolves variances Rectifies books if required and gets confirmation from the vendor. Stop B CEO Accounts Executive A B Mail record for Balance Confirmation Balance Confirmation