Guidelines to Purchasing Process. Purchase Requisition Processing

Transcription

1 To: Unit Purchase Heads, Cc: Financial Controllers, General Managers Guidelines to Purchasing Process Observation: It is observed in the recent audit that there are diverse Purchasing Process followed at unit level to Process Purchase Requisition (PR) to Purchase Orders (PO) in Prolofic system. Risks: These variance defects in various business risks including Limited Purchasing Control, Delay in Material Availability, High Purchasing Cost, Limited Quality Control and poor Inventory Management. Control: It is important to standardise & simplify Purchasing Process to avoid and reduce the business risk and strengthen financial system. The proposed framework shall help in improving the purchasing management, compliance and purchasing governance and reduce the business risk of non conformance. Purchase Requisition Processing Activity Owner: Scope: Applicability: Functional Head (Store & Non Store Item) Procedure covers Purchase Requests for Goods and Services All Operating Units Implied Date: 1 st Sept 2012 Type of Requisitions: Requisition Type Description Product Classification Ownership Supplier Classification MQ Market List Non Stockable User Contracted PQ Purchase Requisition Stockable & Non Stockable Stores Or User Non Contracted CQ Contract Requisition Stockable & Non Stockable Stores Contracted IQ Issue Requisition Stock Issuance User NA TQ Transfer Requisition Stock Transfer Stores NA * DQ (Direct Requisition) is de activated and is not recommended to be used. Procedure for Requisition Step Process Step Responsibility Scope Prolofic 1 Raise Purchase Requisition Functional Head Define specifications as Make, Model, Qty etc. Define Budget Source Define Stock Statement Define Consumption Pattern Define Need by Date & Par Stock 2 Approve Purchase Requisition Purchase Head Verify Budget Validate Item Code & Specifications Validate Stock & Alternate Product Validate Consumption Pattern Need by Date & Par Stock Adhere to Process & DOA 1 st (Requester) 2 nd (Final ) 1

2 Important Points to be Noted & Implied 1. This process is applicable for MQ, PQ, and CQ Type requisitions. 2. Purchase Requisition is Mandatory for Purchase Order Processing. 3. Prolofic System Shall be Configured by IT, with 2 Way Approval System only (As Defined below). 4. All requisitions to be generated through Prolofic System only. 5. User to Provide projected delivery information along with the PR. 6. Off line Requisitions/ Manual Requisitions shall be discouraged. 7. All requisitions above 2 Lac to be authorised from Corporate Office Only, followed by Purchase Order. 8. All Service Contracts/ Purchase Orders shall be processed through Prolofic without the need of Requisition. 9. Split Purchase to be discouraged. 10. Purchase Head to identify Open Requisitions for Approval, Rejection or Short Closure as per Process. 11. Suggested Frequency of Requisitions should be followed. Requisition Type Market List Provision & Groceries Indian Beverages Imported Beverages Liquor Indian/ Imported Engineering (Store Items) Engineering (Non Store Items) Stationary/ Printing/ Guest Amenities/ General Store Stewarding/ Production/ F&B Housekeeping / Laundry Frequency (Advised, can be amended as per Unit Need) Daily (Except Holidays) Once in 3 Months Once in 3 Months As per requirement Once Every 2 Months Once Every 2 Months 12. Requisition Approval Stage in Prolofic System. Purchase Requisition Approval Approval Stage L1 L2 2 Way User Purchase Purchase Order Processing Activity Owner: Scope: Applicability: Unit Purchase Head Procedure covers Issuance of Purchase Order based on Approved Purchase Requisition All Operating Units Implied Date: 1 st Sept 2012 Step Process Step Responsibility Scope Prolofic 1 Identify Approved Purchase Requisition (PR) in Prolofic System 2 Create Purchase Order Recommend for Purchase Order Approval. Purchase Head Obtain approved Pending PR Summary Report on Daily Basis (Pending PR). Validate Last Purchase Price & Approved Supplier information. Validate Price, through Competitive or Non Competitive Procedure. Negotiate and Obtain BAFO (Best & Final Offer). Prepare Comparative or Sole 1 st (Purchase Creator) Order Authority : Purchase Head

3 Supplier Approval. Create Purchase Order along with appropriate Commercial & Legal terms. Recommend Purchase Order for Approval to Finance 2 Approve recommended Purchase Order Finance Controller Validate and Approve Purchase Order in Prolofic System 2 nd (Final ) Authority: Finance Controller 3 Approved PO Issued to Supplier Purchase Head Approved Commercial Document for Supplier, Stores, receiving and Finance Important Points to be Noted & Implied 3 1. A purchase order (PO) is a legally binding document and represents the buyer s intent to purchase specific quantities of product at specified prices. 2. In Competitive Purchasing, minimum of 3 Quotes are Mandatory above an Expense of Rs In Non Competitive Sourcing, approval on Sole Supply Format is mandatory (Attached for reference) 4. PO must have PO number, List of Product, Quantities and Agreed prices, Bill To, Ship To, Need By date, Payment Terms and Commercial T&C s clearly defined. 5. Purchase Order to be approved, printed and signed as per Matrix (Given Below) before issuance to supplier. 6. No Material to be purchased or received without Approved Purchase Order (PO). 7. Purchase Order must have approved requisition, Supplier Quotations, Evaluation, Comparative/ Sole Supplier Approval as a part of Documentation Management Process for filling/ storage. 8. Purchase Order and related documents shall be audited by Finance for conformance to compliance on monthly basis. 9. All Invoices of Supplier must have approved PO reference number. 10. Purchase Head shall be responsible for: a. Coordinating purchase needs with user departments for uninterrupted supply of material/ services. b. Minimise Inventory investment and Loss c. identifying reliable and potential suppliers d. Standardise and Simplify Product Specifications. e. conducting market studies for material purchases f. Proposal analysis and negotiation to buy competitively and wisely. g. supplier selection and issuance of purchase orders h. Resolving purchasing related problems i. maintenance of purchasing records j. Avoid Duplication, Waste and obsolesce. k. Analyse and report the long range availability and cost of Major purchased items. l. to continually search for new and alternative ideas, products, and materials to improve efficiency and profitability; and m. to administer the purchasing and supply management function proactively, ethically, and efficiently. 11. Requisitions to PO conversion framework. Category Requisition Type Frequency PO Type Beverage PQ Once a Month CP Engineering R/M PQ Once a Month CP/ RP Perishable Food Store MQ Daily CP/ RP Dry Food Store PQ/ CQ Once a Month CP/ CA General Store PQ/ CQ Once a Month CP/ CA Liquor India PQ Quaterly RP Liquor Imported PQ Quaterly RP

4 Tobacco PQ Quarterly RP Service PO NA Adhoc SP 12. Purchase Order Approval Stage in Prolofic System. Material Purchase Order Approval Service Purchase Order Approval Approval Stage L1 L2 Approval Stage L1 L2 L3 2 Way Purchase Finance 3 Way User Purchase Finance 13. Operational Approval Matrix for Purchase Requisition and Purchase Orders. Category A : Delhi, Mumbai, Bangalore, Goa Category B : Jaipur, Srinagar, Khajuraho, Udaipur, Bekal Operational Procurement Purchase Requisition Unit Level Requisition Authority Remarks (Category A Units) Additional Formal Approval Upto Rs User Purchase Not Applicable > < (Between 0.50 Lac 1 Lac) User Purchase Manual Approval From FC > < (Between 1.0 Lac 2 Lac) User Purchase > (Greater Than 2 Lac) User Purchase with a Prior Approval From Corporate Functional Head Approval from Corporate. (Category B Units) Additional Formal Approval Upto (Twenty Five Thousand) Purchase Finance As per Purchase Order Approval matrix PO Approval In Scope of Purchase Manager > < (25 Thousand 2 Lac) Purchase Finance Manual Approval From FC > < (1 Lac 2 Lac) Purchase Finance > (Greater Than 2 Lac) Purchase Finance Approval from Corporate. Operational Procurement Purchase Order Remarks (Category A Units) Additional Formal Approval Upto Rs Purchase Finance PO Sign by PM > < (Between 0.50 Lac 1 Lac) Purchase Finance PO Sign by PM & FC > < (Between 1.0 Lac 2 Lac) Purchase Finance PO Sign by PM +FC+ > (Greater Than 2 Lac) Purchase Finance PO Sign by PM +FC+ Approval from Corporate Purchase (Category B Units) Additional Formal Approval Upto (Twenty Five Thousand) Purchase Finance PO Sign by PM > < (25 Thousand 2 Lac) Purchase Finance PO Sign by PM & FC > < (1 Lac 2 Lac) Purchase Finance PO Sign by PM +FC+ Approval from Corporate > (Greater Than 2 Lac) Purchase Finance PO Sign by PM +FC+ Purchase 14. Approval Matrix for Capital Purchase a. All Capital Purchase proposal upto 50,000 requires approval of Purchase Committee Comprising of PM, FC &. b. Over and Above Rs 50,000, all CAPEX needs corporate approval. 15. Emergency Purchase should Discouraged. The of Unit shall authorise or reject the Emergency Purchases. 4

5 16. Online Approval System is planned to be implemented shall act as Request for Approval. The details of the same shall be shared soon. 5