SOP MATERIAL MANAGEMENT
Prepared by D S & P
Document: SOP–Dist/MM/00/2013 Date: 6th Dec’2013
Material Management SOP–Dist/MM/00/2013 Document No.
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Reviewed & Approved by:
Distribution: CC: CDO CC: CSCO CC: DCDOs
ANNEXURE “A” Time line, targets & responsibility: Annex “A”
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OBJECTIVE: To create harmonious cross functional coordination to improve upon the system efficiency to achieve company’s business objectives.
PURPOSE: a) b)
To agree upon departmental activity timelines for completion of the entire procurement process for overall improvement in material flow. To identify areas needing improvement and prepare departmental guidelines for squeezing in their process times.
SCOPE: BU – Distribution, FBA, Finance, Treasury, Procurement & Inventory Management.
DISTRIBUTION STRATEGY: a)
In accordance with business plans, UDs shall initiate preparation of their MRs from Jan 15th and complete in all respects by Feb 15th, 2014 for FBA to take over for finalization and approval by Mar 1st , 2014.
b)
TPRE to ensure 100% specifications availability on share folder SFS for all material items, tools and equipment. If there is a change in desired specifications of a product , that will be notified to Procurement by D ( S&P) to be taken into account for future procurement needs without disturbing the current process.
c)
TPRE to clear 10 to 15 TE files every week received from procurement under intimation to all concerned.
d)
No slashing of budgets to be done without consultation and concurrence of the UD.
e)
Low Value items with no standard specifications to be purchased on Cash Advance by UDs against their budgeted MR.
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PROCUREMENT: 1. TENDERING FOR BIDS AND PROPOSALS / TECHNICAL EVALUATION: At least three quotations will be required to complete the bidding process except proprietary items of OEMS. In all other cases if not possibly three in certain situations, then at least two. All the suppliers participating in the bids shall be PQV (prequalified vendors) with type tested products. SC will constantly endeavor to prevent Single sources of supply by rendering a back end process of R&D performed on potential suppliers identified by SC through a well indentified / documented evaluation process. TPRE to support in searching and recommending new vendors that can potentially become suppliers of KESC of a particular product. Commercial and TE of the potential vendors to go on year round ideally to be completed before the bidding process to allow them to participate in tenders. The tender bidding process involving a new vendor that has been referred to TPRE for TE shall not remain suspended owing to delays in receiving technical feedback from TPRE. The process must go on with prevalent PQVs in place while the TE of a new vendor is awaited. The new vendor may then be included in the next invitation for bids subject to positive evaluation of TPRE. No PO to be issued to a vendor whose product is under type testing process until the results of the test are known to be favorable. TPRE will provide their time lines separately.
2. PURCHASE APPROVAL SUMMARY (PAS): Based on observations of the past drastic cut on time consumed at this stage is required. As a first corrective measure, a PAS approval needs to be expedited by shortening the approval process. Approvals shall be categorized as follows; 1. Items with repeat orders with no price escalation – To be submitted on Excel sheet by Procurement with complete details. PAS approval to be obtained on email. 2. Emergent / contingency requirement of materials – PAS to be specially discussed with FBA by Procurement and approval to be sought on email with no delay. 3. Normal processing of PAS – Approval of PAS on submission of files to FBA for vetting and seeking any clarifications if required. – within 2 days of submission of file. Once the approval as per signature mandate is available on email, the SC must move on to issue the PO to the approved source of supply.- Within 2 working days
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3. LEAD TIMES OF MATERIALS: Local shelf based items 30 days Local manufacturing items (low value) 45 days desired. Local manufacturing items (high value) up to 75 days desired. Imported items up to 90 days. (7 working days to be added over and above for custom formalities. Lead times mutually agreed will be commonly interpreted to start from date of issuance of PO, L/C opening date. Estimated time of arrival of goods shall be construed as the one for actual receipt of goods in KESC CS. For any item being transported from places other than Karachi, an additional cover of 7 working days to be kept over and above for RI.
FINANCE: In conjunction with SOPs of other departments, Finance Department shall give all out support to meet the procurement time lines for ensuring smooth material supplies. In this regards we suggest following measures; To review the Procurement's Monthly payment ceilings which determine the amount of payment that can be made to a vendor in a month. This is seen as a limiting factor if procurement is to enhance the delivery capability of a particular vendor. Treasury's LC cap limits need to be reviewed and improvised on case to case basis to allow fresh L/C for critical items to be opened. New L/C waits until previous LCs are brought under limits agreed with banks. While minimum dependence / prudent use of the option of cheque against delivery is being advised to SC, finance will ensure that the cheque is released to the vendor within 15 days of delivery. The departments involved to improve upon the response time are IM, FBA , C&A and Treasury.
FBA: Revisit the entire process of finalization of an MR for annual consumption – UD / FBA jointly responsible for raising MR. The exercise to start Jan 15th, 2014 to be finished by 1st Mar, 2014. FBA to vet and approve 50% of the MR based on previous year demands and pass on to IM for further processing within suggested time frame. Page 5 of 7
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The remaining 50% MR to be released after the finalization of Annual Budget 2014-15. No slashing of budgets to be done without consultation and concurrence of the UD. Once a partial MR gives way to PR, SC will go into ordering process (tendering wherever required). The procurement decisions taken at this stage will continue to prevail for balance PR whenever it materializes. No new tendering to be done twice.
INVENTORY MANAGEMENT: Once in receipt of partial or full MR, the PR for entire budgeted quantity to be raised after taking into account the open PRs, Pos and Stock in hand. – Within 15 days of receipt of MR. Minimum stock levels to be determined by IM for critical items. List to be provided by DS. IM to define the minimum stock levels which may serve as the bench mark for reordering of new supplies against approved budget. One month inventory stock of critical items must be maintained with due regards to lead times.
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Annexure "A"
MR Creation: Based on 50% of last year budget (Rs 850 million) and include material for: - CM material for 6 months nd
- LT PM -1000 PMTs, HT PM material shall be included in 2 MR. - ABC Project – 60 PMTs - Feeder Laying – 10 feeders Multi storey Bus bar Project - 180 bus bars (80 large & 100 small) SIPs – 85 Village Electrification – 35 schemes Meters required will be around 67,000 single phase, 21,000 three phase & 1,900 others
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