Sample DRAFT April 1, 2016

Sub-Section I
Procurement Process

Supplier Creation,
Procurement Local Procurement Goods Receipt
Modification &
Purchase import Purchase Process
Blocking

Foreign & Local

Invoice Verification Credit Note
Bank Payment

Version Issue Date Prepared by Reviewed by Approved by Remarks

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Sample DRAFT April 1, 2016
Supplier Registration and
Head Office
Evaluation
New 1.1 When a new supplier is required for a new service line or product or when an
Supplier existing supplier needs to be changed; the eligible end user shall first fill up a
requisition form stating the reasons and submit it to its respective HOD for approval.
End User Respective HOD
1.2 Respective HOD will review the requisition form filled up; assess the requirements
Fill up a requisition form, Will review the filled stated and the need for a new supplier; shall then accord its approval or reject the
providing reasons for Filled Requisition requisition and will provide requisition by providing appropriate reasons.
finding of a new supplier Form its Approval /Rejection of
and the item details the requisition in system 1.3
accordingly A) Requisition approved: the procurement officer will then conduct its search for
Reference No. 1.2
Reference No. 1.1 new suppliers, communicate with them to send their companys profile and also fill up
a vendor registration form and send it within the stipulated time provided by the SPEL
Procurement Officer company. Suppliers can be identified based on criteria's like:
New suppliers are Is Requisition - Past experience, Recommendations, Advertisement, Visit to Trade fairs, Visit of
Supplier Yes suppliers representatives, Magazines / catalogues etc.
identified based on a note approved?
Registration Form
criteria; officer will also
visit and interact and get The procurement officer will also conduct an evaluation of the supplier and rank them.
the registration form filled No
And send them to procurement head for approval.
up Evaluation criteria to include whether a vendor is a first stage or a second stage
Supplier
END dealer; the credit that the vendor will pass, the quality, the financial terms of payment,
Procurement Head Reference No. 1.3 Rejected etc. to be evaluated and score rated before any decision is made.
Will evaluate the criteria No
B) Requisition rejected: The requisition note will be closed by intimating to the end
like facility, suppliers on
Supplier Is Sample user who raised the request.
the basis of supplier Sample Order
Evaluation Form Order Yes
evaluation form Successful?
required? 1.4 Procurement head will review the vendor registration form; the score card
Reference No. 1.4
evaluation done by procurement officer and select the vendor considering the factors
Yes such as facilities provided, quality, financial position and market prestige of the
No
vendor. If required, a sample order from the vendor will be place and then evaluated.

Procurement Head 1.5 Procurement head will provide its approvals and comments to the supplier
evaluation form and will send to accountant for commercial check and compliance.
After evaluating the supplier; it
will provide its approval and
Approved supplier
Contd... comments on the supplier
form
evaluation form and will send to
accountant for commercial
check and compliance Report Description Frequency
Reference No. 1.5
Vendor Master Created and Approved in the system Quarterly

x Process Activity x Control Activity Suppliers evaluation / criteria policy, analysis and reports Yearly

Process Owner: Procurement Head Records / Forms:

Interfaces: End user, Procurement Officer, Requisition note / form
Accountant, Chief Financial Officer (CFO), Finance Supplier Registration Form
Manager Supplier Evaluation Form
Approved Supplier Form

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Sample DRAFT April 1, 2016
Supplier Registration and
Head Office
Evaluation
1.6 Once the filled up vendors registration form is received from Purchase
department, the Accountant will cross-verify the details of the supplier with respect to
Accountant their necessary tax and statutory compliance registration details by coordinating with
the purchase officer (if required) and then create a new vendor code and fill in its
Co-ordinate with purchase
mandatory and optional details available and send the documents to ahead for
officer for commercial details of
Contd... approval.
the new supplier (if required)
and then create a vendor code
1.7 Finance manager will verify the vendor master details in the system along against
in the system and send for
the physical form filled up and will approve the vendor master created in the system
approval
Reference No. 1.6
1.8 Once the vendor master is approved and created in the system, the Procurement
officer will have to file the physical vendors master data record in the vendors master
file maintained by the company for future reference purposes.
Finance Manager Procurement Officer
Note:
Will verify the details of the Will file the physical vendors
vendor entered in system master data record in the 1. The tax master will have to be mapped and updated against each vendor master
against physical document and vendors master file database code as per the business type of the vendor and these tax masters will automatically
provide its approval of the maintained with them as per the effect the transactions based on the criterias defined against vendor master.
vendor master in the system companys policy
2. The purchase item master will also be created and mapped against the vendor
Reference No. 1.7 Reference No. 1.8 master for each item that will be procured from such vendor.

Updated System
Vendor Master
Database

END

Report Description Frequency

x Process Activity x Control Activity

Process Owner: Procurement Head Records / Forms:
Interfaces: End user, Procurement Officer, Authorised List of suppliers from the system and their
Accountant, Chief Financial Officer (CFO), Finance physical records
Manager

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Sample DRAFT April 1, 2016

Supplier Modification / Blocking Head Office

START Suppliers database needs to be updated regularly by monitoring their transaction

patterns over a period
1.9 Intimation by Supplier: Informs company about changes in his status or profile,
then procurement officer shall collect necessary details, verify and send it to the
Has supplier Frequent issues accountant for updating the vendor master database.
A routine check of
intimated about its No No with the supplier
the supplier?
updated info.? reported? 1.10 Accountant will input updated details in the system and send for approval

Yes Yes Yes

1.11 Finance manager will review the changes made, cross-verify such changes with
existing source data, along with the necessary tax structure updates required.
Procurement Officer Accountant Procurement Head Authorization by finance manager will finally update the vendor master database.
Will collect necessary Extract a list of suppliers Reports the issue with the
1.12 Accountant will extract a list of suppliers for determining their status change over
documents from the with their status change Finance Manager for the
a period of time.
supplier and send the and those with whom no supplier with adequate
- Supplier With more than 20 transactions a year Once in 3 years
details to the accountant transactions have been reasons for the same
- Supplier With less than 20 transactions a year Once in a year
for updating in the system done over a period of time Reference No. 1.16

Reference No. 1.9 Reference No. 1.12 1.13 Procurement officer will then collect updated information of such suppliers and
Finance Manager send it to accountant for updating vendor master in the system.
Procurement Officer Will block the supplier
Accountant 1.14 Accountant will update the suppliers record according to the latest information as
Will get the updated master in the system and
Will verify the details and send for approval provided by the Procurement officer.
information from the
input the same in the supplier & will submit for
system and send for Reference No. 1.17 1.15 Finance manager will review the changes made along with the necessary tax
approval structure updates required and authorise the same which shall update vendor master.
approval
Reference No. 1.13
Reference No. 1.10
CFO / MD 1.16 Procurement head reports frequent issues faced with a particular supplier to the
Accountant finance manager and his advice on blocking the supplier from the vendor master list.
Will provide its approval /
Finance Manager Will update the suppliers rejection for blocking of a 1.17 Finance manager will review and check the pending deliveries; after completion
Will verify documents and details in system (if any) supplier from the supplier of which will initiate to block the supplier master in the system
provide its approval/ Reference No. 1.14 database
modification/rejection 1.18 CFO/ MD will provide its approval/ rejection for blocking of a supplier from the
Reference No. 1.11 Finance Manager supplier database.
Reference No. 1.18
Will approve / modify /
decline the changes made
in the suppliers master Report Description Frequency
END Updated Reference No. 1.15 Review Suppliers With less than 20 transactions a year Yearly
Vendor Master
Once in 3
Database x Process Activity x Control Activity Review Suppliers With more than 20 transactions a year years
Process Owner: Procurement Head Records / Forms: Updated / Blocked suppliers report Yearly
Interfaces: Finance Manager, Procurement Officer, Updated suppliers updated business record
Accountant, Chief Financial Officer (CFO), Managing Suppliers statutory tax changes record
Director, Blocked suppliers record

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Sample DRAFT April 1, 2016
Purchase - RM/ Packaging/
All Plant Locations
Bought out/ General
START 1.19 End Customer, sends a final confirmation of the items by sending their purchase
order / schedule details as proof of confirmation for purchasing a required product.

1.20 Planner raises a purchase requisition for procurement of goods, materials, etc.
Customer PO / End User / as per customers order / schedule.
No No Re-order Level
Customer Planning dept.?
Trigger?
Schedule? Imp: Here, it will be mandatory to quote the customer order number in the Purchase
Requisition Form.
Yes Yes Yes
End Customer 1.21 Authorized End user / Planner, based on the information available, identifies the
End User / Planner
System will requirement for a material will raise an purchase requisition for procurement of goods,
Send a final confirmation Will identify the trigger for raising materials, etc.
on the items that they wish requirement for a material a requisition
to buy from the company and then raises an internal based on the 1.22 When the re-order quantities configured is triggered in the system; the system
and send their POs / information
requisition for procurement will auto-generate a purchase requisition in the system and send to respective HOD
feeded
schedule as part of their of goods, materials, etc. 1.22 for approval
confirmation
Reference No. 1.19 Reference No. 1.21 1.23 Purchase requisitions raised through different sources, will be reviewed by
respective HODs and will approve / modify (if required / decline the purchase
requisition based on the information and budget available if any.
Customer
Purchase Order
Note:
A. A procurement Policy can also help in guidance for the approval mechanism of the
order requisition against their value.
Purchase
Planner Requisition Form
B. For material / items: No requisitions or Purchase Order can be raised in the
Raises a purchase system for which an inventory master has not been created.
requisition for procurement
of goods, materials, etc. & C. Annual / Monthly Budget will be available with different departments under
will quote customers order Respective HODs
respective Ledger code and all the requisitions made will track specific budget code
number in the requisition Reviews requisition; it will so that Actual v/s Budget comparison can be made. The budget will be blocked at the
Approve / Modify / Decline Purchase Requisition level and amount will be reduced from budget when a P.O. is
GRN / SRN?
Reference No. 1.20 requisition made based on GRN raised. Regular purchase items will be kept out of Budget parameter.
available monthly / annual
budget (if any)
Sales
Process SRN Local /
Reference No. 1.23
Process Import Report Description Frequency
Purchase
Purchase Requisitions Raised, Approved / Modified / Rejected Monthly

x Process Activity x Control Activity Exception report - Items purchased without a Purchase Requisition Monthly

Process Owner: Procurement Head Records / Forms: Purchase Requisitions status report Open v/s closed Quarterly
Interfaces: Customer, End user, Planner Customer Purchase Order
Internal Requisition Order Form
Preliminary Technical Review (PTR) Form

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Sample DRAFT April 1, 2016
Local Purchases - RM/
All Plant Locations
Packaging/Bought out/ General
1.24 Procurement Officer will review the approved requisition and then will check its
Procurement officer supplier database and check with them for the availability of the materials and if the
quotation is for bulk quantity or amount, will receive different sales quotations from
Based on approved New suppliers.
Local
requisition; officer will Does requisition
Yes Supplier
Purchase require a new
check supplier database Imp: If there is a need for a new supplier because of requisitions made cannot be
and invite quotations from supplier?
sourced from existing suppliers database, then the supplier authentication process
different suppliers (if reqd.) will need to be followed before getting a quotation from the new supplier
Reference No. 1.24 No
1.25 Once the quotation is received from different suppliers, the procurement officer
Procurement Officer Procurement Head / MD will enter different quotations in the system and a comparison for L1 and L2 vendors
will be extracted from the system.
Different quotations will be Will review sales
Request for Sales entered in the system and quotation, negotiate and 1.26 Procurement head will review the sales quotation, negotiate and finalize with the
Quotation a comparison for L1 and finalise with the supplier supplier and approve a sales quotation of the supplier.
L2 vendors will be (i.e. payment through LC/
retrieved from the system Advance/Regular) 1.27 Thereafter, Procurement Officer shall raise a Purchase Order by fetching
Reference No. 1.26 quantity and item details from Purchase Requisition and inputting the agreed amount
Reference No. 1.25
from the quotation of the supplier and submitting it to Procurement head for approval.

Procurement Head / MD Procurement Officer Imp: The taxation details shall be taken care while the Purchase Order is created and
Agreement with
approved.
Will Review and Approve / Will raise a Purchase
supplier
Decline the LPO in the Order in the system and 1.28 As per defined authority matrix for approvals, the Purchase Order shall then be
system send for approval approved by Procurement Head / Managing Director.
Reference No. 1.28 Reference No. 1.27
1.29 Once Local Purchase Order (LPO) is Approved, the Procurement Officer will
forward it to the Supplier along with the legal documents.
Procurement Officer
Approved 1.Approved Note:
Purchase Order
Submit Approved LPO & Purchase Order
legal documents to local 1. Taxation structure to be verified before posting of Purchase Order
2. Legal Documents
suppliers 2. Whether the Purchase Order is a BOM or Non BOM item will be captured when
the Purchase Order is raised and of the transaction trail will be followed
Reference No. 1.29

Goods
Received
END Report Description Frequency
Process
Open v/s Closed Purchase Orders Monthly

x Process Activity x Control Activity Purchase Orders raised without Purchase Requisitions Weekly

Process Owner: Procurement Head Records / Forms: Each Suppliers - Price variations / changes over a period Yearly
Interfaces: Procurement Officer, Managing Director Suppliers Sales Quotation
Suppliers agreement (if required)
Local Purchase Order (created / approved)
Legal documents

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Sample DRAFT April 1, 2016
Import Purchases - RM/
All Plant Locations
Location except EOU
Packaging/Bought out/ General

Procurement Officer 1.30 Procurement officer will request quotations from pre-listed suppliers from the
Procurement Head / MD system and such quotations received will be sent to respective Procurement head /
Will request quotations MD for approval
Import Sales Quotation of Will review sales
Purchase from pre-listed suppliers in
the system for the
Supplier (Import) quotation, negotiate and
finalise with the supplier 1.31 Procurement head / MD will review, negotiate with supplier (if required) and
requisition raised finalize with the supplier and enter into an agreement with the supplier.
Reference No. 1.30 Reference No. 1.31
1.32 Procurement officer will then raise an import purchase order in the system with
the relevant quantities and price agreed.
Procurement Head Procurement Officer
Will review the Import Will raise an import 1.33 Procurement head will review the purchase order as raised by the Procurement
Purchase Order and will purchase order in the officer and will provide its approval and send the approved purchase order to the
Agreement with supplier.
provide its approval and system with relevant the Supplier
send the approved quantities agreed and the
purchase order to supplier price inputted into the 1.34 Finance manager/ CFO will carry out an agreement with the supplier considering
system the terms (through LC/ Advance/ Regular)
Reference No. 1.33 Reference No. 1.32
1.35 After placing of import purchase order, Deputy manager stores will provide the
necessary documents (such as Bill of Lading/ Airway Bill, Commercial Invoice cum
FM / Finance Executive Dy. Manager, Stores Packing list and Bill of entry) to CHA agent for clearing of the import items into the
Will co-ordinate for liaising Will provide necessary country.
(if required) for the advance documents to CHA agent for
Approved Import
payment / opening an LC for clearing of the import items 1.36 CHA Agent will complete clearing process, release the goods and send them to
Purchase Order
the supplier into the country the company along with documents.

Note:
Reference No. 1.34 Reference No. 1.35
1. Before any order is placed, the right ledger code should be mapped so that the
budget v/s actual expenses can be tracked
2. Taxation structure to be verified before posting of Purchase Order
3. BOM / Non BOM item details will be captured while raising of the Purchase Order
CH Agent
1. Bill of Lading / Airway
Complete the clearing Bill
Goods
process; release the goods 2. Commercial Invoice
Receipt
Process and send them to the cum Packing List
company along with 3. Bill of Entry
documents Report Description Frequency
Reference No. 1.36
Open v/s Closed Purchase Orders Monthly

x Process Activity x Control Activity Purchase Orders raised without Purchase Requisitions Weekly

Process Owner: Procurement Head Records / Forms: Import price fluctuations report Monthly
Interfaces: Procurement Officer, Managing Director, Suppliers Sales Quotation
Dy. Manager-Stores, Clearing House Agent Suppliers agreement (if required)
Import Purchase Order (created / approved)
Legal documents

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