Procurement

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Description of the Department

Departmental Responsibility

Objectives

Roles

Job Description of the Department

Policies & SOPs

Risks & Controls

Key Performance Indicators

Documents & Reports

Information to be Maintained

Authority Matrix

Departmental Profile - Procurement

About Departmental Profile - Procurement

Description of the Department

The Purchase Department has been established to arrange right material from right source at lowest price in order to assure proper supplies needed for the projects. Continuity of supplies is the major function of the department.

Departmental Responsibility

There will be someone responsible for all the departmental working. There should be primary and secondary responsible for the department.

Primary Responsible

Manager Purchase is primary responsible for all departmental operations.

Secondary Responsible

Assistant Manager Purchase is secondary responsible for all departmental operations in absence of Manager Purchase.

Objectives

The Procurement Department is responsible to ensure that company receives the most favorable vendor pricing and payment terms consistent with acceptable quality and availability in the Purchase of all required materials.

Basic objectives of the department are to buy materials or goods:

At the minimum price
From the right source
With the right specifications that should meet the requirements
As per quantities
Delivery at required time
Selecting vendors on the basis of set standards for all materials
To conduct market research for the materials that can be manufactured by Eden Builders Limited.
To bring innovation. For example to work on the possibility of buying the Eden’s transport vehicles for transportation of frequently used materials such as bricks, sand etc.

Roles

The basic concept of each role of Purchase Department is explained hereunder;

Selection & Evaluation of Vendors

Assessment of strengths and weaknesses of current and prospective vendors in terms of their capacity, sales, revenue, reputation, quality, reliability, service and payment terms is called vendor evaluation. It is expected that Purchase Department should set the standards for all the materials in coordination with company management.

· In case if a new vendor is required for some materials the evaluation for this vendor is called “Vendor Selection”.

· Assessment of current vendors is called “Vendor Evaluation of Existing Vendors”.

We consider it important that Purchase Department should have comprehensive market knowledge. This knowledge should consist of market trends for any specific product regarding prices, supplies, stocks projections and vendor’s strengths and weaknesses regarding that product. Purchase Department should liaison with vendors and market to analyze the market trends and vendor’s strengths and weaknesses.

The vendor evaluation of existing vendors can be done by observing the prices offered by them, the overall terms and conditions, deliverance of orders, quality of delivered materials etc. The data of price approvals, quality approvals, time deliveries, rejections, delayed deliveries should also be maintained to conduct evaluation of existing vendors.

Negotiation

This is an important role of Purchase Department. Once an approved indent is received for procurement, Purchase Department should get quotations, rates from the market and from approved vendors. The rates and terms & conditions should be well negotiated with the vendors and then a comparative statement should be prepared that is essential to get approved from the competent authorities.

We consider it important that the terms & conditions should be well negotiated before submission of the comparative statement for verification and approval from competent authority. The changes in rates and terms negotiated by the verifying or approving authorities should also be recorded and kept in the record for future references.

Procurement

Procurement is the main role of Purchase Department. Purchase Department should ensure the following during procurement;

· Procurement from approved vendors

· Terms and conditions should be competitive as per market practices or better from it and should be within budget limits.

· A transaction of procurement should be formal and all the required documentation both by the company and by the vendor should be completed and recorded.

· Deliveries should be observed on time and in case of delays, it should be recorded in the records of the vendor for evaluation purpose

· The quality of the procured materials should be according to the requirements

· The quantities ordered should be accomplished by the same vendor. In case that vendor fails to deliver the required quantities, it should also be recorded in the vendor records for future reference.

· Purchase Department should keep the tracks of partial deliveries and liaison with the vendor for balance deliveries

· Purchase Department should coordinate among all the concerned including site stores, vendors, accounts department, etc.

· Purchase Department should submit the required documentation for payable processes to the accounts department in a timely manner. The required documentation should be complete according to the requirements of accounts department.

· There should not be disputes between sending and receiving ends and if the case may be, such issues should be resolved by Purchase Department.

· Purchase Department should maintain the records of POs issued to the vendors. All partial deliveries, completed deliveries, POs pending or awaited for deliveries, cancelled POs, closed POs should be kept in record and proper tracking should also be available.

Recordkeeping

Record keeping means to compile all the documentation involved in Purchase Department. Such record keeping includes the following;

· Vendor selection and records

· Approved indents received and their status

· Quotation gathering and their record

· CS preparation and their record

· POs preparation and their record

· Deliveries and their adjustment

· Invoices from vendor and their tracking through documentation

· Submission of required documentation for payable management to accounts department

· Coordination with vendors and company departments and their records

· Payment records to the vendors

· Records of purchase returns

· Vendor evaluation of existing vendors and their records.

Coordination

Coordination regarding material arrangements and related matters is a key role of Purchase Department. It may involve the coordination with the following stakeholders;

· Coordination with site stores and management

· Coordination with PCC department

· Coordination with vendors for quotation or rate gathering and setting terms & conditions

· Coordination with audit department regarding verification of CS

· Coordination with GMO for CS approvals

· Coordination with vendors for schedules and deliveries

· Follow up with vendors regarding schedules and deliveries

· Coordination with vendors for invoicing

· Coordination with finance department regarding financing arrangements

· Coordination with accounts department

· Coordination with vendors for payment matters

· Coordination with accounts and cash section for payment processing

· Payments to vendors.

· Coordination among the purchase team

· Market surveys

· Any special requirements by the competent authorities

Research & Development (R&D)

The role of research & development requires the innovative thinking of Purchase Department. This role contains,

· Market research for the materials that can be manufactured by Eden Builders Limited.

· Research for alternative materials at lesser rates.

· Research for innovative materials.

Job Description of the Department

Based on the roles of the department, the departmental JDs are established. Job Description contains the main activities and roles required to be performed at the departmental level.

Following is the job description of the Purchase Department;

Setting standards of required vendors for all types of materials in coordination with company management regarding Selection of vendor
Maintaining the records of approved vendors that should be easily accessible at the time of negotiations
Setting the lead times for procurement of materials in coordination with PCC department and project site management and keeping in view the market positions and arrangement options available in the market
Review of lead times on periodical basis and adjusting the changes thereon
To conduct market surveys on time to time basis and maintaining the results of such surveys
Receiving the approved indents and verifying them according to policies and procedures
Estimating the cash flow projections and coordination with finance department for necessary arrangements
Negotiating with the vendors and setting appropriate terms & conditions with them
Preparation of CS and to get it verified from Audit department and approved by GMO
Maintaining the records of CS generated along with their status
Purchase order generation and its management
Follow up and coordination with vendors to make sure timely deliveries
Follow up with site stores for required documentation
Follow up with vendors for required documentation
Maintaining the invoices received from vendors and cross verification with received or rejected materials
Submission of the documentation to accounts department for verification and payable management
Follow up with accounts department and liaison with vendors
Payments to the vendors – issuance of cheques
Vendor evaluation of existing vendors according to the policies and procedures
General management of the department operations
To conduct market research for the materials that can be manufactured by Eden Builders Limited.
To bring innovation. For example to work on the possibility of buying the Eden’s transport vehicles for transportation of frequently used materials such as bricks, sand etc.
To define the item profile.