Chemfab Alkalis Limited

Business Process Study

Purchase AS IS Study
Author
Creation Date

: Selvaraj R
: 18-Nov-2013

Last Updated

: 30-Nov-2013

Control Number

: PO/Process/01

Version

: 2.0

Document Control

Revision Details

Date
22-Nov2013
30-Nov2013

Author

Version

Selvaraj R

Draft 1.0

Selvaraj R

Draft 2.0

Change Reference

Distribution

S.No
.
1.

Name

Department

Position

Material
Management
Material
Management

VP MM

2.

Mr.BalaSubramania
nV
Mr. Sarfudeen J S

3.

Mr.Rajaram S

Material
Management

Dy.
Manager

4.

Mr. Dheeraj Kumar

S

Material
Management

Dy.
Manager

5.

Mr. Ramasamy M V

Material
Management

Officer

Signature

Sr.
Manager

Date

Table of Contents
S.No

Title

Page No.

1. Types of
Indent
.4
2. Position Hierarchy for
Indent.6
3. Types of Purchase
Orders
.7
4. Position Hierarchy for Purchase
Order..10
5. Purchase Process Flow..
..12
6. Purchase Order
Amendment
.14
7. Manual Purchase
Order
.16
8. Annexure
..18

TYPES OF INDENT

Process
ID
PO-1A
PO-1D

Description
Repair &
Maintenance
Work Order

PO-1E

AMC- Annual
Maintenance
Charges

PO-1F

ARC Annual
Rate Contract

PO-1G

Consumables

PO-1H

Cash

PO-1J

Others

Explanation
Indent is raised for Repair & Maintenance of equipments that might
be sent out for supply & service.
1. Work Orders created for specific projects that are assigned to
vendors. For e.g Erection and Commissioning of specific plant.
2. These Work Orders are created for a specific value, when the work
is completed the corresponding HOD initiates payment for the
percentage of work that has been completed.
3.Based on Work requirement, the supplier of the vendor delivers the
items required for Project, no transaction takes place for those items,
only the items are entered as manual MRR in stores dept.
1. Purchase Order for Contract Service or Contract Service with
materials. Payment Options are:
a. If the value is 1 lakh for AMC, the partial payment of 5000 is paid
initially, after the 6th month the balance payment is done.
b. AMC is created for certain value but payment is not done.
Payment is done for every invoice after service is done
1. Whenever AMC is performed, the spares/materials is being
procured from supplier with whom the annual rate contract is signed
2.Payment is done after the receipt of material
3. VAT & CST taxes are inclusive in contract, if any changes in taxes
due to govt norms then the contract are revised.
Indent for procuring consumables like stationery items for office
purposes etc..
1.Purchases below 2000 Rs are termed as Cash Purchase
2.The price of item is enquired and communicated to purchase
through phone calls
5
3.Purchase department created Purchase
Order based on the unit
price communicated
Indent created for miscellaneous items are termed as others

Owner
Department User
Department User

Department User

Department User

Department User

Position Hierarchy
Position Hierarchy for Indent

Process
ID

Description

Explanation
6

Owner

PO-2A

Engineer

Can Raise the Request & approved the same. It will be forwarded to
the next level

Purchase

PO-2B

Department HOD

Purchase

PO-2C

Plant Head

Forwarded Indent is approved & forwarded the same to HOD.HOD

forward the Indent to the next level.
Plant Head will approve the same Manually

TYPE OF PURCHASE ORDERS

Purchase

Process
ID

Description

PO-3A

Work Order

PO-3B

Raw Material

PO-3C

Cash Purchase

PO-3D

Repair &
Maintenance

PO-3E

Explanation

Owner
Purchase

Regular import

1. Work Orders created for specific projects that are assigned to

vendors. For e.g Erection and Commissioning of specific plant.
2. These Work Orders are created for a specific value, when the work
is completed the corresponding HOD initiates payment for the
percentage of work that has been completed.
3.Based on Work requirement, the supplier of the vendor delivers the
items required for Project, no transaction takes place for those items,
only the items are entered as manual MRR in stores dept.
1.The following items are procured as Raw Materials from suppliers:
Salt, Soda Ash, Furnace Oil, Sulphuric acid, Sodium Sulphate, Sodium
Bi Sulphate, Magna flaks,
2. Requirement for Raw Material is based on Re-Order Planning,
when the stock reaches the minimum level requisition is created
automatically
3.Salt is procured from PADMA by creating dummy purchase order,
for the rest of suppliers the Salt is procured by creating normal
purchase order with mentioned unit price
1.Purchases below 2000 Rs are termed as Cash Purchase
2.The price of item is enquired and communicated to purchase
through phone calls
3.Purchase department created Purchase Order based on the unit
price communicated
1. Spare parts that is to be serviced are sent to stores by
maintenance.
2.Stores issue the new spare immediately to the maintenance
3.Purchase order created for servicing/maintenance
4.The spare part that has to be serviced is sent to vendor for
servicing
1. Purchase Order created for regular import of items.

PO-3F

R&D Import

1.Purchase Order for procuring import items for R&D

Purchase

PO-3G

AMC

1. Purchase Order for Contract Service or Contract Service with

materials. Payment Options are:
a. If the value is 1 lakh for AMC, the partial payment of 5000 is paid
initially, after the 6th month the balance payment is done.

Purchase

Purchase

Purchase

Purchase

Purchase

b. AMC is created for certain value but payment is not done.

Payment is done for every invoice after service is done.
PO-3H

R&D

PO-3I

ARC

PO-3J

Capital Cash

PO-3K

Capital
Material

PO-3L

Capital-import

PO-3M

Lab

PO-3N

Capital-Lab

PO-3O

Import Lab Regular

PO-3P

Capital ARS

1. Purchase Order for procuring domestic items for R&D.

Purchase
1. Purchase Order is created for certain materials that come under
AMC.
2. Whenever AMC is performed, the spares/materials is being
procured from supplier with whom the annual rate contract is signed
3.Payment is done after the receipt of material
4. VAT & CST taxes are inclusive in contract, if any changes in taxes
due to govt norms then the contract are revised.
1.Purchase of capital items (for e.g Computer spares used in offices)
is directly procured and bill is submitted to stores
1. Purchase of Capital materials of high value like compressors,
generators etc..
2. These items are expense items that are used for long period.
3.E.g of capital items include CAPEX items
1.PO created for import of Capital equipments
1.PO created for Lab equipments

Purchase

Purchase

Purchase

Purchase
Purchase

1.PO created for Lab equipments in capital

Purchase
1.PO created for Lab equipments that are imported regularly are
termed as Import Lab Regular

Purchase

1.PO created for Capital items for Annual Rate Contract

Purchase

10

POSITION HIERARCHY
Position Hierarchy for Purchase Order

11

Process
ID

Description

Explanation

Owner

PO-4A

Purchase Officer

Create Purchase Order

Purchase

PO-4B

Dy. Manager

Create Purchase Order

Purchase

PO-4C

Sr. Manager

Can Forward the Purchase Order to next level

Purchase

PO-4D

Internal Audit

Internal Audit

Purchase

PO-4E

VP Material

Purchase

PO-4F

VP Finance

If the approval limit is less than 1 lakh, they can approve. If the
approval limit is greater than 1 lakh they send proposal to
Chairman. When Chairman accepts the proposal they approve
and forward to the next level.
Approve and Forward for more than 1 lac

PO-4G

Chairman

Can Approve for unlimited value

Purchase

PURCHASE PROCESS FLOW

12

Purchase

Indent to PO Conversion with Quote

Process
ID

Description

Explanation

13

Owner

PO-5A

Indent Receipt

PO-5B

Confirmation
from Stores

PO-5C

Annual Budget

PO-5D

Obtain
Quotations

PO-5E

Verify technical
specification

PO-5F

Final
negotiation

PO-5G

Create
Purchase Order

PO-5H
PO-5I
PO-5J
PO-5K

Forward
Purchase Order
Release
Purchase Order
Receive
Material
Arrange
replacement

Indent is received from Users with Technical specification and

distributed to respective Purchase officers. The Users are the
concerned department employees. The indent may be through
manual entry or through legacy system. Indent may be of different
types: Capital, Repair & Maintenance.
Purchase Users get confirmation from Stores regarding shortage of
on-hand corresponding to the indent created. They study the indent
and check the technical inputs before execution of indents. If any
queries in technical specification, the Purchase interacts with Users.
To confirm whether the value of item has not exceeded in the annual
budget or fresh approval has to be obtained to consider the item in
Annual Budget.
Purchase requests quotation from suppliers against indent. The
request may be through Phone calls, E-mail etc..and receive the
Quotations.
The technical specification in the quotation given by the suppliers is
verified against indent.
Prepare price comparison among different suppliers and select the
best supplier and complete final negotiation. If Quot value is more
than one lakh internal Audit will coordinated with Purchase Team &
approve the same, Then same will be forward to Chairman for
approval
Prepare Purchase Order with technical specification. If it is new
supplier then supplier evaluation system is followed. If the value of
PO is less than or equal to 1 Lac then the Position is VP (Material). If
the value is between 1 Lac and 10 Lac then the Position is Managing
Director. If the value is greater than 10 Lac the Position is Chairman.
Forward, follow up and get back purchase orders after internal audit

PURCHASE

PURCHASE
PURCHASE
PURCHASE
PURCHASE
PURCHASE

PURCHASE
PURCHASE

Segregation and releasing the PO to suppliers & accounts. One copy

of PO to be kept in file with back papers
Follow up with suppliers for dispatch & delivery as per PO due date.

PURCHASE

Follow up for sending back the rejected materials and arrange for
replacement.

PURCHASE

14

PURCHASE

PO Amendment

15

Description

Explanation

Owner

Proces
s ID
PO-6A

Indent Receipt

PO-6B

Confirmation
from Stores

PO-6C

Annual Budget

PO-6D

Create
Purchase Order

PO-6E
PO-6F

Forward
Purchase Order
Release
Purchase Order

PO-6G

Receive
Material with
Excess/Less
Qty

PO-6H

Deliver to
Inventory

Indent is received from Users with Technical specification and

distributed to respective Purchase officers. The Users are the
concerned department employees. The indent may be through
manual entry or through legacy system. Indent may be of different
types: Capital, Repair & Maintenance.
Purchase Users get confirmation from Stores regarding shortage of
on-hand corresponding to the indent created. They study the indent
and check the technical inputs before execution of indents. If any
queries in technical specification, the Purchase interacts with Users.
To confirm whether the value of item has not exceeded in the annual
budget or fresh approval has to be obtained to consider the item in
Annual Budget.
Prepare Purchase Order with technical specification. If it is new
supplier then supplier evaluation system is followed. If the value of
PO is less than or equal to 1 Lac then the Position is VP (Material). If
the value is between 1 Lac and 10 Lac then the Position is Managing
Director. If the value is greater than 10 Lac the Position is Chairman.
Forward, follow up and get back purchase orders after internal audit
Segregation and releasing the PO to suppliers & accounts. One copy
of PO to be kept in file with back papers
Material is received from Supplier with Excess/Less Qty.
a. If the Qty is excess then Purchase communicates to
concerned department. If the department accepts the excess
qty then Purchase accepts the qty with revision and reapproval. If the department rejects the excess qty then
Purchase returns the material to Supplier.
b. If the Qty is less w.r.to Invoice then MDN is created stating the
shortage qty. If the qty is pending w.r.to PO then Purchase
follow up with supplier to receive the shortage qty.
Accepted Material is delivered to Inventory.

16

PURCHASE

PURCHASE
PURCHASE

PURCHASE
PURCHASE
PURCHASE
PURCHASE

PURCHASE

Manual Purchase Order

17

18

Process
ID
PO-7A

PO-7B
PO-7C
PO-7D
PO-7E

Description

Create
Purchase Order
Forward
Purchase Order
Release
Purchase Order
Receive
Material
Deliver Material

Explanation
Prepare Purchase Order with technical specification. If it is new
supplier then supplier evaluation system is followed. If the value of
PO is less than or equal to 1 Lac then the Position is VP (Material). If
the value is between 1 Lac and 10 Lac then the Position is Managing
Director. If the value is greater than 10 Lac the Position is Chairman.
Forward, follow up and get back purchase orders after internal audit

AN

PURCHASE
PURCHASE

Segregation and releasing the PO to suppliers & accounts. One copy

of PO to be kept in file with back papers
Follow up with suppliers for dispatch & delivery as per PO due date.

PURCHASE

Deliver Material to Stores

STORES

ANNEXURE
S.No

Owner

Business Process

RICE Type

Under Standing
19

PURCHASE

No.
1

Yearly budget demand

Not Feasible

Volume based budgeting-yearly

Not Feasible

Volume based budgeting breakup-monthly

Standard

Indent is received from users of different department.

Purchase verifies the stock.

Standard

Stock checking is based on Material requirement Stock

verification and Net Demand is arrived.

Standard

Purchase requests quotation from vendors. After receiving

the Quotation, they find the suitable vendor, create PO
and send for approval.
After approval of PO they release the PO to supplier. Any
changes later PO amendment is done.

10

10

11

11

Monthly break up
demand
From various department
--> Purchase requisition
--> Indent + Approval
(Verify stock & approve)
Gross material
requirement --> Stock
verification --> Net
demand
RFQ - 3 vendors - Vendor
comparison --> PO
Proposal --> Approval
PO Generation /
Authorization / Release
--> PO Amendment with
Authorization
Material receipt -->
Inward inspection Acceptance / rejection
--> Accepted material
move to Stores
Indent based tracking till
Material receipt for all
items all qty. To decide
with management on
Reservation for specific
indent department -wise.
Indent -purchase
monitoring-status
Vendor Creation /
registration process
Vendor rating

12

12

Import PO

Standard

Standard

Standard

After the material is received, inspection is done by

concerned department. Accepted material is moved to
stores. Rejected material is sent back to supplier.

Reports

When indent is created, tracking is to be performed till

receipt stage to know the status of indent.

Reports

Reports having Indents for which Purchase Orders are

created
Based on Quotation received from Vendor suitable vendor
is being found and being created in legacy.
Report Format Given

Standard
Reports

PO for import items

20

13

13

PO Amendment with
History (Archive)

Standard

History is being maintained for whatever amendment is

being done in PO
Work order being created for sending equipments for
servicing/repairing.
No MRP planning at CAL. PO Requisitions should be
generated through Re-Order planning method. Users will
convert this requisition to Purchase Order.

14

14

Work Order

Standard

15

15

MRP - Relevant for Raw

chemicals (15 nos)

Standard

16

137

Daily salt receipt

Reports

Report format is Required

17

212

Goods in Transit (list of

GRN not approved and
GRN not prepared)

Customizatio
n

It is the Old Process not applicable right Now

18

211

AMC calls made report

Reports

There is no CRM/Service module in place at CAL. Hence,

Service PO-number of calls to be mapped with the lines in
the existing purchasing module.

19

125

Roles and responsibility

centres to be available.

Standard

Buyer - For certain users only capital is allowed.

20

228

Blanket PO - Release PO

Standard

21

229

PO Requisition stage need to know about

stock, open PO qty,
pending indent qty-to be
displayed

Reports

22

231

Item Category

Standard

ARC for purchase of items from a specific supplier

While creating requisition, stock, open PO qty, pending
indent qty to be displayed
Item category is to be created
At CAL, Single sequence number for all types of PO (Local,
Import, Service, Capital etc) will be followed as per
standard feature in Oracle. But, the type of PO can be
defined in a DFF in the PO format and can be displayed on
the PO print document. Discussed with Purchase core
team and Point has been closed

24

233

Amending PO

Standard

Changing the PO in terms of Qty, Item.

21