1.

INTRODUCTION
The Tata group comprises over 100 operating companies in seven business sectors:
communications and information technology, engineering, materials, services, energy,
consumer products and chemicals. The group has operations in more than 80 countries
across six continents, and its companies export products and services to 85 countries.
In a first of a kind initiative in India, the Jamshedpur Utilities and Services Company
(JUSCO) was carved out of Tata Steel from its Town Services Division in 2004. In JUSCO,
the steel major reposed nine decades of experience and expertise. The mandate for JUSCO
was to convert an obligatory service into a customer focused sustainable corporate entity.
JUSCO (Jamshedpur Utilities and Services Co. Ltd.) is a wholly owned subsidiary of Tata
Steel, incorporated on 25th August 03 under the Companies Act 1956, with the objective of
providing Quality Services for Life. Tata Steel has been providing municipal services in
Jamshedpur for more than 90 years. Globally, this is a unique case of a private organization
taking up the role of providing civic services to its employees and the community at large,
as a part of fulfilling its corporate social responsibility. This competence gained over the
last 90 years was the basis of formation of JUSCO. JUSCO (The erstwhile Town Division
Tata Steel) is the only EMS 14001 civic services provider in the country, which maintains
Indias first cosmopolitan planned city like Jamshedpur built in the 20th Century. The area
of operation is spread over 14000 acres approximately, with the ability and infrastructure to
serve a vast and varied customer base of over 7 lakhs.
To perform the above responsibilities JUSCO has the well managed and equipped groups
with full resources and infrastructures.
These are:
i.
ii.
iii.
iv.
v.
vi.

Planning Engineering & Construction

Water and Waste Water Management
Power Service Distribution
Solid Waste Management
Integrated Customer Services
Education
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vii.
viii.
ix.

Hospitality
Public Health & Horticulture Services
Fleet Management

Inspired by the core values of Tata Steel, JUSCO has co-created its Vision, Mission, Policy
and Core Values.
Jamshedpur Utilities & Services Company is today Indias only comprehensive urban
infrastructure service provider. A Tata Enterprise, its services focus on the Tata Group
Purpose to improve the quality of life of the communities we serve.
The Group purpose is reflected in JUSCOs Mission of providing quality services for
life. Its services include water, power, infrastructure, public health and horticulture
services. JUSCO works alongside civic bodies, large and small industries, local
government bodies, communities and individuals to deliver value through sustainable
solutions.

INTRODUCTION TO PROCUREMENT DEPARTMENT

2

Procurement Department supports the operations of the organization by catering to the

procurement needs of all the departments, projects and facilities. JUSCOs Procurement
Department has developed competencies for both Project and MRO procurements. The
overall operations of Procurement function are performed and monitored from JUSCOs
corporate office in Jamshedpur.
The Procurement function includes purchasing of materials and services, strategic
sourcing, Vendor Management, Inventory management etc. This department acts as the
medium for communication of all organizational policies and directives to Suppliers. The
Procurement Department of JUSCO runs on SAP ECC 6 - MM Module. E-Procurement
module enables faster B2B communication. The activities and decisions of Procurement
Department are guided by the values such as Integrity, agility, credibility, excellence etc.

The Procurement Department of JUSCO is headed by Deputy General Manager

Procurement who is responsible for overall functioning of the department and is supported
by Chiefs, Sr. Managers, Commodity Managers (Managers/Dy Managers/Asst Managers),
Officers and supervisors. The important KPIs of Procurement Department are Savings
through negotiation and strategic initiatives, Order placement cycle time, internal customer
satisfaction and adherence to MoUs with customers, Supplier satisfaction, Introduction of
new Suppliers etc.

ORGANISATION STRUCTURE OF PROCUREMENT DEPARTMENT

3

The organization chart of the department showing the inter-relationship within and outside
the department is given below:

Managing
Director
GM
BD&CS
DGM Proc
MR

Chief Civil
Alt. MR

Chief Elect
MENTOR
QMS/EHSMS

Mgr/ Dy.Mgr
Sr. Manager
Mgr/ Dy.Mgr
Mgr/ Dy.Mgr
Mgr/ Dy.Mgr
Manager
Sr. Manager
Sr. Manager
/Asst.Mgr
CAPA Mntg.
/Asst.Mgr
/Asst.Mgr
/Asst.Mgr
IQAI
DCI Alt. IQAI
Alt. BE
/ Alt. DCI
BE/Sugg Mgt
Safty
Cord.
EHSMS

Sr. Officer
Officer Officer
Trg. Inc/
Alt. Trg. Inc
EHSMS
Alt. Sugg. Mgt

Officer
Officer
Alt. Supervisor
Supervisor
Alt.
Safty.
Cord
CAPA Mntg.

Fig 1.1

Fig 1.2 Key customers of JUSCO procurement

The customers of procurement department depend upon the integrity of it as it follows

the 7 Rs of procurement. (Fig 1.3)

Right
Price
Right
Place

Right
Servic
e

Right
Quant
ity
Right
Qualit
y

7 Rs
Right
of
Right
Sourc
Time
e Procurement

Purchasing procedure

Flowchart showing the complete process at once. Fig 1.4

Customer
requirement
Purchase
requisition
No

Check
Correct
ness

Refer Procedure
PROC/PUR/01

Yes
Enqu
iry

No

Receipt
of
quotes
satisfact
ory
Quotation

No

Acceptable
as is or
with allow
deviation

Yes

opening &
tabulation
Technical
Clarificat
ion
required

Yes

Yes

Refer to department /
Business Unit for
specs. Value approval

No

Negotiation
Sanction
request
required

No

Creation of Order

Y
e
s

Check & release

of Order
Vendor

Receiv
ed
sancti
on
from
Filed in
depart
Folder
ment /
Busine
ss unit

PURCHASE REQUEST

Purchase Request is a precise document generated by an internal or external

organization to notify the purchasing department of items it needs to order, their
quantity, and the time frame that will be given in the future. It may also contain the
authorization to proceed with the purchase. It is also called Purchase Order Request.
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A purchase requisition is a request sent to the purchasing department to procure

goods or services. It is originated and approved by the department requiring the
goods or services. Typically, it contains a description and quantity of the goods or
services to be purchased, preferred make, a required delivery date, account number
and the amount of money that the purchasing department is authorized to spend for
the goods or services. Often, the names of suggested supply sources are also
included. A purchase requisition is owned by the originating department and should
not be changed by the purchasing department without obtaining approval from the
originating department.

PROCESSING OF PRs

On receipt of the PR, concerned purchase section will open a folder and note the PR No
with red color pen. Folders will be opened for all individual PRs. Verify from PR check
list for RFQ. If a PR is incomplete then the Sr. Managers and Commodity Managers
should intimate the indenter about the same, who may cancel the PR or change the
same.

If the PR is correct and complete in all respects the list of vendors to be sent enquiry
with due date will be decided by the Sr. Managers/ Commodity Manager and written on
the PR. The vendors to be selected from the existing registered vendors and specific
recommendation from the indenting department. For specific requirement of service or
material, new vendors can be added based on their credentials after approval of the
concerned Sr. Managers/ Commodity Manager/ indenting department

Enquiry for the purchase of material/services and for job contract shall be issued by the

Purchasing Officers to the list of vendors decided.

The due date for submission of quotations will be decided by the Sr. Managers/
Commodity Manager, based on the essentiality of the service/material and noted in the
PR.

MODE OF TENDERING
THE RECOMMENDED MODES OF TENDERING FOR PLACEMENT OF ORDERS ARE AS
UNDER:

i) Open Tender / Global Tender - Open / Global Tender is rarely issued in JUSCO. However this
means that the Tender is open to any supplier who can quote for the materials as per
requirements. This is usually done by publishing the Tender Notice in
Newspapers/Trade journals/Internet and other bulletins.
ii)

Limited Tender Enquiry (LTE) - This is the most commonly used mode of tendering in

JUSCO. This mode of selecting vendor/s refers to inviting tenders from only a limited
numbers of bidders. Since tendering is limited to only a few bidders it is presumed that
the bidders are well known to the purchaser for their capability etc.LTEs are issued in
such a way that sufficient competitive quotations are received from the bidders.
Thus LTE is resorted to only when reliable bidders (manufacturers/ suppliers/ traders/
contractors) are known. For this purpose, the Purchasers maintains a list of 'approved' or
registered vendors/.
iii)

Single Tender for Proprietary items - Single tender enquiry should be issued by the Sr.

Managers / Commodity Managers for proprietary items. However multi tender enquiry
amongst authorized dealers of the same manufacturer can be tried to get best price.
Proprietary items are to be purchased from the manufacturers (OEM) and / or their
authorized dealers only. Single Tendering means sending the Tender to one particular
party. Normally, it is either for an item where there is only one supplier or for an item
where the purchaser has developed confidence in one supplier only and would just like
to verify the current price, delivery etc. Single Tenders are also sent for items of
proprietary nature.
iv)Reverse Auction - On receipt of PR, the correctness of the PR in terms of specification is to be
checked & the vendor panel to be selected as per the approved list..A type of auction in
which sellers bid for the prices at which they are willing to sell their goods and services.
In a regular auction, a seller puts up an item and buyers place bids until the close of the
auction, at which time the item goes to the highest bidder. In a reverse auction, the buyer
puts up a request for a required good or service. Sellers then place bids for the amount
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they are willing to be paid for the good or service, and at the end of the auction the seller
with the lowest amount wins.

Apart from the above, orders is also placed based on the following:
Repeat orders / Copied orders - When space is contracted for and no copy instructions are

received by the closing date, previous copy will be repeated. If, the new supplier
contractor is agreed to execute the same with same rate rates, terms & conditions, under
such circumstances for the Item Job Contract for which continuity is essential, may
place order on new agreed party parties by coping from existing last orders.
Job Contract - A job contract is simply a written summary of the terms of employment. It is

also referred to as a 'work agreement.' Experts agree that every nanny and family should
take the time to document the terms of employment.

INVITATION TO TENDER / REQUEST FOR QUOTATION

(RFQ)
Document used in soliciting price and delivery quotations that meet minimum quality
specifications for a specific quantity of goods and/or services. RFQ are usually not
advertised publicly. Prior to release of Request for Quotation (RFQ) Sr. Managers /
Commodity Officers at Procurement Department should ensure that desired information,
particularly specifications / General Terms & Conditions for Material Supply / Work
Orders, Safety rules & regulations are available in the RFQ and checklist should be
followed.
Prior to inviting open tenders, Procurement Department shall determine / record the criteria
for capability assessment of the tenders, which may include:

Required experience and past performance in similar type of supply / contracts,

Required manpower (skill-wise) and type / capacities of equipment and construction /

manufacturing facilities,
Proof of ownership / licensee of required equipments and construction /
manufacturing facilities,
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Financial position, if possible,

Service support, if any,
Any other criteria, considered necessary
Past Safety Records

The above criteria shall be specified in the RFQ document under special terms and
conditions.
Suppliers respond to a RFQ with firm quotations, and generally the lowest-priced (L1
bidders) quotation is awarded the contract. It shall be clearly specified that order on one or
more than one supplier/contractor will be on the basis of L-1 quotation. If required,
negotiations will be held with L-1 tenders only. However, all the tenders may be required
to explain / justify the basis of their quoted price as and when asked for. In case, any tender
fails to justify his quoted price or refuses to cooperate, they will not be considered for
placement of order or during re-tendering if order / contract are not finalized from the
present tender. If needed, site visit of the job shall be undertaken by the supplier before
submitting the quotations.

METHODS FOR CALLING TENDERS

The following methods for calling of tenders shall be adopted:
1. Single Part Tendering,
2. Two Part / Three Part Tendering,
Pre-qualification bid is followed by single / two parts / three part tendering. The
tenders shall

be instructed to enclose each part in a separate sealed cover, clearly super

scribing on the top of each envelope the relevant part number and description along with
RFQ number and date of opening and submit all the parts simultaneously in a bigger sealed
cover clearly super scribing on the top of that the RFQ reference no. and the date of
opening.
RECEIPT AND OPENING OF OFFERS
The following shall be the recognized methods for receipt of tender:-

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1.
2.
3.
4.
5.

Tenders received by Post

Tenders received by Courier service
Tenders received by e-mail
Tenders received by fax
Tenders received through E-Procurement
However, mode of receipt of offers at Procurement Department shall be mainly
through e-procurement Fax / e-mail quotations may only be considered for
emergency procurement/ proprietary items and sealed tenders.
Opening of tenders shall be classified into following categories:

Regular tender: Received within the due time and date prescribed in the tender

notice issued by Procurement Department against Limited Tender / Open Tender.

Regular tender shall be opened on the appointed date in the presence of at least two
officers. The second officer should be from a different Purchase Section than the

one for which quotations are being opened

Late delayed tender: Tenders received after the due date prescribed in the tender
notice. Delayed / Late Tenders will not be opened in case of local suppliers. If the
tender is from an outside party and the envelop shows the posting date well within
the tender submission period, then the tender may be opened and the envelope must
be kept with the offer. Sr. Managers / Commodity Managers shall endorse the

quotation as Late Quotation with original due date and the receipt date.
Unsolicited Tenders: Tenders submitted by suppliers to whom tender enquiries were
not issued. Unsolicited tender after opening will not be considered. However, in
case of LTE issued to registered manufacturers, a tender received from the
authorized dealer of the registered manufacturer along with the authorization letter
of the manufacturer to whom the enquiry was originally issued shall not be treated
as unsolicited.

SCRUTINY OF QUOTATIONS
SINGLE PART QUOTATIONS

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In case of single part quotations (i.e. when the Technical / Commercial terms are firm
and only LTE has been raised as explained), the quotations after opening and scrutiny
about their completeness, will be tabulated for both service & supply order respectively
and negotiation will be done with the vendors. The final comparative statement will be
sent on-line to the indenter through Recommendation from Purchase under
Procurement Management System (PMS) broadly if:
a. The value exceeds Rs. 5.00 Lakh or based on criticality of order.
b. The value exceeds by more than 20 % of PR Value.
c. Specification differs from indent (Purchase Requisition).
d. The indenter has to approve the vendors & No. of vendors for placing orders on
more than one vendor.
The indenter will process the SR on-line through GM or MD as per defined financial
power through Executive Sanction under Procurement Management System (PMS)
within 3 to 4 days after receive of recommendations based on comparative statement/price
tabulation.

SEPARATE TECHNICAL, COMMERCIAL AND PRICE BIDS

In case of high value procurement, the techno-commercial bids after its opening shall be
evaluated by the indenter. Wherever applicable, comments / recommendations of the
Consultants would be obtained. In case, evaluation is done by the indenter, and a
comparative statement of techno commercial tabulation of all the tenders shall be
prepared and handover / mail to Sr. Manager/Commodity Manager through DGM/Chief
(Civil)/Chief (Electrical) along with their recommendations within 7 (seven) days from
date of receipt of the bids.
During clarification meetings with the tenders basic features of the scope of supply / job,
technical and commercial conditions, as stipulated in the PR / tender specifications /
documents shall not be changed. However, if details of the scope of work, specifications,
techno-commercial terms and conditions are not provided / described clearly in the PR by
the tenders, then the same should be obtained during clarification meetings. After technocommercial discussions & clarifications with the tenders and freezing the technocommercial specifications / conditions, the tenders should be advised to confirm the
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validity of their price bids already submitted. In case, tenders desire to revise the price
bids on account of techno-commercial clarifications / confirmation, they should be
permitted to submit their revised price bids within the stipulated time and date.
In case any specific adverse report is received against a tenders, as an information or
upon enquiry made by JUSCO, in respect of capabilities and performance of the
tenders or violation of Code of Conduct after receipt of tender but before the opening of
the price bids, the quotation / tender submitted by such tenders shall be rejected on the
basis of recorded reasons and with the approval of the competent authority. If such
report is received after opening of the price bids, then also the quotation / tender of that
tenders shall be rejected after recording the reasons and with the approval of the
competent authority.

E-PROCUREMENT (E - Proc).
The scope of e-procurement is limited to logistic module of SAP.
(1) Floating of RFQ in e-procurement

Procurement Department uses e-procurement platform through JUSCO website for all
suppliers /contractors except some organizations such as SAIL / BHEL / L&T / Lafarge/
etc. or one time suppliers or for high BOQ items. The system triggers a mail to the
supplier who is an e-proc partner on uploading of RFQ on the e-procurement site. On
receipt of the e-mail, suppliers access the e- procurement site. Adequate security has
been built in the system with the domain name as www.juscoltd.com.
The following steps should be ensured for extensive usage of the system.
1. All Sr. Managers / Commodity Managers Officers shall have necessary access to the
system, which is given by the System Administrator.
2. All registered suppliers/ Service providers should have their e-mail and must be a
registered in e-procurement.
3. Sr. Managers / Commodity must ensure that for same collective No. (PR No.), due
date of receiving quotations

must be the same.

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(2)Opening of Enquiry

Sr. Managers / Commodity Managers shall open the enquiry within 15 days after the due
date of quotation opening. All quotations remain in the site for 15 days after which they
are available in old quotation tab. Old quotations can also be opened after going into the
old quotation tab in the e-procurement site.
While preparing RFQs, the reference field should be positively filled correctly with the
Personal No of the corresponding Commodity Manager. If this is left blank or wrong
value is populated (at places, we have seen " - " or names populated), then it would not
be possible to open the Quotations at e-Proc site and subsequently, these Quotations will
not be transferred to SAP.
During RFQ Preparation, the Due Date and the Our Reference for all Enquiries against
one Collective No. should be the same.
Quotation may be opened regularly at e-Proc Site. After opening, it should be transferred
as well.
For re-float case the Sr. Managers should ensure to add A or B or C or any alphabet after
the collective no. to distinguish between the previously floated RFQs. This would help
the E-Procurement system to understand that it is a refloat case and would provide the
quotation entry screen to the suppliers.
In case of mixed panels (some e-Route and some manual / email / fax Quotes), make
sure to open the Quotes at e-Proc and transfer to SAP first and the go for entering the
other Quotes. If Quotes at E-Proc are not opened, the Sr. Managers / Commodity
Managers might miss quotes of suppliers/contractors who have submitted quote online
and not sent hard copy. These are some of the guidelines and suggestions for the smooth
working of the system
In case of an Out Location Vendor who will be sending the quote thru e mail.
Manual quotation opening

Obtain DGM/Chief's approval to get manual quote thru written communication in

Hardcopy / email or written instruction on the PR.
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Generate RFQ's in system against the vendor if registered or Dummy Vendor if not
registered and ask vendor to quote against that particular RFQ number and collective
number only.
Ask vendors to
i.) Quotes to be on their Letter head and duly signed and stamped
ii) Quotes should be in SEALED envelopes only-stapled envelopes will not be
accepted
iii) The RFQ number and Collective number should be written on top of the envelope.
iv) Manual quotes to be deposited to Office staff only
Manual quotes to be accepted should be stamped and numbered with entry made in
Incoming Register.
Office staffs will hand over the sealed envelope to concerned Commodity Manager. Who
in term will be the custodian till the due date of Quotation Opening.
The quotations can be opened in PRESENCE of two other Officers from Procurement
who will be required to sign the ENVELOPE before opening along with the every page
of the quotation in RED Ink.
All the pages, along with the envelope need to be preserved in the job folder.

(3)Transfer of Data from E-proc to SAP and Vice Versa.

Transfer of data from e-proc to SAP and vice-versa takes place as scheduled on
daily basis. However at the time of placing the order the tax code needs to be verified.

(4)Administrative Authority at Procurement Department on E-procurement .

The administrative authority of the e-procurement system is controlled by the

Administrator as a process owner.
The Controls are following:E-Procurement:
a) Tagging as e-procurement partner on SAP & e-procurement platform.
b) Revoking / Resuming of Authority.
c) Display of all parameters supplier wise.
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d)
e)
f)
g)

Analysis of data in case of problem faced by supplier.

Creation of User ID for Users.
Website Statistic Analysis.
Control & use of Global Messaging System.

COMPARATIVE STATEMENT OF PRICE BIDS

After completion of the techno-commercial scrutiny, comparative statement of price bids
shall be made. The tabulation shall indicate the item wise prices, discount/rebates (if
any), and taxes, duties, packing & forwarding charges, freight & insurance, etc. as
applicable for all the accepted tenders. The factors and the method of their application
which have been prescribed in the tender documents will be used while working the
overall price in the comparative statement. If any additional factor has emerged during
techno-commercial clarifications meetings, to be adopted for evaluation of the tenders,
then in that case an opportunity should be given to all the tenders to confirm such an
additional factor to be considered for evaluation of tenders.
As per tabulation, tenders will be ranked as L1, L2, L3 Ln, L1 being the lowest. Effort
shall be made to indicate the last purchased price against each item/services to know the
variability of the recent purchases. The estimated price as per the indent and its
percentage variation from the total quoted price worked out for L1 tenders will also be
recorded in the tabulation.

EXECUTIVE SANCTION REQUEST

Based on comparative statement sent to executing department, they raise a sanction
request to appropriate sanctioning authority as per financial powers delegated to them.
The sanction request is raised by indenting department and approvals are taken from
either the departmental General Managers or the Managing Director of the company.

PURCHASE / CONTRACT PROPOSAL

As a policy, each department will fix the range for deviations in the estimated price for
acceptance of the total evaluated price of tenders as worked out in the tabulation. This
range may be different for different types of indents as well as for different values of
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indents. Approval of MD / GM / Chief / Head of the department shall be taken on such

deviations from the estimated /P.R. price, which may be reviewed case to case to basis.
Every proposal shall have a validity period. All contracts once signed by all concerned
should be closed formally and date should be put. In case order is to be placed on one
party only and the L1 tenders is within the specified range of estimated price and the
party has offered full tendered quantity / scope of work, proposal for placement of 80%
of the order on L1 tenders shall be made and processed. Balance 20% of the order may
be placed as a trial order to a new supplier, if require

PLACEMENT OF WORK ORDER / PURCHASE ORDER

Before releasing the order (W.O. / P.O.), the Sr. Managers / Commodity Managers shall
review the order and ensure the following points.

Service / Material No., description and specification, quantity and other details as
mentioned in the PR

If the customer department proposes to inspect the product or materials at vendors place
the Procurement Department shall ensure that the relevant inspection plan or inspection
instruction is attached with the P.O. or communicated separately to the vendor.

If necessary, applicable references, standards, codes, specifications, drawings, work

procedures, inspection plans, minutes of meeting exchanged, correspondence etc. are
attached with the purchase /work order

Price, Discount, Duties & Taxes

Completion / Delivery period

If the new purchase order supersedes the old P.O./W.O, the old P.O./W.O. no. shall be
written as superseded in the new P.O./W.O.

Relevant sales tax registration and excise duty code numbers if applicable

Bank guarantee formats if applicable

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Consignment / Delivery particulars & Payment authority details

Packing / Transportation / Insurance as applicable

Conformance of all statutory requirements

General Terms & Conditions for Material Supply / Work Orders

Any other special terms and conditions as agreed

General Safety Conditions

The P.O. / W.O. is released, only if all the above points mentioned in 6.10.1 are found in
order. The P.O./ W.O. Is authorized by designated authority based on the financial power
limits set by the management by way of circulars from time to time .

Wherever necessary, DGM, Procurement / Chief Procurement shall issue a Letter of Intent
(L.O.I.) before placing the formal purchase / work order. On receipt of acknowledgement
from vendor, the formal purchase / work order will be released to the vendor.
Average cycle times have been proposed for placement of orders.
After placement of purchase order, the materials/services are received at various user
departments. Verification of product is done by the user department, as per the specification
given in the purchase /work order, at their end. The bills are certified on that basis and the
GRN/SES is raised accordingly.

KPIs of Procurement Key Performance Indicators. (fig: 2.1)

KPIs
Opening PR pending

Unit of
measure
Nos
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PR received in the month

Nos

Order Processed for the month

Nos

Orders Processed within SLG

Nos

Change orders processed

Nos

Value of the orders released

Rs Lacs

Negotiated Savings

Rs Lacs

Strategic sourcing Savings

Rs Lacs

Compliance to urgent request from Dept.

Nos

Different systems involved in the procurement process .

1.
2.
3.
4.

SAP System Application & Products in Data Processing (ERP Software)

e - Procurement Third party web application for bid submission by vendors
Lotus notes Mailing and Workflow system
PROMIS Procurement Management Information System

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The above operating cycle shows the complete involvement of the different processes
in procurement. (Fig: 2.2)

1. SAP System Application & Products in Data Processing (ERP

Software)
Process flow from PR to PO (fig: 2.3)

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Transactions done in SAP

PR Creation and release by indenting department
There are two types of Purchase requests generated in JUSCO
a) Onetime PR or Normal PR
b) Contract PR
Transactions
Purchase Requisition

Transaction Codes
ME51N Create/ ME52N Change/ ME53N

Normal
Purchase Requisition

Display/ YI51 Print

ME31K Create/ ME32K Change/ ME33K

Contract

Display/ YI51 Print

(Fig: 2.4)

Inputs in a Purchase request:

The indenting department specifies their needs as per below mentioned details:

List of Materials/ Services to be procured

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Qty/ Delivery Date/ Site specific conditions/ Safety Clauses/ Tentative rates etc.

Below are the type of requisitions and the purchase orders. (Fig: 2.5)

The below figure explains how the material or services flows from request stage to
delivery.
If account assignments are used in a purchase requests, the cost directly hits a cost code
and if not then the materials get inventories.

(Fig: 2.6)

Source identification and updation Vendor Master

Based on Materials and services to be procured, possible sources are identified for floating
RFQ Request for quotation. If there are requirement of new sources then Vendor
Management Team introduces new vendors from identified panel.
Vendor Master Creation XK01/ Change XK02/ Display XK03
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The details required for a vendor master are

Basic Data Name/ Address/ Telephone / email id etc.
Statutory requirements PAN/ TIN/ Service Tax/ PF/ ESI/ Factory Lic/ Labor Lic etc.
Accounting Information - Bank Name/ Address/ IFSC Code/ Account Number.
RFQ done by Procurement
RFQ is done through Transaction code ME41/ Changes are made through ME42. The
details of PR gets automatically copied in the RFQ, Procurement officers only enters the
quotation due date and the vendor code to which the RFQs are floated.
Order Placement and release.
Purchase Orders are of two types (fig: 2.7)
a.Onetime PO
b. Contract PO - ARC
Transactions
Normal PO

Transaction Codes
ME21N Create/ ME22N Change/ ME23N
Display/ YI53N Print

Annual Rate Contract

ME31K Create/ ME32K Change/ ME33K

Display/ YI53N Print

The inputs of RFQ gets automatically copied to PO/ARC, The procurement personnel
cross checks the quantity/ rate/ taxes/ delivery schedule/ terms and conditions etc from the
comparative statement.
Then the PO/ ARC are released through transaction code ME28 and ME35K respectively.
The entire workings are mentioned in form of snap shot below:
1. Creating a PR (fig: 2.8)
The transaction code to be entered in the transaction bar in SAP and press enter
STEP 1-

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STEP 2-

STEP 3-

24

STEP 4-

25

STEP 5-

STEP 6-

STEP 7-

26

STEP 8-

STEP 9-

27

STEP 10-

STEP 11-

28

STEP 12-

STEP 13-

29

STEP 14-

2. Creation of RFQ (Fig: 2.9)

STEP 1-

30

STEP 2-

STEP 3-

31

STEP 4-

STEP 5-

32

STEP 6-

STEP 7-

STEP 8-

33

STEP 9-

STEP 10-

Thats the Request for Quotation number created.

34

3. Creation of PO (fig: 2.10)

STEP 1-

STEP 2-

STEP 3-

35

STEP 4-

STEP 5-

36

STEP 6-

STEP 7-

37

STEP 8 & 9Next Screen: now System will generate PO Number Standard PO Created under the
Number 4500000028
Press Enter to Continue for further PO.

Next Screen: Purchase Order Release: To Release a purchase Order User has to do the
following Steps.

38

a) Press Other Purchase Order Button and select Required PO which is required to
release. Like (4500000028)

STEP 10-

After press Release button system showing you the information of Release
Release effected with release code 04
39

Now press the save button (Ctrl + S) to save the PO release Document.
After press the save button PO release screen showing you the message to Save the
PO Release.

Now system showing you the confirmation of Release Standard PO 4500000028

40

2.E-ProcurementThird party web application for bid

submission by vendors
E-procurement is a third party web based application which helps in the transaction
between the vendors and the purchase department. Below are the reasons for introduction
of e-procurement in the procurement system, measures to address the above reasons and
the final benefit obtained out of the proposed measures.
Reasons for low usage of e-procurement
1.
2.
3.
4.
5.
6.
7.

Lack of knowledge about e-procurement system to vendors.

Complications in existing system.
Vendors not being computer savvy.
Unaware of benefits of using e-procurement system.
Updated basic information like email-ids not being provided by vendors.
Hard copies of RFQs were easily available to vendors.
Quotations were accepted in hard copies.

Low usage of e-procurement resulted in .

1.
2.
3.
4.

Longer Procurement Cycle

Expensive
Paper Based Procurement
Prone to Human errors
41

5. Physical Security
6. Wastage of space to store bids
7. Non-retrievable

These factors limited the use of e-Procurement to only 36.76%

The changes were required for the following reasons :For purchase managers
1. Completely Automated Process
2. Shortens Procurement Cycle
3. Economical
4. Greater Transparency
5. Improvement in work culture in the departments
6. System aided Evaluation process
7. Minimize Human errors
8. Minimal Storage Spaces
9. Lesser hassle of communication and administration
For vendors
1. Anytime & Anywhere Bidding
2. Fair, Free and Fearless participation for vendors.
3. No dependence on Newspaper, Courier, etc.
4. Zero Administrative hassles
5. Can carry out all activities from any computer
6. Economical saving on Traveling cost

42

7. Reduces efforts & cost of bidding

8. No tenders can be missed because of distance.
9. Can submit bid on last minute.
Measures to address the identified problems
1.
2.
3.
4.
5.
6.

Communication to be made to vendors about e-procurements usage and its benefits.

System functionality to be upgraded with consultation with ITS, Tata Steel.
Training to be imparted to vendors on E-proc and TCOC on regular basis.
Vendor codes with wrong email ids to be blocked.
Providing RFQs in hard copies to be stopped.
Quotations should not be received in hard copies.

Proposed changes which may result increase in usage of e-Procurement .

1. RFQ should be sent through electronic system like mail or e-procurement.
2. Quotations through e-procurement should only be accepted.
3 Vendors should be forced to submit quotes on due date.
Usage of e-procurement resulted in the following benefits.
1. Shorter Procurement Cycle
2. Economical
3. Anytime Anywhere Bidding
4. bidding possible on Holidays
5. Automated & Accurate process
6. Foolproof Security
7. Lifelong storage on servers
8. One click access to bids

This proposed target will help boost the usage of e-procurement by 75%.

3. Lotus notes Mailing and Workflow system

Lotus Notes is primarily used for mailing but the extended part of it is a good workflow
system.
The different workflows created in lotus notes are:
1. Material/ Service Master Creation Request
43

2.
3.
4.
5.
6.
7.
8.

Customer Master Creation Request

Change Order Requests
Vendor Master Creation Request
Vendor Code Block/ Unblock Request
Technical Clarification
Recommendation from Purchase Comparative Statement
Executive Sanction Request

1. Material/ Service Master Creation Request (fig: 2.11)

1. Step

General
Org
Data
Purchasing
Plant
:
Storage Location
Material
Type
Basic Data
Material Description
Unit of Measure
Material Group
Division
Purchasing
Purchasing Group
Manufact. Part No.
Purchase Order
Text
Accounting
Valuation Class

New Material Master Creation for MM

:
:
:
:
:
:
:
:
:

Page 1- 1

2. Step

44

New Material Master Creation for SD

General
Data
Purchasing
Org
Plant
:
Storage Location
Material Type
Sales Organisation
Distribution Channel
Basic Data
Material Description
Unit of Measure
Material Group
Division
Purchasing
Purchasing Group
Manufact. Part No.
Purchase Order
Text

:
:
:
:
:
:
:
:
:
:
:

Page 1- 2

3. Step
New Material Master Creation for SD
Sales Area
Data
Gen. Item Cat. Group
Item Cat. Group
Product Hierarchy
Account Assing. Grp.

:
:
:
:

Accounting
Valuation Class

Income GL

Will pick
automati
cally

45

4. Step

General
Purchasing
Org
Data
Material Type
Basic Data
Service Description
Unit of Measure
Service Group
Purchasing
Division
Purchasing Group
Purchase Order
Text
Accounting
Valuation Class

New Service Master Creation for MM

: Service
:
:
:
:
::

:
Page 1- 1

5. Step
New Service Master Creation for SD
General
Purchasing
Org
Data
Material Type
Basic Data
Service Description
Unit of Measure
Service Group
Division
Purchasing
Purchasing Group
Purchase Order
Text

: Service
:
:
:
:
:
:

Page 1- 2

6. Step

46

New Service Master Creation for SD

Sales Area
DataItem Cat. Group
Gen.
Item Cat. Group
Product Hierarchy
Account
Assing. Grp.
Accounting
Valuation Class
Income GL
:

:
:
:
:
:

Will pick
automatic
ally

Page 2- 2

2. Customer Master Creation Request (Fig: 2.12)

1. Step
New Customer Master Creation
Request from :
General
Data
Account
Group
Company code
Sales Organization
Distribution Channel
Division
Address:
Title
:
Name
:
Search Item
:
Street/ House No.
Postal Code
:
Country
Marketing:
Nielsen ID:
Customer Class:

:
:

City

Region

Page 1- 2

2. Step

47

Page 2- 2

3. Step

Request from :

Extend Division for Existing Customer

General
Code
Customer
Data
Company code
Sales Organization
Distribution
Sales Area Channel
Data
Shipping:
Division
Delivery Priority
Shipping Conditions
Billing Document:
Inco terms
:
Acct assignment group

:
:
:

3. Change Order Requests (fig: 2.13)

48

Start
Requester
HOD/Chie
f/DGM
N

Reque
st

Approv
e

Commo
Y
dity
Manage
Reques
r
t found
OKY
Change
order
End made

49

4.Vendor Master Creation Request (fig: 2.14)

Flowchart of New Vendor Registration Request

Start
Requester fill the form

Submit to
VMT

VMT. = Vendor Management Team

Com. Mgr. = Commodity Manager

if
VMT=A
pprove

No

Legal

No

No

Yes, goes to
selected
dept. F & A
Yes/
if
dept. No
HOD=
Approv
Ye
e
if
Com.s
Mgr.
=Appro
ve

HR/IR

Ye
s

if
Dgm/
Chief
Proc.Start
=Appro
No
ve

Ye . creates new vendor

VMT
s

End

50

5.Vendor Code Block/ Unblock Request (fig:2.15)

6. Technical Clarification (fig: 2.16)

51

Blo
ck
1 PR No.
Desc.
1.
2.
3.
4.
5.

Procur
ement

PR

cl
o
s
e

cl
o
s
e

cl
o
s
e

cl
o
s
e

Depar
tment
Ac
Yes ce
pt
No
Procur
ement
Clarification Required :
Ac
Yes ce
___________
Attachment: ( )
pt
--------------------No
Depart
Blo
P. No ____________
ment
Name
___________
ck
Ac
Status
: with dept.(track 1)
Yes ce
---------------------Blo
Same as Block 2
4
Mail to: ( ) (can be
ptNo
ck
multiple
Statusrecipients)
: with Proc.(track 2) Procur
ement
Concerned
Same asDept:
Block 2
5
(dropdown of depts.)
Depar
--------------------tment
Mail id: (auto
generated) sender
Date: (auto generated)
Server date
Submit

Blo
ck
Remarks
:
2

Status : with dept.

___________
(mandatory)
Attachment: ( )
Decision:
Confirm & Close Further
Blo
clarification
required
Add
ckrecipients:
Status( :) with Proc (track1)
-----------------------------------------Remarks
: ___________
3
------------------------(mandatory)
Mail
id: (auto( generated)
sender
Attachment:
)
Date:
(auto
generated)
Server
Add recipients: ( )
Blo
date
-----------------------------------------Submit
ck
------------------------Status : with dept. (track2)
Mail
sender
Remarks
: generated)
___________
6 id: (auto
Date:
(auto
generated)
Server
(mandatory)
date
Attachment:
( )
Submit
Add recipients: ( )
CC: DGM, Chief (Proc), GM
(of conc. Dept.)
Decision: Accept
Escalate
-----------------------------------------------------------------Mail id: (auto generated) sender
Date: (auto generated) Server
date
Submit

7. Recommendation from Purchase Comparative Statement (fig: 2.17)

Star
t
Procure

Returne
d with
remarks
No

No

ment
CS
Financia
l
Is
Analyst
taxes
mentio
ned
are
Depart
Are
OK?
ment
commerc
ial terms
and
rates
acceptab
le?

Financial analyst should

check tax part and correct
tax code to be mentioned if
required.

Yes

End
52

8. Executive Sanction Request (fig: 2.18)

Start
Requester fills the form

No

Submits for HODs

Approval
HOD
Approves

Yes, goes to GM
N
o

GM Approves

Yes, Goes to Commodity

No

No

No
No

CMManager
Approves
Yes, goes to Head/ Chief Proc
Head/ Chief
Proc
Approves
Yes, goes to DGM Proc
DGM Proc
Approves
Yes, goes to MD
MD
Approves

End

9.Customer Request Management System (fig: 2.19)

53

4. PROMIS Procurement Management Information System

54

(fig: 2.20)

PROMIS
Initially some of the procurement processes were held manually whose automization was
essentially required. Hence the procurement process was revised again and each every
step was executed in different platforms still heck of time was being taken to complete the
whole procurement cycle. The reasons being-Problem on data security; there was a loss of
control through the systematic analysis of the information gathered and there was no
system for integrating the time, cost, scope and quality objectives. For these stated
reasons projects were often late, over budget and of low quality

(Procurement Management Information System) was created with the objective to

reduce the work rate and to produce efficient and accurate data.
This data is collected from different platforms like SAP, LOTUS and JAVA and then
recombined into a single entity which produces the final report which serves for
tracking records and analytical purposes.

Inputs of PROMIS

55

The data sources of PROMIS are partially auto generated and some of the fields are
manual. The manual inputs helps in generating custom as well as standard reports which
caters to major KPIs of procurement.
Reports and its purposes
Standard Reports There are standard reports which are static in nature and output
measures with respect to KPIs are defined.
Dynamic reports There are three dynamic reports
a) General Report Details of PR generated and Order placed for a certain period.
b) Savings Report Generates data related to Strategic and Negotiated saving done against
purchase order place within a certain period.
c) Cycle time report Represents data related to cycle time of entire purchasing activities.

Review Reports This report is used for review purpose. It has got traffic signals which
describe the criticality of the PRs that has not been converted in to orders.
RFQ not done in 3 days The SLG of generating RFQ is 3 days, this report helps to
identify those PRs against which RFQ has not being done in 3 days.
Quotation opening tracker This report helps in proactive decision of quotation opening
status against RFQ due date.
Delay Report This report helps in analytical purpose where PO has been placed beyond
SLG. Each step is being captured and reason for delay is analyzed based on days taken in
between each activities.
Although the reports are helpful in monitoring the major KPIs but because at times some of
the reports fail to generate actual data where the dependency lies with manual data entered
in the system. Hence, it is suggested to have a fully automated system without any manual
intervention.

HIGHLIGHTS OF THE PROJECT

56

VENDOR EVALUATION 2014

As per the norms; this year also the vendor evaluation was done for the period of
October 2013 to March 2014.

The above graph shows the evaluated vendor rating on the scale of 5 as compared to
the previous years. (Fig: 3.1)

This graph
shows the

rated

vendors who

were

given more

than

3 in the scale

of 5

as compared

to the

previous

years.

(Fig: 3.2)

VENDOR SATISFACTION INDEX

1. This is a survey done every year to check the satisfaction level of the vendors towards
JUSCO, as like it this year also it was done and the following steps were done.

The list of all the active vendors was selected among the total vendors of JUSCO.
The list of vendors was then sorted according to their GR values.
57

 This has been decided by ABC analysis of the master sheet of the vendors detail
where we took the cumulative of GR (goods received) value to find out the ABC class
of the vendors.

A category vendors 90% i.e. the value of the services and goods delivered to

JUSCO by the vendors was 90% of the total business

B category vendors 9% i.e. the value of the service and goods delivered to

JUSCO by the vendors was 9% of the total business.

C category 1% i.e. the value of the services and goods delivered to JUSCO by
the vendors was 1% of the total business.

(Chart 3.1)
GR

GR

value
Categ
or
y

s in

m%

lacs

%
11.

90.9
11.28

to

8.35

0.09

0.0
B

8.26

Cum

s in

1004.
A

value

Cum

lacs

5
99.0

91.04

to

1.25

0.01

0
100.

0.0
C

1.25

0
99.01

to

0.01

0.00

According to the specifications given by DGM Procurement only the A class vendors
were chosen for the entire survey this time, which gave us a total vendor number to be
of 400.

58

The vendors list was then again separated into a) Suppliers and b) Service

Providers.
The Suppliers and Service Providers were also separated into local (Jamshedpur) and

out location vendors.

The out location vendors were sent mails in which the vendor satisfaction survey
questionnaire was attached; so that they fill it and reply back. Whereas, the local
vendors were made calls personally to come down and fill the forms in the JUSCO

conference hall.
After almost a week of the form fills ups, the evaluation is done on the basis of the
marks given by the vendors in the survey form and there by graphs are prepared on

the average marking of the vendors.

The issues raised in the comments section by the vendors are also taken care off in the

report that is to be presented.

There are a number of graphs drawn from the results received from the vendor
satisfaction survey and they are as follows

(Chart: 3.2)- The chart below shows the question wise average marking according to
the ratings given by the vendors. There is a comparison drawn from the past 3
years in order to show the changes in ratings.

(Fig 3.3) The graph below is the graph drawn from the above data of the vendor
satisfaction survey for the years 2011, 2012, 2013 and 2014.

59

 The question wise average and its graph in (Fig 3.4)

Question wise average is done in the entire VSI form and then again the total
average of them is taken and compared to the previous years VSI results and
that is treated as the major index of understanding the success of the entire
survey. that is given in; Chart:3.3 and Fig 3.5

(Chart: 3.3)

60

9
8.8

8.7

8.8

8.83

8.6
8.4
8.2

7.99

8.11

7.83

7.8
7.6
7.4
7.2
FY 08

FY 09

FY 10

FY 11

FY 12

FY13

FY14

(Fig: 3.5)
The remarks given by vendors are also kept in the tabulated form in order to solve
them with their respective departments and prompt response.

61

The questionnaire which was proposed during my internship along with all the
modifications made -

Annexure: 1

Proposed system enhancement PROMIS

62

1. The aim is to transform all the manual work into an automated process.
2. This will be done by identifying the fields in which manual work is to be done
and finding out ways to transform it into an automated process.
3. The source is to be detected of data origin and it has to be linked with the
PROMIS to remove the manual work.
4. This improvement in the working process will help management to remove
common human error and redundancy.
5. This will make the system more efficient and at the same time accuracy of
data will improve.
6. The data input screen has got 50 fields from which system generated various
kinds of reports.
The details of the fields are mentioned below (chart: 4.1)

From SAP and LOTUS notes data is automatically being populated in 20+12=32 fields.
The rest 18 are entered manually by purchase officers, commodity managers and segment
leaders.

INPUT FIELDS.
(Chart: 4.2)

(Chart: 4.3)

63

THE PROPOSED CHANGES IN THE MANUAL SYSTEMS TO TURN

THEM TO AUTOMATED SYSTEMS. (Chart: 4.4)

CONCLUSION
The project of mine being the complete assessment of the procurement process has been
beneficial to me as it has given me complete insights about the whole process and its
different attributes all the other systems involved in it
1. SAP System Application & Products in Data Processing (ERP Software)
2. E - Procurement Third party web application for bid submission by vendors
64

3. Lotus notes Mailing and Workflow system

4. PROMIS Procurement Management Information System

It has been a great learning all through as the procurement department is the head of
Operations. I also got to learn the registration of Material/ Service Master Creation Request
and Customer Master Creation Request,
I was also involved with the vendors- the Vendor Satisfaction Index is the best way to get
the feedbacks from the vendors and then cater according to their demands. In Vendor
Evaluation the company rates the vendors on the service that they have provided. The two
way relationship of the vendors and JUSCO is a great way to carry forward the entire
workflow.
This project has also given me insights about the core procurement process and all the sub
processes related to it. The generation of a purchase requisition in SAP and all the other
intricacies of procurement. The MIS systems involved in the process, as JUSCO has its
own MIS system PROMIS and LOTUS NOTES.
The E- PROCUREMENT facility helps the vendors and makes it easier for them to cater to
the orders and it is also helpful for the company as it takes lesser time to process.
There were also some process improvements as suggested in the E- procurement process
and the PROMIS (the atomization of certain fields).
All through it has been a great learning experience in the span of my internship.

65

BIBLIOGRAPHY
www.tata.co.in/company/.../Jamshedpur-Utilities-and-Services-

Company

66