ALKAWN ALSAUDI CORP

SUPPLY-CHAIN MANAGEMENT
Manual

Table of Contents

Table of Contents
TABLE OF ABBREVIATIONS..............................................................................I
1. INTRODUCTION............................................................................................................. 5
1.1. USE OF THE SCM MANUAL ................................................................................. 5
1.2. ALKAWN ALSAUDI CORP(KSC) .......................................................................... 5
1.3. PRODUCTS HANDLED ......................................................................................... 5
1.4. GENERAL FUNCTION OF SCM DEPT ................................................................. 7
1.5. RESPONSIBLITIES OF SCM DEPT...................................................................... 8
2. WORKFLOW & PROCESSES ........................................................................................ 9

2.1 ENQUIRIES

2.1.1 Acknowledgement of Receipt of Enquiry ....................................................... 9

2.1.2 Regretting Enquiries....................................................................................... 9
2.2 WORKFLOW OFFERS .................................................................................... 10
2.2.1 Time for Preparation .................................................................................... 10
2.2.2 Documents for Offers ................................................................................... 10
2.2.3 Offer Format ................................................................................................. 11
2.2.4 Price Working Sheet .................................................................................... 11
2.2.5 Inco Terms ................................................................................................... 11
2.2.6 Verification of Delivery Times....................................................................... 12
2.2.7 Communications with the Customer ............................................................ 12
2.3 ORDER PROCESSING .................................................................................... 12
2.3.1 Definition ..................................................................................................... 12
2.3.2 Issuing of Approval Documents ................................................................... 13
2.3.3 Creating the sale order................................................................................. 13
2.3.4 Issuing PO.................................................................................................... 14
2.3.5 Order Acknowledgment................................................................................ 15
2.3.6 Follow-up ....................................................................................................15
2.3.7 Dispatch ....................................................................................................... 16
2.3.8 Documentation ............................................................................................. 17
2.3.9 LC Handling ................................................................................................. 17

Table of Contents

2.4 SERVICE .......................................................................................................... 18

2.4.1 Credit Notes for Service Claims ................................................................... 18
3. GENERAL RULES & GUIDELINES ............................................................................. 19
3.1. ESCALATION MANAGEMENT ............................................................................ 19
3.2. PRICE INFORMATION OF COST PRICES & MANUFACTURING COSTS ........ 19
3.3. FOUR-EYES PRINCIPLE .................................................................................... 19

TABLE OF ABBREVIATIONS
Abbreviation

Meaning

CSC

Customer Service Centre

ELC
GM

European Logistics Centre

General Manager

HoS
L/C

Head of Sales
Letter of Credit

LOI

Letter of Intent

MC

Manufacturing Costs

NPP

Net Purchase Price

NPS
NSP

Nuclear Power Station

Net Sales Price

OC
OPUR

Order Confirmation
Order Purchase Requisition

SCM

Supply Chain Management

HoD
AM

Head of Department
Assistant Manager

CBB
FC

Cross Border Business

Forecast

FICO

Finance & Controlling

GA Drwg

General Arrangement Drawing

HQ
KPI

Head Quarters
Key Performance Indicators

MD

Managing Director

MM

Material Management

PO
PP

Purchase Order
Production Planning

OE
OI

Order Processing Executive

Order Intake

PE

Project Engineer

PM

Plant Manager

QAP

Quality Assurance Prior

Sales Rep
SD

Sales Representative
Sales & Distribution

SE
SM

Sales Engineer
Sales Manager

T&C

Terms & Conditions

TDS

Technical Data Sheet

WM

Warehouse Management

WO

Work Order
I

1. Introduction
1.1. Use of the SCM Manual
The SCM Organization Manual serves as a working basis for the employees in the
Supply Chain Management (SCM) Department of AL KAWN AL SAUDI CORP.
It contains all essential information on structures, work processes, rules and guidelines needed for employees in the SCM Dept.
Moreover it is to be handed out to all employees as a hard copy at the time of
publishing of revisions and to any new employee of the department at the time of joining.
The Organization Manual is intended for internal use only and must not be made
available to any person outside the KSC
1.2. AL KAWN AL SAUDI CORP (KSC)
KSC provides a wide range of high quality products and services geared to our
customers specific needs and requirements. Al Kawn Al Saudi Corp (KSC) was
established as a trading company during 1977 to act as a representative office of some of
the best UK, European and American companies for the Kingdom of Saudi Arabia and
neighboring GCC states. The operation is basically to sell the products on behalf of
overseas companies on exclusive representation basis to the wholesalers on direct
orders to the manufactures. In order to achieve our objective we are continually reengineering, reevaluating and reinventing the way we do business in order to provide the
best value solutions to our customers. A promise given is a promise kept. We understand
customers needs and strive to fulfill and exceed customers expectations at all times.

1.3. Products Handled

1- VAG Group
Products manufactured by VAG group companies VAG, GA Industries, Rodney Hunt /
Fontaine & KLAMFLEX
i.

Gate Valves(flanged and socket type)

ii. Knife Gate Valves and Penstocks

iii. Hydrants
iv. House Connection Valves
v. Non-Return Valves
vi. Butterfly Valves
vii. Air Valves
viii. Control Valves
ix. Accessories

2- UTS Engineering Limited UK

i.

Straight Couplings

ii. Stepped Couplings

iii. Flange adaptors
iv. Under pressure tees
v. Repair clamps
vi. Dismantling joints
3- WEG Motors - Brazil
i.

Single-phase, open drip proof and totally enclosed fan cooled induction electric motors.

ii. Three-phase AC motors, open drip proof and totally enclosed fan cooled, squirrel cage
and slip ring, low voltage induction electric motors.
iii. Three-phase AC motors, totally enclosed fan cooled, squirrel cage, low voltage induction
electric motors, explosion proof motors.
iv. Low voltage AC/AC and AC/DC drives, soft starters.
4- Pentair Pump Group USA
a) Pumps for Water and Wastewater
b) Pumps for Commercial HVAC / Plumbing
c) Pumps for Industrial Process
d) Pumps for Fire Protection
5- Liestritz Pumps - Germany
a) Twin Screw Pumps
b) Triple Screw Pumps
6- REXNORD Couplings
7- Enerfin Inc. Canada
a) Generator Coolers
b) Motor Coolers
c) Transformer Coolers
d) Bearing coolers
e) Hydrogen coolers
f)

Shell & Tube heat exchangers

g) Furnace Coolers
h) SCR
i)

Other heat exchangers manufactured by Enerfin

1.4. General function of the SCM Dept

The Supply Chain Management (SCM) serves as the interface between the Customer
and Sales with all major internal departments like Production, Quality, Logistics, De- sign
etc. for all pre- & post-order processes like sales support, order processing and service
handling.

2.4. Responsibilities of the SCM Department

The major responsibilities of the SCM Department can be classified as per the following:
a.
b.
c.
e.
f.

Sales Support
Order Processing
Service
Forecasting
Internal

(Pre-Order Process)
(Post-Order Process)
(Handling of Claims)
(Turnover) (Financial, SCM,
Management, etc.)

The following key responsibilities fall under the above mentioned categories:
a) Sales Support

Enquiries & Offers handling

Application Engineering & Technical Sales Support

Vendor Approvals

Customer Visits

Conducting Presentations & Trainings (internal & external)

Organizing sales relevant Special Events

Assisting in Marketing Issues

Project follow-up

b) Order Processing

Dispatch planning and coordination

Handling Orders

Order Clarification

Arranging and Coordinating Inspections

Documentation (for Enquiries/Offers & Order Execution)

Processing of returns and credit notes

c) Service

Handling Service Complaints towards the clients

Coordination of Service Activities

d) Reporting

Reporting to the Management

Reporting to Controlling
Reporting to Sales

e) Forecasting

Conducting of Dispatch Planning Meetings

Forecasting of Turnover

f) Internal Support

Training of new sales employees

2. Workflow & Processes

2.1. Enquiries
The SCM Dept. receives an average of 20-30 enquiries per month. This does not
include small enquiries for standard products which are quoted as per the offers
received from the suppliers by the sales staff directly and dont necessarily reach the
SCM Dept. How- ever all project offers are worked out and handled by SCM in
coordination with the sales staff. It is in the scope of sales to decide whether an enquiry
shall be handled by the SCM Dept. or not.

Figure 5 - Enquiry Workflow

2.1.1. Acknowledgement of Receipt of Enquiry

The PE of SCM shall acknowledge the enquiry within 1 working day from its receipt to the
sales/client. The acknowledgment shall contain the contact details of the person working
on this enquiry and the expected day of submission.
2.1.2. Regretting Enquiries
Enquiries may be regretted e.g. in case KSC suppliers doesnt fulfil the specifications or
doesnt offer the product enquired. In such cases the offer is to be regretted within 3

working days to the client in writing. An offer can only be rejected after approval from by
HoD and generally an alternative offer shall be made if the products meets the
application requirement.
2.2. Workflow Offers
Within the SCM, quotations are worked out by the respective Project Engineer in
charge and subsequently sent to the respective sales person.
Study the specifications and list out the points which deviate from standard
specifications in a deviation list.
Clarify all technical issues with the concerned sales person or with the client
directly.
Prepare the price working sheet as per the standard format
Prepare the offer as per the standard format
Prepare the deviation sheet as per the standard format
Prepare any additional technical support documents
Sign the offer and get it checked and countersigned by a second person as
per the signature rules applicable
Send the offer along with the deviation list to the respective sales person, or if
instructed by the later, send it directly to the client
Register the offer in the Offer Registry
File all pertaining documents on the server on SCM hard drive according to the
SCM filing guidelines (see General Rules & Guidelines)
Upload the enquiry and the offer in the CRM system
The overall technical and commercial responsibility for an offer lies within the
concerned Project Engineer. This is particularly valid for the correct workout of the
cost prices of the products as well as the detailed analysis of the specifications. All
offers shall be counterchecked by a second person, and sales representative shall
generally be asked to cross check the offer before submitting.
2.2.1. Time for Preparation
The standard time for preparation of an offer should not exceed 3 working days. This is
applicable for all offer for standard products with a value of less than 60lakhs INR
(~100t). The SCM PE has to inform the sales person in case the projected time for
preparation of the offer is longer than this.
For project business which includes Design or Quality support or which exceeds a
value of 60lakhs INR (~100t) the time for preparation of offers should range from 5- 10
working days. In any case the PE shall inform back to the sales and/or client about the
expected time of submission of the offer.
2.2.2. Documents for Offers
Offers are worked out by the PE in charge and comprise the following documents:
Offer as per the standard quotation format with cover letter and all terms and conditions
(Annexure - 1)
Price calculation sheet of the standard format (Annexure - 1) This calculation sheet is
only for internal use and to be send to customers
Deviation List referring the specifications of the client
Supporting technical documents (Reference lists, flow calculations, GA Drawings, design
calculations, according to the requirements and project size)

2.2.3. Offer Format

There is a standard offer format which is to be followed for all quotes. (Annexure 1 Offer
Documents) If offers are prepared by the help of the Leego Builder software, all essential
offer terms are entered while creating the offer. In case the offer is prepared manually with
the word format the following terms are most essential to be mention in the offer:
Customer Names and Address Contact
Person at KSC (Sales & SCM)
Quotation Number
Quotation Date Reference
of enquiry
Type of offer (Budgetary / Competitive)
Validity of Offer
Shipment Terms & Conditions Delivery
Period
Payment Terms & Conditions Currency
of price
Deviation from Specifications
Unit wise price break-up with detailed specifications
Warranty Term
2.2.4. Price Working Sheet
There is a calculation sheet which is to be filled in and filed along with each offer. It
contains the calculated cost prices and clearly lists out any additions like packing and
freight charges, commissions as well as the sale price and profit margin. The calculation
sheets has to be signed along with the offer before offer submission by the PE and a
second person as per the signature rule.
2.2.5.

Incoterms

Table 8 - Inco Terms

2.2.6.

Verification of Delivery Times

Calculating or estimating the delivery time requires intensive knowledge on the supply
routes and background of the suppliers. Minor deviations from standard specifications
might lead to prolonged delivery times and the PE in SCM is generally required to
check the delivery period for each and every project offer individually with the supplier.
For all other products not mentioned in the delivery matrixes, the PE relies on offers to
estimate the delivery period. The general guideline to calculate the delivery after having
obtained the EXW delivery time from the respective suppliers.
2.2.7.

Communications with the Customer

Generally the communication with the customer is under the responsibility of sales. As
general guideline the sales representative shall be following up with the customer for all
sorts of clarifications on the technical and commercial issues that may arise during a
project. The SCM employee specifically shall not send offers or price information to
customers unless specifically agreed with the concerned sales representative. This is to
avoid issues of confusion with prices and commitments which might have been discussed with the sales person not known the SCM employee.
An offer is generally to be submitted through the concerned sales representative or, if
requested by the sales person, it can also be send directly to the customer, marking a
copy to the sales person.
2.2.8.

Workflow in CRM

The entire CRM workflow concerning enquiries, offer and project tracking is available in
the CRM manual; and SCM forms an important part of it. E.g. the Project Engineer in the
SCM holds the responsibility to register the enquirer, enter enquiries into the Sales
Opportunity and to upload the offer into CRM. The CRM workflow is strictly to be followed
and forms an essential part of the responsibilities of the employees in the SCM Dept.
(For details refer Annexure CRM Manual)
2.3. Order Processing
2.3.1. Definition
Orders are divided into stock orders and trading orders. These specify whether the
goods at stock or to be manufactured.
The process starting from the receipt of confirmed order until its dispatch is known as
order processing and the following chart describes the steps involved from SCM
perspective:
The process of order execution for orders requires the following steps, for which the
Order Executive is responsible in SCM:
Check of PO
Issuing of Approval
Documents
Creation of Sale Order
Po to Suppliers (if required)
Issuing of the Order Acknowledgment
Follow-up for delivery schedule & process documents
Dispatch
Documentation

2.3.2. Issuing of Approval Documents

Most of the customer orders require a manufacturing approval by the end client or the
Consultant before commencement of manufacturing. With the approval of certain
documents the customer confirms technical data and specifications according to which the
products shall be manufactured.
A sample set of Approval Documents can be found under Annexure 2 Approval Documents)
It is the responsibility of the PE or OE to coordinate with the Design department for the
respective documents to be submitted to the client. The PE in SCM has to follow up
with the customer to receive back the duly signed and stamped approval, which
enables the company to start with the procurement and the manufacturing of the
products.

2.3.3.

Creating the sale order

Sales rep will receive Sale Order No from the supply management and issue the
Sale Order with all the details to SCM department to process the order

The commission rates and amounts have no effect on the sales price but only show
the values included in the calculation. Once the document has been invoiced, a commission credit memo has to be prepared.
For further details on handling of the SAP while entering a customer order, please refer
to Annexure 3 SAP Manual.
2.3.4.

Placing PO
With respect to the quotation received from the supplier, negotiate and place the
order after confirmation and approval from the HoD.

Figure 14 PO Format
2.3.5.

Order Acknowledgment

An order confirmation stating all techno commercial terms as well as the confirmed
delivery dates is to be issued to the customer by the SCM employee within three days
after receipt of the customer order. Delivery dates which are not confirmed are not to be
given to customers as they are binding contract agreements. The customer is to be
informed in writing, if issuing of the order acknowledgment takes more than the
above mentioned three days time.
2.3.6. Follow-up
At KSC, adherence to delivery dates / on-time delivery rate is measured as a key performance indicator (delivery performance). It is measured for each order/contract and
recorded automatically in SAP.
Measuring begins as soon as the document in the SAP message control either initiates
the print preview of an order acknowledgment (order confirmation) or by sending of an
OC to the archive, to the sales rep or to the customer through SAP. The printout to the
sales rep is excluded in this case and no measuring is effected here.

Once the order acknowledgment has been processed, all subsequent adjustments (rescheduling) of delivery dates will not affect the delivery performance measurement of ontime delivery.
It is the responsibility of the OE in SCM to continuously follow up with the procurement and the production planning department, to make sure the confirmed delivery
dates are finally met. There are weekly dispatch planning meetings to discuss the cur- rent
status of the projects to monitor and steer the dispatch and turnover planning. The
customer shall be informed in writing of any delays of more than a day time.
Similarly like the internal follow up with the production planning there is a follow up with
the customer. The sales respectively the customer is to be informed about the planned
readiness of goods and to be and followed up for all required process docu- ments like
e.g.:
LOI / confirmed PO
Approval documents
Contract Amendments
Advance Payment, PBG
LC / LC swift message
Road permit
Duty exemption certificate Etc.
2.3.7.

Dispatch

The dispatch process is described on the following chart:

Figure 15 - Dispatch Process

The most important steps in the dispatch process are:

Packing clearance:
The packing clearance should be given by PE/OE to Production, Logistics & Quality
departments along with Work Order from SAP System and Purchase order 1-2 days before the planned dispatch by considering the following:
Checking for availability of all valves
Clearance from Sales
Dispatch Clearance:
Dispatch clearance should be given to Production, Logistics & Quality department
considering the following checks
Final check for any changes in Delivery
Conditions Clearance from Production
Clearance from Accounts / Finance for Payment
2.3.8.

Documentation

Documentation is an important post- dispatch responsibility in SCM. The OE of SCM

has to collect several documents from respective manufacturer send them to the
respective sales representatives or to the customer directly as per the following chart:
Internal Sale Order
Purchase Order
Dispatch Intimation
Commercial Invoice Delivery
Challan
Packing List
Test Reports & Inspection Release note (In case of Third Party Inspection) Warranty
Certificates
2.4.1.

LC Handling

Orders with value more than 1,00 0,000 SAR are generally executed based upon
the payment term Letter of Credit (LC). An LC is a payment guarantee for the supplier
to receive the respective payment against submission of the papers as per the LC
agreement and general terms and conditions. Irrespective of any changes the supplier
has the right of encashment of the LC amount against the submission of the papers to
the respective bank. This secures the payment even under events which may have a
severe impact on the project such like:
Order Cancellation
Bankruptcy of the buyer
Unforeseen delays
Conflicts between buyer and supplier
Handling of an LC involves 4 parties:
Buyer(Applicant)
Buyers bank
Seller(Beneficiary)
Sellers Bank

The following chart describes the process / interrelation between these four parties:

Figure 19 - Documentary Credit Cycle

Generally KSC requests its customers to open an LC before commencement of
manufacturing during the initial stage of order execution. Nonetheless, as it is uncommon
in to issue an LC in advance, KSC gives liberty to its customers to open the LC sharply
before the dispatch, i.e. latest 4 weeks before the inspection. The SCM PE is to
coordinate with the sales and/or customer for the opening of the LC. The PE shall request
the client to open the LC along with issuing the invitation letters for inspection. For this
purpose there is a LC requisition form which helps the customer to fill all the fields of
the LC correctly while opening the LC at his bank.
2.5. Service
One of the business segments of KSC is Service and is dedicated to providing the
highest quality workmanship and quick feedback service to its clients. KSC provides
customer oriented services in the field of claim management, commissioning, installation
and refurbishment of valves. In this chapter only the claim management shall be
explained as the other processes are either already covered in the regular process of
enquiry and order processing, or they are handled by the service department
independently.
Procedure for Complaint Handling:
Customer Complaint
Servicing the valves based on the customer complaint.
Close the issue after service.
2.5.1. Credit Notes for Service Claims
A credit note is a commercial document issued by the seller to the buyer to confirm the
crediting / reimbursement of money for goods and services which have not been
received or have been returned. A Credit Note normally corresponds to a particular
invoice which is referred in the note. It lists the products, quantities and agreed prices for

products or services which had been returned or were never received. It may be issued
in the case of damaged goods, errors or allowances. Usually it references the original
Invoice and sometimes states the reason for issue.
It falls under the responsibility of the SCM employee to issue a credit note in case of a
reimbursement to the customer. In any case the credit note has to be approved by the
HoD and needs to be counterchecked and signer by the Head of Finance department.
2.6. Forecasting of turnover
The HoD of SCM is responsible for the planning and forecasting of the month
Turn- over.
The dispatch plan is one of the most important tools used to monitor and plan
the turnover (shipments) from the backlog of orders.

3. General Rules & Guidelines

3.1. Escalation management
Generally any employee is instructed to work for the common company goal to satisfy the
client requirements best possible.
In the event of any kind of critical conflict situations or heated situations employees in
general shall thoroughly try to resolve the issues in a win-win manner between all
parties. If such attempts have failed, it is the primary responsibility of the employee to
inform the superior and not to create or involve in further conflicts. The employee shall
inform his/her superior immediately in such cases and ask for help.
Similarly if an employee faces or foresees a specific situation which might create severe
discord with a client or with the concerned sales representative he/she shall in- form
his/her superior. The employee is not advised to argue or fight out any conflicts, neither
with KSC internal people nor with external people like clients and suppliers unless
specifically asked to do so by the superior.
However there are usual business-processes which might lead to discussions or displeasure on any side (internally or externally) which are not regarded as reason for
escalation, such as technical and commercial negotiations.
3.2. Price Information of Cost Prices & Manufacturing Costs
Cost Prices & Manufacturing Costs shall generally not be informed to any customers or
agents. The sales people shall not be furnished with cost price lists except for General
Managers and the Managing Director.
3.3. Four-eyes principle
All binding documents prepared and signed by an SCM employee shall be checked and
countersigned by a second person of same or higher hierarchy level. This is to minimize
failures and flaws which could possibly be overlooked during preparation of such
documents. This rule applies to all commercial contract documents such as:

Offers
Sales Contracts
Order Confirmations
Invoices
Credit / Commission Notes