DOC. REF. NO.

PHIMSSP12
POWER HOUSE
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ISSUE
DATE 01/05/2015
Procurement Control Procedures PAGE 1 OF 8

ISO 9001:2008
ISO 14001:2004
BS OHSAS 18001:2007
ISO 50001:2011

Document Title : Procurement Control Procedures

Document No. : PHIMSSP12

Issue No. : 2

Issued Date : 01/05/2015

Prepared By : Ahmed Abdel-Razik Supply Chain Manager

Approved By : Bassam Mokhtar TQM Manager & MR

Confidentiality
The information contained in this document is confidential to Power House Co. Accordingly, copyright for
this document is retained with Power House Co. and no copying in any format of this document is permitted
without the written permission from Power House Co. top management.
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Document Amendment
Record

Date of
Issue No. Description/ Details of Amendment Requested By
Amendment

1-4-2014 01 First issue ISO 9001

Changing of Supply Chain organizational
1-5-2015 02 TQM manager
Chart
25-08-2015 03 Adding ISO 50001 consideration ISO MR
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1. General
Power House Company shall ensure that purchased product conforms to specified procurement requirements. The type and
extent of control applied to the supplier and the purchased product shall be dependent upon the effect of the purchased
product on subsequent product realization or the final product.

Power House Company shall evaluate and select suppliers based on their ability to supply product in accordance with the
organization's requirements. Criteria for selection, evaluation and re-evaluation shall be established. Records of the results of
evaluations and any necessary actions arising from the evaluation shall be maintained

2. Purpose
This procedure will be used to describe, facilitate the procurements work flow to be the manual for all purchasing and
service processes on Power House Egypt.

3. Scope
Overarching function that describes the activities and processes to acquire goods and services. Importantly, and distinct from
purchasing, procurement concerns the activities involved in establishing fundamental requirements, sourcing activities
such as market research and vendor evaluation and negotiation of contracts. It can also include the purchasing activities
required to order and receive goods. The purchasing scope may be local or foreign.
I. Suppliers selections.
II. Suppliers evaluations.
III. Suppliers contracts.
IV. Supplier relationship management.
V. Materials& services deliveries.
VI. Materials purchase orders follow up.
VII. Best prices, quality, timing& conditions getting.
VIII. Purchasing policy (local, imported).
IX. Energy saving consideration of the purchased material.
X. Environmental parameter consideration of the purchased material.

4. Responsibility
The responsibility for implementation of this procedure shall be; Procurement manager whom is reporting to the supply
chain manager.

Procurement Manager

Pricing
Coordinator
Specialist

Local Purchasing Foreign Purchasing

Section Head Section Head

Local Purchasing Local Purchasing Foreign

Local Purchasing Local Purchasing
Specialist Specialist Purchasing
Specialist (Fab.) Specialist (Elec.)
(Maint.) (Mech.) Engineer
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5. Definitions and Abbreviations

Ser. Object Abbreviation Definition

1 Unit price
2 Quantity
3 Total price
4 Supplier/vendor
5 Min. order quantity
6 Purchase requisition
7 Purchase order
8 Lead time
9 Unit measure
10 Letter of credit
11 Telegraphic transfer
UP The price of the specific item, good& service etc.
Qty. No. of required items, goods& service etc.
TP UP multiplied by Qty.
- The owner of item, good& service etc.
MOQ Min. no of items, goods& services that supplier can deal with according to his regulations
PR The document that receiving from warehousing department describe the requirement
specifications.
PO The document that submitting to the supplier to request issue with all conditions
LT The time required for delivering starting from purchase order till delivery
UM The unit which used to describe the required item, good& service etc.
LC Payment term where are immediate transfer of funds takes place between two bank accounts
TT Payment term that transfer money where the parties' banks stand guarantor to the transaction

6. Procedures
The next procedures should be applied for all procurement activities like material purchasing, service, contracts

A. Receiving the purchase requisition (PR or Service requisition).

The first and foremost function of purchasing is receiving demand/requisition of material from Warehouse. The received PR
explains all order details like material specification, quantity, need data, etc. (PH-IMS-SP12-FR01). Different departments
of the organization will submit Service requisition when required by using form (PH-IMS-SP12- FR02).

B. Assessment of needs
The received needs should be classified either regular requirements to be gos into planned purchasing way tip no E (local,
imported, supplier, quantity, need date, delivery plan,.. etc.) within approved suppliers resisted list or irregular requirement
which need more investigation to get the best way of purchasing thats will describe within the following tips.

C. Sources of supply selection

Most important function of a purchasing department is the selection of the sources for the requisitioned items of stores. The
visible objective of this selection should be active when inserting new supplier, irregular material and new service.
Inserting new supplier in the approved list Form No. (PH-IMS-SP12-FR10) need a lot of investigated data to verify the
supplies trustiness from local or international market by using Form No. (PH-IMS-SP12-FR08).
Supplier Selection criteria:

1- Legal issues (Commercial Register, tax card and Later of grantee )

2- Back history ( list of clients )

3- Management System Certificates (ISO9001, ISO 14001, ISO50001 and OHSAS 18001) is preferred

Supplier grade Legal form Management system Requirements fulfilling

A: More than 40% Authorized supplier ISO 9001, ISO 14001 Best quality & delivery
OHSAS 18001 time
B: More than 20% Sub supplier ISO 9001 Best quality
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C: Lowest 20% Non authorized Non Certified Best delivery

D. Quotation inquiry
As soon as the purchase requisition is received in the purchase section, sources of supply will be located by procurement
specialist by form (PH-IMS-SP12-FR03); a decision is then taken in respect of the method of quotations from prospective
suppliers.
Quotations is mandatory step for both local and foreign suppliers. Also quotations is a mandatory step for registered suppliers
for regular items or new suppliers with irregular items.
Quotations arent use only for submitting the required purchase order but also to keep this information up to date. Even for
the items which are being purchased on a regular basis, the purchasing section should invite tenders and know full well the
market price. It will ensure that prices being paid to the existing.

E. Placing order :
Placing a purchase order (PO) is the next function of procurement department depend on supplier comparison result by using
form (PH IMS - SP12-FR04) Since PO is a legal binding between the two parties, it should always be accurate, clear and
acceptable to both. The PO should contain needed information like description and specifications of the material, quantity
order, packing charges and shipping instructions for imported materials, name and address of the supplier. Need date, price,
discount and terms of payment, procurement manager signature& claims, conditions and penalties by using form (PH-IMS-
SP12-FR05).

F. Invoices and money transfer

As a feedback step of PO, singed and stamped Performa invoice should be received from the foreign supplier. And
payment term should be proceeding with local supplier. Then money transfer process started under finance department
regulation and supplier agreement term TT, LC, after delivery, period, etc.

G. Purchase order PO follow up

Since one of the successful purchasing objectives is delivery of goods at right time so as to ensure delivery when and
where needed? In normal practice, the responsibility of the procurement department is update PO status by using Purchase
orders follow up Report No. (PH-IMS-SP12-FR11) to verify the delivery plan Form No. (PH-IMS-SP12-FR06).

H. Material delivery method

It is important task of procurement which is transporting of required material or service. The delivery method must be
mentioned in PO conditions. And consider the price, timing & safety of delivery.

I. Receiving material inspection

The purchasing department should have a close contact with quality department. On receipt of the materials from different
suppliers, they are to be inspected as per specifications indicated in the purchase order to verify their quality and quantity if
non confirming material or product founded QC Manager will submit Non Confirming Notification to Procurement
manager and procurement manager will submit supplier complaint report No. (PH-IMS-SP12-FR09) when required. Then
communicate with finance department to finalize the paying term to the suppliers by Procurement department.

J. Suppliers data updating

The final process of procurement is updating data regarding to the suppliers PO. Evaluation report should be submitted to
the suppliers for feeding him by the progress and comments to be enhanced in the next deals By Using form NO. (PH-IMS-
SP12-FR07).
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K. Supplier evaluation criteria:

(i) Criteria and related weights

Ser. Major Criteria Parameters Percentage Wight

Ability to supply product or material Specification 15 %
1 Quality Commitment Ability to supply required documentation 15 % 40 %
Ability to submit technical support 5%
Quality of Packing 5%
Terms 10 %
2 Payment Price Competition 20 % 30 %
On Time Delivery 20%
3 Time Commitment & Response 10% 30 %
Total Evaluation Percentage 100 %

(ii) Total percentages classes& impact.

Ser. Percentage range Class Impact decision

1 100 % ~ 90 % Accepted Acknowledge, rewords, deals expansions,

2 89% 75% Accepted Acknowledge & motivation

3 74 % ~ 60 % Improvement needed Warning letter

4 59 % ~ 40 % Terminated Suppliers Register Data Base

5 Below 40 % Terminated Black list

Note:
Required Documentation Such as (Technical Data Sheet Material Safety data sheet Test certificate -
Certificate of origin- Operation & Maintenance Manual Parts Book Calibration certificate Energy Saving
Card .)
The evaluation will be prepared and submitted each specified period or specified numbers of delivers.

Example:
Evaluation period: 3 months from: 01/04/2015 till: 01/07/2015

Parameters Grad Percentage Justification

e (10)
Ability to supply product or material Specification 9 9/10*15/100=13.5 % Grade = no. corrected delivers divided on
total delivers * 10 within specified period
Percentage =grade/10 *15/100
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L. Pricing procedures :
One of the important tasks of the procurement department is pricing of material or service. Pricing is a driver of any operation
that need to be decided either suited or out of scope. The pricing process activate according to departments requirements by
Estimated Pricing Request form (PH-IMS-SP12-FR12) and the procurement feedback will be estimated according to history
or new quotation from supplier.

6.0 Records & Forms

Purchase requisition PH-IMS-SP12-FR01
External Service requisition PH-IMS-SP12-FR02
Quotation Request PH-IMS-SP12-FR03
Quotation comparison PH-IMS-SP12-FR04
Purchase order PH-IMS-SP12-FR05
Delivery plan PH-IMS-SP12-FR06
Supplier Evaluation PH-IMS-SP12-FR07
Supplier Registration PH-IMS-SP12-FR08
Complaint Report to Supplier PH-IMS-SP12-FR09
Suppliers Register Data Base PH-IMS-SP12-FR10
Purchase orders Follow Up Report PH-IMS-SP12-FR11
Pricing request PH-IMS-SP12-FR12
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