HBL POWER SYSTEMS LIMITED Standard Operating Procedures for Logistics Management
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SUBJECT 1.Introduction 2. Definition 3.Objectives 4. Scope 5. Policy 6. Role of Logistics in HBL 7. Modes of Transportation used in Logistics Management 8. Requirement Planning 9. Purchasing and procurement 10. Production Production planning 11. Storage and Inventory management 12. Material Handling 13. Packing 14. Transportation Transportation Procedures 15. Customer Service 16. Freight Insurance 17. Finance and Accounting 18. Appendices 19.Conclusion
PAGE No.
In pursuant of
has published the
edition of Standard Operating procedure.
This document shall be known as Standard Operating Procedure-Logistics Management 2017, hereafter referred to as SOP-LM 2017 .
Standard Operating Procedures: A set of instructions or steps for carrying out the routine operations and to provide detailed guidance for initiating and completing any process in Logistics management with in the specified time frame.
1. Introduction: a. Logistics is a process of moving and handling goods and materials, from the beginning to the end of the production, sale process and waste disposal, to satisfy customers and add business competitiveness. b. In today’s highly competitive global market place, market place, there is pressure on the Company to find new ways to create value and deliver it to their customers grows ever stronger. The increasing need for industry to compete with its products in a global market, across cost, quality and service dimensions, has given rise to the need to develop logistic systems that are more efficient than those traditionally employed. c. Therefore, in the last two decades, logistics has moved from an operational function to the corporate function level. There has been a growing recognition that effective logistics management throughout the firm and supply chain can greatly assist in the goal of cost reduction and service enhancement. d. “The key to success in Logistics Management (LM) requires heavy emphasis on integration of activities, cooperation, coordination and information sharing throughout the entire supply chain, from suppliers to customers” customers”. e. This is especially true in the rapidly growing area of logistics management in Battery Industry due to the issues in Battery handling at the time of Transportation.
2. Definition: a. Logistics Management is the process of planning, implementing, and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services, and related information from point of origin to point of consumption ( including inbound, outbound, internal, and external movements) for the purpose of conforming to customer requirements.
b. Types of Logistics: Inbound Logistics- Freight Inward: Inbound logistics covers the movement of m aterials received from the suppliers.
Outbound Logistics (Physical Distribution- Freight Outward): Physical distribution refers to the movement of goods outwards from the end of the assembly line to the customer. Material Management: Material management describes the movements of materials and components within the Company. Personnel Logistics: Transportation facility is provided to the Employees of HBL through modes like Buses and Pooling Cars depending on the Level of Employee.
3. Objectives: a. The General objectives of the logistics can be summarized as: Cost reduction Capital reduction Service improvement b. The specific objective of an ideal logistics system is to ensure the flow of supply to the Customer, the: Right product Right quantities and assortments Right places Right time Right cost / price and, Right condition
4. Scope: This SOP-LM 2017 Manual concentrates on policies and proc edures, various key factors and procedures involved in Logistics management in HBL namelyCustomer service Demand forecasting Planning Inventory management Logistics Communications Material handling Order processing Packaging Disposal logistics Return of goods or rejected materials handling For a shorter delivery time For better quality Better product variability Product complexity Shorter life cycle of products
Hence, this SOP-LM 2017 covers all procedures and processes involved from the day Purchase order(Appendix-A) for Raw materials to day of delivery of Finished goods to consumer against respective Sales order( Appendix-B).
5. Policy: This policy aims to achieve the following objectives objectives as decentralized system system of Logistics Management is used in HBL:a. Provide guidelines that employees of the HBL must follow in the management and control of transportation, including inventory and Stores management. b. Use transportation system which is in line with the established procurement principles contained in the HBL’s Policy. c. Eliminate any potential misuse of Freight and possible theft, damage to to goods in transit. d. HBL’s concerned authority shall ensure: Inventories are transported securely HBL has fit-for-purpose software (SAP) and systems to accurately record the order, movement of inventories. Appropriate controls are in place to ensure the accurate and timely entry of transactional information in to Logistics systems. Transportation modes are in accordance with HBL’s Logistics management Policies. Appropriate segregation of duties and security over the access to Freight and the processing of freight transactions, in accordance with Company’s Delegated Authorities. e. The implementation and review of these Logistics policies are the responsibility of HBL’s _____________ committee. f. HBL’s ______________ is responsible for implementation.
6. Role of Logistics in HBL a. HBL being a manufacturing concern and with large number of divisions and plants needs a strong and flexible Logistics management with high level of mutual co-ordination among the Employees to achieve high level of Customer Satisfaction. b. The main business of HBL is Production and sale of Batteries which requires good Stores management- for storage of Raw materials and finished goods. Inventory management- for having less safety stock, Stock at right quantity, r ight time. Logistics Management- For the purpose of having apt Stores management and Inventory Management System, a Logistics Management System with relevant procedures and policies is required with flexible and cost- effective transportation procedures. c. Logistics System in HBL plays a good role in transportation of : Raw materials- Transported from Supplier or any Internal Transfer. Finished goods- Transported to Customer or any Internal Transfer. Employees- Apart from the above HBL provides transportation facility to Employees. d. The concept of logistics has its base upon the systems approach. There is a single chain, with flow of materials starting from the supplier, then to the plant and finally to the end customer, and these activities are done sequentially in order to achieve customer satisfaction at low cost. For this to be successful there has to be co-ordination in the activities of the departments.
7. Modes of Transportation used in Logistics Management a. Air Transport Only in case of Imports and Exports Air transportation is usually used in HBL. b. Sea/ Water Transport Only in case of Imports and Exports Air transportation is usually used in HBL. c. Railways:
Generally capable of transporting large quantities of freight over long distances very economically. It is the main source of transportation of Goods and raw materials which are transported across the length and breadth of the country. The railways also charge competitive freight rates. HBL uses Railways mode of transportation for Indigenious Purchases and Sales. d. Roadways: Roadways is the major mode of transportation used by HBL. The Company enters in to agreement with the Contractors comprising of following terms and conditions: Registration Number of Vehicle Method of Payment Amount of Payment Duration of Engagement Penalty in case of Absenteeism Vehicle fit ness certificates, Copy of RC, Driver’s license copy, Approval from RTA, Vehicle Insurance Policy have to be obtained at the time of execution of Contract itself. Contract validity period
8. Requirement Planning a. Check for Availability of materials, Documentation of justification & comparisons before raising MRP (Material Requirement Plan) in SAP by PPC (Production Planning Committee) b. Control over the investment in material is done before MRP. c. MRP entered in SAP specifies qty and PO is raised by linking such MRP. Weekly Review of procurement with exceptional reporting from SAP for pending requisitions. d. MRP contains procurement schedule and expiry dates. O ther terms are decided by Finance department through SAP. e. MRP specifies delivery schedules. PPC review of open orders based on DMR (daily material receipt) Review of vendor performance t hrough SAP vendor evaluation system. f. The following requirements have to be fulfilled in MRP: Product characteristics Make to stock Make to order Assemble to order (low demand profile (high demand profile Material attributes (low demand profile products with high products) products with low setup cost) setup cost) Just-in-Time MRP system should high exhibit Just in Time demand performance high value characteristics. Use cost and steady consumption time close cooperation measures. with supplier short delivery Reorder point high demand medium value varying consumption close cooperation with supplier short delivery
MRP high demand medium value varying consumption long delivery EOQ* low value steady consumption
9. Purchasing and Procurement: a. Purchase of Raw materials is made as per SOP on P urchase. b. Procurement of materials at the lowest possible cost, at the same time ensuring that it is consistent with quality and service requirements. c. Procurement Requirements: These facilitate the material releases, shipments and the receipts. d. Creation of List of Approved Vendors, SOP for placing order outside approved list Vendors are grouped under categories based on Approval & Open Market and orders are placed as per SOP- Purchase. e. Creating as Basic Purchase Agreement / Purchase Order Format. PO issued at negotiated rates. Documentation & authorisations of Purchase Orders at Indenting Stage as per SOP. f. Ship-from-party details for the Supplier against Invoices and dispatch documentation have to be updated in the SAP. List of approved transporters are available for various locations and ease of dispatch.
g. h. i. j. k. l. m. n.
On the receipt on Goods at Factory gate the following have to be obtained Weightment certificate – certificate – Liquid Liquid and powdered raw materials (Appendix-C) Physical counting by the Stores keeper at factory gate for identifiable items Copy of Invoice from the Supplier Supplier’s delivery challan/ Invoice bearing the P O reference number. Gate pass is issued only after comparison with PO by Stores In-charge. Supplier’s delivery delivery challan/ Invoice must bear the Inward stamp. Information of arrival of materials is given to respective Production, Purchase, Finance departments. SAP on the generation of o f MIGO sends mail to the concerned departments or sometimes oral communication is given.
10. Production Planning: Each Division in the Company must be in a status that it could provide details at any point of time, the below given details: PARTICULARS PARTICULARS RAW SEMIFINISHED MATERIALS FINISHED GOODS GOODS Sales order Number Stock readily Previous Inspection available process of Finished Sales order date details goods Safety stock Customer Name maintained % of work Packing Tender details Production against completed List of raw Storage Tender quotation Sales Order materials or Next process Delivery details components details Engaged Vendor code from required for Process costs logistics SAP production. details
Production against Demand
Date of delivery of FG(As per SO) Sales quantity as per SO Finalised selling price Engaged logistics details for Delivery to Customer Production plan Time period for PPC Budget approval date
Purchase of required Raw materials against PO Goods reciept details Inward slips Storage location details Value of stock Stock-in-transit
No. units in process (in terms of FG)
Final receipt by the customer against respective SO FG-in-transit
Inspection of Finished goods Packing Storage
11. Storage and Inventory Management A. Inventory Management: a. Inventory refers to the stock of materials of any kind stored for future use, mainly in the production process. Semi-finished goods, which are awaiting use in the next process, or finished goods, which are waiting for sale, are also included in this broad category. But these are practically idle resources. Thus inventories are materials / resources of any kind having some economic value, either awaiting conversion or use in future. b. Customers demand that their orders be shipped complete, accurate and on time. That means having the right inventory at the right place at the right time. c. Excess of inventory in the Company increases the overall overall working capital requirements and places a large cost burden on the individual plants and divi sions. The levels of inventory need to be reduced throughout the logistics System, which will lead to an effective operation. d. This Manual focuses on retailers and their distribution services. Inventory aims to reduce costs and simultaneously improve service. Thus the need to reduce costs as against improving service becomes the key issue and the role played by successful inventory management is becoming more apparent. e. Cycle Inventory : Raw materials, components, parts are required for production. This is cycle plays a crucial role in keeping the production cycle continuous. The work in progress inventory is a major part of production related inventory. Determining how frequently to order and in what quantity is called “Lot sizing” . f. Safety Stock : In order to avoid customer service problems and the hidden costs of unavailable components, companies hold safety stock. This gives a cushion against uncertainties in demand, lead-time, lead-time, and supply therefore ensuring that o perations aren’t disrupted. g. Access to the stores area should be limited to the stores In- Charge only. The area should be locked during periods when the stores in-charge is not present. h. The _________ should be held responsible for any unexplained shortages that arise from the results of the inventory counts. i. Delegated officials of the _____& _____should perform physical inventory counts regularly o n a test basis. The purpose is to compare com pare the physical inventory with the theoretical records on a test basis and to detect possible theft, fraud or accounting errors on a timeouts basis. j. Complete inventory verifications of all items on hand should be performed at least “twice” per financial year. These counts should be performed on the last day of the f inancial year and after six months of the financial year. The purpose is to compare the total physical inventory with the theoretical records and to detect possible theft, fraud or error.
B. Stores Management: a. The term storage refers to the physical act of storing the materials in a Storehouse on pallets, shelves, racks, boxes, almirah, etc. with the objective of retrieving them later for issue to the user. The purpose of any storehouse is to provide to users the right materials, in the right quantity, at the right time and at the lowest possible cost. b. For inventory management, plants are created in SAP to represent a location that receives stores, and issues materials. c. The inventory can be materials that are used in the production process, finished goods or maintenance items. The storage location is the lowest inventory level in the inventory management function. d. Storage location is determined at purchase requisition level/ PO stage and accordingly stored based on the user department’s location. Hence, Storage location is allotted at PO level itself. e. SAP doesn’t permit storage in any other location. f. Storage is made as per the list of material types designed in SAP to have proper bifurcation. g. This SOP for Stores management is based on nature and quantity of Inventory. h. Inventory must be stored in a secured, exclusive use area, under lock and key, furthermore the inventory must be insured. i. The area must be used exclusively for the storage of inventory, with limited authorized access only. j. Inventory must be positioned to facilitate efficient handling and checking. k. All items must be stored separately, with proper segregation. l. Inventory must be clearly labeled for easy identification. Inventory tag/bin cards or inventory labels may be used to identify each item and to aid in the physical verification of the items. m. Where ever possible, all items of the same type and reference must be stored together as per the description on the inventory records. n. Items with limited shelf life must be rotated on a first in first out basis, to reduce the occurrence of expired or obsolete stocks. o. Due diligence and care must be exercised to prevent damage of, or deterioration of inventory. p. Due regard must be given to any safety standards which may apply to the storage of certain inventories. High value items like silver are to be stored in Vault rooms and proper security must be provided q. Steps must be taken to ensure safe custody of items, including precautions against loss or theft. r. The Store man or Delegated Official responsible for the custody and care of inventory must ensure that in his/her absence, such items, where ever applicable are securely stored. s. The responsibility for the custody of the storeroom keys must be allocated by the delegated authority to an official who is accountable for its use. t. No unauthorized persons/officials shall obtain entry to premises, buildings or containers where inventory is kept, unless accompanied by the responsible official. u. Whenever a change in store personnel occurs, an inventory count must be c onducted. v. An independent official shall be nominated in writing by the delegated authority to assist Internal Audit team with the handing and taking over with the Physical verification of the inventory and any discrepancies.
12. Material Handling: a. Handling of Batteries: Batteries are large, contain corrosive acids and produce an electrical charge. All of these post a threat to your safety and necessitate a number of precautions be taken when handling batteries. Avoid bringing metal into contact with batteries. This includes metal tools and hoist chain as
well as personal items such as jewelry, watches and belts. As metal conducts electricity, anyone touching a metal object as it comes into contact with the battery runs the risk of electrocution.
Never allow both terminals to make contact with an item (particularly yourself) simultaneously. When both terminals are engaged, an electrical current will pass through anything touching them Do not hand-guide batteries during lifting/moving process. This puts you in danger if the battery were to drop or shift. Also, touching the battery proves a danger as it may lead to electrical shock or bring the worker into contact with corrosive battery acid. Practice safe and appropriate lifting procedures. Do not bring unprotected hands into contact with the battery throughout the moving process. Additionally, use only specified lifting equipment equipment designed for this purpose and approved for the battery’s weight. Otherwise, one runs the risk of damaging the battery or lifting equipment. Wear protective equipment when handling batteries including gloves, eyewear and hardhat. Gloves and protective eye gear are to guard against battery acid while a hard hat is important during the lifting process in case a battery swings or falls. Batteries can be dangerous when mishandled. Not only are these batteries large and heavy objects that can cause severe injury and damage if dropped, battery acid is extremely corrosive and can cause severe burns to the skin or corrode equipment that it comes into contact with. Likewise, touching batteries without proper equipment and preparation can result in high-voltage electric shocks. All personnel working with batteries should first be trained in the proper lifting and handling procedures. Also, it is a good practice to regularly remind workers of appropriate battery handling procedures in order to maintain a safe working environment. Do’s and Don’ts of shipping batteries by ground. Protect batteries from short circuit by placing cardboard insulator pads between layers and shrink-wrap for Ni-CAD batteries as shown given below.
Add the “ Corrosive” label, Identification label, Identification number and mark: “Wet, filled with acid.” Provide bill of lading with description of hazardous material, company and shipper’s name specifically name specifically in case of Lead acid batteries with high chances of spillage.
Rules under Batteries (Management and Handling) Rules, 2001 which are applicable to HBL are: Rule.1 - ensure that no damage to the environment occurs during transportation Rule.2- ensure safe transportation of collected batteries to the designated collection centres or to the registered recycling units/ divisions.
b. Handling of Electrical Items- For Thumukunta plant, Yapral plant and PE division: Buffer sheets and cyro form sheets are used for packing electrical items. Carton boxes are used for final packing
c. Handling of concrete items- For Plants and divisions with concrete based production lines: Use polythene covers and buffer sheets to protect the poles from stains and damages.
The Handling process mainly involves the removal of poles present moulds, transporation to the Storage place, loading and unloading operations. At the time of demoulding the poles and piles will not gain the expected concrete strength required , they are generally more susceptible to damages during handling. Hence, they are to be handled in a way considering the below handling requirements: Position of Casting mould(Vertical/ Horizontal) Minimum concrete strength before demoulding, delivery and Erection. Adequacy design reinforcement to resist handling stresses. Size and weight of Goods. Method of lifting used, Capacity of Crane Location of liting points.
13. Packing:
1) VRLA Battery after after packing 2) Carton boxes used for Packing 3) Defence Battery after packing a. Batteries can be a source of dangerous heat, sparks or fire if they are improperly packaged for shipping. For this reason, HBL customers and Employees must follow applicable safety regulations and appropriate precautions when preparing batteries for transportation. Battery shipments may be subject to both Indian and international safety regulations, and because of the potential dangers associated with violations o f those regulations b. HBL has assembled this illustrative manual to help Employees in safely packing and transportation of many kinds of batteries. In some cases, such as with alkaline or certain nonspillable lead-acid batteries, pocket plate, Aviation batteries , your responsibilities may be limited to simple steps such as: selecting strong outer pack aging; carefully protecting battery terminals to prevent sparking or short circuit; and carefully preparing the interior package components to keep tools or other o ther metal objects away from batteries.
c.
Other types of batteries, including Spillable lead acid, Ni-CAD, Silver zinc, Thermal, Defence,VRLA and other metal types, also may be fully regulated as hazardous materials (also known as dangerous goods) for transportation, so that in addition to those basic safety precautions they require use of specialized packaging, specific hazard labeling, and specific documents certifying compliance with the applicable regulation.
14. Transportation Procedures a. Transport, being the main component of logistics, plays an important part in all management decisions within the Company, from strategic decisions to everyday operations. Day to day management decisions also relies on transport, as “Just in Time” methods for distribution have become more popular. b. The appropriate use of transportation is the key to any logistics management plan.HBL uses a responsive transportation system to lower overall costs c. Documents in Transport Decision Making: Bill of Lading: A computerized, basic document, which is, utilized in purchasing transport services. This serves as a receipt of the commodities and quantities shipped. It also serves as the basis for damage claims in case of loss, damage, delay etc. The terms and conditions of the carrier liability and gives in documentation form theresponsibility for all possible causes of loss or damages. Freight Bill : This is how the carrier charges for the transportation services he performs. The information contained in the bill of lading is utilized for preparation of this.
Shipping Manifest : This document is used when multiple shipments are placed on a single vehicle. The document provides a comprehensive list, which informs the entire load content, making it unnecessary to view individual bills of lading as all details relating to the stops, bills of lading, weight, case count etc for each shipment are listed in this manifest. d. The below mentioned proceures have to followed on the receipt of Materials through Transportation: A. Receiving general items: 1. Communication of all Purchase orders issued to all factory gates. 2. Materials from the Supplier are accepted only against PO.
3. Supplier’s delivery challan/ Invoice bear the PO reference number. 4. 5. 6. 7.
Gate pass is issued only after comparison with PO by Stores In-charge. Weightment certificate verification( Where ever applicabe) Supplier’s delivery challan/ Invoice must bear the Inward stamp. Information of arrival of materials is given to respective Production, Purchase, Finance departments. SAP on the generation of MIGO sends mail to the concerned departments or sometimes oral communication is given. 8. Check the drivers slip to ensure that the Vendor Company states ‘Our Company’ on the face of the slip. 9. Inward factory gate pass ( Appendix-D ) must be prepared on the reciept of Goods. a. Complete the “Receiving Log” with the following information: i. Product Information: Received date PO number Item description Weight in kg (if applicable) Lot number Quantity received Shipment Supplier name Shipment Carrier name ii. Vehicle Inspection: Visual inspection Odor inspection Truck/trailer number
B. Receiving Raw Materials a. The shipper/receiver will: The trucks must be covered and closed. cl osed. Floorboards are dry and clean. No evidence of chemical spills, garbage, waste or spoiled foods. Bad odor. Make a note of the truck license plate or trailer number. Notify the Supervisor and QA of any issues. Unload the shipment and inspect the condition of the shipment to ensure that all products are on clean pallets and no damaged cases or packages. b. Pass the PO with all relevant information to the QC department. c. QC will take sample as per sampling procedure SOP New Raw Material Approval. d. Once the goods are acceptable, QC will place a “QC “QC Approved sticker: Appendix-E on the product.
e. Tag the product with lot number, date received, product name, SAP item code, purchase order number and quantity. f. “100% verification / weighing” to be done in respect of materials listed in Appendix-C
C. Delivery of Finished goods to Customer: a. b.
c.
d. e. f. g. h. i. j. k. l.
Security guards are posted at finished goods location, docks a nd entry points whenever they are open. Shipping bays and loading docks are closed and locked when goods are not being shipped or loaded. System of Work Orders is used for Transportation of Goods. Bills are raised by transporters as per the terms and conditions laid down in the Transport contract, which is the scrutinised by Logistics Dept. head as per negotiated terms and forwarded to Finance Head to payment. Shipping authorisation, numerically controlled shipping documents and bills of lading are generated in SAP. Access controls such as user IDs and passwords are utilized and specific to each application. Multiple failures to log on invalidate the user ID and is reported via an exception report. Management investigates and resolves all items. Printing of duplicates are only after authorisation as per DOA. Dispatch register is mainatined to ensure that same Finished goods are not dispatched twice. On receipt of Dispatch Instruction & Packing List Logistic Dept. Checks the conetnts before the Finished goods are loaded for delivery Quality check is performed by Packing Dept. & Quality Incharge before the goods are sent for dispatch and signed on the Packing List. Weighment of finished goods is done before delivery. Non- Returnable Outward gate pass (Appendix-F) and Returnable outward gate pass (Appendix-G ) are issued for the Finished goods to go outside the factory. SAP restricts the creation of Delivery Challan entry without valid invoice, a copy of the same is used as Gate Pass. Transporters are intimated in Advance for pick-up. List of pending dispatches are prepared and followed-up on a daily basis. Upon transfer of the shipment to the carrier, the shipping shi pping document is noted as “released/shipped” in the shipping system. (Note majority shipments are FOB shipping point.) This notation includes the date and time of release.Based on proof of delivery (POD) the date of delivery is entered in SAP. SAP is configured to restrict the entering of delivery date of a product which is less than the lead time of production of the product in the Sales / Services Order
15. Customer Service: a. Customer service is a combination of activities enables the Company to add more value to the buyer. It is a key element of the product or service, which is offered to the customer. With good customer service, the existing customers are satisfied and this attracts new customers through word-of-mouth communication. Customer Service is not just a function or an activity. It is a philosophy, and attitude. With so much importance given to customer service, HBl is trying to increase the level of customer service and scale up to the expectations of the customer. b. Unless the Final products are in the hands of the customer at the time and place of requirement, products do not have any value attached to them. To attain a commendable service level, the Company has planned a closely integrated logistics strategy. c. In today’s market, customers are so much demanding, not only in the quality aspect but also with regard to the service aspect. Customers form a few perceptions in relation to the various aspects of customer service like reliability, competency, responsiveness, trustworthiness etc. d. With the help of these cues, customers evaluate the Company’s Company’s services and conclude whether they are satisfied or not. Physical distribution plays a major role in delivering customer service.
e. As there is an increase in the competition, and there is advancement in technology, the company is facing the mounting pressure to develop even more innovative strategies for customer service. f. The HBL must ensure the maintenance of a same or similar delivery period over a period of time to deliver material to the customer. This means the Company must have the ability to coordinate the various logistics arms, and also the efficiency and effectiveness of the entire chain and logistics management System. g. Also, the frequency of delivery is an important part of the customer service. Usually, a customer does not prefer to stock huge quantities of particular items, and would prefer smaller quantities in smaller lots. h. Eventually there is an increase in the transportation cost, but the inventory cost reduces and there is a net effect in the entire supply chain. When there are multiple orders from small clients, there is congestion in the logistics system, and thus this reduces the ability of the company to serve its larger clients more efficiently. i. Also the logistics costs for small orders are more than the large orders and also they would swallow up the profit on the large orders. j. To avoid such hassles, and to avoid additional costs, the frequency of delivery and minimum orders are being used as limitations imposed on suppliers as an effort to reduce normal tendency of most clients.
16. Freight Insurance a. The following types of Freight insurances are taken by HBL which covers physical damage to, or loss of your goods whilst in transit by land, sea and air and offers considerable opportunities and cost advantages if managed correctly, namely; Fire Insurance Marine Insurance Cargo Insurance b. Original Insurance policy , Cover note are to filed in the respective plant. c. The insurance policy value must cover the value of shipment. d. Details of all the compensations received in case of happening of an event is to be maintained
17. Finance and Accounting: a. A freight freight bill represents ‘Freight Inward/outward’ paid by HBL when goods are transported to/from respective Unit. b. Freight inward is paid in accordance with the rates as approved by Commercial Department. Upon dispatch of Goods, the Transporter submits the Freight bill to the Commercial Department, which is forwarded to Finance Department for accounting of the expenditure. c. For every bill an amount equal to the approved rate is added to freight as diesel charges. d. Where a bill is received, it is booked directly. e. In the event of non-receipt of the bill, a provisional entry is made on the basis of goods dispatched list and rates approved by the Commercial Department. f. Later upon receipt of the bill, the provisional liability is transferred to Sundry Creditors account. In the event of any difference between the the provisional and actual amounts, amounts, the freight outwards account is appropriately adjusted.
g. INCO terms: i.
International Commercial Terms (‘Incoterms’) are internationally recognized standard trade terms used in sales contracts. They’re used to make sure buyer and seller know:
Who is responsible for the cost of transporting the goods, including insurance, taxes and duties Where the goods should be picked up from and transported to Who is responsible for the goods at each step during transportation EXW (‘Ex Works’) The HBL makes the goods available to be collected at their premises and the buyer is responsible for all other risks, transportation costs, taxes and duties from that point onwards. This term is commonly used when quoting a price. CIP (‘Carriage and Insurance Paid’) The HBL pays for insurance as well as transport to the specified destination. Responsibility for the goods transfers to the buyer when The HBL passes them to the first carrier. CIP (‘Carriage and Insurance Paid’) is commonly used for goods being transported by container by more than one mode of transport. If transporting only by sea, CIF is often used DAT (‘Delivered at Terminal’) The HBL pays for transport to a specified terminal at the agreed destination. The buyer is responsible for the cost of importing the goods. The buyer takes responsibility once the goods are unloaded at the terminal. DAP (‘Delivered at Place’) The HBL pays for transport to the specified destination, but the buyer pays the cost of importing the goods. The seller takes responsibility for the goods until they’re ready to be unloaded by the buyer. DDP/DTP (‘Delivered (‘Delivered Duty Paid’) The HBL is responsible for delivering the goods to the named destination in the buyer’s country, including all costs involved. FAS (‘Free Alongside Ship’) The HBL puts the goods alongside the ship at the specified port they’re g oing to be shipped from. The HBL must get the goods ready for export, but the buyer is responsible for the cost and risk involved in loading them. This term is commonly used for heavy-lift or bulk cargo (e.g. generators, boats), but not for goods transported in containers by more than one mode of transport (FCA is usually used for this). FOB (‘Free on Board’) The HBL must get the goods ready for expo rt and load them onto the specified ship. The buyer and seller share the costs and risks when the goods are on board. This term is not used for goods transported in containers by more than one mode of transport (FCA is usually used for this). CFR (‘Cost and Freight’) The HBL must pay the costs of bringing the goods to the specified port. The buyer is responsible for risks when the goods are loaded onto the ship. CIF (‘Cost, Insurance and Freight’) The HBL must pay the costs of bringing the goods to the specified port. They also pay for insurance. The buyer is responsible for risks when the goods are loaded onto the ship.
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18. Appendixes: The following documents are used in the entire Logistics management system which are given as appendices: Appendix-A : Purchase order Appendix-B : Sales Order Appendix-C : Wieghment Certificate Appendix-D : Inward Gate pass Appendix-E : QC approved Sticker
Appendix-F : Non-returnable outward gate pass Appendix-G : Returnable outward gate pass pass
19. Conclusion: a. Personnel from Logistics department in HBL should be thoroughly familiar with the statutory requirements, rules, by-laws and other official regulations affecting the storage, safety, etc of the logistics management. Typical examples are the petroleum regulations, Explosives storage act, Vehicles act, Factories act, Batteries (Management and Handling) Rules, 2001 etc. b. The procedures covered in this SOP-LM 2017 are meant to be exhaustive. Those not specified here should be dealt with in terms of general policy guidelines and conventions already established.
