Purchasing Control procedure

DMF0003(0)

PURCHASING C ONTROL Code: DMPS - 06

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C ONTENTS 1. PURPOSE.........................................................2 2. SCOPE..............................................................2 3. DEFINITIONS, ABBREVIATIONS......................2 4. REFERENCE.....................................................2 5. RESPONSIBILITIES...........................................3 6. PROCEDURE....................................................4 7. DOCUMENTS, RECORDS.................................7 8. APPENDIX........................................................8

DAEWOO MANGALIA HEAVY INDUSTRIES S.A.

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1. PURPOSE This procedure establishes the outstanding activities necessary to ensure that purchased product conform to specified requirements. Its purpose is to achieve the cost saving and quality improvement through timely supply and to enhance our Company’s international competitive power.

2. SCOPE The procedure applies to the purchasing activities of the materials and equipment for New Shipbuilding and ShipRepair in Procurement Department.

3. DEFINITIONS, ABBREVIATIONS 3.1. Purchasing contract – a juridical document concluded between Customer and Subcontractor, which specifies the financial, administrative, technical and quality clauses of a product or a service. It covers the control both of non-materials, which are to be offered by the subcontractors, such as drawings, certificates, test reports, instruction manuals and the materials and equipment. 3.2. Specification – document stating requirements. 3.3. Purchase Order Requisition – P.O.R. - document, which specifies and defines the material needs (name, code, characteristics, amount, time of delivery, reasons of demand, price, the applicable quality requirements). 3.4. P.O.S. – Purchase Order Specification 3.5. P.N.D. – Production Need Date 3.6. Order Confirmation Sheet – document establishing the subcontractor and including the others purchasing data of the material specified in P.O.R.: supplier’s data, unit of currency, exchange rate, total amount, items. 3.7. P.O. – Purchase Order. 3.8. GSI – General Stock Items

4. REFERENCE 4.1. 4.2. 4.3. 4.4.

Evaluation and Registering Control Procedure for Subcontractors, cod DMPA- 121. Handling and Storage Control Procedure, DMPS - 15. Receiving Inspection Procedures. Source Inspection Procedure, code DMPA-322

5. RESPONSIBILITIES DAEWOO MANGALIA HEAVY INDUSTRIES S.A.

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5.1. PROCUREMENT DEPARTMENT The manager is responsible for: 5.1.1. Purchasing the materials/equipment specified in Purchase Order Requisition (P.O.R.) from approved subcontractors and after the approval of Order Confirmation Sheet (DMF0073). 5.1.2. Establishing the purchasing plan to ensure that purchased product conforms to production schedule. 5.1.3. Establishing the channels for communication and interfaces with the subcontractor’s organization for the feedback system. 5.1.4. Assuring the feedback information system with the Design Departments, Engineering Teams, Production Planning & Control Departments, QA/QC Department, Production Departments. 5.1.5. Analyzing and approving the purchasing orders/contracts. 5.1.6. Informing Production Planning and Control Division and Ship Repair Division about necessary purchasing times to be considered in drawing up of production schedules, when it is necessary. 5.2. MATERIAL CONTROL DEPARTMENT The manager is responsible for: 5.2.1. Carrying out the quality receiving inspection of purchased products, in accordance with proper procedures. 5.2.2. Arranging the procedure.

source

inspections

according

to

source

inspection

5.2.3. Sending to the Purchasing Department the information regarding the subcontractors quality performances. 5.3. DESIGN DEPARTMENTS The managers are responsible for: 5.3.1. Preparing the materials/equipment specification (POS). 5.3.2. Where changes, updating the materials/equipment specification. 5.3.3. Supplying of all necessary drawings to Purchasing Department. 5.3.4. Completing and modification the Purchase Order Requisition (P.O.R.).

5.4.

SHIPREPAIR DIVISION


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5.4.1. Production Departments Managers – are responsible for necessary material preparing according to the specification. 5.4.2. Operation Department managers – is responsible for POR preparing for the shiprepair vessel and establish of PND according to production schedules and sending the POR to Procurement Department. 5.5. PRODUCTION PLANNING DEPARTMENT The manager is responsible for: 5.5.1. Completing in the POR the production need date (PND) for materials and transmitting it to the Procurement Department. 5.5.2. Considering the necessary purchasing times for different types of materials (such as pipes, shafts, etc) when drawing up production schedules. 5.6. Q.A./Q.C. DEPARTMENT The manager is responsible for: 5.6.1. Establishing and revising this procedure.

6. PROCEDURE The purchasing activity contents the following stages: 6.1. Completion of Purchase Order Requisition A. New Building: Design Departments prepare two copies of P.O.R. that should content the following purchasing data: 6.1.1. The type, class, grade, code, number or other precise identification. 6.1.2. The title or other positive identification and applicable issue of specifications, drawings, process requirements, inspection instructions and other relevant technical and quality data, including requirements for approval or qualification of product, procedures, process, equipment and personnel. 6.1.3. The design quantity for a product, total and unit weight. 6.1.4. The reason of requirement, the work package number; The require reason is specified in P.O.R.: it is a new one, it is a change or a cancel of an old one. Attached to the P.O.R. there are supplied all valid drawings necessary for purchasing process.


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After completion of P.O.R., design department has to send one copy to Production Planning Department. B. Shiprepair: Production Departments - necessary material preparing according to the specification and issuing them to Operation Department. Based on the necessary material, Operation Department prepares POR. 6.2. Decision of production need date (P.N.D.) For New Building - The Production Planning Department shall lay down the production need date of materials and equipment according to schedule and send it to Procurement Department. For Ship Repair – The Operation Department shall lay down the production need date of materials and equipment according to the production schedule and send it to Procurement Department. 6.3. Settlement of purchasing quantity The Procurement Department shall settle in P.O.R. the purchasing quantity after reviewing the status of stocks. 6.4. Selection of subcontractors The subcontractors evaluation is done according to “ Evaluation and Registering Control Procedure for Subcontractors”, cod DMPA- 121. 6.4.1. P.O.R. is completed with the stock quantity, the purchasing quantity, the estimate negotiation period and is reviewed by purchasing section chief and department manager and approved by Division Director. 6.4.2. After P.O.R. approval, Procurement Department shall send the related material specification with Inquiry Sheet DMF0072, (if is nesessary) to more than three companies (except where is an only subcontractor). Within required response date, the companies that received the inquiry should submit their quotation, specification, reference records, etc. 6.4.3. The Procurement Department relays the subcontractors’ technical proposal to the Design Departments for technical evaluation. The Procurement Department prepares the Order Confirmation Sheet (DMF0073). Order Confirmation Sheet is, mainly, prepared before purchasing, but the approval after purchasing is possible in case of purchasing from overseas companies and in case of urgent material and equipment purchasing.


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The subcontractors are selected in consideration of the result of technical and economical evaluation, of the efficiency, of the quality control and quality assurance system. 6.5. The Purchase Order After selecting the subcontractor, Procurement Department shall to draw up the purchase order, which is approved by the manager of Procurement Department 6.6. Purchase Contract 6.6.1. Content of contract The content of contract shall specify clear data such as technical characteristics, quantity, yard need date, applicable issue or specifications, inspection instructions, requirements for approval or qualification, quality assurance requirements, in accordance with P.O.R. and POS. 6.7. Verification of purchased product Verification of purchased product is carried out according the “Material Receiving Inspection Procedure”, drawn up by material receiving inspection teams. Where specified in the vessel’s contract, the Client or his representative shall be afforded the right to verify at the subcontractor’s premises and in Daewoo Mangalia Heavy Industries S.A. that the subcontracted product conforms to specified requirements. Such verification shall not be used by supplier as evidence of effective control of quality by the subcontractor. Verification by the Client shall not absolve the supplier of the responsibility to provide acceptable product, nor shall it preclude subsequent rejection by the Client. The storage of the purchased product is carried out according “Handling and Storage Control Procedure for Material”, code DMPS – 15. 6.8. Changes of purchasing information 6.8.1. P.O.R. are modified only by or with written approval of in charge department which prepared the POR. 6.8.2. Subcontractor who performs the order is notified at once about any order or drawing change; if drawing changes took place, valid revisions of drawings should be sent to subcontractor. 6.8.3. The treatment of change and cancellation of specification


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Where changing or cancellation of specification, the content of contract shall be changed or cancelled too, on the basis of the new P.O.R.

7. DOCUMENTS, RECORDS 7.1. The purchasing documents are drawn up, completed and distributed as follows: A. New Building: POR

Design Dept.

Production Planning

Changes

P.N.D .

Stock review

Purchasing Section

Inquiry, Order Confirmation Sheet

Subcontractors

Purchasing Section

Purchasing Order

b. Ship Repair: Production Departments

Nec. mat.

Purchasing Section

Operation Department P.OR. P.N.D.

Purchasing Section

Stock review

Inquiry, Order Confirmation Sheet

Subcontractors Purchasing Order

7.2. Inquiry Sheet - is drawn up by Procurement Department and sent to the subcontractors in order to receive quotations and tenders. 7.3. Order Confirmation Sheet - is drawn up, approved through, filled in and retained by Procurement Department. 7.4. Purchase Order (P.O.) - is approved by Procurement Department manager and it is sent to the subcontractors; a copy is retained by Procurement Department. 7.5. The purchasing contract is received in two copies from the subcontractors, it is reviewed in order to resolve all the differences between the contract and the order, it is approved by the Procurement Department manager and one copy is sent back to the subcontractor. 7.6. During receiving inspections, the person in charge from Procurement Department has to present to the inspectors’ team the purchasing documents: P.O.R., technical specification, P.O/contract to be checked the conformity of products.


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8. APPENDIX 8.1. Flow chart 8.2. Forms: - P.O.R. - Purchase Order Requisition, code DMF0071/1/2 (for New Building, exclusive GSI materials) 8.3. Status of POR – code DMF0490 for GSI mat. and Shiprepair 8.4. Order Confirmation Sheet, code DMF0073. 8.5. Purchase Order -P.O., code DMF0074 8.6. Inquiry Sheet, code DMF0072.


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Purchasing Control procedure

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