Procurement SOP Import

TransfoPower Industries Private Limited Standard Operating Procedure- Import of Raw Material
Prepared By: - Mustafa Khan & Co. (SOP Division) Controlled By :- Effective Date :-
Purpose
 To regulate procurement process.
 To select the suppliers on their ability to meet the company’s requirements.
 To establish management’s control on procurement process.
 To keep records of selected suppliers to ensure effectiveness of quality control

system.
 To ensure that goods and services are ordered at best available terms.
 To ensure that all purchase orders for goods and services are properly
authorized.
 To ensure that purchase orders clearly define the product ordered.
 To ensure that purchased product confirms the specified requirements.
 To ensure that invoices are checked against authorized orders.
 To ensure that trade creditors should be properly recorded in accounting

records.
 To point out any difference between accounting records and procurement

department records on monthly basis.
 To define the process Owner for each activates and sub process
Scope
This manual should be applied over the following areas,
 Import of raw material

 Policies and procedures
 Diagrammatic representation of processes
P a g e 1 | 33
 Duties and responsibilities of staff

 Proposed formats
Purchase Requisition process

START
Master Plan/
LOI/PO
Manager Planning
initiate process
Stock Check and verify

Yes
Availability the stock in hand
NO
Pre-Order
Requisition Import costing /
Department Requisition
Approval from
COO-
Transformer
1 Purchase Requisition
process
END
P a g e 2 | 33
1.1.1 The Process “‘’ Owner”” of the purchase requisition is “Manager Planning”.
1.1.2 Manager Planning will initiate the process of purchase requisition on the
basis of master plan/Letter of intent/ purchase order from the client.
1.1.3 Manager Planning would prepare purchase requisition Refer to Annexure T-
F-001 for format of purchase requisition form.
1.1.4 Manager Planning will check and verify the stock in hand report duly signed
by Manager Store and production manager.
1.1.5 Manager Import will share the Pre order costing sheet with the Manager
Accounts refer as Pre Order Costing Sheet Annexure T-F-02.
1.1.6 Manager Planning will coordinate with the Manager Import and sign the
purchase requisition and send the complete documents to COO- Transformer
for final approval.
1.1.7 After getting the approval from the COO-Transformer, Manager Planning will
prepare the formal purchase requisition from the system as requested
through form Annexure T-F-001.
1.1.8 After preparing the Purchase requisition Manager Planning will send the copy
to
• Manager Import
• Finance department
• Manager Store
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1.1.9 The finance department would make necessary arrangement of funds upon
the receiving of purchase requisition and update the Purchase tracking sheet
refer as Annexure T-F-014.
1.1.10 In case of any funding concentration Finance department will inform the
Manager import to stop OR delay the process until the further instruction.
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Supplier Selection
START
Manager Import
Conduct Vendor
Evaluation
Coordination
with
prospective
suppliers
Suppliers List
Call
quotations
from selected
Quotations suppliers
Negotiate
with suppliers
Comparative Prepare
statement comparative
statement
Comparative
statement
approval
END
P a g e 5 | 33
2 Supplier Selection
2.1.1 The Process ‘’Owner’’ of Supplier selection is “Manager import”.
2.1.2 Manager Import would conduct vendor evaluation / selection activity as
referred in “” Vendor Development Manual””.
2.1.3 Assistant Manager Import will coordinate with the prospective suppliers as
per instructions by Manager Import.
2.1.4 Assistant Manager Import shall have a list and catalogues of well-reputed
suppliers.
2.2 Quotation
2.2.1 Assistant manager import wouldill call quotations from selected suppliers in
RFQ refer as Annexure T-F-002A on the basis of approved purchase
requisition.
2.2.2 Assistant Manager Import would negotiate with the supplier.
2.2.3 The major emphasis should be to get the best price, quality and good delivery
and payment terms.
2.2.4 Assistant Manager Import wilould prepare and recommend the potential
supplier with the reasoning and justification on the comparative statement
refer to Annexure T-F-003 for format of comparative statement of quotations.
2.2.5 Assistant Manager wouldill attach quotations with comparative statement of
quotations for approval with Manager Import and further approval of COO-
Transformer and Directors/BOD.
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Purchase Order Process
START
Assistant Manager Performa Invoice

Import initiate the Is obtained
process
Purchase Order PO Prepared &

approved from
(PO)
COO-
Transformer
Assistant
Finance
Manager Manager Store
Department
Imports
Finance
department
Share PO with
update purchase
supplier Order Tracking
sheet
END
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3 Purchase Order process

3.1.1 The Process “”Owner”” of Purchase Order process is “Manager Imports”.
3.1.2 Assistant Manager Import will initiate the process by obtaining the “Performa
invoice” after getting the approval of final supplier refer as Annexure T-F-003
3.2 Performa Invoice
3.2.1 Assistant Manager will prepare the Purchase order refer as Annexure T-F-
004, as per approval of COO-Transformer.
3.2.2 Manager Planning will share the Purchase Order copy with.
 Assistant Manager Import
 Finance Department
 Manager Store
3.2.3 Deputy Manager Finance would update the purchase Order Tracking sheet
refer as Annexure T-F-14.
3.2.4 Assistant Manager Import will share the purchase order with the supplier and
ask the supplier to share Performa invoice (PI).
3.2.5 Performa invoice will specify:
 Performa Invoice #
 Date
 Supplier name & address
 Terms of delivery and destination
 H.S Code
 Bank Details for Letter of credit
 Terms of payment
 Agreed prices
 Container Free Days
 Other description
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Letter of Credit
START
Performa L.C Opening

Invoice/PO Request From
Manager Imports
Deputy
Manager
Finance Bank
Coordinate
With Bank
L.C
Draft L.C
L.C Code
Generated In
ERP
Assistant
Manager
Import
Supplier
END
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4 Letter of Credit
4.1 Letter of Credit (LC) Opening
4.1.1 Assistant Manager import (Transformers) will send LC Opening Request refer
as Annexure T-F-13 to the Deputy Manager Finance with a c.c to CFO (Finance
Department) along with a copy of Purchase Order & Performa Invoice, duly
approved by COO Transformers.
4.1.2 Based upon the LC Opening Request, Deputy Manager Finance will
Coordinate with the bank and arrange further documents to open the LC. The
following documents will be arranged by Deputy Manager Finance:
 LC Application form
 Performa invoice
 Packing list
 EIF submission Form ( WeBoc)
 Insurance
4.1.3 Assistant Finance manager will perform the following tasks:
 Forward above documents to bank for Letter of Credit Opening.
 Obtain Draft Letter of Credit from the bank & seek Supplier consent
through the assistant manager Import
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4.1.4 The Letter of Credit would be opened by the finance department after the
supplier go ahead and the Letter of Credit would be forwarded to assistant
manager import for record.
4.1.5 Once LC is opened, Assistant Finance Manger would generate the LC
code/expense ledger in ERP and book all the expenses under the specific LC.
4.1.6 Assistant manager import would forward the relevant information to the
Supplier and enter all relevant information in the Tracking & TAT form for
each purchase order as Annexure T-F-11.
4.1.7 Main objective of Tracking & TAT form is to monitor the Import process as
per prescribed days and any delay can be monitor and properly accounted for
with the relevant department.
4.1.8 Assistant manager import will send/email the Tracking & TAT form to the
Finance department.
4.1.9 On the receiving of Tracking & TAT form Finance department will prepare the
Purchase order tracking form refer as Annexure T-F-14,
4.1.10 The Main objective of this form is that Finance department will manage the
funds so that all purchase order LC payment/ duties / Clearing charges can be
paid as per Tracking & TAT form.
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Letter Of Credit Tracking
START
Supplier
Shipment &
Documents
Documents Bank
Dispatched
Documents
Import Department Documents Accounts &

Track Documents Finance Payment
Department
END
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5 Letter of Credit Document’s tracking

5.1.1 Once the Shipment is dispatched by the supplier, supplier will send the
following documents to M/s Transfopower Industries Pvt. Limited
corresponding bank.
 Commercial Invoice
 Packing List
 Bill of Lading
5.1.2 In case of Letter of credit at sight or usance, Deputy Manager Finance will
update the Purchase order tracking sheet accordingly.
5.1.3 Supplier will share the courier tracking number of shipping documents with
the Assistant Manager import.
5.1.4 Assistant manager import will track the documents and update the Tracking
& Turn Around Time sheet refer as Annexure T-F-11 and share the sheet with
the Deputy Manager Finance for timely payment.
5.1.5 Deputy Manager Finance will update their Purchase Order Tracking Sheet
refer as Annexure T-F-14 and arrange the funds for Payment of letter of
credit or as per the Letter of credit terms.
5.1.6 Once payment is made, Deputy Manager Finance will send the documents to
Assistant Manager Import.
5.1.7 Assistant Manager Import is the Process Owner to Send the Documents to
clearing Agent
5.1.8 Assistant Manager Import will send the documents to the selected clearing
agent which will be properly endorsed by the bank.
5.1.9 Upon receiving of documents, clearing agent to start/ready the clearance
process.
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5.1.10 In case of any delay of payment, Deputy Manage Finance will inform the
Manager Import to reschedule or update the Tracking & Turnaround Time
after the approval of CFO.
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In Bond Shipment
START
Manager
Planning
Accounts&
Import
Finance
Department
Department
COO
Transformer
Clearing without Comparative

Inbond NO Approvel Sheet
YES
Inbond
Shipment
END
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6 In Bond Shipments
6.1.1 The Process “Owner” to start the shipment in bond is Manager
Planning
6.1.2 In Bond shipment facility decision would be approved by COO-
Transformer, Directors/BOD.
6.1.3 Manager Import would get the confirmation from the Manager
Planning before initiating the shipment in bond process.
6.1.4 Manager finance will collect the quotes from the different in bond
agents and make a comparative sheet refer as Annexure T-F-22.
Comparative would include below items.
 Godown Rent
 Insurance Charges
 Loading & Unloading Charges
6.1.5 Manager Finance will share the draft/expected with the consent of
Assistant Manager Import.
6.1.6 Manager finance and Manager Import will sign off the shipment in
bond process refer as Annexure T-F-22.
6.1.7 The Process “Owner” to retrieve the in bond shipments is Manager
import.
6.1.8 Manager import will coordinate with the Deputy Manager Finance
retrieve the process which is held due to Quota/Funds constraint.
6.1.9 Manager finance will share the In Bound Process and Fact sheet form
with the reasoning and cost beneficial analysis.
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Vessel Tracking & IGM Filling
START
Manager Import
Documents
Tracking
Clearing Agent
IGM
Clearing Process
7 Vessel Tracking & IGM Filling

END
P a g e 17 | 33
7.1.1 Assistant manager Import coordinate with the clearing agent on the vessel
arrival and berthing as per scheduled.
7.1.2 Assistant Manager Import will make sure the Import General Manifest (IGM)
would be submitted so that clearing process can be initiated.
7.1.3 Below is the List of documents for IGM filling!
 Shipper Details
 Consignee Details
 Number of Packages
 Kind of Packages
 Description of Goods
 Air Way Bill or Bill of Lading
 Flight or Vessel Date etc.
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8 Shipment Clearance
8.1 Taxes & Duties as per Goods Declaration (GD)
8.1.1 Manager Import will make sure the all the Import is done under the most
appropriate/relevant H.S code and as per current market and competitive
norms.
8.1.2 Once the Shipping documents received by the clearing agent Assistant
Manager import will coordinate with the Deputy Manager Finance to arrange
the duties as per the prescribed duty structure form refer as Annexure T-F-
015A
8.1.3 Assistant Manager Import will confirm that all the Custom Duty should be
calculated as per the Custom Duty chart refer as Annexure T-F-15 –A or as
per historic data.
8.1.4 In case of new item import all the duties should be as per H.S code defined in
WEBOC and will update the Annexure T-F-15-A.
8.1.5 Any duty structure change should be informed to Finance department and
proper approval will be required by Manager Import in writing.
9 Clearing Charges
9.1.1 All the clearing charges other than the duties should be well
negotiated/confirmed by the Assistant Manager import.
9.1.2 Assistant Manager Import would distinguish between the controllable and UN
controllable charges with reference to clearing charges and take proper
measures.
9.1.3 Any other Misc. or unexpected charges would require proper sign off by
Manager Import and Deputy Manager Finance.
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P a g e 20 | 33
Demurrages Charges
START
Manager Manager
Imports Accounts
Memo Sheet
Manager Accounts
Close L.C &
Clearing Charges
CFO
Sign Off
END
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10 Demurrages Charges
10.1.1 Manager import / Deputy Manager Finance are the Process of Owner for the
demurrages charges.
10.1.2 Manager import will issue a pre Alert Demurrages note to Deputy Manager
Finance with reasoning and remarks refer as Annexure T-F-21-A
10.1.3 Manager Import and Deputy Manager Finance would write the demurrages
charges justification memo sheet to inform the Demurrages charges with the
reasoning and remarks.
10.1.4 Any demurrages charges incurred due to late duty payments, filling , quota
issue etc. would be signed and approved by with proper remarks and
reasoning refer as Annexure T-F-21.
10.1.5 Manager accounts will update the LC closing & Clearing charges bill check list
refer as Annexure T-F-20 and would submit to Deputy Finance Manager for
sign off.
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Transportation Charges
START
Clearing Agent
Logistics Quatation Import

CO Department
Approval From Quatation

Manager Imports
Transport Register
Updated
Accounts & Finance

For Payment
Arrangements
END
P a g e 23 | 33
11 Transportation Charges
11.1 Bilty Charges -Port to Destination - (Karachi to Lahore)
11.1.1 The process “Owner” of Bilty charges is “Assistant Manager Import”.

11.1.2 On the clearance of shipment Assistant Manager Import will get the Quotes
from the logistics company and forward to Manager Import for the approval as
per prescribed format refer as Annexure T-F-15.
11.1.3 Approved logistics partner assessment is would assessed on quarterly basis.
11.1.4 Approved logistic company quotation will be forwarded to Accounts
department for the record or payment purpose.
11.1.5 Assistant Manager Import will update the Transport Register form for
comparison and better negotiation in future import.
12 Costing Verification Sheet
12.1 The Process “Owner” of collecting bills is Manager Import.

12.2 Manager Accounts will collect the all clearing bills from the Assistant Manager
Import and prepare the Costing verification sheet with the Preorder Costing
sheet refer as Annexure T-F-02 along with historic costing sheet refer as
Annexure T-F-012 & 1 and share the Comparison sheets with the Manager
Import for the approval.
12.3 The costing verification sheet will serve the following purpose!
12.4 Taxes and duty rates are accurate
12.5 Comparing current and historic Taxes and Duty paid for accuracy
12.6 Clearing charges are paid accurately
12.7 Total costing Per Unit/KG/MT cost is as per the standard costing
P a g e 24 | 33
12.8 Any variance in comparison costing sheet or un-receipted bills should be

mentioned/noted separately and would be approved by the Manager import.
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Goods/Shipment Receipt Process
START
Goods Delivered
IGP
IGP
STORE LAB
IGP/GRN
Accounts &
Finance Book
Purchases
END
P a g e 26 | 33
13 Goods/Shipment Receipt Process
13.1 Assistant Manager Import will be responsible for delivery of goods to the
factory/destination.
13.2 Gate Inward Pass
13.2.1 Assistant Manager Import would inform Gate Inward Pass incharge as the
shipment cleared from the port and moved to destination/Factory along with
the below documents and information!
 Bilty Number
 Payment Terms
 Details of Goods
 Packing List
 Expected Date of Arrival
 No of Container/Packages
13.2.2 Once the shipment received in the premises / Factory / Destination,
Gatekeeper shall prepare the “ Daily Purchasing & IGP Record Register “
which include the below information !
 Date
 Vehicle Number
 Name of Driver or Supplier
 Contact Number and Address
P a g e 27 | 33
 Vehicle IN time
 Quantity (in Measures)
 Item Details
13.2.2..1 Gate In Ward Pass incharge will inform the Assistant Manager Import that
goods/shipment is received and internal control process has been started.
13.2.3 Gate Inward Pass Incharge send the shipment to Store department along with
the details of shipment.
13.2.4 Upon receiving of Goods/Shipments, Store in-charge will count and inspect
the goods as per the Packing list provided by the Gate Inward Pass incharge.
13.2.5 After Counting the Goods/Shipments store incharge will inform Gate inward
pass incharge to prepare the “ Inward Gate Pass “.
13.3 Goods Inspection Report
13.3.1 Store incharge would send sample units of goods/shipment to Lab for
inspection.
13.3.2 Lab Supervisor would analysis the Sample units and prepare test result sheet
refer as Annexure T-F-007
13.3.3 Lab Supervisor would send the sheet and send it to Assistant Manager Quality
Control for approval and send the report to Store
13.3.4 Store Officer would identifies and separates passed/rejected material on the
basis of lab tests remarks.
P a g e 28 | 33
13.3.5 Store incharge will update his Stock register
13.3.6 Store Incharge would inform the Gate Inward for GRN.
13.4 Goods Receipt Note ( GRN )
13.4.1 Store Incharge would prepare the Goods Receipt Note (GRN) verifying
Purchase Order, quantity and its rate Refer as Annexure T-F-008 and send
the GRN copies to
 Assistant Manager Import
 Manager Planning
 Accounts and Finance Department
13.4.2 Store In charge would prepare / Update the Stock Register
13.4.3 Store in charge will place goods on respective racks and update bin cards
13.4.4 Commercial/import manager will update purchase order register
accordingly.
13.4.5 Accounts department would update the Purchase Order tracking form.
14 Purchase Return
14.1 Manager Import would be the Process Owner of Purchase return process.
14.2 Manager Import would add “Rejection of goods” note and will be written into
contract with the supplier.
P a g e 29 | 33
14.3 Goods Inspection Report will show the reasons and quantity of rejected
material.
14.4 Store in charge will prepare purchase return note in quadruplicate.
 Copy A Accounts & finance department
 Copy B Assistant Manager Import
 Copy C Store
14.5 Refer to Annexure T-F-010 for format of purchases return note.
14.6 Store incharge will separate the rejected stock and inform Assistant Manager
Import.
14.7 Assistant Manager Import will file all the communications in respective
supplier file.
14.8 Manager Import will inform supplier in writing for rejected goods and any
cost incurred by company.
14.9 Manager import will contact supplier for future action or supply of rejected
good.
14.10 Rejected Goods resale or return decision will approved by COO-Transformer.
15 Reconciliation with the Supplier
15.1 On every signoff of Purchase Order Tracking sheet Finance department will
reconcile the supplier account.

P a g e 30 | 33
15.2 In case of Sale Return Assistant manager import will reconcile the account
and send the copy of email or account ledger to Finance department for
recording purpose.
16 Reconciliation with the clearing agent
16.1 Finance department will close the Purchase Order Tracking and will reconcile
the Clearing agent bills in writing.
16.2 Any delay or excess days against the import of shipment (as per prescribed
format), on the part of clearing agent would be informed to clearing agent in
writing by the finance department.
17 Reporting to COO/BOD
17.1 Manager import will share the weekly import Dash board sheet with the COO-
Transformer and board of directors refer as Annexure T-F-16.
18 Duties and Responsibilities
18.1 Manager Planning
18.1.1 To plan, organize and control all activities reference to Production and
requirement of import of raw material.
18.1.2 To create active liaison with other departments to control flow of documents
within organization
18.1.3 To ensure that management policies and plans are implemented effectively
18.2 Manager & Assistant Manager Import
P a g e 31 | 33
18.2.1 To plan, organize and control all activities related to import of raw material.
18.2.2 To create active liaison with other departments to control flow of documents
within organization
18.2.3 To ensure that management policies and plans are implemented effectively
18.2.4 To ensure that all the import is done under the Allowed H.S Code and as per
the under the law.
18.2.5 To maintain files and records of approved supplier as per procedure
described in “Vendor Development Manual”.
18.2.6 Maintain all files pertaining to import.
18.2.7 To maintain and update the forms and formats.
18.3 Deputy Manager Finance
18.3.1 Preparation of L.C documents and communication with banks regarding
procurement.
18.3.2 To create active liaison with import department for import procurement
functions.
18.3.3 Responsible for clearance of documents from Bank and onward submission to
import department.
P a g e 32 | 33
18.3.4 Responsible to provided pay orders/payments of taxes & duties and payment to
clearing agents.
18.3.5 Responsible to collect all the vetted clearing bills from import department
18.3.6 Responsible to prepare the LC costing sheet along with the comparison with the
previous import and pre-Order costing
18.3.7 Responsible to update and book the all transaction of banks, supplier, clearing
agent and transporter.
18.3.8 Responsible to update and reconcile and the ledgers of supplier, clearing agent
and transporter.
P a g e 33 | 33

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TransfoPower Industries Private Limited Standard Operating Procedure- Import of Raw Material

 To regulate procurement process.

 To select the suppliers on their ability to meet the company’s requirements.

 To establish management’s control on procurement process.

 To keep records of selected suppliers to ensure effectiveness of quality control

 To ensure that purchase orders clearly define the product ordered.

 To ensure that purchased product confirms the specified requirements.

 To ensure that invoices are checked against authorized orders.

 To ensure that trade creditors should be properly recorded in accounting

 To point out any difference between accounting records and procurement

 Import of raw material

 Duties and responsibilities of staff

Purchase Requisition process

Stock Check and verify

basis of master plan/Letter of intent/ purchase order from the client.

1.1.3 Manager Planning would prepare purchase requisition Refer to Annexure T-

F-001 for format of purchase requisition form.

by Manager Store and production manager.

Accounts refer as Pre Order Costing Sheet Annexure T-F-02.

purchase requisition and send the complete documents to COO- Transformer

for final approval.

prepare the formal purchase requisition from the system as requested

through form Annexure T-F-001.

refer as Annexure T-F-014.

Purchase Order Process

Assistant Manager Performa Invoice

Purchase Order PO Prepared &

3 Purchase Order process

Performa L.C Opening

4.1 Letter of Credit (LC) Opening

approved by COO Transformers.

following documents will be arranged by Deputy Manager Finance:

 EIF submission Form ( WeBoc)

4.1.3 Assistant Finance manager will perform the following tasks:

 Forward above documents to bank for Letter of Credit Opening.

through the assistant manager Import

supplier go ahead and the Letter of Credit would be forwarded to assistant

manager import for record.

4.1.5 Once LC is opened, Assistant Finance Manger would generate the LC

each purchase order as Annexure T-F-11.

with the relevant department.

Purchase order tracking form refer as Annexure T-F-14,

paid as per Tracking & TAT form.

Letter Of Credit Tracking

Import Department Documents Accounts &

5 Letter of Credit Document’s tracking

Clearing without Comparative

Vessel Tracking & IGM Filling

7 Vessel Tracking & IGM Filling

arrival and berthing as per scheduled.

would be submitted so that clearing process can be initiated.

7.1.3 Below is the List of documents for IGM filling!

 Air Way Bill or Bill of Lading

 Flight or Vessel Date etc.

Finance with reasoning and remarks refer as Annexure T-F-21-A

reasoning and remarks.

reasoning refer as Annexure T-F-21.

Logistics Quatation Import

Approval From Quatation

Accounts & Finance

11.1 Bilty Charges -Port to Destination - (Karachi to Lahore)

11.1.1 The process “Owner” of Bilty charges is “Assistant Manager Import”.

12 Costing Verification Sheet

12.1 The Process “Owner” of collecting bills is Manager Import.