This action might not be possible to undo. Are you sure you want to continue?
1.1 COMPANY’s PROFILE:
HPCL-Mittal Energy Limited (HMEL) is a joint venture between Hindustan Petroleum Corporation Limited (HPCL)- a Government of India Enterprise engaged in the business of oil refining and marketing and Mittal Energy Investment Pte Ltd, Singapore - a Lakshmi N Mittal Group Company. Both the JV partners hold a stake of 49% each in the company, the rest 2% is held by financial institutions. HMEL is building a Grassroot oil refinery of 9 MMTPA at Bathinda in Punjab, called Guru Gobind Singh Refinery Project. The project is expected to be completed in 2011.
The refinery will produce petroleum products complying with Euro IV emission norms with Captive Power Plant for 165 MW and Crude Oil pipeline from Mundra (Gujarat) to Bathinda with Single Point Mooring (SPM) and Crude Oil terminal at Mundra.
1.2 GURU GOBIND SINGH REFINERY PROJECT
1.2.1 Project Vision To build and operate best in class petroleum refinery using state of the art technologies to ensure protection of the environment, health and safety of the community. The company will be a model of excellence in fulfilling its social responsibilities, meeting stakeholder aspirations, caring for its employees and complying with government laws and regulations.
1.2.2 Project Mission 2
HMEL shall plan, design, construct, commission and operate an energy efficient and environment friendly Greenfield refinery at Bathinda, Punjab along with associated infrastructure facilities. The company shall endeavor to achieve excellence in all aspects of project management while successfully implementing the project within the scheduled time, budgeted cost and desired quality standards.
1.2.3 Project Details The Guru Gobind Singh Refinery will be a zero bottoms, energy efficient, environmentfriendly, high distillate yielding complex refinery that will be producing clean fuels and polypropylene by processing heavy, sour and acidic crudes.As part of this project, the following are being established: • • Grassroot refinery of 9 MMTPA in Bathinda, Punjab. Cross-country Crude Oil Pipeline (approx. 1014 km) from Mundra to Bathinda traversing through the states of Gujarat, Rajasthan and Haryana. • Crude receipt facilities - Single Point Mooring ( SPM) buoy capable of handling Very Large Crude Carriers (VLCC) for crude import located at Mundra, Gujarat, India. • Crude Oil Terminal (COT) approximately six kms. away from the sea shore at Mundra, Gujarat. • Captive Power Plant of 165 MW for refinery power and steam requirements.
The refinery will be a world class, state of the art refinery incorporating the latest technologies enabling it to excel the current specifications available in the country. The 3
refinery configuration has been developed after extensive linear programming, keeping the domestic and regional requirements in mind, the latest cost effective technologies available for generating required fuel specifications, and future changes. The present configuration translates into one of the highest Nelson Indexes* for the refinery amongst all the refineries in the country.
This refinery is the single largest investment at any location in Punjab and is the first Oil and Gas industry being set up in Punjab. The Refinery is expected to create a large number of jobs directly and indirectly in the region, which will lead to industrialization and development of Punjab.
HPCL-Mittal Pipelines Limited is a wholly owned subsidiary of HPCL-Mittal Energy Limited. The objective of HPCL-Mittal Pipelines Limited is to set up and operate business related to crude oil receipt, its storage and cross-country transportation. Mundra - Bathinda Pipeline Project is implemented by the Company for transporting crude oil from Mundra Gujarat to HMEL’s Guru Gobind Singh Refinery at Bathinda, Punjab. The project consists of the following facilities being set up to meet its objective: • Single Point Mooring System (SPM), 10 kms from the shore in the Gulf of Kutch to unload crude oil from ocean tankers. • An offshore / onshore pipeline of approximately 10 kms offshore section and 6 kms onshore section to transfer the crude oil from the SPM to the Crude Oil Terminal (COT).
India. a 30 m wide belt around the COT and up to 25% of land for all intermediate pumping stations shall be dedicated to developing green belt.014 km long cross country pipeline. 5 . The pipeline named Mundra–Bathinda Pipeline (MBPL) route passes through the coastal plains & saline mud flats of Rann of Kutch in Gujarat. an Effluent Treatment Plant shall be provided at COT for treating all the effluent generated at the dispatch terminal before release. A Disaster Control and Management Plan is being developed to control and manage any disaster like accidental spillage and its consequences.• A Crude Oil Terminal (COT) approximately 6 kms away from the sea shore. • An Optical Fibre Cable (OFC) is being laid alongside the pipeline for telecommunication and data transfer between all the stations along the route of the pipeline. Moreover.00. of over 8.crude oil from COT at Mundra to Guru Gobind Singh Refinery at Bathinda.000 KL capacity at Mundra in Gujarat. including one Intermediate Pumping Station to transfer.crossing 24 rivers and 51 canals along the route up to the refinery premises at Bathinda in Punjab. As a part of environment protection. dry cultivation fields & eastern fringe of Thar Desert in Rajasthan and Ghagghar Flood Plains in Haryana . • A 1.
P.Bathinda. Head Of Treasury Head Of Market -ing (V.3 OBJECTIVES: This project aims at acquiring a thorough knowledge and understanding of the Business processess involved in the procurement process at Guru Gobind Singh Refinery Project.) Process (V.CEO Head Of COO Procurement Project Head Of Finance & Acc. (GM) IT (CM) Maintenance Operations (V.P.) Engg.) Security Purchase vendor Project Control Requisition SPM General IT Service SAP Head Office Work Site Fig i) Organisation structure of HMEL 1.P. 6 .
• The scope of study will include understanding the procurement activities that takes place in the organization. invoicing or any other area connected with materials. inventory. Bathinda by HMEL. Materials management assumes responsibility for whatever happens in purchasing.1. Bathinda. • The study will cover the steps involved in the procurement of materials in the GGSR Project of HMEL.4 SCOPE OF STUDY This entire project will revolve around the procurement process occurring at Guru Gobind Singh Refinery Project which is carried out by HMEL. • This project will also include small overview of business process involved in the procurement process during the Operational Phase of Guru Gobing Singh Refinery. 7 . • This project will try to study the business process involved in the procurement process during the constructional phase of Guru Gobind Singh Refinery.
CHAPTER 2: THEORITICAL FRAMEWORK AND REVIEW OF LITERATURE 8 .
1.1 MATERIAL MASTER The material master record is the main source of material-specific data in an enterprise. stores. produces. It is the company's central source for retrieving material9 . 2.The Material Master and Vendor Master data files are at the core of Purchasing.1. The material master contains information of all the materials that a company procures. MASTER DATA The Materials Management functionality includes a number of important master data files.OVERVIEW OF MATERIALS MANAGEMENT Fig.Inventory Management and Invoice Verification. ii) Materials Management 2. and sells.
Fig iii) Material Mater Record The material master is subdivided into information grouped by user departments (functions). Inventory Management. 10 . You can assign materials with the same characteristics to the same material type. Materials Planning. Every area. semi-finished products. This information is stored in individual material master records. Each user department has a different view of the material master record and is responsible for maintaining the data to support their function. and Invoice Verification can use the data stored. such as Purchasing. for example. The material master is the central pool of information where material specifications are entered only once and same item code can be used repetitively as and when required. and finished products.specific data. Material types include raw materials. The integration of all material data in a single database object eliminates redundant data storage.
1.2. It includes the vendor’s address. This information is stored in individual vendor master record. Service Vendors. Government statutory bodies. It includes the PO currency. • Purchasing data: This data is maintained for each purchasing organization. The vendors can be categorized as: Material Vendors. Partner data.e. It comprises data such as the number of the reconciliation account and payment method. It is the company's central source for retrieving vendor specific data. • Accounting data: This is maintained at company level. Own Plants and group companies.2 VENDOR MASTER The vendor master contains information of all the vendors that a company has business relationship for procurement of materials. 11 . bank & other details etc. Price basis. Transporters. for transportation. in our case HMEL. for providing service. customs and various control data. These are to be defined as vendors in the system. The vendor master record contains the following information – • General Data: The data is valid for whole client i. excise. for payments etc. Finance/Term Loan vendors.
You can incorporate Purchasing into the company structure by assigning the purchasing organization to company codes and plants.2 PURCHASING The purchasing organization is responsible for the enterprise’s purchasing requirements. iv) Vendor Master Record 2.Fig. 12 .
invoice verification indicators and delivery tolerances all can be entered into the purchase info record. • Consignment Info Record: When a vendor supplies material to be stored at a customer’s site for customer withdrawal. The purchasing information record is used in the purchase order where information from the record is defaulted into the purchase order. net price.The Purchasing Group can be defined as a person or group of people dealing with certain material or group of materials purchased by through the purchasing organisation. 2. 13 . Information such as purchasing group. There are four categories of purchase info records that can be created. service or group of materials or services • Pipeline Info Record : Pipeline materials such as electricity. oil etc are supplied by utility vendors and used by customer through pipeline withdrawals. • Subcontracting Info Record: This type of info record is created when the order is a subcontracting order.2. water.1 PURCHASING INFO RECORD Purchase Info record consists of information specific to a material and a vendor. the purchasing department can create a consignment purchasing info record for that material. This can then be specified by a particular purchasing organization. Pipeline info record contains information for such kind of material/vendor combination. These are: • Standard Info Record: Standard Info Record contains information supplied by the vendor for a specific material .
2. Purchase requisitions are internal documents requesting a certain quantity of material or service on certain date. 14 . A purchase requisition is not a purchase order and therefore should never be used to purchase goods or services or used as an authorization to pay an invoice from a supplier or service provider. A purchase requisition is an authorization for a purchasing department to procure goods or services. Often. a required delivery date. account number and the amount of money that the purchasing department is authorized to spend for the goods or services.2 PURCHASE REQUISITION(PR) The purchase requisition is the procedure by which general users or departments can request the purchases of goods or services that require processing by the purchasing department. the names of suggested supply sources are also included. A purchase requisition is owned by the originating department and should not be changed by the purchasing department without obtaining approval from the originating department.2. It contains a description and quantity of the goods or services to be purchased. It is originated and approved by the department requiring the goods or services.
3 REQUEST FOR QUOTATION(RFQ) Once the PR has been received and has been processed by the purchasing department.2. Logically. quality level per item or contract length are possible to be requested during the bidding process.Purchase requisitions can be created: – – Manually Automatically: 1. Material not previously used at the company.Production Orders 3. the more detailed the specifications. there may arise a need wherein the purchasing department offers a request for quotation (RFQ). This need may arise because of a number of reasons as: a. among which the best will be selected. The suppliers have to return the bidding by a set date and time to be considered for an award. RFQs often include the specifications of the items/services to make sure all the suppliers are bidding on the same item/service.Planning Function(MRP.An RFQ typically involves more than the price per item. the more accurate the quote will be and comparable to the other suppliers. Sales Orders 2. 15 . To receive correct quotes.MPS) 2. Information like payment terms. An RFQ allows different contractors to provide a quotation.
2. i. Sending a PO to a supplier constitutes a legal offer to buy products or services. New vendor due to logistical issues. The value contract is not concerned with the quantity of material supplied by the vendor but by the total spending with the vendor for the material.A value contract allows a purchasing department to cap the spending with one particular vendor. Acceptance of a PO by a seller usually forms a once-off contract between the buyer 16 . Material being used but has no particular identified vendor. indicating the materials. These contracts can be either based on total quantity or total value. quality issues d.5 PURCHASE ORDER(PO) A purchase order is a commercial document issued by a purchasing department (buyer) to a vendor (seller). c.4 CONTRACTS A contract is an agreement between the vendor and customer for the vendor to supply material to the customer at an agreed price over a specified period of time. There are two types of contracts that can be made: a.2. 2. Value Contract --. e. b. 2. Quantity Contract – As the name suggests this contract allows the purchasing department to agree with the vendor on a set quantity of material or services.e. New vendor required due to government regulations. New vendor required due to termination of contract.b. quantities and negotiated prices for materials or services that the seller will provide to the buyer.
POs usually specify terms of payment. For every goods movement two types of documents are created in SAP: 1. The movement of stock is either inbound from a vendor. Purchase order usually contains the following: • • • • • • Purchase order number Date of Purchase Order Billing Address of Buyer Special Terms or instructions List of Items with quantities Negotiated price of each item 2. incoterms for liability and freight responsibility. Material Document 2. and required delivery date. Various functions of inventory management are: • • To store just enough quantity in view of inventory carrying cost. outbound to a customer.3. To keep safety stock to avoid shortage 17 .and seller so no contract exists until the PO is accepted. Accounting Document The accounting document describes the financial aspects of goods movement and is only relevant is material is valuated. INVENTORY MANAGEMENT The Inventory Management process within SAP corresponds to movements inside the plant that can create a change in stock levels within the storage location designated to that plant. a stock transfer between plants. or an internal transfer within a plant.
You can post goods receipts from vendors to quality inspection stock for the following reasons: • If the material always has to undergo quality inspection before it is used.1 GOODS RECEIPT Goods receipt process allows the receipt of material from a vendor or from in-house production process. see that purchase and availability in ‘Sets’ required • Keep minimum stock of high value items and monitor their price trend. the employee responsible for the purchasing data in the material master record sets the quality inspection indicator in the material master record. Initial Entry of inventory. Receipt from a purchase order. the indicator is copied to the purchase order. • Know the trend of ups and down in production items. A goods receipt is an increase in stock that is triggered because of: • • • Receipt from a production order. quantity and accordingly adjust the purchases • Assembly needs. variety/ various items. In this case. 2. When you order the material.3. Extra care to be taken in ordering and storing of perishable goods Understand the seasonable availability of some items and their pricing and arrange right quantity at right price and of right quality. 18 .• • • Numbers of orders should be such that ordering cost also is reduced.
You then set the quality inspection indicator in the goods receipt item. you must always test the quality of goods if they have been procured from a new vendor. for example. For example. 19 . • If you decide at the time of goods receipt that the material has to undergo quality inspection.• If the material is received from a particular vendor and has to undergo quality inspection first. because you established that the packaging is damaged and suspect that the goods were also damaged during transportation.
2. Stock transfer occurs in three distinct ways: • • • Storage location to storage location Plant to Plant Company Code to Company Code 21 .3 STOCK TRANSFER A stock transfer can occur physically .3. v) Goods Receipts 2. for example by moving material from one storage location to another. Stock transfer normally refers to a physical move . while transfer posting usually describes the logical move.3. moving stock from quality inspection status to unrestricted.Fig. Material Scrapping These are the movement types that identify the various goods issue. or logically .2 GOODS ISSUE Goods Issue is a reduction of stock triggered by one of the following: • • • Issue with respect to reservation Return of material.
Physical inventories can be customized to produce faster and more accurate results.Fig. quality inspection or on blocked status. Physical inventory can be performed on stock that is held in unrestricted use . 22 .4 PHYSICAL INVENTORY Regular physical inventories in the plant. vi) Stock Transfer 2.lowering inventory cost and improving customer service levels.combined with improvements in inventory accuracy are important goals for companies. Physical inventory can also be performed on the company’s own stock and special stocks such as returnable packaging and consignment stock at customer locations.3.
that is. or individual batches. according to different valuation criteria. in-house production/external procurement.2. that is. · Different batch stocks of a material have different valuation prices.INVOICE VERIFICATION 2.4. whether they are valuated by origin. · Stock obtained from one manufacturer is valuated at a different price than stock obtained from another manufacturer. For example. If stocks are to be managed separately. · Valuation type (This is a further subdivision of the valuation category. In SAP there are two ways of valuating stock: 23 .). if the valuation category is origin. a company may want to define the valuation types stock from Los Angeles and stock from Detroit. it also specifies the criteria used to valuate the stocks.) This data is stored in the material master record. The way the stocks of a material are valuated depends on how you define the following: · Valuation category (This defines whether the stocks are valuated jointly or separately.1 INVENTORY VALUATION: The SAP system allows you to valuate stocks of a material either together or separately.4. for example: · Stock from in-house production has a different valuation price than externally procured stock. Split valuation is necessary if.
you must create a material master record with the appropriate valuation category. Once you have specified the valuation category. Joint Valuation (If you want to valuate all stocks of a material at the same price. you specify neither a valuation category nor a valuation type. This verification is important as it ensures that the quantities and the pricing are all correct and neither party has made an error. Split Valuation If you want to valuate stocks of a material separately. you can create a material master record for each quantity of the material you want to valuate separately. This record is called the valuation header record.) ii. Each material always has only one such record for each company code or plant (depending on whether the material is valuated at company code level or plant level). 24 .i. 2. with the appropriate valuation type and accounting data.4.2 Logistics \ Vendor Invoice Verification Invoice Verification is part of the accounts-payment process in which the vendor is paid for materials or services that they have provided to the customer.
Procurement is the acquisition of appropriate goods and/or services at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity.time&location. 25 .
Fig. vii) Procurement Process 27 .
CHAPTER 3: BUSINESS PROCESSES BUSINESS PROCESS OF PROCUREMENT IN THE CONSTRUCTIONAL PHASE OF REFINERY Engineers India Limited (EIL) is managing the engineering. procurement and construction for the refinery project. The items involved in Procurement process are: 28 .
Tagged items are mainly equipments such as columns. valves. CONSUMABLES (Or OFFICE REQUIREMENTS): Office Requirements are those items that are required on a day to day basis for the working of the organization. BOUGHT OUT ITEMS: HMEL has classified all items as Bought Out Items which consists of both Bulk and Tagged Items. 2. These materials are stock able and when ordered are assigned to the unit and there consumption is entirely within the same unit for which they have been ordered.1. 29 . These items can be stock able or non stock able. Bulk items items which are procured in bulk feeding to multiple units and these too are stock able.e. pumps etc and instruments such control valves. Eg: stationery etc. transmitters etc and electrical panels.i. Bulk items are pipes. vessels.1 CSBP(CURRENT STATE BUSINESS PROCESS) FOR PURCHASING INVOLVING EIL All the Brought-out items. 3. fittings. Tagged items are those that are purchased specifically for a particular Unit. electrical & instrumentation cables etc. tagged and non-tagged items are purchased by EIL for construction of refinery. flanges. safety valves. Eg: CDU or VDU.
viii) Purchasing Process of Bought-out items 30 .Fig.
Inputs Responsibilty Type of Input Category of Input Mode of (Data/ Activity (Vital / Essential / Information / Desirable) Essential Soft Physical copy/ 1.Quotation Comparison /Negotiations 4. RAISING THE MATERIAL REQUISITION : Material Requisition(MR) is raised for availing the supplies of Tagged and bulk items by EIL.Material Requisition EIL Process) Activity 2. 31 .Purchase Order EIL EIL/HMEL Activity Activity Essential Essential Document Physical Document Physical Document HMEL Activity Essential Physical Document Table i) Activities involved in procurement of bought-out items STEPS IN PROCUREMENT PROCESS 1. For Tagged items only one time MR is raised and for Bulk items MR is raised several times as the engineering progresses.Request for Quotation 3.
modified list is transmitted back to EIL. description of materials required. of units needed.To facilitate the availability of materials in early phase in order to start the construction of refinery is based on piping and instrumentation diagram.For GGSR refinery 7 MTO have been prepared till date. RFQ(REQUEST FOR QUOTATIONS) INVITATION Based on the released MR items from the user department. plot plan and equipment layout. Later on when drawings are prepared and 3D modelling is done on software(PDS package) Material Take Off(MTO) System is generated through computer automatically. Details includes information like no. RFQ also mention the Terms and Conditions of the order which a vendor should agree with. etc. Bulk materials procurement is done in several phases for continuous feeding of material to site for construction. 3. MTO system is responsible for raising the MR for procurement of bulk items. Contract & Procurement Department (C&P) of EIL shall float RFQ to the vendors finalized by the HMEL team. HMEL team wherein does the required modification of the vendor list if required. EIL submits the Approved Vendor List(AVL) to HMEL for approval. 32 . SUBMISSION OF APPROVED VENDOR LIST TO HMEL: A Vendor List is maintained by EIL which contains the names of approved vendors. All the vendors should reply back their quotations within the stipulated due date. RFQ contains the details of requirements of the company. 2. Once list is finalised.
EIL can increase the due date for submission of Quotations accordingly. UNPRICED BIDS contains the technical details of material without any mentioning of price. PRICED BIDS contains the details of proposed materials along with their unit price and total price. EMD is non-refundable and retained by the company in case the selected vendor backs out later after the contract 33 . 4.Interested Approved Vendor replies back to EIL by giving ACKNOWLEDEGEMENT CUM CONSENT LETTER. EIL can issue ADDENDUM. stating the increase in number of units required or any variation in specification required. QUOTATION SUBMISSION BY VENDORS Interested Approved Vendor should reply back to EIL with their quotations in the form of PRICED BIDS and UNPRICED BIDS in a format specified by EIL in two separate sealed packets. EIL might go for some additions in their requirements. if required. Earnest Money Deposit(EMD) is a deposit in monetary terms taken by EIL from interested vendors as part of security in case of large orders.
UNPRICED Bids are given to concerned department to analyse the technical acceptability of vendor. In case of any variation in the technical specification of available material with vendor against the proposed material then vendor should clearly specify it to EIL. EMD deposits of all unsuccessful vendors are returned back to them. vendor is technically approved by each department involved. 6. commercial bids will be opened by the authorized persons (consisting EIL & HMEL) and the quotations will be maintained for each vendor. PRICE BID OPENING AND COMMERCIAL EVALUATION OF VENDORS All the technically qualified vendor’s bids go for commercial evaluation. After raising of LOA to the successful vendor. 34 . TECHNICAL EVALUATION OF VENDOR(IF REQUIRED) The department which has raised the Material Requisition is responsible for technical evaluation of vendor. 5.signing. In case of multiple departments involvement. The department checks the approved vendors to determine whether they are technically fit to supply the proposed material or not. Commercial evaluation is done by Contracts & Procurement Department of EIL. Only the bids of technically qualified vendors are allowed go for commercial evaluation.
L2 and L3. 8. L3 and so on depending upon the prices in their respective quotations.EIL recommendation report might contain suggestion for multiple vendors. . Vendors are arranged in the category of L1. L2.A price comparative statement is prepared for vendors and analysed by EIL. i. the next higher price quoting vendor is given category L2. HMEL team shall negotiate the prices further with the vendors depending upon certain terms & conditions. NEGOTIATIONS AND FINAL LOA ISSUING: Recommended vendors are invited by HMEL for further negotiation in prices. Price comparison process will involve the comparison of both cost price and operational cost of material for each vendor. 35 .e. 7. L1 category vendors are given preference over higher category vendors. The lowest price quoting vendor is given category L1. and so on. DRAFT LOA(LETTER OF AWARD) RAISING : A price comparative statement is prepared by EIL and recommendation report is sent to HMEL along with Draft LOA (Letter of Award) for the recommended vendors as per the original quote.
36 . As per DOP(Delegation of Power). Acknowledged LOA should be returned back to the company. The copy of the same is forwarded to EIL. The copy of final PO is forwarded to EIL. LOA should be accepted and acknowledged with proper vendor signature and stamp. 9. Final LOA is raised for selected vendor. Detailed Purchase Order is followed by LOA later contain further terms & conditions. PURCHASE ORDER(PO) RELEASING PROCESS: A draft PO is raised by EIL based on which a final PO is prepared by the HMEL team and issued to the vendor. PO is released by HMEL according to releasing strategy and forwarded to vendor. PO contains the complete details about the expected quantity and final prices agreed upon by both vendor and HMEL during final negotiation sessions. LOA gives the details about the proposed materials. Letter Of Award is authorisation for a particular vendor to start with their work for making arrangements for supplies.Final comparison is done by HMEL team after the negotiations. Once the PO cycle is over a PR containing the entire details of the materials and quantity etc is prepared and issued by EIL to the vendor with a copy to HMEL.
10. MANUFACTURING AND DELIVERY OF MATERIAL BY VENDOR Vendor starts the process of manufacturing the materials according to the specifications mentioned in PO/PR. There is a frequent quality check visits done by EIL team during the process of manufacturing of materials. Quality Assurance team of EIL checks that the material conforms to the specifications and quality requirements of the company. After quality checking process is over, a Certificate is issued to the vendor for quality assurance of material to be supplied for work site.
Vendor makes the delivery of materials according to the terms & conditions as per purchase order.
11. GOODS RECEIVING Currently the EIL warehouse team manages the project based inventory. The legacy system used by them is WAMS(Warehouse Management System) The warehouse team receives the DAV (Dispatch advise voucher) from the vendor which is an intimation that the vendor has dispatched the materials after the clearance of quality inspection at the source. As per the DAV (having a unique no.) the EIL team maintains their dispatch advice log (DAL) register.
The EIL team prepares DRR (Daily Receipt Report), once the goods are delivered to the premises of HMEL & are pending for physical verification.DRR report is sent daily to HMEL & Project site as first hand report of the availability of the goods. DRR report is linked to DAL report with reference to the DAV Unique number.DRR report provides
reference of material quantity received.
The MRR (Material Receipt Report), is prepared by EIL only after physical verification of material against DRR. After MRR, material is available in the stock register for issuing. All the physical rejection, shortage, etc is maintained through OSRD (Over short reject & damaged) report . Purchase action is initiated for OSRD items and insurance claim is made.
12. INVOICING AND PAYMENTS Payment terms are mentioned in PR/PO. For simple items like bulk material no detailed bill is required as billing terms mentioned in PO\PR is sufficient. Further detailed billing schedule is prepared for complex materials like major equipments. Detailed billing schedule is prepared by vendor and submitted to EIL for approval.
Billing schedule consists of following heads for which billing break-up is made for complex materials: 1.Process design 2.Detailed engineering 3.Ordering 4.Manufacturing & delivery 5. Construction
As work progresses vendors & contractors submits the monthly invoices to EIL for verification and forwarded to HMEL for payment. Vendors and contractors are given advanced payments for initiating the production process against the bank guarantee.
Payments to vendor and contractor is done by two methods: 1.Direct payment: Money is transferred to the vendor and contractor directly in their name. 2. Payments through banks: Upon the dispatch of material i) Original invoice is submitted to Vendor’s bank by the vendor. ii) Vendor’s bank submits original invoice to HMEL’s bank. iii) HMEL makes the payments to its bank according to the invoice given by the vendor. iv) HMEL’s bank makes the payment to the vendor’s bank. v) Vendor can collect the payments from his bank account. After making the payments, Proof of payments made is generated. HMEL submits this proof of payment to the transporter upon the delivery of materials.
PROCUREMENT INVOLVING HMEL ONLY(NON-EIL).
HMEL carries out the procurement process for consumables items only. Consumables are those items that are required on a day to day basis for the working of the organization. These items can be stock able or non stock able, Eg: Office stationery, etc.
Type of Input Category of Input Mode of (Data/ Activity (Vital / Essential / Information / Desirable) Essential Soft Physical copy/
2.Request for Quotation 3.Quotation Comparison /Negotiations 4.Purchase Order
Document Physical Document Physical Document
Table ii) Various activities involved in procurement of consumables
Fig. ix) Procurement process of consumables items STEPS FOR PROCUREMENT OF CONSUMABLES 41 .
All the quotations received after the due date is considered as invalid. as stated by procurement department.1. Local Purchase Requisition goes to the Procurement department of HMEL. Procurement department of HMEL will identify the approved vendors from Approved Vendor List. All interested vendors should satisfy all the norms. 3. 2. REQUEST FOR QUOTATION RAISING: Based on LPR raised. Approved Vendor List might contain single vendor or multiple vendor names for a particular item. in order to get themselves registered in approved vendor list. description and quantity required. RFQ is floated to all the approved vendors requesting the quotations from them. LOCAL PURCHASING REQUISITION (LPR) RAISING: Local Purchasing Requisition is raised by the concerned department upon the realisation of need. LPR contains the details of proposed items. HMEL procurement department is responsible for maintaining the Approved Vendor List. APPROVED VENDOR LIST : HMEL maintains the approved vendor list for the process of selective bidding. 42 . It might contain the information about the recommended vendors.
Details includes information like no. 4. 43 . etc.RFQ contains the details of requirements of the company. if required. UNPRICED BIDS contains the technical details of material without any mentioning of price. HMEL would increase the due date for submission of quotations accordingly. RFQ also mention the Terms and Conditions of the order which a vendor should agree with. PRICED BIDS contains the details of proposed materials along with their unit price and total price. description of materials required. HMEL might go for some additions in their requirements. HMEL can issue ADDENDUM. stating the increase in number of units required or any variation in specification required. Interested Vendor can reply back to HMEL by giving ACKNOWLEDEGEMENT CUM CONSENT LETTER. of units needed. QUOTATION SUBMISSION BY VENDORS Interested Approved Vendors should reply back to HMEL with their quotations in the form of PRICED BIDS and UNPRICED BIDS in a format specified by HMEL in two separate sealed envelope.
UNPRICED Bids are given to concerned department to analyse the technical feasibility of project. In case of any variation in the technical specification of available material with vendor against the proposed material then vendor should clearly specify it to HMEL. EMD is non-refundable and retained by the company in case the selected vendor backs out later after the contract signing. commercial bids will be opened by the authorized persons and the quotations will be maintained for each vendor. PRICE BID OPENING AND COMMERCIAL EVALUATION OF VENDORS All the technically qualified vendor’s bids go for commercial evaluation.Earnest Money Deposit(EMD) is a deposit in monetary terms taken by HMEL from interested vendors as part of security in case of large orders. After raising of LOA to the successful vendor. The department checks the approved vendors to determine whether they are technically fit to supply the proposed material or not. TECHNICAL EVALUATION OF VENDOR (IF REQUIRED) The department which has raised the Local Purchase Requisition is responsible for technical evaluation of vendor. EMD deposits of all unsuccessful vendors are returned back to them. 6. Commercial evaluation is done by Procurement Department of HMEL. Only the bids of technically qualified vendors are allowed go for commercial evaluation. 5. 44 .
RAISING OF LETTER OF AWARD(LOA) As per DOP(Delegation of Power). and so on. 45 . Final comparison is done by HMEL team after the negotiations. L1 category vendors are usually given preference over higher category vendors. A price comparative statement is prepared for vendors and analysed by HMEL team. L2 and L3. Final LOA is raised for selected vendor. one vendor is selected for giving the supplies of items. . LOA gives the details about the proposed materials. the next higher price quoting vendor is given category L2.e. The lowest price quoting vendor is given category L1. 8. NEGOTIATIONS WITH SELECTED APPROVED VENDORS Selected approved vendors are invited by HMEL team for final negotiations in price. HMEL team shall negotiate the prices further with the vendors depending upon certain terms & conditions. Detailed Purchase Order is followed by LOA later contain further terms & conditions. 7. After comparison process . Vendors are arranged in the category of L1. Letter Of Award is authorisation for a particular vendor to start with their work for making arrangements for supplies.L3 and so on depending upon the prices in their respective quotations.L2.PRICED Bids are analysed by the Procurement Department of HMEL for commercial feasibility. i.
9. Vendor makes the delivery of materials according to the terms & conditions agreed upon by both the parties. Purchase order is prepared and given to procurement committee for approval.LOA should be accepted and acknowledged with proper vendor signature and stamp. After the approval of PO. Acknowledged LOA should be returned back to the HMEL. Service Entry Sheet (SES) is maintained by HMEL upon availing the services from the vendor. Quality Assurance team of HMEL checks that the material conforms to the specifications and quality requirements of the company. 10. a Certificate of quality assurance is issued to the vendor. Upon the reception of PO. After quality checking process is over. vendor can start with the process of making the material available. MANUFACTURING AND DELIVERY OF MATERIAL BY VENDOR Vendor starts the process of manufacturing the materials according to the specifications mentioned in PO. There is a frequent quality check visits done by HMEL team during the process of manufacturing of materials. ISSUE OF PURCHASE ORDER (PO): After the selection of vendor. it is forwarded to vendor. GOODS RECEIVING Good Received Note (GRN) is maintained by HMEL upon the receiving of material. 46 . 11.
12. ii) Vendor’s bank submits original invoice to HMEL’s bank.3 FUTURE STATE BUSINESS PROCESS (FSBP) FOR PROCUREMENT PROCESS INVOVING HMEL(NON-EIL). As work progresses vendors & contractors submits the monthly invoices to EIL for verification and forwarded to HMEL for payment. HMEL submits this proof of payment to the transporter upon the delivery of materials. iv) HMEL’s bank makes the payment to the vendor’s bank. Payments through banks: Upon the dispatch of material i) Original invoice is submitted to Vendor’s bank by the vendor. iii) HMEL makes the payments to its bank according to the invoice given by the vendor. 2. Proof of payments made is generated. INVOICING AND PAYMENTS Payment terms are mentioned in PO. 3. v) Vendor can collect the payments from his bank account.Direct payment: Money is transferred to the vendor and contractor directly in their name. 47 . For simple items like stationary items no detailed bill is required as billing terms mentioned in PO is sufficient. After making the payments. Payments to vendor and contractor is done by two methods: 1.
Negotiations would be carried out by the HMEL team with the shortlisted vendor if required. Service duration. Terms and conditions etc. On receiving the quotations the price would be updated in the system and quotation comparison would be carried out. A PO would be prepared with reference to the LOA or RFQ / Quotation and would be released. If there is a single source or a source that is flagged as a preferred vendor then the system will offer this vendor as the determined source. No Service Purchase order shall be made without reference to quotation/LOA. Source List providing the details of material and vendor combination shall be maintained in the SAP system. However if there are a number of vendors on the source list that are valid by date 48 . In case of procurement of services. Service Purchase Orders shall be placed containing Service Description / Specification. LOA (contract) would be prepared and released after approval based on the release strategy. Purchase Requisition (PR) would be raised by the user. quantum of service. Based on the requisition RFQs would be invited from the identified vendors. All the consumable goods like stationary and other general office requirements are procured by HMEL directly.Future State Business Process(FSBP) includes the business processes after the implementation of SAP ERP solution at HMEL.
selection. x) Purchase Requisition release process(Post SAP) LOA(LETTER OF AWARD) RELEASE PROCESS 49 . then the system will offer the selection to the purchaser. A vendor can then be selected from the list. PURCHASE REQUISITION RELEASE PROCESS Start Create Purchase Order Change Purchase Order No If OK Yes Release Purchase Order Print PO & send to vendor Any further change No Print Changed PO & send to vendor Yes Cancel Release Purchase Requisition End Fig.
Start Create LOA (SAP Contract) Change LOA No If OK Yes Release LOA Print LOA & send to vendor Any further change No Print Changed LOA & send to vendor Yes Cancel Release LOA End Create PO Fig. xi) LOA Release Process (Post SAP) PURCHASE ORDER(PO) RELEASE PROCESS 50 .
xii) Procurement Process of HMEL Procured items(Post SAP) Goods receipt would be done in the system once they are received in the warehouse. if ap able plic ) M in a tain Q o u tatio ns Q otation C p on s te ent u om aris ta m N o eg taite w v do ith en r Ys e Is n otia eg tion requ d ire N o C a C re te ontrac t /L A O ? R eleas C ntra e o ct / LO A P C trac rint on t / L A &s O end to v ndor e C te P rea O R elea e P s O P tP rin O & s nd e to v or end Fig. 51 .Procurem ent Cyc le C atio of P re n R P tR rin FQ & s nd e to ve dor n C te R rea FQ Rc e eipt o Q ta n f uo tio s O en p Te n l ch ica bid Y es Is Te n l rev ch ica iew req uired ? N o O en C m ial p om erc bids (tec nica h lly qualified v o end rs o nly .
Service Entry Sheet would be created by the user on execution of services. Post Credit Memo. The duly authorized hard copy of vendor Invoice shall be forwarded to Finance department of HMEL and LIV shall be posted in the SAP system by Finance department. Unplanned delivery costs if any would be posted in a separate line item and the cost of the same would be captured in a particular G/L account. xiii) Invoicing (Post SAP) 52 . GR based LIV Start Receipt of Physical Invoice from Vendor Yes Is there any Deductions? No Check LIV & Post. End Fig. if any Check LIV & Post.
For materials no particular account assignment or item category is 2 Change Purchase Requisition All users ME52N required. required date etc) for all the materials required along with suggested Vendors. and estimated value. specification. required date. if applicable. 53 . change of quantity. specification.Step # Activity Responsibility / Authorization Tcode Remarks Procurement Cycle 1 Create Purchase Requisition All users ME51N Create PR with all details (quantity. Account assignment for services would be “K” and item category would be “D”. 3 Display Purchase Requisition All users ME53N Display PR 4 Release Purchase Requisition Identified Group ME54N Based on the release procedure defined the PR is released. etc) as required. Change PR (addition/deletion of item.
5 Create RFQ Purchase Officer ME41 Create RFQ with reference to PR. Print RFQ and send to the desired vendors. Individual RFQ printout shall be sent to all the recommended 6 Change RFQ Purchase Officer ME42 vendors. Minimum Quotation value 54 . required date) as 7 Print RFQ Purchase Officer ME9A required. Change RFQ (addition/deletion of item. Mean value Quotation b. 8 Price Updation in Quotation Purchase Officer ME47 On receiving the quotations back from vendors price updation is carried out in SAP 9 Comparing of Quotations in SAP Purchase Officer ME49 Compare quotations based on: a. Put in all RFQs under a single collective number. specification. change of quantity.
Based on the release strategy 13 Release LOA Identified Release Group ME35K identified the LOA is released for sending it over to the vendor. For materials no particular account assignment or item category is required. Print the LOA & send to the 14 Print / Reprint Purchase Officer ME9K vendor. the document gets de released. LOA can be printed only if it is in release status. 11 Change LOA Purchase Officer ME32K If required changes would be made in the document in case of value change.10 Create LOA Purchase Officer ME31K SAP Contract would be used as an LOA. 12 Display LOA Purchase Officer ME33K LOA can be displayed. fresh message needs to be generated in the system. In case. 55 . reprint is required. Account assignment for services would be “K” and item category would be “D”.
fresh message needs to be generated in the system. – Detail purchase order with all relevant details. pricing elements etc.15 Create Purchase Order Purchase Officer ME21N Create Purchase Order with reference to the quotation. PO can be printed only if it is in release status. 16 17 Change Purchase Order Release Purchase Order Purchase Officer Purchase Officer ME22N ME29N Change item details. In case. terms and conditions. 19 Goods Receipts Warehouse Officer MIGO Goods receipt would be carried out by the warehouse person for the amount of quantity received. Part 1 entries would 56 . no changes shall be permitted in the document unless release is cancelled. reprint is required. 18 Print/Reprint Purchase Order Purchase Officer ME9F Print the PO & send to the vendor. LOA etc. Once PO has been released. as required Release of Purchase Order as a document.
4 FUTURE STATE BUSINESS PROCESS(FSBP) FOR PROCUREMENT PROCESS INVOVLING EIL All Bought Out Items e. Based on the released MR items from the user department.g. 20 Logistics Invoice Verification Finance Dept. Contract & Procurement Department (C&P) of EIL shall float RFQ to the vendors finalized by the HMEL team.be updated at this point of time in the RG23 registers. Major Equipments / Materials (stock & non-stock). Process related items etc for Refinery shall be procured in the same way as being followed today. MIRO LIV would be done with reference to the goods receipt done Table iii) Activities of procurement process of consumables(Post SAP) 3. 57 . Spares.
This PO after going through a defined release procedure would be issued to the vendor. A print out of the LOA would be taken and issued to the vendor. However if there are a number of vendors on the source list that are valid by date 58 . The account assignment category can be ‘P’ in case of materials to be charged off and ‘Q’ for materials to be stored as the project stock.No purchase orders shall be made without reference to quotation or LOA. All tagged and non tagged item purchases would be under Project (WBS Element) as capital procurement and shall be capitalized progressively. commercial bids shall be opened by the authorized persons (consisting EIL & HMEL) and the quotations shall be maintained in the system for each vendor.Technical evaluation shall be done outside SAP and based on the approval for opening commercial bids of only technically qualified vendors. Source List providing the details of material and vendor combination shall be maintained in the SAP system. If there is a single source or a source that is flagged as a preferred vendor then the system will offer this vendor as the determined source. A draft PO would be raised by the EIL team outside SAP based on which a final PO would be prepared by the HMEL team in SAP with reference to the LOA. Once the final vendor has been identified LOA (SAP Contract) would be prepared in SAP and would be released according to the approval strategy agreed upon.
Step # Activity Responsibility Tcode / Authorization Remarks 1 Create LOA Purchase Officer ME31K SAP Contract would be used as an LOA. 59 . Material rejection and damage would be handled by the QM module.selection. Unplanned delivery costs if any would be posted in a separate line item and the cost of the same would be captured in a particular G/L account. the GR for the equipment will not be entered till the entire equipment is received. The account assignment category can be ‘P’ in case of materials to be charged off and ‘Q’ for materials to be stored as the project stock. All materials against purchase orders shall be received & posted into the system via an interface between SAP and WAMS (Warehouse Management System) of EIL. A vendor can then be selected from the list. The duly authorized hard copy of vendor Invoice shall be forwarded to Finance department of HMEL and LIV shall be posted in the SAP system by Finance department. The item category would remain blank or ‘B’ in this case. then the system will offer the selection to the purchaser. In case of Tagged equipment.
Print the LOA & send to the vendor. – Detail purchase order with all relevant details.2 Change LOA Purchase Officer ME32K If required changes would be made in the document in case of value change. the document gets dereleased. 5 Print / Reprint Purchase Officer ME9K 6 Create Purchase Order Purchase Officer ME21N 7 8 Change Purchase Order Release Purchase Order Purchase Officer Purchase Officer ME22N ME29N 60 . Change item details. terms and conditions. fresh message needs to be generated in the system. reprint is required. 3 Display LOA Purchase Officer ME33K 4 Release LOA Identified Release Group ME35K Based on the release strategy identified the LOA is released for sending it over to the vendor. Once PO has been released. LOA can be printed only if it is in release status. The item category would remain blank or ‘B’ in this case. LOA etc. In case. pricing elements etc. Create Purchase Order with reference to the quotation. The account assignment category can be ‘P’ in case of materials to be charged off and ‘Q’ for materials to be stored as the project stock. no changes shall be permitted in the document unless release is cancelled. as required Release of Purchase Order as a document. LOA can be displayed.
MIRO Table iv) Activities involved in procurement process of bought-out items(Post SAP) 3. fresh message needs to be generated in the system. reprint is required.5 BUSINESS PROCESS DESIGN FOR PROCUREMENT PROCESS FOR OPERATIONAL PHASE OF REFINERY 61 . Part 1 entries of RG 23 register get updated during this process. Goods Receipt would be done via the interface between SAP and WAMS of EIL. PO can be printed only if it is in release status. In case. LIV would be done with reference to the goods receipt done 11 Logistics Invoice Verification Finance Dept.9 Print/Reprint Purchase Order Purchase Officer ME9F 10 Goods Receipts Warehouse Officer Print the PO & send to the vendor.
Fig. xiv) Procurement Process for operational phase of refinery 64 .
CHAPTER 4: DATA COLLECTION 65 .
1 PRIMARY SOURCES The primary sources of data for this project are • • Supervisor’s instructions and explanations. as part of their documentation process. 66 . Bathinda. • Business process listings and specifications by Trusted Advisors of SAP India hired by HMEL. • Detailed flow charts prepared by Wipro Technologies giving the complete overview of business process flows. • CSBP(Current State Business Process) documents and FSBP(Future State Business Process) ducuments. 4. • Documentation regarding company’s general terms & conditions.4. Business process specifications from HMEL core project team and Business heads.2 SECONDARY SOURCES The secondary sources of data are • Business Blueprints of various business processes of Materials Management used for Phase-I(Constructional phase) of GGSR. • Detailed Powerpoint presentations prepared by Wipro Technologies while implementing Phase-I SAP implementation of GGSR.
Company’s inspection team carries out two stage process to approve a vendor..3 DATA COLLECTION ACTIVITIES AND VARIOUS DOCUMENTS GENERATED DURING PROCUREMENT PROCESS Various documents. The stages of vendor approval are as follows: 1. After documents inspection. These are as follows: 1. Inspection team visit the facility of vendor to evaluate the vendor’s resources and ability to produce the required items.4. COPY OF APPROVAL OF APPROVED VENDOR LIST: EIL&HMEL has maintained the list of approved vendors for procurement of all broughtout items(Tagged and non-tagged) items i. containing paramount data. All the vendors interested to be included in Approved Vendor List are required to apply to the company according to standard company procedures by submitting all the pre – requisites documents.e. Inspection team scrutinises and evaluates the documents submitted by vendors for their validity. Process related items etc for Refinery. 2. major Equipments / Materials (stock & non-stock). Spares. 67 . are produced during the procurement process.
No press advertisement is released requesting RFQ. Only the Approved Vendors are invited to give their bids. Fig xv) Approved Vendor List 68 . Approved Vendor List contains the name of both domestic and foreign vendors.Vendors clearing above two stages are included in Approved Vendor List. Limited Bidding process is carried out in the organisation.Approved Vendor List consists of names of trusted vendors.
Estimated value. Business users can initiate the Material Requisition upon their requirements. PR also consists of Terms and Conditions for Delivery. Material code. PR raised by the user contains the appropriate justification of raising the PR. etc. which is unique for every PR generated. Notes for vendor is also there which makes vendor aware of company’s general terms & condition of procurement. COPY OF MATERIAL REQUISITION ISSUED/APPROVED SAP PR: Material Requisition are raised by the concerned department internally in the organisation. It contains the details of goods/services required like Item code.PR also contains the list of recommended vendors by initiator to help the procurement department in vendor selection process. PR contains the authorised signature of Initiator and approving authority.2. technical requirements etc. Description. SAP PR contains PR No. HMEL uses approved SAP PR process for generating valid Materials Requisitions. Quantity. EIL is responsible for generating the Material Requisition for procurement of Boughtout items used during the constructional phase of refinery. HMEL departments would generate Material Requisition for consumables or general office requirements. 69 . consequences of delay of services.
if the vendor is unable to provide the exact specification material/service. it can forward its proposal for other alternatives. along with RFQ generation date and Quotation due date.if wants. RFQ contains the unique RFQ No.3. RFQ also gives the details about the expected delivery date. Further RFQ contains the details about the item to be procured along with INCOTERMS and PAYMENT TERMS involved. can negotiate with the vendor 4. Interested vendor responds to the RFQ invitation by giving the letter of 70 . In case of monopoly or few vendors. Company . ACKNOWLEDGEMENT CUM CONSENT LETTER OF PARTIES If a vendor is capable of providing all the materials/services and ready to comply with company’s terms and conditions then it sends an acknowledgement cum consent letter to the company. next step is to generate Request For Quotation to invite the vendors for bidding process.RFQ gives the details of term and conditions of bidding process by vendors. RFQ ISSUED After the creation of approved Materials Requisition. Contract & Procurement Department (C&P) of EIL shall float RFQ to the vendors finalized by the HMEL team. Based on the released MR items from the user department.
Acknowledgement Cum Consent Letter is maintained by the Procurement department of the company to carry out further activities related to procurement. 7. 5.acknowledgement. 71 . Vendor must intimate the slight variation in prescribed format to the company and get the consent of the company. Company may provide extension in due date depending upon necessity. The acknowledgement letter contains the consent of the vendors interested to do business with the organisation. ADDENDUM(IF ANY) If the requirement of the material/services changes like additional units of materials are needed or if there is a change in the specification of materials/services. Vendors might go with slight variation in the prescribed format depending upon the specifications of vendor. UNPRICED/PRICED BID OPENING STATEMENT Vendors provides their priced and unpriced bids to the company in a sealed envelope in the required format given by the company. then all the concerned vendors are informed about the addendum in order. Vendors can work upon the new quotation incorporating the Addendum within the extended due date. If no Acknowledgement letter is received then vendor is considered as Not interested.
xvi) Unpriced Bid Format The department which has raised the Material requisition is responsible for analysis of Unpriced bid to determine whether vendor is satisfying all the requisites of procurement of proposed material. The unpriced bid contains details about the actual quantity and quality of materials/services against the proposed one. PRICED BIDS contains the details of unit price and total price of each item to be procured.UNPRICED bids contains the technical details of materials/services needed to be procured without any details about the price. Total price is determined my multiplying unit price by total number of items to be procured. Fig. 72 .
PRICED BIDS are analysed by Procurement department to evaluate the commercial feasibility of the order. recommendations. solutions. Fig. 73 . etc involved with a supplier. xvii) Priced Bid format 8. Supplier correspondence includes the queries. COMPLETE SUPPLIER CORRESPONDENCE All the correspondence happened during the vendor selection process are filed at one place.
RECOMMENDATION OF AWARD EIL prepares Recommendation Of Award list for all the selected vendors and forward it to HMEL. LOA(LETTER OF AWARD) TO THE VENDOR LOA copy is retained and forwarded to EIL.ACCEPTANCE OF LOA Vendor acknowledged copy of LOA is retained by the company as a proof of acceptance of LOA. 10. 12. Only technically qualified users are commercially evaluated by the procurement department. 74 . APPROVAL NOTES WITH ALL SIGNATURES Final LOA is prepared and released according to release strategy. Final LOA raised by HMEL is the authorization to a vendor to start making arrangements for supplies. All the necessary documents are maintained properly signed according to DOP. 13. 11. TECHNICAL REVIEW The department responsible for raising the requisition prepares the technical review of the vendor to determine whether they are technically qualified or not.9. HMEL’s Procurement Department retains a copy of this recommendation of Award list.
14. for payment. PO is released by HMEL according to releasing strategy and forwarded to vendor. 5) Material Name and Description: the name and description of the material being received. If there is a reference on a delivery note / invoice it can be put in here. often including specifications and reference or part numbers of the items to be purchased. with the invoice. with quantities and prices.GOOD RECEIVED NOTES/SERVICE ENTRY SLIP. The copy of final PO is forwarded to EIL. The GRN has information relating to what has been received. A purchase order usually contains: PO number. 3) Delivery note. DETAILED PURCHASE ORDER RAISED PO contains the complete details about the expected quantity and final prices agreed upon by both vendor and HMEL during final negotiation sessions. 6) Quantity: the quantity of items you have received. It is possible to create as many GRNs as you wish as long as the 75 . the number of the PO you are trying to receive items from. terms of payment and a list of services/products. GRN Contains the following details: 1)Order Number. 2) Supplier. This is not necessarily the same as the amount expected. On completion of the GRN a copy is sent to payments. 15. billing address. how much and when. shipping address. The name of the supplier who sends the material. shipping date. These documents are generated when material or services are received.
In some situations it may be necessary to create more than one GRN should you the items on your order arrive at different times. INVOICES Original invoices are retained and forwarded to finance department for payments. quantities. indicating the products. An invoice or bill is a commercial document issued by a vendor to the company. An invoice indicates that company must pay the vendor. and agreed prices for products or services the vendor has provided the company. 76 . 16.total is the same as on the order. according to the payment terms.
CHAPTER 5: ANALYSIS 77 .
1. 3. 2. In particular. Improved Operations Management. SAP’s solution reported significant improvements in reporting accompanied by increases in the productivity of end users (who could now create their own management reports) as well as IT personnel (who no longer had to support the end users in the creation of ad hoc reports). 2. INCREASED EMPLOYEE PRODUCTIVITY AND REDUCED HEAD COUNTS: HMEL has reported increased employee productivity and reductions in personnel costs due to the implementation of SAP solution. it has been observed that the 78 . Improved Information Organisation and access for Decision Making. Increased Employee Productivity and Reduced Head Counts. SAP’s solution for financials and operations management has either reduced the number of finance personnel or avoided hiring additional staff as a result of improved financial reporting.The business processes are analysed after SAP implementation and following benefits are observed : 1. IMPROVED OPERATIONS MANAGEMENT There is reported cost reductions resulting from improved financial and operational management through their use of SAP.
IMPROVED INFORMATION ORGANISATION AND ACCESS FOR DECISION MAKING With the standardization of data and the improved access to management information executives and managers to make better business decisions that were based on sound business data. After SAP implementation there is an increase in supply-chain efficiency and reduction in operational costs.visibility these solutions provided into operations along with the automation of various business processes led to significant reductions in costs and more profitable management of business operations. 79 . 3.
CHAPTER 6: CONCLUSIONS 80 .
81 . Significant benefits are observed due to integration of business processes.With the implementation of SAP. processes and controls and improved efficiencies. standardised systems. Transparency increased in their business with the implementation of SAP. HMEL has significantly realised benefits through improved efficiencies in the business processes of procurement which are critical during project construction.
1 LIMITATION OF SAP IMPLEMENTATION 82 .CHAPTER 7: RECOMMENDATIONS 7.
In addition to the large number of deployment personnel needed to implement SAP. 83 . Since HMEL is relatively new company with less number of employees. LACK OF BREADTH AND REPEATABILITY : A positive return on the SAP investment was achieved only when there was both a sufficient number of users and sufficient frequency of use (breadth and repeatability) to reap significant productivity based gains from the solution. Some employees are reluctant to use SAP implementation which further reduces the chances of attaining the breadth and repeatability. HIGH PERSONNEL COSTS : The high personnel costs associated with the implementation of SAP solution was a challenge for a quick achievement of a positive Return On Investment. the personnel time spent on training was significant in some cases.1. Excessive customization 1. Lack of breadth and repeatability : 2. HMEL has deployed around 50-75 full-time internal personnel for implementation purposes. High personnel costs 3. Excessive customization involved the development of too many individual interfaces between HMEL and EIL. level of breadth and repeatability could not be achieved. EXCESSIVE CUSTOMIZATION : HMEL found that the consulting costs associated with customizing SAP were very high.
Conduct a thorough review of reference users in similar industries to evaluate whether the promised benefits really apply to the industry and the user base in question. Conduct a pre-deployment Return On Investment analysis that evaluates expected returns and costs. 3.focusing instead on deploying a usable system that will deliver returns within a measurable time frame.RECOMMENDATIONS 1. Develop a clear road map for the full exploitation of functionality to a wide breadth of users and departments within a reasonable period of time. BIBLIOGRAPHY WEBSITES: 84 . 4. taking into account the probability of achieving those returns and the payback period for the investment. Avoid excessive customization of the solution and its interfaces. 2.
in 2.G Production and Operations management.Taylor. Nair. 4. http://www. http://www. Tata McGraw Hill Publishing Hours. Operations Management.org BOOKS: 1. Roberta S. 2. Equity Press. 85 . 4th edition.1. Sultan Chand & Sons. new Delhi. N. Martin Muray. 3.hmel.Functionality and Technical Configuration.MM . SAP .MM Verma (Materials Management). SAP Cook Book Material Management. Person Education. Bernard W. Russell. Equity Press 5.wikipedia.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.