# Process Sub-Process

1 Purchase Organization
Purchase Organization
1.1
Structure
1.1.1

1.1.2

1.1.3

1.1.4

1.1.5

1.1.6

1.1.7

2 Master Data
2.1 Material Master
2.1.1

2.1.2

2.1.3

2.1.4

2.1.5

2.1.6

2.1.7

2.1.8

2.2 Vendor Master

2.2.1
 2.2.2

2.2.3

2.2.4

2.2.5

2.2.6
2.2.7

2.2.8

2.2.9

2.2.10

2.2.11

2.2.12

2.3 Service Master

2.3.1

2.3.2

2.4 Source List

2.4.1

2.4.2

2.4.3

2.4.4

2.4.5

2.4.6

2.4.7
 2.5 Pricing Conditions

2.5.1

2.5.2

2.5.3

2.5.4

2.5.5

2.5.6
2.5.7

2.5.8

2.5.9

2.5.10

2.6 Material Quotas

2.6.1

2.7 Release Strategy

2.7.1

2.8 Vendor Rating

2.8.1
2.8.2

2.8.3

3 Purchase Process
3.1 Purchase Requisition

3.1.1

3.1.2

3.1.3

3.1.4

3.1.5
 3.1.6

3.2 Request for Quotation

3.2.1

3.2.2

3.2.3

3.2.4

3.2.5
3.2.6

3.2.7

3.2.8

Purchase Order
3.3
Processing

3.3.1

3.3.2

3.3.3

3.3.4

3.3.5

3.3.6

3.3.7

3.3.8

3.3.9

3.3.10

3.3.11
3.3.12

3.3.13

3.3.14

3.3.15

3.3.16

3.3.17
3.3.18

3.3.19

3.3.20

Import License
3.4
Management

3.4.1

3.4.2
3.4.3

3.4.4

3.4.5

3.4.6
3.4.7
3.4.8
3.4.9
3.5 Contract Agreements

3.5.1

3.5.2

3.6 Scheduling Agreements

3.6.1

3.6.2
 3.7 Vendor Shipment
3.7.1
3.7.2
3.7.3
3.8 Goods Receipt
3.8.1
3.8.2

3.8.3

3.8.4

3.8.5

3.8.6

3.8.7

3.8.8

3.8.9

3.8.10

3.8.11

3.8.12

3.8.13

3.8.14

3.9 Service Confirmation

3.9.1

4 Inventory Management
4.1 Warehouses / Stores
4.1.1

4.1.2
 Stock Placement
4.2
Processing
4.2.1
4.2.2
4.2.3
4.2.4

4.2.5

4.2.6
4.2.7

4.2.8

4.2.9

4.2.10

4.2.11

4.2.12

4.2.13

4.2.14

4.2.15

4.2.16

4.2.17

4.2.18
4.2.19
4.2.20
4.2.21

4.2.22

4.3 Stock Removal - Picking

4.3.1

4.3.2

4.3.3
4.3.4

4.3.5
 Stock Removal -
4.4
Packing
4.4.1

4.4.2

4.4.3

4.4.4

4.5 Difference Processing

4.5.1

4.6 Stock Confirmation

4.6.1

4.6.2

4.6.3

4.6.4

4.7 Stock Returns

4.7.1

4.7.2

4.7.3

4.7.4

4.7.5

4.8 Stock Transfer

4.8.1

4.8.2
4.8.3
4.9 Inventory Valuation

4.9.1

4.9.2

4.9.3
 4.9.4
Vendor Invoice
5
Processing
5.1 Invoice Verification
5.1.1
5.1.2

5.1.3

5.1.4

5.1.5

Invoice Processing / Bill

5.2
Passing

5.2.1

5.2.2
5.2.3

5.2.4

5.2.5

5.2.6
6 Outbound Shipments
6.1 Logistics Planning
6.1.1
6.1.2
6.1.3
6.1.4
6.1.5
6.1.6

6.1.7

6.1.8
6.1.9
6.1.10
6.1.11
6.1.12
6.1.13

6.1.14

6.1.15
Freight Invoicing and
6.2
Settlement
6.2.1
6.2.2

6.2.3

6.2.4
7 Analytics
7.1 Dashboards

7.1.1

7.1.2
7.1.3
7.2 Reports

7.2.1

7.2.2

7.2.3
8 Print Outputs
8.1 Document Prints

8.1.1

8.1.2
8.1.3

8.1.4
Query

Do you follow Centralized Procurement?

If yes, then, please share the list of materials and services purchased centrally.
Also, kindly explain and share the purchase process flow.
If no, then please share the list of materials and services purchased locally for
each location / branch. Also, kindly explain and share the purchase process
flow.
If hybrid, then please share what's procured centrally and locally. Also, kindly
explain and share the purchase process flow.
Do you have Purchase Groups (a set of people who exclusively procure
certain items like Raw Material, Consumables, Capex, Services, etc.)?
If yes, then will Purchase Groups represent individual buyers or groups of
buyers? Please share the number of Groups / Buyers.

What is the accounting process for Purchases? How do you define Accounting
Groups / Cost-Centres for different types of Materials and Services?

What material numbering system and taxonomy do you currently follow?

What attributes do you maintain for Materials? (Physical Attributes, UoM,
Alternate UoM, HSN/SAC Code, Re-order Levels / Safety Stock / FIFO / Shelf-
life, etc.)

Do you maintain Material Types? (Raw Material, Finished Goods, Semi-

Finished Goods/WIP, Consumables, Packaging Material, Spares, Tools, etc.)

Do you maintain Material Groups? (materials having common attributes, e.g.,

Electrical Parts, Mechanical Parts, Cotton Garments, Silk Garments, etc.)

Do you maintain alternate / substitute materials in case of unavailability of a

specific material?
Do you maintain ABC classification for your materials? If yes, please explain
the classification process.
How is the stock re-order level managed? (e.g., from PR to PO to GRN)

Will you maintain your vendor's part number in your system, associated to your
material master number? If yes, could there be more than one manufacturer's
part number associated with one of your material master numbers?

What Vendor numbering system and taxonomy do you currently follow?

What attributes do you maintain for Vendor Master? (including Local Vendors,
Import Vendors, One-time Vendors, etc.)
How do you classify your Vendors (e.g., Material, Job Work, Services, Hybrid,
etc.)
Do you expect Vendors to provide Product Certificates for the material that
they supply?
What payment terms do you follow for Vendors (e.g., Open Credit with
duration, Advance, against Delivery, against Balance, etc.)
What is the payment mode to your Vendors (e.g., Online, Cheque, Cash)
What is your primary and secondary currencies for Vendors?
How do you handle currency exchange rates (e.g., online, fixed for a period,
manual, etc.)
What types of freight modes are agreed with the Vendor? (e.g., Ex-works,
Door-to-Door, etc.)
Are there multiple addresses and contacts, over and above the plant
address(es) and contact(s) that will be used repeatedly on purchasing
documents?

Do any storage locations have an address that varies from the assigned plant?
If yes, provide a list of the additional specific storage location addresses.

Do you have a Supplier Portal? If yes, what functionality does the portal offer?

What attributes do you maintain for Service Master? (including Local Vendors,
Import Vendors, One-time Vendors, etc.)
Does it include Service number, Service category(Calibration, Certification,
Maintenance, Utilities, Civil, Logistics, Material testing, Consultancy,
Manpower, Job Work, Admin), Service Description, Base unit of measurement,
Material / Service group?

Do you maintain a list of approved vendors? If yes, then if a material is subject

to a source list requirement, can it only be procured from the vendors included
in the source list?
Do you maintain a source list for: (1) all materials (2) all materials of a plant (3)
certain materials only? Please explain.
Is there a fixed vendor for some materials? If yes, in certain plants or across
the entire enterprise? Please specify.
Do some vendors cover certain geographical regions? If yes, do you need a
warning if the vendor does not cover relevant region? Should the system
prevent issue of POs in such cases?
What kind of purchase transactions do you perform? (Domestic, Import, High-
Seas, etc.) and do you maintain a Source List for the same?
Do you have specific Minimum Order Quantity (MOQ) for each Material and/or
Vendor?
Do you maintain Delivery Lead Times for each Vendor?
Which price components do you use in purchasing documents (e.g. gross
price, surcharges, discounts, freight, duty, import, etc.)?
To which date does the price determination process relate? (E.g. delivery date,
PO date, any other date)
Is pricing information from any other system used for price computation
purposes?
Do you manually change the price at header level for the entire purchasing
document?
Do you allow changes to the gross price that is automatically determined by
the System?
Does the vendor's price include value-added tax?
Is it possible to change pricing conditions after a PO has been created?
What is the approval mechanism for pricing? (e.g., New, Revision and
Amendments)
What kind of Discounts do Vendors offer to you? (E.g., on quantity, for a
period, for type of material, on good will, etc.)

Do you measure Landed Cost for Materials? If yes, please explain the process.

Do you maintain specific vendor quotas (for example 70 % from vendor A, 30%
from vendor B) for your materials? If yes, how many quota arrangements are
you currently maintaining?

Are any purchasing documents subject to approval before release? If yes,

describe the criteria that will be needed to determine the appropriate approval
policy for indents / purchase requistions, RFQs, purchase orders, contracts,
scheduling agreements, etc.

Currently, how do you evaluate vendors?

What criteria do you use to evaluate your vendors?
How do you rate the scores for these criteria? If the criteria are not weighed
equally, please indicate the individual weightages.

How are purchase requisitions created in the case of stock material, material
for direct consumption, external services?
Are Purchase Requisitions created based on Material Groups or Piurchasing
Group (or both)?
Are purchase requisitions converted into requests for quotations?
Are requisitions be subject to approval by someone (or possibly several
people) before the requisition can be processed into an RFQ and/or purchase
order?
Are the purchase requisitions subject to a release strategy? If so, what is the
criteria?
How do you check for stock availability (locally or in other locations) before the
requisition is converted into an RFQ or PO?

Do you request several vendors to submit prices, terms and conditions in the
form of a tender/bid/quotation?
Do you assign a collective number to the different quotations submitted by
several vendors?
Can an article be procured from several vendors? If so, is this the rule or an
exception? (Or specify percentage.)
Are RFQ documents to be approved by someone before being issued to
vendors? If yes, then please describe the approval procedure.
Do you use an electronic signature to release RFQ documents?
How do you receive the quotations?
How are Vendor Quotations evaluated presently (Price, Delivery Lead Times,
Specifications, Vendor Rating, etc.) ? Please describe in detail.
Do you send rejection letters to unsuccessful bidders? Indicate how such
letters are to be transmitted to the vendor.

What are the different purchase orders that you use currently? (For e.g.,
Standard, Consignment, Subcontracting, Stock-Transfer, Services, Blanket,
etc.)
Do you issue Annual Contracts? If yes, do you issue a Work Order for each
activity?
Specify the consumption categories for which you will procure external
services and material directly: Asset, cost-center, production order, project,
sales order, other (please specify).
Do you order material in a unit of measure that differs from the one used for
stock-keeping purposes?
Do you pay for material in a different unit of measure than the one that is
shown in the PO/and or used for stock putaway?
is there a need to ship raw material to different location (e.g., different job work
locations) directly while creating a Purchase Order?
Do you track certificates of origin and/or customs reference numbers for
materials produced in foreign countries?
Do you enter freight costs in the PO? If yes, describe the basis of the costs.
Also indicate if any types of costs can be determined automatically (for
example, freight costs per piece, per unit of weight, as a percentage of the
value). Does it include Insurance?
Do you sometimes order stock material directly for a cost center or another
consumption category?
Do you have to declare your ordering activities to the authorities? If so,
describe.
Do you allow overdelivery? If so, specify the percentage variance / tolerance
for individual material / material groups.
Can the materials you purchase be subject to different tax types? (For
example, based upon the material purchased, based upon the plant for which
the material is purchased, etc)?
Do your POs issued to vendors contain specific transport or packing
instructions?
Is it to be possible for purchase orders to be generated automatically following
a goods receipt? Please specify the criteria for this.
Are purchase documents to be approved by someone before being issued to
vendors? Describe the approval procedure.
How is the person responsible for approval be notified? - Approver checks
regularly, by phone, by e-mail, by workflow, others.
Do you use an electronic signature to release purchasing documents?
How are purchase orders currently sent to the Vendors?
How does the Vendor acknowledge the acceptance / rejection of the purchase
order?
Do Vendors request for changes in the PO terms? (price, quantity, delivey
schedule, etc.) If yes, how do you manage them currently?

What types of Material Imports are done today? (Direct, High Seas, Advance,
etc.)
What import duties and duty drawbacks are applicable?
Do you use an Invalidation Certificate for Advance License imports?
Do any of Vendors supply materials using all the three modes; Domestic, High
Seas and Advance license?
How is the license quantity consumed in the Purchase Order? (FIFO, LIFO,
etc.)
Do you have overlapping import licenses for the same HSN Code?
How do you manage amendments to import purchase orders?
How do you track license utilization and expiry?
What kind of reports are submitted to DGFT for Imports?

Which types of contract do you use? (e.g. value contracts, quantity contracts)

What do you use contracts for? (e.g. stock materials, consumable materials,
external services, etc.)

Do you use scheduling agreements to procure materials from external or

internal suppliers (vendors or your own plants respectively)? If so, which types
of scheduling agreement do you use? Are these scheduling agreements
maintained centrally?
How do you reconcile the quantity requested and the quantity actually
delivered with your vendor (monitoring function)? How are the lines of the
delivery schedule generated? Manually or via materials planning (MRP)?
How do you receive shipment notifications from the Vendor?
Who manages transportation of vendor shipments?
Do you use any third-party transportation systems?

How do you process goods receipts? Please elaborate.

Name the storage locations to which vendors deliver the goods.
Will you maintain specific material reservations (for sales, for production) for
your stock materials?
Do you receive quantities less than the ordered quantity? If yes, is the
purchase order considered complete then or do you receive the missing
quantities later?
Do you physically store the goods you have received into "stock in quality
inspection" at a different location than those posted to normal stock?
Do you use a unit of measure for the pricing of the goods other than the unit
you order?
Do the materials you receive have to be stored for a certain time before they
can be used or do they have an expiration date that you want to keep in the
system?
Do you refuse to accept deliveries if the vendor has not complied with the
shipping instructions?
Which documents are generated with the goods receipt?
Do you inspect the material/article at the time of goods receipt? If so, do you
enter the goods receipt and the inspection result or do you only enter the
goods receipt after the inspection has been carried out?
If you are using batch management, how is the batch number determined at
the time of goods receipt?
Do you print the material document as evidence of a goods movement? What
information is included in the printout?
Do you receive goods without a PO? (For e.g., low-cost, generic items and
consumables) Are there scenarios where purchase orders are generated
following a goods receipt? Please specify the criteria for this. Do you treat
them as cash expense and do a goods inward using a voucher?
How do you make adjustments for over/underconsumption of components by
the subcontractor (vendor)? Also, how do you handle raw material returns or
scrap received from the Job Worker?

Do you process or document completion of the services performed by the

service provider? Please describe the process.

Describe your current Warehouse / Storage Structure including sub-stores

Do you use storage locations for more than one plant? Name these storage
locations and the relevant plants.
Describe your current stock placement / removement process.
Do you use Batch Management? If yes, please describe in detail.
Do you trace stock based on Bins and Pallets?
Are pallets managed in the system with a unique number?
Are materials posted to quality inspection after goods receipt, or are they in
unrestricted-use stock?
Can goods be issued directly from the goods receipt area?
Do you block your stock?
Describe the various steps performed from GRN to final placement in storage
(Put away process).
Do you have capacity limits for your storage bins, for example, weight,
volume?
What kind of forms do you use for stock putaways? (GR slip, transfer order
form, sticker, etc.)
Is procured material pending inspection posted to stock or does it remain in the
goods receipt storage area? What happens with the samples: - Kept in GR
area - posted to stock - moved to inspection area?
Do you print the stock placement (putaway) document when the transfer order
is created?
Are transfer orders confirmed manually or automatically? (for both sending and
receiving locations)
Please list the storage types that will have placement confirmation.
How do you determine the storage bin in which to place the materials? Is this
done manually?
Who is notified of a stock put away? How is this person notified?
Do you maintain placement strategies (for example, storage types, storage
sections, storage bins) for your stock materials?
How many storage bins do you have per storage type?
How many stock putaways (items) do you have per day?
Do you receive consignment stock from vendors?
Do you receive materials that have batch or serial numbers from vendors?
Do you group together your pick list for multiple processing for a particular
shipping point, route, pick date, stock placement, stock removal?

Describe your current Stock Picking Strategy.

Do you group deliveries together to expedite the picking process? (picking
wave)
How are picking staff assigned to individual pick orders?
How do you determine the location at which an item must be picked?
Which documents are used for Picking and what information do they contain?
(e.g., planned time, transport carrier to be used, etc.)
Describe your current Stock Packing Strategy.

Do you use specific packing materials? If yes, please decribe them.

Do you use multi-level packing? Do you combine different material types and
create a single Packed (Handling) Unit?
Do you use packing documents (packing list)? If yes, what information do they
contain?
Do you combine packed materials into other units (shipping units)? For
example, several packages into one container?

How do you handle stock differences that are noticed either at the time of
transfer order confirmation or continuous inventory based on bin-to-bin
transfer?

Are to-bin transfer orders confirmed separately or automatically?

How much time elapses between delivery of the goods and their inspection,
and between inspection and the arrival of the goods at their final destination?

How are the picking results confirmed? (Actual time of picking, transport
equipment used, etc.)

Are stock quantities confirmed when it is placed into or taken out of storage?

Do you retain costs for material that is inspected as a result of a stock purge?

Do you create action plans/tasks for defective material?

Do you enter data (e.g., defects, characteristic results, specific findings) on the
defective material found in the stockroom or on the shop floor?

What documentation accompanies the goods that are returned to the vendor?

Describe the handling of inspection lots where the usage decision has
determined that they are to be rejected and returned to the Vendor.

What type of stock transfers do you perform currently? [Transfer between

Storage Locations, Transfer between different Stock Types
(Unrestricted / Quality / Blocked), Material-to-Material Transfer, etc.]
What type of documentation (forms) is used for Stock Transfer?
Do you use storage-bin to storage-bin stock transfers?

How do you value your stock? (e.g., Retail Inventory, Specific Identification,
FIFO, LIFO, Weighted Average, etc.)
How do you tag and track your stock / assets? (Serial Number, Batch Number,
Bar Code, RFID, etc.)
What inventory counting process do you use? (Physical Inventory or Cycle
Counting)
What is the frquency of inventory counting?

Do you perform the 3-Way verification process? (PO, GRN, Invoice)

Do you perform automatic settlement w.r.t. GRN?
Do you reduce the amount of your vendors' invoices automatically in the event
of variances?
Name the types of tax that might appear on a vendor's invoice.
Is a goods receipt always necessary for invoice verification? If so, do you allow
reversal of goods issue after the invoice is entered the system?
What do you do if the invoice price exceeds the purchase order price?

Do you require goods receipts to have passed quality inspection before the
invoices are cleared for payment?
How do you treat unplanned delivery costs included in an invoice?
How are incorrect invoices handled currently?
Do you block Vendor Invoices? If yes, state the reasons. (Pricing error, late
delivery, stock rejection, unplanned delivery costs, etc.)
Do you allow for any quantity and price variances? If yes, please share the
tolerance limits.
What is the process for checking and releasing blocked invoices?

How do you plan your transportation?

Do you use any third-party transportation systems?
Describe your transportation handling in detail.
What carriers do you use to transport goods?
How do you create shipments?
Do you have Individual and/or Collective Shipments?
Do you use one mode of transport per route or a combination of modes per
route, e.g. road, rail, sea?
List all documents required to complete the transportation process.
How do you record the progress of the shipment?
Is freight charged to the customers or is it absorbed by the company?
How do you determine shipment costs (for example, kilometers, volume)?
How do you carry out settlement accounting with the external carrier?
Do you charge stores for the costs of using your own vehicles?
Do you handle several deliveries for different ship-to parties in one single
shipment?
How do you respond to capacity constraints?

How do you calculate your freight costs?

Do you verify invoices for your forwarding agents? If so, which rules do you
use?
Do you send documents for physically transporting the merchandise? If yes,
What information do these documents contain?
How do you post your freight costs to accounting?

What key performance indicators are used by the Purchase and Inventory
Management Teams?
Are any dashboards being used currently? If yes, please share the details
If no, then what dashboards and KPIs are expected to be used?

What are the reports used by the Purchase and Inventory Management
Teams?
Describe the frequency at which the reports are generated. (E.g., shift-wise,
daily, weekly, monthly, ad-hoc, etc.)
What additonal reports are expected to be made available?

What purchase documents do you print? (PR, RFQ, PO, Contracts, GRN,
Delivery Note/Challan, Gate Pass, etc.)
Please share the formats used for printing the documents.
What are the specific fields printed in each document?
What validation mechanism is used for document printing? (Physical
Signature, E-signature, Digital Signature, etc.)
Customer Response Additional Remarks