Best Enterprises ISO 9001:2015

Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

1. SCOPE
Applicable for purchasing activity carried out as well as carried out at HO, all location as well as
carried out at all sites.

2. PURPOSE
To ensure that the Purchase product confirmed to specified requirement and suppliers are
evaluated and selected on the basis of their ability to meet purchases product requirement.

3. REFERENCE DOCUMENTS
3.1 BEST ENTERPRISES Quality Manual,
3.2 Procedure for Correction and Corrective Action.
3.3 Procedure for Manufacturing.
3.4 Procedure for QA
3.5 Procedure for Contract.

4. TERMS & DEFINITIONS

4.1 Supplier Evaluation:

Supplier evaluation is the process to access new or existing supplier base on their delivery, price,
production, and quality of management, technical and services. A standard supplier evaluation
framework shall be used in all cases for the existing and potential suppliers.

5.0 RESPONSIBILITY AND AUTHORITY

Purchase Incharge is responsible for review, establish and maintain this procedure and CEO is
responsible for the approval of this procedure.
Manager is responsible for compliance of this procedure.

6.0 DETAILS OF PROCEDURE

6.1 Conducting Materials research and development
RE PORT TH IS AD

6.1.1 Purchase Executive must scan the domestic as well as international markets for the latest and
cost-effective material used in the construction industry through sources like references from
existing suppliers, in house staff, competitor database, industry referrals, and Industry magazines.

6.1.2 The research findings will be collated by the purchase department personnel into a summary
sheet and the same will be forwarded to the Purchase Incharge for review.

6.1.3 In case the Purchase Incharge selects a material profile which interests him, he will issue
instructions to obtain further information on the same. Demonstration for the same will be called
for from the concerned vendor

6.1.4 The material sample will be analyzed on the following parameters:

PREPARED BY VERIFIED BY APPROVED BY
K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 1 of 7

 Best Enterprises ISO 9001:2015
Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

i. Impact on the P/C (Performance to Cost)

ii. Quality Implications
iii. Adequate availability
iv. Logistic Constraints (if any)
v. Ease of incorporation in construction process
vi. Special Conditions other than existing (if any)
6.1.5 Report comprising of the analysis of the material sample and the recommendations will be
forwarded to the Purchase Incharge for a final decision. The report of the above findings will be
retained in the database for future reference.

6.2 Vendor Registration

6.2.1 The need for identifying a new vendor will arise in the following cases:
 Current number of approved vendors is lower than the acceptable norm
 Item is critical to the business operations of BEST ENTERPRISES
 Lead time for an item is high and there is a need to reduce it for reducing inventory holding
costs.
 There has been no change in the vendor profile over the last 1 year.

6.2.2 The company will Endeavour to procure mainly from approved vendors. Based on the market 
research conducted and other sources i.e. reference from the third party, business associates, the
procurement department will invite the identified vendors for registration with the company.

6.2.3 Vendors will be approached and requested to submit their profiles and product details. The
purchase department will screen the vendors on the basis of the following parameters:
 Product- type , grade, specification,
 Current & potential manufacturing capacity,
 Market reputation,
 Creditworthiness,
 Financial background,
 Legal entity status,
 Experience in the industry

An initial vendor enquiry report will be prepared capturing the above information. In case the Head
of procurement department is not satisfied with the findings, the vendor is rejected and the reason

PREPARED BY VERIFIED BY APPROVED BY

K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 2 of 7

 Best Enterprises ISO 9001:2015
Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

for rejection will be captured and attached along with the vendor profile in a separate rejected
vendor file for future reference. If the procurement department is satisfied, then a joint factory visit
will be carried out by a team comprising of the procurement and quality assurance department
personnel respectively.

The joint team will submit a factory visit report. In case the factory visit report is satisfactory,
additional details (if any) are called for. All the relevant vendor information will be captured in the
vendor database and the same will be updated on a continuous basis.

A monthly report on new vendors identified will be forwarded to the Purchase Incharge for review.
Approved vendors will then be classified into different categories based on the type of order to be
awarded. An entry for approved vendors will be made in the system along with an entry level
rating. After approval vendor code is allotted to approve vendor and is registered in vendor
database. Rejected Vendors are informed and the same is updated in the vendor database along
with reasons for rejection.

The vendor database will contain the following information like:

 Vendor’s name, address, telephone, telex & fax numbers
 Main group codes of items supplied
 Key contact person
 Legal entity status
 Status – whether manufacturer, dealer or trader
 Vendor rating
 Permanent Account Number

6.3 Procurement Planning

6.3.1 Arrive at an enterprise wide procurement plan

Purchase department will receive the BOQ comprising of a schedule of materials needed for the
entire Production from the estimation department as well as a final Production schedule suggesting
the timelines based on milestones defined. Based on the BOQ and final Production schedule, the
Purchase Incharge will make an enterprise wide procurement plan   consisting of quantum of
consolidated material over a period of time (yearly/ monthly/ quarterly) for all Productions. The
enterprise wide Purchase plan will be forwarded to the HOD for approval. If the plan is approved,
the same will be documented, circulated and monitored in the department. Changes suggested (if
any) will be incorporated and resent to Purchase for approval.

6.3.2 Yearly materials requirement planning

Based on the enterprise wide procurement plan and the material requirements of all the
Production sites, Purchase Executive will consolidate the requirements and then prepare a
PREPARED BY VERIFIED BY APPROVED BY
K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 3 of 7

 Best Enterprises ISO 9001:2015
Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

schedule of requirement for the quantities required for monthly and annual consumption. The
material requirement is consolidated to arrive at quantity for each construction material and the
schedule of material requirement.

6.3.3 Monthly Categorization and Deciding Purchase Mode

The Purchase Executive will carry out an analysis of criticality v/s quantum and accordingly
categorize the materials. Based on the categorization, materials are classified for the decisions like
direct purchase, rate contract and strategic alliance. If the material is critical and quantity is high
and rate of the material seems to be fluctuating, the procurement department will decide to get into
a rate contract. If the material requires standardization, the Purchase Incharge can go in for a
strategic alliance with the vendors.  Materials covered under this mode can be decided by the
Purchase Manager. If either rate contracts or strategic alliance are not feasible then decision to go
in for direct purchase can be taken.
 6.4 Identification and Selection of Vendor
Details of the materials requirements received from the estimation department will be identified
and studied by the Purchase Executive. Vendors will be identified for strategic alliance and
enquiries will be floated. The vendors will be identified based on market research and other details
available with the purchase department. Based on the offers received from vendors, quoted prices
will be compared with the budgeted cost. If the cost doesn’t exceed the budgeted cost, the
agreement will be prepared and forwarded to the Purchase Incharge for approvals. If the cost
exceeds the budgeted cost, approvals shall be obtained from the BU head or Managing Director (as
the case may be) with the appropriate reasons. Intimation regarding the same shall be sent to the
purchase departments across all locations.

6.5 Rate Contract

Identify materials and enter into contract. Based on the material requirement plans received from
the estimation department, the quantum of materials for rate contract will be identified by the
purchasing department. A detailed cost analysis of the materials will be carried out by Purchase
Executive. A cost analysis will be done taking into account the past prices, present rates and
fluctuations in the rates of the material etc. The purchase executive will constantly scan the
industry for price movements in the domestic and international sector.
The purchase executive will then identify the vendors and invite them to discuss the quantum and
rates of the materials. Negotiations will be carried out to arrive at the pre-decided rate. A vendor
approval note will be generated and forwarded to the Purchase Incharge for approval. List of
approved vendors is maintained in the database.  After the final approval from the Purchase
Department, contract conditions shall be formulated and documented. This contract document will
be approved by the legal department. Contract conditions will include clauses like material
specification, agreed price, delivery time, price fluctuations, payment terms and considerations,
quality parameters etc.  Intimations regarding same will be forwarded to all purchase departments
across all levels.

6.6 Select Vendor

RE PORT TH IS AD

Based on indent received from the site, the Purchase executive shall ascertain whether the material
indented is covered under rate contracts or strategic alliance. If the material is not covered under

PREPARED BY VERIFIED BY APPROVED BY

K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 4 of 7

 Best Enterprises ISO 9001:2015
Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

any of the above, the purchase executive will prepare enquiry letters and forward it to the Purchase
Incharge for approval. After approval, the enquiries will be floated along with the material list to at
least three approved vendors from the vendor database.
Vendors will be requested to send their quotations to the purchase department. The same will be
opened by the purchase manager. The purchase executive will prepare a comparative rate chart
highlighting the vendors offering the second lowest and lowest quote. The Purchase Incharge will
then renegotiate with both of these vendors to arrive at the most competitive quote.
A verbal quote may be accepted at this level provided the vendor follows up with written (revised)
quotation within 24 hours. The comparative rate chart will be updated with the revised quotes to
determine the least quote vendor. The comparative rate chart will be signed by the Purchase
executive who made it and also by the Purchase Manager. Only in certain exceptional case, the CEO
will be consulted and approval will be obtained. In certain cases where the vendor offering lowest
quote is not given the contract, the CEO should be informed and reasons for the same should be
formally documented.

6.7 Receive Material Requisition

6.7.1 Receiving a requisition

The Production manager/Concerned department Manager will identify the requirement of

material and verify the quantity against the procurement budget. The Production Manager/
Concerned Manager will enter the following details in the system: items required, specifications,
quantity, desired delivery date. The Manager has to approve the requisition online and only then
can it be viewed by Purchase Manager. The indent raised by site shall be received at the purchase
executive. The purchase executive shall determine whether the delivery date mentioned in the
intent is as per the ‘Lead Time Schedule’. If the delivery date does not meet the lead time
schedule, the Manager will be required to provide justification for the same.

6.7.2 Inter-Site Transfer of Material

If the delivery date meets the lead time schedule, the store coordinator will check the availability of
stock at the central warehouse or other sites in the vicinity for the same material and inform the
purchase executive accordingly. If the stock is available at the central warehouse or other sites, a
material transfer note will be prepared through the system and the same will be forwarded to the
Production manager. If the required quantity is not available at a central warehouse or other sites,
purchase order   shall be raised for the required material.

6.8 Preparation of Purchase Order

A purchase requisition will be prepared by the Concerned Manager and shall be forwarded to the
Purchase Manager/Executive with the prior approval of the Manager through the system. Based on
the requisition received from the site, the Purchase Manager/Executive will prepare the purchase
PREPARED BY VERIFIED BY APPROVED BY
K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 5 of 7

 Best Enterprises ISO 9001:2015
Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

order which will be system generated. The purchase order for direct materials shall be raised on
the basis of rate contract as entered into. The purchase order for finished materials will be raised
on the basis of the long term contract with the strategic partner. The purchase order for regular
material shall be raised on the basis of monthly ‘base rate’ determined. The Manager will ensure
that the cost is within the budgeted cost. In case the cost exceeds the budgeted cost, the Purchase
Incharge will provide reasons for the same and obtain approval from the CEO. The purchase order
will be approved as per limits specified in the authority matrix. The PO will then be sent/ emailed
to the vendor.

6.9 Vendor performance evaluation

A vendor evaluation policy will include

i. Criteria for vendor evaluation

ii. Parameters for evaluation

iii. Frequency of evaluation

Vendors will be evaluated once in a quarter, semi-annually or annually as decided by the

management. The evaluation shall be carried out by filling up the vendor evaluation form & vendor
rating from.
The form is to be filled in by the sites; purchase department; quality assurance team. An average
score is to be worked out of scores given by sites; purchase department; quality assurance
department & accounts departments
Vendors will be evaluated on four key parameters on a weighted average scale (totaling to 100
points)

 Price – preferential price treatment,

 Efficiency in delivery – ability to supply within a short notice apart from the normal lead
time delivery,
 Ease in dealings – Responsiveness to BEST ENTERPRISES issues, complaints, pro activeness
in dealings, billing errors
 Consistent quality

The evaluation will be carried out based on consignments received during the applicable half
financial year. Vendors to be stratified as Grade A; Grade B, Grade C vendors respectively.

PREPARED BY VERIFIED BY APPROVED BY

K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 6 of 7

 Best Enterprises ISO 9001:2015
Quality System Procedure

PURCHASING PROCEDURE
Procedure No: BE/PRO/019 Rev No: 1.0 Rev. Date: 11/06/2019

Vendor Grades Decision Action

Grade A Retain Give bulk of business

Grade B Retain Ask for further improvement

Grade C Discontinue De list

Discussions will be held with Grade B vendors by Purchase Incharge on a proactive basis to
determine the root cause and initiate corrective action. Based on vendor ratings, management may
decide to re-allocate business shares to vendor with high performance levels. No vendor (for an
item) will be de-listed without prior intimation to the respective user department
Manager/Purchase and vendor itself.  The vendors de listed will need to follow the vendor
registration process for being re-considered as approved vendors, if they so desire. Purchase
Incharge hall forward the rating report to the Manager and CEO.

6.10 Material Bill Passing

The Purchase/QA engineer will receive the 1st copy of PO from vendor for the material supplied. He
will verify it against the Purchase materials. This will be entered in GRIN entry module of the
system to work out the bill amount to be paid to vendor.  The vendor will send the bill. Bill passing
department will verify the bill. After verification of the bill according to the PO qty & rate, invoice
entry will be made in the system. Once the bill is passed, it will be forwarded to the accounts
department for releasing payment. Accounts department will review the invoice and release the
payment.

7.0 RETAINED DOCUMENTED INFORMATION

7.1 Purchase Order ( QMS F 067)
7.2 Vendor Registration Form ( QMS F 068)
7.3 Vendor Rating Form ( QMS F 069)
7.4 Vendor Evaluation Form ( QMS F 070)
7.5 Comparative Rate Chart ( QMS F 071)
7.6 Production Procurement Schedule ( QMS F 072)
7.7 Corporate Procurement Plan ( QMS F 073)
7.8 Lead Time Chart( QMS F 074)
7.9 Receipt and verification/ raw material( QMS F 075)

PREPARED BY VERIFIED BY APPROVED BY

K.THANGAMANI M.PRABAGARAN M.PRABAGARAN

Confidential: For Internal Use Only Page 7 of 7