PROCUREMENT PROCEDURE & STORES/LOGISTICS IMPLEMENTATION

 UAE – NIGERIA - SINGAPORE  Delivering Best Practices

Pradeep Balakrishnan    I   Logistics Support/Stores Mgr    C.S. OffshoreNigeria. I  Mob: + 234 7031885622 ; + 234 8060110666Email:pradeep@cs-offshore.com  www.cs-offshore.com

CONTENTS1. Introduction2. Basic Principle Implementationa) Morning meeting & Morning Reportb) Lube oil and consumable requirement. Planned

Project purchasingc) Dry Ration and perishable requirement.d) Critical spares requirement. 3. Implementing coordinated supply planning.(Through

PMS)4. Warehouse Planning / Inventory updation.a) Plan -Ab) Plan-B 5) Logistics & Shipping6) Transportation7) Other Related Issues8) Conclusion

IntroductionWe hereby take a opportunity to present a set of procedure for your recommendation to integrate effectievely between Procurement , Logistics and Stores Division.

Logistics division in CS Offshore have Identified few bottle Necks in our local, International purchase, Stores and logistic system. These constrains are carefully reviewed and analyzed and presented in various section of this project report.

In the first few slides we have explained basic principles which needs to put in place for Logistics' and store department to perform the roles with better communication, cohesively work with other departments to achieve a desired output. These basic principles enables our department to act on first hand information to achieve required goals and serve a better operations.

In this project ,we have emphasized a procedure of how the store / purchasing department works and what are the necessary steps to be taken to ensure that all your requirements can be full filled in the very short period.

These procedures are very necessary because of the poor profile of the local market supplies and Logistics difficulties.

Please go through the literature and if you have any suggestion , revert back on pradeep@cs-offshore.com

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Basic Principle ImplementationKeeping in mind company policy and operational procedure, I would like to recommend upon a few Basic principle to be strictly adhered thereby departments such as Procurement, Logistics and stores could work effectively on daily basis.

A) Morning Meeting & Morning Report Requirements1) It is noticed that we are conducting morning meeting but without a “Morning report”. 2) The Morning Report should be made available by email prior to meeting.3) The discussion in meeting should cover all vessels as per the Morning report.4) The Morning Report should have following fields in sequence 1. Vessel Name, 2.

Capt/Ce name3. Owner 4.Location .FOB 4. LOB 5. Location 6. Charterer Name 7. Remarks Colum.

Advantages5) The Report is attached for your reference in the next slide will enable us to discuss on

all vessel performance in the morning meeting6) The Capt /Ce and Owners are optional however they could provide necessary details

during operational and approval requirement arises time to time.7) Location and client provides the Logistics department effective planning to ensure

the spares are delivered in time when the vessel is at port. To prepare Freight details for charterer for delivery .This also helps necessary transport requirement for personnel movement protocol.

8) Fuel on board allows Operations to calculate daily consumption and highlight any variation and reporting.

9) Lube oil onboard allows technical dept to analyze daily consumption and report procurement / reserve/as marked in red.

10) Remarks Colum plays a vital report for all department , as shown in ashadeep in the slide. If the water pump is faulty we could identify the problem and initiate the process on immediately and once the issue is solved they can be removed from the morning report. This tech issues should made available in defect report in VDR . Other issue such as personnel sick on board should be highlighted in remark Colum and removed on next day M.R if actioned.

11) This report should be prepared by Samuel on Daily basis and presented in morning meeting.

B) Lube oil and Consumable requirements.Lube oil and consumable items are to procured under following conditions (Recommendations)1. Lube oil request should be forwarded only when the onboard level falls below 500 Liters.2. If there is oil change sufficient time (both Aux and Main eng) should be provided for

procurement process.3. When lube oil procurement approval is in process parallel Intel's crane approval should

also be taken by procurement dept from the owner. This would avoid unnecessary delay after procurement. However if client is doing the lift then we may not require approvals

4. If the contract with the charterer is re-billable then we have to necessitate the rebilling procedure.

5. Since are vessels are operating within oil and gas region and also considering the procurement delays the vessels should order all consumable spares (deck and engine spares) once in a month. This will considerable reduce the number of requisition and repeation /duplication.

C) Dry Ration and Perishable Foods.6. Dry ration should be requested monthly once , (ie) 7 days prior to beginning of the month. 7. Perishable food should be requested every mid week of the month (twice optional)8. The ration fund should be splited as 65 % for dry ration and 35% for perishable.9. Monetary approval for one month food should be provided to operations to avoid MLC

issues.

D) Critical Spares1. Critical spares can be order as per the requirement how ever note consumable cannot be

considered as critical spare. All tech details to be provided in the event of ordering spares to avoid necessary delay and dispatching a wrong shipment.

Implementing coordinated supply planning

4) Warehouse Planning /Inventory updation. Presently we have a very poor infrastructure for Warehouse and there is a no proper

inventory taken for any of the consignment shipped into the country. I have been facing serious constrains trying implement standard procedure. Record Keeping is one more point of concern.

I hereby request the management to approve any one Plan mentioned below with immediate effect for setting up a proper warehouse and ensuring the location are identified and relatively the spares updated in PMS.

PLAN –A Purchase of 3 fairly used container (40 ft). Construction of rack and shelf inside the container. Purchase of one 20ft container for Store/Crew office Preferred Location Intel yard at Flt Onne free port zone Cost of Intel per yard is Usd162.65sqm/Annum adimn charges inclusive Standard out let 500 sq mt however I am negotiating for 200 sq mt . Confirmation next

week. Please find attached quotes for Intel yard as annexure. Cost of 40 ft appx 400000 Naira and 200000 for material , repair cost total cost 4800Usd/

Cont appx

Benefits of Plan –A1. Cs offshore would be operating within Oil and Gas free zone2. All consignments could arrive at Free port zone and does not get hold at Lagos customs

when addressed as “SHIP SPARE IN TRANSIT” Onne Free zone3. Customs clearance process is simplified through free zone office.4. Access Pass for one year will be issued to Tech, Supdt and other CS offshore personnel.5. Transportation cost of spares will be greatly reduces as DHL delivers directly at FLT.6. Any vessel critical requirements and repairs can be attended at all times.7. Stock transfer from stores to vessels could be carried out with much ease.8. Crewing Personnel movement in vessel and issues can be handled more efficiently.9. Accommodation for shore base staff available at Prodeco camp and Notore10. Prodoco camp charges are 102000 Usd for 50 sq mt /Annum.11. Notore charges are cheaper 76000 Usd for 3 bed room 119 sqmt/Annum12. Notore is 10 minute drive to FLT and FOT13. Both quotes are attached for your reference separately for your reference.14. Dry dock /other spares can be imported duty free if the vessels dry docking is done out

of country.15. All visa can be processed through free port zone and issues related to immigration can

be minimized. Demerits Purchase of container , Intel's yard and accommodation could prove expensive

for initial set up.

PLAN-B We need to purchase 2 units of fairly used 20ft container. As per

Dwg Con 2&4 Carry our Rack and shelf location as shown in Plan A Preferred location is our office in Birabi st To be stacked on the top of the existing container Stair way Fabrication to be carried out. Since the space may not be sufficient we may have to fabricate 2

enclosure These two enclosure are determined and drawing attached in

next slide The repaired existing container is inferior quality ,design and

cannot carry load or optimum usage of space cannot be accomplished.

Storage 6 and 7 are to be fabricated. Existing available storage area are Cont 1 , 3 and 5.DemeritsConstruction has to be carried out in rented space.Imported consignment will have existing constrains with customs at

Lagos.Transportation of spares and personnel is additional cost.

5. Logistics and Shipping For a Marine operation we need to have a efficient logistics dept. and local

shipping agents. (@PHC) Following are the requirements.1) All imported consignment (Critical spares) should arrive at Local shipping agent.2) The imported consignment should be duly addressed with Vessel name .3) Lube oil shipment should arrive at Shipping agent premises with proper TN.4) All Local supplies should be put on stage inventory area (or) sent to shipping agent

by the supplier after quality /quantity confirmation from the buyer /Tech supdt.5) A copy of morning report with vessel location should be forwarded periodically or

daily to Shipping agent for ensuring the spares are delivered to vessel at Port as per report. Shipping agent should branches internationally to receive consignments.

6) Imported consignment customs clearance should be processed by local shipping agent.

7) A annual contract with the shipping agent has to established and local shipping agent will be responsible for any theft and damage during shipment to vessel or stacking area. Local agent should posses hydro carbon certificate for lubes at Port

8) All shipping instruction should be copied to the shipping agent to track the consignment and deliver at best possible time.

9) I have requested a quote from Murphy shipping and Procurement is co-coordinating with Red transport. Murphy should be submitting their quote by 05/01/15.

10) Lubes loading and local lift , trucks , stacking area and manpower will be provided by shipping agent.

6) TransportationCurrently the plight of transportation department is not to the standards.

Following are my observations1. The pool cars are not capable to transport Personnel and material to Onne.2. We always resort to renting a car for onne trip.3. The rented cars cannot carry spares with size more than 3 x 3 ft since the

boot space is very limited.4. This results in renting a pick up to delivers spares in the same location in

onne.5. A good sum of money is spent in renting and in repairing the pool cars.Suggestions. It is advisable to lease couple of Toyota Pick up high end under renewable one year

contract. The leaser will supply a brand new pick up as per contract. The Leaser will bear all expenses during on repairs and maintenance. In case of accident the leaser will liaise with the Insurance for necessary repairs The leaser will provide a alternative vehicle in the event of breakdown The pick up being sturdy vehicle serves 2 purpose carrying 4 to 5 passengers and

spares for all vessels at port. Please find attached quote of the vehicle and request procurement to have 2 more

quotes as per terms and conditions should remain same. Best deal can be taken out of three quotes.

7. Other Related Issues1. Getting best deals from OEMs. In Nigeria we do have OEM dealers however they charge 35% additional cost on spares

however the since we have open market in Nigeria we could spares in local market in much cheaper price. Cat, Cummins, filters are much cheaper in local market . However one should be aware and able to recognize will fit spare.

2. Contract purchasing with the reoccurring suppliers. This is possible for few divisions such as catering and lubes. We can get credit facility

in Oando, Mobil, and West Africa catering in Nigeria.3. Integration of end to end systems. This has been discussed in PMS flow chart4. Real time budgeting and financial reporting. Accounting Dept should be able to assist us on this5. Bulk purchases and storing at discounted rates ( Marine spares,

Lubes, paints, equipment, machinery and consumables. Bulk purchase to be put on hold till will have a proper warehouse facility and logistic

facility6. Approved list of all vendors/suppliers. This should be referred to procurement for a update7. Adhering to time lines from requisitions to final supplies. once PMS is completely active we would be able to regulate req. time line8. Logistics management at various locations. This is discussed in Logistics and shipping slide.

8. ConclusionWarehousing and Logistics are serious concern and I hereby

request you to make necessary recommendations and approvals on priority. I am confident that by implementing the procedure as per the report we could provide quality service to the client and maintain our owners assets at optimum level.

I hereby confirm that all information in the project report are accurate to best of my knowledge.

Best RegardsPradeep Balakrishnan Thampipradeep@cs-offshore.com