scm manual -ksc

8/18/2019 Scm Manual -Ksc

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ALKAWN ALSAUDI CORP

SUPPLY-CHAIN MANAGEMENT

Manual


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Table of Contents

Table of Contents TABLE OF ABBREVIATIONS.............................................................................. I

1. INTRODUCTION ............................................................................................................. 5

1.1. USE OF THE SCM MANUAL ................................................................................. 5

1.2. ALKAWN ALSAUDI CORP(KSC) .......................................................................... 5

1.3. PRODUCTS HANDLED ......................................................................................... 5

1.4. GENERAL FUNCTION OF SCM DEPT ................................................................. 7

1.5. RESPONSIBLITIES OF SCM DEPT...................................................................... 8

2. WORKFLOW & PROCESSES ........................................................................................ 9

2.1 ENQUIRIES …………………………………………………………………………9

2.1.1 Acknowledgement of Receipt of Enquiry ....................................................... 9

2.1.2 Regretting Enquiries....................................................................................... 9

2.2 WORKFLOW OFFERS .................................................................................... 10

2.2.1 Time for Preparation .................................................................................... 10

2.2.2 Documents for Offers ................................................................................... 10

2.2.3 Offer Format ................................................................................................. 11

2.2.4 Price Working Sheet .................................................................................... 11

2.2.5 Inco Terms ................................................................................................... 11

2.2.6 Verification of Delivery Times....................................................................... 12

2.2.7 Communications with the Customer ............................................................ 12

2.3 ORDER PROCESSING .................................................................................... 12

2.3.1 Definition ..................................................................................................... 12

2.3.2 Issuing of Approval Documents ................................................................... 13

2.3.3 Creating the sale order ................................................................................. 13

2.3.4 Issuing PO.................................................................................................... 14

2.3.5 Order Acknowledgment................................................................................ 15

2.3.6 Follow-up ....................................................................................................15

2.3.7 Dispatch ....................................................................................................... 16

2.3.8 Documentation ............................................................................................. 17

2.3.9 LC Handling ................................................................................................. 17


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Table of Contents

2.4 SERVICE .......................................................................................................... 18

2.4.1 Credit Notes for Service Claims ................................................................... 18

3. GENERAL RULES & GUIDELINES ............................................................................. 19

3.1. ESCALATION MANAGEMENT ............................................................................ 19

3.2. PRICE INFORMATION OF COST PRICES & MANUFACTURING COSTS ........ 19

3.3. FOUR-EYES PRINCIPLE .................................................................................... 19


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I

TABLE OF ABBREVIATIONS

Abbreviation Meaning

CSC Customer ServiceCentre

ELC European Logistics Centre

GM General Manager HoS Head of Sales

L/C Letter of Credit

LOI Letter of Intent

MC Manufacturing Costs

NPP Net Purchase Price

NPS Nuclear Power Station

NSP Net Sales Price

OC Order Confirmation

OPUR Order Purchase Requisition

SCM Supply Chain ManagementHoD Head of Department

AM Assistant Manager

CBB Cross Border Business

FC Forecast

FICO Finance & Controlling

GA Drwg General Arrangement Drawing

HQ Head Quarters

KPI Key Performance Indicators

MD ManagingDirector

MM Material Management

PO Purchase Order

PP Production Planning

OE Order Processing Executive

OI Order Intake

PE Project Engineer

PM Plant Manager

QAP Quality Assurance Prior

Sales Rep Sales Representative

SD Sales & Distribution

SE Sales Engineer

SM Sales Manager

T&C Terms & Conditions

TDS Technical Data Sheet

WM Warehouse Management

WO Work Order


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1. Introduction

1.1. Use of the SCM Manual

The SCM Organization Manual serves as a working basis for the employees in the

Supply Chain Management (SCM) Department of AL KAWN AL SAUDI CORP.

It contains all essential information on structures, work processes, rules and guidelines needed for employees in the SCM Dept.

Moreover it is to be handed out to all employees as a hard copy at the time ofpublishing of revisions and to any new employee of the department at the time of joining. The Organization Manual is intended for internal use only and must not be made available to any person outside the KSC

1.2. AL KAWN AL SAUDI CORP (KSC)

KSC provides a wide range of high quality products and services geared to our

customers’ specific needs and requirements. Al Kawn Al Saudi Corp (KSC) wasestablished as a trading company during 1977 to act as a representative office of some ofthe best UK, European and American companies for the Kingdom of Saudi Arabia andneighboring GCC states. The operation is basically to sell the products on behalf ofoverseas companies on exclusive representation basis to the wholesalers on directorders to the manufactures. In order to achieve our objective we are continually re-engineering, reevaluating and reinventing the way we do business in order to provide thebest value solutions to our customers. A promise given is a promise kept. We understandcustomers’ needs and strive to fulfill and exceed customers’ expectations at all times.

1.3. Products Handled

1- VAG Group

Products manufactured by VAG group companies VAG, GA Industries, Rodney Hunt /

Fontaine & KLAMFLEX

i. Gate Valves(flanged and socket type)

ii. Knife Gate Valves and Penstocks

iii. Hydrants

iv. House Connection Valves

v. Non-Return Valves

vi. Butterfly Valves

vii. Air Valves

viii. Control Valves

ix. Accessories


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2- UTS Engineering Limited – UK

i. Straight Couplings

ii. Stepped Couplings

iii. Flange adaptors

iv. Under pressure teesv. Repair clamps

vi. Dismantling joints

3- WEG Motors - Brazil

i. Single-phase, open drip proof and totally enclosed fan cooled induction electric motors.

ii. Three-phase AC motors, open drip proof and totally enclosed fan cooled, squirrel cage

and slip ring, low voltage induction electric motors.

iii. Three-phase AC motors, totally enclosed fan cooled, squirrel cage, low voltage induction

electric motors, explosion proof motors.iv. Low voltage AC/AC and AC/DC drives, soft starters.

4- Pentair Pump Group – USA

a) Pumps for Water and Wastewater

b) Pumps for Commercial HVAC / Plumbing

c) Pumps for Industrial Process

d) Pumps for Fire Protection

5- Liestritz Pumps - Germany

a) Twin Screw Pumps

b) Triple Screw Pumps

6- REXNORD Couplings

7- Enerfin Inc. Canada

a) Generator Coolers

b) Motor Coolers

c) Transformer Coolers

d) Bearing coolers

e) Hydrogen coolers

f) Shell & Tube heat exchangers

g) Furnace Coolers

h) SCR

i) Other heat exchangers manufactured by Enerfin


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1.4. General function of the SCM Dept

The Supply Chain Management (SCM) serves as the interface between the Customerand Sales with all major internal departments like Production, Quality, Logistics, De- signetc. for all pre- & post-order processes like sales support, order processing and servicehandling.


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2.4. Responsibilities of the SCM Department

The major responsibilities of the SCM Department can be classified as per the following:

a.b.c.

Sales Support Order Processing Service

(Pre-Order Process) (Post-Order Process) (Handling of Claims)

e.f. ForecastingInternal (Turnover) (Financial, SCM,Management, etc.)

The following key responsibilities fall under the above mentioned categories:

a) Sales Support

• Enquiries & Offers handling

• Application Engineering & Technical Sales Support

• Vendor Approvals

• Customer Visits

• Conducting Presentations & Trainings (internal & external)

• Organizing sales relevant Special Events

• Assisting in Marketing Issues

• Project follow-up

b) Order Processing

• Dispatch planning and coordination

• Handling Orders

• Order Clarification

• Arranging and Coordinating Inspections

• Documentation (for Enquiries/Offers & Order Execution)

• Processing of returns and credit notes

c) Service

• Handling Service Complaints towards the clients

• Coordination of Service Activities

d) Reporting

• Reporting to the Management

• Reporting to Controlling

• Reporting to Sales

e) Forecasting

• Conducting of Dispatch Planning Meetings

• Forecasting of Turnover

f) Internal Support

• Training of new sales employees


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2. Workflow & Processes

2.1. Enquiries

The SCM Dept. receives an average of 20-30 enquiries per month. This does notinclude small enquiries for standard products which are quoted as per the offersreceived from the suppliers by the sales staff directly and don’t necessarily reach theSCM Dept. How- ever all project offers are worked out and handled by SCM incoordination with the sales staff. It is in the scope of sales to decide whether an enquiryshall be handled by the SCM Dept. or not.

Figure 5 - Enquiry Workflow

2.1.1. Acknowledgement of Receipt of Enquiry

The PE of SCM shall acknowledge the enquiry within 1 working day from its receipt to thesales/client. The acknowledgment shall contain the contact details of the person workingon this enquiry and the expected day of submission.

2.1.2. Regretting Enquiries

Enquiries may be regretted e.g. in case KSC suppliers doesn’t fulfil the specifications ordoesn’t offer the product enquired. In such cases the offer is to be regretted within 3


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working days to the client in writing. An offer can only be rejected after approval from byHoD and generally an alternative offer shall be made if the products meets the application requirement.

2.2. Workflow Offers

Within the SCM, quotations are worked out by the respective Project Engineer in charge and subsequently sent to the respective sales person.

Study the specifications and list out the points which deviate from standard specifications in a deviation list.

Clarify all technical issues with the concerned sales person or with the clientdirectly.

Prepare the price working sheet as per the standard format Prepare the offer as per the standard format Prepare the deviation sheet as per the standard format Prepare any additional technical support documents

Sign the offer and get it checked and countersigned by a second person asper the signature rules applicable

Send the offer along with the deviation list to the respective sales person, or if

instructed by the later, send it directly to the client Register the offer in the Offer Registry File all pertaining documents on the server on SCM hard drive according to the

SCM filing guidelines (see General Rules & Guidelines) Upload the enquiry and the offer in the CRM system

The overall technical and commercial responsibility for an offer lies within theconcerned Project Engineer. This is particularly valid for the correct workout of thecost prices of the products as well as the detailed analysis of the specifications. Alloffers shall be counterchecked by a second person, and sales representative shallgenerally be asked to cross check the offer before submitting.

2.2.1. Time for Preparation

The standard time for preparation of an offer should not exceed 3 working days. This isapplicable for all offer for standard products with a value of less than 60lakhs INR (~100t€). The SCM PE has to inform the sales person in case the projected time for preparation of the offer is longer than this.

For project business which includes Design or Quality support or which exceeds a value of 60lakhs INR (~100t€) the time for preparation of offers should range from 5- 10working days. In any case the PE shall inform back to the sales and/or client about theexpected time of submission of the offer.

2.2.2. Documents for Offers

Offers are worked out by the PE in charge and comprise the following documents:Offer as per the standard quotation format with cover letter and all terms and conditions

(Annexure - 1)

Price calculation sheet of the standard format (Annexure - 1) This calculation sheet isonly for internal use and to be send to customers

Deviation List referring the specifications of the client

Supporting technical documents (Reference lists, flow calculations, GA Drawings, designcalculations, according to the requirements and project size)


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2.2.3. Offer Format

There is a standard offer format which is to be followed for all quotes. (Annexure 1 – OfferDocuments) If offers are prepared by the help of the Leego Builder software, all essentialoffer terms are entered while creating the offer. In case the offer is prepared manually withthe word format the following terms are most essential to be mention in the offer:

Customer Names and Address ContactPerson at KSC (Sales & SCM) Quotation NumberQuotation Date Referenceof enquiryType of offer (Budgetary / Competitive) Validity of OfferShipment Terms & Conditions DeliveryPeriodPayment Terms & Conditions Currencyof priceDeviation from SpecificationsUnit wise price break-up with detailed specifications Warranty Term

2.2.4. Price Working Sheet

There is a calculation sheet which is to be filled in and filed along with each offer. It contains the calculated cost prices and clearly lists out any additions like packing and freight charges, commissions as well as the sale price and profit margin. The calculationsheets has to be signed along with the offer before offer submission by the PE and asecond person as per the signature rule.

2.2.5. Incoterms

Table 8 - Inco Terms


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2.2.6. Verification of Delivery Times

Calculating or estimating the delivery time requires intensive knowledge on the supply routes and background of the suppliers. Minor deviations from standard specifications might lead to prolonged delivery times and the PE in SCM is generally required to check the delivery period for each and every project offer individually with the supplier.

For all other products not mentioned in the delivery matrixes, the PE relies on offers toestimate the delivery period. The general guideline to calculate the delivery after havingobtained the EXW delivery time from the respective suppliers.

2.2.7. Communications with the Customer

Generally the communication with the customer is under the responsibility of sales. As general guideline the sales representative shall be following up with the customer for allsorts of clarifications on the technical and commercial issues that may arise during aproject. The SCM employee specifically shall not send offers or price information to customers unless specifically agreed with the concerned sales representative. This is toavoid issues of confusion with prices and commitments which might have been dis-

cussed with the sales person not known the SCM employee.

An offer is generally to be submitted through the concerned sales representative or, if requested by the sales person, it can also be send directly to the customer, marking a copy to the sales person.

2.2.8. Workflow in CRM

The entire CRM workflow concerning enquiries, offer and project tracking is available inthe CRM manual; and SCM forms an important part of it. E.g. the Project Engineer in theSCM holds the responsibility to register the enquirer, enter enquiries into the SalesOpportunity and to upload the offer into CRM. The CRM workflow is strictly to be followedand forms an essential part of the responsibilities of the employees in the SCM Dept.(For details refer Annexure – CRM Manual)

2.3. Order Processing

2.3.1. Definition

Orders are divided into stock orders and trading orders. These specify whether thegoods at stock or to be manufactured.

The process starting from the receipt of confirmed order until its dispatch is known as order processing and the following chart describes the steps involved from SCMperspective:

The process of order execution for orders requires the following steps, for which the

Order Executive is responsible in SCM:

Check of POIssuing of ApprovalDocumentsCreation of Sale OrderPo to Suppliers (if required)Issuing of the Order AcknowledgmentFollow-up for delivery schedule & process documentsDispatchDocumentation


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2.3.2. Issuing of Approval Documents

Most of the customer orders require a manufacturing approval by the end client or theConsultant before commencement of manufacturing. With the approval of certaindocuments the customer confirms technical data and specifications according to which theproducts shall be manufactured.

A sample set of Approval Documents can be found under Annexure 2 – Approval Documents)

It is the responsibility of the PE or OE to coordinate with the Design department for therespective documents to be submitted to the client. The PE in SCM has to follow upwith the customer to receive back the duly signed and stamped approval, which enables the company to start with the procurement and the manufacturing of the products.

2.3.3. Creating the sale order

Sales rep will receive Sale Order No from the supply management and issue theSale Order with all the details to SCM department to process the order


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The commission rates and amounts have no effect on the sales price but only show the values included in the calculation. Once the document has been invoiced, a com-

mission credit memo has to be prepared.

For further details on handling of the SAP while entering a customer order, please referto Annexure 3 – SAP Manual.

2.3.4. Placing PO With respect to the quotation received from the supplier, negotiate and place theorder after confirmation and approval from the HoD.


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Figure 14 – PO Format

2.3.5. Order Acknowledgment

An order confirmation stating all techno commercial terms as well as the confirmeddelivery dates is to be issued to the customer by the SCM employee within three daysafter receipt of the customer order. Delivery dates which are not confirmed are not to begiven to customers as they are binding contract agreements. The customer is to beinformed in writing, if issuing of the order acknowledgment takes more than theabove mentioned three days’ time.

2.3.6. Follow-up

At KSC, adherence to delivery dates / on-time delivery rate is measured as a key per-formance indicator (delivery performance). It is measured for each order/contract andrecorded automatically in SAP.

Measuring begins as soon as the document in the SAP message control either initiates the print preview of an order acknowledgment (order confirmation) or by sending of anOC to the archive, to the sales rep or to the customer through SAP. The printout to thesales rep is excluded in this case and no measuring is effected here.


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Once the order acknowledgment has been processed, all subsequent adjustments (re- scheduling) of delivery dates will not affect the delivery performance measurement of on-time delivery.

It is the responsibility of the OE in SCM to continuously follow up with the procurement and the production planning department, to make sure the confirmed delivery

dates are finally met. There are weekly dispatch planning meetings to discuss the cur- rentstatus of the projects to monitor and steer the dispatch and turnover planning. Thecustomer shall be informed in writing of any delays of more than a day time.

Similarly like the internal follow up with the production planning there is a follow up withthe customer. The sales respectively the customer is to be informed about the plannedreadiness of goods and to be and followed up for all required process documents likee.g.:

LOI / confirmed PO Approval documents Contract Amendments Advance Payment, PBG

LC / LC swift message Road permitDuty exemption certificate Etc.

2.3.7. Dispatch

The dispatch process is described on the following chart:

Figure 15 - Dispatch Process

The most important steps in the dispatch process are:


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Packing clearance: The packing clearance should be given by PE/OE to Production, Logistics & Qualitydepartments along with Work Order from SAP System and Purchase order 1-2 days be-fore the planned dispatch by considering the following:

Checking for availability of all valves Clearance from Sales

Dispatch Clearance: Dispatch clearance should be given to Production, Logistics & Quality departmentconsidering the following checks

Final check for any changes in DeliveryConditions Clearance from ProductionClearance from Accounts / Finance for Payment

2.3.8. Documentation

Documentation is an important post-dispatch responsibility in SCM. The OE of SCM has to collect several documents from respective manufacturer send them to therespective sales representatives or to the customer directly as per the following chart:

Internal Sale Order Purchase Order Dispatch IntimationCommercial Invoice DeliveryChallanPacking ListTest Reports & Inspection Release note (In case of Third Party Inspection) WarrantyCertificates

2.4.1. LC Handling

Orders with value more than 1,000,000 SAR are generally executed based uponthe payment term Letter of Credit (LC). An LC is a payment guarantee for the supplierto receive the respective payment against submission of the papers as per the LCagreement and general terms and conditions. Irrespective of any changes the supplierhas the right of encashment of the LC amount against the submission of the papers tothe respective bank. This secures the payment even under events which may have asevere impact on the project such like:

Order Cancellation

Bankruptcy of the buyer

Unforeseen delays

Conflicts between buyer and supplier

Handling of an LC involves 4 parties:

Buyer (Applicant)

Buyers bank

Seller(Beneficiary)

Sellers Bank


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The following chart describes the process / interrelation between these four parties:

Figure 19 - Documentary Credit Cycle

Generally KSC requests its customers to open an LC before commencement ofmanufacturing during the initial stage of order execution. Nonetheless, as it is uncommonin to issue an LC in advance, KSC gives liberty to its customers to open the LC sharplybefore the dispatch, i.e. latest 4 weeks before the inspection. The SCM PE is tocoordinate with the sales and/or customer for the opening of the LC. The PE shall requestthe client to open the LC along with issuing the invitation letters for inspection. For thispurpose there is a LC requisition form which helps the customer to fill all the fields ofthe LC correctly while opening the LC at his bank.

2.5. Service

One of the business segments of KSC is Service and is dedicated to providing the highest quality workmanship and quick feedback service to its clients. KSC provides customer oriented services in the field of claim management, commissioning, installationand refurbishment of valves. In this chapter only the claim management shall be explained as the other processes are either already covered in the regular process of enquiry and order processing, or they are handled by the service departmentindependently.

Procedure for Complaint Handling:

Customer ComplaintServicing the valves based on the customer complaint.Close the issue after service.

2.5.1. Credit Notes for Service Claims

A credit note is a commercial document issued by the seller to the buyer to confirm thecrediting / reimbursement of money for goods and services which have not been received or have been returned. A Credit Note normally corresponds to a particular invoice which is referred in the note. It lists the products, quantities and agreed prices for


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products or services which had been returned or were never received. It may be issuedin the case of damaged goods, errors or allowances. Usually it references the originalInvoice and sometimes states the reason for issue.

It falls under the responsibility of the SCM employee to issue a credit note in case of a reimbursement to the customer. In any case the credit note has to be approved by theHoD and needs to be counterchecked and signer by the Head of Finance department.

2.6. Forecasting of turnover

The HoD of SCM is responsible for the planning and forecasting of the monthTurn- over.

The dispatch plan is one of the most important tools used to monitor and planthe turnover (shipments) from the backlog of orders.

3. General Rules & Guidelines

3.1. Escalation management

Generally any employee is instructed to work for the common company goal to satisfy theclient requirements best possible.

In the event of any kind of critical conflict situations or heated situations employees in

general shall thoroughly try to resolve the issues in a win-win manner between all

parties. If such attempts have failed, it is the primary responsibility of the employee to

inform the superior and not to create or involve in further conflicts. The employee shall

inform his/her superior immediately in such cases and ask for help.

Similarly if an employee faces or foresees a specific situation which might create severe

discord with a client or with the concerned sales representative he/she shall inform

his/her superior. The employee is not advised to argue or fight out any conflicts, neither

with KSC internal people nor with external people like clients and suppliers unlessspecifically asked to do so by the superior.

However there are usual business-processes which might lead to discussions or dis- pleasure on any side (internally or externally) which are not regarded as reason for escalation, such as technical and commercial negotiations.

3.2. Price Information of Cost Prices & Manufacturing Costs

Cost Prices & Manufacturing Costs shall generally not be informed to any customers or agents. The sales people shall not be furnished with cost price lists except for General Managers and the Managing Director.

3.3. Four-eyes principle

All binding documents prepared and signed by an SCM employee shall be checked and

countersigned by a second person of same or higher hierarchy level. This is to minimize

failures and flaws which could possibly be overlooked during preparation of such

documents. This rule applies to all commercial contract documents such as:

- Offers- Sales Contracts- Order Confirmations- Invoices- Credit / Commission Notes