HRI 8 /12 MARCH 27, 2012

Standard Operating
Procedures- Purchase
Department
Omni Group

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Table of Contents
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Definitions..................................................................................................................................................4.
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Standard Operating Procedure - Purchases

1. Scope

This document is a standard operating procedure (SOP) for purchasing and receiving for all kind
of material, other than raw material, from vendors. Purchase SOPs and reference methods should
be consulted when necessary.

2. Objective

This document set the procedures relating to the operations of purchase department of various
entities of omni group and to achieve the following objectives:

• Managing purchase cost in a highly efficient and effective manner.

• Implementation of effective control system in order to control leakages of resources.

• Ensuring adherence to the company’s policies, procedures and systems.

• Facilitating coordination and communication amongst the several departments of the

company.

• Aiding in performance evaluation of the staff responsible for the smooth running of the
purchase department.

• Clarify reporting structure and responsibilities.

3. Definitions

a). Purchase Order – an arrangement under which a purchaser (OMNI Group) contracts with a

supplier for ordering items on as-needed basis. It prescribes the contract terms and the maximum

amount of money that may be spent.

b). Invitation to Bid (Quotation) – a written solicitation for competitive bids specifically

defining the commodity, group of commodities, or contractual services for which bids are

sought. The invitation to bid is used when the entity is capable of specifically defining

the scope of work for which a contractual service is required or when the entity is

capable of establishing precise specifications defining the actual commodity or group of

commodities required.

c). Requisition-SPR– form completed by requestor for buyer action when ordering materials not

normally stocked in the mill warehouse.

d). Purchases-tangible items – equipment, machinery parts, fixtures, and other tangible items of

non-expendable nature having a life of normally more than one year.

e). Purchases- non-tangible items –chemical, oil and other expendable items to be used in

running the machinery or processing of sugar

f) End users– requestor, individual who order

g) Highest Authority – highest authority means and includes managing director, group general
manger or any appropriate person considered to be the highest authorityfor the time being
4. Procedure for Purchasing

a) Owners of the process

Following are the owners for different areas of the process

S.No Document / Process Owner

1. Store Purchase Person at site who raise the

Requisition(SPR) requisition

2. Quotation Purchase manager

3. Cost Evaluation (Comparative Purchase manager

Statement )

4. Store Receiving Report (SRR) Store Manager

5. Item inspection Person at site who raise the

requisition and QCI (Quality check
inspector)

6. Invoice receipt Purchase manager

7. Recording of payable Senior accountant

b) Purchase requisitions

i. Obtain a blank purchasing request form from the mill Store.

ii. In the first part of the requisition enter catalog number, item description& detail
specification, quantity required,quantity already on hand, nature of urgency & delivery
time expectation.

iii. Second part of the requisition should have provision to include following information
before calling for quotation :

a)      Number of last Purchase Order for this item and its date.
b)      Particulars of supplier/stockiest/manufacturer who provided the item.
c)      Quantity purchased.
d)      Rate at which purchased.

iv. It is the requester’s responsibility to ensure that requisite item should be based on
budgetary needs and meet the mill’s technical & general requirements for their specific
uses as defined in the appropriate methods, the SOPs and the Quality Manual.

v. The inventory of requisite items must be consulted prior to placing orders for routine
supplies.

vi. For exceptionally or urgent required material, approval by highest authority in the head
office must be requested.

vii. It is the requester’s responsibility to state the justification for purchasing the item in the
requisition form.

viii. Requestor should sign and put the date when need for item arises, on the requisition form.

ix. Submit the purchase request form to supervisor for his approval and then to DGM and
GM for the same.

x. After obtaining necessary approval supervisors will re-check the request form and send
through e-mail or mail to the Purchase Manager.

xi. Complete purchase cycle requires reasonable time, therefore Requester and Store
Manager will give reasonable time to purchase said items.
c) Quotations

i. Purchases of commodities / contractual services with a value of Rs. 100,000 or less will
be carried out using good purchasing practices that may include, but are not limited to
written quotations or written records of telephone quotations. A purchase up to
Rs.100,000 requires two or more telephone / verbal or written quotations. Purchases of
commodities with a value of more than Rs. 100,000 requires more than three written
quotations with comparative statement except proprietary items.

ii. Out of three quotations two must be to the supplier having a satisfactory record in respect
of quality, quantity and price and approved by the company’s management.

iii. Site staff must have a say in the selection of quote but head of purchaseswill finalize the
purchases. In case of difference of opinion R.D will be the final authority.

iv. In case of a written quotation it should be on a prescribed form which includes all the
relevant information like supplier and buyer name, description & specification of the item
along with number of units required, timing and location of supply and mode of
payment& government taxes.

v. Quotation only serves the purpose of quotation and not be the binding agreement.
d) Comparatives / Cost evaluation

i. On receiving the quotes from the supplier, purchasing department prepares a comparative
to analyze pricing, items to be supplied and other terms of the supplier.

ii. Cost must be the preferred criteria for selecting the quote but sometimes quality and other
terms may have a preferential edge over the cost but in that case it should be approved by
the highest authorities at the head office.

iii. On the basis of comparative evaluation of quotes, final quote should be selected based on
the approval by the head of purchases, finance manager and resident director.

iv. Provision of sub Para ii + iii is applicable for purchase orders Valued more than Rs.
200,000.
e) Purchase order

i. On receiving the approved quote, purchase manager approves it and forward it to the staff
for preparing purchase order.

ii. Purchase order should be generated through system.

iii. The purchasing department issues an official purchase order to the supplier of selected
quote after review and signature by the purchase department head. The purchase
department will get the signature from the supplier on the office copy.

iv. Two copies of the purchase order are held in the purchasing department for filing both
numerically by PO number and alphabetically by supplier name.

v. Provision to be made in the ERP system for not disclosing the price of the items to
requester / store.
f) Receipt of items

i. Purchase Manager is responsible for ensuring that all supplies ordered are of sufficient
quality and purity for the intended purpose. He will also make sure that supplier must
deliver the supplies at indicated site within stipulated time mentioned in P.O.

ii. Upon receiving the items in store at site, the store manager/staff will check the packing
list and the items received with the requested form and the PO to make sure items meet
the order’s specifications.

iii. If the item doesn’t match with the request form or the PO, the requestor will contact the
purchase manager who then will contact the vendor to clarify the ambiguity.

iv. Incase if item rejected by the requestor or Q.C.I, it will be mentioned on SRR “As
Rejected” and send it back to HO or supplier along-with Store Return Note within a week
of receipt of goods at side.

v. Apart from the requestor, QC inspector will perform a quality check on the items
received that items purchased meet their intended uses and specifications including
requirements for sensitivity and selectivity as determined by the requester and the
methods for which the equipment is intended.

vi. When accepting equipment and chemicals one must wear the appropriate safety
equipment such as rubber gloves, safety eyewear, lab coat, and long pants. Do
not handle any equipment and chemicals with bare hands.

vii. If all items are accountable in the packing list in the form as desired, requestor will
prepare SRR and sent it to the purchasing manager that site have received all the items as
requested within a week of receipt of goods at site

viii. After completing the checking & quality inspection process, The store
manager/storekeeper will input the orders into the inventory program and the bin cards.

ix. In case of chemical, oil or other hazardous material, it should be stored in the specified
area for such items.
g) Purchase Invoice

i. Purchase invoice, GST Invoice along-with received delivery challan should be received
through any concrete means like courier, ordinary mail or through company based e-mail
for being the genuine invoice.

ii. On receiving the purchase invoice purchase department should match it with the signed
item receipt form, from the site and the respective purchase order.

iii. After finding no difference in the invoice, it should be signed by the head of purchase and
send to the finance department for further processing

iv. In case of any discrepancy from the above exercise, it should be reported back to supplier
by the purchase department for its resolution.
h) Recording in the GL

i. On receiving the invoice from purchase department, finance manager performed the
overview of the requisition and if any clarification needed, enquire from the purchase
manager.

ii. Finance manager after reviewing the invoice, signed it and gave it to accounts department
for entry into system for creation of account payable in case of credit invoice.

iii. In case of Income tax exemption, account department will ask purchase department to
obtain the NTN exemption certificate from supplier. Tax must be deducted if exemption
certificate not provided, this will also apply on advances.

iv. In case of immediate payment, finance manager send the invoice to the treasury personal
for its settlement.

v. After entry into the system, finance department personal print the voucher, attach the
invoice and other requisite document and send it for the initials and review of senior
accountant and finance manager.

vi. After obtaining the initialed voucher, concerned finance staff filed it in the safe physical
custody.

Note: 1. No Purchase Order will be issued without SPR or not completing the above
mentioned procedure.

2. No material will be purchased or delivered to mill without purchase order.

i. Purchasing at site

i. At site a lump sum amount as agreed is provided, through which cash purchases of small
items can be made.

ii. At any one time lump sum amount provided may not be more than Rs. 100,000/-.

iii. Excepting obtaining quotes normal purchasing process will be followed in purchasing of
these items.

iv. Purchasing request must be signed by the person heading the site, respective department
head and the preparer of the request.

v. Purchases at site may be the small item of administrative nature for running day to day
operations at site.
j) Emergency purchases

i. Emergency purchases are required only in cases where it disturbs the site operations and
company have no other alternatives.

ii. In case of emergency purchases normal purchasing procedures can be avoided at the time
of purchases but within the time span of two days all the purchasing procedural matters
must be completed except the quotation.

iii. Emergency purchasing requisition must be prepared as the only document in case of
emergency purchase.

iv. Emergency purchase requisition must be signed by the person of higher authority which
includes CEO, COO of the group or person heading the site.

v. At all-time an essential operational part needs to be maintained at the store department in

order to avoid emergency purchases.

vi. If during the month emergency purchases cross the number of item by ten, then inquiry
will be made which will be headed by the senior personals at the head office, because in
case of emergency purchases no cost evaluation can be made due to the absence of
quotes.
 Procurement Department Hierarchy

GROUP MANAGER

NEW PROJECTS

ASST. GROUP MANAGER

PURCHASE OFFICER PURCHASE OFFICER

DADU ENERGY BAWANY SUGAR

OMNI POWER ANSARI SUGAR
PAK ETHANOL KHOSKI SUGAR
OMNI POLYMER NAUDERO SUGAR
SHIKARPUR RICE MILLS

PURCHASE ASSISTANT PURCHASE ASSISTANT

APPROVALS OF SFC COMMITTEE MEMBERS

 For SOP – Purchase Department

Bashir Ahmed Syed Khalid Ali Anwar

Head of Group Procurement Head of Group HR & Admin

Aslam Masood Khawaja Muhammad Salman Younis

Chief Finance Officer Chief Operating Officer

Khawaja Abdul Ghani Majid

Chief Executive Officer

Khawaja Anwer Majid

Chairman