The procurement function is one of the most important and critical function contributing towards the overall success of any company. This manual of “Procurement Policies & Procedure” is a tool to help the company follow a prescribed path of simple and effective control, which is essential to achieve competitive procurement. The policies and procedures will clearly define responsibilities and authorities at various management levels.
The following are excluded from the scope of this Policy:
o Petty Cash Purchases
o Telephone, Fax and Telex Bills
o Electricity Bills
Standard Procedures for Purchases
· The procurement requirement is initiated by the “Originator” who can be either a member of warehouse team responsible for inventory management or the end-user in case of non-stock materials and services requirements.
· The process starts normally when the originator raises a purchase requisition (PR) and details the specification of the goods/ services required.
· The purchase requisition passes through the approval process
· PR must be approved by the Department Head of the originator
· Every PR must be approved by the Finance Department
· Every PR must be approved by the General Manager
· PR for an amount of more than SR 10,000 must be approved by the CEO
· After all the approvals it will be sent to procurement department where the procurement staff will assign an approved PR number. The procurement department receives the original PR and acts according to the nature of the requisition:
· In case of a new item, procurement department first will search the market for vendor(s) selection and then send them requests for quotation.
· In case of a new item from the already selected vendor(s), the procurement department will send directly to those vendor(s) a request for quotation
· In case of items with approved price list from the selected vendor(s) the procurement department will proceed directly with the preparation of Purchase Order for the vendor
· Upon the receipt of quotation from the vendor(s) the procurement department will prepare a “Bid Evaluation Summary” in which all the quoted prices from the vendors will be compared.
· If purchase value is more than SR 5,000/- at least two quotation must be acquired from the vendors
· If purchase value is more than SR 10,000/- at least three quotation must be acquired from the vendors
· In the cases where three quotations will not be available and the order value is more than SR 10,000, the procurement department will then apply for a waiver of the requirement to obtain three quotations by completion of “Three Quotations Waiver” form
· This Bid Evaluation Summary will then be sent to the originator for his review of prices and the specifications of the items quoted by the vendor(s). He will choose the vendor considering the price and the specification of the items.
· The Bid Evaluation Summary will pass through the level of authorities
· The procurement department will finally prepare a purchase order and send to vendor to confirm placing the order.
Standard Procedures for Purchase Return
· If some items ordered are not as per the quality specified in the Purchase Order, storekeeper will not prepare its GRN.
· If GRN is issued and later on some issue regarding quality is disclosed, it will be reported to the procurement and Finance department. Procurement department will take immediate action to communicate the supplier about the issue and make necessary arrangements to return the goods.
· If payment is not made by the Finance Department, it is their responsibility to hold the payment for that particular shipment.
The following basic criteria must be considered prior to selection of vendors.
1. Goods and services must be available from the vendor on demand without any undue delay as this may adversely affect the Company’s operations
2. The prices must be competitive with those of other vendors offering goods and services of a similar quality.
3. The quality and unit order specification must be consistent.
4. The “lead time” between ordering and delivery must be as short as possible to minimize the necessity for carrying high stock inventory levels.
5. Credit terms should be negotiated in the best interest of the company.
6. Vendors should, wherever possible, be Saudi Arabian companies or have a presence in KSA.
Standard Policies and Procedures
- Standard Purchasing Policy in Saudi Arabia
- Policy for Payment to Suppliers
- Ticketing Policy in Saudi Arabia
- Vacation Allowance Policy in Saudi Arabia
- Vacation Policy in Saudi Arabia
- Overtime Policy in Saudi Arabia
- End of Service Benefits Policy in Saudi Arabia
- Advances to Employees Policy in Saudi Arabia
- Standard Medical Policy in Saudi Arabia
- Standard Policy Regarding Iqama Transfer Fee
- Standard Recruitment Policy in Saudi Arabia
- Standard Petty Cash Policy in Saudi Arabia
- Standard Sales Policy in Saudi Arabia