Material Management

Material Management

Stores

Procurement

Receiving

Purchase

Accounts

Transportation

STORE & PURCHASE I/C (Mr.L.RAMESH)

STORE OFFICER (KRISHNA RAO)

STORE OFFICER (Mr.PREM CHAND SHARMA)

STORE CLERK1. S.BHATTACHARJEE 2. LALAN KUMAR 3. RAMAKRISHNA (Cement Godown) 4. RAVINDRA RAUL

5. SUSHIL KM. SHARMA

DATA ENTRY OPERATOR 1. A.BHATTACHARYA

HELPERS1.DINESH 2.GANESH RAM 3.MANAAL

MATERIAL MANAGEMENT PROJECT-2

1. MATERIAL MANAGEMENT Material Management is an important element in any project’s management since it involves issues related to buying, storing, billing and usage of materials. The basic elements of material management are shown as follows:

1. 1 PURCHASE AND MATERIAL REQUISITION

1.1.1 PURCHASING AND STORES ORGANIZATION

The organization on the project site is by function. Here, the materials management department is structured on the basis of functions such as stores, procurement, transport, purchase etc. as shown in the figure below:

The Stores and Purchasing organizations are kept under the same department so as to reduce the inter-departmental issues and procedures and to have an efficient management system for materials.

| MATERIAL MANAGEMENT 1


Project execution requires use of construction materials of natural origin and manufactured items materials for use in permanent/temporary works which should conform to the contract specifications in both the cases.

The steps that will be adopted for control of these materials are taken for each of the above aspects of materal management such as purchase, procurement, receiving and stores. The procedure for material procurement will be as per the flow chart.

1.1.2 MATERIAL REQUISITION

The material requisition is made as per the demand of materials generated on site. The process is as follows:



The purchase procedure after the material request generation at store is as follows:

ERP (Enterprise Resource Planning) is software used at Afcons which connects the people of the organization and the entire working is co-ordinated through it. The material requisition posted on it is sent to various sites and Delhi Regional Office and the regional office decides the source for material supply. For local purchase, the vendors are supposed to be from the approved vendor list of the client (CPWD approved vendor list).

1.1.3 SELECTION OF SUPPLIER AND ISSUE OF PURCHASE ORDER



For materials of natural origin, such as aggregates etc., the process is as follows:

The following list provides a list of manufacturers as approved by the Client, in this case C.P.W.D:



1.1.4 PURCHASING OF MATERIALS

There should be timely purchase of materials to avoid any disruption to the project schedule. Also it is necessary to avoid any wastages etc.

The purchase process is initiated as and when there is a material requirement

1.1.4.1 Tools for PurchasingThe various tools required for purchasing are as follows:

Market Research Price Charts Codification Funds Flow Management Policies

1.1.4.2 Purchasing ProcessThe responsibility matrix for purchasing procedures along with necessary documents is as follows:

Sr. No.

Procedure Description Responsibility

Reference Document Output Record

A Supply items procured from HO/ Region

1 Receive kick off meeting minutes on procurement strategy on items to be procured from HO, Region and site

Planning Engineer

Drawings/Specifications, Contract documents

Minutes of kick off meeting

2 Send detailed construction program indicating delivery schedules to HO/ Regions

Planning Engineer

Construction program and delivery schedule

3 Receive data sheet/ brochures from HO/ Region and submit to customer for approval if required contractually

Planning Engineer

Data Sheet

4 Inform customer approval status to HO/Region if any

Project In charge

Notes

5 Receive Purchase order (duplicate copy) and check the adequacies, delivery status dates and inform deviations if any to HO/ Region for action

Planning Engineer

Purchase Order copy



6 Follow up with purchase department in case of delay

Receive materials and check inspection report, MTC and physical condition of materials and inform concerned personnel of the deviations/ damages if any

Project In charge

Notes

7 Follow corrective action if needed Project In charge

B Construction materials procured from HO/ Region

1 Follow step A1 Planning Engineer

2 ACE provisions and list of approved vendors (contractually agreed) to Purchase department for HO/ Regional Procurement

Planning Engineer

Drawings/ Specs

3 Raise purchase requisition for materials indicating approved vendors agreed in contract, specification of the product, inspection and acceptance criteria, delivery schedule and requirements of QMS

Planning Engineer

Drawings/ Specs Purchase Request

4 Forward to Materials Department through SPM though purchase

Project In charge/ Store keeper

ACE Purchase Request List

5 Follow up with purchase department in case of delay

Receive material and check the conditions along with QC engineer

Store keeper Inspection & Testing Plan

Construction materials procured from site



1 Follow step A1 Planning Engineer

2 Identify vendors for material procurement based on source of supply and capability of supply

Planning Engineer/ Store keeper

Vendors list

3 Prepare comparative statement and select capable vendor

Project In charge

Cost comparison statement

4 Take rate approval from SPM for material procured from site

Project In charge

Note

5 Raise material request indicating specifications

Planning Engineer

Drawings/ Specs Register

6 Approve MR and send to stores Project In charge

Register

7 Raise Purchase Order on the approved vendors with detailed specification of the product, quantity, inspection and acceptance criteria, delivery schedule and requirements of QMS and send to Project In charge for approval

Store keeper Purchase Order

8 Approve purchase order and send to stores for procurement

Project In charge

Purchase Order

9 Check quality of material at vendor premises or on receipt at site

Store keeper Inspection and testing

10 Accept approve material or follow procedure for control of non-confirming reports

D Services/ Sub contracts

1 Receive kick off minutes of meeting on strategy on sub contracting to be initiated by HO and RO and site

Project In charge

Drawings/ specs/ contract documents

Minutes of kick of meeting



2 Obtain item rate approval from PM Project In charge

Approval notes

3 Identify potential agencies based on previous performance and assessment

Sector Project Manager/ Project In charge

4 Screen the subcontractors based on Technical/ financial competence

Project In charge

5 Obtain quotes from above parties and negotiate

Project In charge

6 Place order on the party offering best technical and commercial terms after obtaining approval from appropriate authority

Project In charge

Purchase Order

Comparative statement

7 Evaluate the subcontractors periodically

Project In charge

8 Update master list of specialized contractors/ sub contractors

Project In charge



1. 2 MATERIAL RECEIVING

The materials can be received from the following sources:1. from vendor2. from Delhi Regional Office3. From Mumbai Head Office

The procedure involved in and after the receipt of materials is as follows:

Materials are checked by the Stores Department and the QA/QC in-charge. Separate details for storage of materials shall be discussed later.



1.2.1 FLOWCHART EXPLANATION

1.2.1.1 Material Receipt Note A Material Receipt Note (MRN) shall be prepared on receipt of the material. The MRN should

distinguish the following receipts:o Receipt from vendoro Receipt from branch ( transfer of material whether from another site or Central stores)o Receipts from within the site ( i.e. sub store, tools, sub contractor, rejected, - surplus,

client).o Receipt of capital items, receipt will be taken into computer separately like General

store, spares etc.o Receipt from sub-contactoro Receipt from Cliento Receipt of Construction Assets, Receipt will be taken into computer in a separate

module. The Receipt information shall be updated in the computer system for generating the MRN for

qty received vis-a-vis quantity mentioned in the Challan, rate etc. The MRN for receipts from branches will be prepared in three copies. One copy will be sent to

the branch sending the material The MRN for receipts of Capital items should also be prepared in three copies. One copy should be sent to the Equipment division at Head office. )For purchase through vendor one copy of MRN may be given to vendor, in turn they will raise the bill mentioning the MRN no. In each cased second copy of AMRN will be forwarded to Accounts Department and third copy will remain as Store copy.

At the end of each day, Daily Receipt Report for each category shall be printed. Each entry shall be verified against the respective document again. Adjustment entries should be passed in case of errors in recording the receipts in the computer. A password system for authority to pass on adjustment entry will be provided. Only In-charge stores can pass an adjustment entry. The purpose is to ensure that there are no errors in receipt record and that it is correct. Hard copy of these daily print outs shall be bound & kept as "Receipt Registers".

The system provides various reports based on "receipt of materials"o Materials Received On Cash Purchase Basiso Material Received From Contractorso Material Received Form Cliento Material Received From HCC Brancheso Material Returned Back by Site (Works Return)o Material Returned by Employees (Tools)o Receipts Of Explosiveso Receipt History of Item(s)o Receipt History of Vendor, Contractor, Client, Branch - Item wiseo Receipt History of Vendor, Contractor, Client, Branch - Date wise

Receipt report for major items such as steel, cement etc. may be sent to Procurement Department weekly. Other reports may be furnished to Head Office as & when needed.

1.2.1.2 Inspection The inspection authorities shall be informed for necessary inspection for all material by Inward

Section. The inspection authorities shall endorse the quality inspection remarks on the MRN or



in the Challan copy or by a separate Inspection report. The In-charge (Stores) shall inform these details to Vendors, Customer (Client), Corporate Office, Subcontractors etc. as the case may be. Inspection must be completed within seven days of receipt of the material.

MATERIAL INSPECTING AUTHORITIESMATERIALS INSPECTING AUTHORITIES

Plant & Machinery spares & related materials

Project mechanical engineer or any person authorized by himElectrical materials Project electrical engineer or any person authorized by himGeneral stores materials In-charge (Quality Assurance and Control) or any person

authorized by himBuilding material & Construction chemicals

In-charge (Quality Assurance and Control) or any person authorized by him

Accepted Material:The inspected and accepted material shall be handed over to the Main Store duly acknowledged on Challan by person In-charge of stores for storage and preservation purpose. These shall be tagged by Material Tag having Yellow colour for accepted material.

Rejected MaterialAll rejected Materials shall be kept separately duly identified by Material Tag -Red Colour. For rejected materials Rejection Challan shall be prepared while returning them to Vendors, Customer (Client), Subcontractors, Sending Branch as the case may be.

Treatment To Rejected Material:Materials found defective at inspection stage shall be returned to the suppliers against Rejection Challan. However, if any stock-material is found to be defective later on, issue entry shall be made to take the qty out from the stock and then material shall be returned to the vendor against Rejection Challan.If the material is found to be defective after it is issued then a Rejection slip should be prepared by the returning department. The Stores should account for the return on the basis of the Rejection slip.

1.2.1.3 Weighment The weighment will be verified by stores personnel through computer aided weighbridge. He

may be rotated every fortnight or as may be decided by the In-charge Stores. The name of the Stores personnel supervising the weighment will be mentioned on the Material Receipt Note (MRN) / Weightment slip. Weigh Bridge shall be calibrated once in a year, record shall be available both in mechanical Section as well as in Stores.

1.2.1.4 Sending the Materials Out Of Site Any item (materials, equipments, plant machinery etc) going out of HCC site shall be

accompanied by a Delivery Challan issued by stores, which will be generated from computer. Apart from material code, full description, qty, value etc following information shall be clearly mentioned on the delivery Challan.

Purpose for sending the item out. Eg. : Repairs, rejection, inter-branch transfer etc. Expected date by which the item is supposed to be returned (if applicable) In case it is not a sale transaction, it shall be clearly mentioned NOT FOR SALE and value



indicated is inclusive of sales tax, insurance. Cross reference of relevant work order, disposal order, authority letter for transfer etc. Gate pass is also needed for security purpose Separate registers are to be maintained for all issues made from stores and necessary follow up

is to be carried out for materials sent out for repairs, works returns etc. Every dispatch is to be entered in this register and as and when the materials are received the same is to be entered and necessary follow-up is to be carried out for unreturned materials. A report is to be prepared and sent by Stores to Accounts department at Head office through site accounts at the year-end.

1.2.1.5 Issue of Material to Subcontractor Any subcontractor whom the material will be issued would request Project Manager in writing

mentioning name & Specimen Signature of their authorized representative who will draw the material from stores. In turn Project Manager will inform stores mentioning the name of the sub-contractors authorized representative. Section In-charge/ Engineers who are authorized by Project Manager will give issue indent to stores requesting for issue of material to a particular subcontractor mentioning free or chargeable basis.

The following cases may arise: Free basis - As per Work Order Chargeable basis.

In case of chargeable rate they may be of following two types: Fixed Rate System Rate + Service Charges as mentioned in Work Order or as decided by Project

Manager.Computer system is so designed that it will take care of all options and stock valuation is not affected. If any material is required to be issued to the sub-contractor directly from the site, then appropriate work-return entry shall be made and then only issue shall be shown so as to have complete record of issues in the computer system. Separate issue registers shall be generated from computer for materials issued to Contractors. Sub-contractors shall be asked to certify the materials drawn by them from stores on monthly basis. This shall be tallied with the issue record and differences, if any, shall be settled forthwith.

1.2.1.6 Inter-branch transfer of materialBranch Transfer of any material can be made as per request of receiving branch. In case of construction asset, approval from construction asset In-charge from H.O. has o be obtained. For equipment & spares, clearance from equipment division at Head office has to be obtained. Branch Transfer Challan may be generated by computer for that particular item.

1.2.1.7 Records to be up-dated while issuing materials Bin cards Computer System for issue information (Qty, rate, cost center code etc) Every branch will have their Computer System installed and hence stocks shall be updated

simultaneously for quantity as well as value. Issues shall be valued by Weighted Average method by computerized stores accounting system. At the end of the day, Daily Issue Report shall be printed from the computer separately as per the

type of issue) and after checking the same will be filed separately to generate a Issue Registers. Tools issued to employees shall be entered in "Personal Tool Register" (PTR). In case of tools

misplaced by employee 100% debit will be made for new one, whereas for broken tools 50% will be


Indent of Material

Register Issue Record

Certificate for issue for various registers

Security gate inward/ outward register

Receipt of Material

Receipt of Steel Receipt of Cement


debited on that particular employee. Separate register shall also be maintained after taking printouts for items issued to sub-contractors. In case any materials from the inventory are to be scrapped, requisition duly approved by Project

Manager shall be taken. Computer System shall be updated for showing issue for the purpose of scrap disposal. Separate "Scrap Register" shall be maintained.

The registers shall be bound periodically say monthly/quarterly/half yearly depending upon the volume of issues.

Issue slips also shall be properly bound and preserved as a record. While issuing the materials Bin Card balance (and also the balance shown by the computer) shall be

verified with physical balance where items are stored in small quantity. In case of variance, Discrepancy Report shall be made & Bin card as well as computer shall be updated by passing a suitable adjustment entry.

It is essential that data entry in Computer System is always up-to-date. It is necessary to check entries pertaining to Daily Receipts & Issues everyday. If any transaction entry is missing, it shall be made before entering next day's records. If any mistake is found, adjustment entry shall be made and then alone next day's entry work should be started. This is necessary since Computer System shall not allow any backdated entries once adjustment is passed. Such corrected report (DRR & DIR) shall be preserved as MR / MI registers. Separate register is maintained giving details about adjustment entries made for issues.

The computer system has been provided with facility to do reconciliation of client materials (receipt, issues, return to client & stock), materials issued to contractors (contractor-wise), Tools issued to employees (employee-wise), reconciliation of explosives. It is necessary to run these reports periodically & ensure proper reconciliation to have adequate control over materials.

1.2.2 INDENT OF MATERIAL

• The indent of material are prepared by site engineer, checked by the team leader and approved by the project in-charge.

• The indent is prepared in a given standard format which is also Given to the stores.

• The store keeper takes up the follow up for the item intended with the purchase department or the supplier.

• The pending indent is filed separately.



1.2.3 REGISTER ISSUE OF MATERIAL

• This records the details of all issued register.• This is essential for the verification of the responsible person.• Whenever any register is issued or returned it is recorded in this register.• Person who has been issued this register is responsible for maintaining the record and safe

custody of the register.

1.2.4 CERTIFICATE OF ISSUE FOR VARIOUS REGISTERS

• Issuance of letters should be only done through a system to avoid the chances of manipulation of registers.

• This certificate is essential for the authenticity of the registers.• For this a certificate is given while issuing each register mentioning the register name, no, page

no, name of person issued, his designation and the date of the issue.• This certificate id printed or stamped on the first page of the register.

1.2.5 SECURITY GATE – INWARD/OUTWARD REGISTER

• As far as possible only 1 gate entry should be preferred.• Security register is s standard form maintained at every site.• The register is maintained by gate keeper.• All incoming and outgoing materials are recorded in separate registers ie. material inward and

outward register.

1.2.6 RECEIPT OF MATERIAL

• The purchase order should be filed in pending purchase order file.• When the material is received following actions should be initiated.• If the material is a building material like sand, grit, kapchi, metal brick the store keeper should

physically measure the quantities.• The measurement quantity is cross checked on the site by site engineers on regular basis.• The store keeper in consultation with engineers should know well in advance the location for

loading and unloading of material at specified place only.• The store keeper issues material receipt slip mentioning all details including actual measurement.• Only one receipt book should be used for the issuing receipt.• The material should be stacked to avoid breakage, wastage and pilferage.

1.2.7 RECEIPT OF STEEL

• The steel is unloaded preferably in the steel yard or at a place in consultation with the project in charge.

• The steel received from client/supplier should be weighed at another weigh bridge other than specified in the challan.

• The difference in challan weight and the actual weight should invariably be recorded and the client’s driver’s signature should be obtained.

• Availability of manufacturers test certificate should be recorded and checked in consultation with the QC engineer.

• Steel receipt document is checked by project in charge regularly.



1.2.8 RECEIPT OF CEMENT

• The cement supplied by client /supplier shall be physically verified for quantities, brand type and batch.

• Visual inspection is carried out in consultation with the QA/QC department whenever required.• The cement bag weight is verified on sample basis.• PROCEDURE FOR CONTROL OF MATERIALS

The responsibility matrix for control of materials is as follows:

S.N. Activity Personnel Remarks1. Estimate material quantities with

reference to drawings and specifications

Planning Engineer

2. Prepare requirement plan Planning Engineer Recording in formats

3. Float enquiries enclosing specifications Purchase Officer/ Purchase Engineer

4. Collect samples, test independently QA/QC Incharge

5. Approve source Client’s Engineers Source approved by consultants if required

6. Place order, receive materials sample, test

Purchase Officer/ Stores Incharge

Stores to stack untested material at locations designated for the purpose

7. Receive test reports, if within specifications, approve for usage

Stores Incharge Material Engineer to inform stores on standard formats

8. If routine tests not conforming, inform stores in writing. Segregate this material

QA/QC Incharge

9. Rejected Material to be highlighted in front of location by flags and removed to locations out of bounds for staff or labour

Stores Incharge

10. If source fails consistently discard source

Project Manager

11. Qualify another source Planning Engineer

Project Manager

1.3.1 PROCEDURE FOR IDENTIFICATION AND TRACEABILITY

For identification of materials and traceability, the following methods and records are maintained:

IDENTIFICATION TRACEABILITY

Material Description Method Record Responsibility



Cement Board Material Receipt Note/ Manufacturers Test Certificate

Stores In Charge

Structural Steel Board Material Receipt Note/ Manufacturers Test Certificate

Stores In Charge

Re-bars Board Material Receipt Note/ Manufacturers Test Certificate

Stores In Charge

Consumables Board Material Receipt Note Stores In Charge

Pipes, Fittings & Gratings Board Material Receipt Note Stores In Charge

Electrical Items Tag/ case marking Material Receipt Note Stores In Charge

Tools and spares Tag/ case marking Material Receipt Note Stores In Charge



1. 3 ISSUE OF MATERIALS

1.3.3 MATERIAL ISSUE VOUCHER (MIV)

Job No: 3555 Date:

Activity:

To stores: Please issue the following material

S.No.

DescriptionMaterial Code No.

Cost code/ Equip code

UOMQuantity Remarks

Required Issued



Indented By: _______ Stores In charge: _______ Issued By: _______ Received By: _______

1. 4 PLANNING OF THE MATERIALS

Planning of materials involves identification and estimation of materials. In any project execution, it is important to identify the type, nature, size and quantum of key and critical materials right at the start of the project with the data /drawings available. It is important to know the total quantities and phase wise requirement of critical materials likely to affect the progress of work so that the planning for procurement of the same can be done in a systematic manner.

Planning involves forecasting the materials that would be required. This is done by the Planning Department on site as per the construction schedule prepared. The monthly requirement of materials was worked out at the beginning of the project.

According to the lead time of various materials it is forecasted when a material should be ordered so that the construction process is not hampered.

The planning would include preparation of schedules indicating approximately the total quantity of all essential materials such as aggregates, bricks, structural / reinforcement steel, formwork materials, timber, roofing sheets etc. to be procured. The schedule can thus:

o Ensure availability of these items as per requirement to suit construction programmed.o Constantly monitor procurement function such that no item is procured in excess of

requirement and the material cost is within control.o Ensure sufficient lead-time for procurement of materials at best possible prices / terms

and avoid emergency purchases.o Give sufficient time to arrange for inputs from sites / region / HQ offices for items like

structural steel, scaffolding and shuttering materials etc.

The procedure for preparation of the schedule is as follows:

Compute material requirements month wise for each item as per breakup of the quantities Sum up requirement of the same material under different items of work under individual

material heads and finalize the schedule, taking to consideration the lead-time and stock level. Factors like monsoon, price escalation, union budget etc. must be kept in view. Prepare a separate list for the following items:

o Diameter wise requirement of reinforcement steel.o Section wise requirement of structural steel.o Section wise requirement of timber & plywood.o Item wise / system wise requirement of formwork required for scaffolding and

shuttering purpose.o Materials required as erection aids.


Preparation of Schedule

Preparation of separate list for special

items

Ensure availability of items

Constant Monitor Procure Function

Ensuring sufficient lead time

Sufficient time to arrange for input from offices

Requirements for reinforcing steel

Requirements for structural steel

Requirements for timber and plywood

Requirements for erection aids


1.4.1 STEPS FOR PREPARATION OF SCHEDULE

• For materials required in enabling works like formwork for concrete, erection of structural steel, precast concrete items, work out construction methods first, compute quantities and place order / requisition for the same.

• Material requirements will include provision for wastage, allowance for under weighment in cement, rolling margin in reinforcement and structural steel.

1. 5 VENDOR MANAGEMENT

1.5.1 PROCEDURE

There is a detailed procedure prescribed by the Company for vendor management. This states that the Purchasing authority shall strive to maintain the quality supplies from reliable sources only. To exercise control over sources of Purchase, the purchasing authority shall follow the Procedure as below:


Preliminary work for vendor registration

Initiate action in case of unsatisfactory performance

Assessment of Vendors and their registration and selection

Performance evaluation of registered Vendors


1.5.2 GUIDELINES FOR SELECTION OF VENDOR

Vendor is already registered agency in other unit of Afcons where ISO programme has been implemented.

Vendor is a manufacturer of the commodity himself. Vendor is an authorized Agent / Distributor / Stockist / Dealer of manufacture. Vendor is a monopoly supplier. Vendor is registered

Based on the site assessment i.e. assessment of his manufacturing facilities. Based on client’s list and reputation enjoyed in the industry. Based on evaluation of supplies made.

Supplier is an approved vendor of the client. Any other valid reasons.

Nearness of vendor’s place of business to the branches of the company. Credit period allowed by the vendor as compared to the industry norms.

1.5.3 VENDOR REGISTRATION

The site follows the Vendor Registration Procedure as given in ISO 9001. The Site should follow the preliminary work for vendor registration, assessment and evaluation for

all items where the annual purchase value is likely to be over Rs 1,00,000 or as informed by Head office.

For items below Rs 1,00,000 the system should give details of variation in rates of purchase as compared to the last purchase.

1.5.3.1 Preliminary Work: Vendor registration form shall be issued by the Purchase Department at Site to the vendors seeking

registration with the company. Vendors are expected to submit the forms duly filled, signed and stamped back to the issuing

authority within 30 days from the date of collection of the registration form.

1.5.3.2 Assessment for Vendor Registration: The Procurement Manager and Project Manager at the site shall assess the vendors capabilities for

registration based on the information available with the procurement department at site in any of the following forms:

Profile of the Supplier Catalogue / Literature of the supplier Information from the internet, E-mail, Yellow Pages, Business Magazines, Newspapers,

Seminars. Workshops, Trainings, Technical Exhibitions, JV consortium Partner, clients or competitors. Standard Registration Form Suppliers suggested by any of the AFCONS sites or by experienced senior level personnel

through e-mail, IOM or free style note. Order executed successfully by unregistered suppliers under urgent situation.

Preliminary assessment of any Vendor's capability shall be recorded in the prescribed format within 15 days from the date of submission of the registration form.



Based on the recommendations of the Vendor Assessment, the vendor's registration status shall be identified in Approved Vendors List (AVL) as follows: For vendors chosen by the client: Status - by Client (CL) For new vendors to whom the trial order is not placed or the trial order is placed but the

confirmation about the acceptance of quality of material supplied by them is not yet received. Status - Waiting (W)

For registered vendors: Status - Confirmed (C) For disqualified Vendors: Status - Cancelled (CN)

The status mentioned above shall be updated as and when need arises. After registration, result shall be conveyed to the awarded vendor by a letter duly signed by the

Project Manager.

1.5.4 PERFORMANCE EVALUATION OF VENDORS

All the Vendors shall undergo performance evaluation at least once in six months, but as a routine site will send an evaluation on monthly basis. Each consignment from each Vendor shall be evaluated on the basis of Quality, Delivery Schedule and price as per the norms given in Data Sheet.

For the purpose of performance evaluation of the vendor, following data should be included for each vendor:

Total quantity ordered and details of Acceptance/ Rejections against the order / quantity. Total quantity ordered and details of quantity, which was delivered later

than the scheduled time. Average period taken to replace Rejections. Delays in replacement of rejections should be specified. Average period taken to provide After Sales Service. Delays in providing After Sales Service should be

specified. These Reports should be prepared and sent to the procurement department (Head Office) by the

Stores-incharge on monthly basis.

For performance evaluation, quality and delivery of each lot shall be compared with corresponding purchase order. Vendor's Performance Evaluation shall be based on monthly evaluation from stores at site, mentioning receipt details, i.e. quantity of accepted materials and actual delivery at site.

1.5.5 EVALUATION CRITERIA AND TECHNIQUE

The evaluation Technique followed is the Weighted Point Method. Depending upon the needs of the parent unit, four evaluation factors are identified. Their relative weights can be expressed in numerical terms so that a composite performance index can be determined and supplier can be compared.

1.5.5.1 Evaluation CriteriaQuality 70Delivery 30Price 20Service, Cooperation and others 30

Total 150The detailed breakup of the evaluation criteria is as follows:



Sr. No. Factors for Assessment Weightage Method of Award

1. Quality 70 Total Quality Accepted during evaluation period x 70

2. Delivery Schedule 30 Quality supplied on schedule x 30Total Quality scheduled during evaluation period

3. Price 20 Lowest Tender price x 20

4. Prompt replacement of Rejections

10 Qualitative Factors of Assessment

5. Prompt after Sales Services 10 Qualitative Factors of Assessment

6. Co-operation from Vendors 10 Qualitative Factors of Assessment

1.5.5.2 Minimum Marks to be scored for passingSr. No. Criteria Minimum Marks

1. Quality alone 502. Delivery alone 103. Price alone 104. Prompt replacement of rejections 55. Prompt after sales services 56. Co-operation from vendors 5

Aggregate 85

1.5.5.3 Composite Rating Schedule Vendor Total

shipment recd.

% accepted

Quality Rating

On schedule

Delivery rating

Service Service Rating

ABC

1006050

908070

644842

8090

100

161820

FairPoorGood

211230

Vendor Average price / unit Lowest price / actual price Price Rating Total RatingABC

Rs. 40Rs. 50Rs. 60

40/40 = 10040/50 = 8040/60 = 67

201614

12194

106

Thus, Vendor A would be selected

1.5.6 VENDOR GRADING

Vendor Grading should be done and on the basis of the grade points given to the respective vendors they should be classified as follows:

Grade Points Classification125-150 Excellent80-125 Good


Obtain company profiles of Vendors/Contractors

Evaluate Capacity & Capability of Vendors/ Contractors

Maintain Databank Category – wise/ Discipline wise/ Size wise

Pre-qualify Vendor/Contractor

Evaluate the existing Databank periodically at six months intervals

Revise/ Update Databank

Pre- qualification & Evaluation of Vendors & Contractors

F&A

QA/QC

Engineer

Project Manager


55-80 Satisfactory00-55 Un-satisfactory

Thus, Vendor A would be graded as Good

1.5.7 VENDOR EVALUATION PROCESS AT A GLANCE

1.5.8 DOCUMENTS REQUIRED FROM NEW VENDOR

A new Vendor is required to submit the following details: Certificates for ISO Certification Certificate for ISI Certification Details like sales tax registration, excise registration, income tax registration are mandatory. Manufacturers, Indian agents, Indian representatives of Foreign principals for machinery/

Computers and peripherals/ Office automation equipment must give full details of service facility available in India. The availability of spares / trained service personnel/ warranty terms etc. must also be mentioned.

All vendors should attach relevant certificates, order copies, proof of registration with major customers etc. along with the application. Manufacturers / Authorized dealers/ Indian agents of Foreign Principals must attach relevant catalogues/ technical literature for the Products listed.

Any change of in the status above mentioned information should be communicated within one week. This information is required for updating the vendor database

Filled in applications with enclosures should be sent to the “The Purchase Dept AFCONS ECC Construction Company Limited.



1.5.9 PARAMETERS OF VENDOR EVALUATION

1. Building and General Impression of Good Maintenancea. Check floor space available against that stated in questionnaire form

Same/Different

b. What material handling equipment is used? Crane/ Hoist/ Fork – lift/ Otherc. Level of Housekeeping, cleanliness and maintenance order

Poor/ Good/ Very Good

d. Age of the plant 5 to 10/15/more old/ modernized/ new and modernizede. Is care and maintenance of plant a planned programme? Yes/ Nof. Does the presence of clever methods and set ups show adaptability in the type of working being done?

Yes/ No

g. Is there space for expansion? Yes/ No2. Production and Technical Competence

a. Check list of machines attached to the questionnaire form

Same/ Different (Why?)

b. No. of technically qualified engineers/ Staff and level of qualification

E.E/ M.E/ I.E/ Other

c. No. of Skilled workers and type of training i.e. trade apprenticeship, etc.d. Can design assistance be given by the vendor? Yes/ Noe. Is any basic research being done? Yes/ Nof. What other work is in progress? Yes/ Nog. General level of precision and finish of work in progress compared to what his machines can achieve

Poor/ Good/ Very good

h. Is any production planning method used? Yes/ Noi. Are job orders followed up? Yes/ Noj. Are there regular contracts for raw materials? Yes/ Nok. Limitations of work due to this size or capacity of the tools and machine?

Yes/ No

3. Quality control and Inspection of Facilitiesa. Is there a regular quality control dept/ section? Yes/ No

b. Are gauges and instruments used for quality control and inspection?

Yes/ No

c. Are gauges and instruments calibrated and corrected Yes/ No

d. Are gauges bought or borrowed Bought/ borrowede. Are SQC methods used? If so what is the sampling plan Yes/ No

f. Are records kept of the results of instrument checks and production inspection?

Yes/ No

g. Is incoming materials inspected and evaluated? Yes/ No

h. To whom does the head of QC report? Yes/ Noi. No. of people full – time on inspection Trained/ Untrainedj. What is present per cent rejection (5/5-10) 10 years

4. Financial Resourcesa. What is the approximate value of work in progress? Rs



b. What is the approximate value of raw materials and finished goods?

Rs

c. Has vendor any raw materials license or allocation? If so how much of which material(s) and from which source?

Yes/ No

d. What is the approximate annual turnover of sales? Rs

e. What were last year’s approximate profits (gross)? Yes/ No

f. Does he have any future plans for expansion/ diversification?

Yes/ No

g. Names of associate companies Yes/ No5. Other Companies Supplied to

a. Check names mentioned in the questionnaire from Same/ Different

b. What work was done for these companies?c. How long has vendor been supplying to these companies?d. Does vendor do entire job or does he further sub contract?

Entire job/ further sub contract

e. IS so, list names of parties work sub contracted to:

f. Timing performance of delivery of a few typical cases Poor/ Good/ Very good

g. Quantity performance of delivery of a few typical cases Poor/ Good/ Very good

h. Obtain reference from other companies if large order is to be given

6. General Observationsa. How would you rate the morale of the total organization?

Poor/ High/ Very high

b. How would you rate the progressiveness and competence of vendor’s management?

Poor/ Good/ Very good

7. ConclusionShould this vendor be added to our list of approved suppliers?

Yes/ No


Purpose served by codification

Proper identification Accounting and control


1. 6 MATERIAL CODIFICATION

1.6.1 INTRODUCTIONSince the number of items of stores run into large numbers, a proper method of identifying them, using a common language is a must. Codification is a process representing each item by number. The digit will indicate group, sub-group, type and dimension of the item.

There are number of methods of building of coding system, but method should be:o Simpleo Capable of being understood by allo Each code should uniquely represent one item

1.6.2 REQUIREMENT FOR CODIFICATIONA stock code to group and identify items with similar physical characteristics in a logical pattern permits simple and precise material identification as an aid to production, stores, purchasing and accounting. This stock code should be kept as short as possible, starting with a class designation for like items keyed to major commodity group, e.g. electrical hardware, fastener, pipe fittings, sanitorial supplies and so on. First two digits will be sufficient for this purpose, followed by a single digit to denote subclass. The codification of materials in such a way helps in quick identification of the material. In fact elaborate coding will provide the information regarding details descriptions of the materials very easily. This helps in reducing waste of time.

1.6.3 OBJECTIVES OF CODIFICATIONIn order to identify the items correctly and logically for processing the transactions and to facilitate each location in stores, a codification system should be evolved with the following objectives:

• Accurate and Logical Identification: A separate code is allotted to each of the items available in the storehouse indicating the size, quality, price, usability, special characteristics, specification etc.

• Prevention of Duplication: All items are separately codified and are arranged in a logical order. Since each item has a different code number and various items are kept in different bins at different places, there can be no duplication in placing the orders and no piling up of the materials will take place in the storehouse.

• Standardization and Reduction in Varieties: For codification, grouping of identical items is done and it enables the stores to examine the entire range of items. It facilitates the elimination of those varieties in place of which other varieties of the like quality can be used, this reduces the number of varieties to the minimum.

• Efficient Purchasing: The filling up of purchase requisition and preparation of purchase orders are simplified by the use of codes, which easily indicate the materials required. Buying instructions to the suppliers become easy and quick if there is proper understanding of codification by the supplier.

• Efficient Recording and Accounting: Codes lead to effective stock control, efficient recording and result-yielding accounting. Chances of mistakes are minimized.


Codification of materials

Alpha-Numerical Numerical Colour codification


• Easy Locating, Indexing and Inspection: The materials in the store have to be kept in an order, which may facilitate their placement and location.

• Easy Computerization: Small size computers such as personal computers are finding their wide applications in materials management.

1.6.4 CODIFICATION - FEATURESThere could be many possible arrangements of coding symbols (numbers, alphabets, etc.), which can be used to design a code. The following considerations must be kept in mind when designing codes.i. Brevity: The codification system should avoid long and unwieldy description. This implies that the

codes should consist minimum possible number of digits.ii. Logical: The coding system should be logically fit for the needs of the users and the methods of

data processing employed.iii. Flexibility: The code design should be flexible to accommodate changes without disturbing

existing codes. We are familiar with the library coding system in which codes do never get disturbed by addition of new books and all books to come in future are easily accommodated by the existing code structure.

iv. Uniqueness: Each code must be a unique representation for the item it identifies. For example, an inventory item number or employee identification code must identify one and only one inventory item or employee.

v. Easy Understandability: The code structure must be easily understood by various users. It should be as simple, practical and meaningful as possible.

vi. Proper Choice of the Coding Symbols: While a code may have numbers, alphabets or a mixture of both, certain precautions should be taken in selection of the symbols.

vii. Layout of codes: The layout of codes should be equal in length. Codes longer than four alphabetic or five numeric characters should be divided into smaller segments for human judgments.

1.6.5 REQUIREMENTS OF MATERIAL CODIFICATION Material Codification it is required for the following reasons:

For Proper Identification Of Item By All Departments To Avoid Use Of Long Description Of Item To Avoid Duplicate Stocks Under Different Description To Enable Reduction In Varieties And Sizes To Arrange Bin Cards, Stock Control Cards, and A/C Records Etc. In Uniform Manner To Ensure Receipt & Issue Document Are Posted In Appropriate Records

1.6.6 METHODS OF CODIFICATION

1.6.7 MATERIAL CODE STRUCTUREHead Office (Mumbai)’s material code is a 9-digit all numeral one. Item is identified in first four digits and the rest five digits are for specific identification.o 1st Digit specifies the class, o 2nd Digit specifies major group in that class,



o 3rd & 4th Digits specify minor group within the respective major group.1.6.7.1 Classification Of Items

Items are classified as follows: FIRST DIGIT CLASS

0 Capital Items1 Heavy Tools & Tackles2 Small Tools3 Consumables4 Reserved for Future Use5 Electrical Main Items6 Construction Materials7 Special / One-Time Items8 Reserved For Future Use9 Spares (P&M)

1.6.7.2 Class 1: Heavy Tools & Tackles (Nc Items)Class & Major Group (1st & 2nd Digits) Description

10 & 11 Equipments12 Electrical Items15 Form Work (DOKA System)17 OTHER SYSTEMS (ACROW, APOLLO, EWL, Etc.)19 Temporary Structure

13, 14, 16 & 18 Reserved For Future Needs1.6.7.3 Class 2: Small Tools There is no major group in this “class”. There is only sequential codification for all type of small tools. For example – measuring tape, drill bits lab items, etc.

1.6.7.4 Class 3: Consumables

Class & Major Group (1st & 2nd Digits) Description

31 Chemical, Etc (Oils, Gases, Paints, Chemicals, Admixtures, Etc. )32 Electrical Items33 Pipe Fittings34 Hardwares (All Metals Included)35 Welding Electrodes36 Cutting Tools37 Abrasives38 Others (Wire Ropes, Packing Materials, Stationery Etc.)39 Common Spares (Bearings, Tyres, “V” Belts Etc.)30 Reserved For Future Needs

1.6.7.5 Class 6: Construction Materials

Class & Major Group (1st & 2nd Digits) Description


ILLUSTRATION 1:MATERIAL CODE3 4 06 5 12 20

LENGTH :

DIA :

METAL :

MINOR GROUP :

CLASS :

MAJOR GROUP :

100 MM

12 MM

G. I

HEXAGON BOLTS

HARDWARES

CONSUMABLES

THEREFORE THE DESCRIPTION FOR MATERIAL CODE “340651220” IS: “ HEXAGON BOLT G. I M12 100 “

Spare item code is 9 digit alpha numeric code.The equipment is identified in the first five digit and the rest four is the sl.no. Of item codification.1st digit specifies the material id (spares)2nd alphabet specifies the equipment category3rd alphabet specifies equipment name,4th digit specifies the make of the equipment,5th digit specifies equipment model.6th, 7th, 8th & 9th digits specify the serial no. for parts


61 Major Items (Aggregates, Bricks, Cement Etc.)62 Ferrous Items64 Non-Ferrous Items65 Timber And Plywood

60, 63, 66, 67, 68 & 69 Reserved For Future Needs1.6.7.6 Codification of Spare Parts

1. 7 MATERIAL RECONCILATION

Reconciliation is the process to identify the unaccountable use of materials during various construction activities at site. It is the record keeping of the materials at site. The total quantity, Consumption, Wastage and balance of the material at the site are accounted in the Reconciliation reports.It is being prepared for most of the materials- Cement, sand, aggregates, reinforcement etc.It helps to identify the wastage out of the unaccountable consumption of the material during activities, transportation, test samples, and poor workmanship etc.Reconciliation forms are as follows:

1.7.1 RECONCILATION FORM FOR THE MAIN STORE

The main store maintains the following Reconcilation form for all materials to keep stock of the material quantities issued and available:

MATERIAL IN MATERIAL OUTPurchased Quantity To Site Store QuantityFrom Other Site Quantity To Other Site QuantityBALANCE QUANTITY = MATERIAL IN - MATERIAL OUT

1.7.2 RECONCILATION FORM FOR THE SUB STORE

The sub store at site maintains Reconcilation forms for all materials in the following format to keep stock of materials received, materials issued, billed materials, wastage in materials and balance stock. The reconciliation form is as follows:

Sl. No. Details QUANTITY1. Material received from Main Store 100 T



2. Material Issue 75 T3. Material Balance 25 T

4. Material Billed 70 T5. Material Wastage 2.5 T6. Work in Progress 2.5 T


Material Management

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