Standard Operating Procedure-Production 14 8 - Copy

8/18/2019 Standard Operating Procedure-Production 14 8 - Copy

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Top Gear Promotions

Standard Operating Procedure

(SOP)

2014


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Private and Confidential

Contents Of The SOP

S.

No.

Title Page Number

1 Executive Summary 3

2 Methodology 4

3 Phase I : On-site Activities Discussion and Interviews andOverall Confirmation

5

Documentation 5

4 Phase II : On-site Activities Existing Internal Weaknesses 6

Understanding the SOP 8

5 Comprehensive Standard Operating Procedure (SOP) 9

6 Department-wise StandardOperating Procedure

Production Department 15

Quantity Surveying (QS) 23

Stores 29

Procurement Department 48

Audio Visual Department 55

Furniture Department 64

Accounts Department 70

Administration Department 72

Admin and HR Department 73

7 Other Recommendations & Suggestions 74

8 Suggested Templates 75

9 Disclaimer 81


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Executive Summary

The main objective of having a Standard Operating Procedure (SOP) is to provide the

management and the user with an insight into the process flow to be followed to adhere to

the industry best practices and to ensure effective internal control systems. The SOP would

also standardize the procedure across the various functional units in one division thereby

reducing duplication and overlapping of activities and would also be an effective tool for cost

control, cost reduction and optimization of resources.

Currently, the level of internal control in terms of processes is relatively weak and not all the

required documentary evidences are being issued.

This SOP elaborates on the procedures to be followed by various functional units which have

been explained using narrative descriptions, tabular representations and flow charts. Along

with the process, the person responsible at every stage is also mentioned to improve

accountability.

The functional units as specified in the name itself are categorized based on the job carried

out by that particular unit. The functional units referred to in this document for developing a

SOP have been listed below:

Department Respondent Respondent Designation

Production Warehouse Head Mr. Subiraj Production Director

Human Resource Management (HRM) Ms. Jinky Admin/HR Assistant

Admin Ms. Joem Admin Assistant

Accounts Ms. Elpie Accountant (Prod)

Quantity Surveying Mr. Dinesh Quantity Surveyor

Production Mr. Dayaram Production Manager

Project Managers Mr. Javed and Mr. Fouad Project Manager

Stores Mr. Chetan Store & Inventory Manager

Procurement Mr. Khalil Procurement ManagerAudio Visual (AV) Mr. Greg Technical Manager

Furniture Mr. Dani Furniture Supervisor

The prime focus along this SOP is optimal utilization of resources like Manpower,prudent

Procurement policies ,efficient inventory management and control through proper

documentation and to reduce wastage and overhead costs which would thereby increase the

overall profit per project. Also, it aims at inculcating an effective pre-show budgeting activity

for every project to control costs and prevent for over-riding the quote and get assured of

income expected from the project.

Last but not the least to deliver in time and meet the expectations of the client.The SOP also

contains suggested templates of documents to be issued by various departments to ensure

transparency,maintenance of a complete set of documentary evidence and audit trail.


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Methodology

In a nutshell, our key focus was to gather as much information as possible through interviews

and discussions with various personnel at the Production Warehouse. We carried out the

creation of the SOP in two main phases namely, On-site activities and drafting the SOP. Each

individual phase was broken into a series of events based on the activity to be performed.

Phase I: On-site activities:This phase includes all the activities and tasks performed at theProduction Warehouse. This phase began with obtaining a briefing on the warehouse and its

operations. As mentioned above, the various events constituting this phase has been charted

below in the order of their occurrence:

Phase II: Drafting the SOP

On confirming the SOP drafted, it would be handed over to the concerned authority of TGP

marking the completion of the engagement.

Phase I: On-site Activities

Discussions & Interviews

•Interviewing divisional heads of every division at the warehouse,

•Understanding the existing process flow.

Overall Confirmation

•Re-confirming the information gathered with the respective division

heads,•Discussing and confirming the correctness of the information gatheredfrom various divisional heads with the Production Director.

Documentation

•Collecting sample of PO's, MRN, GRN and order forms,

•Procuring latest stock count report with differences

Evaluating internal weaknesses

•Assessing from the information gather on the job profile and processflows of various personnel, the loopholes and flaws that exist in theprocesses.

Drafing and Confirmation the SOP

•Drafing the Standard Operating Procedure based on the best practicesto be followed in terms of the process accuracy, completeness andauthenticity,

•Obtaining final confirmation on the SOP drafted for handover.


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Discussion and Interviews and Overall Confirmation

Departments and Respondents:

As a general practice across every industry, the Production Warehouse has been segregated

into various departments based on the functionalities of the respective departments. Each

department is headed by a Manager who was interviewed to obtain information on their roles

and responsibilities as well as on the methodology followed by them in completing an assignedtask.

The departments along with the respondent from each department selected for the interview

has been tabulated below:

Department RespondentRespondent

Designation

Information Gathered

Production Warehouse

HeadMr. Subiraj Production Director Overall confirmations

Human Resource

Management (HRM)Ms. Jinky Admin/HR Assistant

1. Job description,

2. Information received

from and dispatched

to,

3. Methodology in carried

out tasks,

4. Accountability.

Admin Ms. Joem Admin AssistantAccounts Ms. Elpie Accountant (Prod)

Quantity Surveying Mr. Dinesh Quantity Surveyor

Production Mr. Dayaram Production Manager

Project ManagersMr. Javed and

Mr. FouadProject Manager

Stores Mr. ChetanStore & Inventory

Manager

Procurement Mr. Khalil Procurement Manager

Audio Visual (AV) Mr. Greg Technical Manager

Furniture Mr. Dani Furniture Supervisor

Documentation

Under the documentation part, the various supporting documents issued were collected on a

sample basis to analyze the data entered in them and also to determine the requirement of

any documents not issued but are required to strengthen the internal control. Furthermore,

based on the documents collected, we have prepared a list of all the necessary vouchers that

have to be issued along with their respective suggested templates which are contained in the

last section of this document.

Phase II: Drafting The Standard Operating Procedure


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Existing Internal Weakness

To be able to suggest the Standard Operating Procedure (SOP) for each department, it is

important to find the flaws and weaknesses in the respective departments that require

correction to be brought in line with the best practices. We analyzed the exceptions that

existed in each department and required to be brought to the notice of the management. Our

exceptions have been tabulated below based on the departments they pertain to.

Department Observations

Procurement

Department

There are no payment terms agreed with the supplier and neither is there a

particular payment date shared by TGP to its suppliers.

No approved vendors/suppliers list was maintained with the Procurement

Department.

We were informed that the practice of month end reconciliation of the invoice

summary prepared by TGP and supplier SOA did not take place.

There exists no centralized software used to monitor and track stock at a real-

time basis as to give an accurate stock position when required. Before placing

an order, a physical count of the inventory is to be done to check it availability

to decide the order quantity.

At present, there existed no procedure to identify alternate suppliers ormaterial. Furthermore, there was no practice of accurately estimating the

usage of common raw materials such as plywood, MDF, etc.

LPO’s generated did not contain the signatures of all the authorized

signatories.

In several instances, we were informed that orders were placed at the last

minute due to which the Procurement Manager could not select amongst

multiple suppliers and had to settle for suppliers who held the stock at that

point of time irrespective of the price at which it was being supplied.

Furthermore, there was no predefined procedure for supplier selection based

on order quantities and its corresponding quantity discounts.

Audio Visual

Department

The latest inventory count performed by the AV department showed several

quantity differences, i.e., surplus or shortage. Surplus is a result of thephysical stock exceeding the stock quantity as per the books, which indicates

improper recording and documentation of purchases and post show returns.

On the other hand, shortage occurs when the physical stock quantity falls

below the book quantity which is an issue of higher concern as apart from

signifying improper recording, it also signifies the possibility of leakage or

movement of inventory outside the warehouse without the notice of the

authorized person.

No records are maintained as to the time and dates of dispatch of inventory

from the warehouse, i.e., inventory log, are maintained. Also, there is no

model number or serial number wise tracking of inventory at the time of

dispatch and hence the exact one-to-one reconciliation cannot be done on

return of the items post show.There was no predefined manner to estimate the expected useful life of the

AV equipment.

There is no security check outside the AV department and the items can be

easily pilfered outside the warehouse.

We were informed that any scrap of unusable AV inventory was disposed off

in dustbins. TV parts contain lead and other hazardous materials which have

an adverse effect on the environment.


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The inventory was not stored in an organized manner, i.e., items of the same

model no/other similarities were not stacked together.

Production &

Stores

Department

There are no records maintained pertaining to unused waste material that

could be reused in future and it availability can only be ascertained by physical

checks.

There exists no project-wise allocation and planning of labor due to which

labor performance cannot be measured, i.e., no project-wise manpower

utilization evaluation. Further on, due to absence of a manpower requirementestimation prior to the work along with absence in actual utilization, a

variance analysis cannot be carried out.

We observed that a high cost was incurred towards payment of overtime to

the staff at the Production Warehouse.

There was no interaction between the Production Department with the

Quantity Surveyor or Procurement Manager as on market related information

and other material information that would influence the decisions taken.

We were informed that waste paint diluted with water were disposed of by

dumping them in dustbins. However, paints qualify as Household Hazardous

Waste (HHW)because they contain chemicals that can be harmful to humans,

animals and the environment. HHW items should never be disposed of in the

trash or down the drain.Project

Management

The Project Managers are unaware of the budget, i.e., contract price, due to

which they cannot restrict the show related spending below the budget.

Accounts We understand that revenue entries are passed in the books of the warehouse

by passing a sales entry to the Head Office which is subsequently approved

by the Head Office as a purchase. Following the entry mentioned, the revenue

from the client is recorded at the Head Office as a sale to the client. This

practice is followed by both the Production and Graphics Warehouse.

However, we were informed by the accountant that in case of sale entries to

the HO pertaining to the Graphics Warehouse, the corresponding purchase

entries to be approved by the HO, is approved by the accountant herself as

she has been provided access for performing the same. Due to approval of

the purchase entries by the accountant at the warehouse herself, erroneousor incorrect entry approvals could take place.Besides accounting practices are

in tandem with IFRS .


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Understanding The SOP

Understanding this document:

Hereon, every section of this document would be differentiated on a department-wise basis.

A preset standard format has been used uniformly in every section starting with a brief about

the department and respondent followed by the objectives of the section and the job

requirements pertaining to the respective department. Next, the existing methodology of carrying out the constituents of the assigned role is highlighted and finally the suggested

process flow explained using narrative descriptions, forms and a flow chart.

Understanding the flow chart:

The flow charts have been added to support the narrative descriptions and forms to provide

the reader with an insight to understand the process in its real sense. It specifies the terminal

points, i.e., starting and ending points, along with directions in which the process must flow

and any possible loop formations.

Existing Practice:

1. Template for existing practice:

Suggested Practice:

1. Template for narrative description

2. Template for forms:

3. Template for flow charts

S. No. ActivityPerson

ResponsibleDepartment

Existing Practice:

Narrative Description:

Predefined

Process


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Comprehensive Standard Operating Procedure (SOP)

The comprehensive Standard Operating Procedures (SOP) is the all-inclusive process flow

covering every department in a sequential order stating the flow of information and authority.

This section provides an insight to the process flow at a macro level right from the stage of

Account Manager getting an enquiry, confirming a project until the final invoicing is done

along with the client’s decision to store or discard the stand and can also be taken as the job

process of a Project Manager.

Form

S.

No.Activity

Person


Stage I: Off-site

1.Client contacts TGP to procure quotation for a

particular project

Account

Manager

Head Office

2.A quotation is sent to the client after consulting Mr.

Omar and Mr. Alex

Account

Manager

Head Office

3.Client negotiates and after approval from Mr. Omar

and Mr. Alex a revised quote is sent to the client

Account

Manager

Head Office

4.

Client appoints TGP to carry out the project and

communicates the confirmation along with the

signed contract

Account

Manager

Head Office

5. Forward contract details to Production WarehouseAccount

Manager

Head Office

6.

The work is assigned and allotted to a Project

Manager(s) (PM). In case of multiple PM’s, distribute

the work between both

Production

Director

Production

7.

Account Manager briefs the Project Manager about

all details obtained from the client and the other

show details such as budget, time frame, etc.

Account

Manager

Head Office

8.

A Bill of Quantities (BoQ) and pre show budget is

prepared based on the design and overall cost

budget

Quantity

Surveyor

Quantity

Surveying

9.

Get the preshow budget approved and signed by the

client for conclusiveness in the work and to avoid

any last minute changes

Account

Manager

Head Office

10

Send material requirements to the production, AV,

furniture and graphics divisions through an order

form

Project Manager Project

Management

Department

11.

Necessary material and labour are arranged for

based on the budget received and for any

unavailable material, a Purchase Requisition is sent

to the Procurement Manager

Production, AVand Furniture

Manager

Production, AVand FurnitureDepartment

12.Based on various quotes from multiple suppliers, the

most economical offer is selected

ProcurementManager

ProcurementDepartment


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13.

A constant check is kept on the work-in-progress of

the stand and also an actual VS budget analysis is

performed on a regular basis

Production

Manager

Production

Department

14.

Inform and call client for inspection of the stand

along with the QS and Graphics personnel to prevent

any last minute changes (Mock up review )


Management

Department

15.

Keep a track of the production of the stand and

communicate any technical difficulties to the

Account Manager and the client


Management

Department

16. Coordinate with the client for the artworkAccount

Manager

Head Office

Stage II: On-site and On-site service

17

Deliver finalized stand as per the clients

specifications and requirements


Management

Department

18

Supervise the site from installation till the handover Project Manager Project

Management

Department

19.

Provide necessary support to client for any technical

or other problems on-site

Project Manager

or Account

Manager

Project

Management

Department &

Head Office

Stage III: Dismantling

20.

Co-ordinate with the Production department for

storage of site as per contract or instructions of the

client. If the site needs to be discarded, the reusable

items must be extracted before disposal


Management

Department

Stage IV: Invoicing and Post Show

21.Based on the approved preshow budget, the invoice

would be raised for the client

Admin Assistant Admin

Department

22.

A variance analysis would be carried out between the

total material and labour actually consumed against

the preshow budget which was invoiced determining

the profit or the loss from the project

Quantity

Surveyor

Quantity

Surveying


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Flow Chart


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Production Department

Overview:

The Production department needs to adhere to high quality standards & timely delivery of

delivering the final product along with using cost effective techniques and optimum usage of

resources. Apart from the usual process of production, the production department requires a

reasonable level of interaction regarding the external environment such as market informationor expected competitor tactic which lacks in the current work environment.

Production Manager Mr. Dayaram

Reporting To Mr. Subiraj (Production Director)

Overall Responsibility Estimating and suggesting the optimal mix of raw

materials, labor and other resources and

monitoring the usage of consumables. Ensuring

the highest quality standard are maintained in

delivery.

Objectives:

1. Optimal planning of resources, i.e., material, labor and overheads,

2. Maintenance of high level quality in delivery of final product,

3. Estimate manpower requirements prior to production to the closest estimate and

accuracy,

4. Timely measurement of actual manpower performance and comparison against

standard to develop variance report,

5. Providing the required training and development to the Production team for upgrading

existing knowledge and reducing wastage.

Job Requirements:

1. Resource Planning: The Production Manager plays a vital role in estimating the

resource requirement for various projects which would have a direct impact on the

gain or loss from a project. The manager needs to verify whether the amount paid as

overtime justifies the benefit derived from the activities performed. The Manager will

also require to look at the aspect of reduced productivity from a worker working

overtime as compared to an additional individual employed wherein, all work is

completed within working hours,

2. Consumption Control : The Production Manager would require keeping a close check on

the consumption trends of the raw material and must determine manners which would

assist in reducing wasteful consumption,

3. Cost Control : The Production Manager, apart from overseeing the production process

would have to suggest ideas and views towards cost control and reduction. One of the

key factors influencing the cost are material and labor, whereby, in case of material,

the Production Manager may recommend alternate materials which are relatively cost

effective and on the other hand, in case of labor, by proper estimation and allocation

of labor as mentioned under ‘Resource Planning’,


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4. Providing Training and Development to Production Workers: With the rapid

technological advancement and increase in the methods of carrying out a particular

task, it is very necessary that the production workers are tuned to the on-going

advancement which would help in increasing the work efficiency or might also call for

incurring capital expenditure (CAPEX) over assets that would provide higher benefits

than its cost.

Suggested Practice

1. On the project getting confirmed at the Head Office, an email is sent to the Production

Director or the Admin Assistant conveying the same,

2. A Project Manager is selected for the concerned project by the Production Director who

would technically be the point-of-contact between the Account Manager and the client,

3. Post the appointment of the Project Manager, the Account Manager, Project Manager

and Production Manager have a combined meeting where the material to be used is

finalized and the actual production of the stand begins,

4. In case of any material requirement, the production worker approaches the

storekeeper asking for the required material,

5. The storekeeper verbally enquires about the project for which the material was

required and issues a slip for the issue of material,

6. The slip is then submitted to the Stores & Inventory Manager who enters its details in

an excel sheet maintained,

7. Once the stand has been duly constructed, the client is called for a mock up test of the

stand and any changes required are made as specified by the client and approved by

the Project Manager.


Narrative description:

As mentioned in earlier part of this document, the Production Department is the key

department for provision of the highest level of quality in its process and at the same time

making the process cost effective by proper resource allocation and optimization. The

Production process can be broken down into 5 simple steps which are the general steps as

suggested by management authors, namely- Planning, Organizing, Staffing, Directing and

Controlling.


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Planning Stage: The standard process initialization is the same as the existing practice where

the Production Director appoints a Project Manager and there is a combined meeting with the

Account Manager, Project Manager and Production Manager. In the combined meeting, the

Production Manager is required to suggest alternate material that could be used and at the

same time would have to estimate the labor requirements at a level where there would be

reduced idle time and the same time there would be a minimal of overtime hours which would

reduce their productivity. Furthermore, apart from merely suggesteing estimated resource

requirement, the Production Manager must suggest efforts to reduce the overall costs to win

over the bids of its competitors or having higher profit margins.

End Result: By the end of this stage, a tentative estimate would be created in terms of the

required resources.

Organizing: Once the material and labor requirements have been finalized, the Production

Manager will have to communicate the same to the Quantity Surveyor (QS). In turn, the QS

would provide further inputs on the estimated requirements and the optimal resource mix

would be decided with regard to the raw material, consumables, labor and overheads and the

Bill of Quantity (BoQ) preshow budget would be created by the QS.

Contents of the preshow budget:

• Material : Total material required to complete the production in units and its respective

cost are analyzed. It would also contain a supplier analysis whereby the most

economical offer would be selected,

• Labor : The estimated manpower requirements are analyzed along with planning for

any abnormal losses or unforeseen events and an analysis between the overtime cost

VS appointment of new labor keeping in mind the efficiency aspect, i.e., with an

Planning

Organising

Staffing

Directing

Controlling


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increase in the working hours per day, the efficiency of a worker would reduce

gradually,

• Overheads: Apart from the above material and labor costs, the estimation for the other

project related expenses would be made.

End Result: This stage would end by creation of a formalized Bill of Quantities (BoQ) and

Preshow budget which would be the base for execution of the production.

Staffing: In this stage, based on the estimated resource requirement, the Production Manager

will start arranging for their availability.

• Material : All the materials required are issued by the stores and any items which are

not in stock are purchased using the preset process of the Stores & inventory Manager

raising a Purchase Requisition (PR).

• Labor : Based on the budgeted labor usage, the Production Manager formulated teams

along with team leaders for the various projects to be executed and every team leader

and member are assigned their respective roles.

Directing: The Production Manager in this stage would have to act like a friend, philosopherand guide, i.e., the Manager would provide the teams and its respective leader the guidelines

to achieve the desired goals and objectives, provide the necessary training at regular intervals

for enhancing the knowledge, outlook and perception of the teams towards the tasks

performed and finally inculcating an interactive atmosphere which would motivate the teams

to provide valuable information relating to the external environment, market forces, expected

market trends, etc. Apart from the above mentioned responsibility, the Production Manager

will also have to lay down the following details to ensure adherence to correct practices:

• Authorization: All the documents issued for material requisition or purchase

requisition, must be duly approved and signed by the Production Manager which

would indicate that the Manager has agreed to the required quantity beingoptimal,

• Documentation: Every document issued by the Production Department or any

carbon copy of a document received from any other department needs to be

properly documented for future use.

Controlling: The final stage of the Production process required keeping a check over the

happenings to prevent it from surpassing the budget. All deviations from the budgeted

quantities and amounts would be derived and steps for corrective action would be taken. The

Production Manager would have to keep a log or would have to be informed if in case the

material usage is nearing the budgeted usage or if in case the actual labor hours worked is

nearing the budgeted hours, the Production Manager would have to scrutinize and determine

reasons for the same and communicate it to the Production Director. Also, the Production

Manager would need to monitor the quality of the work-in-progress in order to be able to

propose corrective actions in cases of quality flaws.


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Form:



Planning

1.

Production Director appoints a Project Manager.

Account Manager, Production Manager and ProjectManager have combined meeting

Production

Director Production

2.Suggest alternate materials and estimate labour

requirements considering efficiency and productivity

Production

Manager

Production

Department

3.Recommend efforts to reduce the overall costs

to win over the bids of its competitors or havinghigher profit margins.

Production

Manager

Production

Department

Organizing

4.Communicate material and labour requirements to

Quantity Surveyor (QS)

Production

Manager

Production

Department

5.The QS provides further inputs on the

estimated requirements

Quantity

Surveyor

Quantity

Surveying

6.

The optimal resource mix would be decided

with regard to the raw material, consumables,

labor and overheads and the BoQ and preshow

budget would be created by the QS.

Quantity

Surveyor

Quantity

Surveying

Staffing

7.

Arrange for material, labour and overheads to

implement the project. Purchase materials not in

stock and organize teams.

Production

Manager

Production

Department

Directing

8.

• Provide guidelines to team and team leaders

to achieve their goals,

• Provide necessary training to teammembers,

• Inculcating an interactive atmosphere to

motivate teams to provide valuable

information relating to the external

environment, market forces, expected

market trends, etc.

Production

Manager

Production

Department

9.Ensure all documents issued and received are duly

authorized and documented

Production

Manager

Production

Department

Controlling

10.Check over actual consumption and take corrective

actions in case of any deviations

Production

Manager

Production

Department

11.Ensure quality of WIP to be able to propose

corrective actions in cases of quality flaws.

Production

Manager

Production

Department


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Flow Chart:


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Quantity Surveying (QS)

Overview:

The Quantity Surveying Department has been formalized recently with the surveyor having

preset roles and responsibilities. The QS plays a very critical role in cost control and also the

inference from the QS decides the viability of a project.

Quantity Surveyor Mr. Dinesh


Overall Responsibility Estimate resources correctly,their costs and co

ordinate for execution within the estimate

Objectives:

1. Ascertaining the best estimate of the quantity of material, labor and overhead required

to complete a project.

2. Monitoring execution of project in regular intervals including surprises checks,

3. Preventing spending from exceeding preshow budget,4. Having an effective system to examine variances between estimated and actual costs.

Job Requirements:

5. Creating Bill of Quantity (BoQ): The Quantity Surveyor (QS) is responsible to estimate

the material required in units and the estimate labor hours relating to a particular

project. Using the units derived, the QS will require quantifying the units in money

terms which would be called the Bill of Quantity (BoQ). Using the BoQ, the QS must

communicate to the Production Manager whether the price received from the Head

Office for the concerned project is appropriate or whether the project has been

underpriced in a case where the cost exceeds the project price.6. Pre and Post show cost comparison: Carrying out a comparison of the preshow

budgeted costs and the post show actual costs is an important function of the Quantity

Surveyor to verify whether the costs incurred have been kept below the budgeted

costs,

7. Show reports: Preparing reports on the cost control aspects of all running shows and

also determining reasons in cases of contracts which were lost. The contents of this

report must critically analyze the reasons for any losses helping in Business Process

Re-engineering (BPR).

Suggested Practice

8. Once the Account Manager receives the lead from the client, the same will have to be

given to the QS,

9. The QS will have a briefing session with the Account Manager on the client details and

requirements,

10.A Bill Of Quantities (BoQ) will be prepared by the QS which will be submitted to the

client for approval. Any changes required by the client will require amending the BoQ,


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11.On receiving the clients approval, the signed contract will be compared with the BoQ

and on matching the same, the pre-show costing will be prepared,

12.The budget is allocated first to the Graphics, AV and Furniture department after which

a 10% margin is deducted and the remaining is allocated towards materials, labour

and overheads.



The role of the Quantity Surveyor is of critical importance in determining the cost variance

between the estimate and actual costs. The role of a Quantity Surveyor is divided into two

stage namely, Preshow and Post show.

Stage I – Preshow

This stage deals with all activities that take place before the event date. Initially, the Account

Manager details the designer on the exhibition details such as the stand dimensions, budget,

material requirements and other specifications. At this point, the Quantity Surveyor is briefed

on the same details by the designer and the QS suggests methods that would make the

project cost effective and on finalizing the design, it is then finally handed over to the QS.

Following the finalization of the design, the Account Manager briefs the QS on the client

details, show details, stand size and the deadline. On having finalized the design with the

designer and obtained the briefing from the Account Manager, the QS using those details

prepares a Bill of Quantities (BoQ) which is a cost sheet containing the units of material, labor

and overheads required and the per unit cost which helps in deriving at the total budgeted

cost. The BoQ is then approved by the Production Director and forwarded to the Account

Manager for correspondence with the client. Based on the client’s requirements, the BoQ is

amended and finalized.

Post the all the correspondence between the client and Account Manager, once the job has

been confirmed, the Account Manager would send the confirmation along with the signed

contract from the client to the QS. The contract received will be compared to the BoQ to

ensure that there are no discrepancies or there have been no miscommunications and once

they have been matched, the QS will prepare the Preshow schedule where all the costs are

segregated and clubbed based on their nature, such as, flooring, structure, labor, overheads,

external purchases and other project related costs. The Preshow schedule will be signed by

the QS and approved by the Production Director from where it would be submitted to the

accountant to generate a job order with a reference number. Each of the departments namely,

Graphics, AV, Electrical, Furniture and Production will be allocated the budgets. Every

departmental head would analyze the budget and sign it if approved. However, in cases where

the Preshow budgeted costs exceeds the budget as received from the Head Office, the QS

communicates the difference to the Production Director who in turn forwards this information

to the Account Manager for negotiation with the client and on received the revised amount,

the entire above-mentioned process would be looped.

After completion of the production and assembly of the stand, the Project Manager calls the

client for a mock up test along with the Graphics and QS. The involvement of the mentioned

three parties would prevent any last minute changes in the graphics and at the same time if


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the client requires certain revisions to the built stand, the QS would immediately take a

note of it and communicate the additional cost to the Account Manager.

Stage II – Post show

In this stage, a variance analysis report is performed by the QS whereby the QS prepares a

schedule of actual costs incurred over a project and compares it against the Preshow budgetto arrive at the net benefit or loss. The variance report is then analyzed and signed by the

Production Director.

Form

S.

No.Activity

Person


Stage I: Preshow

1. Designer is given briefing on the stand and

exhibition details

Account Manager Head Office

2. QS is detailed by the designer and QS suggests

cost effective alternatives

Designer Head Office

3. Account Manager educates the QS on other client

details and deadline

Account Manager Head Office

4.Prepare BoQ with all per unit costs of the project

Quantity SurveyorQuantity

Surveying

5. Get BoQ approval by Production Director and

communicate it to the Account Manager

Production Director Production

6.Amend BoQ as per client requirements after

correspondence between Account Manager and

client


Surveying

7. Receive confirmation and signed contract from

Account Manager and compare with BoQ


Surveying

8.Prepare a Preshow schedule, get it authorized by

the Production Director and forward it to the

accountant to generate a job order


Surveying

9.Provide each department the respective budget

and procure the approval for the same by the

departmental managers

Production Director Production

10.

If Preshow budgeted costs exceeds budget asreceived from the Head Office, communicate

the difference to the Production Director whoin turn would forward this information to theAccount Manager for negotiation with theclient and on received the revised amount,

the entire above-mentioned process would belooped.


Surveying


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11.Take a note of all changes specified by client

during the mock up test and communicate the

additional cost to Account Manager


Surveying

Stage II: Post show

12. Prepare a variance analysis report and get itsigned by the Production Director


Surveying


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Flow Chart


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Stores

Overview:

Stores is one of the most critical areas in relation to inventory control and management. The

stores department is responsible to keep a track of all the goods inwards, issuances and

outwards and at the same time ensure that stock levels are maintained to prevent under-

stocking.

Stores Manager Mr. Chetan


Overall Responsibility Maintaining optimum inventory levels and

keeping a track of all inventory movements.

Objectives:

1. Maintain sufficient stock levels,

2. Proper documentation to track movement of inventory and consumables,

3. Ensure that physical stock quantity matches with book quantity,4. Ensure appropriate storage of inventory at the stores,

5. Develop proper systems and control to have an complete system of planning,

execution and post-implementation reviews to ascertain any deviances from the

planned targets,

6. Monitor consumption and ensure optimum utilization of material.

Job Requirements:

1. Inventory Management – Inventory management is one of the broadest areas of

responsibility assigned to the Stores & inventory Manager. The scope under this role

extended right from the point of having a track of the inventory and at the same timeinvolved maintaining adequate inventory levels as to prevent any stock-outs or under-

stocking which was cause a delay in delivery of the final product. The inventory in this

context includes the normal inventory as well as the wasted inventory capable of being

reused and has been stored at the warehouse. The following activities fall under the

scope of inventory management :

a. Adequate Stocking: This function requires the Stores & Inventory Manager

to constantly review the stock balances as per the statement maintained to

derive the nature of the item based on its sales movement, i.e., fast moving

or slow moving, based on which he should ensure that the required stock is

available at all times to match the demand.b. Reorder levels and EOQ: As mentioned in the previous point, the fulfillment

of adequate stocking would only be achievable by planning and fixing a

inventory level at which an order for replenishment of a particular item(s) is

to be made. In other words, the reorder levels would require preventing the

inventory from falling below the minimum set limit. Also, the Stores &


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Inventory Manager would have to support the Procurement Manager in

deciding the Economic Order Quantity (EOQ).

c. Estimating future requirements: The Stores & Inventory Manager would be

assigned with the responsibility of analyzing the consumption of different

items which will form the base for estimating the future consumption levels

of those items and would be a tool of primary importance in deriving the

reorder level.

d. Inventory placement and stacking: Placement of inventory inside the

warehouse plays a major role in preventing any unnecessary usage of labor

to arrange and rearrange inventory, i.e., the inventory should be stacked in

racks in an organized manner such that the fast moving items are placed in

the front and are easily accessible while the slow moving items are stored

last. This function is of major importance to prevent time loss and abnormal

usage of labor hours.

2. Inventory Control – Inventory management and control go hand-in-hand. Inventory

control of past periods is the prerequisite to future inventory management and

inventory management is the basis of inventory control of the same period. It involves

assessing the measures taken to manage inventory and taking corrective action to

prevent any leakage. Further, it also involves tracking the movement of inventory

using proper documentary evidences which will also be of much use as an audit trail.

a. Inventory Checks: Inventory count is the main tool in ensuring that the book

stock quantities match with their corresponding physical quantities. Any

differences, whether surplus or shortage, would have its respective

implications of improper recording or theft/leakage respectively which would

have to be investigated. The Stores & Inventory manager must aim at having

weekly inventory counts using a small sample out of the total population of

inventory and month-end 100 percent inventory counts.

b. Proper Documentation: In the absence of a centralized inventory

software/ERP, inventory can be traced and an audit trail can only be created

using proper documentation. Documentation would include issuing

appropriate pre-printed vouchers having printed reference numbers for

goods inwards, issuances and outwards. The issuer of those vouchers must

also state the project for which the material has been issued.

c. Monitoring consumption: One of the most important methods for cost-saving

would be monitoring the consumption of inventory in the final product to

prevent over-utilization of material above the required limits. This would be

done by comparing the Bill of Quantities (BoQ) prepared by the quantity

surveyor against the material issue slips specifying the project name as

mentioned in the previous point.


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Suggested Practice

a) Based on the BoQ, final contract and 3D design the production process commences,

b) All the issues except for MDF, plywood and paints are done by the Stores & Inventory

Manager. The Stores & Inventory Manager is in-charge of monitoring the receipt and

issue of inventory and stock control,

c) Anyone from the production department approaches the store asking for the required

item. The store in-charge enquires as to which project was the item required for and

issues a slip for its release which is signed by the concerned person from the production

department asking for the item. The slip is then handed over to the Stores & Inventory

Manager who records the same in an excel sheet along with the details.


The stores department being the central focal point for all movements of inventory and

consumables covers a broader range of activities due to which the SOP has been divided

into 2 primary categories which in turn have been further sub-divided to cover the entire

gamut of activities to be performed in a systematic manner.

Category I: Inventory and Consumables

a) Receipts (inward ),

b) Issues (outward ),

c) Inventory Count.

Category II: Wastage and Damage

a) Reusable,

b) Unusable and to be disposed.

Category I: Inventory

a) Receipts (inward)


Under this head, the Stores & Inventory Manager would require documenting the inflow of

inventory into the stores. The descriptive explanation of the process is as follows:

1. On receiving the inventory, a ‘Goods Receipt Note (GRN)’ will have to be issued.The GRN must have a preprinted reference number to prevent any human errors,

2. Inspect the goods received to confirm if they are as per the specifications of the

order placed in terms of nature and quantity,

3. Obtain signatures of the Stores & Inventory Manager and the person handing over

the goods on the GRN,


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4. Arrange the received inventory in the systematic manner along with inventory

having similar nature and manually update the bin card,

5. The Stores & Inventory Manager will have to update the receipt in the

system/records maintained,

6. Send the inventory records to the Procurement Manager on a weekly basis to

enable Order Planning.

Form

S.

No.Activity

Person


1. Issue ‘Goods Receipt Note (GRN)’ having

preprinted reference number on receipt of goods

Stores & Inventory

Manager

Stores

Department

2. Inspect and confirm inventory receipt against

order specifications

Stores & Inventory

Manager

Stores

Department

3.

Obtain signatures of the Stores & Inventory

Manager and the person handing over the goodson the GRN

Stores & Inventory

Manager

Stores

Department

4. Systematically arrange inventory at the

warehouse and manually update the bin card

Stores & Inventory

Manager

Stores

Department

5. Update the receipt in the system/records

maintained

Stores & Inventory

Manager

Stores

Department

6.Send the inventory records to the Procurement

Manager on a weekly basis to enable Order

Planning

Stores & Inventory

Manager

Stores

Department


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Flow Chart


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b) Issues (outward )


Under this head, the Stores & Inventory Manager would require documenting the issues of

inventory from the stores. The descriptive explanation of the process is as follows:

1. A manual Material Requisition Note (MRN) will be submitted to the Stores &

Inventory Manager by the end user in the production department authorized by

the Production Manager,

2. The Stores & Inventory Manager will have to check whether to items required are

available and the location of the stock,

3. In case the required quantity is not available at the stores, the Stores & Inventory

Manager would have to send a Purchase Requisition to the Procurement Manager

with the details and quantity of the required items to be purchased. On the other

hand, if the inventory is available, issue the same against the MRN and get it signed

by the production end user,

4. A ‘Good Issue Note (GIN)’ will have to be raised by the stores, signed by the

manager, containing the specifications and quantity of inventory issued and get it

signed by the recipient.

5. The Stores & Inventory Manager will have to update the issue in the

system/records maintained,



Form

S.

No.Activity Person Responsible Department

1. End user in the production submits a manual Material

Requisition Note (MRN) authorized by the Production Manager

End User Production

2. Check availability and location of items required in Stores

system/records

Stores & Inventory

Manager

Stores

Department

3.

If required quantity is not available at the stores, a Purchase

Requisition is sent to the Procurement Manager with the

details and quantity of the required items to be purchased. On

the other hand, if the inventory is available, issue the same

against the MRN and get it signed by the production end user

Stores & Inventory

Manager

Stores

Department

4.Raise ‘Good Issue Note (GIN)’ signed by the manager,

containing the specifications and quantity of inventory issued

and get it signed by the recipient

Stores & Inventory

Manager

Stores

Department

5. Update the receipt in the system/records maintained

Stores & Inventory

Manager

Stores

Department

6. Send the inventory records to the Procurement Manager on a

weekly basis to enable Order Planning

Stores & Inventory

Manager

Stores

Department

Flow Chart


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c) Inventory Count

Objective:

1. Ensure book stock quantity is equal to physical stock quantity,

2. Reconciliation of any differences in the records as compared to the physical

inventory and determination of reasons for the differences,

3. Inventory control.


The presence of books records for carrying out an inventory count is of utmost importance as

without the records, there would not be any base against which the physical count results

would be compared against making the count insignificant. Thus, the first data gathering

process is a straightforward process requiring precision and accuracy. This process can be

used in for category II – consumables too but however, has been included in the inventory

section due to its higher importance in this category. Consequently, this area has been divided

into two phases namely, Phase I: Initial Data Gathering and Phase II: Periodic Stock Counts.

Phase I: Initial Data Gathering

The initial data gathering count must be carried out on a holiday when the operations of the

warehouse do not take place. This would ensure that all the movement entries passed

subsequently, will affect the corresponding stock balances as entered on the count date.

Preliminary Procedures:

1. Construct count teams – Develop teams in-charge of carrying out the inventory

count and assign every member with their respective roles and responsibilities,

2. Assign Count Areas – The count areas and inventory details must be clearly defined

to the count team members,3. Organize inventory – The inventory must be arranged in an organized manner with

items of similar model or nature kept together or must be arranged in a scientific

manner.

Count Day:

1. Freeze Inventory Movement – On the day of the count, all movements of inventory

must be stopped as it would change the physical stock position,

2. Begin count – Commence the count and record the item description,

manufacturer’s name, model number, serial number and year of purchase,

3. Combined assessment – With every team member having completed the count of inventory in their respective areas, the entire team will walk around every area of

the warehouse to ensure no area has been missed or whether the same area has

not been covered by multiple members.


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Post Count:

1. Data Entry – All the data captured during the count must be duly entered into an

excel sheet or the software used which would be the inventory record.

Phase II: Periodic Inventory Counts

Preliminary Procedures:

1. Pass all pending entries – All transactions which have taken place but are pending

to be updated into the records are to be entered.

2. Construct count teams – Develop teams in-charge of carrying out the inventory

count and assign every member with their respective roles and responsibilities,

3. Assign Count Areas – The count areas and inventory details must be clearly defined

to the count team members,

4. Organize inventory – The inventory must be arranged in an organized manner with

items of similar model or nature kept together or must be arranged in a scientific

manner.

Count Day:

1. Obtain inventory data – From the system used/records maintained, extract the

inventory data containing the stock description with its respective SKU’s and

quantities,

2. Take Cut-off documents – Cut-off documents, i.e., the last issued GRN, GIN, MRN,

PO, PR and other documents maintained at the store must be acquired,

3. Freeze Inventory Movement – On the day of the count, all movements of inventory

must be stopped as it would change the physical stock position,

4. Begin count – Commence the count and record the item description,

manufacturer’s name and model number.

5. Combined assessment – With every team member having completed the count of

inventory in their respective areas, the entire team will walk around every area of

the warehouse to ensure no area has been missed or whether the same area has

not been covered by multiple members.

Post Count:

1. Data Entry – All the data captured during the count must be duly entered into an

excel sheet or the software used alongside the book quantities which were made

available at the time of extraction of inventory data,

2. Examine and Reconcile Differences – The difference between the physical stock

quantity and the book stock quantity must be examined and reasons for such a

difference must be ascertained. The differences could have had aroused due to

error in counting, erroneous entry in books of accounts or wrong categorization of

stock. Certain differences would be accepted by the management without any

particular reasoning. However, it should be made sure that all the differences have

been reconciled,


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3. Confirmation and Sign-off – On reconciling all the differences, a final

confirmation must be obtained by the department head and the Production Director

and the stock count report must be approved and signed off by both the confirming

authorities.

Form

S.

No.Activity

Person



1. Count team creation and assigning roles and

responsibilities

Stores & Inventory

ManagerStores Department

2.Define count areas and inventory details to

team members

Stores & Inventory



warehouse

Stores & Inventory


4. Freeze All inventory movements in and out of

the warehouse

Stores & Inventory


5.Commence the count and record details, i.e.,

item description, manufacturers name, model

number, serial number and year of purchase.

Inventory Count

TeamStores Department

6.

Carry out a team walk around the warehouse

to ensure all areas have been covered and

there has been no overlap

Inventory Count


7.Enter the count details into the system or

tracking method used which would form the

book records

Inventory Count



1.Update book records and enter pending entries

Stores & Inventory


2. Count team creation and assigning roles and

responsibilities

Stores & Inventory


3.Define count areas and inventory details to

team members

Stores & Inventory


4. Systematically arrange inventory at thewarehouse

Stores & InventoryManager

Stores Department

5.Extract inventory records from the system

Stores & Inventory



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6.Obtain Cut-off documents, i.e., the last issued

GRN, GIN, MRN, PO, PR and other documents

maintained at the store must be acquired.

Stores & Inventory


7. Freeze All inventory movements in and out of

the warehouse

Stores & Inventory


8.Commence the count and record the item

description, manufacturer’s name and model

number.

Inventory Count

Team

Stores Department

9.

Carry out a team walk around the warehouse

to ensure all areas have been covered and

there has been no overlap

Inventory Count


10.Enter the count details into the system or

records maintained alongside the book

quantities

Inventory Count


11.Ascertain reasons for variation between book

stock and physical quantity and reconcile the

differences.

Stores & Inventory


12. Confirm and obtain signed approval of Production Director and Stores & Inventory

Manager on the inventory count report

Stores & Inventory

Manager and

Production Director

ProductionWarehouse


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Flow Chart



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Category II: Wastages and Damage

a) Reusable


Reusable waste would be capable of being used in future projects where the waste quantity

fits the respective quantity requirements. Also, it would help in reducing the cost of reusablewaste that is disposed off after using it in the project it pertained to. The following are the

steps to be followed for recording and storage of reusable waste:

1. The production end user will enter the details and quantity (if possible to quantify )

of the wasted material in the ‘Reusable Waste Receipt Note (RWRN) and get it

authorized by the Production Manager,

2. Submit the RWN to the Stores & Inventory Manager who will inspect the waste and

compare it with the details in the RWN,

3. Once the items have been inspected, the Stores & Inventory Manager will counter-

sign the RWN and store the waste in a distinct location separate from the normal

inventory,4. The Stores & Inventory Manager will have to send a weekly report on the project-

wise reusable wastages stored to the Quantity Surveyor to be reduced from the

concerned Project cost,

5. On issue of such waste items, the process followed for issue of inventory (as

explained in the previous category ) would be applicable.

Form

S.

No.Activity

Person


1. End user in the production submits a manual ‘Reusable Waste Receipt Note (RWRN)’

authorized by the Production Manager

End User ProductionDepartment

2.Submit the RWN to the Stores & Inventory

Manager who will inspect the waste against the

details in the RWN,

Stores & Inventory


3.Counter-sign the RWN and store the waste in a

distinct location separate from the normal

inventory

Stores & Inventory


4.Send weekly report on the project-wise reusable

wastages stored to the Quantity Surveyor to be

reduced from the concerned Project cost

Stores & Inventory


5. Follow same process as of inventory for issue of

reusable waste stored

Stores & InventoryManager

Stores Department


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Flow Chart


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b) Unusable and to be disposed


One of the most critical areas in handling of unusable wastage is its correct disposal with the

necessary approvals from the municipality to prevent any hazardous effect on thesurroundings and environment. To initialize this process, the Stores & Inventory Manager will

have to prepare a ‘Material Destruction Form’ with a list of all the non-reusable wastage that

needs to be disposed off. Disposal and destruction of certain material requires the municipality

permit and destruction certificate with is to be acquired and destroy the material as per the

prescribed manner. Post the destruction, the concerned personnel from TGP inspecting the

destruction will have to click photographs as a part of the records which would complete the

destruction process.

Form

S.

No. Activity

Person

Responsible Department

1.Prepare a ‘Material Destruction Form’ with a

list of non-reusable wastage that needs to be

disposed off

Stores & Inventory


2. Acquire municipality approval and destruction

certificate

Stores & Inventory


3.Destroy the material in the prescribed manner

Stores & Inventory


4.Post destruction, click photographs as a part of

the records which would complete thedestruction process

Person inspecting

destruction

Stores Department


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Flow Chart


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Procurement Department

Overview:

This section involves a detailing into the process flow followed in the Procurement Department

beginning right from the point of an end user requesting for a particular item using a “Material

Requisition Note (MRN)” till the point where the final supplier invoice is given to the

accountant for booking and payment.

Procurement Manager Mr. Khalil Rahman


Overall Responsibility Carrying out procurement related activities

for all purchases across the production

warehouse.

Objectives:

1. Prompt and accurate recording of all transactions with regard to procurement,

2. Establishing a standard process flow for all procurement related activities,

3. Maintaining and monitoring the actual process followed and taking corrective action in

case of any deviations,

4. Ensuring proper documentation using printed forms with pre-printed reference

numbers for the following:

a. Purchase requisition (PR),

b. Material Requisition Note (MRN),

c. Goods Received Note (GRN),

d. Goods Issued Note (GIN).

Job Requirements:

1. Supplier Enquiry and Analysis – Floating enquires to various suppliers for procurementof materials and analyzing from amongst a gamut of suppliers the most appropriate

one,

2. Communication with suppliers – Being the point-of-contact between TGP and the

supplier and carrying out all communication and follow up with the supplier,

3. Supplier relationship – Being in constant touch with the suppliers to improve supplier

relationship resulting in probable discounts and better trade deals,

4. Identifying new suppliers – Carrying out researched to explore new locations and areas

for new suppliers with more competitive pricing,

5. Identifying alternate materials – Surveying and researching for alternative materials

having similar characteristics and more competitive pricing,

6. Payment terms – Agreeing upon pre-defined payment terms with suppliers as toprevent delayed payments,

7. Reconciliation and Reports – Carrying out month end supplier reconciliations between

the books and supplier SOA,

8. Creating and continuous updating of approved suppliers list – A detailed list of the

approved suppliers along with the product wise prices offered by them must be created

and constantly updated by the Procurement Manager to have a birds-eye view of the


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comparison between the pricing of the different suppliers allowing TGP to choose

the more economical one from amongst them. A point to be noted is that the preferred

supplier would vary for different products based on their respective prices offered,

9. Order Planning – Apart from the above functions, the Procurement Manager has the

responsibility of planning orders in a strategic manner as to have minimum spending

with maximum benefit. Few examples of order planning are as follows:

a. Ordering in bulk quantities,

b. Eliminating middlemen and direct purchase from manufacturer,

Economic Order Quantity (EOQ) for various products would have to be determined to

prevent under-stocking and at the same time reduce over-stacking,

Suggested Practice

1. Any item which needs to be purchased will be communicated to the Procurement

Manager by the Production Manager/Project Manager/Other person either through e-

mail or a material requisition form, (the Procurement Manager in in-charge of all

purchases in the warehouse),

2. The Procurement Manager will generate an enquiry and get quotations from at least

2-3 vendors. However, in some cases, a fixed vendor is given the order due to pasthistory and services,

3. On comparison of the various quotes received, the Procurement Manager will select

the vendor,

4. Based on the selected vendor, a PO will be generated by Ms. Jinky based on the

quotation, The PO will be approved by the Production Director, Procurement Manager

and the person initiating the order,

5. The PO is then scanned and forwarded to the supplier for confirmation along with the

required delivery terms,

6. Supplier delivers it to the stores with the DO which is matched with the invoice and

PO to confirm that the order and quantity is as required.



In a nutshell, the process to be followed by the Procurement Manager is a five-fold process,

i.e., purchase request, selection of supplier, generating PO, follow up and receipt of goods

and finally payment to the supplier.

Step 1: Purchase Request:

The purchase request involves raising the “Purchase Requisition” by the Stores &

Inventory Manager in case of the following two circumstances: Self-review of stock requiring replenishment based on past trends and stock

nature, or

Material Requisition Notes (MRN) received from:

Stores & Inventory Manager (in case of unavailable stock )

Others


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Step 2: Selection Of Supplier:

Receiving multiple quotes and carrying out a comparative analysis is what is contained in the

step involving supplier selection. Quotes from a minimum of 2-3 suppliers would be obtained

and compared by preparing a comparative statement to select the most economical option

based on various determinants such as price, quantity, quality, supplier image, payment

terms, discounts, after sales service, etc. Also, once the supplier has been selected, it needs

to be approved by the Production Director,

Step 3: Generating PO:

Once the approval from the Production Director has been received for the selected supplier,

based on the quotation, statement and approval, a Purchase Order (PO) is generated. The PO

would require six levels of approvals (signatures) by the Person who has requested for the

item, Production Manager, HR/Admin Assistant (PO creator ), Procurement Manager and

Production Director. Apart from the above mentioned signatories, the quotation would also

require to be approved by the Account Manager to agree upon the payment terms. The

approved PO would then be scanned or faxed to the supplier to initiate the order,

Step 4: Follow up and receipt of goods:

Until the goods are received from the supplier, the Procurement Manager would have regular

follow ups with the supplier to determine the status of the order until the goods have been

received. On receipt of the goods, the Stores & Inventory Manager would have to issue a

Goods Receipt Note (GRN) or Goods Inwards Note (GIN), through the stores, obtain the

customer copy of the invoice and Delivery Order (DO) from the suppliers delivery person and

update the supplier invoice details in the statement maintained,

Step 5: Payment to supplier:

Once the supplier invoice details have been updated into the statement maintained by the

Stores & Inventory Manager, the same would be communicated and sent to the accountant

along with the GRN/GIN and Delivery Order (DO) to process it for payment on the due date

marking the end of the procurement process.

Form:



1.

Generate a “Material Requisition Note (MRN)”

signed by the end user listing the material

required and obtain authorization of the

Production Manager

End User &

Production

Manager

Production

2.Forward the MRN to the Stores & Inventory

Manager

Production

ManagerProduction


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3.

Based on the MRN’s received, if the item is not

available, or through a self-review of current

stock levels, prepare a “Purchase Requisition

(PR)” to be forwarded to the Procurement

Department. In cases of non-production

purchases, the MRN should be directly

submitted to the Procurement Manager

Stores & Inventory

ManagerStores

4.

Obtain price and availability against PR from

“Approved Suppliers” or “Alternate Source” as

needed

Procurement

ManagerProcurement

5.Prepare a statement evaluating the various

quotations received

Procurement

ManagerProcurement

6.Approve the statement made along with the

choice of the preferred supplierProduction Director Production

7.Based on the quotation, statement and

approval, prepare the “Purchase Order (PO)”

Admin/HR

AssistantAdmin/HR

8.

Obtain six levels of approvals (signatures) for

the PO generated by the Person who has

requested for the item, Production Manager,

HR/Admin Assistant (PO creator ), Procurement

Manager and Production Director. Obtain

Account Managers approval on the quotation

to agree upon payment terms

Admin/HR

AssistantAdmin/HR

9.

Finalize the approved PO, scan and generate

PDF file to be forwarded to the supplier, by e-

mail or fax, as the case demands to initiate the

order

Admin/HR

AssistantAdmin/HR

10. Follow up with supplier till the time of deliveryProcurement

ManagerProcurement

11.

On receipt of the stock, prepare a “Good

Receipt Note (GRN)” through the stores, obtain

the customer copy of invoice and Delivery

Order (DO) from delivery person and update

the supplier invoice details in the statement

maintained

Stores & Inventory

ManagerStores

12.

Forward the supplier invoice along with the

payment details, GRN and delivery note to theAccounts Department for entering it into the

system and subsequent payment on due date

Accountant AccountsDepartment


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Flow Chart:


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Audio Visual (AV) Department

Overview:

The audio visual (AV) department is like an independent unit operating in the Production

Warehouse. Unlike the other departments except furniture, the final product is simply leased

out to the client for the required duration of the show and subsequently collected back post

show for a lease rental. An online website has been created where the client would be able tolease the required AV items using the internet.

AV Manager Mr. Greg


Overall Responsibility In-charge of managing and tracking all the

activities with regard to purchase, inward,

issuance and outward (leasing) of AV related

products.

Objectives:

1. Making cost-effective purchase or sub-contract decisions,

2. Proper documentation to track movement of inventory and consumables,

3. Ensure that physical stock quantity matches with book quantity,

4. Appropriate arrangement of inventory.

Job Requirements:

1. Monitoring and documenting stock movement - As mentioned above in the overall

responsibility, the AV Manager would have to monitor the movement of stock in and out

(leasing) of the warehouse and support it with the necessary documentation which is not

being practiced as of now.

2. Buy or sub-contract decision – The AV manager is required to make decisions as to

whether to purchase a required item or to sub-contract the provision of the same item to

a third-party by carrying out a comparative analysis and estimating the frequency of

requirement of the demanded item.

3. Estimating voltage requirements – The Admin Assistant is required to submit, a form

containing the details of the voltage requirement at the site, to the organizers (site

authorities) based on which the organizer will raise an invoice. Due to knowledge on the

technicalities, the voltage requirement is an estimation done by the AV department by

evaluating the voltage required by every electrical item used on site.

4. Inventory Checks: Inventory count is the main tool in ensuring that the book stock

quantities match with their corresponding physical quantities. Any differences, whether

surplus or shortage, would have its respective implications of improper recording or

theft/leakage respectively which would have to be investigated. The AV manager must

aim at having weekly inventory counts using a small sample out of the total population of

inventory and month-end 100 percent inventory counts.


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5. Inventory Storage – It must be ensured that the inventory is stored in an organized

manner based on the frequency of usage following which all items of similar nature must

be stacked together.

Suggested Practice

As mentioned in the overview, the AV department operates as semi independent unit. The

process is initiated with the PM e-mailing the requirement to the AV manager. If the required

items are available with the AV department, the same is leased out to the client and an order

form is sent to the Admin Assistant for generating the corresponding invoice. However, in

case the required items are not in stock, then the following action is taken:

a) Suggest alternatives to the required specifications,

b) Subcontract,

c) Purchase the required item(s).


Similar to that of the stores department, the AV department also has its independent

inventory which is leased out and taken back after the show. Hence, the SOP for thisdepartment too works in the similar lines of that of the stores department and has been

divided into two categories which have further been sub-divided.


a) Purchases,

b) Lease Out,

Category II: Wastage and Damage


a) Purchases


Under this head, the AV Manager would require documenting the inflow of inventory into the

AV storage area. The descriptive explanation of the process is as follows:

1. On receiving the inventory, a ‘Goods Receipt Note (GRN)’ will have to be issued.

The GRN must have a preprinted reference number to prevent any human errors,

2. Inspect the goods received to confirm if they are as per the specifications of the

order placed in terms of nature and quantity,3. Obtain signatures of the AV Manager and the person handing over the goods on

the GRN,

4. Arrange the received inventory in a systematic manner along with inventory having

similar nature and manually update the bin card,

5. The AV Manager will have to update the receipt in the system/records maintained,




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Form

S.

No.Activity

Person


1. Issue ‘Goods Receipt Note (GRN)’ having

preprinted reference number on receipt of goods

AV Manager AV Department

2. Inspect and confirm inventory receipt againstorder specifications


3. Obtain signatures of the AV Manager and the

person handing over the goods on the GRN



warehouse and manually update the bin card


5. Update the receipt in the system/records

maintained


6.Send the inventory records to the Procurement

Manager on a weekly basis to enable Order

Planning



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Flow Chart

8/18/2019 Standar

Standard Operating Procedure-Production 14 8 - Copy

Documents

Transcript of Standard Operating Procedure-Production 14 8 - Copy