Company Operational Manual(COM) Insurance 6.1 Purchasing of Products and Services	Doc No.: COM 6.1 Revision: 1 Date: 15 Oct 2023 Issued by: DPA Approved by: MD

6.1 Purchasing of Products and Services

This procedure ensures that products and services are purchased in a planned, controlled, and cost-effective manner, in accordance with agreed budgets and operational requirements.
Our philosophy is to obtain, for our clients, the best value goods and services as determined by a combination of price, quality, assured supply, reliable delivery, technical innovation, commitment to efficient service, and with due regard to the environment. This procedure is to be used by the Ship Management Office (SMO) in the management office.

6.1.1 Responsibility

The Technical Manager is responsible for the implementation of this procedure. The Procurement Officer is responsible for the processing of all requisitions and orders as laid down in the procedure.

The Technical Superintendent has the responsibility to give authorisation for the purchase of stores, spares, and services. The order is to be discussed with the vessel should any clarification be required or before any material reduction of quantity ordered or cancellation of requisition or line item within a requisition.

The Master has the responsibility to give authorisation for the purchase of provisions, compromising of foods, miscellaneous victuals, and slop chest items. He/She is also responsible, in consultation with the Managing Office, for the authorisation and purchase of any item of an urgent nature such as:

• Urgent requests for service or items that endanger the safety of the vessel;
• Urgent requests for service or items required for possible breakdown situations;
• Requests for service, e.g. radar/navigation equipment repairs, engine repairs, or technical assistance;
• Urgent lube oil requirements to avoid a ship-stop situation;
• Urgent Agency appointment – in which case, the Agent should be selected from the List of Approved Agents provided by the company Agency or from the Owner’s list if such a list has been provided.

6.1.2 Planning & Budget Phase

Purchasing budgets are agreed with the Owners based on a defined need, either when a vessel enters management or as part of the annual budgeting process during the course of management.

Preplanning for the next year’s budget must take into account the trading area, future prospects of the vessel, new legislation needs, the Master’s defined needs and must be prepared according to best industry practice including explanations where required. It is the ship’s colleague’s responsibility to contribute information to the Office. The Technical Superintendent responsible for the vessel shall discuss the needs with the vessel to ensure an effective budget.

An analysis of fleet-wide needs may result in a bulk order with varied delivery and payment conditions at a more economical level that would benefit the Owner. Effective purchasing results in the buying of good quality products at a competitive price.

6.1.3 Processing of Requisition and Requests for Quotation

• Identify from the Supplier Database those vendor(s) to be invited to tender, but should include any contracted suppliers or group company. Where applicable, a maximum of 3 suppliers will be requested to tender. A single vendor may be nominated when an emergency situation occurs, when a fleet contract is in place, or where an owner has indicated a preference for OEM spares with only a single source availability.
• Invitation to tender must be sent to the vendor(s) in the form of Request for Quotation (RFQ) – Form PUR01. Email enquiries are to be used, and a telephonic conversation should follow on an email.
• On receipt of tenders, the Procurement Officer shall update the requisition table.
• All services including repairs, materials for shore repairs or disposal, must be requested on a requisition form or, in the case of urgent requests, by email etc., ensuring that all relevant information is quoted including the shore assist form number.

6.1.4 Approval Process

• The trading area of the vessel should always be considered when nominating vendors and placing orders.
• The Technical Superintendent shall, in agreement with all aspects of the requisition form:
  • Confirm the account code;
  • Confirm that all details are correct.

If the Superintendent, due to local knowledge or other factors, is aware of a company suitable to supply, on an equal quality basis, the required goods or service at a competitive cost, this information should be highlighted to the Technical Manager and Procurement Officer prior to an RFQ being issued.

The Technical Superintendent shall acquire the Technical Manager’s authorisation for any purchase over the value of $5,000USD (Five Thousand United States Dollars) with the exception of fleet contract requisitions where costs have already been agreed.

The Technical Manager shall acquire the Managing Director’s authorisation prior to the purchase of any order over the value of $10,000USD (Ten Thousand United States Dollars) with the exception of fleet contract requisitions where costs have already been agreed. It is the responsibility of the Procurement Officer to ensure that both authorisations are in place.

For the selection of dry-docking or ship repair yards, the SMO is responsible for raising the requisition. Repair orders, service, and classification requests must be raised, authorised with the supplier, and accrual attached by the SMO.

▶▶ See - COM Section 5.3 - Dry-Docking / Major Repairs

6.1.5 Order Process

On receipt of purchase approval from the Technical Superintendent, the Procurement Officer shall issue the order to the vendor. Any special handling, storage, packing, certification, and delivery instructions are to be clearly stated on the Purchase Order using the form PUR03.

6.1.6 Delivery and Receipt Process

The responsible Officer, or their nominee, will note goods as received against the delivery documentation to ensure that goods received match what is shown on the Delivery Documentation and that the quality of the goods received is acceptable. Goods/materials shall be considered as having been received for the purpose of payment when they are confirmed onboard.

Every month end, the vessel's monthly supply status is to be forwarded to the Procurement Officer in Form PUR04.

6.1.7 Disputed Goods Process

The vessel should report any disputed goods as soon as they are identified, by:

1. Reporting the issue to the Technical Manager, Technical Superintendent, SMO, including any photographs of the damaged goods or part numbers of goods that don’t match those ordered.

Disputed goods are categorized as follows:

• Incorrect Goods: The goods don’t match those that were expected.
• Damaged/Faulty Goods: The goods are not of the expected quality and/or don’t function to the expected standard.
• Missing Goods: The goods have not been delivered.
• Services: The service was not carried out correctly and was not to the quality expected.

The Technical Superintendent will review the order and decide on appropriate action:

• To reorder the goods.
• To return and get a replacement from the supplier.
• Accept and close the order as delivered.

The Procurement Officer is responsible for liaising with the supplier.

The vessel may be asked by the SMO to raise a new requisition.

6.1.8 Invoice Process

All invoices, received by the Technical Superintendent or by the Procurement Officer, shall be sent to the Finance department for processing the payments.

Prior to sending the invoices to the Finance department, the Procurement Officer needs to ensure correct payee details are mentioned in the invoice.

6.1.9 Provisions Orders

Provisions, including slop chest items, are ordered through the local suppliers, and according to the agreed budget. The Master and Chief Cook are responsible for inventory control, quality, and determining stock levels to be maintained.

Expenditure and stocks shall be checked on a monthly basis to ensure all outdated or deteriorated items shall be taken out of circulation and disposed of in accordance with the Garbage Plan. The Master confirms satisfactory receipt of provisions and reports any sub-standard/short deliveries to the supplier directly (notifying the SMO immediately).

The Master informs the SMO of monthly provisions statistics utilizing the following Forms:

• Monthly Provision Inventory - PUR02
• Vessels Victualling Account – ADM 11

6.1.10 Efficient Purchasing

Timely confirmation of receipt, and experience feedback on quality, quantity, and service standard is of great use in evaluating the performance of the supplier.

The contractor’s/supplier’s performance shall be monitored to ensure that Company quality and environmental standards are complied with.

6.1.11 Points to Note When Raising a Requisition

• Delivery and port clearance costs for small orders are proportionately higher than for large orders, which has a major impact on the vessel's budget, i.e., less to spend on spares and stores. Small orders must be avoided except in exceptional circumstances.
• Insufficient details cause additional correspondence costs back and forth with vessel and supplier, delays in supply, and waste of valuable processing time.
• Insufficient pre-planning means more frequent orders and greater numbers of urgent orders. Proper planning should require an average of 250 orders per vessel per year.
• Freight costs can be reduced with advance planning and consolidation of orders.

6.2 MARCAS

The company does not subscribe to MARCAS.

6.3 Supplier and Sub-Contractor Control

This procedure defines the purchasing and technical department's role by which companies and individuals supplying products and/or services to managed vessels are selected based on the conformance of the product and/or service to the Company and owners’ requirements, quality, reliability, cost competitiveness, availability, and environmental impact.

6.3.1 Responsibilities

The Technical Manager is responsible for the implementation of this procedure.

6.3.2 New Supplier Process

The database of suppliers is for use in the office by the SMO to identify appropriate solutions to approach for tendering the supply of spares, stores, and technical services. Any amendment to listed supplier details should be highlighted to the Procurement Officer.

6.3.3 Initial Assessment

Inclusion into the Company database will be granted to companies that can satisfy at least one of the following criteria:

• Original manufacturer, their licensee, or agent.
• Approval/membership of a recognized employers’ organization, trade body, or has quality assurance accreditation as referred to previously in this section.
• Has a proven track record of supply to the Ship management company.
• Has been recommended and has advised the required information for inclusion in the Company database.

The following information is required for inclusion:

• Supplier Details
• Address & Contact Details
• Bank Details
• Person in Charge & Contact Details
• Business Overview
• Financial & Operational Information
• Quality and Certificate Details
• Reason for Inclusion
• Details of Requestor

6.3.4 Performance Evaluation

Evaluation of suppliers is used to assess the performance of the companies on the Suppliers/Sub-contractors Database. The supplier performance evaluation is based upon response times, delivery times, and performance (quality).

The supplier is rated on their performance in three areas: response times, delivery times, and quality.

6.3.5 Use of Non-Listed Suppliers

Should a supplier or sub-contractor who is not listed on the Company database be used as a result of an emergency supply or repair situation or the agent’s local knowledge, then that supplier/sub-contractor’s details must be provided and passed through the new supplier process described earlier in this section.

6.3.6 Drydock or Ship Repair Facility

▶▶ See - COM Section 5.3 - Dry-Docking / Major Repairs