Muhammad Ali Jinnah University - Karachi

Assignment # 4
Converting Theory into Practical

“Analysis of International Purchasing done by

Attock Cement Pakistan Limited”

Semester Fall-2022

Course International Logistics & Global Supply Chain Management

Submitted To Sir Saheer Ali

Prepared By Faisal Wahab - SP21-MSEE-0005

Sohail Wahab – SP21-MSEE-0007
 A. Objective
This learning process is not complete without turning theoretical knowledge into practical. The
International Logistics and Global Supply Chain Management is a very vital subject in the area of
Management Sciences as beside theoretical knowledge, one must also know relevant procedural
requirements, statutory regulations, management techniques and interpersonal skills to master in this
subject. Therefore, our respected subject Teacher, Sir Saheer Ali, has not only focused on giving
theoretical subject knowledge but also encouraged students to get practical acquaintance by giving
different assignments and visits to factories during learning process.

This Assignment, is finally assigned to students enabling them to have a grasp of not only theoretical
aspect but also gaining practical knowledge. Thus, creating a balance between theory and practical.

We have selected “Attock Cement Pakistan Limited (ACPL) - a market leader in selling cement with a
brand name – Falcon Cement” to study their International Purchasing Techniques & Procedure.

In this report/assignment we will deal with the following details aspects of ACPL:
1. Explain the company process while conducting international purchasing.
2. Explain the obstacles faced by the company while conducting international purchasing.
3. Provide Recommendation for the company.
4. Provide a brief conclusion for the overall report

B. Introduction
ACPL, has established its production line in 1980 in Hub District of Baluchistan. To cater the increasing
demand of both local and export market, it has gradually increased its production capacities by installing
three (3) production lines and fourth (4) line is under construction. With the addition of Line-4 the total
plant production capacity will reach up to ~14000 tons per day.
These production facilities are of the most modern latest plant machinery and equipment which
demands not only highly skilled professionals but also a comprehensive mechanism to run it operation.
Like any other corporate company, ACPL has different departments headed by highly professionals to
meets its business demands. All procurement actions are being taken by the Commercial department of
ACPL.

C. Material Management System (MMS) of ACPL

This covers budgeting, procurement actions, inventory management, outsourcing, and material
utilization. We will focus on the International purchases being done by ACPL. The procedure of and
documentation are governed, as per Attock Cement Commercial Department and Stores Department
procedures.

The main Purpose of MMS are;

• To ensure timely purchase of materials as per detail / specifications given by the indenter.
• To ensure effective control of purchase documents and verification of purchased products /
services.
• To ensure effective selection, evaluation and re-evaluation of suppliers.
• To continuously review and evaluate procurement procedures and practices in the light of
changing regulations and market conditions and initiate measures for changes / streamlining /
improvement of existing system / procedure.

Company Purchases Procedure

D. International Purchasing (Import Purchase Indents – IPI)

The following methodology is adopted by ACPL for all international purchases;

• User department to initiate Import Purchase indent (IPI) with complete specifications, preferred
suppliers, etc. on prescribed forms.

• After approval from Management, Commercial department assigns unique MC# and a dealing
Commercial Office for future reference.

• The dealing Commercial Officer follows-up the case until he receives necessary approval. After
approval he takes action for placement of Import Purchase Order (PO).

• He then fills the LC opening application to be received form banks and after getting approval of
CEO, sends the LC application to the Bank for establishment of Letter of Credit.

• The dealing Commercial Officer submits the application for LC along with required documents to
the concerned Banker, who approves and issues the LC accordingly.

• Upon receipt of one copy of the LC from the Bank, the Commercial Officer sends a copy of the
same to the supplier through fax.
 Note: After shipping the ordered items / materials the Supplier normally sends a set of
documents (Copy of Invoice, Bill of Lading or Air way bill, etc. and packing list) which are called
non-negotiable documents.

• The dealing Commercial Officer keeps a track of the case and waits for the Non-negotiable
documents. On receipt of non-negotiable documents, he selects a custom clearing agent and
hands over these documents for initiating the custom clearance.

• On receipt of original documents at the Bank, the concerned Commercial Officer arranges to get
necessary Bank endorsement on them and collection accordingly.

• He then hands over these documents to the clearing agent for getting the clearance done.

• In case the non-negotiable documents are not received by ACPL or by the local agent of the
Supplier or by the concerned Bank, by due date, the dealing Commercial Officer contacts the
Supplier for necessary follow-up.

• The Bank sends a written confirmation regarding receipt of the relevant documents along with
their “I” Form, which the dealing Commercial Officer completes and returns to the Bank. Based
on completion of the following documents, the Bank releases required payment as per invoice
to the concerned Supplier: -
• Discrepancy acceptance certificate signed by Manager (Com) and Manager (Fin) in case of any
discrepancy in the documents / conditions against those given in the LC.

• Completion of all other conditions of LC (ensured by Commercial Officer and verified by the
Bank before payment).

• Retirement instructions along with endorsement by ACPL’s authorized signatories by Manager

(Prod) / Manager (Com) or nominee.

• Once the payment is made by the Bank to the concerned Supplier, the Shipping Company issues
necessary Delivery Order (DO) to the clearing agent based on which the items / materials are
cleared from the port.

• The dealing Commercial Officer finally arranges for payment of necessary Govt. duties / taxes
and dispatch of goods from the Sea / Airport to ACPL Stores Department at the Factory.

• Rest of the procedure for payment to Supplier is done as per set procedure of Finance
department.

• C/S is sent to indenter for technical scrutiny and is returned duly signed by competent
authorities. The case is then forwarded to CEO for approval through HOD (Com) / Company
Management.

Inspection of Material at Suppliers Premises.

If required, Commercial Department contacts the supplier and makes necessary arrangements for the
inspection of special item. A team of representatives from the indenter and Commercial Dep’t visit the
supplier’s premises and perform the inspection / approval. The inspection results are sent by the
indenting department through IM / Email
 Receipt and Verification of Company Purchases at Factory
Security clerk prepares Inward Gate Pass and the goods are sent to the ‘Receiving Section’ of Stores
Department. A system generated Material Receipt and Inspection Report (MRIR) is raised in four copies
and one copy is sent to indenter. The indenter either accepts or rejects the material on the basis of
specs, details according to LPI/PO and signs the MRIR accordingly.

Stores Receipt Voucher (SRV) is issued by Store Department for accepted item and are taken on charge
and put in the respective yard/ store/ warehouse.

Computer/ Stationery
Range of Suppliers

Consult/Certification

Elect & Instr. Equip

Machinery & Eqpt

Training Institutes
Packing material

Repair /Services
Transportation
Bulk Material

Fabrications
Assessment
Chemicals
Parameters
GOS

Authenticity of Registration Doc X X X X X X X X X X X X

QC set-up /Quality/ISO Certified X X X X X X X X X X X X

Qualified Technical Staff - - X - X X X X X X - X

Sample Qualification X X - X - X - X - - - -

Field Experience X - X - X X X X X X X X

Credibility / Market reputation X X X X X X X X X X X X

Sufficient Capacity (size) X X X X X X - X - - - X

Appropriate Capability (type) X X X X X X X X X X X X

Accessibility / Location / Comm X X X X X X X X X X X X

Credit Facility X X X X X X X X X X X X

Guarantee / Warranty - X X X - - - - - X - X

Financial Stability X X X X X X X X X X X X

Suppliers Selection and Evaluation

The aim of selection and evaluation of suppliers is to develop and maintain transactions with only those
suppliers who can best meet the purchase requirements of ACPL. Commercial Department maintains a
system of Selection / Registration of Suppliers and only the registered suppliers are allowed to supply
goods and services.
Suppliers’ Performance Monitoring and Evaluation
Performance of the approved suppliers is regularly monitored and they are evaluated after every six
months on Supplier’s Performance Record form by the Commercial Department. Suppliers are assessed
for each delivery made against a valid PO / supply order. Each parameter carries a weight age factor
(WF).

 Quality of goods or services: Weight age Factor = 06

 Quality of goods or services (after rejection): Weight age Factor = 03
 Timely Delivery:Weight age Factor = 03
 Accessibility / Response: Weight age Factor = 01

Hose deliveries, which are accepted by the indenter, are given 06 points for ‘Quality’ and those, which
are rejected, are given 0 points but if the material is accepted after rejection than it is given 03 points.

For ‘Delivery Time’ the supplier is given 03 points if the goods / services are delivered within due time
and zero if delayed.

‘Accessibility / Response’, which includes how well he replaces rejected stores or reimburses any
payments received etc., is also assessed as 01 for good and zero for poor.
Obstacles faced by the company
Stringent procedures are adopted by the company to mitigate internal obstacles, ACPL often face the
following problems while executing its International Purchasing procedure;

 Often experience delays in delivery delays,

 Sometime missing documents and problems with paperwork missing.

One of the biggest challenge, in case the imported goods are rejected by the indenter due to inferior
quality, or not as per required specs, after they it is almost next to impossible to return. Supplier, with
good repute, normally arrange for replacement in most of the case.

Conclusions
1. Being Private Ltd company, ACPL is not bound to follow PPRA rules, however, ACPL has
implemented system procedures which are transparent and auditable;
• For International Tenders/Contracts (e.g. Settings up new production lines) FIDIC rules
are followed, mostly.
• For Import & Local procurement of machinery, equipment, spare parts and
Outsourcings, ACPL has formulated procedures under the guidelines of PPRA rules
which are related to Procurement Planning, Procurement Advertisement,
Prequalification of Suppliers & contractors, Methods of Procurement and Bid Selection
& validation.

2. E-Procurement is in practice through Relational Database Management System (RMDBS). This

indigenous RDMBS has many modules including, Procurement, Finance, Accounting, Warehouse
Management, Human Resources, Dispatch etc.

3. Beside Electronics process, there still exist paper based system (Partial) to satisfy different
needs.

Recommendations:
 ACPL to continuously monitor supplier evaluation criteria to examines current suppliers to
measure and monitor their performance in order to reduce costs, mitigate risks and drive
improvement.

 A separate and dedicated procedure to make for Imported Coal, receipt, sampling, testing and
payments. This is required in view of variation in Imported Coal specification and limits,
tolerances in Gross Calorific Values in every Coal Contract / LC / Purchase Order.