Risk Assessment and Proposed Effective Compliance

Management of Sub Vendors appointed by SCM

2nd December 2020

 Background Understanding
We engage multiple contractors / service providers to fulfill the business needs which are
temporary in nature or not our core competence .
Majorly 3 types :
Manpower ( Sodexo takes the Contract and Outsources Complete or Portion of Manpower
Supply )
Job Work ( Painting, Tank Cleaning, Mechanized / Manual Carpet Shampooing , Chair Cleaning,
Facade Cleaning etc.)
Material Supplies ( Canteen Supplies, Spare Parts, Housekeeping related material and so on )
End to End management by SCM ( right from identification of Contractor / Vendor to
discontinuation of services )

**The First 2 is the under scope for this project.

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 Background Understanding
As Is State
a.For the Manpower Vendors in the event of any violation of applicable labour laws and
compliance norms by them, Sodexo being the Principal Employer / Main Contractor in
this case, becomes responsible for mitigating the risk and making it good and compliant
as per applicable law.
b.For the Job Work Vendors, in the event of any non-compliance by them pertaining to
the manpower deployed by them to carry out the given job, Sodexo being the Main
Contractor becomes liable to make it good. We have experienced this during the ESIC
Inspections time and again in past.
Sodexo is responsible to ensure the compliance of such sub vendors and to avoid future
litigation to both Sodexo and Client, assessment of compliance risk is advisable for all
stages of this activity i.e. A)On boarding , B) During the tenure of engagement, C) Exit
and Post Exit Full and Final Settlement

3–
 Onboarding of New Vendor / Contractorw
As is situation-
•SCM send the details of a TO BE ONBOARDED VENDOR to Aparajitha and post their
confirmation engages vendor in business until the requirement as the case may be.
•However, any work/ job assigned to any vendor directly by the site team / operations/
business is not going through the above route .
Stage 1:
On boarding of Contractor / Vendor
•Identification of vendor by Operations team directly to be stopped and routed through
SCM team only.
•Operations as guided by SCM will share the particulars to verify the credentials of the sub
vendor with Compliance Partner (Aparajitha/ or any other agency) before engagement of
the vendor.
•Compliance partner (CP) will assess and share the structured report with its
recommendation for go or no go.
•In case the report of CP found unsatisfactory, Operations should not engage such sub
vendor to avoid risk.
•CP will raise the invoice for such services to operations directly keeping SCM in copy.
•SCM to have two dedicated resources in their team to manage sub vendor compliance
PAN India.
4–
 Stage 1 : Onboarding of New Vendor / Contractor
Current Process

01 Step 1 02 Step 2
SCM send the details of a TO BE ONBOARDED VENDOR to However, any work/ job assigned to any vendor
Aparajitha and post their confirmation engages vendor in directly by the site team / operations/ business is not
business until the requirement as the case may be. going through the above route .

Revised Process

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Identification Operations as Compliance In case the CP will raise SCM to have

of vendor by guided by SCM partner (CP) report of CP the invoice for two dedicated
Operations will share the will assess and found such services resources in
team directly particulars to share the unsatisfactory, to operations their team to
to be stopped verify the structured Operations directly manage sub
and routed credentials of report with its should not keeping SCM vendor
through SCM the sub vendor recommendati engage such in copy. compliance
team only. with Compliance on for go or sub vendor to PAN India.
Partner before no go. avoid risk.
engagement of
the vendor.
 During Life Cycle of Service by Vendor / Contractor

As is situation-
•SCM on their own is managing the invoicing and payment process control for sub vendors.

Stage 2:
Compliance Assessment during the life cycle of vendor during engagement :
Since Sodexo engages sub vendor under different types viz., (a) Manpower contract (b) Job Work (c )
Material Supplier Nature of completion of each type of contract varies which results into different
requirement s of compliance and frequency of raising invoice by vendor and payment by Sodexo.
•SCM through CP to audit and verify the statutory compliances and vendor to attach NOC along with the
invoice to SCM .
•Only after the NOC from CP the invoice should be cleared.
•In case of project work, the compliance applicability in detail to be assessed by CP basis on the inputs
shared by vendor to the SCM pertaining to manpower portion of the invoice and resultant compliance
fulfilment along with the Proof of Remittance .
•CP will assess the records and submit the report to Supply Chain and Operations.
•If non compliance observed, the same will be highlighted to sub vendor by Supply chain and invoice will
be on hold till compliance is fulfilled to the expectation of CP and SCM.

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Stage 2 : Compliance Assessment during the life cycle of vendor during engagement

01 Current Process
SCM on their own is managing the invoicing and payment process control for sub vendors.

Step 2 Step 4
Only after the NOC from CP the invoice CP will assess the records and submit
should be cleared. the report to Supply Chain and
Operations.

1 2
Step 1
SCM through CP to audit and verify the
statutory compliances and vendor to
attach NOC along with the invoice to
SCM
3 4 5
Step 3 Step 5
In case of project work, the compliance If non compliance observed, the same
applicability in detail to be assessed by CP basis will be highlighted to sub vendor by
on the inputs shared by vendor to the SCM Supply chain and invoice will be on hold
pertaining to manpower portion of the invoice till compliance is fulfilled to the
and resultant compliance fulfilment along with expectation of CP and SCM.
the Proof of Remittance .
 During Exit of Vendor / Contractor
As is situation-
• No Due diligence before clearing the final payment in case of supplier / vendor for a)
Manpower Contract, b) Job Work.

Stage 3: End of the contract and exit process of Sub Vendor:

• SCM must intimate the cessation of any contract for a) Manpower Contract, b) Job Work
to CP and simultaneously inform vendor for submission of all documents for assessment.

• CP will verify the documents and submit the report.

• In case of non compliance observed, the same to be highlighted to sub vendor by SCM
and invoice to be put on hold till compliance is fulfilled to the expectation of CP and SCM.

• SCM is responsible to ensure the rectification of non compliance of sub vendor and get
the clearance from CP before final payment .

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 Stage 3 : End of Contract and Vendor

01 Current Process
No Due diligence before clearing the final payment in case of supplier / vendor for a) Manpower Contract, b) Job Work.

STEP 1 01 STEP 2
SCM must intimate the cessation of any CP will verify the documents and submit the
contract for a) Manpower Contract, b) Job report.
Work to CP and simultaneously inform vendor
for submission of all documents for
assessment.

04 02
STEP 4 STEP 3
SCM is responsible to ensure the rectification In case of non compliance observed, the same
of non compliance of sub vendor and get the to be highlighted to sub vendor by SCM and
clearance from CP before final payment . invoice to be put on hold till compliance is

03
fulfilled to the expectation of CP and SCM.
 Action taken and Way Forward

• Compliance and HR discussed with Aparajitha team for assessment of the process for
accuracy and submit their commercials to undertake this activity.

• To understand the scope of work, volume of transactions and geographic spread of existing
vendors we have requested the details from SCM on the same. Expecting the details by 3 rd
Dec’ 20 as informed by Gopal.

• Expected to have the SoP’s, Checklist for all stages, Templates and Mode of
Communication, Detailed Report by 10th Dec’ 20.

• We are in discussion with UCS ( Mr Shaiju ) who will give us the process followed by UCS for
Vendor Management. UCS being the auditor from Client side for good number of our sites,
these inputs will help us in designing our framework.

• By 15th Dec 2020 the concrete proposal will be submitted

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 Suggestion Received During the Meeting on 02/12/2020

1. Send the communication to Segment Heads , Finance Director and

Manish
2. Ensure agility while the process is being streamlined
3. Follow up meeting with all the stakeholders to firm up the plan.
4. Involve Jiten Joshi along with Gopal in all the discussion.

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